Health Care Reform - Round 2

It appears that the main features of a reformed health care system are firming up and will include the following:

1 - Mandatory health care insurance for everyone although there will be an opt-out for those who claim financial hardship.
2 - No exclusions or additional premium for pre-existing conditions from private insurers.
3 - Annual premium increases from private insurers will be 1.5% less than what the increase would otherwise be.
4 - No public insurance option other than possibly cooperative insurance at least for the 1st 5 years following reform.
5 - Government subsidies for low and middle income families for premiums paid.

The net-net of the above is that private insurance premiums for everyone will probably increase and the private insurance companies realize significantly higher revenues and profits.

In the case of no exclusions for pre-existing conditions and no additional premium for medical issues that exist at the time that the policy is taken out, the insurers will just raise the premiums for everyone else in the age group to cover the higher costs associated with this new group. When I took out private health insurance from Blue Cross several years ago, my premium was increased 25% due to high cholesterol. I doubt that health care reform will require these existing surcharges to be removed but the insurers will not be able to levy these surcharges on new policies and will spread the surcharge over all policy holders.

In the case of mandatory insurance, the health insurers will add a large number of young, healthy policyholders which can only translate to higher profits.

Government subsidies will increase the number of policy holders above what it would otherwise be which will also increase insurers' profits. With the annual cost of health insurance increasing at double digit rates, the insurance industry must have realized that they were in danger of pricing themselves out of business. The subsidy will enable the insurers to keep increasing premiums at double digit rates without pricing themselves out of the market - at least for a few more years.

As far as increasing annual premiums by 1.5% less than what the premium increase would otherwise be, it will be almost impossible to determine whether the insurance industry is keeping to this promise. The premiums on my personal policy from Blue Cross has been increasing by 14% per year so even the lower annual increase of 12.5% which, if this is typical, will still eventually bankrupt the consumer.

An effective and significant health care reform would need to include the following characteristics:

1. Single payer
2. Mandatory coverage
3. Negotiated prices with all providers
4. Emphasis on preventing fraud
5. Higher co-pays for everyone including Medicare recipients. A $120 per year calendar year deductible is too low.
6. Generic drugs required if available
7. Electronic, centralized health and treatment records