Friday, April 02, 2010


The all-too-debated health care bill in the USA has finally been passed. While the sound and fury still hasn't abated it may be time to begin to take stock about what the bill actually contains. Both sides of the ruckus down USA way have magnified the legislation way beyond its actual importance. To the left it was something akin to the Second Coming, to the right it was instead more like the Antichrist. Out here in the civilized world the general feeling was that it was insufficient and of Byzantine complexity.

The following opinion piece comes from the Trial By Fire blog. It came to Molly's attention via the LibCom website.

Whats in the Health Care Bill
Below is the first of a two-part series on the Democrats bill, HR 3590 – the health care reforms.

Health care reform in the United States has finally arrived.

After years of debate, President Barack Obama signed HR 3590 into law on March 23rd, 2010, heralding a new chapter in health care for millions of Americans.

The Democrats are ecstatic over the win. But is this really a victory for the American working class?

Lets take a look.

Health Care Reform’s History:

Health care reform, or “Obamacare” as it’s sometimes called, has its roots in Hilary Clinton’s own health care battle of the 1990’s. But it may surprise you exactly where in that debate its major ideas come from.

No, it wasn’t Hilary’s legislative proposals which inspired Obama’s reformation – it was in fact Republican proposals which formed Obama’s health care overhaul. Specifically, it was a health care strategy first articulated by the conservative think tank the Heritage Foundation. You can still read the original plans here and here.

Notably, amongst its original supporters were Richard Nixon, George Bush senior and even Mitt Romney.

Amongst their proposals were the creation of an “individual mandate,” and the founding of “insurance exchanges” – both of which are now pillars of the Democrats’ reforms; but originally, the republicans supported them as good “free market” alternatives to government entitlement programs like Medicare.

This is precisely why Obamacare passed where numerous other health reform efforts failed. It was a good, free market option that CEO’s could get behind. “Government is,” after all “the shadow cast by big business over society,” as John Dewey once remarked.

That being said, lets take a closer look at the contours of this new silhouette on the next page.
&&& PART TWO &&&

Whats in the Bill?

The bills effects on the health care industry are mixed. Certainly, there are some positives.

On the one hand, it restricts some of the worst practices of the insurance industry – such as refusing to cover children with preexisting conditions.
On the other hand, it leaves health care under the control of the same corporations that got us into this mess.

Below we will begin to address the biggest changes the new reform brings to our system of health care.

1. The individual mandate: Amongst the reforms, the democrats have introduced an “individual mandate,” meaning individuals who do not purchase health insurance will be fined by the federal government. The fines will be introduced in 2014, and will grow until 2016, when they will total $695 a year, or 2.5% of personal income (whichever is greater).

Because of this, Democrats have touted the myth that this bill will “provide health care to 31 million people who are currently uninsured.”

In reality, these reforms don’t actually “provide” us with anything. It only punishes those who cannot provide it for themselves. But even then, the incentive to buy insurance won’t be great enough to cover millions of Americans: according to a report put out by the Congressional Budget Office, the total number of uninsured Americans in 2019 without reform is still expected to hit 24 million.

The individual mandate is expected to be a magnificent profit maker for the insurance industry. And of course it will be – it will force tens of millions of Americans into consuming the insurance industry’s goods.

But the bonanza of new profits doesn’t end there. Big Pharmaceutical companies are laughing their way to the bank as well, specifically Biotech companies.

Tacked onto the health care reform bill was a guarantee of market exclusivity for Biotech drugs for the next decade. In effect, less expensive, generic versions of biotech drugs are forbidden from being sold in the U.S. for the next 12 years, giving them a complete monopoly in their markets.

2. Cost control: Undoubtedly, one of health care reforms biggest selling points was that it would bring down the cost of health care.

So will this bill bring down costs? Yes and no. Certainly in some cases, costs will come down.

But overall, the costs of health care will remain astronomical.

Whereas in 2009 health care costs accounted for about 17% of our GDP, costs with the bill are expected to rise a tenth of a point higher than they would have without the reforms (20.8% of GDP in 2019 without reform, 20.9% with, according to the Center for Medicare and Medicaid Services).

Jane Hamsher of the Firedoglake points out that premiums will not come down significantly for most Americans either, and certainly will not decrease as much as Obama had promised ($2,500 a year). In fact, families shopping for insurance on their own are projected to spend nearly $2,000 more on insurance in 2016 than they would have without the reform, achieving exactly the opposite of what the bill claims it would.

Further projections for working class Americans are equally dismal. Jane Hamsher writes:

“A family of four making $66,370 will be forced to pay $5,243 per year for insurance. After basic necessities, this leaves them with $8,307 in discretionary income — out of which they would have to cover clothing, credit card and other debt, child care and education costs, in addition to $5,882 in annual out-of-pocket medical expenses for which families will be responsible.”

In short, the lower costs we were promised in the run up to these reforms are seriously lacking.

3. Insurance exchanges: State governments will create what are called “exchanges” to facilitate the purchase of health insurance, with the aid of federal start-up funds. Individual states may choose not to open an exchange, in which case the federal government may open one for them.

The exchanges would offer a range of private insurance options for qualified consumers to pick through, rated on a scale from cheapest to most expensive – or from a “platinum plan” to a “bronze plan.”

In theory, insurance policies on the exchange will be cheaper and of better quality than their counterparts in the private market, because the exchanges can offer larger customer pools, giving consumers more bargaining power.

But in practice, the results haven’t been quite so good.

In April of 2006, former Massachusetts governor Mitt Romney signed into law chapter 58, the forerunner of HR 3590. The bill would be the first in the U.S. to test out the ideas of both an individual mandate and a health care exchange.

Although the reform was supposed to lower costs to bearable levels for the working families of Massachusetts, a study conducted by the state found that 21% of their residents still went without medical treatment because they couldn’t afford it. This includes a stunning 12% of children.

And additional 18% are covered by insurance, but can’t afford to use it.

And of course they can’t. Since the reforms, the cost of insurance has substantially increased in Massachusetts, both in the private sector and in public spending.

In the private sector, the states’ Attorney General found in her research that this was largely because of disparities in bargaining power between consumers and the insurance companies – or, simply put, because insurance companies had too much power over consumers.

Publicly, costs have grown at an average of $88 million a year. This has been due, at least in part, to the reforms failure to address emergency room visits – a central concern of all health care reform efforts.

Although reformers predicted an astounding decrease of 75% in emergency room visits, in the first two years of the reform alone, it’s turned out that visits have increased by over 17%.

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