Health Reform Still Makes Sense

How health reform de-funding will cost you

By John F. Wasik, Author The Cul-de-Sac Syndrome

Although corporate and conservative interests have done a stellar job of demonizing “Obama Care,” it makes no economic sense whatsoever to de-fund this landmark legislation.

In a major concession triggered by pending state lawsuits challenging the health reform law, President Obama recently signaled he was flexible on the law’s insurance mandate. Yet that would require Congress to shift the major building blocks of the plan back to the states, many of which are ill-prepared to design their own plans.

We’re back to a cagey political poker game. Obama has called to see the cards of his opponents. They either come up with a winning hand or fold. Being martyrs to the cause proves nothing, though.

Tea-partying House GOP members who want to kill health reform, and (in some cases) refused to sign up for federal health benefits, are paying the price and experiencing first-hand the cruelty of individual insurance markets.

My own Congressman (Joe Walsh, R-Illinois), eschewed federal coverage at the expense of endangering his own wife, who has a pre-existing condition. Although I didn’t vote for this fellow, I can tell him from my own experience that he’s going to pay sky-high premiums, not get any real discounts from providers with his meager health-savings account and may not even get private coverage for his spouse.

Misguided principles are trumping sound politics. Health reform is one of the best consumer laws in a generation. Not only would the health reform law over time create employment, it’s good for small and large businesses alike.

According to a Center for American Progress study, the health law would create up to 4 million jobs. That’s in addition to saving lives by expanding health access for all, eliminating the inhuman denial of coverage for those with pre-existing conditions and reducing costs for businesses.

Starving the law of funding — which is what the House GOP said it plans to do — will immediately raise taxes for small businesses. Currently they receive a 25- to 35-percent tax credit for paying for health insurance for employees. It will also trigger a cascade of roadblocks that will prevent some 30 million Americans from saving on insurance through widely-available exchanges in three years.

One of the keystones to health reform has been an attempt to move insurance marketing toward free-market principles. Today’s system is upside down. Instead of creating one large pool to include both the sickest and healthiest Americans, those with pre-existing or chronic conditions are “underwritten” out of most private non-group coverage.

Individual buyers (under age 65) can’t shop for themselves across state lines for the best rates or get into any federal program. They are restricted to their own states, which are typically controlled by a handful of large insurers who can keep competition low and rates high. Instead of an ability to pick the best insurer, it’s the companies who select their clients.

In theory, the insurance exchanges that will go into effect in 2014 will end the apartheid of the sick and chronically ill. Should Congress do anything constructive with health reform enhancement, it should put exchanges and consumer protections on the books next year or create an option to buy-in to Medicare.

Ironically, the health insurance industry, which lobbied vigorously against reform, has the most to gain from the law going forward. Mandatory purchase requirements will deliver them some 32 million new customers.

Yet by pouring millions into GOP coffers and indirectly encouraging Republican governors and attorneys general to battle the individual mandate in federal courts, they should be chary of what they initially desired.

I asked Wendell Potter, a former health insurance company executive with a conscience, what he thought of the industry’s perverse death wish. Potter, who authored “Deadly Spin,” a brilliant insight into corporate public relations, told me “they [the industry] need the revenue stream” from the potential new customers. “Their business practices were not sustainable for the long haul. Without the individual mandate, their costs will explode.”

Granted, the health reform law is loaded with flaws. It won’t ensure universal coverage for all Americans and may not reduce costs all that much. We will need a single-payer system to better address many of these shortcomings.
As an economic booster, though, the health act is still potent and should be enhanced. The Congressional Budget Office predicts it will shave $124 billion from the federal deficit by 2019 and $1 trillion in the subsequent decade.

The best kind of economic growth comes from a confident populace that’s willing to take risks to succeed. They can’t do anything if they are still at risk of bankruptcy from simply getting sick.