(A version of this Health Alert was published by RealClearHealth.)
Largely absent from the vigorous debate over reforming the nation’s health care laws is the understanding that simply being covered by health insurance does not reduce health care costs.
Before the Affordable Care Act (ACA) passed in March 2010, President Obama repeatedly promised that the typical family’s health premiums would go down by (sometimes “up to” but frequently “on average”) $2,500. That decline did not occur because the ACA strengthened the control that insurance companies—as opposed to patients—have over health care spending. In fact, Americans’ increasing dependence on health insurance over the last seven decades has been a major contributor to exploding health costs. Continue reading Third-Party Payment Is The Root Cause of Health System Dysfunction →
The following are key findings from Gallup surveys:
- Most Americans do not believe that the U.S. healthcare system is in a state of crisis.
- Americans are not convinced that healthcare reform will benefit them personally.
- Americans do not believe that healthcare reform would lessen costs — neither for the system as a whole nor for individuals.
- The push for healthcare reform is occurring in an environment characterized by high levels of concern about fiscal responsibility, government spending, and the growing federal deficit.
- Americans have relatively little confidence in Congress and thus, by inference, little confidence that Congress can effectively and efficiently reform the country's massive healthcare system.
A Lewin Group analysis of the House health reform bill finds that 2 out of 3 Americans will lose their current health coverage:
- 114 million Americans would be forced out of their current private health coverage, including more than 106 million Americans who currently have employer-provided health care.
- There will be substantial cost shifting to private health plans. The “public” plan will significantly underpay health care providers, generally compensating them at rates 20-30% below what private health plans would pay for the same services. As a result, physicians and hospitals would be forced to charge those with private insurance more in order to offset the losses they experience under the Democrats’ government-run plan.
- A December Milliman Group study found current Medicare and Medicaid underpayments drive up the cost of private coverage for the average family of four by $1,788.
- The Lewin Group study estimates that a government-run plan that pays Medicare-based rates would increase the cost shift to $3,628.
- Medicaid enrollment will increase by 16 million.Many of those newly enrolled would previously have had employer-provided health care.
This isn't about principled reform, she says. It is about creating a single-payer system.
Two Wall Street Journal editorials have already tackled this issue — explaining the unfairness of public/private health insurance competition and the likely crowd-out of private insurance, based on a Lewin report. So is there anything else to say? Actually, quite a lot. Bottom line: It’s very hard to do this right; but if the advocates are intellectually honest, they can start with the State Children’s Health Insurance Program (SCHIP) and adopt a proposal Gene Steuerle and I made some years ago.
Here’s the background. Everyone is assuming that President Obama will keep his campaign promise to create a parallel system for health insurance. Those who don’t get insurance through an employer would have the opportunity to buy insurance in an Exchange. Details on how the Exchange would work are murky; and the clearer they become, the worse the whole idea sounds. But that’s not the problem. The deal-killing issue is whether one of the plans in the Exchange will be a government plan.
Two immediate questions jump to mind. What would it mean for a public plan to compete with a private plan? Why would anyone want that to happen? Let’s consider each of these in turn.
httpv://www.youtube.com/watch?v=WmxT21uFRwM
We are the Children
Continue reading Should Public Plans Compete Against Private Plans in Health Care? →
The Obama health plan envisions an alternative to employer-based health insurance, called a health insurance Exchange. Premiums would be community-rated, people could choose a new plan once a year and the out-of-pocket premium would be limited to be no more than, say, 10% of income.
Some Democrats in Congress insist that one of the options offered in the Exchange be a public plan (e.g., Medicare for nonseniors). A Lewin Group report estimates that 32 million people would lose their private coverage and enroll in the public plan if it paid Medicare-level reimbursements and eligibility were limited to the small firms, self-employed and individuals. The number of people dropping private coverage and enrolling in the public plan would increase to 119 million people if eligibility were open to everyone.
Yesterday was a sad day for the nation's children. Best estimates are that when President Obama signed the bill expanding the State Children's Health Insurance Program (SCHIP) he insured that 2 million kids will lose their private insurance coverage and enroll in the state program instead.
While privately insured, most of these children had liberal access to doctors and facilities in the area where they live. But since SCHIP typically pays well below markets and often pays Medicaid rates, the children will now have limited choices. And as the number of people paying below market swells, it exacerbates the rationing problems faced by all the current enrollees.
The bill Barack Obama signed will reduce, rather than increase, access to care.
Health Care Policy and Reform Insights | NCPA
(A version of this Health Alert was published by RealClearHealth.)