Wednesday, January 6, 2010

Health Insurance Reform: Insanity or Relief?

By Michael M. McGreer 01-06-2010

Albert Einstein defined insanity as doing the same thing over and over again and expecting a different result. That fairly well defines congressional activities.

For decades those elected to the U.S. Congress have done the same thing with health issues: argued. Since the 1900's America has lagged behind European countries in coming to grips with the value of insuring against the costs of sickness. Oddly enough, it was progressive reformers who, in the 1910's, argued for insurance coverage. At that time, physicians and other interest groups argued against insurance. Today, those labeled as progressives, are arguing for insurance reform while conservatives argue for the status quo.

In the 1920's General Motors signed a contract with Metropolitan Life to insure 180,000 workers. Today, ailing GM is looking to scale back generous health benefits.

During the 40's Blue Cross began offering private coverage for hospital care in dozens of states. Insurance professionals argued against providing these services. Today, the less money a person has the more their hospital charges. In addition, profits at 10 of the country’s largest publicly traded health insurance companies rose 428 percent from 2000 to 2007, while consumers paid more for less coverage.

At the start of the 1950's, national health care expenditures were 4.5 percent of the Gross National Product. If nothing is done to control costs, the Congressional Budge Office (CBO) estimates that this percentage will rise to 31 % over the next 25 years. Clearly, even the middle class, especially the elderly, have difficulty affording insurance.

It was President Lyndon Johnson who pushed Medicare and Medicaid into law in the decade of the 60's. Today's conservatives seem to forget that it was President Nixon who presented a plan for national health insurance and progressives seem to forget that it was rejected by liberals and labor unions.

In addition, the status quo that conservatives are so fond of, was modified by President Ronald Reagan when he and his congressional supporters shifted Medicare from payment by diagnosis instead of by treatment. Private plans quickly followed suit and profits for the insurance industry skyrocketed.

By the end of the 90's decade and still today there are 44 million Americans, 16% of the nation, with no health insurance at all. Federal health care reform legislation failed to pass in the 1990's, and health care costs continue to rise. Medicare is viewed by some as unsustainable under the present structure.

Presently, the House and Senate have agreed to subsidize insurance for a family of four making up to roughly $88,000 annually, or 400 percent of the federal poverty level. This provision, among others, is included in the Senate bill which, as scored, would save $132 billion over the next decade.

However, some savings come from cuts in Medicare including $23.9 billion in Medicare cuts added to the $12 billion in cuts that went into effect on Oct. 1.

Some income is expected to come from requiring the uninsured to purchase coverage and imposes penalties if they do not. This provision will fall most heavily on the 60 million Americans that are most undereducated and underpaid. Even with subsidies many Americans will remain uninsured and penalized.

About 15 million lower income individuals would, in theory, be covered by an expansion of Medicaid, the state-federal health program for the poor. However, governors control the percent of people enrolled in Medicaid and in tight economic situations they simply cut. Nevada Governor Jim Gibbons cut Medicaid payments during the H1N1 epidemic to hospitals by 5%. Some physicians specializing in orthopedics, urology and cancer, saw their Medicaid payments reduced by 41%. Gibbons proposed to eliminate Medicaid coverage for low-income pregnant mothers and has reduced personal-care assistance to the elderly and disabled. He capped dental benefits under the state's SCHIP program for lower income children, and eliminated orthodontics and vision coverage.

The Senate version of health reform passed (60-39) on Christmas Eve. The House could approve that version early in 2010 by a simple majority.Einstein was right, insanity is doing the same thing over and over again and expecting a different result.

Michael McGreer writes on public policy. See his blog at:


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