In Conclusion...

What I've come to realize over the course of following reports on health care reform as it twists and turns its way through congress is that really, not a whole lot is going to change for the everyday American with the current proposals.  There, I said it.  The proposal of a government run public option has been beaten into the ground, and as the latest reports from the nonpartisan Congressional Budget Office (CBO) say, even if we do get a public option passed as legislation you probably won't even be eligible for it.  In fact, it's estimated that roughly six million total Americans will enroll in the program when it's eligible in 2013.  I don't mean to sound pessimistic, but for the majority of the focus of reform from media to be centered around an element of the bills that won't even have a large impact on health reform, I wonder what about this proposed legislation will really cause big change. 

President Obama has said countless times throughout his presidential campaign and his presidency that the time for change is now, and that health care is his top domestic priority.  What we're looking at here is a possible individual mandate, which is arguably the major element of the bills that will affect all Americans.  However, based on the soft fines imposed on those who opt out of the mandate (as low as $250 per person annually), it doesn't really strike me as an incentive for those who prefer to not be insured to go out and jump into the boiling pot of health insurance.  The bottom line here and the real root of why this individual mandate will likely pass is that insurance companies need the 45+ million uninsured people to join the pool of those insured to off-set sky rocketing premiums.  But digger even deeper here, we uncover the nasty, hush-hush topic of rationing health care.  Certainly it is one of the most sensitive topics brought about throughout the debate over health care reform, but something I haven't addressed in my blog until now. 

When President Clinton first proposed rationing health care in the 1990's, the idea was met with hostility and high emotion as people couldn't fathom putting a price on someone's life.  But the situation we're looking at now is that one in six dollars spent in the U.S. is on health care, and health insurance premiums are increasing at a rate four times faster than wages.  Four times!  Additionally, we are in fact already rationing care already based on the high cost of care and prescription drugs.  People are making decisions based on how much a doctor or hospital visit costs.  Is it worth the $25 co-pay to see my doctor while I have a cold and the $40 on the two prescriptions, or just wait it out.  In recent years, I tend to just wait it out, take a sick day and save the $65.  On a much grander scale, millions of American's are faced with the decision of whether or not to pay to get their diabetes medicine, or buy groceries for their family. 

The majority of money spent on health care each year - about 70%, is spent on care for the elderly and end of life care.  That's not to say that 70% of people with insurance are elderly, it's in fact the opposite; a small minority of Americans absorb the majority of health care dollars.  Research results have proven that compared with other developed countries around the world, The United States doesn't even come up in the top five or even 10 in terms of mortality rates and quality of care.   At some point, as crude as it sounds, there needs to be a value put on one's life.  Should hospitals and insurance companies spend more time and money on a 80 year old cancer patient to receive medication that would cost $30,000 and would prolong their life for a couple more months, or spend it on a costly transplant surgery for a teenager who has decades more to live.  What if that cancer patient were your grandmother?  What if that teenager were your son?  Not an easy decision to make, but at this point in time, since those decisions aren't being made and money is being spent with some element of moral hazard, we have to look at the results on how it's affecting the bigger picture - sky rocketing costs of health care and the quality of care for millions of Americans that's compromised as a result.  Should it be the government making these decisions and advising on how to ration? No, which is why I think the mere mention of this by the Clinton administration left them dead in their tracks.  But what some researchers are finding is that by implementing some sort of third party regulator to identify what is too costly for insurance providers to be spending on a given case, costs for health care as a whole tend to flatten out and people actually become more conscious about the decisions they're making about their own health, if it means they have to pay for certain things out of pocket. 

