Gov. Phil Bredesen has been a bold critic from the beginning of what opponents disparagingly dub “Obamacare.” Never mind that it was Congress that wrote the Patient Protection and Affordable Care Act. Or that the bill was watered down in a futile attempt to attract support from the Party of No, which in the case of health care might well be called the Party of No Way, No How. Bredesen’s latest attack on the plan carries his slanted view even further.
In an opinion piece in the Wall Street Journal last Thursday, Bredesen predicted that employers will be irresistibly tempted to drop employer-provided coverage when the law is fully implemented in 2014.
That’s so, he argued, because federal subsidies to help middle class citizens buy their own health insurance through regulated insurance exchanges will make private insurance affordable and practical — and thus enable employers to save a lot of money by dropping their health insurance plans.
Bredesen’s prediction
Families with incomes of just over $80,000, or four times the federal poverty floor, as he noted, will receive subsidies of up to 40 percent for the cost of a quality family plan under the new health care reform act. And employers could save so much money by dropping employee insurance programs, he wrote, that they will be easily able to absorb both the penalty costs of dropping employer-based insurance ($2,000 per employee), and an additional gratuity payment to ensure that their employees incur no increased personal cost by buying insurance through the exchanges.
He roughly calculated, for example, that Tennessee could cut its yearly health insurance costs from $346 million to $200 million by dropping coverage for state employees and pushing them into the alternative federal insurance exchanges. He suggested his calculus would work equally well for local governments and other employers, which typically provide roughly 80 percent of an employee’s health insurance costs.
In short, he suggested that the reform plan, either unintentionally or deliberately, would establish a mix of incentives that would make it acceptable and logical, morally and financially, to shift responsibility for obtaining health insurance from employers to employees.
The problem with that dynamic, he said, would be that health care costs to the federal government would go up proportionally, but with no offsets to restrain the upward spiral of medical costs.
Bredesen’s flawed view
Bredesen’s assessment conveniently overlooks several factors. One is that the plan does envision a number of ways to reduce the rate of medical costs inflation. Another is that many companies may choose to continue providing health care benefits to ensure employee loyalty.
A third factor is that, with nearly half of Tennessee’s employers already failing to provide employee insurance benefits, it is crucial that citizens have a viable alternative option for health insurance at a reasonable cost — that is, a cost comparable to what covered employees pay as a share of their total insurance premiums.
Bredesen’s argument wrongly suggests that the reform plan is flawed because it makes the latter available. In fact, that is one of its many necessary benefits. An additional benefit is that the cost equivalency of a system that does not wholly depend on the nation’s fraying patchwork of employer-provided insurance allows both employers and employees more mobility.
If employees are able to purchase insurance independently, they aren’t obliged in a job with no upward potential to keep their insurance. Employers who choose not to provide a company-subsidized plan after 2014 may be more cost competitive in key manufacturing markets, where their foreign competition already has a cost advantage due to the universal, national insurance plans offered in all other industrialized nations.
Options for covering costs
Still, there are readily apparent ways to limit increased federal costs. If the nation truly wants to keep an employer-based insurance system, one option is to raise the offset costs for employers that drop employee health insurance plans, or fail to offer them. The most popular alternative, however, is one that roughly half of Americans, according to polls, would embrace: Creation of a comprehensive, nonprofit “public option” insurance plan — a model standard plan akin to Medicare — that the government would provide to any citizen or family for a fee (or tax) adjusted for income status.
That is the essential core of the universal plans provided by all other advanced industrial nations, which as a result spend nearly half of what Americans spend as a percentage of GDP for quality health care. Such plans do not uniformly exclude private insurance companies; they just make them more cost conscious or niche marketers.
The plague of hidden costs
Bredesen’s narrow view of a federally subsidized market misses a much larger point: Americans already pay for the uncompensated costs of care for indigents and under-funded public care. Those costs, though hidden, already amount to a tax that is tacked on to our insurance premiums. The problem is that those costs, like other medical costs, are way too high because we do not have a universal, national plan with transparent regulation of fees and protection against price-gouging.
America’s health care system now rations care, though very cruelly, through hidden costs transfers and insurance denials, and tolerates enormously lavish compensation, overhead and price gouging in the medical industry in all its parts — insurance, pharmaceutical, ancillary services, imaging and medical parts.
Obstructing reform would make our medical industry even more unaffordable. Rationing of care would worsen through the growing number of uninsured (now 50 million) and through insurance denials (the industry’s own pre-existing “death panels”). Bredesen’s criticism notwithstanding, reform is the solution, not the problem.