Obama's big thing right now is Health Care Reform. He ran and was elected on a platform of national health care reform - Obama-style: which means according to Obama's campaign promise giving health insurance to all who want it, and those who are happy with their health care plans get to keep it.
General Comments about Health Care Insurance:
First off, let's talk about what is wrong with USA's health care system currently:
1. It is expensive, and looks as if costs will increase due to aging and more unhealthy population - Americans are an obese lot - which means Americans eat more, and exercise less.
2. Because of rising cost of health care, more and more employers are offering medium to high deductible plans, which shifts the burden of health care from the employer and insurance companies to individuals and families.
3. More and more Americans cannot afford health insurance. Depending on who is talking I've heard numbers quoted frm 40 to 50 million americans are not insured. Reasons for non insurance range from unemployment, employers who don't offer medical insurance, inability to afford health insurance, to people simply choosing not to be insured.
4. Health insurance coverage issues - many or most health insurance plans exclude pre existing conditions.
5. Medical Malpractice tort reform:- again depends on who you talk to - some people say that the rising health insurance costs are driven by an industry that spends too much on unnecessary procedures simply because they are afraid they will be sued.
Ok, now let's talk about what is right with our health care:
1. Everyone has access to emergency health care that is the best in the world. ER's and hospitals cannot turn away a person in need of emergency attention simply because of their inability to pay.
2. Health care accessible through traditional means - such as your insurance plan - is the best in the world. People have access to state of the art equipment, and world class expertise.
3. If your health care plan covers costs of specialist referrals (and most do) accessiblity is determined not by medical triage, but by scheduling accessibility.
4. You can get to choose your primary medical practitioner (there are limits for in/ out of network provider lists.) Accessibility to your primary med practitioner is schedule dependent and not medical triage dependent. And you have the ability to build up a relationship with that provider.
5. Health care plans cover preventative procedures - annual check ups, and preventative medical procedures which are unheard of in all third world countries.
General Comments about Health Care Reform:
1. How to make Health care accessible to all?
2. How to make Health care affordable?
How to make health care accessible to all?
There are 2 parts to this. Firstly accessibility that is coverage dependent. Example: a person with a pre existing condition such as chronic diabetes, will not have access to health insurance under a pre existing condition exclusion. If all health care plans were not allowed to have pre existing condition exclusions, then accessibility to health insurance is guaranteed.
Second part - is those people who are not insured. How to extend coverage to those people?
By mandating all employers to offer health insurance to their employees no matter how small the business? By providing a national health care plan that offers the same or comparable coverage to private health care plans? By extending unemployment benefits - thereby separating health care insurance from being employer driven?
How to make health care affordable?
Do you create yet more governmental regulation that will set how much premiums health insurance companies can charge? Do you make health care affordable by capping medical malpractice claims? Do you set a means test, which would determine how much people would pay - the rich pay more than the poor?
At the end of the day - you get what you pay for.
So now let's look at the proposed Health Care Choices Act:
For a summary of what the bill contains see here. For text of proposed bill see here.
Some comments on the Proposed America's Affordable Health Choices Act:
1. If you are satisfied with your current health care plan, you get to keep it.
Wrong. Under the proposed act all health care plans are required to meet certain standards of coverage. The bill provides for a grandfathering in process for current private health care plans to get their plans to meet the Federal requirements. So for most people on current health care plans, their plans will change - and it will most probably mean that premiums charged will change too.
2. If you are not satisfied with your current health care plan, you can choose the public health care plan?
Only if your current employer meets certain requirements - employers employing more than 20 people will not be eligible to offer the public health care option. There is language in the proposed act that allows the commissioner to extend the public health care option to larger employers. But there are no guarantees that that will happen.
3. What are the Federal Standards?
No health care plan whether private or public can exclude pre existing conditions. Sec 122 sets out minimum standards of coverage. For cost sharing individuals are $5,000 and families are $10,000. It appears this refers to the annual out of pocket maximums.
4. Setting of premiums?
Health insurance companies can no longer set premiums based on health status. See Sec 113 where premiums can only be set with regard to age, area and family enrollment. For premium set by age the range from lowest to highest premium cannot exceed the ratio of 2:1.
I can't help but that that this is going to be increased premiums for everyone.
The commissioner or health insurance Czar sets a medical loss ratio (premium to loss/ payouts.) According to Wikipedia, Medical Loss ratios range from 60% to 110%. (Note a loss ratio 100% and over means that the losses/ claims paid out meet or exceed the premium collected - not good when you are concerned about the financial security of an insurer.) This entry in Wikipedia is based on the current situation, where insurance companies are allowed to screen out participants with pre existing conditions. Imagine what the premiums would have to be raised to to ensure loss ratios of say 70%?
5. The national health care plan:
Private Health plans eligible under the Health Insurance Exchange can be offered at 4 levels - basic, enhanced, premium and premium plus. See Sec 203. The categories refer to the kinds of coverage offered, and structure of the plans. Remember all private health care plans have to change to meet federal standards. The national health care plan is offered as an option in the Insurance Exchange, BUT only basic, enhanced and premium levels are offered. See Sec 221.
Start up funding of $2,000,000,000. The language only appears to cover cost of payment of claims. Cost to Administer plan is not included. So if we are looking at a medical loss ratio of 100% then we would need to collect premium in the amount of $2,000,000,000. That means $2,000,000,000 in premium/ taxes to meet the 100% loss ratio.
6. Individual Affordability Credits See Sec 241.
Affordability Credits can only be used for first 2 years towards the basic plan. These credits are NOT cash rebates. Individuals eligible must meet 400% below the Federal Poverty level or for an individual $43,320. For a family of four, it's $88,200. Persons not lawfully in the USA are not eligible.
7. Employers Responsibility to provide health care coverage - See Sec 311 onwards.
If employers don't provide health care coverage through the traditional measures i.e. through private health care plans, employers can contribute to the National Health CAre plan in lieu of providing coverage. Contributions to the national health care plan seem to be 8% of annual payroll. If employers are smaller employers then the % they will contribute will be less than 8%. Small businesses are provided some tax credit relief.
For those individuals without health insurance an additional tax of 2.5% will be imposed. Additional taxes imposed for individuals earning over $500,000.
Conclusions
I don't see how health care plans that have to extend coverage, and extend their risk by including individuals with pre existing conditions, can continue to operate UNLESS they RAISE premiums considerably. Especially if the Federal Government is going to set premiums based on loss ratios. I can't see a situation where health insurance companies are going to be giving money back to policyholders.. Not with increased benefits and increased claims.
I think it is inaccurate for Obama to state that "if you are happy with your health care plan, you get to keep it". The federal regulations of all health care plans will essentially change the nature of all plans. I don't believe it will put private health insurers out of business, not if they get to raise their premiums. And given the loss ratio approach to setting premium, they will be able to do so. I also don't think it is in the interest of the National Health Care plan, to do away with the private health care options - they are simply not going to afford it. Also all employers that employ more than 50 employees are not going to be eligible to offer the national health care option. The revenue generation povisions are interesting - these are essentially increased taxes on individuals and companies, on employees and employers.
I am sceptical of the ability of a government to compete with private health insurance companies. Governments are by their very nature highly inefficient, and certainly do not make for reduced pricing. I believe what is ultimately going to happen is that we are going to get increased premiums across the board, increased taxation to pay for a very expensive system.
For more reading:
Wikipedia has an interesting entry on Health Insurance.
Also so Megan McCardle's take on why she opposes National Health Care.
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