I have been trying to avoid writing about the current health care issue on this blog. The key reason being that if I start writing I won’t be able to stop. I have been discussing this issue with my friends on my facebook page and the discussions often became quite passionate and sometimes quite heated too. The rumors, hear-says, myths and speculations on the healthcare bill have risen to a level that I doubt if ever happened before in American social and political life. Multiple bills have been floating in the Capitol and today Senator Baucus unveiled the so-called bipartisan bill (which apparently only one Republican Sen. Olympia Snowe is likely to support) which has no option for a public-option, requires families to contribute 13% of their income for health insurance premiums and imposes fines ($3800 per family) on those who do not purchase insurance. The bill does however impose some restrictions on insurance companies to prevent them from rejecting people with pre-existing conditions or from increasing the rates for people with serious illnesses. This bill, if accepted, would cost $856 billion over 10 year time.
I would say that this bill is kind of a disappointment, at least for me. Thirteen percent of one’s income as health insurance premium is far from what we call affordable. Secondly the bill does little to encourage competition. Without any public option, the insurance companies will have a field time to set their own rates. The so called exchange or market place can do little when each state has only a handful of insurance companies to select from. Health co-operatives, as proposed in the bill, can hardly compete with the insurance companies.
In New Jersey, the state imposes some regulatory measures for individual and small business health coverage. The standard plans for individuals are community rated. From late 1993 through 2008, this has meant that a carrier must offer a standard individual health benefits plans to everyone at the same rate, regardless of the applicants’ age, gender, profession, health status or geographical location in the State. In 2009, carriers may offer standard individual health benefits plans using community rating that considers age. The ratio of the highest rates for a standard individual health benefits plan to the lowest rates for the same standard individual health benefits plan cannot be more than 3.5:1.
Although this is far from being perfect, but at least it ensures one aspect of health coverage is that the premium rate cannot be adjusted based on health status. And this is one of the aspects of the Baucus bill – something which is already available in NJ and I am sure in many other states. This bill seems to me as a huge compromise with just a light slap on the insurance companies palms which I presume was worked out as a deal.
What I fail to understand is, what does this bill and similar bills like this can do to reduce or contain the health care cost? Insuring everybody (or almost everybody) can only reduce the risk for the insurance companies and possibly improve their profits, which unless the insurance companies share with their policy holders, will do little to reduce the premiums.
But premiums are only part of the story. What about deductibles and out of pocket expenses? What about insurance companies policing the doctor’s decisions? What about inflated hospital bills? What about doctor’s and hospitals practicing defensive medicine to shield themselves from potential malpractice suits?
Without public participation, I don’t think any reform can help control healthcare costs. People should not go bankrupt, or lose their homes or die just because they cannot afford medical insurance.
One suggestion I have is for the Government to provide a supplementary insurance for major medical costs like chemotherapy or other expensive treatments or surgeries that insurance companies are reluctant to cover. Currently, Medicare does pay for patients requiring dialysis for kidney failures even if they have not reached the Medicare qualifying age. Why not expand this coverage for other life saving expensive treatments like chemotherapy or transplant surgeries or similar conditions? This may require a minor adjustment of social security taxes or other taxes, but it would significantly reduce the cost of general health insurance and hence the potential savings in premium can cover for the increase in taxes, if any.