Professional Documents
Culture Documents
BUSINESS
VOLUME 3 ISSUE 3
WINTER QUARTER, WEEK 4
REVIEW
Costs of Healthcare
What Obama Healthcare Costs You: p. 20
Pharmaceuticals
Companies and Healthcare Reform: p. 16
Recent Legislation 16
Obama’s Healthcare Bill
News of the Week 4
Massive Earthquake hits Haiti
Pharmaceuticals 17
Companies and Healthcare Reform
Calendar 5
Events January 27 through February 18
International Healthcare 18
Coverage, Prescriptions, and Financing
Business School Profile 6
Wharton, University of Pennsylvania
History of Healthcare Bills 20
Investment Banking 8
Recent News in the Banking Industry Costs of Healthcare 23
What Obama Healthcare Costs you
Accounting 9
News and Recruiting Tips
Consulting 11
News in Consulting
PHOTO CREDITS
Cover | Patrick Tran
Table of Contents | Lona Zhao, Christian Svensson,
‘LittleMan’
Credits Page |Andrzej Gdula, Cathy Kaplan, Jyn Meyer
News of the Week | Shaul Schwarz
Calendar | G & A Scholiers, Mike Johnson
Business School Profile Pictures & Charts | Wharton
Business School
Investment Banking | Jakob Lyng, Styledbits.com
Accounting | Darren Shaw, Shaun W
Consulting | Martin BOULANGER, “FOTOCHROMO”, Ivan
Petrov
Healthcare title page | Michelle Morales
Overview of Health Care | “yenhoon”, Vangelis
Thomaidis , Will Thomas
New Health Care Legislation | Rabi Raj
Pharmaceuticals | Aleksandra P.
International Health Care | Dominik Gwarek, “RAWKU5”
History | Sundeip Arora, Tijmen Van Dobbenburgh,
Lona Zhao, Christy Thompson, Thiago Miqueias
Costs | Melissa Balkon, Keith Syvinski
Bruin Business Review - News of the Week 4
NEWS OF THE WEEK The Red Cross has donated its efforts to help victims of the
MASSIVE
Haiti earthquake as well by focusing its fundraising on this
cause. The organization has also reached out to young people
by involving cell phone providers and such social networks as
‘Twitter’ in order to increase donations collected. The Red
EARTHQUAKE Cross has enabled those that want to lend a helping hand to
Haiti in this time can simply text or ‘tweet’ a donation to the
Red Cross. By January 15th, 3 days after the earthquake, these
HITS HAITI campaigns had generated more than $10 million for Haiti
relief funds.
CALENDAR
January 27th
January 28
February 9
Event: Internship Search, Job Search Jumpstart
Time: 4-7pm Event: Media and Entertainment Night
Location: Career Center Time: 7-9pm
Location: Grand Horizons Room, Covel Commons
February 10*
February 11
Admission Deadlines
and Expenses
MBA
There are three different rounds throughout the year in
which students can apply for the MBA program. However,
the later the round, the more competitive it is to enter the
program. For 2010, deadlines for rounds one and two have
already passed, but round three’s deadline is March 9, 2010
and the decisions release date is May 14, 2010. Total ex-
penses per year are $81,000, including room and board.
Doctoral
For 2011, students need to submit their applications and ma-
terials by December 2010. As an extremely selective pro-
gram, the admissions committee reviews previous academic
work, GMAT or GRE scores, and instructor and job evalua-
tions. All PhD students receive a stipend as well as a fellow-
ship that covers tuition of $24,720.
