Tag: health insurance premiums

Meet the New Plan, Same as the Old Plan

Or it may even be worse.

This morning, President Obama released his latest health care blueprint, which he hopes will breathe life into his moribund effort to overhaul one-sixth of the U.S. economy.  The new blueprint is almost exactly the same as the House and Senate health care bills that the public have opposed since July.  It mostly just splits the difference between the two.

One new element, however, is the president’s proposal to impose a new type of government price control on health insurance premiums.  I explain here how those price controls are a veiled form of government rationing that helped sink the Clinton health plan.

If anything, those price controls make the president’s new plan even more bureaucratic and government-heavy.  The Senate bill would take an ill-advised stab at cost-control by imposing a tax on the highest-cost health plans.  That president proposes to pare back that excise tax and instead have a panel of federal bureaucrats cap the growth in health insurance premiums for all health plans.  Those new government powers could make it even harder for people to obtain the coverage and care that they need.

Curtain Call for the ‘Public Option’ Sideshow

Senate Democrats now appear to be jettisoning the idea of creating a new government program to snuff out compete with private insurance companies.  It was an audacious proposal from the start, as it made their health care plan even more left-wing than the Clinton plan, which voters soundly rejected for being too statist.

Yet it was always a sideshow that helpfully distracted the Left, the Right, and the mainstream from what shrewd Democrats and their allies at AHIP have really wanted all along: an individual mandate forcing all Americans to purchase health insurance under penalty of law.

As I argue in this Cato study, an individual mandate gives government more (and more immediate) control over Americans’ health care than even the so-called “public option” would.  As it has in Massachusetts, an individual mandate will allow government to control what kind of insurance you buy, how much you pay, how insurers pay doctors, where doctors report to work, how doctors practice medicine, and what kind of medical care you get.

The question now is whether the Left, the Right, and the mainstream will recognize the Senate health care bill for what it is: a massive $450 billion bailout for private insurance companies that will drive health insurance premiums and taxes higher while reducing quality, all for the benefit of a small cadre of Democrats with a preternatural need to control other people’s health care.

(Cross-posted at Politico’s Health Care Arena.)

Reid Health Bill Perpetuates the $1.5 Trillion Fraud

Senate Majority Leader Harry Reid (D-NV) has finally unveiled his massive 2,074-page health care bill.  The Congressional Budget Office reports that the insurance-expansion provisions would cost the feds $848 billion over 10 years.  To raise those funds, the bill would tax wages, medical devices, prescription drugs, sick people, health insurance premiums (twice), HSAs, FSAs, HRAs, and – why not? – cosmetic surgery.  The remainder would supposedly come from $491 billion of Medicare cuts, even though Medicare’s chief actuary says such cuts are “unrealistic” and “doubtful.”  But don’t worry.  Somehow, this thing’s gonna reduce the deficit.

Of course, that $848 billion only accounts for part of the federal government’s share of the tab.  There is other new federal spending.  My read is that the CBO estimates $998 billion of total new federal spending – though I’ll be waiting for former CBO director Donald Marron to provide a more authoritative tally.

And then there are costs that Reid and his comrades have pushed off the federal budget.  For example, the $25 billion unfunded mandate that Reid would impose on states.  Total so far: just over $1 trillion.

But the biggest hidden cost is that of the private-sector mandates.  In both the Clinton health plan and the Massachusetts health plan, the private-sector mandates –- the legal requirements that individuals and employers purchase health insurance –- accounted for 60 percent of total costs.  That suggests that if the Reid bill’s cost to federal and state governments is $1 trillion, then the total cost is probably $2.5 trillion, and Harry Reid – like House Speaker Nancy Pelosi – is hiding $1.5 trillion of the cost of his bill.

Without a cost estimate of the private-sector mandates, Reid has not yet satisfied the request made by eight Democratic senators for a “complete CBO score” of the bill 72 hours prior to floor consideration.

Fortunately, by law, the CBO must eventually score the private-sector mandates.  When that happens, the CBO will reveal costs that the bills’ authors are trying to hide. When that happens, the CBO will present the new federal spending on page 1, new state spending maybe on page 10, and the cost of the private-sector mandates on page 20 or something.  Democrats will tout the figure on page 1.  But the bill’s total cost will the sum of those three figures -– a sum that will reveal the costs that the bill’s authors have been hiding.

