Saturday, August 22, 2009

What is Obama's Health Care plan? What is Obamacare?

There's been so much misinformation spread about so-called 'Obamacare' that it's difficult to tell the facts from the lies - and there are a lot of lies and misinformation being spread around (largely by insiders from the insurance industry.)

The absolutely inexcusable failing of the Obama administration is their inability to clearly and concisely explain what 'Obamacare' actually entails - which is why lies about 'socialized medicine' and 'death panels' appeal to the populous so much.

So here, in my typically unqualified fashion, is my explanation of 'Obamacare.'

The current reform bill being debated is America's Affordable Health Choices Act of 2009.

It proposes:
  • All US residents with an income above poverty level will be mandated to purchase health insurance, or face penalties during tax season.
  • Health insurance companies will be forbidden from refusing coverage on the basis of 'pre-existing conditions.'
  • Health insurance companies won't be allowed to cancel coverage except in cases of proven medical fraud.
  • Maximum out-of-pocket expenses will be limited to $5,000 annually for an individual, or $10,000 for a family.
  • A tax credit will be provided for low-income families, so they can afford health insurance.
  • All employers with payroll costs of over $250,000 will be required to provide medical coverage for their employees.
  • Medicare payments to hospitals which discharge their patients too early, characterized by frequent re-admissions, will be punitively reduced.
  • A Center for Comparative Effectiveness Research will be created, which will seek to discover why some medical treatments cost more in certain parts of the country.
  • Medicare coverage will be expanded by requiring pharmaceutical companies to reduce or rebate the cost of qualifying drugs for eligible patients.
  • A National Prevention and Wellness Strategy will be developed, which will aim to promote healthy living and preventative medicine to reduce the overall need for medical treatment.
  • A Health Insurance Exchange would be created, which would mean small business could 'pool' together to participate in more cost effective insurance plans (currently, only larger businesses have the 'clout' to earn lower premiums through increased participation.)
  • A 'public' health insurance option would be created, which would compete with insurance companies in an effort to reduce insurance premiums, while maintaining coverage.
What Obamacare does NOT propose is the following:
  • There will be NO 'government takeover of the health care industry.' A 'public' option will exist alongside the current insurance industry, so this is NOT a socialized or nationalized health care plan. It's not even close.
  • There will be NO 'health care rationing' beyond that which currently exists in the marketplace.
  • 'Grandma' won't be unplugged or denied treatment. So-called 'death panels' are actually 'end of life' discussions - proposed by Republican Charles Boustany. These will offer patients the chance to discuss with their doctor under what circumstances they would want to refuse medical treatment (like in the case of complete, irreversible brain death.) The doctors themselves cannot elect to refuse treatment.
There are elements of the health insurance industry who are fighting tooth and nail to have America's Affordable Health Choices Act of 2009 totally derailed. They are using the so-called 'grassroots' movement to disrupt Town Hall discussions - even though the protesters themselves will suffer if this bill isn't passed.

If conservatives successfully keep the status quo, the following will happen:
  • Health insurance premiums will continue to rise - they've more than doubled since 1999, rising twice as fast as wages. They're projected to increase by a further 94% by 2020. Unless this is stopped, nobody in America will be able to afford health care!
  • The percentage of out-of-pocket costs will continue to increase, too. This year, economists reported that medical debt was the leading cause of bankruptcies in the US. You should be able to be treated for cancer without losing your house - and currently, that's not how the American system works.
  • As premiums rise, coverage drops - and more and more Americans find themselves refused coverage because of 'pre-existing conditions' or dropped altogether thanks to exclusions in the small print. If this continues, only healthy Americans will be 'privileged' to pay for health insurance (that they don't need.)
It's no wonder that pro-industry pressure groups like Conservatives for Patient's Rights are fighting so hard to combat health care reform. They'll continue making millions by preserving the current system - out of the pockets of hardworking Americans like you, me and the misguided protesters.


Tom said...

Of course, it's not just health insurance people will be mandated to purchase. It's a particular level of health insurance, with the level mandated by the government. Expect that it will be required to handle things like chiropractic care and mental health counselling... both of which raise the cost substantially.

I have a high-deductable health plan. I pay the first $2000 of medical expenses out of my pocket, and insurance pays everything above that. The result is that my insurance is a little under $2000 cheaper a year, but that's way cheaper than it would otherwise have been, and I get to pay those $2000 from my health savings account, with pre-tax money.

Obama's plan will eliminate high-deductable insurance, costing me and people like me thousands a year, without a particular increase in service.

According to the Levin group (linked from here), 88 million people will lose their insurance, and be forced into the public system.

