Thursday, December 17, 2009

Time to kill the bill

The Health Care Reform Bill at it now stands in the Senate is essentially a bill written by lobbyists for insurance companies, drug companies, and for-profit medical providers. With the exception of a few good provisions (increases in Medicaid eligibility, elimination of pre-existing conditions) most of what's left of health care "reform" not only isn't perfect, it is not even good. It has become a BAD BILL. The only argument left for supporting this bill is that Democrats needs to pass something, anything, called "health care reform" to prove they can accomplish something and not be punished by voters.

The best solution now is to let it go down in the Senate and then blame the Party of No and the Party of Joe. Kill the bill and then salvage its useful components through reconciliation (discussed at the end of this article).

Since Democrats campaigned on universal healthcare, voters may well be less likely to vote for them if they don't deliver. Unfortunately, this is a dilemma of Obama's and Congressional Democrat's own making. If Democrats pass a bad bill which forces people to buy unaffordable minimum insurance and then turns around and taxes employees with good insurance, voters will be even more likely to punish them.

The current Senate bill supposedly provides health care to the uninsured, but it is done by a mandate forcing them to buy unaffordable policies from for-profit private companies. If they do not buy the insurance, they will be fined by the IRS. This bill puts no limits on premiums, allows drug companies to charge whatever they want, and taxes the insurance policies of union workers and older Americans whose premiums are higher. This health care reform bill has become a massive taxpayer-financed subsidy to private insurance and drug companies.

Currently, health insurance policies for individuals average over $6,000 per year and policies for families average over $14,000 per year and are increasing about 10% annually. Anyone who wants to buy the same health benefits as members of Congress, or to buy coverage through Medicare, should be prepared to fork over a large chunk of cash. According to the Congressional Budget Office, a family of four earning $54,000 in 2016, when the health legislation is fully in effect, would be eligible for a subsidy of $10,100 to help defray the cost of insurance under the health legislation being debated by the Senate.

By 2016, one of the most popular plans, a Blue Cross and Blue Shield policy, is projected to cost a family more than $20,000 per year!

When the American people realize how much they will have to pay and how little they will get in return, they will blame the Democrats, with lots of encouragement from Republicans who will still claim this government subsidy to private businesses is "socialism". Rather than this being an incremental step, as liberals hope, it's more likely to prove to them that the government is forcing them to buy a defective product which they can't afford. Nobody is "getting covered" here. People are already "free" to buy private insurance and one must assume they have reasons for not doing it already. Whether those reasons are good or bad won't make a difference when they are suddenly forced to write big checks to Aetna or Blue Cross that they previously had decided they couldn't or didn't want to write.

Senate leaders are all over Washington claiming they finally have a healthcare reform bill they can pass, as long as they remove the public option. After all, they say that even without a public option, the bill still "covers" 30 million more Americans. What they are actually talking about is something called the "individual mandate." That's a section of the law that requires every single American buy health insurance or break the law and face penalties and fines. So, the bill doesn't actually "cover" 30 million more Americans -- instead it makes them criminals if they don't buy insurance from the same companies that got us into this mess. ~Jim Dean, Democracy for America

There are more bad provisions in the bill:

Nothing in the bill limits how much insurance companies can charge for premiums. While the bill prevents insurance companies from rejecting people for pre-existing conditions, they will almost surely use the excuse that they are taking on additional risk and raise premiums. In addition, they will probably use the 4 years between the time the legislation passes and the time the mandates, subsidies, and insurance exchanges take effect in 2014 to raise premiums at an even faster rate, just as banks jacked up credit card rates between the time Congress passed credit card reform and the time it takes effect. This will blow the budgets of the American people and the Federal government.

There are two ways to control premiums, none of which are in the bill. The first might have been a robust public option tied to Medicare rates. This would have given people an alternative to private insurance if the private insurers raised their rates too much. But first the Blue Dogs in the House killed the Medicare rate tie-in and then the Senate caved into Joe Lieberman and killed the public option entirely. The other way to control premiums would be through government price regulation. Most states, which require that car-owners carry liability insurance in exchange for the privilege of driving, have insurance rate regulation. No one has proposed that federal health insurance mandates include rate regulation. With no robust public option, no rate regulation, and over 30 million mandated new customers, insurance companies can charge whatever they want.

The bill does not allow Medicare to use its purchasing power to negotiate lower drug prices or allow people to buy cheaper drugs from Canada. This would have saved tens of billions of dollars a year, which could have been used to make health care more affordable. The House bill still contains the Medicare drug negotiating provision, but it's been stripped from the Senate bill.

The subsidies are paid for by charging a 40% excise tax on employer-paid health insurance policies costing more than $8500 for individuals or $23,000 for families. This is called a "Cadillac tax" but it's really a "Chevy tax". It would fall on approximately 19% of policies in its first year. Many union-negotiated policies cost more than this, especially for workers in high risk jobs. In addition many older people pay more than this in premiums. In order to avoid the tax, businesses will provide only basic policies which have higher deductibles and higher co-pays for the employees.

The Senate has stripped out the language that would end the anti-trust exemption for the insurance companies. They are the only business – other than professional baseball – which is not subject to anti-trust laws. This means the Federal government can't do anything to prevent insurance companies from engaging in price fixing and dividing up markets.

The Senate has stripped out provisions that prevent insurance companies from placing caps on the amount of benefits they pay out to individuals or families. This means that after paying premiums and co-pays, someone who gets really sick and needs expensive treatment like chemotherapy or organ transplants could end up exceeding the cap and having to pay the rest of their healthcare costs themselves, likely bankrupting them if they do not just walk away from getting the care they need (and then dying).

Democrats should introduce a series of individual bills and use reconciliation where possible. When reconciliation is not possible, then force Republicans and corporate Democrats to filibuster against individual popular provisions such as:

• Providing cost-savings reforms to Medicare. In particular, abolish the Medicare Advantage program which subsidizes private insurance companies to provide Medicare drug benefits at a 17% higher cost than the original government-run Medicare plan.

• Increasing Medicaid eligibility to 150% of the Federal Poverty Level, and subsidize the states for the extra cost.

• Letting Medicare use its negotiating power to lower drug costs and allow people to buy cheaper drugs in Canada.

• Revoking the insurance company's anti-trust exemption.

• No longer allowing insurance companies to deny pre-existing conditions, refuse to pay claims, put caps on total insurance amounts paid over a lifetime, or drop people who get sick.

• Letting uninsured individuals buy into the Federal Employee Health Plan available to government workers.

It would have been better if the Obama administration and Congressional Democrats had stood up to the insurance and drug companies, the Republicans, Ben Nelson, and Joe Lieberman in the first place. They should have fought hard for a good bill. Under the circumstances, it is better to kill this bill.