Now that healthcare reform legislation has passed, we thought it would be helpful to take a quick overview of the pros and cons.
New Health Care Bill – Pros:
1. Everybody can have health insurance if they want it.
2. Insurers will not be able to stop paying for people who are sick, even if they lose their jobs.
3. People who cannot afford health insurance won’t have to pay as much money.
4. People who are already sick will be eligible for healthcare.
5. In the long run it will (hopefully) reduce medical costs significantly. Rising medical costs are the main reason the long-term budget projections are so alarming. Unfortunately, this bill might not do enough. While there will definitely be some savings, it’s not clear that they will be as great as hoped.
6. Health insurers can no longer cap coverage. In other words, they will no longer say that they have spent enough on you and you’re on your own for the next hundred thousand dollars. This should reduce medical bankruptcy.
7. There will be increased competition in the insurance market. This might push the healthcare companies to lower costs and provide better service.
New Health Care Bill – Cons:
1. For the first ten years, it will cost about $100 billion a year. This is about the yearly cost of the Iraq War.
2. The bill might increase the cost of health insurance. This depends on whether the gains from increased efficiencies and increased competition are outweighed by the cost of providing additional benefits.
3. The Individual Mandate. You will have to either buy health insurance if you don’t have it or have a 2% tax increase. This insurance will be subsidized—but there is no guarantee that the subsidy will suffice for your specific situation.
4. There will be a tax increase on very high income people. If you are making more than half a million you will have about a 1% tax increase.
5. Increased government involvement in healthcare. Government already pays for huge amounts of healthcare—so this won’t be anything new.
6. Additional regulation on insurance companies. This might increase costs. It will increase quality.
7. Physicians will have increased access to information about what treatments are most effective for their cost. If two treatments work equally well and one is cheaper, doctors can recommend that one. This was almost universally considered a good thing until a few years ago, but some people have started criticizing it lately.
Here are some more facts about this new Health Care Bill on government extractions:
1. The US government will extract a fee of $2.3 billion annually from the pharmaceutical industry. If you are a pharmaceutical company what you will pay depends on the ratio of the number of brand-name drugs you sell to the total number of brand-name drugs sold in the U.S. So, if you sell 10% of the brand-name drugs in the U.S., what you pay will be 10% multiplied by $2.3 billion, or $230,000,000. (Under reconciliation, it starts at $2.55 billion, jumps to $3 billion in 2012, then to $3.5 billion in 2017 and $4.2 billion in 2018, before settling at $2.8 billion in 2019.
2. The US government will extract a fee of $2 billion annually from medical device makers. If you are a medical device maker what you will pay depends on your share of medical device sales in the U.S. So, if you sell 10% of the medical devices in the U.S., what you pay will be 10% multiplied by $2 billion, or $200,000,000.
3. The US government will extract a fee of $6.7 billion annually from insurance companies. If you are an insurer, what you will pay depends on your share of net premiums plus 200% of your administrative costs. So, if your net premiums and administrative costs are equal to 10% of the total, you will pay 10% of $6.7 billion, or $670,000,000. In the reconciliation bill, the fee will start at $8 billion in 2014, $11.3 billion in 2015, $1.9 billion in 2017, and $14.3 billion in 2018.
Many of the provisions of the reform don't go into effect until 2014, so depending on what happens in the November elections, it's possible it could be amended or changed. It is unlikely this will happen but it is possible.
