The Health Insurance Reform Bill

http://voices.washingtonpost.com/ezra-klein/2009/12/jane_hamshers_10_reaons_to_kil.html#more

Hard Questions answered:

1) Forces you to pay up to 8% of your income to private insurance corporations -- whether you want to or not.

"You," huh? For the 85 percent of the country already covered by health-care insurance, it doesn't force "you" to do anything at all. People on Medicare are not going to be paying money to private insurance. People with employer-based care will not see their situation change.

For the nearly 50 million Americans caught in the ranks of the uninsured, here's the deal: The bill expands Medicaid, a public program, to cover about 20 million of, uh, "you." Private insurance gets nothing. If you make more than 133 percent of the poverty line, but less than 400 percent, there's a huge system of new subsidies to help you afford private coverage. There are also new regulations on insurers forcing them to spend between 80 percent and 85 percent of every premium dollar on medical care, barring them from rejecting you or charging you higher premiums due to preexisting conditions, ensuring they can't place any annual caps on insurance benefits, and more.

But here's the catch: So long as insurance won't cost more than 8 percent of your monthly income, you have to buy into the system. You can't wait until you get sick or get hurt and and then buy insurance, shifting the costs onto everyone else. The cost of having a universal, or near-universal, system is that people have to participate. The promise is that, for the first time, participation will be possible.

2) If you refuse to buy the insurance, you'll have to pay penalties of up to 2% of your annual income to the IRS.

Again, who's "you?" If you don't have employer-based coverage, Medicare, Medicaid, or anything else, and premiums won't cost more than 8 percent of your monthly income, and you refuse to purchase insurance, at that point, you will be assessed a penalty of up to 2 percent of your annual income. In return for that, you get guaranteed treatment at hospitals and an insurance system that allows you to purchase full coverage the moment you decide you actually need it. In the current system, if you don't buy insurance, and then find you need it, you'll likely never be able to buy insurance again. There's a very good case to be made, in fact, that paying the 2 percent penalty is the best deal in the bill.

3) Many will be forced to buy poor-quality insurance they can't afford to use, with $11,900 in annual out-of-pocket expenses over and above their annual premiums.

How many is "many?" For a look at how various families will fare with reform and without reform, see this table, and this article. But if you don't want to click the links, this graph, which shows the financial risk that medical costs post to families with different incomes with and without reform, tells the story:

The vast, overwhelming majority of families will be better off under this bill. They will have insurance that they can use, and if they need it, subsidies to help them afford it. Compared with the status quo, in which about 50 million people have no insurance and tens of millions more have insurance they can't afford to use, this is a massive improvement. As Jonathan Cohn writes, "This is a hugely progressive program to bolster economic security, the likes of which we haven't enacted in this country for a long, long time."

4) Massive restriction on a woman's right to choose, designed to trigger a challenge to Roe v. Wade in the Supreme Court.

The Senate bill is better than the House bill on this score, but it's still a problem. That said, the restriction here is not on the right to choose, but on whether primary insurance covers abortion. In the House bill, the exchanges can't offer primary insurance that covers abortion. In the Senate bill, individual states can choose to bar abortion from their exchanges, but it is not the default.

5) Paid for by taxes on the middle class insurance plan you have right now through your employer, causing them to cut back benefits and increase co-pays.

"You" probably don't have these plans. Your plan almost certainly doesn't cost more than $23,000 a year. And if it does, the only part that gets taxed is the part in excess of $23,000 a year. The average family health-care plan costs about $13,500 -- almost a full $10,000 less than the plans this policy taxes. If we don't manage to slow the growth in health-care costs, this policy will, over time, hit plans that are less generous. But economists consider the excise tax, which functions as a tax on insurers who let premiums grow too quickly, one of the most effective cost-control mechanisms in the bill.

There's an equity aspect here, too: The problem with the excise tax is that it doesn't go far enough. All plans would be fully taxable. This policy begins to chip at the edges of one of the most regressive elements of our system: Health benefits, which are mostly given to better-off workers, are protected from taxes, while income isn't. A worker at Wal-Mart with no health benefits sees his entire paycheck taxed. A worker at Goldman Sachs with a $40,000 health-care plan is getting $40,000 of his paycheck tax-free. It's wildly regressive.

6) Many of the taxes to pay for the bill start now, but most Americans won't see any benefits -- like an end to discrimination against those with preexisting conditions -- until 2014 when the program begins.

It's not even clear what Hamsher is referring to here (the accompanying link is broken). The main tax in the bill is the excise tax, which starts in 2013, not "now." And the bill isn't funded primarily by taxes. It's funded primarily by changes to Medicare. It would be useful if Hamsher explained what tax changes people are going to notice in, say, 2011. My understanding is that the answer to that is, essentially, "none at all." The word "many" is obscuring a lot more than it's illuminating here, making it seem as if the majority of the bill's funding mechanisms trigger immediately. They unequivocally do not.

7) Allows insurance companies to charge people who are older 300% more than others.

The status quo is that insurers can charge people as much as they want, and they can refuse some people altogether. Hamsher doesn't present it this way, but the bill is a huge improvement on this front.

8 ) Grants monopolies to drug companies that will keep generic versions of expensive biotech drugs from ever coming to market.

This is correct. The bill gives pharmaceutical companies a 12-year exclusivity period, and then changes get 12 years atop that. It's one of the worst elements of the bill, and should be changed.

9) No re-importation of prescription drugs, which would save consumers $100 billion over 10 years.

This isn't really part of the bill, so much as it's a failure to pass a change that people have been trying to pass for a decade now. People should keep trying. But saying you'll torpedo trillions in subsidies and protections for the poor if you don't also get drug re-importation is a bit like saying you'll refuse to pay the sale price for this TV if Best Buy doesn't also let you use a coupon.

10) The cost of medical care will continue to rise, and insurance premiums for a family of four will rise an average of $1,000 a year -- meaning in 10 years, your family's insurance premium will be $10,000 more annually than it is right now.

It's not even clear what this is supposed to mean. According to the Congressional Budget Office, this bill reduces the average cost of premiums by a little bit for most people, and a ton for the people the bill directly affects. According to the Center for Medicare and Medicaid Services, the bill cuts spending in the long term. According to everybody, it decreases the deficit. The bill has at least five major cost controls that won't exist in its absence, and many smaller efforts to cut spending beneath that. And the bill does all this while covering more than 30 million people, ending the ability of insurers to discriminate based on preexisting conditions, creating a new and more competitive insurance market, taking the first steps away from fee-for-service medicine, and much more.

And that's the problem with Hamsher's list more broadly. The points about the bill's provisions are, in most cases, misleading. But much more deleterious is that Hamsher's list implies that the bill is failing relative to a world in which we don't kill the bill. But in that world, there's still no drug re-importation. Still 50 million uninsured. Still rampant cost growth. In the world where we pass the bill, everything gets somewhat better, if not good enough. In the world in which we kill it, everything just continues to get worse, and politicians are scared away from the issue for decades.