UPDATE: See below, at the end of the article.
The Wall Street Journal reports that the Senate finance committee has approved a healthcare reform bill today.
The vote was 14-9, with Sen. Olympia Snowe of Maine the only Republican to join the 13 Democrats on the panel. Ms. Snowe indicated earlier in the day that she would support the measure.
The Senate Finance panel, led by Chairman Max Baucus, becomes the last of five congressional panels to act on a health-overhaul bill, and it marks the biggest step forward yet for President Barack Obama’s top domestic priority. The Baucus-proposed 10-year, $829 billion plan would require all Americans to purchase insurance and aims to hold down spiraling medical costs over the long term.
The legislation that passed the other House and Senate committees did so without a single Republican vote.
Unfortunately for Congress, a non-partisan report has come to the conclusion that costs will go up if the proposed legislation is made into law.
On Monday, insurers ratcheted up concerns about the sweeping Finance Commitee bill. A report released Monday by America’s Health Insurance Plans, an industry trade group, said the Finance bill would impose stiff costs on consumers. Among other things, the report said a family health-insurance policy that costs $12,300 today would increase to $25,900 on average by 2019 under the bill, more than under current law.
The analysis in the report was conducted by PriceWaterhouseCoopers, certainly not a slacker, no-name entity without a reputation for accuracy on the line. Even though they did not release the underlying statistical data with the report, it does not take an advanced degree to understand the logical problems inherent in the bill’s design.
PWC is stating the issue politely, to say the least. What is meant by a “weak mandate” is that, in the current version of the Baucus bill, there is no requirement to buy health insurance at all until after 2013, and by 2017 the penalty for failing to buy health insurance still amounts to only about 15% of the cost of the insurance. Now, think about it: if you know that you don’t have to buy health insurance when you are young and healthy, but if you should get sick, or just get older, you can apply for health insurance at any time and it will be illegal for the insurance company to turn you down, what would you do? Obviously, you would defer buying insurance unless and until you get sick. This means that the pool of those who are insured will be lower quality, and the cost therefore higher for everyone who buys insurance. It is as though you could wait until you die, and then your heirs can buy life insurance on you.
This isn’t reform, it is stupidity.
Trying to force everyone to have health insurance in the manner proposed by this bill may technically solve the problem of millions of Americans being uninsured. It is also logically impossible to do so without lowering quality, increasing costs, or both.
Some people are skeptical, so we will present a current example to prove the point. In this case we will examine the healthcare system in Massachusetts.
So let’s look at the closest model we have for this system in the United States: the state of Massachusetts. Massachusetts has all the goodies in the Baucus bill: subsidies, guaranteed issue, community rating, an individual mandate, and employer penalties. Indeed, the Massachusetts program is probably to the left of where we’re going to end up, on things like empowering the exchanges to negotiate with insurance companies and the size of the penalties for failing to procure insurance, two measures which are supposed to be critical for holding costs down.
Instead, costs have exploded.
Go take a look, they have a few charts up and detailed analysis of the cost increases. This whole sordid affair raises plenty of good questions:
So I’ll turn it around on reformers: why do you think that we can control costs, given that we couldn’t at the state level? Massachusetts is a very liberal state, a very rich state, and it started out with a relatively low proportion of its citizenry uninsured. Proponents of reform often say it has to be done at a national level because states can’t borrow money in downturns, but this doesn’t explain why the spending side is headed through the roof.
Some people would say that Congress is choosing the complicated and expensive way versus the simple and cheap way because the former presents opportunities for graft, unlike the latter. Here is one such simple reform idea:
All we have to do is allow insurance companies to compete nationally instead of state-by-state and eliminate all mandates that limit consumer choice. It has been estimated that these simple reforms–which are not part of any of the Democrats’ “reform” bills, for obvious reasons–would reduce health care costs by one-quarter to one-third. Instead of such common-sense reforms, the Dems are proposing Rube Goldberg measures that will make health care more expensive. Instead of eliminating mandates, their measures, including the Baucus bill, increase them–in effect making cheaper health insurance illegal.Once more: this isn’t reform, it is stupidity.
Thanks to the power of the internet you can now fax senators about the healthcare reform bill and let them know what you think. Now is a great time to let your voice be heard.
It’s important that this blast fax campaign reaches every citizen who is opposed to this irresponsible legislation, especially in the states of MT, IN, AK, CO, PA, ND, NC, SD, AR, FL, PA, VA, MO, UT, IA, NH, ME and OH. Our best chance to stop this government healthcare takeover is to let our legislators know, whether they are home or in Washington, we are watching closely.
There is another reason why the CBO’s preliminary analysis should be taken with a grain of salt, though this one wasn’t mentioned in the report. Whatever the content of the Baucus bill once it is voted out of the finance committee, it will disappear into a legislative black hole as Senate Majority Leader Harry Reid, House Speaker Nancy Pelosi, and their key aides do what they did on the economic stimulus package back in February — huddle together behind closed doors to write the final bill, which will then be presented as a fait accompli in the form of a conference report.
Governor Tim Pawlenty (R-MN) clearly shows that the bill being brought forth is strange because there are good ideas for reform being ignored. He also lays to rest the popular misconception that there are no good ideas for healthcare reform being suggested other than what is present in the current bill:
There are many bipartisan ideas that would actually cut health care costs, like medical liability reform, allowing employees to keep their insurance when they switch jobs, standardizing health information technology, and allowing consumers to purchase insurance across state lines. In Minnesota, we’ve passed reforms that made price and quality more transparent for patients, moving the health care system towards paying for and achieving better health care outcomes, and empowering patients themselves to help drive down costs.
You can read here how Governor Pawlenty is implementing those ideas for healthcare reform right now in Minnesota. Although we are proud of Governor Pawlenty putting his money where his mouth is on healthcare reform, we are not comfortable with him promoting creationism in public schools.
MR. BROKAW: In the vast scientific community, do you think that Creationism has the same weight as evolution, and at a time in American education when we are in a crisis when it comes to science, that there ought to be parallel tracks for Creationism versus evolution in the teaching?
GOV. PAWLENTY: In the scientific community, it seems like intelligent design is dismissed — not entirely, there are a lot of scientists who would make the case that it is appropriate to be taught and appropriate to be demonstrated, but in terms of the curriculum in the schools in Minnesota, we’ve taken the approach that that’s a local decision. I know Senator Palin — or Governor Palin — has said intelligent design is something that she thinks should be taught along with evolution in the schools, and I think that’s appropriate. My personal view is that’s a local decision —
MR. BROKAW: Given equal weight.
GOV. PAWLENTY: — of the local school board.
MR. BROKAW: And you would recommend it be given equal weight?
GOV. PAWLENTY: We’ve said in Minnesota, in my view, this is a local decision. Intelligent design is something that, in my view, is plausible and credible and something that I personally believe in but, more importantly, from an educational and scientific standpoint, it should be decided by local school boards at the local school district level.
In conclusion, as we have discussed here before at length, there are many very good ideas for healthcare reform which should be given a chance to succeed, especially because mandatory government healthcare runs contrary to American principles of liberty. As always, when it comes to Congress (or any government officials for that matter) judge them based on their actions, not their words. Ok, sometimes by their words.
UPDATE: Recent news reports are publicizing claims by MIT economist Jon Gruber that the PWC report is false. Unfortunately, Mr. Gruber is lying. We discuss the issue at length here.