|Print This Post||Subscribe to RSS Feed||Bookmark this on Delicious|
The Lens through Which to View Healthcare Reform – Part 1Posted in News on March 30th, 2010
It is becoming increasingly clear that the average American cannot really figure out the details of healthcare reform. Obviously, if an individual has a pre-existing condition or suffers from an illness which he/she fears will approach his/her policy’s lifetime limits, healthcare reform may be like winning the lottery. When we look at it from a national perspective, however, we hear divergent views from the Democratic camp (extolling the virtues of their legislation) and the Republican camp (claiming that it is the death knell of America).
How is the average citizen supposed to formulate an opinion? I believe that, currently, it would be very difficult as the legislation is extremely complex and virtually all the commentators choose particular aspects of the law to buttress their particular position.
After giving some thought to the recent legislation, reading various reports, and recognizing the difficulty of synthesizing the totality of this most voluminous legislation, I think I may have stumbled on some real truths regarding understanding the benefits and possible burdens of our future healthcare.
Obviously, the first question to be answered is how will Americans benefit? Even this question is a bit more complex than it seems at first blush. Obviously, increased benefits, and the increased millions of people that will finally have health coverage is part of the benefit.
However, many young healthy Americans have chosen not to purchase health insurance reasoning that the odds are significantly in their favor that they will not need any medical care. Even if they have to visit a doctor for something minor, it would still be much cheaper than insurance premiums. Under the new legislation, though, they will not have this choice but will be forced to purchase insurance, or their employers will be forced to purchase insurance for them. Apparently, the math is correct. As Anthem Blue Cross of California explained, the outsized increase in their insurance rates was because a significant number of lower-cost younger subscribers had opted not to purchase insurance leaving a pool of insured individuals that were both older and more costly. The question remains whether there is a true benefit to the people whose freedom of choice has been taken away and are now forced to subsidize older and costlier subscribers. I think that it may be dependent on basic differences in Democratic and Republican ideology and the question of the propriety of forcing a redistribution of wealth. I hasten to point out that increased taxes or a more equal redistribution of wealth might be more beneficial than forcing younger people who may not have significant means to subsidize the healthcare of older people.
The second question is at what cost? This question can be broken up into direct cost and indirect cost. Even with the projected direct costs there seems to be very different opinions. On the one hand, because President Obama drew a line in the sand that the cost could not exceed $1 trillion over the next decade, the numbers were jiggled and tweaked until the Congressional Budget Office (a nonpartisan agency) issued a projection that the cost in the next decade would be $940 billion. Hooray!
A former congressional budget office official has stated, however, that the way in which the $940 billion projection was achieved was in part by starting taxes and other offsetting revenues sooner than the costlier parts of the legislation take effect. In more simple language, what he is saying is that the government decided to delay the implementation of many parts of healthcare reform so that there would be fewer years of greater expense in the next decade while collecting money for many more years of the coming decade. If he is right, the second decade may be much more expensive than any Democrat wants to talk about.
If that was not enough, an analysis by RAND, an independent think tank, suggests that the reforms will actually increase America’s overall health spending–public plus private–by about two percent by 2020 (so much for savings).
The Cato Institute, a libertarian think tank, points to the Massachusetts health care reform of a few years ago which is similar to Obamacare. It finds that the law has not improved people’s health, and claims that estimates understate the law’s cost by at least one third.
So much for the direct costs. In the next segment, I will continue with the indirect costs.