Health policy in the United States is unique, to say the least. We are the only developed economy that does not have nationalized health care and despite popular belief, the United States does not have the best healthcare in the world even though we spend the most on it. According to the World Health Organization, the United States ranks 37th in health care – just behind Costa Rica and above Slovenia and Cuba. So how did we get into this economic and unhealthy mess? It’s a long story full of scandals, politics, history, economics, and American culture. In this space, I’ll seek to tell that story and explain healthcare policy, and the debates that swirl around it, in accessible terms.
In just a week, Americans will go to the polls to decide whether President Obama will get a second term. Healthcare reform – the president’s signature legislative achievement – hangs in the balance. Vice President Biden once described healthcare reform as a “BFD,” and he couldn’t be more right. I would be surprised if the majority of Americans were satisfied with healthcare costs and quality. So President Obama introduced The Patient Protection and Affordable Care Act of 2010, or “Obamacare.” The law reflects our monstrous and knotted health care system. It is lengthy, complex and full of intricacies that at most, only a handful of people truly know. With its existence at stake, there’s no better time to unravel those intricacies.
Broken down, there are three main issues the healthcare reform addresses – cost, quality, and access to care. Overall, the law is supposed to save $124 billion but barely makes a dent in decreasing our deficit. However, it attempts to make our healthcare system more efficient and gives 32 million more people health insurance.
First, there’s the problem of access to care. A lot of the sickest people aren’t insured and a lot of people still can’t afford health insurance either. So some major moves in Obamacare are to expand Medicaid to 133% of the poverty level and to create competitive government-regulated health insurance plans, called exchanges, which will compete with private insurers. Plus, insurance companies won’t be able to turn people down, but that also means people must buy health insurance so they don’t wait until they’re super sick to buy insurance.
To make sure everyone buys health insurance the government has two mandates – the individual and the employer. The employer mandate requires big employers to have affordable insurance available for employees or pay a tax. Small employers will qualify for subsidies to pay for health insurance through private companies or through the exchanges, which will be run state by state. If your employer still doesn’t provide health insurance you can get some tax credits so you can buy some. The employer mandate will be an extra cost to businesses, but it may save money in the long run if you have a healthier, more productive work force, right?
Now the individual mandate, as you may know, has caused a lot of controversy but it is needed so insurance companies won’t turn you down. In 2014, it will be the law to buy health insurance or pay a tax. People have no qualms about being required to buy car insurance (and there are almost as many cars as people in the United States) so I wouldn’t think insurance for your health should really be a BFD, especially if you can afford it. The good thing about Obamacare is that if you can’t afford health insurance the government will help you out. People with incomes up to 400% of the poverty level (about $45,000 a year for one person) will receive credits to help pay for insurance. Nonetheless, by the time this is enacted in 2014 most people will receive insurance through their employers, as they do now. Certain individuals will be exempted from the mandate such as cases of financial hardship or if you’ve been uninsured for less than three months.
There are also some smaller rules that give people more access to care: people being able to stay on their parent’s insurance until they’re 26, having some free services including tests and vaccines, and expanding Medicare to include drug costs.
Then there’s the total cost of healthcare that Obamacare tackles. Anyone who has ever received a hospital or doctor’s bill, which often go together, knows that healthcare is expensive. Expenditure on healthcare is up to 17.6% of our GDP and rising. To combat these problems, ObamaCare regulates for-profit insurance companies and makes sure that they don’t spend too much of the money they receive from premiums on administrative costs, which will lower the costs of those premiums. The state-by-state exchanges will also be regulated for most cost-efficient practices and may mean that doctors will begin to be paid on salary or by outcomes instead of being paid per service.
Yet, health reform itself is not cheap either. All these tax credits to provide insurance and exchanges will cost a lot, but Obamacare does eventually pay for itself and saves us money. Wealthier people will pay more in taxes for the expansion of Medicare and Medicaid, and there will be taxes for for-profit insurers and big employers that offer really expensive health benefit plans. More taxes will be paid by big pharmaceutical and medical technology companies. To try and regulate for-profit hospitals, the government will also set a limit on how much money they give to hospitals to pay for Medicare and Medicaid (this may be what is meant when people say Obamacare hinders these programs.) Lastly, there will be a new tax for tanning and the American Medical Association also suggests a new tax on soda.
Mostly to cut down on costs, the state and federal government will regulate the exchanges by relying on evidence-based medicine and services (you’d think this would be how our health care operates in the first place with the most reliable health services being offered, but nope, not when your doctors are paid by how many services they provide). This regulation will also improve the quality of care. Exchanges will be created by each state, but will have more coordinated care (meaning your specialist might talk to your primary care doctor or your health record will be readily available to all your doctors) and may be cheaper and more comprehensive than some private insurers which will keep prices and services competitive. These cost-efficient and higher quality practices researched by the exchanges will be recommended to all in the health care system.
In the end, Obamacare is not nearly perfect if you’re looking for nationalized health care. In theory it is supposed to regulate for-profit hospitals and insurers by introducing cheaper and more effective insurance and healthcare practices through the government exchanges. It is true that a lot of the cheapest health care is of the highest quality (just check out some of the services provided by Johns Hopkins and Maryland General) and will be translated to these exchanges. In reality, it is not guaranteed that the for-profit companies will actually serve the best interest of the people as some plans will be costly yet won’t be comprehensive and many will still be uninsured. Some of these changes won’t be made until 2014 but lucky for Marylanders, this state will be accepting Obamacare changes regardless of the election. It takes a lot to try and tackle this heath care monster and I for one, take my hat off to the president for making some really awesome and progressive changes in health care.