There certainly will be rationing, as money is pulled from one area and placed into the others. For example, Obama wants to cut $150B from Medicare. You can't pull out an amount of money that is bigger than the yearly cost of Iraq _and_ Afghanistan, without cutting some benefits.

The big problem here is that in the current system, the government is strictly on your side. If the insurance company makes a bad decision, you can appeal it to the government, which decides if it's really medically necessary.

In the new system, the government is both the insurance company and the arbiter... which makes it easy for rent-seekers and cost-cutters to cut your benefits to save money.

(Case in point: British Columbia decided to eliminate 600,000 operations a year, the other day. I'm pretty sure that means that people whose lives would have been improved by those operations are now stuck living with their condition.)

A couple of other points: We can't afford this. Obama just announced that the 10 year deficit will be 9 _trillion_ dollars. I don't think we can afford to add another $200+ billion
to that.

Of course, the $200 billion/year is for the first 10 years. Obama has been cheating by having the taxes start before the benefits (taxing us for nothing), so that the next 10 years will run an even bigger deficit.

Finally, let me just point out Mark Steyn's excellent comparison between the American health system and the UK NHS. The first paragraph on the second page is the probably the most important one: "It’s the difference between health “care” (i.e., going to the doctor’s every month to no purpose) and health treatment — and on the latter America is the best in the world."

87% of people like the current system. More than half of people are opposed to changing it... and that number is increasing every day.

Anonymous said...

All of your "not's" are wrong.

Private industry cannot compete with the government on health care. It failed in Hawaii, so the government option went away. Private industries HAVE to make a profit, the government does not. You cannot compete with that.

There HAS to be health care rationing. In Massachusettes there is now a near 45 day wait to get into see your doctor at times. Then it makes, as Tom stated, health care a budget item that will be cut when times are tight. There is natural rationing now, this option will make it much worse.

Now the death panel is where you are most wrong. Look at Oregon. Again, when it becomes a government budget item there has to be a 'best interest in the public dollar' decision made. And I AGREE with this. Why should I pay for a new hip for grandma who is dying of cancer? Now if grandma wants to pay out of her own resources, more power to her.

You remove the personal option to bankrupt yourself for your health. Now its not your money, so its not your decision.

Susanne said...

The thing about the government is that they can go in the hole and just take more money from another program, from taxpayers or just print some more money. Private companies really don't have those options. yeah, they can increase premiums, but they cannot print money the way the gov't can. So I don't see how the gov't can compete fairly with the private sector.

Tom said...

Take a look at cash for clunkers. The program is 200-300% over budget, because the government overestimated demand for its services... and it would be further over budget if it hadn't been shut down early. Payment for the dealers, which was promised to happen in 10 days, has been overdue for weeks, causing several dealers to drop out of the program.

Now, ask yourself... are these the people you want managing your healthcare?

One Salient Oversight said...

Universal Health Care is present in all industrialised countries... except the US.

It is just so much less hassle and stress for us to know that if we get sick we can go to hospital, get treated by doctors and leave the front door without having to pay a cent from our bank accounts.

Yes I know it isn't "free" - our taxes pay for it. But most people in these countries are happy for their taxes to go to support the common good.

Our systems are not perfect by any means, but they still work.

Roland Hulme said...

Hi Tom,

I’m not sure where you got the 87% figure from, but it’s fair to argue that those figures have SHOT up since the conservative campaign of misinformation began.

When Bush was in office, 75% of Americans said health care was too expensive and 60% of them wanted drastic reform. What has improved their situation since Obama came into office? Why do they suddenly want to stick to the same system they were previously complaining about? Because health industry stooges like Conservatives for Patient’s Rights are telling them they do.

Either way, I’m deeply suspicious of any of these statistics or polls. I mean, the Democrats are still claiming that 76% of Americans support the public health option Obama proposes, but I currently can’t imagine that to be even CLOSE to being true.

Roland Hulme said...

Anyway. Addressing some of the things you said, like: "health treatment — America is the best in the world."

That's TRUE, sort of. Only if you can afford it.

You’ve read my blog, so you’ve seen that I agree that American health care offers enormous choice and opportunity for amazing service, if you have decent insurance or deep pockets.

I have one friend who is alive today because of a procedure carried out in Boston that simply doesn’t exist in the UK. She paid $50,000 out of pocket for it.

But when it comes to the ‘big picture’ – addressing the level of care and coverage average Americans get, the score is pretty dismal.

WHO rates the US’s level of care for the average American as 37th in the world.

Americans have a lower AVERAGE life expectancy than many other industrialized countries and a higher infant mortality rate.

Where America succeeds, like treatment for cancer, it’s an expensive process that not everybody can afford. There was that one Canadian politician who snottily supported the Canadian single-payer system by saying: “I had cancer. It’s in remission – and I still have my house.” Which is TRUE.