Executive Education
Individuals and organizations can apply at any time. Since
Bruin Business Review - Investment Banking 8
O
markets executives are optimistic about
ne of the major recent head- passes with the approval of Congress, the IPO activity this year. 68% of those
lines dominating the banking the proposed tax could be set into ef- polled believe that IPO activity will see
industry striking up consider- fect as early as June 2010. To become a an increase this year. Overall, there is a
able controversy has been the law the bill must pass both houses of definite sense of optimism in the air.
large bonuses banks have been paying Congress and then be approved by the The increase in IPO activity will un-
its employees. Four of the largest President. doubtedly help the banking industry as
American banks plan to announce bo- they will see an increase in workload
nus payments of up to $100 billion for Despite Obama’s confidence in passing among the capital markets group, po-
their staff this week. JP Morgan, for this proposal, he faces opposition from tentially leading to more hiring.
instance, plans to pay its staff up to $6 Republicans and the financial services
billion in bonuses. Citi on the other industry. Jamie Dimon, Chief Executive Some other potential IPOs to look
hand, has plans to cap bonuses at of JP Morgan Chase, said, “Using tax out for:
$100,000, a move that may help dimin- policy to punish people is a bad idea. All Skype
ish the public outrage over Wall Street businesses tend to pass costs on to cus- Twitter
bonuses, but may make it more difficult tomers.” The banks could simply tighten Yelp
for them to retain top talent. their credit and raise interest rates, Linkedin
making it more difficult for consumers
Digg
“If banks can afford to pay to borrow money. Similarly, small busi-
nesses relying heavily on credit from
out bonuses, then they can banks may see a tightening of loans is- Facebook is most likely one of the top
repay taxpayers too” sued by banks. Other banks have also candidates to look out for an IPO in
raised their objections by stating that 2010. Recently, Facebook implemented
To address complaints of “Main Street”, many of them have already repaid the a dual-class stock structure, a move that
the Obama administration has proposed TARP money with interest. many companies utilize prior to issuing
a $90 billion tax on the largest banks. an IPO. Although Facebook has kept its
Obama emitted an air of confidence at a revenues a secret, it has been growing
recent public announcement saying that very quickly, with a current user count
“if banks can afford to pay out bonuses, of 350 million worldwide. If Facebook
then they can repay taxpayers too.” The were to issue public shares any time
Obama administration estimates the soon, it could potentially be valued at
0.15 percent tax should affect as many around $14 billion as many investors
as 50 of the largest banks and should said that they were willing to pay ap-
raise approximately $90 billion within a proximately $32 per share. A Facebook
span of 10 years. The money raised will IPO may very well lead to what many
be used to pay back the costs of the analysts coin as the “Netscape Mo-
$700 billion Troubled Asset Relief Pro- ment,” a surge in technology IPOs that
gram (TARP) that the U.S. Government characterized the dot-com boom back in
implemented during the peak of the the late 1990s.
financial crisis back in 2008 to bail out
the largest U.S. banks. If this proposal
Bruin Business Review - Accounting 9
BREAKING INTO
CONSULTING
By Robert Chang radical changes may take some out
Staff Writer of their comfort zone, but to others
they bring an opportunity to break
Also, the popularity of consulting, once Another major roadblock in the consult-
again linking to flexibility, is the diversity ing industry is lack of an MBA. Most
of projects. Contracts between team of UCLA graduates should enter the com-
consultants and the client’s company panies as a low level analyst for a few
can last anywhere from months to years and then go on to get their MBAs,
years. After finishing the project, a con- or get MBA progress along with their
sultant will then be transferred to an- early career. Regardless of your path, an
other project in another location, possi- MBA is necessary. Consulting firms will
bly across the nation or on the other not use BAs on their project teams be-
side of the world. This new project will cause the client, represented by mostly
most likely involve an entirely new MBAs, will not want to pay for the ad-
team, new project managers, and a vice of someone with a lower education
completely different project goal. These level.
