One of my best friends in Milwaukee is my friend Ben. I’ve known him for a few years, and as soon as we met through mutual friends, it took us about 5 minutes to hit it off. Our friendship is designed mostly around three common themes; politics, ice hockey and beer. For purposes of this post, I’d like to focus on the first of these, more than likely to the great relief of my benefactors here at Fi-Med.
Ben and I have been following the progress of the health care legislation that became the law of the land this past week with great gusto, being the above-average policy wonks that we consider ourselves to be. It’s been an interesting journey, and as we have discussed this topic in public in different venues around Milwaukee, we’ve tended to suck in random eavesdroppers who are surprised mostly that people are engaged in the process without the tirades and invective so common in the modern world of 24-hour cable news.
Over the past two weeks, random employees of Fi-Med have also informally polled me for my opinions and analysis of the health care reform legislation. Weighing in at 2,409 pages, breaking it down can be daunting. Having said that, I’ll try to focus on the biggest issues that are front and center in the Patient Protection and Affordable Health Care Act.
Covering The Uninsured – The main reason why health care reform was seen as a top priority was the number of uninsured people in the United States. Currently, 83% of Americans have health insurance coverage. After the full phase-in of the new law, that percentage is expected to grow to 95%. There are a few ways the law expands coverage. Medicaid programs will be expanded to cover people with incomes up to 133% of the federal poverty level (currently $29,327 a year for a family of four). If you own a small business (generally defined as less than 50 employees), are self-employed or currently uninsured, the law mandates the creation (or expansion) of state based insurance exchanges, which are basically purchasing pools designed to give smaller groups the same kind of purchasing power as a large employer or other well-heeled insurance customers. There will also be national exchanges available that will be overseen by the same agency that currently oversees the health plans available to members of Congress. Beginning in 2014, if you are not covered by a health care plan, you face a penalty, unless your income falls below a certain level. Additionally, in 2014, if you are employed by a company with more than 50 people, and the government subsidizes coverage for your company, the company faces a penalty of $2000 for each full-time employee, with 2 part-time employees counting as 1 full-time employee for purposes of calculation. Pro - People who do not have coverage will be able to find affordable coverage from multiple sources. Con - On the surface, this would seem to strengthen the hand of an already entrenched insurance industry in the absense of a national public option or the option to buy into the Medicare program while weakening the options of the mid-sized employer.
Pre-Existing Conditions – Beginning in 2014, insurances will no longer be able to use pre-existing conditions (for adults or children) or a person’s gender to deny a person coverage or increase premiums. Since this is four years away, the law also creates a temporary national high-risk pool similar to programs currently available in 35 states. There are only pros in this portion of the law. When healthcare reform was first attempted in 1993, the idea of the elimination of pre-existing conditions was brought forth against the backdrop of over a decade dealing with the AIDS crisis and the challenges it brought to chronically ill patients attempting to obtain coverage. What we ended up with was HIPAA, which was an important first step with regard to patient privacy and protection of medical records, but somewhat far afield from the initial goal. I would imagine that insurance applications are going to look radically different four years from now barring any sudden changes to the law.
Insurance Basics – Some long-held standards in the basics of insurance coverage change with the new law. Parents will be able to keep children insured on their policies until age 26. Beginning in 2014, childless adults below the federal poverty level will be eligible for Medicaid coverage. Pro - College graduates can continue coverage under their parents’ plan in a challenging job market. Con - Really? Your children don’t have a plan by age 26? Sell their X-Box when they’re not looking and put their possessions at the curb. Explore tough love.
Senior Citizens - By 2020, the so-called “doughnut hole” in Medicare Part D coverage which doesn’t cover up to $1,720 of prescription drug costs, will be substantially addressed. This will begin modestly this year with a $250 rebate to seniors facing the out-of-pocket expense incurred after the first $2,830 of benefits have been exhausted. Beginning in 2011, seniors will begin to receive a 50% discount on brand-name drugs, which will slowly increase to 75% by 2020. The bill also has a cap on annual increases in Medicare spending, which will be closer to 2%. This is down from the 4% increases seen in the past. Pro – The onerous gap in prescription drug benefits for seniors is belatedly addressed. Con – A back-door gift to the larger players in the pharmaceutical industry, as generic drugs are not subject to the same discounting procedures. Decreases in Medicare spending more than likely will be felt in the elderly wallet. This could theoretically turn into a pro for drivers like me, as the elderly will have less money for fuel to drive their Buicks in the left lane at 35 miles per hour on the expressway as I’m trying to pass.
Dollars and Cents - The plan has an estimated cost of an average of $94 billion dollars over the next ten years. While the total seems high at first blush, comparing it with the costs of the ongoing military operations in Iraq and Afghanistan (remember those?) suddenly makes that number seem small. A tax on investment income of 3.8%, as well as increased taxes on individuals making more than $200,000 per year and married couples making over $250,000, pays for some, but not all of the bill. Pro – When held up to the projected costs of a full government takeover of healthcare with a public option, this appears not to be a lot of money. Con – When a citizen overdraws his personal checkbook, we get a nasty letter and a fine from our bank. When an American legislator of either party overdraws the country’s checkbook, they congratulate themselves, get checks from their corporate benefactors and get re-elected. This is one of the big reasons why I’m in the slender minority of people who want to see global warming actually succeed, so we can usher in a Humankind 2.0 that in theory will be able to properly operate a calculator.
PQRI – Less talked about in the greater news media is the fact that the new law mandates the use of the Physician Quality Reporting Initiative beginning in 2014. As with the current statute regarding electronic medical records, there will be gradual reductions to a physician’s Medicare payments if quality reporting is absent. This shouldn’t come as a surprise to anyone in this industry, as this has been an eventual goal of the program from the very beginning.
Physician Payments -The current state of the physician fee schedule was not addressed with the new law. This is still tied to another piece of legislation that extends unemployment benefits and rural satellite TV. Senator Tom Coburn of Oklahoma has objected to the bill in the same fashion as the objection by outgoing Senator Bunning of Kentucky to the last extension. The Senate adjourns on March 31st for a two-week recess, leaving 5 days for the temporary fix to the Medicare Fee Schedule to remain in place before reverting to the 21.3% cut mandated by current law.
As many of the provisions of the new law do not take effect for a few years, the results will not be immediate. As the law stands, it should be viewed as a beginning, as both sides of the political fence fight to either expand or contract the law in its current form. I know that my friend Ben and I are optimistic. Now if only we were so optimistic about our respective teams’ chances in the Stanley Cup Playoffs that start in a few weeks….