Friday, March 19, 2010

The Basics of the New Healthcare Reform Bill

With the political drama of President Obama's healthcare reform bill coming to a climax, it looks like there may be a new House bill, based on the Senate passed bill, by the end of the weekend. If this really happens, getting the provisions of this new bill passed through the Senate seem very likely using the budget reconciliation process. What this means for us in the industry is that the biggest piece of legislation affecting healthcare since the enactment of Medicare will become law without any bipartisan support. This doesn't seem right to me. I have been arguing that we need healthcare reform and I stand by that. But I thought that the process would come from meaningful debate and input from a lot of different sources.

Don't get me wrong. I am not holding the Democrats 100% responsible for this outcome, but they did set the take it or leave it tone when they had 61 Senators behind them. They started the bully process and were not open to real dialogue in the beginning. Then the Massachusetts vote for Senator Kennedy's vacant seat happened and the Republicans have since shown the same resistance to sit down and really discuss issues. President Obama tried to retract the unyielding rhetoric had had used earlier but it was too late. The damage had been done.

Since we are finally to the point where we may really be passing some significant healthcare reform legislation, maybe it is time to take a look at the basics of what it offers. I must confess that I don't know the details, but I doubt that anyone voting on it this weekend does either. Here are some key points:

1) It will cost $940 billion (with a b) over 10 years according to the Congression Budget Office
2) 32 million more people will be covered, but major coverage expansion won't start until 2014
3) By 2014 everyone would be required to have insurance except low income people. There will be tax credits and aid to help people afford this
4) By 2014, private insurers will have restrictions on them including denying coverage for people with medical conditions and charging higher premiums for women. There will also be lifefime caps on premiums and coverage allowed for children until age 26.
5) A pool for highrisk patients and the uninsured will be set up to cover them until 2014
6) Medicaid coverage will be expanded
7) Medicare's doughnut hole for prescription drug coverage will gradually be closed
8) Many employers will have to pay a fee if the government subsidizes their workers health coverage. But by 2014 there will be state based exchanges to provide health insurance to small businesses and individuals
9)And all of this will be paid for by increased Medicare Payroll taxes on investment income and the very wealthy

All of this sounds great but I have my doubts that this will really be implemented just like it is summarized above, particularly point 9. I have been saying for some time that the real source of income to pay for this plan will come from cutbacks in Medicare payments to physicians and hospitals. Everyone says there is waste in the system and they are right. But I don't see provisions in this plan that will really attack the waste. It looks like they will just reduce reimbursement and leave the waste cutting to us.

Let's see what happens on Sunday.

More on this later.

Mark Brodeur

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