Instead of doing health care reform big, if elected, Mr. Obama will have to settle for doing it cheaper. But that fiscal austerity will also be used to justify more controls on health care delivery and access to drugs and devices. Ultimately, patients will face fewer medical options.
Mr. Obama will start by growing existing government programs, expanding Medicaid eligibility and enlarging the State Children's Health Insurance Program (SCHIP), which provides coverage to low- and middle-income children. Mr. Obama said he'd also create a federally subsidized reinsurance program to cover "catastrophic health" expenses in employer plans.
Next, the would-be president would move on to the centerpiece of Obamacare, the creation of a "national exchange" offering a selection of insurance options that meet new federal "standards." The candidate has promised to make a Medicare-like public program one of the "national" options.
But the 10-year cost of Obama's plan is pegged at $1.17 trillion, and that's according to one of the lower estimates (from The Lewin Group.) Mr. Obama's under-65 Medicare option is a big part of those costs, and the piece of his plan most likely to invite intense industry opposition. Given these factors, and mounting government debt, don't expect him to follow through on it.
Instead, Mr. Obama will use his "pay or play" tax on employers that don't offer health insurance to partially offset peoples' cost of purchasing coverage from a menu of closely-regulated private insurance plans. The tax would be levied on some portion of an employer's payroll, ultimately translating into lower wages from employers who would pass on these costs to workers. Obama hasn't specified the regulations he'd apply, but he supports "guaranteed issue," which compels insurers to accept all comers, and says he'd require plans to offer benefits similar to those that federal employees receive.
The exchange would be open to individuals, the self-employed and small employers. Larger employers, and new businesses, would weigh the costs of continuing to provide employee-sponsored health care or funneling employees into the "exchange" and paying the new taxes. Mr. Obama hasn't said what the tax rate would be. Chances are it would initially be priced in a way to make it a wash for employers presently providing health care. Many would continue providing their own coverage for the time being. Democrats won't want a politically ugly exodus of people moving from employer-sponsored coverage and into the public plan. But over the long run, there will be a steady migration into the tax-subsidized national exchange.
What does this mean for patients, providers and medical product developers? Some healthy people who don't qualify for Obama's subsidies could face higher premiums once insurers are required to sell policies to all comers. Also, wider access to government-sponsored health insurance is likely to come at the price of more federal restrictions--imposed in the name of fiscal austerity--on medical treatments and patients' access to new medical products. The national exchange empowers the feds with greater leverage over private health care.
Sen. Barack Obama has proposed to save families up to $2,500 on their health care premiums through a series of measures he says will cut health care costs. It comes to almost $300 billion annually based on census data on the number of American households. But there's little reason to believe the candidate's proposals for the adoption of electronic medical records or his gauzy ideas on improved "efficiency" will approach his whopping figure.
Instead, Obamacare is likely to control spending by "managing" it, and in some cases rationing drugs, procedures and medical devices. To affect these goals, the candidate proposes a new federal agency charged with developing "research" to empower government payers like Medicare with making more "efficient" and eventually "cost-effective" decisions about the medical products they purchase and the health care procedures they pay for.
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