On November 5th Newsweek posted, an online article by Evan Thomas, called “Repeal or Replace?”, which needs some additional discussion to bring out more than just a political view about how the new Congress will maneuver on health-care-reform. I tried to respond to some his key points below. Please add your thoughts in the comments section.
“Conservatives who voted for congressional candidates because they pledged to repeal and replace the health-care-reform law are in for a rude awakening.”
First, it is difficult to get an honest discussion going when someone starts out with labeling opponents of PPACA as “Conservatives” and uses terms like “shadowy “AstroTurf” groups”. I know many who do not consider themselves as conservatives politically, who are very much against the new health-care-reform law. I am one.
I agree with the author that many of the newly elected members of Congress seem to be set to propose repeal of the PPACA on a purely political basis and this would be a big mistake as I understand the new law. Let me add here, I am a 25+ year employee benefits expert, not an insurance company guy, not a political operative, not a healthcare industry guy, but extremely knowledgeable in health care finance and benefit plan law and practice. I am one of those few who have actually reads the laws, regulations and contracts to understand how they work so I can help employees understand how they benefit from them.
I do not dispute that the insurance lobby gave more to Republican than Democrats this time. However, I do not follow the logic that health insurers “can’t survive without it”. Why not? We hear all the time that the insurance industry is ripping off the consumer with excessive profits. Why do they need massive government subsidies for their survival? If they do, why not support democrats who passed the law in the first place?
“Despite all the attacks on “Obamacare,” the new law props up the employer-based system that insurers and large corporations benefit from so greatly.”
This is good one. The new law does not prop up the employer-based system at all. In fact, it destroys it. You must have read the WSJ article on Tenn. or the now public release from the Waxman hearings on AT&T, John Deere, Caterpillar and Verizon who all have crunched the numbers and understand that it will be better to drop coverage effective 2014 instead of keeping their employer-based plan. (Follow this link for more on this http://money.cnn.com/2010/05/05/news/companies/dropping_benefits.fortune/)
“It also guarantees that private insurers will get billions of dollars in new revenue. “
As for the billions in new revenue, I assume this comes from the estimated 10 million un-insured who are required to purchase insurance under the new individual mandate. First, this part of the law will likely fail in the courts, but even if it does not, the windfall will only offset the billions lost as we move from employer-base group plans to lower cost individual plans. Not to mention the massive tax increases put into this law in a feeble cover up to reduce the size of the massive government subsidy of healthcare.
Did you know that under new law, a family of four, earning $8oK a year, with a plan costing them $24,000 per year will be subsidies with $16,400 costing them only $7600 per year. And a family of four, earning $40K, with a plan cost them $24,000 per year will be subsidies with $21,822 costing them only $2,178 per year.
This is simply unsustainable for the federal budget and ultimately they will give with one hand and tax us with the other. All we will get is more government administration, i.e. taxes and nothing more to reduce the real cost driver causing illness rates in the U.S. compared to other countries.
“The real reason insurers want the GOP leading Congress again is not to repeal “Obamacare,” but to try to gut some of the provisions of the law that protect consumers from the abuses of the industry, such as refusing to cover kids with preexisting conditions, canceling policyholders’ coverage when they get sick, and setting annual and lifetime limits on how much they’ll pay for medical care.”
You may be surprised to hear me say I agree with this statement. The insurance industry, like most industries, does not like government regulating their business. Regulation is always presented as consumer advocacy without regard to the unintended consequences. Look at the Mortgage mess. Government’s requires that everyone has the “right” to a mortgage, underwriting standards are gone, poof… billions our wealth is lost for decades.
What you need to know, is I would advocate that policies should not have annual, lifetime, or pre-existing limits. But you must be prepared to pay for the benefit. Nothing in life is free. If an individual cannot afford that, they may choose to take less coverage and more risk. After all we are free to pursue happiness as we perceive it. Right?
I won’t even touch the “death panel” discussion here. Political talk like this is what spoils the soup on both sides. Judd Gregg is a fairly independent voice of reason. I agree that we should not repeal PPACA, but retool what won’t work…what is too much government in the private affairs of free people.
As for Mr. Potter and Bill Hoagland, I am not sure what their agenda is. I don’t see them as whistleblowers or independent voices. The fact that this article comes from Newsweek, undermines its creditability. The people behind the Center for Public Integrity, lack my confidence as well. That being said, I enjoy open and free dialogue among citizens.
What I can tell you is this. I see health insurance coverage is moving away from an employer-based system, with a defined benefit, set by the employer, toward individual policies, acquired in a free market. Only open market competition will ultimately lower costs. Our state insurance commissioners will need start working for more than the insurance company lobby in their individual state and prepare to open up markets to vigorous competition with many products set against minimum standards.
Elimination of employer-based plans will reduce administrative costs such as COBRA administration costs, annual open-enrollment system costs, and group benefit manager positions such as mine. Employees will have portable coverage for themselves and their families. I would not ever recommend that we repeal and open ourselves up for another round of Washington DC lobbyist and lawmaker changes. Keep what they passed now that we have read it and implement corrections related to its fatal flaws.
As written, employees will not suffer from pre-existing exclusions, or plan limits as long as they pay their premiums. On the issue of affordability, employers will replace their current define benefit plan expense with a defined contribution expense that they will set at a level year to retain positive employee relationships. The partnership between employer and employee will focus on wellness and prevention not insurance.
Finally, this leaves the issue of un-insured or under-insured individuals. I expect the new congress will address this by offering tax incentives (deductions or credits) reduce the number of this group. It appears to me, that given the new law, President Obama has open the door to eliminate Medicaid since everyone can get a private policy on the proposed exchanges. We should be able to save all the administrative associated costs right there. But of course, you cannot mandate coverage or fix stupid. Everyone must look in the mirror and find the root cause of their illnesses and seek the appropriate changes in their life to reduce risks, illness and all the associated financial and personal suffering they experience.
To link to the original article see below:
http://www.newsweek.com/2010/11/05/why-healthcare-reform-will-survive.html
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