Health Care Legislation Emerging

Health Insurance Coverage in the U.S., 2007. A slightly larger share of Americans are uninsured (15%) than covered by Medicare (14%)

Health Care legislation is coming, the only question is what it will look like. So far we have several outlines and issues that are on the table, they are:

1. Mandating Coverage for all Americans-No word yet on what type of penalty would exist to coerce people into buying it.
2. A public health insurance program-Desperately wanted by liberals and the left as well as by President Obama and Ted Kennedy. The most we know about it is that households making less then 88,000 would qualify. Outside of that there is a strong push to prevent the payment schedules of medicare and Medicaid to be used for this new entitlement.
3. Greater spending on computerized records, technology, and preventive care to eliminate waste and create savings. -They may be good things, but it is highly unlikely they will generate the savings to cover the spending.
4. Paying for the program by taxing health benefits. Considerable support exists but opposition would be fierce. The Unions oppose such a measure, Charles Rangel who chairs ways and means opposes such a measure, and President Obama excoriated John McCain over he issue. Although he has "evolved" into possibly supporting the idea.

This is a brief outline, other issues waiting in the wings but politicians fear discussing include rationing elements, do non-citizens and illegal aliens qualify for the program, the fiscal solvency of Medicare and Medicaid, privacy issues in regards to electronic health care, etc. In other words a lot! Anyway the Economist has taken a look at the issue, lets have a look shall we:

For the first time since Hillary Clinton’s failed attempt of 1993-94 Congress has taken up health reform in earnest. On May 20th Senator Tom Coburn from Oklahoma and three fellow Republicans (including the up-and-coming congressman Paul Ryan) introduced their version of a health-reform bill. On June 2nd Judd Gregg, a conservative Republican senator, introduced another. An innovative earlier bill by Ron Wyden, a Democratic senator, has a number of Republican co-sponsors. All this, says Mr Gregg, proves that his party is willing to participate in, rather than obstruct, efforts at health reform this time round.

That pledge of bipartisanship may not survive. And it may not matter much, for Mr Obama has made it clear that he will sign health reform as part of the budget reconciliation process if necessary—a controversial manoeuvre that would need only 50 votes in the Senate, not the normal 60. So the reins are firmly in the hands of two senior Democrats: Mr Baucus and Edward Kennedy, the head of the Senate’s Health Committee. Both are expected to deliver their own bills this month. Although Mr Kennedy’s is expected to tilt further to the left, insiders expect that the two will be merged fairly easily. That hybrid bill will be the one that matters.

Hybrid indeed, there is talk that the public insurance program will be put on hold and merely be a fall back if enough people have been insured under the new legislation.

But what will the reformers actually come up with? Although the final details will not be known until the Baucus and Kennedy bills are unveiled, a few important elements are already clear. Despite the hopes of some, there is, in the words of Mr Baucus, “no chance” of a single-payer system advancing in legislation this year. “We’re not Sweden, Britain or Canada,” he says, “and we’ll come up with an American solution” that will involve both government and the private sector.

That points to a fight over some form of government-run insurance plan. Many on the left, including Mr Obama, argue that reform must include a “public plan” that would provide an alternative to rapacious private insurers. But industry types are convinced that any government plan would enjoy unfair advantages, like implicit government guarantees and huge pricing power, and suspect it would serve, in Mr Gregg’s words, as “a stalking horse for a single-payer system”.

Who is right? Neither side, perhaps. Andrew Stern, the head of the Service Employees International Union and an influential labour boss, believes a compromise is possible. But Douglas Elmendorf, the head of the non-partisan Congressional Budget Office (CBO), observes wryly that “the closer a public plan is to a private plan, the less the gain.” Old lags of health reform suggest that some in Congress want to pick a fight over the public plan issue to distract from other, bigger reforms in the works.

No kidding, either you end up with a government plan that drives private companies out of business, or you have a public plan that acts like private companies, which defy the logic of having a government run operation on the first place. Although there is talk that in lieu of a public insurance plan, uninsured households would receive a government subsidy to purchase private insurance.

One of those is the once controversial notion of an individual “mandate” to purchase insurance. Without such a requirement in place, too many healthy people choose not to pay for insurance. This leaves less money to cover the sick, and some of the uninsured inevitably turn up at emergency rooms. A mandate would need to be coupled with comprehensive insurance-market reforms. This would involve stronger regulation of insurance firms to force them to offer insurance to everyone, the creation of central exchanges for buying insurance, and subsidies for the poor.

Pioneering reforms in Massachusetts have helped win over many liberals to the mandate idea. Mr Kennedy’s bill is likely to be an expanded version of those reforms. And a U-turn by the industry is also winning over Republicans. The health insurance lobbies now say they are willing to live with rules forcing them to accept all patients without regard to pre-existing medical conditions—but only if this is accompanied by an individual mandate. Mr Gregg’s proposal has just such a requirement, while Mr Ryan’s bill has a similar proposal for “automatic enrolment” of people into private insurance schemes.

The other surprising area of possible agreement concerns the most important question: how to pay for these reforms, which may cost $1 trillion or more over the next 10 years. The biggest available pool of money is the tax exclusion granted on employer-provided health insurance. Jonathan Gruber of the Massachusetts Institute of Technology thinks eliminating this distorting giveaway would net some $2.3 trillion over the next decade or so. When Mr Wyden proposed abolishing that tax break to pay for universal coverage in 2006, many thought the notion outlandish, but it now looks likely to happen, at least in part.

Of course you would end up with a middle class uproar as well as adamant union opposition. One of the prides of the more powerful unions are the health care benefits they have wrenched from government and management, to open those up to taxes would be a heavy blow to membership.