Thursday, March 25, 2010

Breaking Down Healthcare Reform

After watching NCAA basketball all day Sunday I know what you did. You tuned to CNN to watch the votes on the health care bill, right? Okay, neither did I. But I did wake up Monday morning to the news that the bill had passed. On Tuesday, President Obama signed the Affordable Health Care for America Act into law.

I’m not quite sure how I feel about this.

The New York Times describes this bill as the most sweeping social legislation enacted in decades. Yes, I can agree with that statement. But does it accomplish what we need it to? I have maintained that the problem with health care is about both coverage and cost.

Let’s take a look first at coverage:

I think there’s some good news here. In January I wrote about my concern about continuing medical coverage for my son graduating from college. The Health Care Reform bill does address this concern. Instead of coverage to age 23 if the child is a fulltime student, young adults will now be eligible for coverage under their parent’s policy until the age of 26. It’s no longer necessary to be a student to qualify, but this does help the case for students going on to graduate school, as well as those who don’t yet have their own coverage through an employer.

Insurance companies will no longer be able to exclude those with pre-existing conditions from coverage. Nor will they be able to drop coverage for those who get sick. This is a big win. After all, what is the point of having health insurance all your life if you can’t get medical care once you get sick?

Everyone will be required to have coverage… sort of. For the record, I am in favor of this. We need everyone in the coverage pool to have any chance of costs coming down. But, the penalties for not having coverage may not be compelling enough to ensure compliance. The fine for not having coverage will start at $95 per year (or 1% of income) in 2014, and will increase to $695 (or 2.5% of income) in 2016. Low income families (with subsidized insurance) will need to spend up to 2% of their income for insurance premiums. But middle income families with an annual income of $88,200 will need to spend up to 9.5% ($8400) of their income on insurance premiums. For many, the penalty will cost less than the cure.

Everyone who would like to have health insurance, will be able to. The bill will help those currently uninsured, and those with chronic and critical medical conditions. CBS MoneyWatch has more details on who gains and who loses.

So how are we going to pay for this?

In theory, taxing individuals and families making more than $200,000 and $250,000 per year, respectively, will pay for the expanded coverage. They will pay an additional 0.9% in Medicare tax, and a proposed (additional) 3.8% tax on unearned income (including interest, dividends and capital gains). Yes, we are taxing the rich to cover the poor. Or, some may prefer to look at this the way this New York Times article does, as an attack on economic inequality.

And in theory, the new taxes will outweigh the costs. In theory.

But now let’s get to the elephant in the room – the rapidly rise cost of care.

Aside from a provision that will require new plans to offer basic preventive care, nothing has been done to address the fact that we are sicker than ever before. And yes, we love the fact that we have better technology, and better techniques, and drugs that can work wonders. Sure, the doughnut hole (which leaves seniors without prescription coverage after they spend $2830 on drugs but before they reach their annual out-of-pocket cost of $4550) will be phased out (starting with a $250 rebate in 2010). But let’s stop and ask why we need to spend so much on prescription drugs? How about incentives to stay healthy? How about incentives to eat better, exercise more, lose weight?

And dare I mention the costs associated with medical lawsuits and malpractice insurance? What about medical malpractice reform?

I’m happy that we’ve taken steps to expand coverage. Fundamentally, I do believe that everyone should have access to medical care. But our medical insurance premiums today are already way too expensive, and I continue to be concerned about costs.

What do you think? Do the positives of the bill outweigh the negatives?


Anon_e_mouse said...

Positives? There ARE positives? From my perspective, I see the government taking more from those whose work ethic has driven them to succeed and giving it to those who are content to just get by and to that segment of society which has come to expect the government to provide for them since they are too lazy to provide for themselves. I see the government saying "we've taxed you to death already, so we're going to fine you since you don't have any money left to pay your health insurance premium".

The New York Times is right... this is an attack on economic inequality. It is that economic inequality that drives progress and the capitalist system, because without an incentive to get off your tailbone and try and lift yourself up, why bother? Every major social program our government has introduced over the past eighty years has reduced the incentive for people to better themselves, because they know they can count on the government to provide for them.

Our country was once looked up to around the world as the land of opportunity. We pulled ourselves up by our bootstraps, attracting people from around the world who believed that in America they could succeed on their own merits, unfettered by oppressive taxes and government regulation. It was that dream that inspired men like Robert Fulton, Leland Stanford, Andrew Carnegie, Thomas J. Watson and others to put forth the effort that helped make America the industrial powerhouse of the world. It was that dream that drove others to make great strides in other areas of achievement. It was a dream that everyone shared. Today, that dream is gone, replaced by apathy and indolence... why dream, when the government will provide?

And, without the promise of profit, what incentive will the pharmaceutical and healthcare industries have to find new medicines and new cures? New medications aren't cheap; this bill, however, includes strict price controls on them, which will invariably lead to fewer and fewer new ones being developed. "Your child has the latest strain of the zombie virus? Sorry, we had to stop work on the drug to treat it because of the price caps, he/she will just have to suffer." We lose again.

This healthcare bill is another classic example of the old oxymoron "I'm from the government and I'm here to help".

KarenG said...

