Health Care 'Reform' -- Getting Less for More

Larry Elder
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Posted: Oct 15, 2009 12:01 AM
Health Care 'Reform' -- Getting Less for More

The Democratic-controlled Congress reached another hurdle in achieving health care "reform." The Senate Finance Committee passed a version, 14-9, with one Republican vote. At last, "bipartisanship"!

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It requires people to get health insurance, expands Medicaid, provides tax credits to help low- and middle-income people buying coverage, creates "health insurance exchanges" for individuals and small businesses, and requires employers who don't offer coverage to help pay for employees' government-subsidized coverage.

The price? No one really knows -- and few really care. The only certainty is that whatever Congress says it will cost will fall woefully short of the real cost. Cost projections as grossly inaccurate as the ones government gave for Medicare and Social Security could land someone in the private sector in jail.

The Congressional Budget Office projects a cost of $829 billion over 10 years. But the CBO claims it actually would reduce the federal deficit by $81 billion! How? "Reform" curbs the growth of spending on federal health care programs. In Washington, when predicted future spending rises less than previously projected, we've "saved" money. The legislation would impose taxes on health insurers, pharmaceutical companies and medical device companies.

Under this latest legislation, insurance companies could not deny coverage or charge more for pre-existing medical problems. Initially, the insurance companies went along with that because they expected Congress to require everybody to get coverage. This would mean a windfall to the insurance companies. But wait! The bill would soften the penalties for those who fail to get insurance, and the insurance companies now oppose the bill. "The bill imposes hundreds of billions of dollars in new health care taxes and provides an incentive for people to wait until they are sick to purchase coverage," said Karen Ignagni, CEO of America's Health Insurance Plans -- an expense to insurance companies that would be paid for by all their customers.

Meanwhile, this latest bit of legislation needs to be reconciled with a measure passed by another Senate committee back in July. And a whole host of heavily Democratic-backed options are still on the table -- including requiring businesses to cover employees and a government-run public option.

It's not as if some states haven't tried this kind of something-for-nothing health care.

Hawaii offered universal child health care -- for seven months. Then it dropped the plan. Why? People (and employers) with private plans dumped them to ride the "cheaper" government train. One of Hawaii's health care administrators lamented, "I don't believe that was the intent of the program." And Hawaii is a small state, without nearly the number of "health insurance needy" as we have on the mainland.

Several New England states offer health care "reform," using most of the ideas floated by the Obama administration. Vermont, Maine and Massachusetts all have "guaranteed issue," forcing insurance companies to provide insurance to everybody -- regardless of an individual's health conditions. And insurers can't charge different rates based on factors such as a person's state of health, age or gender -- a policy called "community rating." Maine also offers a "public option" (a government-run plan with taxpayer-subsidized premiums that competes with private plans), and Massachusetts imposes an "individual mandate" that requires everyone to purchase insurance.

New England boasts that its number of uninsured has gone down (although not as much as predicted). But health care in New England now costs more than anywhere else in America. Many insurance companies just abandoned these states, resulting in less competition and higher premiums. As health care subsidies consume more and more of the states' budgets, they turn to higher taxes, rationing and, excuse please, cost containment.

The Council for Affordable Health Insurance is a research and advocacy organization that includes, among others, free-market-oriented health care providers. It examined current rates in Massachusetts, the only state with "individual mandate," "community rating" and "guaranteed issue." The cheapest plan available for a family of four -- with a $3,500 deductible -- is more than $9,000 a year, and the most expensive is more than $19,000 a year. This about doubles what families currently pay in most other states.

"Reformers" point to the "unfair" number of claims turned down by private insurers. But Medicare, as a percentage of claims filed, actually turns down more than do non-government carriers. According to the American Medical Association, Medicare turns down 6.85 percent of claim lines, followed by Aetna at 6.8, Anthem at 4.62, Health Net at 3.88, Cigna at 3.44, Coventry at 2.88 and UHC at 2.68. All private carriers combined averaged a denial rate of 4.05 percent, making Medicare's rejection rate 170 percent higher!

Hold on to your wallets.