Sunday, September 13, 2009

What's really in these health care reform bills?

The Radical Right is fond of saying that the Democrats favor a "government takeover" of health care. Even if the Democrats were proposing a single-payer system, the Radical Right would be full of shit. A single-payer insurance system isn't a takeover of the health care system as a whole, just the insurance part of it. As far as I know, no one is proposing a British-style system where the government runs health care delivery as well as insuring all its citizens.

But the biggest inaccuracy in that statement is that the Democrats' main reform proposals do not come close to a single-payer system. These plans won't get rid of useless insurance companies that just take a piece of the action for their Wall Street investors on every health care transaction. Instead they would preserve the structure of the insurance system mostly as it is. Let's take a critical look at what is really in the Democrats' health care plans.

I'm going to base this mostly on the House bill, but the Senate bill that passed out of the HELP committee (that's Sen. Kennedy's committee) is pretty similar. These bills are huge and bring a lot of different changes in health care policy under one umbrella. Open Congress has a summary of HR 3200 here, the New York Times has a graphic comparing the various proposals here in regards to expanding insurance coverage here, and Ezra Klein has a good summary of the House bill here.

Note: The House bill has passed out of three committees in slightly varied form, but the basic outline is the same. The Senate will have another bill from the Finance Committee, headed by Sen. Max Baucus, that will be different than the HELP bill, and probably way less progressive because Baucus is negotiating with Republicans who probably won't vote for the final bill anyways. More on the Baucus bill later.

1) Covering the Un-Insured with Subsidies and Mandates

The plan uses mandates to get close to universal coverage. Under the employer mandate, also called the "pay or play" provision, employers must offer a group plan to their workers and pay the majority of its cost or else pay a tax, either on their payroll or per employee. Under the individual mandate, everyone who doesn't have employer-based coverage has to buy an insurance plan or else pay a penalty.

Another way the bill seeks to cover the un-insured is by expanding Medicaid. Medicaid pays for health care for families below the poverty line. It would increase the maximum income to qualify up to 133% of the poverty level, which would help a lot of the poor un-insured.

For the un-insured and small businesses that don't qualify for Medicaid or can't afford insurance, the plan creates a national "exchange" where they can shop for plans. All the plans have to offer a minimum of benefits, and can only make consumers pay a certain amount in deductibles and co-payments, preventing people from being under-insured in the exchange. The idea is that it forces insurance companies to compete and should lower their administrative costs because they don't need to market the plans as much. Even then people wouldn't be able to afford the plans (that's why most of the un-insured don't have coverage!), so subsidies are available for people with incomes up to 400% of the poverty level to buy insurance.

The House bill currently includes the "public option." This would be a government-run, non-profit insurance plan that people would pay their premiums to just like any other insurance plan. It should have lower premiums because of lower administrative costs and power to bargain with hospitals and pharmaceutical companies.

Anyone who gets coverage through their employer cannot leave that plan and buy insurance on the exchange. So a very limited amount of people could buy into the public option. Also, the public option wouldn't get special taxpayer subsidies. People buying insurance on the exchange would get the same subsidy whether they buy one of the private plans or the public plan.

2) Consumer Protections: Reduce Under-Insurance

The bill has consumer protections, mostly aimed at reducing under-insurance, which occurs when people have insurance but still get stuck with a large chunk of the bill (a majority of those who experience medical bankruptcy actually had insurance). It bans the insurance company practice of dropping people when they get sick because of a pre-existing condition that those people didn't inform them about. It also bans companies from not covering someone to begin with because they have a pre-existing condition. The bill prevents companies from discriminating in its premiums based on anything except age, geography, or family enrollment. Finally, it caps what families and individuals have to pay out-of-pocket under an insurance plan, which will greatly help reduce medical bankruptcy.

3) Medicare Reforms

This part of the bill could be another bill on its own (I wrote about how conservatives like David Brooks are falsely characterizing this section here). It expands coverage for most seniors in that it makes preventive care free and provides greater assistance for buying prescription drugs by closing the so-called "donut hole." It also staves off a reduction in payments to doctors that was planned earlier so that doctors won't stop taking Medicare patients.

Despite those increased benefits, the bill still extends the projected solvency of the Medicare trust fund from 2017 to 2022. The best things that it does is cut overpayments to private plans that cover elderly people through Medicare Part C, the Medicare Advantage plans. It also cuts the growth in payments to hospitals, and creates incentives for hospitals to ensure when they discharge a patient, the patient doesn't have to return soon thereafter, which costs Medicare a lot more.

4) Other

The bill funds the creation of an institute to do "comparative effectiveness" research. Basically it would seek to find which treatments for a given condition get the best outcomes for the least cost. These findings could be used eventually to cut costs in Medicare (or when we move to a single-payer system some day!).

Like with Medicare, it increases coverage for preventive care under Medicaid.


So let's recap what's in the bill: consumer protections; mandates, an exchange, subsidies, and (hopefully) a public option to expand coverage; and Medicare reforms with some smaller items as well. The big question is: does it meet the goals of health care reform?

Does it get us to universal coverage? Pretty darn close but not quite. The Congressional Budget Office found that 3% of Americans will still go without coverage. 3% of Americans is still a lot of people. The consumer protections should do a lot to combat the problem of under-insurance, and the high rate of medical bankruptcy that it causes.

Does it cut costs? If so, not by much. The cost savings in Medicare are great, because treatment for the elderly is a big chunk of our health care system. But does it do anything to cut the costs that a private insurance market creates for us all? I'll get into that later, but the short answer is, nope. Near-universal coverage ideally should cut insurance premiums for everyone. Hospitals won't have to charge insurance companies as much to compensate for treating the un-insured. However given the profit motive, it's likely that insurance companies and perhaps hospitals will simply pocket the savings. The employer mandate and subsidies should bring down premiums for working families, but won't really cut overall costs, just transfer them to businesses and/or taxpayers.

Does it improve care? Yes, by expanding insurance coverage and improving coverage for preventive care under private plans, Medicare, and Medicaid, the lack of which was formerly a big reason why our health care outcomes are not as good as those of other countries.

One last question: Does it come anywhere close to reform on the level of single-payer? Not even close!
In the coming days, I'm going to keep blogging on parts of the plan that need to be improved and/or retained for it to be worth supporting, as well as on what parts single-payer advocates should be concerned about.

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