Health Care "Reform"

Well, the US Senate passed the health "reform" bill on a vote of 60-39. Very few people know what is in the bill outside of the general descriptions we have heard from the press which has done its typically horrendous job covering this issue.

The short(ish) version:

The bill expands coverage to a number of people without coverage right now through a massive expansion of the Medicaid program (good luck finding providers) and through new subsidies for those purchasing small employer coverage or individual coverage through the new exchanges. The bill is paid for through a variety of new taxes, including an increase in the Medicare payroll tax, the excise tax on "Cadillac" plans (which somehow contains costs while generating ever higher revenues), and taxes on insurers, pharmaceuticals, and DME (all of which will simply be passed along to consumers through higher prices).

The bill makes substantial changes to the insurance market by preventing insurers from denying coverage based on pre-existing conditions, limiting rate variation through adjusted community rating mechanism, regulating loss ratios (a truly idiotic idea), guarantee issue, minimum benefits, no lifetime caps etc. The new exchanges will operate as a single marketplace for coverage but also as a regulator by determining which plans are eligible to be offered.

The bill contains a number of pilots aimed at reducing cost, but really the strategy in the bill for dealing with health care costs is to pray they won't go up. (The bill does make it more affordable for some people by subsidizing coverage, but that's not the same as addressing cost of coverage).

And that's really the problem. The goal of the bill was never to address the primary issue in health care- cost. The goal was to expand coverage, enshrine universal care as a right, and deal with tricky issues like "how the hell do we pay for this" later...or never, which is far more likely. Look at the Medicare program, the current system operated by the government. Slated to run out of money in eight years, $70+ trillion in unfunded liabilities, and no plan for how to deal with it. Maybe that's not entirely fair. There are some plans out there, they're just laughably awful. Like- let's establish a center that measures whether certain health care procedures are really worth the cost. See, once we have evidence that something isn't really effective (which already exists) then people will see it should not be paid for (like annual mammograms!) and health care spending will go down. See? Everything will be fine.

At the end of the day, the Medicaid expansion and the subsidies will expand coverage significantly through a transfer of wealth from higher income earners to lower income earners. See Keith Hennessy's outstanding post on the impact for people by income bracket. The bill, as noted above, does almost nothing to address cost. But I think that's a calculation of the bill's supporters. Going backwards on entitlements is very difficult to do. Once you get universal coverage in place you can deal with the cost issue later- just like we have with Social Security and Medicare. Except not at all. The problem will be "dealt" with through large tax increases, which I suspect many of the bill supporters find to be a pleasant side effect.

Can't wait to see their energy policy!