The Bitter Pill of Health Reform

Passage of the health reform bill in 2010 was quickly overshadowed by the mid-term election this past November that swept many Democrats out and a new wave of Republicans into office. It also effectively hung a giant blinking question mark over the whole issue of health care reform.
What will happen next is anyone’s guess, but one thing is for sure: an epic battle of wills and words regarding Obamacare, specifically the mandate requiring individuals to purchase health insurance starting in 2014, is likely at hand. As the 112th Congress convenes this month, those of us invested in the health reform issue are holding our collective breath in anticipation of what will or won’t transpire and where all the dust will have settled come February 2013.
Lots of questions are hanging in the air, such as, who’s going to be in charge? Will the Tea Party newbies muscle in and rule the old-guard GOP majority, and if so, what will this jockeying mean for Obamacare? Health care reform (and the repeal of parts or the entire bill) is top of mind and as Sen. Lindsey Graham-R said last week, “I think you're going to see the fight on Obamacare across the board in the House and the Senate to try to defund the Obamacare bill and to start over.”
This is all going to be especially interesting because of the fact that Republicans have traditionally backed insurers while many newly elected Republicans were sent to Washington D.C. by tea-partiers who have made their displeasure with the passage of health care reform abundantly clear. Who will prevail? Only time will tell.
So as a post-holiday refresher, here, in a nutshell, is what’s on the table at the moment: the health care bill that was passed in 2010 was a triumph for supporters but fell short of the single-payer system many wanted and does not include a public option. But in addition to extending health coverage to millions in the U.S. who would otherwise be without health insurance, it prohibits private insurers from denying coverage because of preexisting conditions and allows children to remain covered by their parents' insurance until the age of 26. Depending upon which side of the fence you may be, this can be viewed as progress in U.S. social policy or a dangerous swerve to the left (that is nowhere near as left as those who want a single payer system would probably tell you).
Here’s who has a dog in the fight (in terms of the mandate requiring the purchase of health insurance) and why:
Pro-mandate:
Suprisingly, hospitals and health care providers. Why? They stand to profit because the mandate will create a whole new pool (an estimated 30 million) of patients/AKA: paying customers.
Ditto the boost to health insurers and pharmaceutical companies. This new pool of customers will help to offset the huge increase in costs to providers and healthcare facilities that will be presented by expanded benefits of Medicaid coverage for approximately 16 million people. Insurers say they need the income generated by the mandated customers in order to offset the increased costs they will incur for not being allowed by law to deny coverage to those with preexisting conditions.
Not so fast:
The requirement to purchase some form of health insurance and penalties in the form of a fine for failing to do so has libertarians steamed by what they view as the federal government’s unprecedented and unconstitutional reach into the personal lives of Americans, an extreme intrusion on individual rights, in their opinion. Ditto the rhetoric of many of the newly elected Republicans who are backed by powerful and game-changing Tea Party groups (who will have their representatives under a microscope). Hm. But as we pointed out above, if parts of the bill are repealed, the rest of the reform plan will most likely collapse because one layer cannot possibly exist without solid support (money) from the others.
What does all this mean to employers? It means more uncertainty, at least for now, and while the cost of offering employees health and dental plans may stabilize and become more affordable at some yet to be determined point down the road, at the moment it continues to climb. The cost of providing these benefits makes some organizations less competitive and less profitable, particularly against overseas businesses that do not have the same costs, driving some employers to look at doing away with health benefits and offering a stipend for employees to purchase their own coverage, opting for the cheaper fine for failing to provide coverage.
Where will it all end? Stay tuned.