I've read the house health care plan. Similar to any law, some of it is a bit like reading Leviticus, so I won't say that I understand it all. Based on what I do understand, from the published plan and the president's health care speech, below are the planks of "ObamaCare" if it were enacted as the president proposes. I've used blue italics for what I consider facts to try to separate facts from my opinion and interpretation
1. Everyone will have to buy insurance except for those on Medicare/Medicaid.
2. Those who can't afford insurance policies will be partially subsidized by a voucher funded by tax dollars from a number of proposed sources. Vouchers are used to help pay for insurance from any company at their standard published rates. Everyone on the voucher program will have to contribute something (no free health care except Medicare/Medicaid). The government will set standards as to what is the minimum acceptable plan so that tax dollars are not spent for companies that do not provide adequate coverage.
3. Insurance companies will have to insure anyone who comes up with the money to buy their standard policies at their published rates. Thus, no pre-existing condition exclusions and no dropping people when the become sick. Also no raising rates on individuals or small businesses just because the person or an employee becomes seriously ill. This means that insurance contracts will be multi-year commitments that cannot be dropped or modified to adjust the insurance company's bottom line. If insurance companies cannot drop anyone and if everyone has to buy insurance, then the unfairness of covering pre-existing conditions should disappear after an adjustment period.
4. Small businesses and individuals can create "Cooperatives" to negotiate group rates with insurance companies in the same way that big corporations do. In effect these are bargaining unions that multiply clout in the same way that a worker's union does.
5. A public plan will be set up to run similar to the U.S. Postal Service. The plan will not be subsidized (note that USPS is not subsidized - there is a lot of misinformation on this point). The public plan will set its rates based on what it takes to pay claims and cover administrative costs. The only subsidies will be the same that the private insurance companies are getting - through the subsidized vouchers that lower-income individuals can use to help pay for insurance directly from a private company, through a cooperative, or from the public plan. Note that "lower income" implies someone making more than the poor who are covered by medicaid, but less than someone who can afford to spend $5K to $10K per year on a private policy. It seems to me that if the market works correctly, at the start the public plan will be cheaper than the private plans, which will force insurers to become more efficient and cut their administrative expenses. Eventually, the public plan will be squeezed down because government programs are generally not as efficient as private companies in a competitive environment. However, the public plan may still be able to fight back (much as the US Postal Service challenged by FedEx and UPS) to maintain some market share. The dynamic competition between public and private should be a boon to health insurance consumers.
6. A federal health insurance commissioner would be established to oversee regulations. As I understand it the key issues will be
a) Setting the percentage of premiums that insurance companies must pay out in benefits (controlling the Medical Loss Ratio).
b) Setting the minimum policy coverage that will be necessary for a company to be eligible for the federal insurance voucher program.
c) Setting policies for creation of the Cooperatives
d) Overseeing development of the public plan bureaucracy.
7. There are additional efforts proposed to reform Medicare and cut waste, fraud and abuse. However I have not spent enough time looking at these to say that I understand them. I welcome comments from anyone with information on these.
Back to commentary: I'm trying as best I can to not spin things, but since I support the plan I probably have put things in their best light rather than worst. I would really like to hear from people who have rational arguments as to why some of these are bad policies or where I have any facts wrong. Let's have a reasoned and logical discussion. I'm not going to change your ideology and you're not going to change mine. But we can discuss the implications of the above policies on how the health insurance system will work or not work. I don't believe in one party rule. Democratic republics work best when people of reasoned views can discuss and explain their viewpoints and reach a compromise.
As an example of what we might discuss, one of my major concerns is the idea of the health commissioner controlling the Medical Loss Ratio. On the one hand, it is very satisfying to my developing progressive ideology to tell the insurance companies that they must revert to the old system of making money by investing premiums so that they are gaining the time-value of money between collection and payout (the historic approach to all insurance). On the other hand, my well-entrenched liberal ideology (which is different than progressive ideology) says that a direct setting of the Medical Loss Ratio seems a bit like the wage and price controls implemented by Nixon, which were a disaster (note that wage and price controls are, strictly speaking, a form of either fascist or communist policy - two very different ideologies, one from the left the other from the right, the wind up in the same totalitarian place).
Right now, my liberal side is winning and I think that the direct intervention of the government through competition in the public plan would be more effective than prescriptive control. That is, the public plan will operate with a very high Medical Loss Ratio (Medicare is 96%, compared to 84% for Wellpoint and 82% for Aetna). If the competition from the public plan is effective the private companies will be forced to become more efficient, which will naturally drive up their Medical Loss Ratio. I like this idea rather than mandating a specific Medical Loss Ratio. In the long run, whenever we place regulatory mandates on an industry we find that lobbying power will eventually relax the mandates and make them irrelevant. However, if we lose the public plan I don't see how we get sufficient competition to ensure a dynamic market, so mandating the Medical Loss Ratio may be a necessary evil. UPDATE: Dec 19, 2009. It looks like the public plan is not going to be part of the senate bill, so I've given the MLR more thought. My conclusions aren't pretty: http://booleancontinuum.blogspot.com/2009/12/perverse-incentives.html
If you're interested in this discussion, you should be able to state whether you think the present system is working or broken. If you think that its broken and the ObamaCare policies won't work, then what are your policy prescriptions? Is the status quo sustainable?
My views aren't set in stone, but I can't learn and adjust unless and until someone more conservative than myself can challenge me and provide some clear and reasoned ideas. As yet, I have not heard a single conservative politician, think tank or individual provide any reasoned analysis or discussion of the above points.