The Obama Administration has spent a considerable amount of time and energy trying to convince the American public it’s time for revolutionary health care reform. It was one of Mr. Obama’s chief campaign issues and it’s clear he wants this to be part of his ambitious 1st year goals.
Last night (September 10), President Obama made a forceful case for this reform to attempt to clear up the misunderstandings and complexities of his proposal. It’s still early to determine the impact of this speech with the American public, but it’s still a highly emotional issue with many. One U.S. Congressman made the headlines of newspapers by responding to Mr. Obama’s comment that ‘illegal immigrants will not be covered by this health care reform’ by shouting “It’s a lie!”
It’s not difficult to make a case for health care reform. There are estimates of 45 million Americans without health insurance. Many of these people choose NOT to have health care because of premiums costs or coverage under a spouse’s employer’s program.
But many of these uninsured people don’t have health coverage because they are unemployed or cannot obtain private insurance due to pre-existing health conditions. When an individual loses a job, he has the right to continue group health insurance benefits from his employer but that’s typically capped at 18 months. While the premiums for this coverage, called “COBRA”, are better than private insurance premiums, they can still be rather high. Family coverage for an average health care plan could be $1,500/month or more. When COBRA eligibility expires, individuals must choose to go without insurance OR try to purchase private health insurance. These premiums could be $2,000/month or more and may not be available to individuals with certain expensive ‘pre-existing’ conditions such as cancer, diabetes, high blood pressure, etc.
Finally there’s the biggest case for reform - expenses are going up significantly each year. It’s estimated that health care costs double every 7 years. Clearly something must be done to control these escalating costs.
Most Americans agree that health care reform is necessary but there are 2 very different approaches. Mr. Obama and the Democrats feel the solution to the problems of our current health care system require extensive government intervention. They propose to offer ‘universal’ coverage so that all people will have a right to health care. This would be offered through a government program similar to Medicare (which provides health insurance coverage to people age 65 and above).
Mr. Obama also proposes that people with health insurance coverage through their employer have a ‘public option’ to purchase health insurance through the government. Critics argue that the government could provide artificially lower premiums under this public option, thereby attracting most employees to transfer from employer plans to the government plan. Employers could also choose to pay a small penalty, perhaps 8% of payroll, to discontinue their health insurance plans or severely limit them so that employees prefer to use government health care. The advantage to employers would be eliminating costly health insurance plans that continue to increase in cost year by year. This could provoke a radical change in the employer/employee contract much like the elimination of defined benefit pension plans has done over the past 10 years. But a recent poll indicated that 80% of employees are happy with their health care coverage.
Critics of Mr. Obama argue this is an extremely costly way of addressing the health care issue. Conservative estimates of the costs of this type of comprehensive health care reform are at least $1 trillion U.S. dollars, despite the claims of cost management. Most experts view this estimate at being extremely low, suggesting a more honest
estimate would be $3-4 trillion U.S. dollars.
What is the alternative to comprehensive reform? Republicans have offered their own proposals but they are not radical but rather gradual. They agree that insurance availability, affordability and portability are very important but they don’t feel the federal government should get so involved in actually providing a ‘socialistic’ program.
The chief objections to Mr. Obama’s program are:
1) High costs during a time of major recession and other large government programs such as the bail-out of the auto industry and the financial industry stimulus program;
2) Creeping socialism or expanded influence of government;
3) People will not be able to choose their own doctors and many quality doctors will leave their profession because of the lower reimbursements approved by the government
(similar to the lower Medicare reimbursements now);
4) Rationing of care to control costs, impacting the quality and availability of health care to everyone but especially to people who need ‘elective’ surgery such as hip replacements, back surgery, etc.
5) “death panels” to determine whether disabled or elderly people ‘deserve’ certain drugs or operations in consideration of their life expectancy or value to society;
6) unwillingness to deal with exploding malpractice costs (since trial lawyers who obtain large settlements for their clients usually donate to the Democratic party or are leaders in the Democratic party such as John Edwards);
7) the health care reform proposal will unfairly ‘bail out’ the United Auto Workers’ union from the health insurance costs to their members and retired members for their generous health insurance program. This was a promise made by Mr. Obama to gain union support during the Presidential election.
Republicans propose that health care reform should be gradual, starting with controlling costs.
Health insurance companies are currently regulated by each state, so allowing companies to compete with each other across state lines should increase competition and lower insurance premium prices.
Regulating malpractice settlements will also reduce costs because doctors are paying high premiums now for malpractice coverage. Reducing the risk exposure will lead to lower doctor expenses and hopefully lower doctor fees.
Radical health care reform has been tried several times and failed each time, notably during President Clinton’s administration in 1994. Hillary Clinton, President Clinton’s wife and chief promoter for this effort, was blamed for that failure but Mr. Obama and the liberal wing of the Democratic leadership are determined not to repeat that experience.
Some compromises will be discussed and Mr. Obama still has the option to implement many of his proposals using the large majority of Democratic votes he has in the Senate and House of Representatives, without any Republican votes. If that happens, and the American public does not agree with the radical changes imposed, Mr. Obama’s Congressional majorities can surely change in 2010 during the next election cycle and his 2nd term will be severely in doubt.
We will continue to monitor the health care battle over the next few months particularly since it has such huge impact on companies doing business in the U.S.