I appreciate this analysis. I haven't researched it, I'm only getting stuff second-hand from my husband and his talk radio buddies. Who really understands anything the government does? It's all a mass of polarized confusion. I'll wait and see what happens with this like I do with all of it.

Anonymous said...

Anon e mouse - Breaking the cycle of poverty is remarkably difficult. For most it's relatively impossible. This idea that laziness is the problem for struggling individuals is just plain naive. Most successful Americans were born with automatic handouts by being born into relative privelage.
As it was our healthcare system was failing. This bill isn't perfect but it's a step in the right direction.

Colette said...

Karen - you bring up another good point which is that it's very complicated. Too complicated. I hope somewhere down the line we get some simplification.

Anon e mouse - I agree with Anonymous that it's not just about laziness. I DO think it's a positive that the coverage is expanding. I DO think people with pre-existing conditions deserve coverage. At the same time, I agree with your concern about the drug companies -- and I'll add doctors to that list. If medical innovation and talent is stifled that is certainly not a good thing.

Dave E said...

Personally I don't think medical coverage should be the subject of 'insurance' since insurance is for stuff you hope does not happen. How many people do you know that have never been sick.
Get old, tour more likely to be sick. That's not what insurance is about.
People complain about the socialization of health care but we live in a society. That's a social environment. The well off take care off the less able. That's what a society does (or don't you ever look in on your older neighbor?). That's not socialism, that a society in action. The governments role is to remind us of that and implement policies that make sure we all play our part.

As for insurance companies not being able to drop ill patients or refuse coverage. These are businesses in the businesses of making a profit. I've not seen or heard anything that says they cannot inflate premiums to the point where someone with an preexisting condition cannot afford coverage, or did I miss that bit. I've certainly not heard it mentioned at all.

Good or bad, I think it's time for a change but anyone that things the insurance companies will not still make a profit (at our expense I might add) is blind, stupid or worse, both!

Dave E said...

PS. I wish I could type!

Colette said...

Dave, that is an interesting perspective. I do think that we tend to lump health care and health insurance together, and perhaps we shouldn't.

Sick of the Lies said...

Oh Good Lord, the same old tripe about 'laziness' and 'the government will provide'...

First of all YOU AND I ARE ALREADY PAYING FOR PEOPLE, OF ALL INCOME CLASSES, THAT DON'T HAVE INSURANCE. Every single time an uninsured patient walks into an ER, we as a society pay through the nose for that visit and any and all tests/procedures/surgeries that result from it.

Instituting a broad-based insurance mandate, at the very least, helps to bring down costs by ensuring that everyone has access to affordable preventive care. Neglecting your health until you end up with a grapefruit-sized tumor just doesn't make any financial (or medical) sense at all.

Second, the yammering by Mr. Anon e mouse sounded alot better as part of Gordon Gekko's "Greed Is Good" speech from 'Wall Street'.

Let's not forget that we are just now starting to recover from an economic implosion that was caused, in no small part, by the sheer avarice and recklessness of some of the downtrodden, put-upon capitalists that Anon e Mouse appears to be weeping for. And, by the way, a true capitalist system simply would not allow the bailing out of banks or auto companies, nor would it abide the subsidization of student loan originators or farming conglomerates.

The only REAL differences between a welfare queen and a Wall Street Banker are the size of their public assistance checks and the amount of economic destruction they each cause when they go bankrupt.

So, let's cut the crap, and stop portraying healthcare reform as an issue between the lazy and the industrious, when it is patently obvious that health spending has, and in the absence of reform, will continue to drown more and larger household budgets.

Colette said...

Lots of valid opinions on an obviously very touchy issue.

Sick of the Lies, is it safe to say that you see this as an issue about costs?

Megs - Scattered Bits said...

As someone that actually works for an insurance company, I have much deeper rooted concerns because I watch claims everyday and see what drives some of those premium costs, mostly health care costs.

One of the things my particular company does is ask hospitals why they're raising rates on a procedure that already costs three times as much at their facilities as it does at a private clinic? This happens all the time. There are exorbitant health care costs that continue to rise that insurance companies continue to pay, but there is nothing in the bill to help anybody pay for it, only to help people get insurance. The effect that this is going to have in the long run is that almost anybody that is young or relatively healthy is going to spend a LOT more on insurance and that a few people are going to get help and a lot of smaller insurance companies are going to have trouble sustaining the costs at all.

There are caps on how much the person paying your medical bills can charge, but NO caps on how much the person BILLING you can charge. That just doesn't make sense.

Included in the bill is that the IRS is going to be able to mandate MONTHLY whether or not they like your health care insurance. That is a scary thought to me.

Included in the bill is that anybody that is lucky enough to have good insurance is going to get taxed on it. Insurance companies too. Guess who's going to pay for that? Your premiums.

While Capitol Hill claims that this is going to help more people get insurance, they're not telling you that several states had laws like this already. In those states, premiums are about triple what they are in the rest of the nation and many insurance companies simply can't afford to do business in those states. It's too expensive.

It may expand how many people can or HAVE to get insurance, but it certainly hurts anyone that can already manage to afford it now.

Colette said...

Megs, thanks for sharing your perspective from the inside. Yes, it is cost that continues to be the biggest concern. We all spend way too much on medical care already, and I shudder to think how much it will cost going forward.