Free Markets, Free People

Daily Archives: December 29, 2009


Health Care Reform – Left and Right

In case you missed it, which is entirely possible, it appears one of the potential “show stoppers” for the reconciliation of the health care reform bill between Democrats in the House and Senate is no longer an issue. Surprisingly that would be the “public option”.

A week or two ago, the House Whip, Rep. James Clyburn, made it clear in an interview that the House wouldn’t be rubber stamping the Senate’s version of reform. No sir. Because, you know, the House isn’t some second class legislative body and it has certain requirements that must be in a bill, such as a strong public option, before the support of House Democrats can be considered to be behind it.

That, of course, was then. Now Rep. Clyburn is singing a different tune:

“We want a public option to do basically three things: create more choice for insurers, create more competition for insurance companies and to contain costs. So if we can come up with a process by which these three things can be done, then I’m all for it. Whether or not we label it a public option or not is of no consequence,” House Majority Whip James E. Clyburn, South Carolina Democrat, said Sunday on CBS’ “Face the Nation.”

When asked by CBS host John Dickerson whether he could give his support to a bill that has no public option, Mr. Clyburn said “Yes, sir, I can.”

I’m sure that Clyburn actually meant he wanted something which created more “choice for the insured” vs. “insurers”, but nevertheless his defense of dropping the public option is exceedingly weak by anyone’s standard. That’s not to say dropping it is a bad thing – obviously I’d like to see the whole bill dropped. But that’s not going to happen. However it is interesting to watch the willful self-delusion necessary to state the Senate bill does these things parroted by someone who was adamantly against the Senate’s version of the bill because it lacked that very thing he now says it contains.

And, of course, it doesn’t “create more choices for the insured” or more “competition for insurance companies” and it certainly doesn’t “contain costs”. It mostly increases government’s intrusion into the market by mandating coverage (Who is going to monitor and enforce that? Government.), requiring insurance companies to cover those with pre-existing conditions (Monitor? Government. Result? Increased cost.) and increase taxes (Enforced by? Government. Result? Increased cost, although not “direct”.).

It also leaves a significant portion of the uninsured uninsured. Well, not really. They either self-insure or pay a fine (or, got to jail). In fact, this bill is so bad that even the ever dependable statist hack Bob Herbert is having problems swallowing the “major accomplishment” line on this boondoggle. He’s not at all happy with one particular provision in the bill. Methinks it’s probably because Mr. Herbert knows he’s one who will be paying for it:

The bill that passed the Senate with such fanfare on Christmas Eve would impose a confiscatory 40 percent excise tax on so-called Cadillac health plans, which are popularly viewed as over-the-top plans held only by the very wealthy. In fact, it’s a tax that in a few years will hammer millions of middle-class policyholders, forcing them to scale back their access to medical care.

The so-called “Cadillac health plans” are those which cost more than what the government (via the Senate bill) has decided cost more than what it arbitrarily has designated as a “cost-effective” health care plan. In other words, it has declared a certain amount paid for health care coverage to be “enough” and anything over that excessive and taxable. The entire intent of the bill is to make those who enjoy better health care insurance benefits pay for the privilege through a tax penalty which will then subsidize those who don’t have insurance to the tune of 150 billion.

As Herbert realizes, that means a number of things might happen, none of which translate into “if you like your coverage, you can keep it”.

The idea is that rather than fork over 40 percent in taxes on the amount by which policies exceed the threshold, employers (and individuals who purchase health insurance on their own) will have little choice but to ratchet down the quality of their health plans.

These lower-value plans would have higher out-of-pocket costs, thus increasing the very things that are so maddening to so many policyholders right now: higher and higher co-payments, soaring deductibles and so forth. Some of the benefits of higher-end policies can be expected in many cases to go by the boards: dental and vision care, for example, and expensive mental health coverage.

Proponents say this is a terrific way to hold down health care costs. If policyholders have to pay more out of their own pockets, they will be more careful — that is to say, more reluctant — to access health services.

Notice how it is in the private market that these “proponents” seem to be aiming their “cost cutting” knife. Tell me – how does cutting costs in these private plans at all effect the 89 trillion in future benefit obligations of Medicare and Medicaid? That’s where the unaffordable costs are. Isn’t that the area where government should be focusing its “cost cutting” effort? Sure it claims it will cut 500 billion from Medicare – something absolutely no one believes will be done. But this so-called “cost cutting” measure aimed at “Cadillac plans” is pure and unadulterated semantic nonsense.

There’s no benefit in terms of “cutting costs” to be found in taxing them. It’s a revenue stream, pure and simple. The “cost savings” rhetoric is purely to dupe those who don’t know any better. It does nothing to “cut costs”.  In fact, it increases the cost of those plans. But it does accomplish two “progressive” goals – it levels the benefit field so the vast majority of people, most likely including the entire middle class, is on “equal footing” with everyone else, especially the “poor”. In fact, only the rich will enjoy Cadillac plans after the Senate gets done with it (oh, and the Senate of course, which has exempted itself from what we proles are allowed to have).

The other goal it will supposedly accomplish is ration health care consumption without calling it that (increasing the cost will impose self-rationing). And, it will do it through cost. Yes, irony of ironies, that was exactly the complaint progressives used to support government intervention in this market. But as we all know, the left is irony impaired. By jacking up co-payments to levels that hurt, people will indeed be less likely to consume health care. But that’s not a “cost cutting” measure no matter how badly progressives want to characterize it as such. Because someone will be consuming health care. It’s a finite product and government is in the middle of expanding the market by millions and millions at a higher cost (pre-existing conditions) than before.

Newt Gingrich is out there saying Republicans should be running on repealing this bill (obviously assuming it will pass and be signed into law). I agree. This is the perfect platform and perfect example of government out of control. The good news, if there is any, is the bill is structured in such a way (taxes begin immediately, benefits don’t kick in for 4 more years) that it can be repealed before the damage is done.

Unfortunately, and I say this based on history, the Republicans most likely won’t have the stomach to just repeal it and return to the status quo, or even better, pass legislation that enables the market (tort reform, sell insurance over state lines, etc). My guess is they’ll get wobbly and assume they have to pass some sort of nonsense that appeases the whining on the left. Of course it won’t appease the left’s whining – their compromises never do – but it will compromise the Republican’s principles – again. That’s assuming the same old faces that got the GOP in the mess it now finds itself in are still running the show then. I think you get my point.

So, in summary, the stage is set to pass this monstrosity. The stage is also set for the GOP to use its passage as a platform for electoral success and its eventual repeal. If even Bob Herbert understands that his travesty does much more harm than good, then the average voter is going to pick up on it as well. And since it is going to effect that average voter immediately while they see no benefit from the increased taxation, the GOP should have a very strong case to make. But they better have their ducks in a row and be willing, for a change, to actually stand on principle and then once in power, have the spine to implement those principles and do what is necessary to roll back government intrusion, power and spending.

And that, of course, is the weakness of the plan – the GOP has never, ever, shown it has the cajones to live up to its principles once in power. That’s because the perks of power are just too seductive and the incentives of the existing political system work at odds with any stand to limit them.

~McQ