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Equity Analyst’s Views of Health Reform

Editor’s note: This, an excerpt from Carl McDonald, equity analyst for Oppenheimer on the impact of Health Reform:

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The current health reform legislation has a lot of objectives, but two key goals are to provide coverage to all Americans and to control the growth in health care cost trends. The legislation currently pending in Congress would achieve partial success in covering more people, but we think it will fail miserably in slowing health care costs. Because there’s so little in the bill that actually deals with cost, we wouldn’t be surprised if reform actually caused health care trends to accelerate more than if we’d done nothing. And so while health reform is laudable for its efforts to cover more people, it just isn’t a very good outcome for the country. 
 
KEY POINTS  
 
Seniors in the Medicare Advantage program will face higher premiums and lose valued benefits, while younger people (a key Obama demographic in the last election) will have to pay significantly more for their health care, since they will now be subsidizing the older sicker members of the population.
 
The relatively modest subsidies to help people buy insurance and the very minor penalties for not having insurance, coupled with a significant illegal immigrant population, mean that the uninsured population will still number 10-20 million even after this legislation, raising the question of whether we should be spending almost $1 trillion on reform.
 
The taxes levied on health insurers will ultimately be passed onto employers and consumers, raising premium rates by over 1% each year, meaning that the middle class will be funding at least a portion of the coverage expansion.
 
In addition, states will be covering a large chunk of the Medicaid expansion. Because states have to balance their budgets each year, this will likely result in higher state income, sales, and property taxes, which will have a disproportionate impact on the middle class.

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October 6, 2009 - Posted by | Federal Government, healthcare | , , , , ,

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