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Small Business Employee Benefits and HR Blog

Thoughts on the new healthcare reform bill

In case you haven't heard, the House of Representatives has released a healthcare reform plan.  Here are some quick thoughts about it. 

First, a disclaimer.  The actual bill is over 1000 pages long.  I haven't really had time in the past 24 hours to read it.  What I did read was the predictably vague summary.  On to the opinions:

The Good

There are certainly some good ideas in this bill.  One of my favorites (that I suspect many people won't like) is a req
uirement on individuals to purchase their own health insurance.  Obama pointed out in his town hall that ERs can't turn away patients, even if they can't pay for the treatment.  This basically means that tax payers are still footing the bill for the uninsured, it's just being done in the most expensive way possible.

By requiring everyone to have insurance (or suffer a financial penalty if they don't have insurance), this bill could be a very real step towards the goal of smartly allocating money that is already being spent.  I bet a lot of people aren't comfortable with the government telling you that you have to buy something - I'm the same way - but I think this is a concession that needs to be made.

Another idea that I like is offering "sliding scale affordability credits".  Right now, you basically either qualify for Medicaid or you don't.  It makes a lot of sense to offer some amount of assistance to low-income individuals and families without necessarily putting them on a program like Medicaid.

Finally, the Health Insurance Exchange has some potential.  Basically, this would be an aggregation of health insurance policies which would be maintained by the government (the aggregation, not the policies).  It sounds like they might limit the insurance offered through this exchange so much that no healthy people will want to buy from it, but it's too early to say whether or not that will happen.  It's a promising idea if nothing else. 

The Bad

I still don't understand why so many people think that health insurance has to be offered by employers.  Employer Benefits (insurance, 401(k)s, etc.) only exist because of tax breaks. If employers had to pay taxes on health insurance, I think it's safe to say that the individual market would be a lot stronger right now.

With that in mind, it seems very weird to me that this bill requires almost all employers to either provide insurance or contribute money on behalf of their employees.  Employers don't help me pay for other essentials such as groceries, utilities, rent and mortgage payments.  My employer pays me money and I go buy my own stuff.  I have yet to hear a compelling argument for why health insurance is fundamentally different.

Another problem I have is that this bill suggests that insurance companies are "discriminating" by offering different rates to different people based on age, gender, and preexisting conditions.  I wholeheartedly believe that we as a country have an obligation to help out the needy, but it's not discrimination to underwrite insurance customers.  Every other type of insurance uses the same practice, but for some reason its only discrimination when health insurance carriers do it. 

The Ugly (well, Vague)

Everything else in the summaries I've read seem pretty meaningless.  Basically, the plan will lower costs through innovation and technology.  That sounds great, but if the government really does have innovative ideas, why aren't we seeing those put to use with Medicare and Medicaid already?

There are plans to reduce waste, increase accountability, expand medical facilities, etc.  I'd love for all of that to happen, but it's hard to get too excited about talk.

Finally, there's still talk about a government insurance plan to compete with private carriers. Competition is always good, but there's a problem with this.  If I understand the bill correctly, private carriers will still be able to medically underwrite on individual policies (as long as they aren't sold through the exchange) but the government plan won't do that.  This basically means that all healthy people will get private insurance and all sick people will use the government plan.  Effectively, it would be a federal risk pool which is sorely needed, but it probably won't actually compete with private carriers.  I would chalk that up as a win, but an unintentional one.

All in all, this bill seems pretty much like what we were expecting.  It's got some good stuff, but it suffers from the type of inconsistency that compromise often causes.  It moves toward  consumer driven healthcare and a single payer system all at the same time.  My opinion is that action is better than inaction, but I hope that someone with some clout (I'm looking at you Mr. President) pressures the legislators to pick a more clear direction.