Health Reform: What’s in it for you? (US News)
Almost immediately after the House vote on Sunday, the media switched its “horse race” coverage from analyzing the politics of the affair to what it characterized as a clash of economic classes. Analysts were often quick to suggest that the average American might find himself in the loser column. Others offered the conventional ”on the one hand, on the other hand” pseudo-journalism, probably leaving most to assume (not unreasonably, based on their experience under trickle-down economics) that they have little to gain. And inevitably, confusion spawns cynicism: The first question on Monday from my 91 year old uncle was: ”Do I still have Medicare?”
If we are going to do a triage by economic class, lets get it right: I’m still waiting for a headline writer to capture the real story of the legislation: Health Reform Law Reallocates Opportunity to the Working Class
One unassailable fact that emerged from the year-long legislative debate is that the working poor and those in the middle economic stratum are the primary victims of our dysfunctional health system. It is widely recognized that health care debt ranks at or near the top causes of personal bankruptcies. Less commented on, however, is the effect of widespread financial insecurity resulting from the high cost and lack of access to care. More than 4 in 10 people earning under $40,000 per year say their household has had problems paying medical bills over the past year. Not only does that statistic imply that many households are adjusting their budgets away from socially-important expenditures, like childcare and education, but it also reveals the personal toll imposed on lower income individuals and families. For those who have insurance, increasing premiums have forced them to take on more risk: Nearly one in five Americans say cost increases caused them or their employer to switch to a less comprehensive health plan, while almost half of all people purchasing insurance in the dysfunctional individual market say they have had to switch to a less comprehensive plan.
The misinformation spread throughout the debate has lent credence to those who would paint health reform as a victory for elites. Judging from the expressions of outrage about health reform by some middle class citizens, many appear to carry the misapprehension that the primary beneficiaries of the legislation are those unwilling to work. Nothing could be further from the truth; today’s uninsured are predominantly found in working families. In factover 15% of employed workers and a stunning 41% of low income workers lack health insurance. And given the stampede of employers dropping health care coverage for their workers, the epidemic of uninsurance or underinsurance is undoubtedly spreading upward in the economic class order.
Also under-reported are the many ways the current health care system works to disadvantage the working class. Most prominent is the tax benefit which gives a significant and regressive tax subsidy to wealthy elites. Excluding employer contributions for health insurance from taxable income–at $168 billion per year– is the largest “tax expenditure” in the budget– and obviously benefits the higher brackets more than the lower ones. (Revising this indefensible and economically inefficient redistribution would have been a sensible way to help fund reform, but Congress settled for adding some progressivity to the payroll tax and some other taxes aimed at upper income citizens).
In addition, the health care system perversely redistributes wealth in a variety of other ways. For example, as Mark Hall and Carl Schneider have made clear, hospitals and physicians price discriminate against those with lower incomes: the uninsured and those in the individual market –who generally lack the bargaining power to command lower prices–pay higher prices to hospitals (often as much as two or three times higher) than those with group insurance.
Even less widely acknowledged is the fact that insurance favors the upper classes in subtle ways. Co-pays, for example, burden those with low incomes much more severely than upper class insureds. Havinghurst and Richman aptly summarize the “distributive injustice” of the system:
[C]onditioning eligibility for insurer payments on patients’ willingness to make certain out-of-pocket payments causes lower income participants in employee health plans to get disproportionately fewer benefits than their more affluent coworkers receive in return for equivalent premiums
To be sure, the health reform legislation does not assure equal access to care among the social classes; but it certainly is a big step in the right direction.
I doubt that most Americans accept the idea that social class should dictate vast differences in opportunity for our citizens. The capacity of health reform to lessen the economic and physical burdens imposed on the working class then should be headline news.
A nationally recognized expert on health care and antitrust law, Professor Thomas (Tim) Greaney has spent the last two decades examining the evolution of the health care industry and is a vocal advocate for reforming the health care system and protecting consumers. He also has a strong interest in comparative antitrust law, having been a Fulbright Scholar in Brussels and a visiting lecturer at several European law schools.