By Daniel Sholler, University of Pennsylvania
Landmark. Unimpressive. Historic. Appeasement. Socialist. Each of these words has been used in the same breath as “Obamacare” or “the health care bill” in the past week. Stepping back and taking a more moderate approach to assessing the strengths and weaknesses of the bill yields some truth in each of these terms (except, maybe, “Socialist”). Regardless of your stance on the bill, the very fact that a bill addressing a historically contentious issue has been passed into law is noteworthy. It will be published in your children’s history books, in your grandchildren’s history books, in your great grandchildren’s history books, and in your distant future evolutionarily superior relative’s history books. In order to avert the risk of getting lost in the novelty of the bill, we’ll take a look at it from a critical yet appreciative standpoint, revealing the good, the bad, and the downright ugly.
The Good
Anyone who is worried about the state of his or her insurance after graduating into a difficult job market stands to benefit from a part of this healthcare bill. One of the immediate effects of the bill is the ability to stay on a parent’s health insurance plan through age 27—helpful to those who are between jobs or struggling to find work as the economy recovers.
The “doughnut hole” in Medicare prescription drug coverage will be addressed immediately by a $250 rebate. This is a step in the right direction, but (SPOILER ALERT) you may see this issue reappear in “The Bad.”
Children with pre-existing conditions will be covered in pools beginning this year, so they will not go without care.
Rescission and lifetime/annual limits have been regulated so that insurers cannot withhold coverage from people who become seriously ill.
The Bad
Many of the most effective provisions of the legislation—mandating employers to offer coverage, health insurance exchanges for lower cost options, tax credits and subsidies for Medicare recipients and low income citizens, and deficit-cutting measures—don’t go into effect for several years. In other words, many of the people who need change immediately won’t get it until 2011, 2012, 2013, or 2014.
The legislation somewhat discourages (or fails to encourage) the use of Health Savings Accounts or Flexible Savings Accounts, which could be a viable long-term solution to the growing moral hazard problem in the United States.
Employers will lose the tax deduction they currently receive for offering Medicare Part D. What sense does this make when trying to extend coverage? Also, the “doughnut hole” $250 rebate is a small dent in the gap—which eliminates prescription coverage for annual costs between $2,700 to $6.154—one that won’t be closed by the plan to discount generic drugs in 2011.
The Ugly
The bill does not include a Public Option. This is debatably “ugly,” but without provisions for increased HSA and Flexible Savings Account usage, many of the key problems—including sky-high premiums—go unaddressed.
As mentioned above, the economics of this situation indicate that we may soon see sky-high premiums; the verdict is still out on the issue.
The bill does not address the lifestyle issue that we face in the U.S. While it is difficult to prevent people from getting three square meals at McDonald’s, insurers could have been implored to offer discounts to those who meet healthy lifestyle requirements. Instead, the guaranteed renewability and preventative care with no copayment provisions encourage over usage of healthcare, which equals higher spending.
The bill includes little to no malpractice reform and fails to solve the problem of useless medical practices done to cover a doctor’s risk of being sued.
All in all, I don’t think we’ve seen the end of the healthcare monster in the U.S. Several issues remain unaddressed, including what should have been a key focus of the bill: cutting the ratio of U.S. spending on healthcare to the quality of care received as compared to other countries. In addition, many people favor a single-payer system in which everyone is covered; without this, the issue will probably be at hand for the remainder of President Obama’s term.