The moral hazard that we've seen in recent decades with health insurance is that actual costs of doctors visits and hospital stays and medications are not clearly communicated to consumers.  All they know is how much their premium is and when they have to pay a co-pay.  Consider this:  if you injured your knee playing flag football and needed and MRI, have you ever considered calling around to the hospitals in your area and asking them how much they charge for an MRI?  Likely not.  The reason I ask is that each hospital has difference prices they charge, which are all dealt with behind the scenes between the insurance companies and the providers (hospitals, doctors), so you aren't in a position to call around to make sure you're getting the best deal, the way you would if you were shopping for a car or a contractor to remodel your kitchen.  And that's where the moral hazard comes into play.  If Americans were put in a position to be more conscious about what services they're getting and play an active role in their health care by paying for fees out of pocket, perhaps they would be more inclined to lead healthier lifestyles.  Some researchers have actually gone so far as to suggest that citizens should be required to obtain catastrophic health care insurance, but all other routine, non-catastrophic costs be paid for out of pocket.  Though it is a radical idea, it's one that's worth thinking about. 

While my intention for this last blog post was not to scare you or depress you with the sad state of health care in our country, I do want to open your eyes to the fact that at the end of the day, no matter what health care reform legislation passes, you are in control of your own health and your own life.  In the words of Michael Pollan, "eat less, not too much, mostly vegetables."  As long as we're faced with increasing health care costs, we might as well take action and combat them with impressively healthy lifestyles.  Of course watching what you eat isn't the only thing one should focus on to be healthy, but it's just something to get you started as you wonder, "how can I make a difference in this big mess of rising health care costs?"  It is likely that some form of health care reform will pass through the White House in early 2010, so prepare yourself for, well, very small changes that will likely only affect specific groups of people and types of insurance.  While it has been incredibly interesting to follow the policy change as it passes through the Senate and the House, I've come to realize, as long as politicians are in charge of my health care, I might as well take as much of that control back and determine my own health destiny, and you should too. 

Whaddya know, Joe?

As the weeks pass and tension in the House and Senate increase, more key players are stepping up with their stance on passing a health care reform bill.  We've heard from Senate Majority Leader Harry Reid, Speaker of the House Nancy Pelosi, Senator Max Baucus, Senator Olympia Snowe, the Blue Dog Dems and now Senator Joe Lieberman.  Of course we knew as we got closer to a bill being voted on in the House and Senate people were going to come out of the wood works and make their case known, that's what public policy is all about.  Every time an issue gets to a certain point in potentially passing, it has somewhat of a snowball effect and it really is about each and ever last vote, not just the few who drafted the bill behind closed doors.  Will that last vote be Joe Lieberman?  Will it be Olympia Snow?  We will find out.  In the meantime, there's never a dull moment as these voices do emerge.  The issue that's top of mind in both the House and the Senate is the public option, specifically how it can be written so that it will eventually pass and become federal law. 

Before we dive into those specifics, let's first refresh the parts of the bill that are likely leaning one way or the other.  First, employer mandate.  Will employers be required to provide insurance coverage plans to all employees?  Short answer; no.  Long answer; for companies employing more than 50 people that do not provide coverage and as a result employees need government subsidies to get affordable care, they will incur hefty fines - upwards of $750 per employee.  Will insurance providers face strict regulations preventing them from denying coverages to those will pre-existing conditions? Yes. Will "cadillac plans" be taxed, therefore providing incentive to companies to shop around for lower cost programs and thus resulting in more market competition?  Likely not.  All of these issues have, for the most part, been ironed out.  And now in the 11th hour, we're finally at the meat of the debate, which is that of a public option. 

