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Stones & Bones / health care / volume 12 number 4, April 2010 DOSE OF REALITY On March 23, 2010, President Obama signed into law H.R. 3590 (The Patient Protection and Affordable Care Act, and sometimes referred to as Obamacare). Over 900 pages long, the bill covers a lot ground, and so, at this early date, few Americans actually know what is in the bill. Despite lacking that knowledge, most already have opinions, pro or con. Roughly half of Americans favor the bill and the other half are ag’in it, some for reasons related to what they think the bill contains, and others for reasons having nothing at all to do with what the bill says. Some expressing criticisms of the new law do so because they are disappointed in its failure to transform the nation’s health care into something rational (i.e., single-payer universal health care.) Others, the Tea Party types like Sarah Palin and the Say-No-To-Everything Republicans like Lisa Murkowski, are critical because they fear that passage of the law implies that President Obama and the Democrats might have done something good for the American public. That really smarts. As far as these people have been concerned this past year, the objective has to discredit the current administration by any means possible, ethical or not. Anyone aware of the control that the health insurance and pharmaceutical industries exert over Congress should not be surprised that the new law does good things for these industries, and very little that may harm their profitability right away. The surprise (for me at least) is that the new law actually does do some good for the public—and in ways that might and should eventually lead to the demise of the for-profit health insurance industry and the continuing obscene profits of the pharmaceutical industry. Had the new law included a public insurance option, I suspect that would have diffused much of the current criticism from the left. Nobody likes to be told that they have to buy insurance from a for-profit insurance company. So if the public option existed, at least people could buy insurance from that instead—in essence self-insuring and thereby cutting out the profiteering middleman. Fortunately, the new law allows for self-insuring, and even encourages it by allocating $6 billion to help set up health care cooperatives. That money will go to loans and grants to help establish the creation of nonprofit member-run insurance organizations in all states. Called the Consumer Operated and Oriented Plan (CO-OP), this program will begin handing out money by July 1, 2013. Such health care co-ops are already in existence in the United States. One example is the Group Health Cooperative based in Seattle. In operation since 1947, the co-op has about a half a million members. My examination of its recent financial statements suggests that this is a highly efficient organization operating with a loss ratio near that of Medicare’s 97 percent (meaning that 97 cents of every premium dollar received from its members actually goes to provide health care.) That loss ratio is far better than that of the for-profit health insurance industry, which has an average loss ratio near 82 percent and in some instances less than 50 percent. In that regard, the new law requires insurance companies to have a minimum loss ratio of 85 percent for large group policies and 80 percent for small group and individual policies. Insurers not meeting these requirements must offer rebates to beneficiaries. On the other hand, those insurers who perform well can be eligible for bonuses that will make the new rules less painful for them. A likely consequence of the new floors on loss ratio and other provisions of the new law is that policies available to individuals and small business groups are likely to be fewer in future. That in turn may help convince Americans that they should join the nonprofit health care co-ops. They obviously can save money by so doing. Saving money will be a good thing because there is not much in the Patient Protection and Affordable Care Act that will cut the cost of health care. But there is some. One positive step toward reducing cost and also improving the efficiency of Medicare is a reduction in Medicare Advantage payment rates. Medicare Advantage (Medicare Part C) is an overly costly program that President Obama had rightfully hoped to get rid of altogether. In the long run, Medicare beneficiaries get better health care and lower cost by enrolling in Medicare A and B rather than the Medicare C managed care programs. Most Americans have figured that out already and have fled Medicare C. President Obama and other Democrats probably made a mistake in not going for single-payer health care from the start. The irrational opposition could not have been any worse than what we are hearing in the right-wing rants against the mediocre to minor reforms going into effect. Hard to say, but I predict that we will see a backing off by the Republicans critical of the Patient Protection and Affordable Care Act as Americans start to comprehend that the new law has positive benefits for them. State governors like our own Governor Parnell who talk about trying to block the new law’s health reforms in their states likely will back off, too. They better if they want to get re-elected. Neil Davis is a retired geophysicist and author of several fiction and nonfiction books. His most recent book is Mired in the Health Care Morass. More on health care issues can be found at his blog, http://healthcaremorass.blogspot.com. Neil can be contacted at neildavs@mosquitonet.com. | ||
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