In the media afterglow of the historic signing of the health care reform bill, the immediate advantages of the legislation’s passage are rightfully being highlighted in news reports and analyses. Children cannot now be denied coverage based on pre-existing conditions, and insurers cannot drop their clients because they get sick. No matter how you felt about the bill’s passage, these are decent policies that are helpful reforms to the system.
They also didn’t need a 2,000-page+ bill written around them – and they don’t tell the whole story about the state of health care that we’ll be entering into courtesy of the bill’s passage. This will be forgotten in the euphoric coverage and human interest stories that will inevitably come, but the long view must not be forgotten.
For all the talk about the uninsured getting covered, what’s lost is that there will remain significant numbers of Americans without coverage. In a March 11th report, the CBO estimated that there wouldn’t be any significant drop in the number of uninsured Americans until 2014. Five years later in 2019, 23 million Americans will still be without insurance. This is less than the 54 million projected uninsured, so this is the source of the “coverage to 32 million” being touted.
During this time, premiums will not decrease – rather the rate of increase will be less than what it might have been otherwise. Sen. Dick Durbin alluded to this during remarks last week, and the Associated Press came to the same conclusion as well. It might bend the cost curve for consumers in a more friendly direction, but it won’t make health care costs go down.
In addition, employers will gradually be forced into offering their employees health care coverage, and some will need to buy more expensive plans to meet the new minimum requirements. Subsidies are advertised to make up much of the difference, as well as alleviating premium costs to individuals – but subsidies are more money out of the Federal Treasury that must be accounted for.
It brings us to cost. The CBO score (which helpfully looks at a window that only has government spending for half of the decade examined) that so many hailed as the game-changer in the House debate said that the bill would “only” cost $948 billion and shave $118 billion off the deficit over a 10-year time span (note: the operating deficit in one month, last month, was $248 billion. In a report the next day, the CBO acknowledge the Medicare “doc fix,” which updates reimbursement rates and has been pushed by Democrats as a means of letting doctors take Medicare patients without losing large amounts of money. It turns out that this package, which has been seen in separate bills in the House and Senate, would tack on an additional $208 billion to the price tag. And if the first 10 years of actual spending were scored (2014-2023), the actual price tag for a decade is over $2 trillion.
Cuts in Medicare will partially offset this, but that will also leave some seniors to find alternate methods of health insurance – which they’ll be mandated to buy, along with the rest of us, starting in 2014. The constitutionality of an individual mandate throws another wrinkle into the entire puzzle and should a court challenge strike it down (which I don’t believe is extremely likely at this point), a great majority of the house of cards will fall.
None of this even scratches the surface of the impact on actual health care providers as insurance companies are likely to lower their reimbursement rates to keep their costs in check. This will put the squeeze on hospitals and testing laboratories and may result in lower salaries or layoffs – which will negatively impact patient care.
Keep all of this in mind over the next few months as heart-warming stories and anecdotes are broadcast far and wide about the immediate positive effects of this new health care law. What’s bad about this law isn’t what happens in the first few months, but the state it puts us in over the next several years.
The narrative now is that Something Was Done – though what the something actually “is” doesn’t seem to matter much now. But, as before the law’s passage, there are legitimate reasons that people have to be concerned about the new law. It might be easier to accuse them of wanting kids to die of cancer or of just hating Obama – but the cold numbers reveal an increasingly risky future that isn’t secured by the passage of this law.
The legitimate question can be asked, “Why does this still matter? The battle’s over, the victors are flushed with righteous glory.” It matters because all of this will still need to be reckoned with in the years ahead. Searching for the short-lived political benefit to one party or the other is a myopic brush-off of the financial and societal reality that won’t be felt until years after the newsprint accolades have yellowed and the television pundits have been cancelled.
Cross-posted at Wellsy’s World