Posts Tagged ‘obamacare’

Reform – Ahhh Sure

July 22, 2010

First, let’s remember what was called “healthcare reform” had very little to do with healthcare. It was foremost a move to shift the payor mechanism. If anyone doubts that, play back the rationale to reduce the federal deficit through healthcare reform. Regrettably, before the legislative session recessed for summer, Congress had already passed the so-called Doc Fix that the Congressional Budget Office opined would eliminate any federal savings. So now, we have reform that has little to do with health care and no favorable effect on the federal budget. What then are we left with out this legislation.

1. A larger federal administration with new departments responsible for insurance oversight.
2. Government designating minimally acceptable benefits. Remember the models are the Mass. reform effort which is awash in red ink and Medicare, which has doctors and hospitals opting out at unsustainable rates. Alongside that, if the Medicare model makes such great sense, why does even the government recommend a private insurance supplement?
3. Increased taxes on medical devices that will ultimately be passed along to purchasers.
4. Reduced tax benefits with the cap on Section 125 benefits.

In addition to the points noted above, the new law requires a minimum employer contribution to the total insurance premium cost. Dependents are included in the mandate. For employers who paid for single coverage and required employees to pay the costs of dependent coverage, this will be a significant financial hit. The mandated minimum contribution and the “Cadillac Plan” tax may well also turn out to be added factors pushing employers toward minimum effective benefit plans.

Having said that, some elements of reform were needed. Removing the pre-existing conditions exclusion in the individual insurance market (which was largely done in 1986 for the group market) was long overdue. However, if it is a good idea, why was it only enacted for children in 2010. Adults must wait until 2014. Wellness benefits are largely a good idea, but I have reservations they will be effectively implemented. Take that, however, as a personal worry and not a political one. Others will almost certainly disagree with me on that point, and I respect their right to do so.

My take is this remains an issue whose time had come; however, Congress fired its arrows and missed the target with most.