Canadians continue to watch with interest and concern as policy-makers in the United States debate how to best reform the US health care system. Canadians and the Canadian health care system have even been targeted in negative advertisements surrounding the potential reforms south of the border.
The following is an update to my analysis (posted on July 16th) of the bill introduced by the Democrats in the US House of Representatives last Tuesday. Since then, three key events have taken place.
First, surprisingly, the American Medical Association (AMA), a notoriously conservative and anti-reform group, endorsed the House Democrats’ bill. The group sent letters to each of the three House committees considering the bill saying that it supports and appreciates the reforms. Arguing that it was not a liberal/conservative issue, the president of the AMA, Dr. J. James Rohack was quoted in the Washington Post as saying: “the status quo is that 50 million Americans not having health insurance, a system that has administrative waste and as a result drives up premiums so that it is unaffordable for many patients – that is just not acceptable”
Second, the Senate Health, Education, Labor and Pensions (HELP) Committee approved its own health care reform bill. Like the House Democrats’ bill, the HELP bill includes an individual mandate, an insurance exchange and an employer mandate for businesses with 25 or more employees. However, the employer mandate only requires employers to offer adequate insurance to their employees or pay $750 per year per full time equivalent employee, far less than the up to 8% of payroll provided for in the House bill. Moreover, the HELP Committee bill does not address revenue issues, which will be addressed later by the Senate Finance Committee.
Finally, I mentioned last week that it was unclear whether the House Democrats’ bill did enough to contain the US’s skyrocketing health care costs and whether the bill would be deficit-neutral or sustainable in the long-term. Apparently the current version of the bill does not include sufficient cost-containment mechanisms. On Friday , Douglas Elmendorf, the director of the non-partisan Congressional Budget Office said that the bill would add $1 trillion to federal spending but would only save about $500 billion from increased taxes and cuts to existing programs. He then stated that while there may be some additional savings in the bill, “the changes that we have looked at do not represent the sort of fundaments change, the order of magnitude that would be necessary to offset the direct increase in federal health costs that would result from insurance coverage proposals.” While this comment does not indicate that the proposal is fatally flawed, it does make it clear that more attention must be paid to containing costs in future versions of the bill.
It will be interesting to see how President Obama addresses Mr. Elmendorf’s comments – and the cost containment issue in general – in his nationally televised speech on health care reform on Wednesday night.