Did I miss something? More people are going to have insurance because of health care reform, meaning the risk pool would be bigger and average costs should go down. So what gives?
One of the big selling points for health care reform was that, once nearly all of the currently uninsured people have coverage—including lots of healthy, low-risk folks in their 20s and 30s who choose to go without right now—the per-person premiums would come down. I can understand the overall costs of the system going up: More money is required because more people are being covered. But what’s up with increase in average cost for the individual? No one is saying the coverage will be better, or even all that different from what insured people have right now. So what are we paying for?
My colleague over at Swampland laid out the most likely (no one knows for sure what’ll happen) impact of the health bill on various individuals, including:
Another group that may be unhappy are people who don’t get coverage at work, but who are too wealthy to qualify for subsidies. A family of four earning 400% of poverty (or about $88,000 a year) would find itself paying $19,100 a year for health care.
Yikes. That’s about 22% of household income. Even more disturbing, the $19K figure is much higher than what the average family pays right now: $13,375, per the Kaiser Foundation. (Among other disturbing health care stats, the average family plan would rise to over $30K by 2019 at the current rate of increase.)
We’re not supposed to care about the average policy’s price increase because the cost of employer-sponsored insurance isn’t supposed to rise quite so steeply, and because the federal government will be providing subsidies to cover at least some of the premiums’ costs for low-income and middle-income people.
But where does the federal government get the money for those subsidies? From taxpayers, naturally. I find myself agreeing with a WSJ editorial when it wrote:
Democrats are declaring victory, claiming that these higher insurance prices don’t count because they will be offset by new government subsidies. About 57% of the people who buy insurance through the bill’s new “exchanges” that will supplant today’s individual market will qualify for subsidies that cover about two-thirds of the total premium.
So the bill will increase costs but it will then disguise those costs by transferring them to taxpayers from individuals. Higher costs can be conjured away because they’re suddenly on the government balance sheet. The Reid bill’s $371.9 billion in new health taxes are also apparently not a new cost because they can be passed along to consumers, or perhaps will be hidden in lost wages.
From another article written by Swampland’s Karen Tumulty:
In a recent letter to Obama, 23 prominent economists identified four provisions that they said “can go a long way toward delivering better health care, and better value, to Americans.” They are: ensuring that reform doesn’t add to the federal deficit; creating an independent commission to bring Medicare costs under control; discouraging high-cost insurance plans by taxing them; and changing the incentives in medicine so that doctors and hospitals are paid not for how much treatment they give but for how well it works.
Many of these economists — as well as other health experts — are watching in dismay as the legislation’s reforms and cost-saving measures are whittled away by powerful special interests.
And that’s our answer, really. Whether through taxes or lower wages or regular old premiums, it looks like the average person will be paying more for health insurance and yet getting no improvements in their coverage. Where is the extra money going, then? Presumably to the same special interests and administration-heavy institutions that reform was supposed to tame in the first place.
Early on in the health care debate, there was a lot of talk about increased competition to give consumers more options and make insurance policies more transparent and easier to understand, all which would, in theory, bring prices down. So where’s the step-up in competition?
An AP story proclaims that, “Shopping around for lower-priced medical care has never been easier.”
And then the story goes on to say that, in fact, comparing services, policies, and prices isn’t easy at all, with details like:
confusing and overlapping websites set up by doctors, hospitals, insurers and state officials…
unexpected fees can quickly inflate medical bills…
Despite the availability of online pricing information, patients are still facing unexpected costs fees from clinics and doctor’s offices owned by hospitals. The charges, known as “facility fees,” can amount to hundreds of dollars and are often not covered by insurers.
A truly competitive, transparent marketplace does not exist if shopping around is such a complicated, daunting proposition. And nothing I’ve seen in the proposed health care legislation will make shopping around any easier.
I’m all for universal health coverage. I think it’s a moral imperative, and I think that, if done the right way, it should also bring the cost to cover the average person down. The reform proposals we have on the table do the opposite.