Perdido 03

Perdido 03

Monday, March 22, 2010

The Great Health Insurance Company Giveaway of 2010

The papers this morning are all abuzz with the president's victory getting health care reform passed through both the House and the Senate and readied for him to sign into law (actually the Senate work still has to be done but it is considered a fait accompli.)

Over the top rhetoric about how Obama is now one of the greatest presidents in American history abound (see here) and make no mistake, that was what this fight was about.

Obama's ego, that is.

But this wasn't really about reforming health care or expanding it to everybody in the country.

Because this isn't a great law, it's certainly not monumental reform and it isn't any earth shattering new way of going about health care in the U.S.

In fact, it doesn't even provide universal coverage.

What it does do is cause more harm than good.

It perpetuates the power of the insurance industry, it mandates people buy bad coverage or get nailed on their taxes for an extra 2%, it funds the bill with an excise tax on people with employer-provided health care plans who will soon lose those plans when employers don't want to pay the 40% tax and it leaves millions of people uninsured anyway.

Here is, in full, Jane Hamsher's fine myth-busting piece about HCR from Huffingtonpost.

It is a must read:

Myth 1: This is a universal health care bill.

Fact: The bill is neither universal health care nor universal health insurance. According to the Congressional Budget Office:

  • Total uninsured in 2019 with no bill: 54 million

  • Total uninsured in 2019 with Senate bill: 24 million

Myth 2: Insurance companies hate this bill.

Fact: This bill is almost identical to the plan written by AHIP, the insurance company trade association, in 2009.
The original Senate Finance Committee bill was authored by a former Wellpoint vice president. Since Congress released the first of its health care bills on October 30, 2009, health care stocks have risen 28.35%.

Myth 3: The bill will significantly bring down insurance premiums for most Americans.

Fact: The bill will not bring down premiums significantly, and certainly not the $2,500/year that President Obama promised during his campaign.

Annual premiums in 2016: status quo / with bill:
Small group market, single: $7,800 / $7,800
Small group market, family: $19,3oo / $19,200
Large Group market, single: $7,400 / $7,300
Large group market, family: $21,100 / $21,300
Individual market, single: $5,500 / $5,800
Individual market, family: $13,100 / $15,200

(The cost of premiums in the individual market goes up somewhat due to subsidies and mandates of better coverage. The CBO assumes that cost of individual policies goes down 7-10%, and that people will buy more generous policies.)

Myth 4: The bill will make health care affordable for middle class Americans.

Fact: The bill will impose a financial hardship on middle class Americans who will be forced to buy a product that they can't afford to use.

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.

Myth 5: This plan is similar to the Massachusetts plan, which makes health care affordable.

Fact: Many Massachusetts residents forgo health care because they can't afford it. A 2009 study by the state of Massachusetts found that:

  • 21% of residents forgo medical treatment because they can't afford it, including 12% of children

  • 18% have health insurance but can't afford to use it

Myth 6: This bill provides health care to 31 million people who are currently uninsured.

Fact: This bill will mandate that millions of people who are currently uninsured purchase insurance from private companies, or the IRS will collect up to 2% of their annual income in penalties. Some will be assisted with government subsidies.

Myth 7: You can keep the insurance you have if you like it.

Fact: The excise tax will result in employers switching to plans with higher co-pays and fewer covered services.
Older, less healthy employees with employer-based health care will be forced to pay much more in out-of-pocket expenses than they do now.

Myth 8: The "excise tax" will encourage employers to reduce the scope of health care benefits, and they will pass the savings on to employees in the form of higher wages.

Fact: There is insufficient evidence that employers pass savings from reduced benefits on to employees.

Myth 9: This bill employs nearly every cost control idea available to bring down costs.

Fact: This bill does not bring down costs and leaves out nearly every key cost control measure, including:

  • Public Option ($25-$110 billion)

  • Medicare buy-in

  • Drug re-importation ($19 billion)

  • Medicare drug price negotiation ($300 billion)

  • Shorter pathway to generic biologics ($71 billion)

Myth 10: The bill will require big companies like Wal-Mart to provide insurance for their employees.

Fact: The bill was written so that most Wal-Mart employees will qualify for subsidies, and taxpayers will pick up a large portion of the cost of their coverage.

Myth 11: The bill "bends the cost curve" on health care.

Fact: "Bends the cost curve" is a misleading and trivial claim, as the U.S. would still spend far more for care than other advanced countries.

  • In 2009, health care costs were 17.3% of GDP.

  • Annual cost of health care in 2019, status quo: $4,670.6 billion (20.8% of GDP)

  • Annual cost of health care in 2019, Senate bill: $4,693.5 billion (20.9% of GDP)

Myth 12: The bill will provide immediate access to insurance for Americans who are uninsured because of a pre-existing condition.

