Current Events Health Insurance Public Policy

Health Reform Bill Passes in the House: Who wins and who loses?

A Health Reform Bill passed in the House despite declining support among the American people.  The Kaiser Family Foundation has a nice summary of what is included in the bill.  Today, I will review who wins and who loses from different aspects of the bill.

Individual Mandate.

  •  Winners: High cost individuals.  Premiums (may) decline if younger, healthier individuals are forced to buy insurance and the insurance companies.  This will only decrease premiums, however, if insurance companies can’t charge lower rates to these healthier individuals.
  • Losers: Those who don’t want health insurance or can’t afford it.  All individuals will have to pay a penalty if they do not buy “acceptable health coverage.”  Low-income families are exempt from this requirement. 

Employer funding requirements.

  • Winners: Requiring employers to pay for health insurance simply means that individuals will see lower wages in the long run.  The big winner here is big business.  They already provide health insurance for their employees.  Small company competitors however
  • Losers: Health insurance is more expensive for small companies.  Making them pay for health insurance will drive up their costs and force them to cut wages more than big businesses will.  This may make working at a small firm less attractive, especially for younger employees.  However, the smallest companies are exempt from this requirement and the government will provide subsidies to cover some health insurance cost initially.

Expand Medicaid to all individuals with incomes below 150% of the Federal Poverty line (FPL).  

  • Winners: Lower middle class individuals who are now covered by Medicaid who were not in the past.
  • Losers: Taxpayers. 

Require CHIP enrollees with incomes  above 150% FPL to obtain coverage through the Health Insurance Exchange.

  • This depends on how well the Health Insurance Exchange works.  If it is an efficient system, poor children could get better coverage and the taxpayer bill could decrease.  Or poor children could get worse coverage and the taxpayer bill could increase.  

Subsidies to individuals with incomes below 400% of the FPL to  to obtain coverage through the Health Insurance Exchange.

  • Winners: Middle class families not eligible for Medicaid who now will received subsidized insurance.
  • Losers: Taxpayers not eligible for the subsidy.

Reinsurance program for individuals aged 55-64.

  • Winners: Employees of this age bracket.  They will be more attractive to employ since their health care costs will be capped.
  • Losers: Taxpayers not aged 55-64.

Tax of 5.4% on individuals with modified adjusted gross income exceeding $500,000 ($1m for families).

  • Winners: Individuals getting subsidies, expanded public programs, etc.
  • Losers: The Rich.

The Public Option and the Health Insurance Exchange.

  • Here, the devil is in the details.  If the Public Option provides superior health care at lower cost, everyone wins (except private insurance companies).  If the public option provides superior health care but runs a deficit every year, consumers will win while taxpayers and private insurance companies will lose.  If the public option loses money and provides low quality care, everyone loses except for government employees now hired to run the public option. Similarly, the health insurance exchange may provide more choice to consumers, a standardized benefit package so the consumers can price shop, or it may reduce insurance choice by limiting the products insurers can offer. 

Savings from Medicare and Medicaid

  • Winners: If the savings come from reduced waste, Medicare enrollees will benefit (fewer unnecessary procedures will increase their health) as will the taxpayers. However, if the savings come from cuts to necessary services, Medicare enrollees will be harmed.
  • Losers: Doctors and hospitals. Cuts to Medicare mean that doctors and hospitals will get less money. If the cuts are from waste, only inefficient doctors will see their earnings hurt. If the cuts come from necessary care, then good and bad doctors will see their incomes fall.

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