Bruin Business Review - Consulting 12
GETTING A JOB
Summer Jobs / Internships
These are the internship offers as listed on Bruin-
View. This list is not all enclusive but a list of
upcoming oppurtunities
to determine whether to research a drug. With limited testing of ZS Associates is offering three internships for the
the drug, the company will need to determine how valuable the year, the deadlines for these programs are April 6th
drug potentially will be and how much it will cost to develop. The
company is presented with three uncertainties, the cost of re-
search, whether the drug will past regulatory standards, and Accenture is offering a summer job for, the deadline
whether the drug will be commercially marketable. The company to apply is Febraury 21st
has the potential to lose huge amounts of resources if the drug is
not profitable and will gladly pay a consulting firm to look at the Mercer is offering a summer job, the deadline is Feb-
decision. The consulting team will look at the data drawn from ruary 28th. They are also offering two summer in-
early trials of the drug, the potential risks that would prevent FDA ternships, the deadline for these is March 5th
approval, and the marketable qualities compared to similar drugs
on the market, such as cost and side effects. The consulting team FULL TIME JOBS
will have to complete a risk-benefits analysis and present their
findings to the company.
Valvoulis, Weiner & McNulty, LLC is offering the Ana-
While problems like these are something that can be studied at
business school much of it is inherent in your personal decision lyst position to bruins in Los Angeles. The deadline to
making ability and professional experience. The ‘thinking’ and the apply is February 18th.
‘doing’ are both integral parts to a team of consultants.
Compass Lexecon is offering a job as an Analyst in
Finding the balance between these two aspects is key to being a Century City. The deadline to apply is February 19th.
successful consultant. A simple analyst will never move up very
far in the company because poor business strategy or inter per- Oliver Wyman is offering a Junior Analyst position in
sonal skills make the company reluctant to take him out and show either Boston or Chicago. the deadline to apply is
him to clients. Those that have all the skills of a good business- February 20th
man combined with technical knowledge are the stars of the
company, both solving problems and building strong consultant-
client relationships.
Washington Occupational Health Associate Inc is
offering a spot as Project Manager in their Washing-
This is why despite more years of education, PHD’s are often re- ton DC office. The deadline is February 27th.
ceive starting salaries lower than MBA’s. MBA’s are on such high
demand from all sectors of the economy, consulting firms are Desmond, Marcello & Amster is offering a position
willing to pay more money in order to secure their interest. It’s as Financial Analyst in their Los Angeles offices, the
simple supply and demand. deadline is Mar 5th
AN OVERVIEW OF
THE HEALTH CARE
By Jane Kim
Staff Writer
health-care indus-
try, including doc-
tors, registered
INDUSTRY
nurses, veterinarians, physic
A ccording to the Bureau of Labor
Statistics, the health-care industry
cal therapists, biomedical equipment
technicians, etc. Some fields in the
is one of the fastest growing businesses health-care industry include nursing,
in the United States. Accounting for biotechnology, and pharmaceuticals.
14.3 million wage and salary workers, it Work hours also vary depending on the
includes employees in hospitals, private
job description, and whether the job is
offices of specialized doctors, nursing full time or part time. Almost 20 percent
care facilities and ambulatory health- of workers in health-care work part time
care services. In addition to medical and many hold more than one job.
assistance, the healthcare industry also
comprises of pharmaceuticals and bio- Within the health-care industry, the
technology, providing patients with
pharmaceuticals and biotechnology
newer and improved methods of treat-
industry is one of the fastest- growing
ment and care.
fields. The pharmaceuticals and biotech-
nology industry is responsible for devel-
Much of the health-care industry is pri- oping and promoting medications and
vately owned; more than half of health- treatments. Even during a recession this
care establishments are private offices particular industry continues to flourish
of physicians and dentists, as well as as demands for prescription drugs and
other specialized care providers. Public (MCOs). Most prevalent examples of
medication increase due to the rise in
health-care facilities, on the other hand, population. Consequently, from 2004 to MCOs are health maintenance organiza-
account for only 1 percent of all health- 2014, the number of wage and salary tions (HMOs) and preferred provider
care institutions, though they employ workers in this industry is expected to organizations (PPOs). While both reduce
about 35 percent of all workers in the increase about 26 percent, compared to health-care costs for citizens due to lim-
industry, illustrating the variation in size a 14 percent increase for all health-care ited out-of-pocket costs, HMOs and
and proportion of the health-care indus- industries combined. However, the dis- PPOs differ in coverage. Based on a
try. For example, while a private doc- covery of newer and better drugs poses fixed monthly cost, HMOs can only be
tor’s office employs only a handful of used within the network—hospitals and
several problems: it takes a long time
workers, a hospital employs thousands. for new medications to be introduced other medical coverage that participate
into the market and costs for research in HMO. By signing contracts with spe-
In addition to a wide range in number and development are high, thus reflect- cific providers, HMOs offer cheaper
and share of workers, there is also a ing the increase in costs for patients.
