Tuesday, May 18, 2010

More Bad News For The Cost Of Healthcare Reform

One of the key provisions of the new healthcare reform law is ensuring that people at high medical risk and those with pre-existing conditions will be able to obtain healthcare coverage. Often they are unable to get coverage in our current patchwork system. This is a very laudable and necessary component of the plan. But it appears that its cost to the system was not realistically estimated when putting together the cost figures for the new legislation.

The plan is to create high risk insurance pools in each state for all uninsured patients. $5 billion has been set aside to finance these plans. States are invited to set up their own plan and they would receive federal funding to operate them. If states opt not to develop their own plan, the federal government will set one up in that state. Thus far 18 states have decided against accepting the money and setting up a plan. Here's why.

It currently costs $2 billion annually to cover about 200,000 people under similar plans operating in 34 states. It is projected that the new high risk pools will be covering 2 million additional people between now and 2014. In addition, it is estimated that this pool of patients will be costlier than current pools. Therefor the real cost estimates are somewhere between $25 and $40 billion. The current $5 billion in funding is expected to run out by 2011. States are legitimately concerned that if they set these up, they will be left holding the bag when funding dries up.

Once again, I am not suggesting that we abandon this concept. Dealing with this important issue is necessary. And there certainly are significant costs already in the system to provide care for these patients. You can find these costs on the hospital's bad debt and charity write offs. But before we charge in with a grossly underfunded fix that will fall flat in a year, lets think this through. This is another example of the cost paid for rushing a bill through Congress without adequate input and discussion.

More on this later.

Mark Brodeur

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