How health reform de-funding will cost you

March 9, 2011

Opponents of the proposed U.S. health care bill are pictured during a rally outside the U.S. Capitol Building in Washington, March 21, 2010.    REUTERS/Jason Reed  Although corporate and conservative interests have done a stellar job of demonizing “Obama Care,” it makes no economic sense whatsoever to de-fund this landmark legislation.

In a major concession triggered by pending state lawsuits challenging the health reform law, President Obama recently signaled he was flexible on the law’s insurance mandate. Yet that would require  Congress to shift the major building blocks of the plan back to the states, many of which are ill-prepared to design their own plans.

We’re back to a cagey political poker game. Obama has called to see the cards of his opponents. They either come up with a winning hand or fold. Being martyrs to the cause proves nothing, though.

Tea-partying House GOP members who want to kill health reform, and (in some cases) refused to sign up for federal health benefits, are paying the price and experiencing first-hand the cruelty of individual insurance markets.

My own Congressman (Joe Walsh, R-Illinois), eschewed federal coverage at the expense of endangering his own wife, who has a pre-existing condition. Although I didn’t vote for this fellow, I can tell him from my own experience that he’s going to pay sky-high premiums, not get any real discounts from providers with his meager health-savings account and may not even get private coverage for his spouse.

Misguided principles are trumping sound politics. Health reform is one of the best consumer laws in a generation. Not only would the health reform law over time create employment, it’s good for small and large businesses alike.

According to a Center for American Progress study, the health law would create up to 4 million jobs. That’s in addition to saving lives by expanding health access for all, eliminating the inhuman denial of coverage for those with pre-existing conditions and reducing costs for businesses.

Starving the law of funding — which is what the House GOP said it plans to do — will immediately raise taxes for small businesses. Currently they receive a 25- to 35-percent tax credit for paying for health insurance for employees. It will also trigger a cascade of roadblocks that will prevent some 30 million Americans from saving on insurance through widely-available exchanges in three years.

One of the keystones to health reform has been an attempt to move insurance marketing toward free-market principles. Today’s system is upside down. Instead of creating one large pool to include both the sickest and healthiest Americans, those with pre-existing or chronic conditions are “underwritten” out of most private non-group coverage.

Individual buyers (under age 65) can’t shop for themselves across state lines for the best rates or get into any federal program. They are restricted to their own states, which are typically controlled by a handful of large insurers who can keep competition low and rates high. Instead of an ability to pick the best insurer, it’s the companies who select their clients.

In theory, the insurance exchanges that will go into effect in 2014 will end the apartheid of the sick and chronically ill. Should Congress do anything constructive with health reform enhancement, it should put exchanges and consumer protections on the books next year or create an option to buy-in to Medicare.

Ironically, the health insurance industry, which lobbied vigorously against reform, has the most to gain from the law going forward. Mandatory purchase requirements will deliver them some 32 million new customers.

Yet by pouring millions into GOP coffers and indirectly encouraging Republican governors and attorneys general to battle the individual mandate in federal courts, they should be chary of what they initially desired.

I asked Wendell Potter, a former health insurance company executive with a conscience, what he thought of the industry’s perverse death wish. Potter, who authored “Deadly Spin,” a brilliant insight into corporate public relations, told me “they [the industry] need the revenue stream” from the potential new customers. “Their business practices were not sustainable for the long haul. Without the individual mandate, their costs will explode.”

Granted, the health reform law is loaded with flaws. It won’t ensure universal coverage for all Americans and may not reduce costs all that much. We will need a single-payer system to better address many of these shortcomings.
As an economic booster, though, the health act is still potent and should be enhanced. The Congressional Budget Office predicts it will shave $124 billion from the federal deficit by 2019 and $1 trillion in the subsequent decade.

The best kind of economic growth comes from a confident populace that’s willing to take risks to succeed. They can’t do anything if they are still at risk of bankruptcy from simply getting sick.


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Hey Reuters, why don’t you trade John Wasik to the New York Times or Washington Post? Maybe you could get a future draft pick or some small stipend. Better yet he can go to work for the administration since he appears to be such an Obama sympathizer. Suffice to say I won’t be reading anymore of pathetic OP/ED’s.

Posted by DPender | Report as abusive

[...] Reuters Blogs (blog) [...]

I guess you’ll be going to Fox “News” to get your opinions.

These are opinions, and meant to generate thought and debate, not news, which is to inform. Mr. Wasik brings up several valid points regarding the health care debate, all of which explain why he believes not funding it would not be in our best interests.

Politics is broken in this country because of the ‘with us/against us’ attitude pervasive in the system and the populace. Don’t listen to opponents, but villanize them. Seek solutions that parties espouse, not those that make common sense for the population in general (even if that doesn’t include you). Until we get past the noise and grandstanding (as Mr. Wasik points out with Rep. Walsh, who I’m certain has some insurance cronies to help him out of his predicament), we won’t generate solutions. Health care is broken. The boomers will be finding this out when health care costs destroy their nest eggs once they retire and lose employer coverage.

Posted by Mike_s1 | Report as abusive

As a child I grew up in a health system similar to the US system. The health insurance premiums were a major cost to my widowed mother. Then in the 1970′s an innovative Prime Minister introduced universal health care. The difference is huge the care is better and the costs are less than half the US costs. Most progressive nations have moved to similar systems to reduce costs and to show some compassion for the poor.
It seems that Americans fear change and would rather believe propaganda than the facts that are plain for all to see.

This is another reason why the US is going into economic decline but like lemmings the US population just keeps walking off the cliff, very sad.

Posted by Sinbad1 | Report as abusive

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