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Chandra on pricing flaw in health care bill

To access the full segment on Bloomberg Advantage Radio, click here.

Nilesh Chandra, healthcare expert at PA Consulting Group, shares insights with Bloomberg Advantage Radio on the outlook for health care reform. 

Commenting on this topic, Nilesh states: “In terms of what's interesting about this bill, we are talking about taking away the individual mandate and moving to a system of tax credits instead of subsidies. A complication that I think seduces, is once the individual mandate goes away, a lot of healthy people would have no incentive to buy health insurance and so what you start seeing in the exchange markets is increasing proportion of high risk pools and high risk individuals buying insurance, which would in turn then drive the premiums to go up. So you can disagree about the specific numbers, but it is fair to say that the exchange markets as they are currently set up would become increasingly untenable and it would be a significant impact for them.”

Nilesh continues: “The other significant impact from this proposed legislation is that as people voluntarily, or involuntarily, choose to forego health insurance, you start seeing increased levels of uncompensated care in health care so that's when you go to an emergency room and you don't have health insurance, the doctor is still legally obligated to treat you but they're not getting paid for it. We saw instances of this being quite high before 2010. It has dropped significantly, especially in fields like emergency medicine, but those sorts of changes will start to unravel.”

Nilesh concludes: “Another way [to make this system work] is that people pay for what they use. The challenge becomes, in health care especially, we have such a high incidence of obesity and diabetes, and conditions like that, which are really expensive. Plus in these instances of cancer, which can be very arbitrary and random. So the questions becomes how do you as a society pay for it and who pays how much.”

Note: This interview was broadcast before the vote of AHCA was cancelled

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