Tuesday, 23 March 2010

The US healthcare bill - what's in it?

Today Barack Obama signs the US healthcare reform bill into law. It's been a long, ugly and draining process, but in the end Obama and the Democratic congress have succeeded in doing what no US president before has been able to - reform the broken American healthcare system.

I thought I'd write a brief entry on what this bill actually entails because I've found a lot of Europeans (and Americans, for that matter) are confused about what it contains. Many of my friends on the left seem to be under the impression that the bill has been watered down so much that it is almost meaningless and will do no good for anybody. People on the right still seem to believe that this is a government takeover of the healthcare system that mandates rationing of care. Neither is true.

 First off, the bill is not in any way shape or form a government takeover of healthcare. The establishment of a single-payer government-run health service like in the UK or France was never even considered by the US congress, because it was though that would be too much of a drastic change. Instead Democrats had wanted to enact a list of reforms while also setting up a government-run insurance program to compete with private insurance companies, designed to drive prices down. In the end however the 'public option' was dropped from the bill because of the united opposition of Republicans combined with a three conservative Democrats in the senate. So in the end, the government will not be running the health system or even any insurance plan. In short, the government will "take over" nothing. The US healthcare system will continue to be less comprehensive and more expensive than European systems, which all either have national health systems or government-run insurance options.

What the bill does do is set up strict new rules for how the private health insurance companies can operate. Up to this point, private health insurance companies have had special exemption from anti-competition laws and have been subject to little regulation from the government, which has allowed costs to spiral out of control. These changes will bring 32 million previously uninsured Americans into the health coverage umbrella. As soon as Obama puts his pen to paper today, the following things will happen at the following times:

  • Small businesses, who have had to pay drastically higher healthcare costs than large ones because they lack leverage when buying group plans for their employees, will be able to apply for tax credits.
  • Seniors who have previously fallen into the so-called "donut hole" of skyrocketing costs for prescription medication will see their prices drop.
  • Special pools will be set up for people with "preexisting conditions" so they can purchase healthcare that is not astronomically expensive.
Later this year
  • Insurance companies will no longer be able to deny children coverage because of a pre-existing condition.
  • Insurance companies can no longer drop people when they get sick
  • Insurance companies can no longer impose lifetime limits on people's benefits
  • Young adults can stay on their parents' insurance until they're 26 (wish I had that back then!)
Next Year
  • Insurance companies will be required to spend 80-85% of what they are paid by people in actual medical care. If they don't, they must pay the difference as a rebate
  • Medicare recipients will start getting free preventive care (not just emergency treatment)
In 2014
  • Insurance companies will no longer to be able to deny anyone coverage because of pre-existing conditions.
  • Insurance companies can no longer impose annual limits on benefits
  • All Americans will be required to have health insurance, which should achieve near-universal coverage
And the cost for all this? Well at $940 billion over 10 years, it's not cheap. But according to the non-partisan Congressional Budget Office, over the long term this bill will actually reduce the federal budget deficit by $143 billion, and it has been designed in a way to pay for itself.

However there are limits to what this bill can accomplish, and by no means does it bring America to anywhere near the comprehensive level of European healthcare. It has backed away from any drastic changes and has kept the for-profit healthcare model intact. There are fears that without a public option adding competition, health insurance companies will have no reason to lower their rates. And now that all Americans will be mandated to have healthcare, the government is giving those insurance companies a whole new customer base. There is anxiety on the left that this bill merely forces everyone into a broken system, and that insurance companies will continue to drive up costs.

But the fact is this was perhaps the best the Democratic congress could do in a fundamentally conservative country where the right-wing dominates the media messages. This has taken nearly a year to complete and it has been very unpleasant to watch, showcasing not only the worst in the American political system (the abused filibuster, the kickbacks, the cynical grandstanding) but also in the American public (the hysteria, the ignorance, the incivility). With the 2010 midterm elections coming up in November, I think it's safe to say the Democratic congress doesn't have much of an appetite to dive right into the other thorny issues they promised to tackle, including the climate change legislation. Obama has taken a beating in this healthcare debate, and there's perhaps some wisdom in questioning why he chose to pursue this issue before tackling climate change or financial regulation. Over the coming weeks it will be interesting to see how eager the white house and the congress are to move on to another fight. I could be wrong, but I have a feeling there won't be much appetite for that within congress.

Incidentally, I have no idea how this health coverage requirement is going to affect Americans who live abroad in countries with national healthcare systems. We all have to file an income tax return every year, even if we don't owe anything. Apparently anyone without insurance will pay a penalty on their taxes. Does the NHS count as "insurance" for that purpose? Hopefully they haven't forgotten about us Benedict Arnolds when crafting this legislation!

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