In previous posts I have provided perspective on how each type of program will affect American's, but now it's time to roll up our sleeves and take a look at the different terms of the public option, as proposed and rejected by groups of constituents.  As they say, the devil is in the details.  What we're seeing from Senate Majority Leader Harry Reid (with the support of Sen. Baucus and Sen. Dodd) is a proposal for the public option to have an opt-out provision for states that wish to not participate.  He is including this in his bill that's up for vote in the Senate, and reaching out to conservative Democrats to be on board until it reaches the floor and is open to debate.  This move is a risky one, but one deemed necessary because 60 votes are needed to prevent a GOP filibuster, however once passed and on the floor, it only needs 51 votes to pass. Enter Joe Lieberman.  Our favorite Independent Democrat from Connecticut is stepping on his soap box to say that he will not be voting in favor of the public option.  However, reports say that Lieberman is in favor of getting the bill on the floor, but once open for debate he will side with Republicans to prevent the bill from passing.  Amidst increasing pressure from his caucus to vote for the bill (after nearly being booted from his party for supporting John McCain in the 2008 presidential election), Lieberman claims to "hate to" be the one that stops health reform in it's tracks, but one has to wonder if the insurance industry concentration in his home state Connecticut has something to do with it.  Lieberman also made clear that he would not support a trigger of the public option, as proposed by Senator Olympia Snow (R-Maine), as a compromise on the issue.

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While I let the mental image of Joe Lieberman filibustering resonate in your mind, let's discuss what's happening with Nancy Pelosi in the House.  Pelosi has proposed that as part of the public option, rates must be negotiated with providers in an effort to contain costs.  Her opponents in the House are of a more progressive idea and want to hold the public option to a Medicare + 5% rate.  The Medicare +5 won't likely make it into the bill, but what's most interesting about the negotiated rate is that it will cost tax payers an additional $85 billion and it is supported by Blue Dogs and other conservative Democrats whose reputation is being fiscally conservative.  Reading between the lines on the Blue Dogs who claim to really be looking out for business interests, we see that the negotiated rate means higher payments for providers (hospitals, doctors, drug companies), and less competition for insurance companies.

As I mentioned a few weeks back, President Obama has been strangely silent about his opinions on the proposed bills and has only released recent statements about the public option that leave a lot of room for discussion.  Obama has recently said that he supports the trigger plan for public option as proposed by Olympia Snow, which many believe to be because he is adamant about the bill having bipartisan support.  He worries that the proposal for the public plan with the state opt-out clause will put the bill in a position to not gain a single Republican vote, which Obama fears will lead to hesitation and eventually a vote against the final bill from conservative democrats who are weary of it being bipartisan.  Obama has warned that Sen. Reid's proposal with the public option is a risky one because if it is up for a filibuster due to not gaining 60 votes and ultimately fails, our opportunity for health reform will be lost.  That being said, Obama has said in the past that he acknowledges that the only way to fundamentally reform health care is to provide a public option and create a government run system to create competition in the market.  However, now after seeing the resistance from Republicans and making motions to appease insurance companies, Obama is being cautious and supporting the trigger.  It should also be noted that the trigger option has long been associated with White House Chief of Staff Rahm Emanuel, who is sure to play a key role in the final bill.

So now, the march goes on and we will continue to watch the events as they unfold.  Nancy Pelosi is said to reveal the latest proposal tomorrow morning, which will provide more detail on the plant to negotiate rates.  Look forward to more key players stepping up and speaking out on each proposed variation of the public option, as I'm sure Sen. Lieberman won't be the last.  In next week's post I'll address the rather large elephant in the room:  cost containment, how the current political landscape could affect the success of health reform, and how decades past prove that even the most major reforms at the time have not have long term affects on containing costs and what needs to be different this time around. 

Much Ado About Public Option

Politicians and special interest groups on all sides of the ideological spectrum are revving their engines about the importance of the public option - having it, or not.  It's a topic that's been on the board for our entire discussion and dissection of health care reform bills, but now more than ever people are starting to get more vocal, and frankly, kind of nervous, about what's likely to be put into law.  Let's me be very clear on this next point: a public option is not the back door to a single payer system, which is what many of it's proponent - liberal Dems- really want.  Furthermore, in response to it's critics - the entire Republican party sans Olympia Snowe - having a public option will not lead to a nationalized system and thus lead to the end of private insurance.  The public option is meant to increase market competition and lower the cost of insurance.  I've discussed how the insurance companies and their lobbying efforts have already had a monumental impact on the shaping of the reform bill, so today I'm going to focus on the argument of the single payer system and why the system has been brought into the public option debate. 

