Is America ready for single payer healthcare?
President Barack Obama has repeatedly said âFirst of all, if youâve got health insurance, you like your doctors, you like your plan, you can keep your doctor, you can keep your plan. Nobody is talking about taking that away from you.â
But Americaâs Affordable Health Choices Act of 2009, the bill under discussion in the House of Representatives, would result in the demise of private health insurance in America.
The 1,018-page bill would result in unprecedented regulation of Americaâs health sector. Among other provisions, it includes an 8 percent tax on employers who do not offer health insurance to employees, a mandate for everyone to have insurance, and requirements on whom insurers must cover, what benefits must be provided, the extent of variation in premiums, and how much profit is permittedâwith excess profits returned to enrollees.
This would solidify government control of all health care in America, force most private insurance companies out of business, and lead to a single payer health system, like Britain or France.
The billâs focus is to drive people to the new public health-care plan or to Medicaid, the federal-state plan for low-income people. It would motivate many employers to drop insurance and pay the 8 percent tax, effectively steering employees to the new public plan.
The bill would create a new Health Insurance Exchange, where âqualified health benefit plansâ are allowed to advertise their health insurance plans to individuals and firms. Only qualified health benefit plans are permitted to participate. In order to achieve the status of a qualified plan, an insurance company has to offer a certain package of benefits, meet guidelines on who can sign up, and agree to limits on profitability. It is unlikely that insurance companies can meet these requirements and stay in business.
The basic benefit plan for insurance companies who want to participate in the Exchange comprises inpatient and outpatient hospital services, as well as physician services and equipment and supplies used for treatment. In addition, it includes services that can by no means be considered basic, such as dental, vision, and hearing care for children, and mental health and substance abuse services.
Men would have to pay for maternity services and baby and child visits even if they are single and childless. People who do not abuse drugs would have to pay for substance abuse. This basic plan is like making everyone pay for a Cadillac when they would be glad to drive a used Ford.
Insurers would be required to accept all applicants, no matter how sick, and would be always required to renew coverage. With the exception of age, everyone, no matter how sick or healthy, would be charged the same premiums. When pricing by age, the highest premiums could not be more than twice as high as the lowest.
This means that in order to stay in business the prices charged by insurers would necessarily have to be very high. Companies would be required to cover a broad range of services, to accept anyone who applies without regard to sickness or health, and to keep premiums within a narrow range.
In addition, if companies were to make more than a certain level profit in a particular year, they need to return funds as rebates to enrollees. This prevents insurance companies from building up a reserve in some years to guard against losses in other years.
This pricing mechanism would quickly force private plans in the Health Exchange out of businessâand leave consumers with the public plan.
In order to prevent insurance companies from offering plans outside the Health Exchange, Americans who receive financial help in paying for insurance would be required to buy plans in the Exchange. They could not select âbare bonesâ or catastrophic insurance plans sold on the open market.
Some Americans would be given âaffordability credits,â credits to lower the price of their insurance, to be spent only within the Health Exchange. Individuals would be eligible if they earn too much to qualify for Medicaidâover 133% of the poverty line, now $29,000 for a family of fourâbut less than 400% of the poverty line, now $88,000.
Hence, health insurance assistance would be extended well above the median income for American households, now $55,000. These individuals would be forced to join plans in the Exchange in order to take advantage of government assistance.
Employers are also driven towards the Exchange. Beginning five years after passage of the bill, they would either have to offer health insurance comparable to plans in the exchange, or pay an 8 percent tax specifically designated towards subsidizing coverage in the Exchange.
Although President Obama repeatedly says that Americans who are happy with their medical insurance plans will be able to keep them, the House bill will make these plans disappear. Then, itâs a short step to a single payer system. Is America ready?