Benefits of health overhaul won't be immediate

Oct 12 2009

Mechanisms to make health insurance more affordable for families and low- and middle-income households won't start until 2013 if health care reform passes.

The Associated Press reports that Medicare cuts and tax increases to pay for the overhaul will kick in immediately. "The eat-your-vegetables-first approach is causing heartburn for some Democrats. Three years is a long time to wait for dessert, and opponents could capitalize on misgivings about the complex legislation to undo what would be a signature achievement for Obama." Officials say the reason for the three-year wait is to give officials time to set up insurance exchanges or marketplaces and to write rules to protect consumers. Similarly, it took the Bush administration two years to do the same for Medicare prescription benefits, The AP reports (Alonso-Zaldivar, 10/11).

USA Today reports that there will be short term improvements including "a benefit for people on Medicare, who already have insurance coverage. Starting in 2010, those who fall into the Medicare prescription plan's coverage gap would get a 50% discount off the price of brand-name drugs. In 2011 and 2012, certain employers with fewer than 25 workers could get a tax credit for up to 35% of what they contribute toward the cost of employee coverage. That could encourage some companies that don't offer coverage to do so."

From 2010 to 2013 the Senate Finance Committee bill would put $5 billion aside to help states "provide affordable coverage" to people denied insurance because of a medical condition (10/11).

The Boston Globe reports that the bill's effect on costs may be slight: "But (the bills) stop short of such bold cost-cutting moves as aggressively overhauling the way care is organized and doctors and hospitals are paid, or investing intensively in finding the best treatments for diseases and tying the results to reimbursements. Nor do they give people with employer-sponsored insurance the chance to comparison-shop for the best insurance deals and pocket any savings." Many health economists think incentives for doctors and hospitals must be changed to reward giving good care, though efforts to make such moves are proving slow-going (Wangsness, 10/12).

Related KHN story: Baucus Bill Doesn't Bend Cost Curve Enough, Experts Say (Carey and Pianin, 9/23)

And The San Francisco Chronicle also reports on concerns about costs from analysts: "None of the bills is likely to reduce the government's costs. Democrats rejoiced when the Congressional Budget Office gave a green light to the Finance Committee bill, judging that it would reduce deficits by $81 billion over the next 10 years … But almost nobody believes that will happen because much of the savings would come from a familiar budget gimmick - a promise to reduce payments to doctors and hospitals. Congress, under Democrats and Republicans, has promised such cuts in the past and almost always reversed them." Other concerns on reform cost include preventative care — touted as a cost saver, but is a cost increaser in the short term — and employer and individual mandates on carrying coverage (Lochhead, 10/12).