Michael Tanner, a senior fellow of the Cato Institute, presented “Health Care Reform: What Just Happened” last Tuesday.
Tanner began by explaining that the media has exaggerated the flaws of the American healthcare system. According to Tanner, it is the best system in terms of innovation, quality, and choice. The United States attracts brilliant minds and produces the most research breakthroughs, which translate into better quality care. Also, unlike other countries in which citizens are assigned doctors based on their residential district, Americans are allowed to choose their doctors.
The majority of critics view cost as the biggest problem facing the US healthcare system. Undoubtedly, the US has the most expensive healthcare system in the world; about double the amount compared to other industrialized nations. However, Tanner argues that Americans tend to spend more on everything—from running shoes to healthcare.
The healthcare bill passed in March focuses on providing insurance to everyone. However, Tanner explains that being insured is not the same as seeing a doctor. For instance, Canada provides universal healthcare, but the supply and demand do not match up and hundreds of thousands of people in Canada are currently on a waiting list to see a doctor.
Tanner explained that the numbers cited for the uninsured can be explained by the ebb and flow of the job market. Because insurance is tied to employment, as people cycle in and out of the job market they also gain and lose health coverage.
The bill, which consists of over 2500 pages and costs $940 billion for the next ten years, averages $1.2 million per word. It charters dozens of new agencies and institutes to regulate health insurance.
Tanner explained the main points of the bill as follows:
Everyone must have insurance (by 2014) or else pay a fine. The insurance plan also must cover a range of benefits including pharmaceutical drugs, drug rehabilitation, mental health, dental and vision, but not abortion. Failure to have full coverage will also result in a fine.
People who have insurance now are grandfathered in, but cannot modify their plan at all or else they must meet the new requirements.
Employers must provide insurance to their employees. According to Tanner, this law
“flunks economics 101” because businesses only consider the total cost of hiring employees and will offset those additional costs by either cutting other benefits or laying off workers.
The bill locks American citizens even more into the employer based healthcare system. Tanner argues, “Our auto insurance doesn’t come from our employers. Our life insurance doesn’t come from our employers. Why should our health insurance be decided by our employers?” On the pro-side, employees receive tax benefits in addition to health insurance.
Insurance companies will no longer be able to drop coverage for pre-existing conditions. Additionally, insurance companies must charge everyone the same insurance premium, except by basis of geography, age, and smoker/nonsmoker. However, insurance companies can only range their premiums by three times, which is good news for the older population, but this law will result in very high premiums for the young and healthy, predicted to be up to a 300 percent increase.
The bill will be paid for with at least ten new types of taxes, including a tanning tax effective immediately, but the price estimate of $940 billion is very misleading. The majority of spending for the bill does not actually start until 2014, which misrepresents the ten-year projection. Tanner extrapolates the cost for ten years of actual operation of the reforms to be $2 trillion.
With these new regulations and requirements, the United States government has essentially nationalized healthcare. However, several states and interest groups are currently filing lawsuits against the bill. According to Tanner, how the costs and benefits of this controversial bill will eventually balance out is yet to be determined.