Tuesday, December 29, 2009

Health-Care Reform--Light and Dark Sides

by Richard Crews
Health-care reform legislation (now in conference to reconcile the House and Senate bills) is a great step forward. Although we do not know the final details, it appears--

(1) It will be illegal to deny Americans health-insurance coverage based on pre-existing conditions.
(2) There will a cap on an individual's out-of-pocket health-care expenses.
(3) Small businesses will be able to buy health-care insurance from a national exchange, giving them increased buying power.
(4) A new benefit will allow workers to buy into a plan that will provide them a cash benefit if they become disabled and need in-home care.
(5) Access to Medicaid will be increased to people making 130% (or perhaps 150%--the two bills differ) of the poverty level.
(6) There will be limits on insurance company profits, requiring that 85% of revenues be spent on delivering health care; if insurance companies exceed these limits and more than 15% goes to administrative expenses, advertising, lobbying, profit, etc., the companies would be required to pay rebates to those they insure.
(7) The Senate bill requires that insurers cover preventive health services such as immunizations, colonoscopies, and HIV testing.
(8) Insurers would not be allowed to rescind a policy because someone gets expensively sick.
(9) State and federal regulators would review any and all rate increases and determine if they are justified.

These requirements represent a robust set of health-care insurance reforms. But there are some problems in the two bills:

(1) Most importantly the Senate version contains no public option which is an important key to establishing competition between insurance companies (to provide greater choice and lower premium costs). The final version will not have a public option, although it will have important (though watered-down) substitutes.

(2) Both bills require most people to get health insurance (which assures better continuity of ongoing care and takes enormous pressure and cost off of emergency services) but even with the subsidies that are proposed, some of the poorest families might be required to pay up to 20% of their income. The availability of government subsidies for the poor should be fixed.

(3) Both versions impose archaic restrictions on women's health care. This has been a long battle--since the Middle Ages really, but coming into acute focus in First World countries over the past few decades. Childbirth is still the number one cause of death in both mothers and children around the world, and large "families" (with not 2 or 3, but with 6 or 8 or 10 children) is the main cause of hunger, the malnutrition diseases (the greatest causes of death in childhood), and persistent inculturated poverty (including lack of education, career opportunities, and even-handed justice).

(4) For extra funds, the Senate version taxes super-fancy health plans; the House version imposes a small income tax surcharge on the very wealthy. I believe both approaches should be employed.

(5) Insurance companies--for curious historical reasons (plus expensive lobbying)--are still exempt from anti-trust laws that protect against monopolies and price-gouging. The House bill finally fixes this; the Senate bill does not.

It will be interesting to see the final health-care reform package that emerges from the House-Senate compromise negotiations over the next few weeks.