Obama’s Health Insurance Proposals

Obama’s Health Insurance Proposals
May Cut Costs for Businesses

As the Obama administration sets to work, health care will be high on the agenda. Obama proposes to cut costs by $2,500 per year for the average family, while expanding coverage to all. But is not going to happen if we do not watch the legislation very closely, because we know from bitter experience with health-care reform that insurance companies, drug manufacturers, and other medical industry interests are going to do everything in their power to water down the legislation to protect their profits.

Few dispute the fact that the system needs a radical overhaul. Medical costs in the U.S. are DOUBLE those of Western Europe, but less accessible and often less effective. Infant mortality is higher in the U.S. than most European countries (6.4 per thousand in the U.S., vs 4.2 in France and twice as high as Sweden’s.) Our life expectancy is lower than in Italy, Spain, France, Germany, Greece, and Switzerland. According to some estimates, sheer administrative overhead accounts for 30% of the costs, which confirms doctors’ frequent complaints about the huge amount of time they have to wasted on paperwork.

Help for Businesses
Among the specifics are some ideas that could be beneficial to small businesses. Obama proposes the creation of tax credits for small businesses to make it easier for them provide affordable health insurance to employees. He also advocates stronger government coverage for catastrophic care, which would reduce premiums for businesses. Equally important would be a rule to require large employers currently offering little or no coverage to contribute more to the cost of health care.

Cost-Cutting Measures
Some of the cost-cutting measures would include:
1) Banning insurers from overcharging doctors for malpractice insurance and investment in methods to reduce medical errors.
2) Reducing drug costs by permitting import of safe medicines from other developed countries and increased use of generic drugs in public programs.
3) Improving and expanding the technology of computerized medical record-keeping.
4) Better coverage for screening and preventive care, to detect and treat illness before it reaches the costly catastrophic level.

Getting What the Politicians Get
An interesting element is a proposal to establish a new public plan based on benefits available to members of Congress themselves. This would be part of a National Health Insurance Exchange with a range of private insurance options as well as a new public plan that will allow individuals and small businesses to buy affordable health coverage. This would be linked to reforming the insurance market by stopping uncompetitive practices that drive up costs.

Who Pays for the Fix?
The cost of the reform could be as high as $65 billion. Obama proposes to get this money by reducing the Bush tax cuts for those who earn more than $250,000 per year and keeping estate taxes at the 2009 level instead of reducing them.

Redistribution of Wealth?
You Bet, It’s Good for Business
No Matter Who Yells “Socialist”
This IS indeed a redistribution of wealth, but it is increasingly clear that a redistribution of wealth is sorely needed to pull the economy out of the pits. The concentration of wealth in the top income brackets is now higher than at any time since the Great Depression. In 1982, for example, the richest 1% of Americans received 12.8% of the total national income. By 2000 this had ballooned to 20%. By 2005, the richest 300,000 Americans had almost as much total income as the bottom 150 million Americans. People perched at the top made 440 times as much those the bottom half, making the income gap twice as wide as in 1980. It does not take an MBA degree to know that business suffers if the average person has nothing to spend. This has been well understood for at least 100 years. Henry Ford, hardly a socialist, made himself famous by proposing to pay his workers enough to be able to buy the products they made. Among the major remedies for the Great Depression were the New Deal’s efforts to redistribute income to get the economy moving. This included massive public works and conservation programs, farm aid, labor laws that empowered unions, and intensely tightened regulations of banks and Wall Street speculators.

The key will be to insure that effective health care reform is funded by redistribution, and not by higher taxes on ordinary people, or by reductions in the quality of care. We must watch developments, and use our political clout to make sure reforms don’t get derailed.