Health care needs reforming, but Sen. Barak Obama’s proposal fails to get the fix right.
Democrat Obama’s plan basically relies on the same Washington-knows-best mentality that was the central formula for HillaryCare in 1993. Obama’s proposed “change” is gradual government takeover of health care.
For anybody who’s paid attention to health policy for the past 16 years, Obama’s plan isn’t exactly “change we can believe in.”
Obama gives the appearance of consumer choice. But it ultimately comes at taxpayers’ expense.
Federal reinsurance would cover a percentage of employers’ costs for catastrophic care, at some unspecified rate. Lower-income individuals (and, to buy off votes, even some in the middle class) receive a taxpayer subsidy for either public or private coverage.
For employers, it’s “play or pay.” They’d have to give workers “quality” health benefits, make a “meaningful” health insurance contribution or pay for a new government health program. That government-run insurance covers anybody not covered by another government or private plan.
Apparently, by “meaningful” employer contributions toward health coverage the campaign means enough money to buy an insurance policy with low employee premium, low deductibles and copayments, and coverage of everything from mental health to chiropractic.
Obama takes the Federal Employee Health Benefits Program as his model — “the plan members of Congress have.” On top of physician, hospital and prescription coverage, the new government-run health plan will include preventive screening, maternity and mental health coverage. That’s the minimum a private policy could offer.
If bureaucrats judge an employment-based private plan as inadequate by Obama standards, employers may begin to find it cheaper to pay than play. They’d simply drop coverage and pay “a percentage of payroll toward the costs of the national plan.”
The government-run health plan would initially provide generous benefits at the same or less cost to the insured. Obama promises “guaranteed eligibility,” “comprehensive benefits,” and “affordable premiums, co-pays and deductibles.”
Private insurers would almost certainly find it hard to keep offering guaranteed-coverage, rich-in-benefits, low premium/co-pay/deductible insurance policies. Many would start to drop out of the market.
Obama creates a national health “exchange,” which becomes the new federal regulator of private insurance. The exchange sets federal standards for plans. Health plans have to provide specific disease management benefits, cancer screenings, antismoking programs and other mandated benefits.
Obama requires “guaranteed issue.” That means an insurer couldn’t deny anyone coverage. A study by the Society of Actuaries in the mid-1990s found that guaranteed-issue insurance regulations caused premiums to rise 23 percent the first year and be 50 percent higher the second year.
This approach makes insurance more costly for everyone, because the healthier pay more to subsidize the sicker, the younger to subsidize the older, the richer the poorer, etc. Advocates of “guaranteed issue” view this as equitable. It’s really just redistribution of wealth.
It’s unclear whether Obama’s plan would preclude insurers from passing along the higher costs. If they could, then they eventually price themselves out of the market, compared to what the government-controlled insurance plan charges.
In other words, through overregulation and bureaucratic micromanagement, broad benefits are required, escalating insurance costs.
Meanwhile, state mandates continue. Obama makes the federally mandated coverage of things like mental health benefits and dubious providers’ services the floor; every state’s mandated coverage would still be required.
Scott Gottlieb of the American Enterprise Institute observed in the Wall Street Journal, “Right now Mr. Obama’s health-care proposal . . . does the opposite [from giving people more health coverage options] by adding federal regulations on top of state laws.”
Obama insures all “children” under 25, largely through Medicaid and the State Children’s Health Insurance Program, or SCHIP. Further, Obama expands these programs. This has been tried with SCHIP, which was created in the 1990s to help cover low-income children.
Last year, congressional Democrats attempted to qualify households that earn four times the official poverty level — well into the middle class. They, too, defined “child” as including adults up to age 25.
The price tag for SCHIP expansion to grown-ups and middle-income earners? Almost $36 billion over five years.
Also, Medicare would directly negotiate with pharmaceutical companies on Part D drug prices. That creates an uneven negotiating table. It undermines drug makers’ ability to invest in research and development of new life-saving drugs.
Obama asserts unspecified “savings” from his restrictions and micromanagement. He’d pay for his health proposal by ending the Bush tax cuts for households earning $250,000 or more. That’s known as a tax increase.
Obama needs to go back to the drawing board on health care. Right now, he has proposed not much more than snake oil.
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