wide assortment of jobs within the With new developments and improve-
ments in health-care and the growing “With new develop-
number of private healthcare establish-
ments, rising costs have become an ments… in health-
overwhelming issue for the average
American citizen. Most patients receive
care…, rising costs be-
assistance in the form of health insur- come an overwhelm-
ance—private or public.
ing issue for the aver-
Private health insurance is coverage age American.”
through an employer, mainly provided
through managed care organizations
Bruin Business Review - Healthcare Issue 15
Medicare is health insurance for citizens providing access to those who are de-
and long-term residents who are 65 nied health insurance and also on pro-
years of age or older and the disabled. moting self-service for patients so that
Medicare is separated into two parts: they have easier access to scheduling
Part A and Part B. Part A covers for stays appointments, researching costs, and
in hospitals and nursing- care facilities- paying electronically. This particular
like convalescent homes. Part B, which solution also aims to maximize revenue
is optional, covers medical procedures and makes the billing and collection
such as x-rays, blood tests, and other process more efficient by accelerating
forms of medical treatments. Medicaid, the collection of revenue through meth-
funded by both state and federal gov- ods such as automatic secondary billing,
ernments, is another type of public electronic claim processing, and direct
health insurance offered to low-income entry of Medicare claims.
individuals and families. Though qualifi-
cation depends heavily on one’s in-
come, Medicaid eligibility requirements
and coverage differs in every state. For
example, in California, dental insurance
health-care. This is beneficial to provid- within Medicaid is no longer available to
ers and holders since HMOs provide the those who are older than 21 years.
former with a greater number of pa- Meanwhile, Tennessee limits the num-
tients, thereby increasing profits, while ber of prescription drugs available to
allowing for more affordable health- each Medicaid patient.
care for the latter. PPOs are similar to The Bureau of Labor Statistics predicts
HMOs but have a broader coverage as Though health insurances have exten- that the health-care industry will create
holders are covered within or out of the sively relieved the financial burden of 3.2 million more wage and salary jobs,
PPO network. However, PPO holders are medical bills for many American citi- largely due to the retirement of baby
encouraged to use providers within the zens, many health-care companies are boomers of the 1950s and 1960s. Fur-
network due to higher costs when pro- now finding alternative solutions to re- thermore, with the recent national de-
viders are out of the network. Due to duce costs. Health-care information and bate on universal healthcare coverage in
greater flexibility in medical services, technology solutions offer to help those the U.S., the health-care industry will
PPO holders generally have higher out- without health-care insurance by lower- continue to be examined closely.
of-pocket expenses than do those of ing costs while maintaining good qual-
HMOs. ity. Some solutions include revenue cy-
cle management, enterprise revenue
management, pharmacy and nursing
“…the pharmaceutical solutions, etc. For example, revenue
cycle management primarily focuses on
and biotechnology in-
dustry continues to
flourish as demands…
increase due to the rise
in population”
In contrast to private health insurance,
public health insurance is subsidized by
the government. This type of insurance
provides lower-cost of health-care ser-
vices for specific groups of people, in-
cluding the elderly, disabled, military
veterans, and the poor. Of the many
types of government-funded health-
care programs, Medicaid and Medicare
are most common. Federally funded,
Bruin Business Review - Healthcare Issue 16
I t has been almost six months since superior health benefits, which come
of these high-cost
President Obama’s original August with a steep price tag. Consequently, plans will have to
2009 deadline for finalizing a health union members are at a disadvantage pay a steep 40-
care bill. It quickly became evident to compared to non-union members who percent tax.”