The House passed its bill without a complete CBO score.  The Senate should not follow suit.

I’ve written previously about this massive fraud here, here, here, and here.

(Cross-posted at Politico’s Health Care Arena.)

Wednesday Links

  • If the health care overhaul bill were a medical product it would have to come with a warning label, which could read something like this: Warning: This product will increase your health insurance premiums, make your children poorer and won’t make you healthier. That’s not all. There’s more.
  • Unintended Consequences: Could government efforts to redesign cities to make them more pedestrian friendly, concentrate jobs in selected areas, and increase mass transit actually raise C02 emission levels?

Washington Post Misrepresents Individual Mandates

Here’s a poor, unsuccessful letter to the editor I sent to The Washington Post:

Like Car Insurance, Health Coverage May Be Mandated” [July 22, page A1] paints a misleading picture of proposals to require Americans to purchase health insurance – i.e., an “individual mandate.”

First, the article lacks balance.  It cites three politicians who support an individual mandate but none who oppose it, a group that includes a majority of Republicans.  The article claims an individual mandate “has its roots in the conservative philosophy of self-reliance,” even though most conservatives, including the movement’s flagship magazine National Review, oppose the idea.  The closest the article comes to offering an opposing perspective is one conservative who has supported an individual mandate in the past and may yet again, just not yet.

Second, the article makes the demonstrably inaccurate claims that an individual mandate “lowers overall costs” and “help[s] keep premiums down” by adding more young and healthy people to the insurance market.  Forcing healthy people to purchase insurance does not affect premiums for sicker purchasers, because insurers set premiums according to each purchaser’s health risk.  The article confuses a mandate with price controls, which force low risks to pay more so that high risks can pay less.

Finally, if an individual mandate reduced overall costs, then health care spending would be falling in Massachusetts, which enacted the nation’s only individual mandate in 2006.  Instead, overall health spending is rising, and the rate of growth has accelerated under the mandate.  Rising health spending implies rising health insurance premiums, which has also been the Massachusetts experience.

The Coburn-Burr-Ryan-Nunes Mandate-Price-Control Bill

Today, Senators Tom Coburn (R-OK) and Richard Burr (R-NC), along with Reps. Paul Ryan (R-WI) and Devin Nunes (R-CA) announced that they will introduce a health care reform bill. If my reading of the bill summary is correct, their bill would:

  • Mandate that states create a new regulatory bureaucracy called a “State Health Insurance Exchange,”
  • Mandate that all plans offered through those exchanges meet federal regulatory standards,
  • Mandate “guaranteed issue” in those exchanges,
  • Mandate “uniform and reliable measures by which to report quality and price information,”
  • Impose price controls on those plans by prohibiting risk-rating,
  • Launch a government takeover of the “insurance” part of health insurance, by means of a “risk-adjustment” program intended to cope with the problems created by price controls, and
  • Fall just short of an individual mandate by setting up (mandating?) automatic enrollment in exchange plans at “places of employment, emergency rooms, the DMV, etc.” – essentially, trying to achieve universal coverage by nagging Americans to death.

Needless to say, I am troubled.

The bill summary is self-contradictory. On the one hand, it lists “No Tax Increases” as a core concept. Do its authors not know that imposing price controls on health insurance premiums imposes a tax on healthier-than-average consumers? And where do they think the money for “risk-adjustment” payments will come from? Heaven?

The bill sponsors seem to want to cement in place the monopoly regulation that currently exists at the state level – when they’re not encouraging Congress to take over that function. Have they abandoned their colleague Rep. John Shadegg’s (R-AZ) proposal to allow for competitive regulation of health insurance?

And if Massachusetts created an “exchange” on its own, why do other states need federal legislation?

The bill includes some ideas for which I have more sympathy, like its tax-credit proposal and expanding health savings accounts.

But the above provisions would sow the seeds of a government takeover of health care – so much so that The Washington Post’s Ezra Klein is salivating:

The word of the day is “convergence.” That – and that alone – is the definitive message of the conservative health reform alternative developed by Sens. Tom Coburn (Okla.) and Richard Burr (N.C.), as well as Rep. Paul Ryan (Wisc.). For now, some of the key provisions are about as clear as mud. The plan’s changes to the tax code, in particular, are impossible to discern. So I’ll do another post when I can get some clarity on those issues. The politics, however, are perfectly straightforward.

