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Health Reform: Competition, Cuts and the Need for Cooperation

Too young to access Medicare, and not poor enough to qualify for Medicaid, the majority of people taking care of elderly relatives occupy a tenuous middle-ground when it comes to figuring out how to pay for their current and future health needs.

Both presidential candidates are looking to stem the rising tide of healthcare spending that, according to the Centers for Medicare and Medicaid Services (CMS), threatens to engulf nearly 20 percent of the gross domestic product—the total value of all the goods and services made in the U.S.—by the year 2020.

The healthcare dispute of the 2012 election is a cage match between President Obama's Affordable Care Act (ACA) and Governor Romney's proposals to improve competition, cut spending and improve quality in the health care system.

One big thing the election will ultimately do is determine the life span of Obama's ACA. Should Romney assume the role of Commander in Chief this coming January he has said he will do everything in his power to see the bill repealed.

Many experts believe that one candidate's plan has an edge over the other, but some feel neither proposal is capable of solving the problems facing the American health care system.

"I'm not sure either candidate can stop the momentum of increased need that is facing the aging population," says John McDonough, President and CEO of Studemont Group, a fiduciary firm specializing in senior finances.

Caregiving's physical and financial costs

People taking care of aging family members often find themselves on the receiving end of the double-fisted punch of dwindling (or disappearing) paychecks and increased care costs.

Approximately one-third of family caregivers are forced to scale back or even quit their jobs to take care of their elderly loved ones, according to a 2011 MetLife study. Not only does this result in being dropped off of most employer-provided health insurance, it also costs the average caregiver over $300,000 in lost wages and Social Security benefits.

Less money and fewer coverage options make it difficult for people taking care of aging relatives to afford to take care of themselves.

Many of these family caregivers also have health problems of their own, sometimes developing as a result of the stress associated with caring for a loved one. A report compiled by the National Alliance for Caregiving estimates that a woman taking care of a family member with dementia will rack up approximately $4,766 in additional health care costs for herself, when compared with a non-caregiver peer.

Candidates divided over decision-making power

Should health care policy decisions be placed in the hands of the states, or the federal government?

This question forms the heart of the health care debate. Obama feels that the federal government would be the best vehicle for implementing reforms, but Romney disagrees, saying that individual states should be allowed to determine what is best for their citizens.

Obama's plans are detailed in the ACA, which calls for:

  • A Pre-Existing Condition Insurance Plan which extends health insurance to people with pre-existing conditions.
  • Preventing health insurance companies from dropping policies when people get ill and banning lifetime and annual limits on coverage.
  • An Early Retiree Reinsurance Program, which partially reimburses employers who keep early retirees on their health insurance plans
  • Insurance companies to provide full coverage for certain prevention-related health care services.
  • Insurance exchanges to help people research and purchase health insurance programs, to be put in place in 2014.

Romney's plan lacks the details of Obama's, primarily because of his desire to cede much of the authority of health care reform to state governments.

He has, however, outlined a series of proposals that are integral to his plan for the future of American health care:

  • Use insurance exchanges (pools of state-regulated health care plans that people can choose from), subsidies, and public-private partnerships to aid people without insurance.
  • Institute high-risk pools and reinsurance programs (insurance bought by insurance companies to off-set risk of taking on policyholders) to help people with chronic illnesses afford care.
  • Enact policies that stop insurance companies from discriminating against people with pre-existing conditions, as long as they maintain consistent coverage
  • Shift incentives away from fee-for-service health insurance plans
  • Allow funds from individual savings accounts be used to pay for both medical costs and health insurance premiums.
  • Increase competition among health insurers by allowing people to purchase plans across state lines.

Party divides could hinder progress

The partisanship that has infected Congress over the past few years indicates that health care reform is likely to be a lengthy, painful process, no matter which candidate receives more votes in November.

Bob Graham, M.D., professor of family medicine at the University of Cincinnati, School of Medicine, expresses his concern over the deeply divided nature of the legislative branch. "In the current political climate, it's difficult to find a circumstance where the two parties are willing to come to an agreement to do something," he says.

Over the next few years, Americans of all ages are likely to bear the burden of Congressional indecisiveness as lawmakers gradually hammer out the details of the plans of whichever candidate is elected.

Despite the uncertainty presented by both candidates' proposals, McDonough urges caregivers and seniors alike to educate themselves on the issues and remain involved in the election. "This is probably one of the most critical elections we've had in our entire history," he says.

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