This time around, “health care reform” has meant several things:
- Increase the number of people who have health care insurance
- Make that insurance affordable to everyone
- Reduce the rate of rise of health care costs
These primary goals have at times been forgotten during the reform sideshows: death panels, public options, abortion coverage. But the key question remains, Will the new law make progress towards those three goals?
First, will it provide more people with health care coverage?
Ten years from now, a higher percentage of those living in America will have health care insurance. The final bill, the details of which are not yet known, will both increase the Medicaid rolls and provide more people with an opportunity to buy health care insurance.
The Medicaid increase is straight forward. Eligibility requirements will be expanded, and more money will be appropriated to cover those eligible. In addition, primary care reimbursement rates will go up, make it easier for those covered by Medicaid to find a doctor.
More important, a new category of government funded health care insurance will be created. It doesn’t yet have a catchy name like Medicaid or Medicare, but it consists of those who are too rich for Medicaid, yet too “poor” to afford insurance. These people will get subsides to help pay their costs, on a sliding scale ranging from a high subsidy for those with incomes above 150% of the official poverty level (currently $22,000 for a family of four), to no subsidy above 400% of the poverty level (incomes over $88,000 for that family of four.)
If you want to see how this works, here is an excellent graphic summary from The New Republic’ Jonathon Cohn, with links to other similar assessments:
http://www.tnr.com/blog/the-treatment/what-reform-means-families-reponse-firedoglake-others
In addition to increased government funding for Medicaid and the new “Midi-care” subsidies, employers whose payrolls exceed $750,000 will be required to “pay or play”. They must provide partial coverage of health insurance premiums or pay an 8% payroll tax. Individuals and employees of smaller businesses will be required to purchase health insurance; they are eligible for the subsides noted above. If they don’t, they face a fine (probably less than $1,000 a year) which is much less than the cost of that insurance.
The market for health care insurance will be altered through increased and altered regulation of insurance companies. Pre-existing conditions: gone. Annual and lifetime limits on insurance coverage: gone. Wide spreads in cost based on age: reduced to a 2:1 (House) or 3:1 (Senate) spread. Unlimited profits and administrative expenses for insurance companies: capped.
All of these changes will result in a higher percentage of Americans with health care coverage. The number may go from today’s 86% to 95% by 2020.
Maybe more important is, will that coverage be affordable?
In addition to the government subsidies and new insurance regulations, Congress is betting that a novel change to the market for selling health care insurance will result in increased competition between carriers, and thus control costs for consumers. Because this method is untried, it is hard to know if it will work.
The exact nature of these market changes will be hashed out over the next month between the House and Senate bills. We do know there will “exchanges”, or virtual marketplaces where standard benefit packages can be compared, and where the government subsides will be focused. Still to be decided: will these exchanges be state based, regional, or national? Will a government run plan (public option) be offered? Will new, non-profit insurance carriers be encouraged to form?
No matter the final form, the value of these exchanges in controlling the cost of insurance is unknown.
Finally, underlying all of the concern about coverage and affordability is the fundamental problem with health care: for the past sixty years, we have been spending an increasing percentage of our national income on health care, from 5% when I was born to the current 18%. So as inflation has risen at less than 3% annually over the past decade, health insurance costs have risen by 8.7%. To those who work within the health care industries, and those who are helped by them, this may not be a bad thing. But do we really want to crowd out and underfund other elements of our economy?
Up to this point, apparently, the answer is “Yes.” Nonetheless, the health care reform bills assume that, at some point, we must bring this increasing spending under control. Otherwise, we put our future at risk. With federal, state, and local governments paying for 50% of health care costs, our ability to provide other social services, including national defense and education, will become more and more constrained. With employers paying another 30%, our goods and services become less competitive compared to other countries with lower health care costs – and that means every other country on the planet.
So the final bill will have elements which seek to reduce that rate of rise in costs. Lip service is paid to “reducing administrative inefficiencies, and waste, fraud and abuse” in Medicaid and Medicare. But main method seems to be the “spaghetti strategy”: throw a lot of trials, pilot programs and experiments against the wall, and see what sticks. Atul Gawande, MD, writing in The New Yorker, has thankfully provided us with both the theory behind this process, and examples of how it may work.
http://www.newyorker.com/reporting/2009/12/14/091214fa_fact_gawande
I’ll return in January or February with my (hopefully) last installment in health care reform, once the final bill is published and I can make some sense of it.