Three Potential Pitfalls in Health Care a Risk for Dems

health care

Updated at 6 p.m. ET with news about Sebelius' letter to the insurance industry.

Even as President Obama and Democrats continue to sell their comprehensive health care overhaul to voters, it's becoming clear that the benefits of the legislation may not materialize in the way some people are expecting.

Implementing the new laws will be a monumental task, and officials could face a few major pitfalls: Unexpected costs and ineffective cost controls, loopholes in the consumer protections and potentially weak or stalled enforcement of the new rules.

President Obama has stressed in his remarks to the public that the new legislation is cost controlling, deficit neutral, and expands access to more highly-regulated insurance to millions of people.

"That's our proposal," the president said at a Virginia rally in the days before the final health care votes. "Toughest insurance reforms in history, one of the biggest deficit-reduction plans in history, and the opportunity to give millions of people -- some of them in your own family, some of the people who are in this auditorium today -- an opportunity for the first time in a very long time to get affordable health care."

Costs

The Democrats' plan does indeed include ways to cut costs and earn revenue, keeping the bill from increasing the deficit on the books. Yet not all of the costs may be accounted for, the Wall Street Journal reports.

The new law creates a program to subsidize health care plans for retirees under the age of 65. The program is expected to be a temporary solution for those retirees until the new state-based health insurance exchanges are created, and it has been allocated $5 billion. However, the Journal reports that the program could go over budget.

"I think there probably will be" a need for additional funds, Chuck Loveless, the legislative director of the American Federation of State, County and Municipal Employees, told the Journal. "Five billion is not going to last very long."

Other programs in the legislation, such as the CLASS Act which will provide insurance for the disabled, could also end up costing more than expected, according to the Journal.

The argument that the Democrats' health care plan is unaffordable is "the major engine of opposition" to the new law, according to the surgeon and writer Atul Gawande. And it is unclear whether the law will actually bring down costs, Gawande argues.

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"In large part, it entrusts the task of devising cost-saving health-care innovation to communities like Boise and Boston and Buffalo," he writes. "This is the way costs will come down -- or not. That's the one truly scary thing about health reform: far from being a government takeover, it counts on local communities and clinicians for success."

The question of how to bring down health care costs is a central question in the current gubernatorial race in Massachusetts, a state that has already implemented a similar health care plan, the New York Times reports.

State Treasurer Timothy Cahill, who left the Democratic party to run for governor as an independent, said the Massachusetts health plan had "blown a hole" in the budget and warned that the federal changes would "bankrupt this country within four years," according to the Times.

Consumer Protection Loopholes

Meanwhile, insurance companies are already finding ways to circumvent the consumer protections Mr. Obama has promised.

"Starting this year, insurance companies will be banned forever from denying coverage to children with pre-existing conditions," the president said at the Virginia rally.

However, insurers say that they are not obligated to cover children with pre-existing conditions until 2014, when the rule kicks in for adults as well, the New York Times reports.

"The fine print differs from the larger political message," William Schiffbauer, a lawyer whose clients include employers and insurance companies, told the Times.

He and others argue an insurance company would be obligated to cover pre-existing conditions in any policy offered to a child -- but that the insurer is not obligated to sell insurance to that child in the first place.

Currently, insurers may choose to cover an entire family, including a child with a pre-existing condition, but choose to exclude coverage for that condition from the policy. Under the new rules, the Times reports, an insurer may opt to simply not cover that child at all rather than be forced to provide coverage for their condition.

Enforcing the New Rules

Rules such as consumer regulations and the minimum standards for what insurance covers will be left up to the states to enforce.

States will have to set up the market-based changes. "It requires appointing people to run the exchanges and figuring out how Americans will use them, but it also means preparing to regulate insurers more closely than anybody regulates them now," writes Jonathan Cohn, a senior editor for The New Republic.

While the state of Massachusetts has proven that the states can handle such a task, there are dozens of state officials interested in stopping the new federal laws who could make it difficult to see out the creation of a market-based insurance exchange in every state.

Meanwhile, some observers of the health care debate do not trust state insurance commissioners to properly enforce new regulations. David Dayen, a writer for the progressive Web site FireDogLake, said the commissioners are "long thought to be puppets for the industry."

"And if they are in charge of enforcing these vaunted regulations, I don't know how you would expect the regulations to be anything but conciliatory toward those industries," he wrote.

Selling the Plan

So far, a new Washington Post poll shows, the passage of health care reform appears to have slightly boosted the public's image of Mr. Obama and House Speaker Nancy Pelosi, while the public's opinion of the Democratic party remains the same.

Sen. Claire McCaskill, a Democrat from Missouri, said last week that Democrats are "over promising" the benefits of reform, the Hill reports.

Democrats, she said, have "not been clear enough about the fact that this is going to be an incremental approach over time, [and] the benefits aren't going to be felt by most Americans immediately."

Mr. Obama will continue touring the country to promote the new health care plan, stopping next in Maine this Thursday.

UPDATE: Health and Human Services Secretary Kathleen Sebelius sent a letter to the head of a health insurance trade group indicating that she will institute new regulations in the coming weeks to prevent insurers from exploiting the "loophole" in the consumer protections for children with pre-existing conditions.

The new regulations, Sebelius wrote, will further confirm that beginning in September 2010, children with pre-existing conditions may not be denied access to their parents' health insurance plan and that insurance companies will no longer be allowed to insure a child but exclude treatment for a pre-existing condition.

"For too long, parents across the country have struggled as pre-existing conditions have prevented their children from accessing affordable, stable health insurance coverage," Sebelius wrote to Karen Ignagni, president and CEO of America's Health Insurance Plans. "Now is not the time to search for non-existent loopholes that preserve a broken system."

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