Questions: Will Healthcare Reform Work?

By Steve Schulte of
Health Advocate Solutions

If you pay some close attention both to casual conversations around you as well as to any polling, the confidence in the ultimate success of pending healthcare reform is mixed. In fact, many pundits (not just on Fox News...) and a few polls are showing that concern about a mixed economic recovery has pushed aside the sense of urgency for healthcare reform form many people.

There are lot of reasons for this growing suspicion. Concern about job stagnation and the growing deficit (which the Congressional Budget Office has demonstrated will be eased over 10 years by a strong healthcare reform measure); distrust of the Congress; concern about the influence of powerful lobbyists; even some fading in the luster of President Obama's star.

But most likely something else is a major cause of the uncertainty. That is: the dizzying complexity of healthcare reform (given our fractured, inefficient and inquitable system now). This, combined with the sheer enormity of the reform bills themselves (which few have read)is stirring great anxiety about the final outcome.

There may be good reason for this, too.

Over the past several weeks--and continuing throughout the process---there have been many mixed signals from Congressional reform proponents as well as major players. Partly this is due to the meandering and lurching political process. But it is also due in part to disinformation campaigns and the attempts to address key interests (not our typical consumer....) that will ultimately be affected by any outcome that results from the current deliberations.

Let's take a look at a few concerns in this regard and consider them one at a time.

Costs will only continue to increase---perhaps will even accelerate---after reform passes. Actually that depends. One of the key goals for reform stated by President Obama was that reform be "budget neutral". As cited here, the CBO has suggested that the final reform package being considered by the Senate might reduce the overall deficit by as much as $80 billion over 10 years.

But the actual opportunities to actually save money through reform are much more complex. Take for example part of the touted $300-400 billion that would come from savings in Medicare "efficiencies". Approximately one quarter of that would come from cutting current subsidies (about 17% per individual premium) from Advantage plans. These are plans that were devised under Part C in the mid-90's to urge seniors to shift to managed care plans.

So, today, Advantage plans (usually PPO or HMO plans)marketed by Blue Cross, Blue Shield, Kaiser Permanente, Aetna---and so on, are all subsidized by the federal government. These are also the same companies that are concerned about competing with a "public option", but never mind! The point is that uninformed seniors and agitated health plans and insurers will fight very hard against this reform that would both cut cost and help pay for overall reform.

Next, why not tax high-premium plans? These are the so-called "Cadillac plans". Doing so would accomplish two things. Again, it would raise needed revenue to pay for reform (and thus help to keep Obama's promise about revenue-neutrality), but it would also act as a brake on higher premiums and extravagant benefits. By the way, what is being defined is "Cadillac" is a premium that would cost more than $8,500 per year for an individual. Does your premium cost that? The term has nothing directly to do with the actual benefits provided by the plan.

This last point is controverial in and of itself. But I refer to expensive and unnecessary cosmetic surgery, extreme cardiac procedures that will likely prove ineffective and countless other measures that go way beyond what most of us would consider to be important benefits. I also mean lots of emotionally based but unnecessary---even harmful---interventions given to people who are in a terminal state and nearing the end of life.

Remember that what is at stake here is healthcare for everyone: primary and secondary care, prescription medications, some dental and home care, behavioral health, pre- and postnatal care, and so on. To balance the difference between "Cadillac plans" and care for everyone some argue that there will be "rationing". But, as everyone knows, "rationing" already exists for those who cannot afford care. It just depends on who is defining the term.

Expect, once again, very powerful interests to oppose the tax I am endorsing here. Some unions for one, since they have negotiated substantial benefit packages in lieu of pay increases in some cases. But also large insurers. The bigger the premium, the larger the profit. The concept is pretty simple. Unfortunately, many Democractic lawmakers are indebted to---perhaps committed to---unions. Not a bad thing in general. But here this works against truly effective reform.

One last example. It appears that, while insurers will have to cover everyone, the Congress has determined to give these companies time to do that. Why? Because the companies do not want to have to conform to this principle till everyone has to have coverage. Since it will take both the federal and state governments time to get everyone covered---and to enforce this provision---the insurers get more time to comply with the new sanctions on them. So, such provisions may not be in effect until as late as 2014.

Once again, the consumer loses. Many people will not actually realize a key promise of reform for several years. Why? Because insurers, not the consumer, are being accommodated. At the very least this is gross government inefficiency in terms of getting reform implemented. At best it is more coddling of "the market" which has already failed to deliver for millions of Americans.

Note: both Reid and Pelosi need a certain tally of votes to get final legislation passed. As the discussion here shows, how they do that will help determine whether the outcome will "work".

I urge you to write your legislators NOW and be heard on these important issues during the next few critical weeks.


To respond to this blog, email steve6schul@yahoo.com