For months now, one of the main arguments against the PPACA is that it doesn’t address health care costs or provide a means to pay for the reforms that it includes. Opponents of the reform law have used the money argument to drum up support for their cause, and – along with opposition to the individual mandate requiring everyone to have health insurance starting in 2014 – it remains one of the first things that people will mention when asked why they oppose the PPACA.
This week’s Health Wonk Review includes a characteristically outstanding article by Maggie Mahar explaining in detail many of the provisions in the PPACA that will provide the funds needed to save Medicare from insolvency and expand health insurance coverage to an additional 32 million Americans (much of this coverage will be funded by subsidies, employer tax credits, and the expansion of existing government programs like Medicaid, so although private health insurance will remain private, significant additional premium dollars will come from government funds).
Maggie explains the major revenue sources included in the PPACA, and goes on to clearly and thoroughly explain why it makes sense to raise taxes (ever so slightly) on the wealthiest Americans and cut payments to Medicare Advantage. These are expected to be two of the largest sources of funds for health care reform, and are thus in the best interest of most Americans. The wealthiest Americans who will be paying a very small additional amount in taxes will still be paying less (percentage-wise) than they would have been a generation ago, and just a fraction of what they would have been paying in the 50s and 60s. As far as Medicare Advantage, Maggie makes a particularly good point that seniors who are covered by MA are still part of the Medicare system. If Medicare runs out of money, there would be no more MA either. And since MA costs the government 13% more than traditional Medicare, it makes sense to try to save money there first.
The people involved in projecting costs and revenue associated with the PPACA has acknowledged that there is a good deal of estimated and educated guessing going on. We simply cannot know some of the specifics about cost eight years down the road. We don’t know how individual Americans will react to the changes, and there will likely be additional savings and/or expenses that haven’t been addressed yet. But it’s unfair for people to say that the PPACA doesn’t address costs, and doesn’t provide a means to gather the revenue needed to fund the reform. The law includes extensive revenue-generating and cost-containing measures. Whether they will be enough remains to be seen. But it’s important to note that the pre-reform health care system seemed to be financially unsustainable and would not likely have been able to trundle along for much longer without some major changes. More than 50 million Americans were uninsured last year. Hospitals – like Denver Health – that treat the uninsured in large numbers are finding it harder to stay afloat. Medical bills trigger 60% of personal bankruptcies. Health insurance premiums have been rising at double digit rates each year, even while wages and investment income have remained relatively flat over the last decade. How much longer could we have continued on a trajectory where the number of uninsured people increased each year and the increase in the cost of health care far outstripped increases in annual income? When people talk about the health care reform bill being financially irresponsible, I have to wonder how much they understood about the financial sustainability of our health care system prior to reform?