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Will Health Reform lower costs for Michiganders?By MI Health Facts, Section News
HealthReform.GOV has posted a list of ways that health reform will "help" each state.
One of the ways that HealthReform.GOV believes that Michigan will be helped by legislators' proposed reforms (even though there is not one set of proposed reforms and so it's hard to know what the effects of the eventual legislation will be) is that costs will be lowered for all Michiganders. The problem is that many of the reforms proposed are unlikely to have the effects that the site claims.
Although it's true that the costs of caring for the uninsured are likely shifted to those whose insurance pays for their care, this "hidden tax" will not be ended - it will merely be shifted. Health reform does not come for free - the lowest cost estimates for the bill are still around a trillion dollars. Assuming this cost is distributed evenly by population, this will cost the state well over $32 billion dollars in the first ten years alone... assuming the government program stays within budget. Instead of a hidden premium tax, Michiganders will have an explicit health tax. Further, even a trillion dollar plan isn't expected to insure every American. Nor should we expect it to! Auto insurance mandates in Michigan have not ensured that all drivers are insured, and health insurance mandates in Massachusetts have also failed to insure everyone in the state.
Finally, cost shifting from the uninsured is not the only or the most significant cost shifting that takes place in our health care system. More significant is the cost shifting that occurs when government health insurance programs underpay for services to stay within budget and hospitals shift the costs for these people to the privately insured. There is a real concern that any government program that expands Medicaid or creates another government insurer will make this problem worse, not better, and increase Michiganders' insurance premiums even further. The administration has not presented a plan for dealing with this "hidden tax."
 It's true that many in Michigan will be able to take advantage of subsidies for their insurance premiums under all legislation put forward, but again, this isn't free. In Massachusetts, which has undergone the most extensive health care reform in the country and embodies many of the President's stated goals for health care policy, premiums have increased faster than anywhere else in the country and subsidies have struggled to keep up. Massachusetts premiums are more than four times as high as Michigan's under their reforms and are rising quickly.As a result of these much higher premiums, Massachusetts has had to start cutting back on the eligibility of these programs. Recently, they cut 30,000 legal immigrants from the ranks of those who qualify for subsidies. With Michigan already in budgetary distress, the state can hardly afford these higher costs. If subsidies are to be paid for by the feds, higher taxes will be needed to finance these subsidies and costs will not be lower overall for Michiganders. And, of course, there is the question of who will have to have their subsidies cut when the going gets tough.
The House health care bill also imposes an 8% tax on businesses that cannot afford to purchase coverage when the costs of providing it are increased by legislation that eliminates low cost plans such as high deductible health plans and health savings accounts. Businesses who grow will be heavily penalized by becoming required to provide care under an employer mandate if it is included in the bill. This significantly increases the cost of employing workers. Many economists agree that employer mandates will lead to job losses and reduced job creation - hardly something Michgian's economy can afford.
Massachusetts' health insurance reform has led to cost overruns so high that the state is considering "global spending caps" - that is, a maximum amount that can be spent, per patient, on health care. It's possible that this would never come into effect on a national scale, but it's highly unlikely that costs will stay within budget for any government program. Medicare's unfunded liabilities are well into the trillions. In every country in the world with universal health care, costs are out of control and need to be rationed. This isn't to say that rationing doesn't occur already under private insurers, but right now Americans have the choice between many insurers that ration in different ways. Health insurance reform will destroy many of America's choices, and in turn increase their costs by squeezing out competition, by creating coverage mandates that will increase costs for all plans. So it doesn't look much like health insurance reforms of the type that have been proposed thus far by federal legislators will lower costs for Michigan, even with the best intentions. Cross-posted to MI Health Facts.
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