Congress that if health care is going to will not be subject to the tax. Workers,
be successfully reformed, it would take as well as government employees, cur- over ten years. Drug companies would
time and careful deliberation on many rently in collective bargaining agree- also be required to discount medica-
aspects of the bill. ments will not be affected by the tax tions by 50 percent for Medicare bene-
until 2018, while the tax ficiaries. Now, Congress is asking for an
will take effect for every- extra $10 billion from the pharmaceuti-
one else in 2013. The 40 cal industry, a bold move that makes
-percent tax on insurers Congress look like a financial scavenger,
will decrease their will- looking for money from wherever pos-
ingness to offer such sible.
high-cost plans, as well
as compromise the qual- Senators are saying that because an
ity of benefits offered additional 30 million Americans would
with these plans. It is be receiving health care insurance, the
also likely that insurance extra $10 billion expense incurred by
companies will increase pharmaceutical companies would be
the prices on their lower offset by the massive increase in mar-
-cost plans to offset the ket size. However, companies are still
The source of funding for the bill will be proposed tax on the more expensive hesitant because restrictions on insur-
the most difficult piece to take on. plans. ers would make for unpredictable fu-
Congress has included in the bill a tax ture drug sales.
on what are sometimes called While the Senate strongly favors taxing
“Cadillac” health care plans. Originally, health care providers, the House of Another measure under consideration
the tax would be placed on premiere Representatives favors an alternative is whether to allow generic drugs to be
plans costing more than $23,000 for method that taxes high-income indi- sold alongside brand name drugs. As
families and $8,400 for individuals, gen- viduals. In the House, individuals and the bill stands, brand name pharmaceu-
erating $150 billion over the next ten couples with incomes higher than tical companies would have twelve
years. However, new legislation would $500,000 and $1 million, respectively, years of closed sales before generic
raise the price limit to plans costing would be forced to pay an additional companies would be allowed to com-
$24,000 and $8,900 for families and 5.4-percent income tax. According to a pete. This would allow the big-name
individuals, respectively. The small CNN / Opinion Research Corporation drug companies to see maximum profit
change in the price limit of subject high poll, 61 percent of people polled fa- on their sales without having to worry
-cost plans would drop the projected vored the House proposal, compared to about being undersold by manufactur-
tax revenue to $60 billion over ten 29 percent who supported the Senate‘s ers of generic varieties. Subsequently,
years. This move can be argued as inef- plan. the profits of brand name drug compa-
ficient because the seemingly small nies would largely be used to promote
change in the price limit of taxable In addition, also in question is the research and development of new
plans translates to a large decrease in amount of financial responsibility for drugs.
projected revenue from the tax. the bill pharmaceutical companies
would bear. The original contract be-
Providers of high-cost insurance plans tween Congress and drug companies
will have to pay a steep 40-percent tax. would generate $80 billion in tax dollars
Bruin Business Review - Healthcare Issue 17
Pharmaceutical
And Healthcare Reform
By Andrew Edwards Staff Writer
way to partially offset new costs. Drug companies are hoping
The Pharmaceutical Research and Manufacturers of Amer- the health overhaul will increase their market due to the fact
ica recently announced it would relinquish its support for that more Americans will be insured and can therefore afford
the health-care legislation if Congress were to reduce the prescription drugs.
proposed twelve-year monopoly on new biological drugs.
During this twelve-year period, drug companies are al-
lowed to be the exclusive seller of the new biological drugs “The current support of the pharma-
they create. By charging high prices for new drugs, compa-
nies can use this period of monopoly to recover expenses ceutical industry is a sharp contrast to
incurred during the research and development of new
drugs. The pharmaceutical industry’s trade group includes
the mid-1990s when drug company
the chief executives of the leading pharmaceutical compa- executives led the opposition to
nies on its board, including Pfizer, Merck, and Bristol-
Myers. President Clinton’s health-care plan.”
