I discuss the much anticipated health care reform bill and its effects on the health care industry, on health insurance and on all of us hapless consumers.
Here’s what we were all clamoring for, but is it what you expected or what you wanted it to be? Personally, I was eager to see some reforms done in the health care area. We all want lower health care costs for everybody but what can we really expect from the new health care reform bill?
My main beef is about all the medical waste we’re seeing at hospitals when they’d charge you ridiculous amounts for small items such as $140 tylenol pills and $1,000 tooth brushes, which would consistently slip through the cracks whether they’re deemed errors or not. These get paid for by our insurance companies and well, that’s where a lot of the bloat comes from.
I was expecting health care reform in terms of better checks and balances covering the health insurance industry and the medical industry… instead we get this: consumers get slammed. Or let me rephrase it — certain consumers get slammed and many others benefit. I’m wondering why consumers have to pay for these discrepancies in the first place. Can’t we just fix what’s going on in the insurance world or get some transparency in the medical community? But wait, that’s wishful thinking — regular consumers don’t necessarily have lobbyists and deep pockets on their side.
Health Care Reform Bill: How It Affects You
At any rate, here’s a look at the Health Reform Bill that became law:
So as the video shows, there are those who benefit from the bill and those who don’t (or are these euphemistic terms for “winners” and “losers”?). And here are some personal thoughts about this from my end:
The health care reform bill has highly anticipated benefits.
Hey this is great. If you are unemployed and have no way to get insurance, well this bill will cover you. And if you’ve got preexisting conditions, then that’s awesome — you’ll now be in better hands. Sooner or later, we’ll all find ourselves with a preexisting condition anyway, so shouldn’t this be a good thing? There’s a wait though, as this part of the bill will be made effective in 2014.
There are also quite a number of criticisms.
1. More Taxes
If you’re well off, well there are more taxes coming your way by 2013. They had to hit someone for these taxes, right? Anyway, taxes are going up — namely, 4% of income on investments including the sale of your home (unearned income). There’s also a planned personal income tax increase of 1% (earned income) if you make $350,000 or higher. Behold another example of legal wealth transfer.
2. Less Innovation = Shorter Life Spans?
With the government becoming more involved in our health care, could there be effects on the progress on medical innovation? The thing is, when the government steps into the picture, they’re generally recognized as a demotivating influence. Could we end up paying for a shorter life expectancy due to any kind of slowdown in medical innovation, especially if researchers lose the financial motivation to innovate?
3. The Case for “Adverse Selection”
And finally, for those who are healthy and who carry their own health insurance: could this health care bill give you a huge disincentive to buy health insurance? Some reasons why that could be the case given the passage of this bill:
(a) You can think about deferring the purchase of an insurance policy if you are generally healthy. Why? Because you can always get a policy anytime even if you develop a preexisting condition (but don’t jump the gun because this comes into effect in 2014). Previously, people felt the need to carry insurance to ensure that they were covered if they ever do develop a chronic sickness. Without the bill, anyone with a preexisting condition could not qualify for insurance coverage.
(b) While there’s a penalty for not carrying insurance, it’s really not that large — it’s around $2,000 (again, this will be effective in 2014).
If you aren’t an employee with health benefits but are someone who is fairly healthy and who doesn’t need to visit the doctor that often, then you may get away with saving money by just skipping out on health insurance altogether. If you’re in this boat and you’re typically self-insured, you may think that the best strategy for saving on insurance in the long run is to finally go without coverage. And if the government ever catches you — since insurance will eventually be mandatory by law — then simply pay the $2,000 penalty, which you can expect to be cheaper than the premiums you’d pay over a long period of time. This way, you can wait to get coverage until you absolutely need it.
But while this situation may be financially beneficial for the healthy individual consumer, it’s really bad for society as a whole. Here’s why: this scenario is called “Adverse Selection”, which means that only people who are the most expensive to insure will be compelled to get insurance. Unfortunately, the health care reform bill does not support a well designed insurance market due to the effects of Adverse Selection. A good plan would motivate anyone to get insurance (whether they’re healthy or not) such that the costs of insurance are spread across the whole population.
The consequence of Adverse Selection is that the cost of insurance will increase because the available pool of insured customers will shrink. What we want is an affordable insurance system that is made available to everyone, and for the costs of insurance to be spread around more equitably. This can be achieved by making the government penalty of NOT carrying insurance much higher than what it is now.
So what do you think of these new developments?
For other reads on the subject of health care and medical issues, try:
- Don’t Let Medical Bills Turn Into Medical Debts!
- Get Health Insurance Claims Paid
- Dealing With Health Insurance: The Financial Task I Dread The Most
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