Conservative Political Commentary

...usually with an attempt at historical and economic context

Monday, October 12, 2009

On Health Care, White House Can’t Handle the Truth


The White House and Democratic Congressional leaders are apparently trying to “hit back twice as hard” against those who question or criticize their Obamacare plan. And they got a new target to strike at today: A study commissioned by insurance industry group America’s Health Insurance Plans (AHIP) and prepared by accounting firm PricewaterhouseCoopers, stating that private health insurance costs, instead of decreasing under health care reform, will rise significantly.

The report has sparked great concern in Sen. Baucus’s committee as well as the White House, coming one day before a key vote in the Senate Finance Committee. According to a Washington Post article, “‘Those guys specialize in tax shelters,’ said Nancy-Ann DeParle, director of the White House Office of Health Reform. ‘Clearly this is not their area of expertise.’” [1]

An Associated Press article quotes as follows: “‘Distorted and flawed,’ said White House spokeswoman Linda Douglass. ‘Fundamentally dishonest,’ said AARP's senior policy strategist, John Rother. ‘A hatchet job,’ said a spokesman for Senate Finance Committee chairman Max Baucus, D-Mont.” [2]

Also, “‘The misleading and harmful claims made by the profit-driven insurance companies are politicking for corporate gain at its worst,’ said Sen. Jay Rockefeller, D-W.Va.” [3]

Pretty sharp words, but the report is potentially very damaging to President Obama’s plans for a reform that he said in his radio address has “unprecedented consensus” behind it, and those who oppose it are simply doing so for political purposes.

The study cites four provisions of the Baucus bill that would drive insurance costs higher:
“Insurance market reforms coupled with a weak coverage requirement, a new tax on high-cost health care plans, cost-shifting as a result of cuts to Medicare, and new taxes on several health care sectors.” [4]

The “insurance market reforms” refers to the requirement that insurance companies provide coverage to people with pre-existing conditions with guaranteed-issue policies, and the “weak coverage requirement” refers to the less-than-desired “mandates and penalties on those who do not buy health insurance.” [5]

The study finds that, on average, because of these four provisions, the cost of private health insurance will increase by 26% between 2009 and 2013 under the current system and 40% if the provisions are implemented; 50% between 2009 and 2016 under the current system and 73% with the four provisions; 79% between 2009 and 2019 under the current system and 111% if the provisions are implemented. [6]

This translates to, for example, the average annual cost of coverage for a family of four, $12,300 today, would increase to $21,900 by 2019 under the current system with current inflation rates but, under the Baucus plan, it would increase to $25,900. [7]

According to the Heritage Foundation’s Foundry blog, “Lawmakers claim the bill would ‘save’ money, but that’s not true for those who have insurance. The only ‘savings’ would be to those who receive government-paid health care and subsidies at the cost of higher prices for everyone else. (Even if the legislation ‘reduced the deficit,’ it would do so by making citizens pay more, not by controlling government spending.)” [8]

The insurance companies had a tentative understanding with the White House and a willingness to accept the reform until the four provisions they object to became part of the Baucus bill. While the reform plan was disastrously bad anyway, the insurance companies had apparently received enough arm-twisting to agree to its basic provisions – until Baucus’s committee did its work. Anyway, we are fortunate that their commissioned study has pointed out the increased costs that otherwise might not have been mentioned.

Obama mentioned several Republican current and former officials that support his plan, but it’s actually a far cry from “unprecedented consensus.” A majority of the American public, as represented by likely voters, oppose Obamacare. It’s doubtful that any Republicans will support the final bill. State officials who understand the mandated additional costs of Medicare that are to be imposed on them, can’t be enthusiastic about it, especially since most states are not in a strong position financially.

If the Democrats have their way, all these costs are going to be placed on Americans who have been through, and are still in, economic hard times. The Obama Administration does not mind burdening the taxpayers with heavy tax increases. Just think about cap and trade. A McClatchy article states that while the Congressional Budget Office says the $829 billion Baucus bill would reduce the deficit by $81 billion, the [CBO] report “‘masks who pays the bills. This package includes hundreds of billions of dollars in new taxes and fees,’ said Sen. Charles Grassley, R- Iowa, the committee's top Republican.” [9]

As more of the truth emerges, the White House and Congressional Democrats are quite apprehensive if not plain scared. Which shows there’s some hope that Obamacare won’t become law.


[1] Ceci Connolly, “New Bill Would Raise Rates, Says Insurance Group.” The Washington Post online, 10/12/2009, at http://www.washingtonpost.com/wp-dyn/content/article/2009/10/11/AR2009101102207.html?hpid=topnews.

[2] Ricardo Alonso-Zaldivar, Associated Press, “Dems scramble after warning from health insurers,” 10/12/2009, at http://news.yahoo.com/s/ap/us_health_care_overhaul_insurers;_ylt=AvqIoTjMnIT7NYbtqEfHhsSs0NUE;_ylu=X3oDMTNlbXZvYm5lBGFzc2V0A2FwLzIwMDkxMDEzL3VzX2hlYWx0aF9jYXJlX292ZXJoYXVsX2luc3VyZXJzBGNwb3MDMQRwb3MDMgRwdANob21lX2Nva2UEc2VjA3luX3RvcF9zdG9yeQRzbGsDZGVtc3NjcmFtYmxl


[3] Ibid.

[4] PricewaterhouseCoopers, “Potential Impact of Health Reform on the Cost of Private Health Insurance Coverage,” October 2009, page E-1, at http://www.politico.com/static/PPM116_pwc2.html

[5] The Foundry, “‘Reform’ Means You Pay More for Health Care,” The Heritage Foundation, 10/12/2009, at http://blog.heritage.org/2009/10/12/%E2%80%9Creform%E2%80%9D-means-you-pay-more-for-health-care/.

[6] PricewaterhouseCoopers, see [4].

[7] The Foundry, see [5].

[8] Ibid.

[9] David Lightman, McClatchy Newspapers, “Partisan split likely in key Senate health care vote,” 10/12/2009, at http://news.yahoo.com/s/mcclatchy/20091012/pl_mcclatchy/3331544

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