Health Safety Net Fraying

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WASHINGTON —Despite passage of the landmark health care overhaul this spring, the nation’s health system is continuing to fray, raising the prospect that the country could experience a crisis before the law establishes a health care safety net in 2014.

Three months after President Barack Obama signed the law, that unsettling possibility is increasingly casting a shadow over its implementation, which the White House and its Democratic congressional allies had hoped a wary public would begin to embrace.

Instead, state governments struggling with budgets savaged by the recession are contemplating further cuts in health care aid for the poor, despite the promise of more federal dollars.

At the same time, several million unemployed Americans and their families who have used federal assistance to hold on to health insurance from work will lose coverage in coming months as the special assistance program expires.

Those with jobs face their own challenges as employers continue to look for ways to pare back health benefits and shift more costs to employees, if not drop health coverage altogether.

And people in all walks of life face rising health care prices and skyrocketing insurance premiums, which in many places are rising at double-digit rates this year.

“If the economy does not improve substantially, we may be taking some steps backward before we take steps forward,” warned Ron Pollack, a leading supporter of the health care overhaul who heads the consumer group Families USA.

Even Obama’s senior health care adviser acknowledged that the road ahead may be rough.

“Will plans continue to raise prices? Will some people continue to lose coverage? I think the answer is yes,” said Nancy-Ann DeParle, head of the White House Office of Health Reform. “It is something we are concerned about.”

DeParle called the next several years a “bridge period” until 2014, when Americans will get guaranteed access to health coverage along with billions of dollars of federal subsidies to help them pay their insurance bills.

The Obama administration believes that a series of initiatives in the new health care law will help hold the line during this implementation period.

Since the law’s passage, administration officials have moved quickly to begin offering new tax breaks to small businesses to encourage them to offer their employees health benefits. The administration is developing new regulations designed to increase oversight of insurance companies and prevent major rate hikes.

The Department of Health and Human Services is working with states to set up high-risk pools for people who have been denied coverage.

“I think we have tools that will help make thing better than they would have been” if the health care legislation had not passed, DeParle said.

While the Obama administration works to ease the transition, the same forces that helped spur passage of the overhaul legislation are taking a relentless toll on the country’s health care system right now.

And early research suggests that some of the short-term aid in the health care law, such as $5 billion for new high-risk pools, may be inadequate.

“This is not about health care reform,” said Helen Darling, president of the National Business Group on Health, a group of large employers that provide coverage to about 50 million workers, retirees and dependents. “It’s just existing pressures on the system. … It’s business as usual.”

Small businesses, which already are less likely to offer their employees health benefits, are under even more pressure.

“Costs are out of whack and nothing can change that in the short run,” said Len Nichols, a health care economist at George Mason University.

Nichols and many other experts believe that provisions in the new law to make the health care system more efficient could slow cost growth in the longer run.

So far, federal and state officials have managed to hold together a safety net with the help of billions of dollars of stimulus spending authorized by Congress last year.

Washington provided an estimated $2billion in 2009 to help more than 2 million people and their dependents hold onto their health benefits after being laid off.

But now, under pressure to control spending, Congress appears certain to end the COBRA assistance.

Democrats on Capitol Hill are moving to provide states with some extra money to prop up their Medicaid programs for the poor, which have seen a huge surge in enrollment since the recession began.

But for many states, even the extra aid is not expected to be enough this year.

Copyright © 2010, Chicago Tribune

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