Health care reform: The big 'what if?'
The Supreme Court will soon issue a decision on the Affordable Care Act. What happens if part -- or all -- of the law is struck down?
This post comes from Jay MacDonald at partner site Bankrate.com.
If the court determines that Congress acted within its constitutional powers in passing President Barack Obama's landmark health care reform bill in March 2010, the gradual overhaul of America's health insurance system will continue.
But what if the Supreme Court strikes down the law, in whole or in part?
That's a big "what if," given the measure's size and scope, and the fact that many of its provisions have already taken effect.
"While 'chaos' might be a bit strong, it would create a lot of uncertainty because basically we would go back to square one, where we were three or more years ago in recognizing that our health care system is broken -- but not knowing exactly how to fix it," says Dr. Glen Stream, the president of the American Academy of Family Physicians.
Here's how American health care might be shaken up if the Supreme Court strikes down the Affordable Care Act.
The cornerstone of the Affordable Care Act -- and the focus of the Supreme Court challenge by 26 states and the National Federation of Independent Business -- is its "individual mandate" clause, which requires Americans to buy health insurance if they don't have it. If the court rules that Congress overstepped its powers with the individual mandate, it could throw out only that part of the law, or it could toss out the Affordable Care Act completely.
The individual mandate, which is expected to add 30 million of America's approximately 50 million uninsured to the health insurance pool beginning in 2014, is considered essential to making the "guaranteed issue" clause work. That provision ensures that people with pre-existing conditions have access to coverage; it's the concession the law requires insurers to make in exchange for millions of new customers.
"They're two sides to the same coin," says Jessica Arons, the director of the Women's Health and Rights Program at the Center for American Progress, a nonpartisan educational institute. "If they were to strike down the individual mandate, I think guaranteed issue unfortunately would go away." (Post continues below.)
Other reforms already in effect that could face a similar uncertain future include the following:
- The law's elimination of lifetime and annual limits on health insurance benefits.
- Its discount on name-brand drugs for seniors, to close the Medicare "doughnut hole."
- The expanded coverage for young adults to age 26 under a parent's plan.
- Customer rebates from insurers that spend too much on administrative costs and bonuses.
- Tax credits to 4 million small businesses to help them insure their employees.
- Expansion of Medicaid so states can insure more low-income residents.
The business case for preventive services
Some parts of the law appear to be here to stay, regardless of what the court does. For example, its elimination of co-pays and deductibles for preventive services such as mammograms, colonoscopies and well-baby visits may survive, at least on employer plans, which insure three out of five working Americans younger than 65.
The reason? Business has increasingly recognized that maintaining a healthy workforce is cost-effective.
"I don't see large employers rolling back 100% coverage on preventive care," says Tom Billet, a senior benefits consultant with the global consulting firm Towers Watson. "Many companies already covered that even before health reform."
But preventive services that are "free" to consumers under health care reform could cost them in the form of higher premiums if the law is struck down, Stream says.
Large employers certainly have their differences with the law, especially its scheduled excise tax set to begin in 2018 on so-called Cadillac plans geared toward executives. But "they probably view certain aspects of it as a positive," says Billet.
What large employers want most is an end to the uncertainty that has scuttled their long-term planning, he says.
A different kind of exchange
The law has required states to set up health exchanges, where consumers can compare prices and buy insurance under the individual mandate. If the act is struck down, are those marketplaces likely to survive?
"No, I don't think so," says Ken Sperling, national health exchange strategy leader for the global consulting firm Aon Hewitt. "Because a critical part of this law is the prohibition on medical underwriting based on pre-existing conditions. In order for insurance companies to be OK with giving up the right to underwrite (based on health), they want to get healthy people into the pool." And that makes the exchanges necessary.
However, exchanges of another sort may be on the way as Aon and other consulting firms roll out private-market versions for large employers, so employees can comparison-shop for health insurance.
"We're borrowing a concept from the Affordable Care Act, but what we're doing is not dependent on anything in the legislation," he says. "So whatever the Supreme Court does, we're moving forward."
For example, would they immediately have to start billing Medicare patients for wellness visits, which are "free" under health care reform? How do you prescribe medications for seniors suddenly thrown into the Medicare Part D doughnut hole, who can't afford name-brand prescriptions? And who's going to pay the bill for the 25-year-old who says she's covered under her parent's plan?
