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A Worrying Prognosis for Health Care Reform

MedSave Admin | November 25, 2008

The Wall Street Journal carried an editorial today titled "A Worrying Prognosis" that estimates that the Obama administration's health care initiative will add an additional $200 to $300 billion dollars per year to the U.S. spending on health care and add 50 million new health insurance policies to the system. The article describes the five provisions of the recent Baucus health care reform proposal that is presumed to be the template of the new Obama administration. The editorial concludes with the comment "But like it or not, when our new government takes office in January, socialized medicine may well be on its way into America".

A simple calculation of the median total cost of the proposal divided by the number of people affected (i.e. 250 billion divided by 50 million) results in an average cost of $5,000 per person per year. We can't imagine how any federal government initiative could force the 50 million Americans to suddenly come up with an additional $400+ per month to purchase health insurance and cover other health care costs. If we presume that individuals could not be coaxed to pay this amount directly then the same cost must be covered through new assessments on employers or through additional taxes. Even recognizing that this analysis is a gross over-simplification of a very complex system, it still underscores the point that there is nothing "affordable" about the current reform proposal.

Americans would probably be surprised to read that all five provisions of the current Baucus proposal regulate and expand health insurance but contain absolutely no measures to address underlying health care costs. Continuing our course of expanding health insurance regulation without addressing health care costs is not a solution to our problem. As Obama often said during the campaign "That's not change; that's more of the same". We agree with the author of this editorial that the currently favored reform proposal is primarily a move toward a government-controlled health care system.

At the same time, we can't help but realize how much of a boom this proposal would be to our business that supports enrollment in low cost health insurance. Prior publications (see "Covering the Uninsured; 2008 Update") indicate that most of Americans qualify for the low cost policies supported by MedSave.com. Presumably these policies would be more attractive to those forced to buy coverage than the more expensive risk pools and group insurance policies. All indications point to a flood of Americans moving toward enrollment in the nation's most innovative and affordable health insurance policies.

Tags : obama reform proposal, baucus reform proposal

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