Monday, March 15, 2010

Urban Institute: The cost of failing to enact health reform will be high

The Republicans have constantly assailed the proposals for health reform as a government takeover of healthcare. They harp on the promise that then-Senator Obama promised in his campaign that if you like your health insurance, you can keep it.

The Republicans are wrong in that this is a government takeover of healthcare. The part of the plan involving the insurance exchanges is basically the bipartisan solution in Massachusetts - that then-Governor Mitt Romney signed off on. It is basically what the Republican Senator John Chafee proposed in response to the Clinton health reform proposal.

However, without health reform, if you like the insurance you have, you may be unable to keep it. The Urban Institute has projections of what happens without reform, and things look quite bad. Under their intermediate scenario, where incomes grow and the historical rate of healthcare cost growth slows somewhat, the 55.9% of Americans who are covered through their employer would decline to 50.8% in 2020. An estimated 18.4% of people are now uninsured, but that rate would rise to 21.9% in 2020. Presently, about 5.5% of Americans purchase non-group coverage on the individual market; this number would decline by about 1% in 10 years as such coverage became less affordable.

Most of the decline in employer-based coverage would occur among small and medium-sized firms - basically, people working at employers with less than 1,000 employees. Furthermore, Americans further up the income scale would be affected. Presently 7% of individuals or families over 400% of the poverty level are uninsured. In 2020, the Urban Institute estimates that 13% of them would be - nearly twice the present rate. For a family of 4, 400% of the poverty level means an income of over $80,000 a year.

Medicaid enrollment would pick up some of the slack, increasing from 16.9% of the population to 19.6%. It obviously wouldn't be enough. Furthermore, the Urban Institute assumed that states maintained their present eligibility levels. If health care costs continued to grow, state governments would likely decrease their eligibility levels or freeze enrollment unless the Federal government subsidized them at greater rates.

None of the solutions the Republicans have proposed attack the underlying problem of cost growth. The Republicans boast that their proposed package of reforms would decrease costs. However, the Republican plans would make it cheaper for healthier people to get coverage but harder and more expensive for older and sicker people to get coverage. Again, they do not attack the problem of cost growth, whereas the plans the Democrats have put forward do everything that we know works except start a government body to approve or disapprove treatments or set payment rates, or open a publicly-sponsored insurance plan that pays Medicare rates. If the Republicans don't want a government takeover, they need to get with the current plan, because if they win and the status quo remains, the only thing that will work in 10 years is a real government takeover.

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