The drug industry was the first to back reform and its sup- The pharmaceutical industry backed reform early on in the
port has helped move legislation through Congress. The hope that they would be able to influence the intent of the
current support of the pharmaceutical industry is a sharp legislation. The industry trade group believes that twelve-
contrast to the mid-1990s, when drug company executives year protection for new biological medicines is necessary to
opposed President Clinton’s health-care plan. An important promote future drug innovations. They argue that without
reason for their support is that, unlike the Clinton legisla- proper patent protection firms would not be willing to spend
tion, the currently proposed legislation does not include vast sums on research necessary for creating new drugs. The
provisions that allow importation of brand-name medi- industry trade group, which has long cooperated with pro-
cines or that provide a public option for government-run posed legislation and made some initial concessions, has an-
insurance. Drug companies have promised $80 billion in nounced that it can no longer support the bill if it includes a
rebates over ten years to assist with the cost of insuring reduction of data protection on biological drugs.
more Americans. A portion of this money will be used to
discount brand-name drugs for seniors not covered by
Medicare. The gap in Medicare prescription drug coverage
is referred to as the “doughnut hole.” The Medicare
doughnut hole is the medical treatment that Medicare
beneficiaries are financially responsible to cover. This oc-
curs when their costs exceed the prescription drug cover-
age level and are less than the catastrophic coverage level.
Recently, there has been pressure in the House and Senate
to fully cover the doughnut hole, thereby pressuring drug
makers to increase their overhaul concessions.
The other major purpose of the contribution is to help off-
set the cost of providing subsidies to the uninsured. Pro-
posed health reform increases government costs and con-
tributions from pharmaceutical companies are seen as a
Bruin Business Review - Healthcare Issue 18
INTERNATIONAL
HEALTHCARE
By Eric Park
Staff Writer
According to New York Time’s research, the national average healthcare spending per person in 2008 was $7,681: an increase
of 3.5% from 2007. Medicare is a U.S. government funded program that provides health insurance for citizens over the age of
65. Medicare spending increased to 8.6% in 2008 to $469 billion. The U.S. had an average healthcare spending per person of
$6,402 in 2005 while Japan had an average of $2,358 per person according to statistics provided by National Public Radio.
There are further existing discrepancies between the two countries as Japan provided healthcare for 100% of its population
during 2005 while the U.S. provided healthcare for only 82% of its under 65 population and 100% for those over the age of 65.
Because of the existing problems with the U.S. healthcare system, there have been many reform bills proposed in the past
months. Many critics of the current healthcare system argue that U.S. healthcare falls behind that of its international counter-
parts.
Britain is another country where the government pays for cost of emergency
room health services for its legal citizens.
The differences in healthcare also reach the spectrum of patient and doctor appointments. According to research by the
Commonwealth Fund, 60% of Dutch citizens and 42% of French citizens were able to successfully schedule same day ap-
pointments with their primary care doctors. The U.S. figure for the rate of successful same day appointments was only 26%.
These are only a few of healthcare coverage discrepancies that exist between the U.S. and those of their international coun-
terparts. However, the U.S. is the only country that lacks universal healthcare for its citizens.
Bruin Business Review - Healthcare Issue 19
Medicaid. This was the first real victory for universal health-
THE GREAT SOCIETY, care. Medicare provided public health insurance for individu-
MEDICARE AND MEDICAID als over 65 and Medicaid allowed states to provide insurance
to individuals receiving healthcare. Medicare was to be par-
tially funded by a payroll tax on workers. The remainder of
After Roosevelt’s death in 1945, his successor Harry Truman Medicare would be funded by a matching contribution from
pushed health care but never got a bill to vote in congress. the employer with no exceptions. Medicare costs have been
His ideas would inspire further Democratic efforts to reform steadily increasing since its passage in 1960. In the fiscal year
healthcare. In 1952, Dwight Eisenhower was elected to the of 2007, Medicare costs reached $440b or 16% of all federal
presidency. He was a firm opponent of American healthcare spending. Nonetheless, the passage of Medicare was a major
but provided a ‘reinsurance plan’ which would support pri- step in generating support for a universal system which al-
vate insurance companies with federal subsidies. The bill was most happened with the very next president, Richard Nixon.
met with little support in congress and was voted down twice.
