What’s happening with US healthcare reform?
Civitas, 11 January 2010
The international health policy research community is tuned in to the United States this month as Congress inches closer to passing the most extensive healthcare reform bill in 45 years. But what will these reforms really change?
On Christmas Eve, the U.S. Senate—one of the two houses of the nation’s bicameral legislature—passed its 2074-page version of a health reform bill. (To emphasise the perceived significance of this issue, it was the first time the Senate had gathered for a vote on Christmas Eve since 1895.) This follows the House of Representatives’ reform bill, which was passed in early November. What happens now is that the houses must combine their documents and vote together on a final bill, which if passed, is then given to President Obama to sign into law.
The Senate and House bills both passed on or very close to party lines—meaning that even in its final form, the healthcare reform bill will probably face unanimous Republican opposition. But Democrats are pushing ahead, with the goal seeming to be that of passing anything at all, as soon as possible…perhaps with the intention to add and change details once something is set as law.
So what will reform look like? The central difference between the House and Senate bills is that the House bill contains a government-run insurance plan (the so-called ‘public option’) while the Senate bill does not. According to the House bill, the government would allocate $2 billion in start-up money for the public insurance plan, but beneficiary premiums would then have to cover the full cost of implementation. The plan would negotiate payment rates with doctors and hospitals (rather than using Medicare rates set by the government), and the government would also provide loans for states and organisations to start similar, non-profit insurance cooperatives. The bills also differ in regulations regarding funding abortion, coverage for immigrants, and how to use taxes to pay for the expansion of insurance coverage (i.e. the House bill proposes a tax on wealthy individuals while the Senate would tax ‘Cadillac’ health plans—top-notch, all inclusive insurance coverage usually offered to employees of large, rich corporations). The Commonwealth Fund and the New York Times provide more in-depth analyses of the two bills.
Aside from that the two are quite similar, and the final bill, costing between $700-900 billion, is likely to expand health insurance coverage by doing the following:
– Requiring almost everyone to purchase insurance or face a penalty
– Increasing income threshold for eligibility for Medicaid
– Offering subsidies to help moderate-income people buy insurance
– Forbidding insurance companies from denying coverage of pre-existing conditions (‘medical underwriting’)
– Creating insurance exchanges—new government-regulated marketplaces where individuals and small businesses could come together to shop for and compare plans (with the goal of improving system transparency)
– Requiring insurance plans to offer a minimum package of health insurance benefits, to be defined by the federal government. and no annual or lifetime limits
– Requiring businesses to provide insurance coverage for employees or contribute to its cost (or else pay a penalty). The government will provide tax credits to small businesses that want to offer coverage.
The 160 million Americans who currently receive insurance through their employers would be able to keep those insurance plans.
Will this new health system resemble any of those we are familiar with internationally? The most similar structure I can see is actually that of the state of Massachusetts, which overhauled its health system in 2006. Massachusetts enacted many of the currently proposed reforms, including developing a central, public insurance exchange, individual and employer mandates, and providing subsidies for those with low incomes. According to the Kaiser Family Foundation, two-thirds of the people who were previously uninsured had gained coverage by September 2009. The state now has the lowest proportion of uninsured residents in the United States (2.7%). Surveys have shown the public to be favourable toward legislation, however, the state government has faced criticism on long-term sustainability and rising health care costs. As for the country as whole, no doubt further challenges will arise as Massachusetts was a relatively wealthy state to begin with, with a lower than average percentage of uninsured.
The core reform proposals outlined in the bills above are unlikely to change, but the weeks ahead are sure to bring further tweaks and rewordings to appease certain groups, and plenty of debate.