An unfortunate consequence of all the media focus on partisan health reform politics is that it masks the real work that needs to happen. The new law is a broad promise to cover the nation's uninsured without raising insurance premiums and without increasing the federal deficit. These are good goals, but hard to achieve.
To guarantee universal coverage the law requires everyone to buy or have qualifying health insurance, state governments to expand their Medicaid programs to cover more low-income people, health insurers to offer coverage to anyone who applies no matter how sick they are, and the federal government to offer subsidies to help the middle class afford insurance. So far so good, except perhaps that the penalty for not having health insurance is quite low. But if universal coverage were the law's only promise, its implementation would be a simpler matter.
Keeping the other two promises will be the real challenge because of the way universal coverage is structured and financed. For instance, when those who have been unable to obtain insurance because of pre-existing conditions join the pool of insured persons, premium costs for everyone will rise. The new law assumes that this will be offset by having more young and healthy persons insured, but the combination of a weak penalty for being uninsured and newly mandated premium discounts for older persons at the expense of others will price the young and healthy out of the market. Most of the new taxes that fund universal coverage are imposed on the health system itself, which is a new cost that will also raise prices. Private premiums will further rise through provider cost-shifting when the federal government ratchets down Medicare payments. Federal subsidy costs will rise along with private premiums. State costs for Medicaid will rise with expanded eligibility.
The only sure way to avoid the above scenario is to begin to do something about medical costs that typically rise at two to three times the rate of inflation. This is work that needs to happen. Otherwise, the currently insured, the states, and the federal treasury will foot the bill for universal coverage.