Thursday, January 21, 2010

The undead

That was fast. In a post this morning I said:

Yes, I know the current versions of health care reform are dead but they’ll rise from the grave at some point...

and now here’s a post up at Movin’ Meat that quotes various people on the Left as saying health care reform will happen - and not that milquetoast version conjured up by Obama’s call for Democrats and Republicans to “coalesce” around elements both sides can agree on. Nope, these guys are talking about passing the approved Senate bill through the House (probably with a cross-your-heart-and-hope-to-die promise to change the provisions the House doesn’t like with later legislation); breaking up the Senate and House bills and passing pieces through both houses, via reconciliation if necessary; or doing a Senate and House conference to come up with a combined bill and getting it through the Senate by leaning on Olympia Snowe.

So we can argue about whether we think any of that is possible but the more interesting question is: If something that looks substantially like the Senate bill passes, what are the Democrats going to be running on in 2010? Via Megan McArdle, we can look at a handy timeline (load the pdf, don’t bother with the “highlights” on the Web page) of what happens when in the Senate bill and see what effects voters will feel before November 2, 2010.

What happens before the 2010 elections?

1) Prohibition on pre-existing condition exclusion for private insurance on the individual market.

If the bill stops insurance companies from excluding pre-existing conditions but doesn’t stop them from charging more for people with those conditions, this will help only a limited number of people. Most people with pre-existing conditions will now find they can get insurance but it will cost them a fortune they most likely don’t have being as how they’re sick and all. On the other hand, people who currently have health insurance but worry about losing it and not being able to buy new insurance due to a pre-existing condition will feel better - they won’t realize how expensive that new insurance would be.

If the bill stops insurance companies from excluding pre-existing conditions and from charging more for them, everyone who buys health insurance on the individual market will find their premiums increasing. On the other hand, people who are locked into a yearly contract won’t see those premium increases until a year after the bill passes; that is, until after the 2010 elections. On the third hand, my insurance company makes its next year rates available no later than November 1 - just in time for me to see them before I vote.

It’s important to note that the individual mandate does not kick in until 2014. This means that flood of healthy young people who are forced to buy health insurance and will offset the cost of covering those with pre-existing conditions is not going to exist for almost four years. Never mind what this is going to do to insurance premiums; imagine what it’s going to do to insurance companies. Unless there’s something left out of the timeline (always possible) I can’t quite figure out why anyone - individuals or employers - will buy any health insurance between the time this bill passes and 2014. If I believed all that conspiracy nonsense I’d figure this is a darn good way to put insurance companies out of business right quick like.

2) Prohibition on revoking insurance for patients who falsify applications to fraudulently obtain private insurance coverage (however, penalties for fraud against federal health programs are increased).

This is going to drive everyone’s insurance premiums up: the insurance companies will simply have to build in some fudge factor for getting stuck with higher than anticipated costs for people who lie. On the other hand, there will be less incentive to lie since pre-existing conditions won’t be excluded (at least on the individual market). On the third hand, if policies cost more for people with pre-existing conditions, the incentives to lie will be the same as they always were.

3) “Annual Fee” tax on prescription drugs of $2.3 billion, allocated according to market share.

Companies don’t pay fees or taxes; they just pass them along to their customers. Prescription drug prices will go up.

4) New 10% tax on indoor tanning services effective July 1, 2010.

I don’t think this will have either an upside or a downside for the Democrats unless I am underestimating the number of voters who frequent tanning salons. On the other hand, this seems like the kind of thing it would be easy for an opponent to make effective fun of.

5) New restrictions on not-for-profit hospitals.

I don’t know what this is and Google search didn’t turn up anything helpful. It would be nice if the timeline references bill sections because I’m not digging through that furball to find this.

6) Special tax benefit for BCBS organizations that maintain medical loss ratios of at least 85%.

If a Democrat is running in an area that has a large BCBS employer, this is an advantage; in an area that has a large non-BCBS insurance company employer, this is a disadvantage. Otherwise, I don’t see this as either a selling point or a black mark.

7) Medicare: Physician payments decrease 21% effective March 1, 2010.

Doctors are going to hate this. People on Medicare are going to hate this when they can’t find a doctor who’ll see them. In order for Democrats to sell this they’ll have to argue that doctors are gouging the government or that it’s tough but our fiscal situation requires it. The latter is going to be a hard sell for anyone who is a doctor, is on Medicare, or has a relative who is on Medicare. They’re going to want to know why the government can’t balance the budget on the backs of someone other than the elderly.

Those seven policies go into effect immediately. There’s one other policy that goes into effect in 2010, six months after the bill passes:

8) Group and Individual policies issued after this date may not contain lifetime coverage limits, must provide first-dollar coverage for preventive care as defined by the U.S. Preventive Services Task Force, and must cover “children” of primary policyholders up to age 26.

This will raise everyone’s premiums and those additional costs will show up in our 2011 premiums which we almost certainly see prior to the November 2010 elections.

Maybe I’m missing something but I just don’t see much here that is going to make voters who are unhappy about the health reform bill change their minds before the 2010 elections. The one possibility is that the psychological benefit of believing we can always buy health insurance because pre-existing conditions cannot be excluded will be enough to make the bill look like a winner. If premium costs skyrocket, however, I’m not sure voters are stupid enough to find it comforting to know the government has guaranteed they can always buy health insurance - while doing nothing to help them afford it.

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