After Eisenhower, John F. Kennedy and Lyndon B. Johnson
entered office. Kennedy’s New Frontier plan included the
intellectual predecessor to Medicare but he could not get it
passed in congress. After Kennedy’s assassination, Lyndon
Johnson unveiled his Great Society program, a series of pro-
gressive social reforms. One of the main focuses of the Great
Society was an evolution of the Kennedy plan, Medicare and
Medicaid. Johnson was presented with a rare political oppor-
tunity. Democrats outnumbered Republicans 2 to 1 in the
House and nearly held that ratio in the Senate. However,
even with these legislative advantages, healthcare reform
faced many hurdles.
presented to congress. Known amongst open. After the passage of SCHIP, the erage and payments to physicians. The
its detractors as “Hillarycare”, the bill next change in health care came with current draft of the bill would essen-
stipulated that all Americans must be George W. Bush in 2003. George W. tially set up the government as a com-
covered by health insurance whether Bush expanded Medicare to cover drug petitor to private insurance firms. One
government provided or privately pro- prescriptions which was viewed as a of the criticisms of the Health choices
vided. The bill also mandated that all major victory for healthcare reform act is that the public option would drive
employers needed to provide insurance from an admitted opponent of health- private insurance firms out of business.
to their employees. The Clinton admini- care reform. This was the case in other industrialized
stration took a very hard stance on the nations where the government offered
bill. The bill faced staggering opposition AMERICA’S AFFORDABLE a public option such as in the United
from medical organizations, including Kingdom.
the AMA, and business owners. Al- HEALTH CHOICES ACT
though many businesses had health Instead of only a public option, private
plans, their coverage is rather limited. In companies found they could not com-
order to abide by the new legislation, pete with the resources of the federal
most businesses would have to expand government and are now marginalized
their coverage by millions of dollars. to a limited portion of the market. The
Health providers and insurers were costs of the bill would also be immense.
against the bill because they felt they Congressional Budget Office, a non-
could not compete with the federal gov- partisan organization, estimated that
ernment. Also, medical professionals the healthcare reform bill in its current
were against the bill because they be- state will increase the federal deficit by
lieved that healthcare reform would $216 billion from 2010 – 2019. How-
actually increase cost of care and thus ever, many critics of the bill indicate
limit them to providing subpar care. The One of Barack Obama’s first acts in of- that this only represents the monetary
bill died despite being pushed in a heav- fice was to propose a health care bill. cost and that the cost may be higher
ily Democratic congress. Although many viewed this as an ex- due to the costs of medical care increas-
tremely risky political move so early in ing in response to the passage of the
Senate Majority Leader George Mitchell his presidency, Obama believed that his bill.
proposed a compromise bill but there victory over John McCain gave him a
was not enough Democratic faith in political mandate to reform healthcare. The history of healthcare in America is a
healthcare reform to push the new bill The result was the America’s Affordable history of failure and opposition. Ever
through. In response to this failure, Health Choices Act of 2009. In order for since 1912, healthcare reform has been
Hillary Clinton along with Democratic the act to become law, both houses of in the political sphere but very few re-
Senator Ted Kennedy and Republican congress must pass a version of the bill sults have come from the discourse. Yet,
Senator Orrin Hatch created the State which would then be unified by a joint even with most of the failed attempts at
Children’s Health Insurance Plan in committee. Then the new bill will once reform, many of the ideas existing in the
1997. SCHIP allowed federal and state again be voted on and sent to the presi- Affordable Health Choices Act can be
governments to work together in order dent. There are currently two senate traced to previous health bills. The cur-
to provide insurance to qualifying chil- versions of the bill which have not yet rent bill represents a natural evolution
dren. The bill was funded by increased passed a vote. The bill in its current of previous congressional bills. The fu-
cigarette taxes and allowed for block house form is very similar to Nixon’s ture of this bill is still clearly in doubt,
grants given to states specifically for Comprehensive Health Insurance Act but the bill itself represents a continuing
medical insurance for children. The to- and uses many of the same ideas. political battle which started in the mind
bacco industry was largely unaffected of a president in 1912.
