Health Care Reform for Hard-Working Americans

The people of Massachusetts have spoken—will the U.S. Congress listen?

President Obama’s push for comprehensive health reform increases health insurance coverage principally through expanding federally and state funded Medicaid programs. In fact, the two bills in conference committee use a Medicaid expansion to reduce three-fifths (House bill) to four-fifths (Senate bill) of the present uninsured population. Vernon Smith, a principal at Health Management Associates in Lansing Michigan, a former Medicaid Director, notes the recent stimulus package appropriated 87 billion dollars for Medicaid programs in the 50 states over a 2 year and 3 month period of time ranging from October 2008 through December 2010.

After stimulus monies vanish, the House passed health care bill has the federal government paying for costs associated with expanding health insurance coverage to the uninsured for fiscal years 2013 and 2014 but only 91 percent of the costs thereafter. The Senate passed bill pays for new costs of care for expanding coverage to the uninsured from 2014 through 2016 but only 81 to 95 percent of the benefit costs in subsequent years. The levels depend on the state Medicaid matching rate which was highlighted in the infamous cornhusker exemption and Louisiana purchase in recent Senate negotiations.

More Medicaid enrollees means expanded administrative costs for states.

Expansion of Medicaid services to the uninsured is projected to raise state-based administrative costs by $9.6 billion for Fiscal Years 2014 through 2019 in the Senate bill and $14 billion between fiscal years 2013 through 2019 in the House passed bill.

While a short-term political strategy could be to offer extra transfer payments to quell political opposition, a key question is who pays for these new costs after enactment of the law. Governors and state legislators are genuinely opposed to the bills in conference committee because each bill imposes new costs for state governments and taxpayers at the state level. In Indiana, with current budget shortfalls and a weak economy, one thing Hoosiers do not need is more unfunded federal mandates.

Healthcare reform would be far more effective and affordable if we implement simple insurance reforms that ban insurance companies from dropping individuals with pre existing health conditions and guaranteeing that an individual’s health insurance will not be taken away by disease or sickness in the future. Yes, there are individuals who lose jobs and get sick and employer based care is neither affordable nor available in these situations. Government based coverage should be available in these situations. This will likely require an individual mandate and penalties for those who chose not to pay for health insurance. In line with car insurance, the key issue will be affordability. The insurance reforms are not worth much if the health care policy is unaffordable for those with pre-existing illnesses. Presently, the Senate bill provides no way to assure that the policies will be affordable when these new insurance reforms are implemented. These insurance reforms, combined with subsidies to small businesses enabling small businesses to provide insurance to employees, would solve much of the health care “crisis.”

We need market-based health care reform and true cost containment. The Massachusetts Senatorial election helps us understand more deeply the words of Sam Rayburn, the former speaker of the U.S. House of Representatives, who was known to say, “When I feel the heat, I see the light.” Contact your U.S. Senator and U.S. Congressman and help them see the light.