A Single Payer system is one that delivers near-universal public health care to all citizens in a given population.  It collects all medical fees and pays for services through a single government source.  Medicare is an example of a single payer system in the United States, except that it only serves a section of the population.  Single payer systems function in such nations as the United Kingdom and Taiwan.  With these systems, quality is at par with that of the U.S., but the costs are much lower.  The average cost of health care for an individual in the UK is $4,000 and staying steady while the average cost for an American is nearly $5,000 and growing at an alarming rate.  To provide some perspective on how wide ranging health care programs are across the globe, let's consider the case of Singapore.  They have a complex scheme of mandatory medical savings accounts compulsory savings based on income - a conservative's dream!  They also have catastrophic insurance, provided by the government on a single payer basis, paid for my taxes.  In total, their health care ranks in the top 10 in the world (with the US coming in down in the 30-range), and makes up less than 5% of their GDP.  Pretty amazing. 

What we're seeing happen in congress is that many of the bill's supporters think the only way to successfully have reform is through the single payer system, and knowing that is not a reality in the face of extreme opposition from the right, would settle for a public option and that's what they're putting their ammo into.  However, at the root the system, public option is not about coverage.  Public option  is about competition and lowering costs of insurance.  And even if a public option plan were to pass and be made into law, its not a building block for the single payer system.  President Obama has been very transparent in his intentions with health care reform:  we will tinker and tweak what we've already got, but we will not rebuild a brand new system.  All of the bills that will be debated in congress have the same fundamental elements:

• Universal guaranteed issue (no denials in coverage)
• Universal community ratings (no penalties for pre-existing conditions)
• Increased insurance company regulation
• Increased Medicaid and SCHIP (children's health care)
• Subsidies for lower income families to buy coverage
• Insurance exchange for those buying in the individual market
• Out of pocket caps - maximum you can ever pay

That being said, there is still a lot of good that will be done with these proposed changes.   For all of the attention put on the public option, the ultimate issue of cost containment and paying for the overhaul will be most important.  As I was saying in my last post, what we're getting so far is increased coverage, we haven't heard much about what plans are in place to make sure it's affordable for citizens and what will help save the government money.  The issue of taxing costly health care plans is one that's split down the middle in congress.  The intent of the tax is to pat down medical spending that over a decade would generate nearly $200 billion, which is a fourth of what the proposed legislation would cost.  The proposed tax is one of the few remaining proposals that could directly lead to a reduction in health care spending over the long term.  The tax would be imposed in 2013 on employer sponsored health care plans that exceed a certain threshold, $8,000 for individuals, $21,000 for families, regardless of whether the plans are completely paid for by employers, partially, or not at all.  The tax would be imposed on insurers and it will likely then be passed on to the customers.  The idea here is that employers, when shopping for health care for their employees, will consider these high costs and bargain hunt and attempt to avoid the tax, which will put pressure on insurance companies to provide cheaper coverage, and thus, slow the costs of medical coverage for everyone.  Critics say that employers will likely just pass the expense on to the employee as an out-of-pocket expense, raising costs for individuals and families, hitting the middle income population for which the tax is intending to protect.  Obama has embraces the idea of the tax, but it still stands to be seen if it will remain in the bill and further speak to the commitment of his party to slow the rise in medical expenses.

Before I sign off on this post, I must make mention of a key player in the issue - Olympia Snowe.  After the vote from the Senate Finance Committee for which she is a part of and voted as the sole republican in favor of the proposed bill, her name and face is likely one that you've seen on e-newspapers and magazines over the past few weeks.  While Snowe has made it clear that this bill has a long way to go and her vote for it last week does not represent a vote for it in the future, she is going to be a key figure in this legislation.  Democrats will likely spend a lot of time and energy to keep her on board, because without her, passing this bill will be very hard.  Not only may she bring along other Republicans to support the bill, she provides the bipartisan cover that is politically necessary for gaining the support of more conservative Democrats.  As more debates develop in congress we will also want to watch Rahm Emanueal, Obama's Chief of Staff, who will be taking a break from focusing on the war in Afghanistan to focus on health care deliberations.  He will be a central figure in crafting any Senate approved measure and the final bill.  Stay tuned for more next week.

