Health Care Reform And The Government Exchange
Behind closed doors members of Congress are hammering out plans to change the shape of the current health care system. Details are still somewhat scarce, but House and Senate member are determined to have a bill put together by the middle of the summer and actual reform by year end. Outlined below are changes that we might expect to see in the not so distant future.
Government Health Insurance Pool
Congress seems determined to create a federally subsidized health care pool. In essence this will be government created and run health insurance. It will compete with the private carriers and most likely will force health insurance prices down across the board if it undercuts currently available plans.
If govt insurance provides good care and is popular with hospitals and doctors, then it will go a long way toward driving out private insurance in the individual and family marketplace. If the insurance is substandard and unpopular with health care professionals, then private plans will remain necessary. If consumers are receiving better attention from their health care providers with private insurance, it will be advantageous to avoid a government run plan.
Health Insurance Mandates
One goal of health care reform may be to ensure that all Americans have health insurance coverage. This could only be done by creating mandates like those we have seen with car insurance. Mandates will require that individuals and families purchase or qualify for some type of federally mandated minimum insurance coverage. Individuals and families will either qualify for state run coverage like Medicaid or be forced to either join the government pool or purchase private insurance. Underwriting will be virtually non-existent for preexisting conditions, but tobacco use will still be a factor in determining monthly premiums.
Employer Sponsored Health Insurance
There is also talk of requiring most, if not all, small and large businesses to provide health insurance to their employees. This will likely only be offered from private insurers like Anthem, Aetna, United Healthcare or others, but perhaps the government will be active here as well. How this will ultimately affect businesses is yet to be determined. It could however become a financial burden to small business owners across the country – especially those operating on slim profit margins.
In summary, plans are underway and change will soon be upon us. It will be interesting to see what evolves from the ongoing talks between legislators, unions, hospitals, doctors, pharmaceutical companies, insurers, and corporate advocates. It will also be intriguing to see if these plans actually drive down the cost of health care now and into the future.
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Category: Health Care Reform, Op/Ed
Issues with Health Care Reform – Cost, Taxes and Job Loss
Health care reform is coming and possibly soon. President Obama promised changes to the health care system during his run to office and has quickly taken measures to deliver on those promises. While several questions remain as to what these changes might entail, he has pledged to insure more Americans under a universal system.
It is hard to disagree with the notion that Americans need health care to be more accessible and affordable. The primary concern is the overall cost now and as a going concern. Additionally, what types of trickle down effects might develop as a result of a more universal system? And overall, do the ends justify the means?
Grim Economic Times
At present, we are in a prolonged recession at best. Consumers are losing jobs at a breakneck pace, output is shrinking quarterly, tax receipts are down, and a financial crisis not seen since the Great Depression casts a long shadow over the world. Financial and insurance giants like AIG, Citigroup, and Bank of America teeter on insolvency while the need for further bailouts cannot be ruled out.
Our government already spends more on health care than any industrialized nation in the world. Are there ways to use our current dollars more efficiently without a costly overhaul? One can only wonder if this is an ideal time for the government to infuse billions into the health care system.
Potential Cost of Health Care Reform
Thus far, the Obama administration has set aside $634 billion in a reserve fund as down-payment on reform. Current estimates say at least $1.5 trillion will be needed over a ten year period – more than two times the amount already reserved. Obviously, these are large amounts and if we know anything about government estimates, chances are they will continue to climb upwards.
There have been a few ideas as to how the taxpayers can foot such a bill, especially in light of current deficits and the recent passing of a $787 billion stimulus package. Proponents point toward potential savings through digital medical records, higher income taxes for the wealthy, and carbon emission auctions among other suggestions. But can such a large amount be generated through these measures alone? Savings from digital records has been difficult to calculate and some of these dollars have already been set aside for other government spending programs. Will income tax brackets need to be further adjusted in favor of the government?
The Sick and Uninsured
Here is where it gets a little tricky. Advocates of universal health care will tell us that a government run program will reduce costs and increase the availability of health care to the sick and uninsured. If Medicare is any example, then cost reduction is certainly up for debate. And of the 47 million who are without insurance, how many are insurable and capable of purchasing coverage, yet choose to do without. It is the sick and impoverished that need the most help.
Recent increases to Medicaid (state-run health insurance for the impoverished) eligibility requirements have made coverage more readily available to families and especially their children. This is a step in the right direction and should help millions across the country. These efforts should decrease the number of uninsured Americans. More will need to be done, but the recent proposal by the major insurance carriers to provide coverage for the unhealthy at lower rates should also help considerably if adopted.
The Demise of the Health Insurance Industry
However, if the government spends $1.5 trillion to create a large subsidized health insurance pool for Americans, what might be some unintended consequences? If this subsidized pool undercuts the current market, then it would be fair to assume that many Americans would join in order to save on premium? And when small businesses know their employees can join this pool, then why would they offer benefits at all? And what about large employer sponsored groups – can they discontinue coverage and nudge their personnel toward the government pool?
A universal system would certainly go a long way toward getting more Americans insured. However, it could have disastrous affects on the health insurance industry overall. There would be very little need for agents, underwriters, managers, marketing firms, clerical staff, and several others who are involved. The industry as we know it would downsize considerably, insurance carriers would go out of business, and many would become jobless.
Significant Job Loss
Some would say good riddance. Sure, but there are tens of thousands who work in this industry and pay taxes every year. Are we not counting on their contributions to the treasury to fund our country? Unemployment is already above 8% and some predict it will rise to 12% before the economy improves, so are we ready to add hundreds of thousands more to the unemployment rolls?
There is a quite a bit of politicking about financial companies that are too big to fail. The same argument might apply here. The insurance industry and all whom it employs are too big to undermine. It would have a devastating affect on the economy and our elected officials should recognize this consequence of a universal system.
The current health insurance industry must play a significant role in any attempt to reform health care. If they are cast off as an unneeded group, then many more American will be without jobs, tax receipts will go down, and economic conditions will only worsen.
You will get no argument from most rational people working in the insurance industry that changes must be made to insure more Americans – especially those with preexisting conditions. There are several ways this can be accomplished with the help of insurance carriers and all who make a living in the industry, but that is a topic best discussed in a separate article.
Category: Health Insurance, Op/Ed