Fact: Access to the "high risk pool" is limited and the pool is underfunded. Only those who have been uninsured for more than six months will qualify for the high-risk pool. Only 0.7% of those without insurance now will get coverage, and the Centers for Medicare and Medicaid Services report estimates it will run out of funding by 2011 or 2012.

Myth 13: The bill prohibits dropping people in individual plans from coverage when they get sick.

Fact: The bill does not empower a regulatory body to keep people from being dropped when they're sick. There are already many states that have laws on the books prohibiting people from being dropped when they're sick, but without an enforcement mechanism, there is little to hold the insurance companies in check.

Myth 14: The bill ensures consumers have access to an effective internal and external appeals process to challenge new insurance plan decisions.

Fact: The "internal appeals process" is in the hands of the insurance companies themselves, and the "external" one is up to each state.

Ensuring that consumers have access to "internal appeals" simply means the insurance companies have to review their own decisions. And it is the responsibility of each state to provide an "external appeals process," as there is neither funding nor a regulatory mechanism for enforcement at the federal level.

Myth 15: This bill will stop insurance companies from hiking rates 30%-40% per year.

Fact: This bill does not limit insurance company rate hikes. Private insurers continue to be exempt from anti-trust laws, and are free to raise rates without fear of competition in many areas of the country.

Myth 16: When the bill passes, people will begin receiving benefits under this bill immediately

Fact: Most provisions in this bill, such as an end to the ban on pre-existing conditions for adults, do not take effect until 2014.

Six months from the date of passage, children could not be excluded from coverage due to pre-existing conditions, though insurance companies could charge more to cover them. Children would also be allowed to stay on their parents' plans until age 26. There will be an elimination of lifetime coverage limits, a high risk pool for those who have been uninsured for more than 6 months, and community health centers will start receiving money.

Myth 17: The bill creates a pathway for single payer.

Fact: Bernie Sanders' provision in the Senate bill does not start until 2017, and does not cover the Department of Labor, so no, it doesn't create a pathway for single payer.

Obama told Dennis Kucinich that the Ohio Representative's amendment is similar to Bernie Sanders' provision in the Senate bill, and creates a pathway to single payer. Since the waiver does not start until 2017, and does not cover the Department of Labor, it is nearly impossible to see how it gets around the ERISA laws that stand in the way of any practical state single payer system.

Myth 18: The bill will end medical bankruptcy and provide all Americans with peace of mind.

Fact: Most people with medical bankruptcies already have insurance, and out-of-pocket expenses will continue to be a burden on the middle class.

  • In 2009, 1.5 million Americans declared bankruptcy

  • Of those, 62% were medically related

  • Three-quarters of those had health insurance

  • The Obama bill leaves 24 million without insurance

  • The maximum yearly out-of-pocket limit for a family will be $11,900 (PDF) on top of premiums

  • A family with serious medical problems that last for a few years could easily be financially crushed by medical costs

Real health care reform is needed. But this bill falls short of that on many levels.

The news stories today are almost all "process" stories - Obama did it, he brought monumental change, blah, blah, blah. They are wrong on so many levels, it's not even funny, because as we can see from Hamsher's piece, the only real change in the bill is how people will now be MANDATED to buy insurance they cannot afford to use.

We will have to put up with a few weeks of Obama and Rahm and the rest strutting like cocks in the barnyard. But after that, it will be interesting to see if people actually LIKE what is in the bill. There are a few good things - like the pre-existing conditions clause and extending coverage to kids past 21, but even those have loopholes the insurance companies can drive bull dozers through.

So at the end of the day, when people realize that if they already have insurance, they're going to end up paying more for coverage or lose it completely (that's Obama's "cost containment initiatives" - have people with expensive health care coverage provided through employers lose their coverage or have employers choose cheaper plans for them) while those without it are going to be mandated to buy a pretty shitty policy they cannot afford to use or get nailed with an extra 2% on their taxes, we'll see if Obama and Rahm still feel like cocks at the walk.

POSTSCRIPT: Dunno what this means for NCLB Jr. It is possible Obama builds momentum with this victory, Repubs decide they want to do something bipartisan so they cannot be tarred as the Do-Nothing Party and make a deal with Obama and pro-deform Dems to pass the president's blueprint into law.

It is also possible they decide they cannot give Obama anything and decide en masse to vote against NCLB Jr. (there are plausible policy reasons they could give - it costs too much, it cedes too much federal control from the states, etc.)

It is also possible that all the bruised feelings from the arm twisting Rahm and Obama and company had to do to pass HCR will leave many Dems, particularly ones in purple districts, less open to future arm twisting on either immigration reform or NCLB Jr.

We'll see. Public opinion on what is in the HCR bill matters. Nobody knows because the process has been so screwed up and complex. But if Repubs can win a message war on the mandates (and Jane Hamsher thinks that is where the next battle will be fought with this), it is very possible that Obama and Dems will be more weakened by the passage of the Great Health Insurance Giveaway of 2010.

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