It's all Politics, After All

Now that the Senate Finance Committee's Health Care Reform Bill is up for vote, all we can do is wait to find out what happens next, and do our best to wrap our head around what this all means - for the Democratic Congress, for the legitimacy of Obama's presidency, and oh yeah, health care in the United States.  I feel as though until recently I've been somewhat narrow minded when thinking about health care reform, having lofty hopes and expectations of what positive changes will come from this proposed $830 billion plan, but I'm realizing that the weight in each congressional vote is so much more than just the issue at hand, it's about politics.  Each vote cast for or against the proposed bill is just as much about the arms race for power in congress and breaking or building up the reputation and legitimacy of Obama's Administration.  Republicans are fighting this bill with their ideological reasons (against individual mandate as a violation of human rights, for example) but they are few and far between, they're focused on a larger agenda:  the undermining of Obama's presidency.   If they stop Obama from passing a health care reform bill, they are planning to use it as his Waterloo, to break him and destroy his presidency.  The Republican party is shrinking and is left with a group dominated by white male conservatives, bordering on radical, and lacking real leadership.  And as you might have noticed, the gap in leadership has opened up the arena for outrageous right-wing media personalities such as Glenn Beck.  They want their power back, and they're focusing on this health care bill to be their ticket to victory.  Obama stepped up to the plate under daunting circumstances after Bush's presidency and has charged forward with a goal in mind.   What we're seeing now as we wait for the Senate Finance Committee's bill to pass is that in an effort to make sure this bill passes at all costs, every major component of the bill is in a constant state of being watered down.  A comprehensive successful pan must include proposed solutions to the following issues - access, cost containment, and quality.  What we're likely to see pass is just the first part of this equation, access.

To satisfy constituents, Obama has made deals with nearly all of the major stakeholders involved in health care - insurance, pharma, hospitals.  The deals were made early in the summer which already set limits to how radical the reform bill could be.  Couple that with the extreme political pressure to get something (anything!) passed, and what we're left with is a watered down plan that will provide access to all citizens through and expansion of government programs, but not much more.  Though some in congress are still fighting hard for a public plan, there's a very narrow chance anything of the sort will end up on the bill.  Through tens of millions of dollars in lobbying by the insurance industry fearing that a public option will create too much competition and eventually drive them out of business, the public option idea has been essentially thrown to the wayside.  I think it's a little extreme and quite frankly ridiculous to claim to say that adding a government run plan to market competition with drive insurers out of business.  Public and private entities exist in many other industries that make up large portions of our gdp and I don't foresee the private sector going out of business any time soon.  Let's take social security for example.  Social security is the largest government program in the world and the single greatest federal expenditure, and it coexists with 401(k)'s in our open market.  The financial industry providing 401(k)'s contribute billions of dollar's to the United State's GDP, while social security provides insurance gathered from payroll taxes on worker's wages (that distributed over $500 billion in 2004),  and neither seem to be disappearing as a result of the others competition.

It's a shame that as a result of all the politics and lobbying, the public option is discounted even though it may be exactly what the country needs to be able to provide insurance coverage for the 47 million uninsured Americans.  Even with the proposed expansion of Medicaid and government subsidies, it is projected that over 10+ million people will still be left uninsured after the reform bill passes. With the individual mandate for insurance in place, and insurance prices being decided based on solidarity principle, or membership of a group with shared costs across high risk and low risk participants, Americans are given the access to health care, but without and restrictions and regulations on how costs will be contained and what quality of care you're getting.  Sure, you've got access to health care, but if you can't afford to buy insurance and there's no incentive to provide quality care, we're stuck in the mud.  I would think creating a plan for providing better quality would be at the core of reform, then figuring out how to make high quality care affordable, then lastly making the affordable high quality care scalable to all Americans would be the logical process.  Unfortunately, the political strong arming in congress and the lobbying influences can't be ignored, and the push for some sort of reform to pass to give a political win the Dems and Obama is the reason we're getting this reform bill that's short of what really needs to be in place to be sustainable and successful. There's nothing in the bill that addresses how costs will be contained to stop the steady rise of costs that we've been seeing over the last few decades.

