Putting a Price Tag on Health Care Proposal

The Senate Finance Committee is expected to pass its version of health care reform legislation today. But a new report — titled Potential Impact of Health Reform on the Cost of Private Health Insurance Coverage — warns about the likely impacts on individuals, families and businesses.

The PricewaterhouseCoopers study looks at four key provisions:

  • Insurance market reforms coupled with a weak coverage requirement
  • A new tax on high-cost health care plans
  • Cost-shiftng as a result of cuts to Medicare
  • New taxes on health care sectors

Health care costs are going to go up absent any reforms. With this combination of provisions, the increases are projected to be significantly higher. How high? According to the study, the cost of private health insurance coverage will increase:

  • 26 percent between 2009 and 2013 under the current system and by 40 percent
    during this same period if these four provisions are implemented
  • 50 percent between 2009 and 2016 under the current system and by 73 percent
    during this same period if these four provisions are implemented
  • 79 percent between 2009 and 2019 under the current system and by 111 percent

The authors wrote: "Market reform enacted in the absence of universal coverage will increase costs dramatically for many who are currently insured by creating a powerful incentive for people to wait until they are sick to purchase coverage."

Additional analysis and numbers are expected from the Congressional Budget Office after committee approval and before floor debate. This report certainly gives all involved something to consider.

2 thoughts on “Putting a Price Tag on Health Care Proposal

  1. Two basic facts are ignored by health care proponents: you do not get something for nothing and when demand increases, prices increases.

    First, someone has to pay for government paid or subsidized health care. Second, the more demand for health care there is (demand goes up the more the end patient bill is subsidized) the higher the per unit price.

    There is no way that the savings from moderating health care costs will pay for those who are uninsured.

    It will be interesting to see if the lamestream media report on this.

  2. The senate finance bill is scored as deficit neutral (actually reducing the deficit)because it includes new tax revenues among other revenue enhancing provisions. Prices will rise following a demand increase if supply remains constant. But the plan proposes improvements in productivity (supply shifts out) which, if successful, would yield the kind of result common in electronic goods markets. A bend in the cost curve trajectory of 1% in GDP would pay for the required subsidies. Only if we achieve savings in the health delivery system, can we cover the costs of subsidies.

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