More than half of all bankruptcies in America are because of medical costs.

Roland Hulme said...

So I don’t disagree that America offers some of the best treatment available in the world – but I do argue that we have to find a way to make it more affordable AND to give more people access to it.

One answer is expanding the MIXED system that we currently have now.

I don’t know why people are so afraid of the public health option.
Well, I do know – but most of the reasoning seems hallow and false to me.

Like, conservatives argue that a public health option would establish a faux-market which the current health insurance companies couldn’t compete with. This article points to reports that indicate that there ISN’T any competition between health insurers.

The fact is, they keep raising premiums (twice as fast as wages/inflation) and reducing coverage because they’re only competing with each other.

A government-run health care option would offer a cheaper option, which would either force insurance companies to reduce their premiums OR incentivize those higher premiums by offering better coverage.

Or, more likely, do neither since it’s only planned to give coverage to 11 million.

If, like the conservative fear-mongers imply, the government option is SO cheap that the insurance companies can’t compete – well, perhaps that means America’s being offered a cheaper option than the free market system and should adopt it, like many industrialized countries have. I don’t like that idea, but that’s the worst case scenario (and it ain’t so bad.)

The reality, however, is that the insurance companies CAN compete. They just don’t want to. But they CAN. Just look at the UK, where we have a totally socialized, almost Soviet health care system. EVEN THERE, there is a health private health insurance business that has an 8% market share.

Almost one-tenth of Britons choose private coverage even though they, though taxation, have to ‘pay’ for the free coverage anyway. They pay twice – something nobody in America will be expected to do.

Obama’s public option isn’t anything NEARLY the size or scope of the British NHS – and if private health insurance companies CAN compete against the British monster, there is no reason on God’s green earth that they can’t compete against Obama’s.

If they fail, that says more about their business model than it does about Obama’s plan!

A mixed system is the answer. Not socialized medicine – which Obama never suggested in the first place. Simply a system that incorporates a public option and private ones. It’s what many of the rest of the world’s industrialized nations have, they all have better health care scores than the US, so perhaps it’s worth investigating.

I believe a public option will improve the care the ‘average’ American has access to, while not stopping people having the choice of more expensive procedures if they’re willing to pay more.

Roland Hulme said...

Hi CK!

Really good comments, by the way. Nailed me – especially this comment: “You remove the personal option to bankrupt yourself for your health.”

I think this establishes the different mindset I, as a European, have compared to you. As far as I’m concerned, you shouldn’t have to lose your house and bankrupt yourself when you get cancer. It shouldn’t be a choice between your home or your life.

Perhaps that’s what happens in the unregulated free market, but can you seriously argue that this is better than rationing a geriatric’s access to care because of their age?

The rationing thing really gets me. In the current system, your access to care IS rationed because you can’t afford it. In a totally socialized system, like the UK, your access to care is rationed by doctors, based on your circumstances.

Ultimately, WHAT’S THE DIFFERENCE? The former option is only better if you happen to be rich or own your own home! If not, you’re screwed either way.

Personally, I think Obama’s proposals are a good middle ground between the two. Conservatives argue that if Obama institutes a public health care option, people on it will have their access to health care ‘rationed.’

Well, isn’t that an incentive to pay for a private health insurance option instead? Which might cost more, but will give better coverage and access to the procedures you want?

Isn’t that how competition works?

Isn’t that the idea of a mixed system?

Rationing is a fact of life in health care – and I’ve yet to see any convincing argument that it would be worse by introducing a public health option.

Roland Hulme said...

Susanne! Thanks for stopping by.

I think I covered your comment in what I wrote to Tom – that even in the UK, where we have a soviet-style system, there IS a private health care industry.

In America, with a public option that’s a fraction of the size of Britain’s state-wide NHS, there should be no reason why a health insurance company can’t compete.

And as that article I linked to proved, there currently is NO competition between health insurance companies, so we need some.

Roland Hulme said...

One Salient Oversight! Hi there! Great to see you again.

You hit the nail on the head with that one. The truth is, everybody ‘pays’ for health care, whether it’s a nationalized system like the UK, or a private system like America.

You pay through taxes or premiums.

Conservatives make the assumption that universal health care will lead to higher taxes. Two points –

First, that’s arguably an acceptable scenario if you didn’t have to pay insurance premiums.

Secondly, it’s not actually true. Ireland has a universal health care system like the NHS and, lo and behold, actually pay LESS tax per head than the USA.

The fact is, a streamlined, well run, efficient service costs less.

The problem is that the current private system in the USA and the dinosaur-like NHS in Britain are both inefficient, bureaucratic clusterf*cks that hemorrhage money.

Arguably, it really doesn’t matter which one you have, as long as it’s run well – which it’s currently NOT.