by this first tax with their revenues not In November, it was passed in the
decreasing much, however, with the House of Representatives, 215-200 with
resigning of this bill in 2009 by the the only Republican vote coming from
Obama industry, SCHIP faces a new hur- Representative Anh ‘Joseph’ Cao of Lou-
dle. isiana. Elements of the bill include a tax
on married individuals with a joint ad-
The Obama administration expanded justed gross income of $350,000 as well
the tax to all tobacco products as well as as businesses who fail to provide the
increasing them. Again, the tobacco required level of healthcare coverage.
industry is projected to stay largely un- The bill also prohibits cancellation of
affected. However, stores which primar- plans unless there is evidence of fraud.
ily run on tobacco sales such as corner The bill also creates a slew of commit-
stores are now facing a crisis to stay tees as well as expanding Medicaid cov-
Bruin Business Review - Healthcare Issue 23
Health Care Costs age pays doctors 20% to 30% less than
those in private insurance plans.” As
patients switch into the cheaper govern-
Affects You
ment-run plan, doctors are expected to
earn 15 percent to 20 percent less be-
cause doctors will be pressed by both
higher practice costs and lower reve-
By Steven Laird health-care reform legislation may not nues. Moreover, government insurance
Staff Writer help as much as Americans would like. programs will introduce new bureau-
cratic red tape, such as expensive docu-
As health-care costs rise to new highs The $1.05 trillion House health-care mentation, electronic tools require-
and make up an increasingly larger per- reform plan will be funded through ma- ments, and staffing regulations, making
centage of the country’s GDP (17 per- jor cuts to the existing Medicare pro- it difficult for private practices to com-
cent), how to fix the current system and gram, which would save $472.8 billion pete. In addition, Medicare provides
how these changes will affect people according to the Congressional Budget charge-based incentives that reward
like you and me comes into question. Office. Furthermore, the bill will also be doctors for delivering more care. All of
Throughout the decades, the steady rise funded by a 5.4-percent surtax on high- these factors will only compel doctors
in the cost of health care has been at- income individuals, which is expected to to increase their volume of patients,
tributed to new technology, an aging generate an additional $460.5 billion. which means appointments will be
America, and inefficiencies in the cur- Lastly, the House expects to raise $135 shorter and harder to secure. As doctors
rent system. While technology, one can billion through increases in employer are increasingly consolidated into con-
argue, is something that can likewise contributions, taxes on medical devices, glomerates, corners will be cut and pa-
make health care more efficient, people and penalties for those who fail to com- tients may not be given the quality care
often fail to see another reason behind ply. they deserve as the government em-
rising costs. As Americans increasingly ploys cost capitation systems that dic-
sue one another, doctors have been As a result, this new “public option” is tate a fixed amount of money per pa-
forced to employ costly measures to expected to reach 131 million Ameri- tient.
ensure their own protection against cans, which is seemingly promising.
possible lawsuits. As a result, they order However, as programs are cut and doc- The 60 percent of self-employed doc-
many costly tests such as magnetic reso-
nance imaging (MRIs) or computerized
axial tomography (CAT) scans to be ab-
solutely sure of their results. One MRI
scan can range from $1,750 to $2,200 in
hospitals, while outpatient facilities can
provide it for a mere $700 to $1,000.
Thus, while Americans want to ensure
their health, they are faced with the
problem of the unreasonable costs to
maintain it.