To provide an example of how backward the plan is, there was a proposed public option "trigger," meaning after a set period of time if private insurance companies cannot meet certain success metrics for coverage (lower premiums, higher quality), a public plan would be triggered into place.  In order to placate the private insurers, this idea was suggested as an alternative to including public option in the bill right now.  Can't we determine if insurance companies aren't providing coverage based on metrics right now, at this current moment in time, rather than giving them time to "shape up"?  I think most experts would argue that there is something seriously wrong with the way coverage is provided right now, which is why reform is necessary, so giving insurance companies more time to see what changes than can muster up seems counterintuitive.  Put the public option on the reform bill now, and avoid wasting more years on a system that we already know is broken. 

At the end of the day though, it all comes back to politics.  It's nice to think that the reform proposed in the bill that eventually passes is 100% based on what's best for America in repairing health care, but unfortunately it's not the case.  Republicans are doing everything they can to break Obama.  Thinking of every other major bill that has gone through congress over the years, there have always been votes from both parties in the majority, but out of sheer political determination to undermine Obama in any way possible to show that he cannot pass a big policy bill, Republicans aren't focused on the content of the bill, they've got their eyes on a larger prize.  It means Obama will be counting on every Democratic Senator and member of Congress to vote for reform, which is why the "Blue Dog Democrats" have been put in the spotlight.  Ordinarily moderate to conservative Democrats weren't the biggest concern to earn the votes of but with the guarantee that not a single Republic will vote for the bill, they need to be able to count on every single vote available.  But like I said, all we can go is sit and wait.  Waiting for the vote can lead to head spinning discussions that lead to frustration and at times disappointment and anger, but there needs to be at least a glimmer of hope to keep us going and supporting the cause.  The fight is tougher than some have been in the past (consider how easily bail out bills from Bush  passed), it means much more than just health care reform, and I suppose we have to understand and respect that.  After all, it is all politics.

More on the topic of insurance companies... 

In case you haven't already seen this video, I recommend you checking out the link below.   It's spot on.

Will Ferrell Stands up for the Real Health Care Victims

Insurance Companies : The Ultimate Frenemy

Whether you're insured, uninsured, or underinsured, most will agree that in some way or another, they're confused about how insurance companies benefit them, and can't clearly discern the good from the bad, not to mention the ugly.  I have to admit, until I hunkered down with the latest literature on the subject, I was one of the said majority.  Insurance providers affect all the major players in health care - consumers, doctors, hospitals, pharmaceutical companies, the government -  and now that reform has the nation's attention, this is the time to gain some perspective on the subject.

Employers large and small are held tight by the high costs to insure their employees even when their employees can be dropped at moments notice when they're sick, all at the mercy of the insurance providers.  Consumers are struggling to pay monthly premiums and are left feeling helpless and without much choice; either pay the increasing costs, or be left to figure it out on your own, uninsured.  But don't forget that even if you are covered under a plan, that doesn't necessarily mean that you'll be covered when you get sick.  What?  You're surprised?  Believe it or not in many cases it's true.  Thanks to medical underwriting, you can be denied coverage or dropped for pre-existing conditions, or failure to disclose information of a potential illness in the future.  This is an industry built on loopholes.  Just to give you an idea, a person can be denied coverage from anything ranging from acne to cancer.   The two things I deduct from the example are 1) try as I might I cannot find any information linking acne to future illnesses, and 2) wouldn't having cancer be a reason for someone to need insurance?  And as much as you want to forget that pesky knee injury from your college sports days, your insurance provider won't let you. 


