September 10, 2009

Key Issues with Health Care Reform

richardBy Richard J. Schillig, CLU, ChFC, LUTCF
Independent Insurance and Financial Advisor

President Obama said frequently over past several months that Americans ‘can’t afford to wait any longer’ for health care reform, and he is urging lawmakers to pass a healthcare reform plan this year. What I would like to do today is to outline the key issues involved with health care reform and what is being discussed or debated.

What are the major issues in the healthcare reform discussions? These issues focus around these areas:
1. A government sponsored plan. The President has continuously pitched a government sponsored plan similar to medicare that would compete with private insurers and in his opinion result in driving down health insurance costs. During the election campaign last year – this was a big Obama theme – or sometimes you hear this referred to as a single payer system. A true single payer system has just one health insurance plan run by the federal government – that is a single payer – the single payer being the government. Proposals currently being discussed however are not just a single payer system but a health insurance system that provides an option for consumers to choose the government plan instead of a private insurance plan.

Republicans are against a public plan. They fear too many Americans would loose the insurance they currently have – and are pleased with as employers switch group insurance with private carriers to a less costly government insurance plan. A question a government sponsored plan brings up is – Are employers currently offering insurance required to also offer this government plan? If you are reading the media coverage on this topic…. the fear that many legislators have is the potential for too many losing insurance coverage they are well pleased with now.

Media has also reported the democrats are backing off somewhat of the requirement of a government sponsored plan. This issue is a biggie and discussions; debates will continue I am sure.

2. Health Insurance mandate is the next issue. The key word is that one MANDATE – studies show about 46 million Americans are living without health insurance today. Although that number changes depending on who is counting and how this census information is being acquired.

One of the reasons cited for the absence of insurance is that hospitals are required to treat emergencies regardless of coverage. If rushed to the emergency room for an accident or a serious illness, hospitals are required to treat the uninsured regardless. The debate is – this is one of the reasons health care costs are so high and reflected in insurance company premium increases.

A couple democratic plans call for all individuals to have some type of coverage but a plan discussed by house republicans would not require this mandate. If a mandate were included in healthcare reform, how would it be enforced….does that bring about another layer of government control or as is called today – an healthcare czar or oversight?? Some democrats have proposed a tax penalty as a manner of control. Is that realistic enforcement-wise? A real issue, huh folks.

3. Expansion of current system. Lawmakers could expand the programs it currently has in place – that is medicare, Medicaid and children’s insurance programs to include more people. I read of one program that would substantially expand the Medicaid eligibility to include many of the uninsured. Expansion of the current system may be an option but with these proposals, costs of healthcare remain an issue as well as the taxpayer cost for this expansion.

4. Regulation is an issue. Should the government step in and further regulate the private insurance market? Both parties – democrats and republicans seem to agree that insurance companies should be prevented from providing coverage for persons who have pre existing medical conditions. But there are other issues that could be addressed here too such as payout issues or standard benefits. This issue is a hot one, too, because government regulation again creates need for an oversight – that is an additional costs item. Regulation may defeat the purpose of cost saving by creating oversight cost. Built into this idea may be an opposite proposal that actually reduces regulation – this may allow individuals and groups to shop outside their area or state for coverage.

5. Cost is an issue. A biggie, too – and maybe the one that overrides everything. One bill proposed by house democrats would tax the rich to pay for its overall health care costs. The tax would kick in for individuals making $280,000 or more and for families making in excess of $350,000 or more. House Speaker, Nancy Pelosi, has recently suggested expansion of the rich to individuals making in excess of $500,000 and families making in excess of $1 million per year. Republican leaders are adamantly against this idea of taxing the rich saying it would hurt small business terribly and kill jobs.

Montana Senator, Max Baucus, chairman of the Senate Finance Committee, said his bipartisan group is considering a proposal that would tax insurance companies for so called Cadillac plans that cost much more than average plans. He originally wanted to tax benefits provided by employers – benefits that are tax-free right now – but democratic leaders rejected that proposal after complaints from organized labor groups.

So there you have it folks – to summarize health care reform issues – these are essentially the 5 main issues that are being discussed and debated throughout the country and throughout the media. The outcome remains to be seen. We will continue to keep you informed on these issues.