Current Events

2014 State of the Union: A Healthcare Review

As is an annual tradition, below is the Healthcare Economist’s blow-by-blow commentary of all healthcare-related statements made by the President in his State of the Union address.

Michelle’s Let’s Move partnership with schools, businesses, and local leaders has helped bring down childhood obesity rates for the first time in thirty years – an achievement that will improve lives and reduce health care costs for decades to come.  
This is great news. Of course, the first lady did not accomplish this feat single-handedly, but it’s always good politics to say nice things about your wife.

One last point on financial security. For decades, few things exposed hard-working families to economic hardship more than a broken health care system. And in case you haven’t heard, we’re in the process of fixing that.

A pre-existing condition used to mean that someone like Amanda Shelley, a physician assistant and single mom from Arizona, couldn’t get health insurance. But on January 1st, she got covered. On January 3rd, she felt a sharp pain. On January 6th, she had emergency surgery. Just one week earlier, Amanda said, that surgery would’ve meant bankruptcy.

That’s what health insurance reform is all about – the peace of mind that if misfortune strikes, you don’t have to lose everything.

This is the key contribution of Obamacare, decreasing uninsurance.  The Affordable Care Act did so in a way that is likely unaffordable in the long-run without significant changes.  At the individual level, however, having health insurance greatly decreases downside financial from serious health problems.

Already, because of the Affordable Care Act, more than three million Americans under age 26 have gained coverage under their parents’ plans.

The ACA allowed children under 26 to be covered by their parents plan.  Prior to the ACA, only children under 18 or those enrolled in college could be covered on family plan.

More than nine million Americans have signed up for private health insurance or Medicaid coverage.

Again, coverage expansion is the key to the ACA.  However, who will pay for the Medicaid expansion?  Initially the federal government will foot the bill, but eventually most of this burden will shift to states.  Will they be willing to continue to foot the bill for the increasing number of Medicaid beneficiaries?

And here’s another number: zero.  Because of this law, no American can ever again be dropped or denied coverage for a preexisting condition like asthma, back pain, or cancer. No woman can ever be charged more just because she’s a woman.  And we did all this while adding years to Medicare’s finances, keeping Medicare premiums flat, and lowering prescription costs for millions of seniors.

Not only does the ACA prevent denying coverage due to pre-existing conditions, but also health insurers cannot alter their rates based on health condition (only based on wide age bands and smoking status). If you are old or sick, this is certainly a good thing.  However, it does distort pricing.  Health insurers now have an incentive to target customers who are young and healthy.  Older individuals are money losers.  

Alternative proposals–such as the “Best of Both Worlds“–would allow the market to work freely and insurers can charge whatever price they would like. In this plan, insurers do not have an incentive to target healthy individuals.  To counteract the result that health insurance would be prohibitively expensive for the old and sick, the government would subsidize health insurance based on individuals age and health status.

And if you want to know the real impact this law is having, just talk to Governor Steve Beshear of Kentucky, who’s here tonight.  Kentucky’s not the most liberal part of the country, but he’s like a man possessed when it comes to covering his commonwealth’s families.  “They are our friends and neighbors,” he said.  “They are people we shop and go to church with…farmers out on the tractors…grocery clerks…they are people who go to work every morning praying they don’t get sick.  No one deserves to live that way.” 

Steve’s right.  That’s why, tonight, I ask every American who knows someone without health insurance to help them get covered by March 31st.  Moms, get on your kids to sign up.  Kids, call your mom and walk her through the application.  It will give her some peace of mind – plus, she’ll appreciate hearing from you. 

I consider this part simply advertising for

As this time of war draws to a close, a new generation of heroes returns to civilian life.  We’ll keep slashing that backlog so our veterans receive the benefits they’ve earned, and our wounded warriors receive the health care – including the mental health care – that they need.  

Military servicemen have an implicit contract: they risk their lives in combat in exchange for security and health care when they return to civilian life.  I agree that providing health care for veterans is an important duty.  The cost to improve the healthcare veterans receive will not be inexpensive.  Nevertheless, politicians should weight these implicit promises next time the government considers going to war with another nation or rebel group.

I first met Cory Remsburg, a proud Army Ranger, at Omaha Beach on the 65th anniversary of D-Day…A few months later, on his tenth deployment, Cory was nearly killed by a massive roadside bomb in Afghanistan. His comrades found him in a canal, face down, underwater, shrapnel in his brain.

For months, he lay in a coma.  The next time I met him, in the hospital, he couldn’t speak; he could barely move.  Over the years, he’s endured dozens of surgeries and procedures, and hours of grueling rehab every day.

Even now, Cory is still blind in one eye.  He still struggles on his left side.  But slowly, steadily, with the support of caregivers like his dad Craig, and the community around him, Cory has grown stronger. Day by day, he’s learned to speak again and stand again and walk again – and he’s working toward the day when he can serve his country again.

“My recovery has not been easy,” he says. “Nothing in life that’s worth anything is easy.”

An anecdote that illustrates the point above.

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