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Sunday, November 08, 2009

Health Care Bill Overview

Now that I've looked over the bill more, I think I can summarize the whole thing pretty quickly (relative to the size of the bill, anyway):

- Plans that aren't at least as expensive as the average employer-based plan today will become prohibited. This means you will no longer have the option of getting cheaper, catastrophic (high-deductible) insurance. Presumably this eliminates HSAs as well.

- The rough cost of the cheapest plan will be about $440/month for individuals.

- Since no cheaper plans will be allowed, you may be inclined to forego insurance entirely. But doing so, aside from leaving you exposed to possibly catastrophic health care expenses, will cost you penalty of 2.5% of your income. (And if you don't pay that, you go to jail.)

Yes, that's right, their solution to people being unable to afford health insurance is to eliminate all of the remotely affordable plans, and then threaten you with fines and jail if you don't have health insurance. (It's not quite that bad: having set up this horrific scenario, they then make a show of rescuing you with subsidies if you're sufficiently poor -- see below.)

- I gather that there will be no more exclusions for pre-existing conditions, though I haven't paid much attention to that part of the bill.

- The government is going into the insurance business and will offer a "public option" along side the private ones. Quoting from section 322: "(1) IN GENERAL. The Secretary shall establish geographically adjusted premium rates for the public health insurance option (A) in a manner that complies with the premium rules established by the Commissioner under section 213 for Exchange-participating health benefits plans; and (B) at a level sufficient to fully finance the costs of (i) health benefits provided by the public health insurance option; and (ii) administrative costs related to operating the public health insurance option." In other words, they seem to think they--this is the US government we're talking about--will be able to compete on a level playing field with, say, Blue Shield (a non-profit entity, incidentally).


- If you earn less than about $40,000 (individual), you can apply for a government subsidy to help pay for your ~$5300/year health insurance premiums. This is graduated as your income goes down, and if you are earning $20k/year (about $10/hr full time), your monthly premium after subtracting the subsidy would be about $75/month. The $365/month you are "saving" will come from the "health insurance exchange trust fund" which tries to fund itself with various penalties, but ultimately appropriates shortfalls directly from the Treasury, and hence you can expect even more taxes.

- A great deal of the bill is about establishing various layers of bureaucracy to administer all of this, from tracking compliance of insurers and providers to making sure you aren't lying about how much you earn when you are getting subsidies, to special tracking and reporting requirements if your income is not consistent, and so on and so on.

- All of this goes into effect Jan 1, 2013. (So, correction to yesterday, it looks like plans only need to be established by the end of 2012 to be grandfathered in. But this is increasingly nebulous--one portion of the bill refers to grandfathering in individual plans, while the actual amendment to the IRS code only makes reference to grandfathering in employer-based plans, at least that I've found so far. It seems likely that things like HSA-compatable plans will just vanish altogether in 2013.)

I should emphasize that this is it -- there's no magical bright side of this plan which I think so many of you are counting on to save your health care day. About the only thing in it that is likely to appeal to anyone are the subsidies for "low" income people, and the lack of pre-existing condition exclusions (but at those premiums, who cares).

So, in sum, this is pretty much exactly the opposite of what I would propose, and I do not look forward to saying "told you so" when, from our inglorious position of having the world's most expensive merely-adequate health care, we disembark at full throttle in the direction of rapdily increasing costs and rapdily declining care.

I find it curious that the start date is just beyond the next presidential election.

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Simon Funk / simonfunk@gmail.com