Commentary

What Health Care “Reform” Would Mean For Montana

President Obama will be in Montana to sell his health care reform plan. We can expect him to be deeply eloquent in describing the problems facing the American health care system and the need for reform. But the actual reform proposal that he is pushing is a deeply flawed product that even the best salesman can’t disguise.

If one totals up all the new taxes in the House Democratic health reform bill — the income tax surtax, the penalties on businesses that fail to provide and individuals who fail to buy the governments prescribed health care plan, as well as other frees and taxes —the cost to American taxpayers will top $820 billion. Combined with President Obama’s plan to allow President Bush’s tax cuts to expire and state taxes, Montana residents would face a top marginal tax rate of 50.48 percent. That’s a big price tag for a health care plan that will likely lead to Americans receiving less and lower quality health care.

And, if that wasn’t enough, studies suggest that the plan could increase insurance premiums by 75-95 percent. In Montana, a health insurance plan for a family of four with a deductible of $2,500 costs $440-500 per month today. But if the bills in Congress pass, that cost could rise to as much as $858-975 per month.

Worse, when the president says, as he undoubtedly will today, “if you like your current plan, you will be able to keep it,” that is simply not true. Even White House spokesmen have said that President Obama’s oft-repeated pledge to that effect isn’t meant to be taken literally. The reality is that millions of Americans — including the majority of Montana residents — will be forced to change insurance plans.

First, the legislation making its way through both the House and Senate contains an individual mandate — a requirement that every American buy health insurance. And not just any insurance but insurance that includes all the benefits government thinks you should have. That insurance could be more expensive or include benefits that people don’t want, or are morally opposed to such as abortion.

That doesn’t just affect those without insurance today. The bills now before Congress say that while you won’t be immediately forced to switch from your current insurance to a government-specified plan, you’ll have to switch to satisfy the government’s requirements if you lose your current insurance or want to change plans. And, for the 70 percent of us who get our insurance through work, those plans will all have to satisfy the government’s benefit requirements within five years.

Perhaps more importantly, the legislation would create a government insurance program that would compete with private insurance. But because this ultimately would be subsidized by American taxpayers, the government plan could keep its premiums artificially low or offer extra benefit.

In the end, millions of Americans would be forced out of the insurance they have today and into the government plan. Businesses, in particular, would have every incentive to dump their workers into the public plan. The actuarial firm, the Lewin Group, estimates that under the bill in the U.S. House 89.5 million people, including nearly 257,000 Montana residents, would be forced from private to public coverage. That represents 62 percent of Montanans with private health insurance today.

At the same time, hospitals in Montana would find their annual revenues cut by as much as $268 million per year. Most Montana hospitals, especially in remote, rural areas would be thrown into the red. Total physician income would be slashed by $36.6 million, nearly $14,000 per Montana physician.

In the end, Montanans would pay more for fewer choices. The government would end up running our health care system, with all that means in terms of rationing, inefficiency, and bureaucratic meddling.

And for all this, we wouldn’t even get universal coverage. Studies indicate that even after reform was fully implemented, 57,000 Montanans would still be uninsured. That’s one-third of those without insurance today.

Some products are so bad that not even the best salesman can sell them. President Obama should realize that the bills making their way through Congress today are just such a failed product which he should stop selling. It’s time to start over.

Michael D. Tanner is a senior fellow at the Washington DC based Cato Institute, and the author of Healthy Competition: What’s Holding Back Health Care and How to Free It