Health Care Reform: Now What?

Posted by Bill Pierce

In the end, I became an unenthusiastic supporter of the health care reform bill.  I did it not because it was good policy; it is a mixed bag at best.  No, I became a supporter because after 100 or 20 years, whatever time-frame you measured the health care debate by, the country had to get over the political hump.  Now that we are past the passage of a reform bill we can get down to the hard work of fixing our health care system, because despite what both sides claim, no one really knows what impact the legislation will have on our health care system or economy.  However, there are a few things we can make some very educated guesses about.

I’m willing to put a wager down that it will not lower costs, neither the government’s nor individuals’.  Despite what the CBO said in its analysis, in the real world, once the program gets up and running, we’ll find we have much work to do.  There are a host of reasons why we won’t lower costs but the bottom line is that most of the revenue raised goes not to expanding coverage but to dedicated purposes.  Therefore to pay for the expansion we may end up having to borrow hundreds of billions in the future.

• Most of the Medicare reductions go to the Medicare program (the biggest savings) and these cuts will also cause Medicare spending to go up in the end because the near collapse of Medicare Advantage will lead seniors back to traditional Medicare and Medicare supplement plans, which are more expensive compared to Medicare Advantage;
• The increased Medicare tax to goes to Medicare;
• The CLASS Act (a limited long-term care insurance program that the CBO said would save money in the first 10 years, but in the second 10 years the CBO said would go off a cliff and become a huge drain and government obligation) premiums are dedicated to the CLASS Act trust fund;
• And the Cadillac tax is so weak it might as well be non-existent.

While much is unknown about the actual impact and the risks are great, there is no doubt that this is a real accomplishment for the President.  However, like the actual costs of this bill it is unclear if this accomplishment will translate into political good will. 

What all this adds up to is something that few want to hear after more than a year of fierce debate, but here it is: over the next 5 years we’re going to have to work hard getting it right.  If we don’t, this will make the Medicare and Social Security solvency issues look like small potatoes.