4 Financial Implications Of The Health Care Bill
With a historic and unexpected ruling last week by the Supreme Court (except for constitutional law professors, who predicted with 90% certainty that this Court would rule like they did), the country exploded along the lines of those in favor and those against the new Health Care Bill, which is actually called the Patient Protection and Affordable Care Act. Republicans went nuts, which is to be expected because they thought they had this one in the bag, and Democrats breathed a sigh of relief because they thought the same as the Republicans.
When all is said and done, the bill has been ruled constitutional because Congress, it seems has the right to raise taxes for whatever purposes it deems necessary. In other words, financial health of the country is the job for politicians to decide, and we pay or don’t pay depending on whatever they come up with.
With that said, I think it’s time to bring some reality back into this discussion. Let me just say up front that I support this bill because I’ve always believed everyone should have access to health care, no matter what kind of money one does or doesn’t earn. It’s not a close to perfect bill, and there’s still a lot we don’t know about it (even though I perused, eventually, the 2,600 page ruling from a couple of years ago). But here are 3 financial realities that come to pass.
The first is that yes, taxes will increase on the middle class. They’re just not going to increase the way you think they will. The government plan states that those who decide against joining the plan (yes, people still get the right to choose to opt out) will pay a “premium” (tax) for that right. Single people will pay $900, families will pay $3,800. Sounds unfair, right? Money stretched too thin already?
Here’s the reality. No one actually pays that much. That’s what will be included in your tax statement as income. Do you know what the amount is that one pays on income of $900? It’s $91, or less than $8 a month. Yup, all this fuss and that’s all that’s been added. For families it’s a bit more, around $383, but that figure is negated by how many dependents a family can claim. Does that still sound daunting? True, some folks are going to gripe anyway, but now you have facts to deal with.
The second is that this is a great thing for hospitals, which then becomes a great thing for almost everyone else. The biggest problem hospitals have is getting payment from patients that don’t have health care coverage. Having to deal with things such as bad debt and charity care saps a lot of money from hospitals, even if people who are self pay would end up paying more for their services across the board than those with health care coverage. More bills will be paid; this is a great thing.
Suddenly at least 30 to 50 million more people will have health care coverage, which means more bills will be paid. Some of those folks are young people, who now can be covered under their parents plan until they’re 26 years old. That gives them time to get on their feet, especially if they’ve graduated from college and can’t find a good paying job immediately. There are also subsidies to help those who want health care coverage but can’t cover all the costs themselves.
Trust me, this is a good thing. The only unknown is what reimbursement rates will be. I’ve been predicting that they’ll come in around the same rate as Medicare pays now, and in the long run that’s not so bad, as Medicare also pays fast, which will make budgeting much easier.
The third thing is that indeed it will bring health care costs down, but for how long is anyone’s guess. Imagine being an insurance company and having to now compete against the federal government in offering affordable plans in places such as California, which is notorious for some of the rate increases in premiums each year. Imagine being the pharmaceutical companies now having to fall under the scrutiny of federal government audits of things such as drugs for diabetes and high blood pressure, and other companies that offer supplies in those areas?
More people will have access to things that are pervasive in this country, which can only help because when those things get really severe, not only are they hard to cure but eventually everyone else pays for that treatment; yup, you’re being taxed anyway, but moreso because you’re indirectly paying for critical health care instead of what the government’s proposing.
And fourth, there are some entities this isn’t a great bill for. Small businesses are now considered as those with less than 50 employees instead of 200 as it used to be, and now they have critical decisions to make as to whether to keep offering insurance, if they do, or pay the government penalty for not offering insurance, which will actually cost them less but their employees now have to take care of it.
Also, there’s still this thing about construction companies, where if they have 5 or more people they have to have insurance coverage or pay a penalty, which I expect they all will pay. My issue there is that I tend to believe fixing infrastructure is a great way for communities to both create jobs and beautify their areas, and I don’t like that the government has specifically picked them out of everyone else.
As I said earlier, it’s not a perfect bill. But in the long run it’s a better benefit for the people, and brings us in line with the rest of the world; almost.