A superficial read of the Patients’ Choice Act – which I’ve uploaded here – would make you think you’re digging into a liberal bill. A fair chunk of the rhetoric is lifted straight from Sen. Ted Kennedy’s office. “It is time to publicly admit that the health care system in America is broken,” begins the document. “Health care is not a commodity in the traditional sense,” it continues. “States should provide direct oversight of health insurers to make sure they are playing by fair rules,” it demands. The way we pay private insurers in Medicare “wastes taxpayer dollars and lines the pockets of insurance executives,” it says. Elsewhere, it praises solutions that have worked in several European countries.”

And though it’s still too early to say how the policy fits together, it’s clear that many traditionally Democratic concepts have been embraced. To put it simply, the plan wants to encourage a version of the Massachusetts reforms – which it calls a “well-known, bi-partisan achievement of universal health care” – in every state. There are some differences, of course. The plan doesn’t have an individual mandate. It doesn’t have an obvious tax on employers. But it strongly endorses State Health Insurance Exchanges. And that, for Republicans, is a radical change in policy.

This idea – present in every Democratic proposal but absent in Arizona Sen.John McCain’s plan – would empower states to create heavily regulated marketplaces of insurers. The plans offered would have to “meet the same statutory standard used for the health benefits given to Members of Congress.” Cherrypicking would be discouraged through risk adjustment, which the PCA calls “a model that works in several European countries.” The government would automatically enroll individuals in plans whenever they interacted with a government agency and states would be able to join into regional cooperatives to increase the size of their risk pool.

In essence, Coburn, Burr, and Ryan are abandoning the individual market entirely. Like Democrats, they’re arguing that individuals cannot successfully navigate the insurance market, and they need the protection of government regulation and the bargaining power that comes from a large risk pool. This is literally the opposite approach from McCain, who attempted to unwind the employer-based insurance and encourage families to purchase health coverage on the individual market. The core elements of this plan, in other words, make it the same type of plan Democrats are offering. A plan that enlarges consumer buying pools rather than shrinks them. It’s pretty much exactly what I’d expect a Blue Dog Democrat to propose. And it’s further evidence that the argument over health reform is narrowing, rather than widening. And it’s narrowing in a direction that favors the Democrats.

UPDATE: After discussions with Sen. Coburn’s staff, I happily issued a few corrections. Still, concerns remain.

Events This Week

Tuesday, March 31, 2009

POLICY FORUM - Can the Market Provide Choice and Secure Health Coverage Even for High-Cost Illnesses?

12:00 PM (Luncheon to Follow)

In a study recently published by the Cato Institute, economist John Cochrane argues that the market can solve a huge piece of the health care puzzle: providing secure, life-long health insurance and a choice of health plans to even the sickest patients. The key, Cochrane explains, is to eliminate government policies that force the healthy to subsidize the sick, such as the tax preference for employer-sponsored coverage and other attempts to impose price controls on health insurance premiums.

Featuring John H. Cochrane, Myron S. Scholes Professor of Finance, University of Chicago Booth School of Business Research Associate, National Bureau of Economic Research; Bradley Herring, Assistant Professor, Johns Hopkins Bloomberg School of Public Health; moderated by Michael F. Cannon, Director of Health Policy Studies, Cato Institute.

Please register to attend this event, or watch free online.


Friday, April 3, 2009

PglennOLICY FORUM - Drug Decriminalization in Portugal

12:00 PM (Luncheon to Follow)

In 2001, Portugal began a remarkable policy experiment, decriminalizing all drugs, including cocaine and heroin.

In a new paper for the Cato Institute, attorney and author Glenn Greenwald closely examines the Portugal experiment and concludes that the doomsayers were wrong. There is now a widespread consensus in Portugal that decriminalization has been a success. The debate in Portugal has shifted rather dramatically to minor adjustments in the existing arrangement. There is no real debate about whether drugs should once again be criminalized. Join us for a discussion about Glenn Greenwald’s field research in Portugal and what lessons his findings may hold for drug policies in other countries.

Featuring Glenn Greenwald, Attorney and Best-selling Author; with comments by Peter Reuter, Department of Criminology, University of Maryland; moderated by Tim Lynch, Director, Project on Criminal Justice, Cato Institute.

Please register to attend this event, or watch free online.

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