Sunday, October 18, 2009

A plan for disaster

The Bacaus health reform plan has some serious flaws. One of the big ones is that it forces everyone to buy insurance. If they do not buy insurance they will pay a fine that is reported to be about $1,000 give or take. Insurance premiums are expected to be $4,000 to $5,000. This does not include other "out of pocket" expenses such as co pays and the like.

The math here does not compute!

Knowing that an insurance company will no longer be able to deny someone health insurance, who in their right mind would pay the $4,000 to $5,000 for insurance when they are not sick?? Why not just pay the $1,000 fine, wait until you are truely sick, then sign up for insurance?  The insurance company cannot deny you! You will save lots of money.

Young people, who think they are indestructible, will no doubt see the difference.
This is where the recently released study from the insurance industry determined that premiums will skyrocket under this plan. Of course those in support of this reform claimed it was false, and that the insurance industry was trying to "scare" people. Yet, on at least this point, the logic in the study seems quite correct.
This is what would be called an "un intended consequence".

Another consequence of this plan, although very intentional, is that in order to stay under the trillion dollar mark and be so called defecit neutral, its revenues are front loaded and its expenses are back loaded.

This means that cuts in medicare reimbursements to providers, new taxes on "cadillac" insurance plans and the other host of revenue generating features will happen right away, yet on the expense side, like expanded insurance coverage are not fully implemented until years later(some nearly a decade), so as to allow the reform to build a surplus making it "appear" to be under a trillion dollars and defecit neutral. This is pure gimickry.

Another point on "cadillac" insurance plans is that the government, to generate revenue, calculates that the use of these plans will continue to increase over time, yet that flies in the face of economics 101. When you increase taxes on something, you get less of it, not more. So this is another area that will likely contribute to the reform plan exceeding planned expenses.

As it is now, many doctors refuse Medicare patients, does anyone think this situation will improve after the government cuts reimbursement rates even further?

I am in favor of reform, but only reform that makes sense. This does not make sense!


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