Editorial: Premium problems

A story on page 1 of this week’s Business Journal indicates
businesses will likely face a return to double-digit increases for
health-insurance premiums.

Health care has been overshadowed recently by the economy.
But believe this: Medical bills are still a big pocketbook issue for businesses
and consumers. State and federal reform measures should be examined carefully.

At the federal level, it appears certain now that Barack
Obama will face John McCain in this year’s presidential election. Both
candidates have offered reform measures. Both plans emphasize lowering costs,
making it less expensive to buy insurance. Neither plan creates universal
coverage.

Robert Laszewski, who runs a Washington, D.C.-based health
policy consulting business, writes about health care policy on his Health Care
Policy and Marketplace Review blog (healthpolicyandmarket.blogspot.com). Here’s
what he says about both candidates’ proposals.

McCain’s plan: He wants to move away from employer-sponsored
coverage and make it cheaper to buy individual coverage, and he says there are
no extra upfront costs. He has called for: allowing people to buy insurance
nationwide instead of strictly from in-state providers; creating one national
health-insurance policy form; dumping the employer tax exemption, swapping it
for tax credits for individuals ($2,500) and families ($5,000) as incentives
for people to buy their own insurance; creating state-run pools of money to
provide gap funding for people still unable to afford coverage – the poor or
people with pre-existing conditions, for example.

Where it falls short: No estimates exist on how much
individual-coverage prices will decrease; tax credits would seem to fall short
of helping people buy decent coverage; there are no details on who would pay
for the gap funding.

Obama’s plan: He wants to significantly reduce the number of
people without coverage, which he says will help spread out the costs more
evenly for everyone. He has called for: making the federal government provide
catastrophic coverage for the highest-cost claims; creating a Medicare-like
program for anyone under age 65 who didn’t have insurance through work or who
didn’t qualify for Medicaid or SCHIP; requiring employers to pay for employee coverage
or pay into a public plan.

Where it falls short: Catastrophic coverage costs would
shift from individual or employer to federal government; there would be upfront
costs of $50 billion to $100 billion a year; nothing specific reins in costs
significantly.

As a practical matter, it will be impossible for the federal
government to make the health care system work perfectly for everybody. We like
McCain’s basic approach, to free up the insurance market to better respond to
consumer needs. But his plan doesn’t go far enough to make sure everyone has
access to care. By eliminating trips to the emergency room by the uninsured,
for example, costs are spread more evenly and the system runs better. Elements
of Obama’s plan better address that.

The most important thing is to stay informed.