The United States has the most expensive health care system in the world, with per capita health expenditures far above those of any other nation. For many years, U.S. health care expenditures have been growing above the overall rate of inflation in the economy. A few experts have argued that high and rising costs are not such a serious problem. Most observers disagree with this view, pointing to the negative impact of employee health care costs on employers, the government budgetary problems caused by rising health care expenditures, and an association between high health care costs and reduced access for individuals needing health services.
Several explanations have been offered for high and rising health care costs. These include the perspectives that high and rising costs are created by forces external to the health system, by the weakness of a competitive free market within the health system, by the rapid diffusion of new technologies, by excessive costs of administering the health system, by the absence of strong cost-containment measures, and by undue market power of health care providers.
For the first time in history, US citizens will be required to purchase health insurance by law. This bill is a significant achievement by the Obama administration. They have been able to pass a sweeping health legislation where previous presidents have been unable to do so for decades.
Reuters has a very succinct and simple article that has an explanation of the what the bill means to ordinary Americans. We are quoting certain paragraphs of the report below.
We point out 4 interesting questions and answers about the health-care bill:
Q: What does the health-care bill do?
A: The bill would significantly change the $2.5 trillion U.S. health-care system that almost everyone agrees costs too much and leaves too many people without medical coverage. For the first time in U.S. history, citizens and legal residents will be required to purchase a health insurance policy.
Federal subsidies will be available to help them afford coverage. The subsidies will be available for people with incomes up to 400 percent of the poverty level, about $88,200 for a family of four. The poverty levels for 2009 is $22,050 a year for a family of four and $10,830 for an individual.
Small businesses will be able to tap into federal tax benefits to help buy medical plans for employees.
Employers are not required to provide health coverage for workers, but they would have to pay a penalty if any employees use federal subsidies to purchase insurance.
Q: Are there protections for consumers?
A: Yes. Insurance companies will no longer be able to deny coverage to anyone because of a pre-existing condition. They also will not be able to charge higher premiums because of gender, health history or occupation. Insurers also will be prohibited from dropping people when they get sick.
There will be no more lifetime limits on coverage and annual limits will be restricted. Insurers also will be required to cover preventive health-care services. Co-payments and other out of pocket expenses for beneficiaries also will be limited.
Q: What do insurance companies and hospitals get?
A: Insurance companies will get 31 million more customers, many of them subsidized by the federal government. However, in addition to new coverage regulations, insurers will be required to spend a minimum of 85 cents of every premium dollar on medical care for large group plans and 80 cents on every premium dollar for individual and small group plans.
By requiring everyone to obtain insurance, hospitals will have fewer cases of uncompensated care. Many people without insurance seek care at hospital emergency centers because they do not turn away patients. When patients are unable to pay, hospitals make up those losses by charging more to those with insurance. Democrats say that pushes premiums higher by about $1,100 a year.
Q: How does the bill reduce costs?
A: The bill seeks to save money by streamlining paperwork and providing more information to consumers to help them make decisions about their health-care.
Other cost savings will be driven through Medicare, the government health-care program for the elderly and Medicaid. Lawmakers hope that payment reforms that reward quality rather than quantity of services and treatments will help drive down costs. The bill aims to encourage coordinated care for patients particularly those with chronic conditions.
Studies have shown that better coordinated care can save significant amounts of money and improve the quality. The bill will provide for pilot programs to explore some of those cost saving methods for Medicare and Medicaid.
It also will encourage creation of Medical Homes and Accountable Care Organization where doctors, hospitals and other health providers can better coordinate care.