INSURANCE BATTLES HEALTH REFORMS

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PLAN LOSES SUPPORT OF INSURANCE COMPANIES

Drug industry lobbyists agreed to contribute a total of $80 billion, but no more, over 10 years in reductions of their government payments. It was agreed to limit the industry's costs by excluding government price negotiations on drug prices. . The drug lobbyists also made sure a proposed Medicare commission could not force negotiations either.

Congress is going to prevent insurance companies from denying people coverage or charging different rates under pre-existing conditions. How do we handle people who are uninsurable?

States have experimented with high-risk pools and health status insurance. It gives people an incentive to postpone buying insurance till they need expensive care. You can only guarantee this kind of insurance if the government requires everyone to have mandatory insurance coverage.

Subsidies will be needed to help lower income people get the coverage they would be forced to buy. Many of us would be forced to buy expensive policies without any help from the government. Workers, who are offered coverage by their employers, will require the employer to offer it. You will not be eligible for any subsidies and would have to accept what they're given. (You know it would be a minimum package of benefits designed by Washington.)

The insurance industry forecasts that thousands of dollars that will be added to their cost of a typical insurance policy, when insurance companies would be banned from denying coverage on account of poor health. Many people will wait to sign up until they get sick, thus driving up insurance costs. (Karen Ignani, president of America's Health Insurance Plans)

PricewaterhouseCoopers, projected that this legislation will add $1700 a year to the cost of family insurance coverage in 2013. Payments for a single person would go up more than $600. A family plan would cost over $4000 and an individual plan would cost $1500.

Proposed government taxes on high-cost insurance, new taxes on insurers, and Medicare cuts, will have to be passed on to privately insured policyholders. Employers and individuals will be forced to switch to lower-cost plans to avoid taxation.

The Senate Finance bill in its current form replaces a public option with nonprofit “health care cooperatives. Instead of an employer mandate, the finance bill has a “free-rider” provision. That will make companies with over 50 employees who don’t offer insurance contribute to any public subsidies their workers qualify for. This Senate Finance plan includes tax credits to help small businesses afford insurance.

The small print of the released bill, limits compensation of key officers to $500,000. This has caused a change in the position of the insurance companies.

COMMENTARY

Obama has wagered huge political capital on the fight to pass health reform, and to offer affordable care to 46 million people in the United States who have no insurance. The Senate plan already has reduced the number of people covered to 26 million. A far cry from the Obama goal of 46 million.

Should the reform bill pass and include the president's campaign promises, Obama may still hang on to his political credibility and take credit for this historic domestic reform.

But, should the effort unexpectedly fail, despite Democratic majorities in both chambers of Congress, Obama could find his political leverage and capacity to enact other elements of his sweeping agenda severely hampered.

The Senate will try to blend the finance bill with the House’s more liberal version. The two chambers disagree on how to pay for this legislation.

The Senate prefers a tax on high-value insurance policies as its main revenue measure, and slapping a surcharge on millionaires. The House liberals want to penalize companies that don't provide coverage to their employees.

The original $1.2 trillion plan for expanding coverage has been squeezed into a $900 billion dollar box, by making subsidies less generous for co-payments, and increasing the deductibles for people buy insurance through the new exchanges.

These cuts in the cost of the plan were made available by the following:

$240 billion was cut from the bill by placing a separate piece of legislation which would require doctors who see Medicare patients to take a big cut this January. By taxing the wealthy, with incomes over $500,000, they expect to raise another $460 billion over the next decade.

The insurance industry has a great incentive to reduce the costs of these plans. It will allow them to reduce benefits, rather than raising their prices.
A major question is whether people will be able to afford the policies they would be required to buy under the finance committee's bill?

PLAN OF PRESIDENT

The president wants to fulfill one of his key campaign promises--providing health care to 47 million Americans (15% of our population). He hopes to cut health-care expenditures by 50%.

Once the major proposals are narrowed down into a single bill, you can expect President Obama to hit the campaign trail again and come back to the center of the public stage. As negotiator to drive the legislative process, he will use the persuasion tactics of Roosevelt and Lyndon Johnson.

There are very deep problems with the health care system, but the should not be made worse than the problem we are trying to solve. “Haste makes waste”.

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