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2010 Health Care Reform Bill

A controversial health care bill that the Senate passed on March 21, 2010.

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Corporate welfare and regulatory capture at its worst, but a few minor good points

  • Dec 13, 2010
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There has been a lot of false advertising about this bill.  This is an attempt to cut through a lot of this and give to the best of my ability a fair review of the changes of law.

The major issues the health care reform laws were intended to tackle were the rising cost of care and rising health insurance rates.  I can tell you my family has been without health insurance for over a year because the rates were suddenly raised on us 50% from one year to the next.  There are real problems here, and real reforms are needed, but this law on the whole makes things quite a bit worse.  There are also some truly horrific parts of the bill including what I call the "Jim Crow provisions."

There are six basic parts to the bill, and four of them are bad.  The fifth is good, but undermined significantly by the other four, and the sixth doesn't go far enough.  Going through these in nearly reverse order:

On the positive side, the bill makes it significantly easier for states to create interstate compacts regarding health insurance.  This is a good thing because it allows states to negotiate with other states in creating interstate risk pools for insurance purposes, and to harmonize their laws regarding health insurance offerings generally.    Larger risk pools mean more predictable actuarial risk, so insurance margins can come down.  In theory, states reserve at least some regulatory power over insurance sold to their residents, but in practice, this has been badly damaged.

The second positive element is the emphasis on insurance exchanges, but this doesn't go far enough.  In addition insurance exchanges, i.e. gateways for insurance brokering, administrative costs could be reduced by creating consistent, state-run billing gateways, but this is not being pushed, and funds are not being made available for this.    The billing gateway is probably a bigger benefit than the exchanges, and was not a part of this set of laws, and too bad.  Personally, I'm a fan of the general idea of government-run infrastructure with private services run on top of it.

The third part of this package involves onerous new regulations on insurance companies.  Insurance companies   These involve pricing controls, mandatory rebates for periods where payouts are not high enough, etc.  The problem here is that the wrong incentives are created.  Insurance companies are under pressure to increase payouts in order to avoid costly rebates.  This is not a way to contain costs.  Also the way for insurance companies to get ahead here is to delay claims until near the end of the year and pay out the right dollar amount to avoid these rebates.  I also suspect this will decrease predictability over what is covered even further than it is today.  Allegedly the law also prevents insurance companies from cancelling coverage just because you get sick or for any other non-fraud reason, but in actuality the law hasn't changed in this area at all.

The fourth part is that of banning certain actuarial considerations such as pre-existing conditions.  Now, this seems like a good idea on the surface, but it generally means that the risk is unknown since insurance companies haven't been covering this area.  Consequently, prices will go up to compensate for unknown risk potential in addition to the risk itself.  It also necessitates the individual mandate which is poorly conceived and prone to bad incentives too.

The fifth part is the individual mandate which is designed to prevent healthy people from deferring getting insurance until they are sick or in the hospital.  The penalty is collected as if it were a tax (but probably isn't a tax as authorized by the Constitution, meaning it will be assessed under Commerce Clause and related powers), and is set to a floor (minimum of $695 per adult or half that per child, to a maximum of  3x the adult rate, or 2.5% of AGI whichever is greater) and a ceiling (the average national cost for minimal health insurance).  This means that many people will not save money by buying health insurance.   Moreover nothing prevents  one from buying inexpensive coverage and then increasing it dramatically when one gets sick.  Again, this creates the wrong incentives and the expenses will be borne by everyone.

The final and worst part of the legislation involves regulations regarding long-term care facilities.  These include onerous new restrictions ostensibly designed to prevent abuse of patients by employees.  However, the worst part of this is that the penalties that are incurred can be adjusted downward if the federal government decides that full penalties would harm minorities and rural communities.  This means in essence that the penalty for abusing patients in a nursing home that houses primarily black patients is lower that one in a city that houses whites.  Even at the height of Jim Crow, few states had criminal or civil codes that explicitly changed penalties based on race of the defendant.  This makes explicit the notion that minorities and rural folk are second-class citizens in our nation, and this is entirely unacceptable to me.   And while we may hope that the courts may strike down these provisions, it's not clear to me how such a challenge could take place.  After all, who is going to appeal a fine reduction?

