This has been a tough week for health reform. As we have emphasized all last year, the consequences of doing nothing are truly scary:

• Costs will continue to rise at 7-10% per year, compared to skimpy pay raises if any. Take a spreadsheet and assume health care now equals about 30% of your income (e.g., your income is $50,000 and your health care costs are $15,000, which either you pay for directly or you somehow think your employer pays for it out of its own generosity). Then assume your income goes up at about 2% per year and health care rises at 8% per year. In 9 years (2019) health care equals 50% of your income. If your health care goes up by “only” 7% per year, or your income goes up by 3% per year, then health care equals 50% of your income shortly after the 10th year. Either way, much more of your pay or retiree income is going to go to health care, vs. food, housing, entertainment, transportation, travel or whatever you’d rather spend money on - sooner that you realize or are prepared for.
• More employers will continue to drop active employee health care coverage as too costly or force employees into very high deductible plans (as GE recently did). Note how over the last 10-15 years most employers have dropped retiree health care coverage, except those in the public sector or with bargained plans.
• Already 45,000 uninsured people die each year from lack of health care (15 times the number who died in the 9/11 attacks). This number will rise dramatically as more people lose employer-based coverage, are laid off, find work only as contingent workers, can’t afford individual policies, or buy high deductible or limited policies and can’t pay the out-of-pocket costs for preventive care and controlling for chronic conditions.
• Even more millions each year will go bankrupt, and millions more become at risk for it, due to lack of insurance, or policies with big gaps.
• Insurance companies will expand their underwriting rules and rating provisions to segregate people according to health risks and age (see our last e-mail update on the letter from the PA state insurance commissioner).
• More hospitals will close or move farther into the wealthier suburbs because they cannot afford the increases in indigent care.
• Medicare deficits will plow the federal government deeper into debt, as the baby boomers start becoming eligible for it, and as costly new treatments become available and people continue to expect unlimited care, regardless of whether its effectiveness has been demonstrated. Seniors will continue to resist anyone “touching my Medicare or Medicare Advantage” and certain politicians remain more than willing to pander to them. Meanwhile, China no longer agrees to be our creditor and the nation defaults.