Medical Underwriting - Wikipedia

The reason I chose Insurance Companies as this week's discussion is because as I'm reading about the debated bill from the Senate Finance Committee, I'm finding that Insurance Companies are given the advantage whereas other stakeholders are not.  The proposed bill would require all U.S. citizens to have insurance (or else pay a $1,900 annual fine), which would create millions of new insurance customers, but without the government providing a public option and creating government-run competition.  Insurers: 2, The People: 0, for those who are keeping count.  Speaker of the House Nancy Pelosi, however, is an advocate for a public plan because providing one for people under 65 could save as much as $100 billion over the course of the next decade (of the $1 trillion current tab).  If the government paid health care providers at the low rate that they pay for Medicare, government would have savings to prevent cuts to current plans and provide more subsidies to lower income people/families who need to buy insurance.

As previously mentioned the bill includes an individual mandate which would actually serve well to insurance costs because the cost to cover healthy people would balance out the high premiums in place to cover the sick.  There are a few risks in this, though, one being that the healthy, and most often the young, are those that are uninsured and happy at that.  The fine incurred by those who don't comply with individual mandate is actually much less than what one might pay in an insurance plan.  After heavy criticism from Republicans, Sen. Baucus cut the annual fine from $3,800 to $1,900 whereas the average cost of a plan is upwards of $8,000.  Seems like a pretty easy math to me - pay the fine and avoid the sky high cost of an insurance premiums, and pay out of pocket for care as needed.  The risk to insurers in this case is that uninsured people will wait until they are sick to get insurance, which will then drive up the costs to those already insured.  As is, the enforcements proposed to manage the market reform is weak and will in turn benefit insurers once again.

Finally, the absence of a public plan lends itself to two potential outcomes, based on the proposed alternative.  The Finance Committee has proposed that rather than having a government-run public program, a nonprofit health cooperative will be formed to compete with private insurers. Says Ron Williams, Aetna's chief executive, "We're concerned about the possibility that the co-ops are a back door [to a public plan]." Should the co-ops fail, the government will likely take them over, not to mention being given money from the government to start with.  This could be the thorn in the side of insurers.  But my concern is that the thorn needs to be bigger to really have a significant impact on how insurance companies manage costs. 

Despite industry concerns, critics say the Baucus bill as proposed is favorable to insurance companies.  I worry that in order for the proposed bill to pass it will be watered down and necessary market regulations will not be in place to protect consumers from the murky water they're already in.  My thoughts are also that with the proposed insurance exchanges that will be put into place to create competition among insurers, consumers need to be kept top of mind.  Too often the beaurocratic forces prevail and consumers are left in the dark, but now more than ever, consumers should be able to shop around like they do for cars or houses.  There is an absence of educational materials and cost comparison resources - let alone public forums where costs of procedures are made known.  There is a significant moral hazard in that the lack of information about actual costs of procedures and payment passing from consumers to providers that overuse is actually encouraged.

As we're seeing, the plan is changing on a daily basis.  Stay tuned for next week's latest and greatest.  

An Introduction...

As the two houses of Congress work to form health care reform bills to propose to its constituents, there is much left for debate among Americans, stakeholders and members of Congress.  The current issues on deck are that of a public plan, employer mandates, expanding Medicaid, financing a proposal and the last but not least elephant in the room: cost containment.  In President Barack Obama's speech on 9/9/09, he made it clear that the single payer option was not a consideration.  This type of government run program, thought to be very successful in other nations, namely the UK, faces criticism that it would require those already happily insured to switch to a government run program.  I'm sure you've heard the phrase, "if it isn't broken, don't fix it."  What Obama did explain, however, were his goals for health care reform, stated in the clearest, most concise terms I've heard explained since it was debated nearly a year ago during his campaign for president.  In the simplest of terms, Obama proposes security and stability for those who are already insured (eliminating and/or restricting limitations for those with pre-existing conditions and who are subject to cost discrimination), creates a new insurances marketplace or "exchange" for the uninsured (including tax credits), and promises to not contribute to the current deficit (in a one dollar in, one dollar out method of spending).
Obama's Health Care Plan