"I think everyone will sort of be numb," says Stream. "There's a lot of it that would affect actual day-to-day practice. There are a whole bunch of pieces that would fall apart."
Yet Stream isn't sure a celebration will be in order if the health care reform law survives.
"It doesn't completely get the job done in terms of reforming our health care system," he says. "Whether it stands or whether it goes, there's going to be work to be done."
More on Bankrate.com and MSN Money:
Go back to fee for service for things under $10,000. My dental bill for three implants because a drug dealer knocked my teeth out robbing me was $9,500 and I had to pay for it out of pocket. Too many people want to go to the doctor to have a pimple examined or some other ridiculous purpose.
Insurance should have deductibles like car insurance does. All anyone really needs insurance for is catastrophic health care services. Let someone buy a $100,000 insurance policy with a 10, 20 or 30 dollar deductible. People pay that much for cars, so it is not an impractical amount.
If you increase the number of health providers and insurance companies and allow for paying the doctors a fee for service, educate and create more general practioners, increase the number of nurses and other health care providers as well you will see a huge reduction in cost.
The AMA has set the number of doctors to a LIIMIT and they should not be allowed to do so. Insurance companies though a pain in the backside must make a profit, and if you think the government will not have to "make a profit" to pay for MORE GOVERNMENT EMPLOYEES who make more than people in the private sector you are just plainly ignoring the facts. Insurance companies are no different than any other business but at least they can be forced to having competition. The government has NO COMPETITION and is the most backward, inefficient means of doing anything.
There are 4 main reasons for health care trend increases:
1. Medical inflation
2. Cost Shifting
4. Deductible leveraging
Healthcare reform did little to nothing to address 99% of reason healthcare increases by 8%-12% each year. Until we tackle the four main components of trend we will continue to see these large increases.
1. Medical Inflation: This is the pure price increase in the cost of goods and services provided by healthcare providers.
2. Cost Shifting: This occurs when medical and managed care plans such as meidcare and medicaid pay a fixed or discounted claim charge to healthcare providers. Basically the government is able to force the healthcare providers to charge a certain rate for services even if it means that the healthcare provider will lose money. The providers subsequently increase their charge to insurance companies to make up for the shortfall. Another reason for cost shifting is the increasing number of uninsured. Those without insurance go to the expensive Emergency Room because they know that they can not be turned away. The hospitals have to get their money somewhere so they shift the cost to those with insurance. They just can't take a loss, which is justified. Basically those with insurance end up subsidizing the uninsured, those on medicare and medicaid.
3. Utilization: Reflects the increase in utilization of health care services. Pressures of an aging and increasingly health-conscious society, the practice of preventative medicine, new technologies, new expensive synthetic drugs, etc. lead to increased utilization. We all want the newest and best health care, which is expensive.
4. Deductible leveraging: This happens if you have a single payor system or the current insurance system: This refers to an increase in plan costs due to the effect of fixed dollar deductibles and out-of-pocket limits applied against trended claim amounts. As medical cost increase, the employer's or governments plan will absorb a larger portion of the increase. The leveraging component as a function of the other trend factors, will increase or decline to reflect the trend levels of the other three components. Do the math, it is pretty simple: Assume you have a $1,000 deductible and a $1500 claim this year. You pay $1000 and the insurance company pays $500. If healthcare trend is 10%, next year that claim is $1,650. If you do not increase your deductible you pay $1000 and the insurance company pays $650. Therefore, the insurance carrier's liability just increased 30% ($650/$500 = 1.3) even though inflation/trend was only 10%. Deductible leveraging will always happen as long as you have a fixed deductible. Somebody has to pay for the leveraging component or the individual has to increase their deductible to lessen the impact of leveraging.
For insurance premium, 93-95% of the cost is claims, 4-5% is the cost of administration, and 1-2% is profit. Don't you think we should be focusing on the 93-95%? Hospitals, doctors, drug manufactures, Durable Medical Equipment providers, and medical researchers are making huge profit margins and making the most money from this system. They are the most powerful people so neither political party will go after them. Insurance companies are a small issue that we should keep our eye on. We need to focus mostly on the 93-95% of cost if we want to help America.
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