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TEMPE, Ariz. — Many Americans are asking how they will really be affected by the new health insurance legislation. How will coverage change, and how much will it cost? Two nationally recognized health care experts are weighing in with a breakdown of the pros and cons.
“It’s difficult to predict the specific out-of-pocket costs for the average person who already has employer-provided health coverage,” says Dr. Marjorie Baldwin of the W. P. Carey School of Business at Arizona State University. “However, we’ll definitely pay more for health care, either in taxes or outright for the services because we have to subsidize the health care of more people. It will also cost way more than (the $938 billion) anticipated.”
Baldwin is a renowned health economist who participated with other health care experts in conference calls held by the official White House Health Reform Task Force over the summer. She has written dozens of health care articles.
“I think the individual mandate contained in this legislation, requiring everyone to have insurance, is needed so the costs of emergency care for uninsured people aren’t passed on to all of us,” says Baldwin. “However, the penalties for not purchasing insurance in the legislation are not high enough to motivate people to get coverage. The monetary penalties don’t even come close to what the insurance itself would cost.”
The legislation was designed to expand health insurance coverage to all Americans, and it will include the expansion of Medicaid to cover many more low-income citizens than it previously did. The act will also place limits on how much insurers can spend on administrative costs and profits.
W. P. Carey School of Business Professor Eugene Schneller believes this health care reform measure is long overdue. He is director of the Health Sector Supply Chain Research Consortium, a group of health care organizations researching how to improve the performance of hospitals and streamline health care costs. But this is about more than money to Schneller because it affects real people and the companies for which they work.
“For people with illnesses and preexisting conditions, who have been bounced around in the current system, this will give them a sense of stability that people in many other countries already have, that they will always have health care,” says Schneller. “For people who currently have insurance, in the short term, this is a neutral thing. Employers aren’t going to knee-jerk and make changes right away. Large companies will probably stick with similar plans, but some small businesses will have to start weighing whether they want to get out of the ‘benefits business’ and just let employees get the new federally subsidized coverage.”
Baldwin and Schneller agree there will be many unintended consequences of the legislation as consumers, insurers and providers respond to its provisions. They believe some form of rationing will happen in order to serve the huge volume of people receiving new coverage.
“Some people will have concerns about rationing of treatment because of more demand on the system,” says Schneller. “Plans might not be as robust in terms of the kinds of treatment available, and also physicians and hospitals, facing lower levels of reimbursement, may make choices based on that. For example, a doctor might order a CT-scan rather than an MRI, which costs more and currently results in more money paid to the health care provider. But was the MRI really necessary to begin with – and which scan is more appropriate?”
Schneller also believes there will be a bigger load on primary care doctors, who may be required to write more referrals for specialists. He believes more community health centers will pop up to provide greater access to care for those who now have no usual, convenient location to use. He believes treatment recommendations will start focusing more on “evidence-based medicine” and utilizing checklists, capitalizing on our ability to assure patients are exposed to what has been proven to work best.
Both Baldwin and Schneller agree the new legislation is not ideal. It doesn’t have bipartisan support and involved a lot of political deal-making. They also worry cutting profits for companies, such as those making medical devices and pharmaceutical drugs, might discourage some innovation in those fields.
Overall, they like that the legislation will help fill gaps in coverage, such as insurance for people between jobs and for younger Americans up to 26 years old and still living at home, who will now be able to get coverage through their parents’ insurance plans. They are pleased about the removal of lifetime maximum benefits, which can currently bankrupt people with catastrophic illnesses when their benefits run out.
Both maintain that some type of health care reform was needed, although Baldwin wishes it had come in increments, rather than such sweeping change. Schneller thinks the overhaul was necessary. He says that is due to the escalation in insurance premiums and what he calls the relative failure of the market-based system to create the incentives needed to assure safety, high quality and appropriate care.
“Following the passage of Medicare and Medicaid in the mid-1960s, there were many unanticipated consequences and necessary adjustments to escalating costs and abuses in the system,” he says. “For people in those programs, things worked out, but the gaps in both access and accountability have become unacceptable. Those of us who are insured and secure have been looking at this legislation in very personal ways, and the thought of change creates fear and trepidation, but you have to look at the overall impact of the bill on improved access and quality and lower costs. We have to recognize that if things were bad when the banking industry recently fell, we were on the same track if health care costs weren’t brought under control in this country.”
W. P. CAREY SCHOOL OF BUSINESS
The W. P. Carey School of Business at Arizona State University is one of the top-ranked and largest business schools in the United States. The school is internationally regarded for its research productivity and its distinguished faculty members, including a Nobel Prize winner. Students come from 75 countries and include more than 60 National Merit Scholars. For more information please visit wpcarey.asu.edu and http://knowledge.wpcarey.asu.edu.