On the whole this represents the grant of a large captive market to the insurance industry, and provides them with the wrong incentives.  Moreover the racial disparities written into the law are so severe that the few positive elements cannot matter much.

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December 20, 2010
I agree. The minor good points certainly have done nothing for us as a family. We are struggling as is, but the increase in our insurance premium is putting us over the edge financially. So much for 'affordable'. :(
December 20, 2010
After a great deal of thought, I've concluded that the only responsible way to reform our health care system is to do exactly what Mr Obama pledged to do when he was running for office, not what Congress actually did, namely to open up the federal insurance pool as a public option and then mandate that private businesses with more than, say, 20 employees purchase insurance for their employees (for part-time employees, I think the business should be required to offer the insurance and pay a portion of it depending on how part-time the work is).
December 20, 2010
Yes, that would have worked a lot better than this mess we're in.
More 2010 Health Care Reform Bill reviews
review by . March 28, 2010
Bailing out & falling short big time!
Helping others is morally good. However, when a government which is broke or on the verge of bankruptcy goes beyond and put every part of its country deeper into debt, that's totally insanity and dangerous. The U.S. is on its way to 'solve' its problems by simply printing money and pumping money that was otherwise not there to begin with? Not to mention the interest it has to pay for its sovereign debt? I don't get it! It's a no way out situation at all. What does the Obama administration …
review by . March 22, 2010
Although I have been watching today's events like a freight train running toward a brick wall, the finality of the vote still leaves me speechless.  For the first time in my lifetime, I have witnessed the most divisive partisan legislation pass the final hurdle towards law.  A 2700-page bill rife with backroom deals and pork that will cost taxpayers an admitted 600 Billion dollars, will require young people who do not have insurance to purchase it themselves and will ultimately experience …
review by . March 22, 2010
The ends never justify the means.
So there you have it.  President Obama, Nancy Pelosi, Harry Reid and the rest of the Democrats have gotten their way. The 2700 page 2010 Health Care Reform Care bill will become law.  Had the Democrats played by the rules and managed to get this legislation passed I would have been upset but I could have lived with it. That is the American way!  But as we have come to discover all too often over the years Democrats rarely play by the rules. These ideologues …
Quick Tip by . July 03, 2010
Personally, what started out as an initial opinion of excited promise has since turned into a much less hopeful one. Reading up on different perspectives has revealed more cons over pros than I first thought existed. Maybe we didn't need this one after all. I'm hoping I'm wrong.
Quick Tip by . March 27, 2010
It is immoral for those of us who have health insurance to deny it to others. Scare tactics should not prevail.
About the reviewer
Chris Travers ()
Ranked #116
   I live in a haunted house Beneath a tall and mighty tree   With my wife Mia and my sons Wilhelm and Conrad   Where I write software and carve runes   It is a … more
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The Patient Protection and Affordable Care Act (H.R. 3590) was signed into law by President Barack Obama on March 23, 2010. Along with the Health Care and Education Affordability Reconciliation Act of 2010, the act is a product of the health care reform agenda of the Democratic-controlled Congress and the Obama administration.

The bill was originally drafted by the U.S. Senate as an alternative to the Affordable Health Care for America Act, which was passed by the U.S. House of Representatives two months earlier on November 7. However, after the Democrats lost their supermajority in the Senate on January 19, 2010, the House decided to pass the Senate version and amend it with a third bill. This will allow the Senate to pass the amendments via the simple-majority reconciliation process.

The Patient Protection and Affordable Care Act passed the Senate on December 24, 2009, by a vote of 60–39 and passed the House on March 21, 2010, by a vote of 219–212, with no Republicans in either house voting for the bill. At the time of the vote, there were 4 vacancies in the United States House of Representatives.
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