Over the next ten weeks, you can look forward to weekly break-downs of the latest proposals in congress and issues raised among experts in the industry, including the current issues mentioned above.  In this first post, I will provide a brief explanation of what is at the forefront of policy development based on Senate Finance Committee Chairman Max Baucus' (D-Mont.) proposal last week, discuss how his proposal will raise the cost of health care for the middle income families and more specifically young adults, and address the advantages and disadvantages of such a plan.

Senator Baucus' long awaited bill made headway on the idea that public option should be mandated for all U.S. citizens and legal residents, and is necessary to keep the cost of health care down for all American's provided low premiums for those who are young and healthy.  From what I can tell, this is really the lifeline of the proposal:  young and healthy people are needed to help spread the risk and keep costs down in order to finance health care reform.  Sounds great, but the major problem with this is that in practice, with the cost of premiums as high as they are now and the offered subsidies out of reach for many uninsured, the young and healthy demographic are precisely the ones who are opting out of coverage, and are taking the risk and betting on their good health. Just to give you an idea of who this includes, more than 10 million of the total 46 million current uninsured Americans are adults between the ages of 19 and 26. 

I think a policy disadvantage to this proposed bill is that for those who opt out of mandated insurance, annual fines will be incurred of anywhere between $750 and $950 for single people, depending on income.  This may sound like a lot but considering the average cost of a bare-bones health care plan under this bill could be more than $100 per month, it may be cheaper for people to pay the fines.  Not necessarily a win-win situation, but looking at the bigger picture, the government ends up making some of the money back from the fines and that money will hopefully go right back into the system to help offset costs of premiums and offer subsidies to those who need it.  This also brings up the issue of moral responsibility, but I will address that in depth in the coming weeks. 

View side-by-side comparison of Health Care Reform Proposals

In response to this bill media has been addressing the issues facing middle income single people and families who under the current plan cannot afford to pay for insurance, even if it is offered by an employer.  Under the microscope is Massachusetts, who in 2007 imposed a state law requiring all residents to have health insurance.  Of the 600,000 people uninsured in 2007, 200,000 are still uninsured.  This is a result of private insurance policy reform not being in place to protect people from exclusions from plans caused by pre-existing conditions, employer plans that do not cover dependents, and those who simply cannot afford to pay high premiums for themselves and their families. However the proponents of such a plan argue such a mandate is necessary to keep premiums affordable under the argument that healthy people are relatively cheap to cover and therefore help pay for the "high risk" population.  The state offers subsidies for low-income families and exclusions from the mandate for those it determined could not afford even the cheapest plans, but this again leaves us with a portion of the population who at the end of the day will be living without insurance.  Subsidies, under Sen. Baucus' plan will be offered to those who are within 133-400% of the federal poverty level ($22,050 for a family of four in 2009).  With non-subsidized monthly premiums of $300-500 for many Americans, if a person is making $40K a year, not only do they not qualify for subsidies but they also cannot afford private insurance. 

The bill proposed by Sen. Baucus and his Senate Finance Committee is popular with Democrats, but for Republicans, who by in large believe the market should run the cost of health care and that people should be allowed to shop around in a competitive marketplace, the challenge to get all of the stakeholders on board for a plan to reduce premiums and cut out limitations from current plans is great.  It's undeniable that health care in our country is a commodity, but there needs to be limits in place.  It needs to be cost effective so that all persons that want insurance can afford it under their income and there needs to be incentives in place for all stakeholders involved to include every citizen.  But here I am getting idealistic on you.