Health Care Reform!
Americans woke up earlier today to the new Health Care Reform House Bill, “Affordable Health Care for America Act. HR 392”, which completes an important 1st step of 3 stages of a final bill. While I didn’t quite make it through the 1990 page there are couple of items that stood out.
According to The Associated Press the Congressional Budget Office concludes that the public option might actually cost consumers more than private coverage. The bill is expected to fetch close to $1 trillion dollars over 10 years. However, the bill could lead to $104 billion net reduction in deficit by spending cuts, revenue raisers and other bill provisions.
- The bill would create a Health Insurance Exchange system that individuals could use to buy health insurance from private insurers and government-run plans.
- The bill also would provide incentives for the creation of nonprofit, state-based health insurance cooperatives.
- The public option plans would have to negotiate their own rates with providers, rather than using the ultra-low Medicare rates.
- Individual responsibility: A “shared responsibility” section that would take effect in 2013 and covers both individuals and employers. The max tax for individuals would be either 2.5% of persons AGI or cost of average health insurance premiums.
- Employer responsibility: would impose a tax equal to 8% of employee wages on employers over a minimum size that failed to provide health coverage. The payroll tax would be lower for employers with $500,000 to $750,000 in payroll, and 0% for employers with less than $500,000 in payroll costs.
- Forbid plans from basing premiums or denials of care on factors such as pre-existing conditions, race, or gender.
- Close the Medicare Part D prescription drug program “doughnut hole”.
- Provide “affordability credits” to help individuals and families who meet income requirements pay their health insurance premiums, and provide health insurance subsidies for small businesses.
- Require the secretary of Health and Human Services to negotiate drug prices on behalf of Medicare beneficiaries.
- Expand Medicaid.
How will this be paid for? The new costs would be paid for according House Democrats by “making Medicare and Medicaid more efficient, imposing 5.4% tax surcharge on individuals with adjusted gross incomes over $500,000 and married couples with adjusted gross incomes over $1 million; and adopting other tax measures.”
Our reaction is that without a greater focus on health care costs, families and employers will not be able to afford coverage. Health care has tripled in a span of 15 years since 1984 to over $2 trillion and is expected to increase to $3.1 trillion by 2012. Most uninsured have programs available that were absent when I was growing up. You can still be middle class and qualify for state subsidies. Example for NYS is Healthy NY for small businesses and sole prop. as well as Family Health Plus and Child Health Plus.
In the absence of tort reform, however, and an expected 21% reduction in Medicare reimbursement this will negatively affect providers. In speaking with our client physician groups and national polls this could lead unintended consequences such 25% retirement and reduction of new physicians. Could this lead to more prescribing privileges and responsibilities for Physician Assistants, Nurses and Pharmacists?
Malpractice costs account for only 1% of spending but this leads to another estimated 9% is for “defensive medicine”. According to JAMA– “Defen
sive spending is described such as ordering tests, performing diagnostic procedures, and referring patients for consultation, was very common (92%). Among practitioners of defensive medicine who detailed their most recent defensive act, 43% reported using imaging technology in clinically unnecessary circumstances. Avoidance of procedures and patients that were perceived to elevate the probability of litigation was also widespread. Forty-two percent of respondents reported that they had taken steps to restrict their practice in the previous 3 years, including eliminating procedures prone to complications, such as trauma surgery, and avoiding patients who had complex medical problems or were perceived as litigious. Defensive practice correlated strongly with respondents’ lack of confidence in their liability insurance and perceived burden of insurance premiums.”
The issue of private competition is a big factor. According to Kelly Loussedes, of National Association of Health Underwriters, “By injecting more competition into the insurance market, this might seem like an intelligent way to lower overall health care costs. A “public option” would simply shift health care costs onto private payers — and undermine the private insurance system”. We question how real the private sector can compete with a public plan
however, well intentioned it may be.
In addition, most uninsured in progressive states such as NY are young people who elect not to pay now, illegal residents and people who earn over $50,000 but decide to opt out. The issue how strong is the requirement for individuals to participate? If its like Massachusetts with only a $1500 penalty or not enforced then this creates actually much more costs.
According to Mark Wagar President of Empire Blue Cross, “fewer businesses and individuals purchase private coverage and enrollment shifts to high cost Medicaid coverage, further increasing State funding burdens. In turn, too many people delay needed services, resulting in increased costs for urgent care for hospitals and physicians when care becomes critical.” He goes on to say that in NYS where the non group individual market is unaffordable now “The presence of an effective mandate – alone – would reduce the cost of individual coverage in New York by
over 60 percent and enroll 8 times as many New Yorkers in coverage than today because of improved affordability.”
Progressive countries such as Denmark and France have actually moved to private sector. According to our client Lisa Halpern of Euro Center USA , which works with a Danish travel insurance company for expatriates, “Denmark’s public single payer system had to include the private sector starting more than 20 years ago. This has become increasingly popular in recent years because the public had trouble accessing physicians without longer waiting times, diagnostics and private hospitals. The Private Insurance has also benefitted as a tax deduction for private companies offering additional health insurance.”
We support taking steps to lower costs as mentioned in prior newsletter
such as negotiating with drug manufacturers and implementation of healthcare cooperatives. On the other hand, we are wary of moving
too quickly on this road of reform and leading to unintended consequences. As debate and legislation is clarifying that a public option is a probability we are concerned if this will lead to big government, wasteful spending, higher taxes and the specter of no private sector.
As the saying goes the madness is in the details. As a fellow business owner we ask that you join us in staying active with your local chamber, legislative rep., editorials and social media forums on this road to reform. We have included some helpful links below.