2009 December 02 Wednesday
Costs Of The Proposed US Health Care Plan

A Wall Street Journal article points to a Congressional Budget Office study which finds Harry Reid's health care bill will boost premiums for individual buyers.

We have now reached the stage of the health-care debate when all that matters is getting a bill passed, so all news is good news, more subsidies mean lower deficits, and more expensive insurance is really cheaper insurance. The nonpolitical mind reels.

Consider how Washington received the Congressional Budget Office's study Monday of how Harry Reid's Senate bill will affect insurance costs, which by any rational measure ought to have been a disaster for the bill. CBO found that premiums in the individual market will rise by 10% to 13% more than if Congress did nothing. Family policies under the status quo are projected to cost $13,100 on average, but under ObamaCare will jump to $15,200.

Fabulous news!

"No Big Cost Rise in U.S. Premiums Is Seen in Study," said the New York Times, while the Washington Post declared, "Senate Health Bill Gets a Boost." The White House crowed that the CBO report was "more good news about what reform will mean for families struggling to keep up with skyrocketing premiums under the broken status quo."

The Wall Street Journal didn't provide a link to the article but it was easy enough to find. Curiously, in spite of the title "No Big Cost Rise in U.S. Premiums Is Seen in Study" the New York Times piece does admit that the bill in Congress will raise the costs of individual buyer premiums. But Congress and the Gray Lady pretend that since taxpayers will fund the higher costs that individual purchasers won't really pay higher prices. Um, at least some individual health insurance purchasers do pay substantial amounts of taxes, right?

Before taking account of federal subsidies to help people buy insurance on their own, the budget office said the bill would tend to drive up premiums. But as a result of the subsidies, it said, most people in the individual insurance market would see their costs decline, compared with the costs expected under current law. The subsidies, a main feature of the bill, would cost the government nearly $450 billion in the next 10 years and would cover nearly two-thirds of premiums for people who receive them.

So if you are self-employed, buying your own health insurance, and you are not going to qualify for the subsidy then your health insurance premiums are going to go up even faster.

The Gray Lady also has an article comparing claims by Republicans and Democrats in Congress about what this bill will do.

Senate Republicans say that it is unlikely that Congress would follow through on many of the cost-saving measures included in the bill and that the projections are therefore misleading. Democrats say the budget office does not give them any credit for many provisions, like new prevention and wellness programs that they believe will potentially save billions of dollars but that cannot be attributed directly to the budget.

Savings from prevention and wellness programs are pretty bogus. Most people are pretty immune to dietary and exercise advice. Most of what gets labeled as preventive medicine amounts to early diagnosis. That can cut costs. But I doubt the savings will be large. Electronic medical records aren't saving money where they are used.

One of the proposed savings for this bill is a reduction of Medicare pay-outs to doctors. This same proposed savings was used to pay some of the costs of the Medicare drug benefit which George W. Bush signed into law. Congress claims the pretend saving and at the same time does not pass legislation to achieve that saving. Why? Because too many doctors would stop seeing Medicare patients if the payment for seeing them goes down too far.

What I continue to find most amazing about this new health care bill: The United States is alreadly deeply in debt and going deeper. We are on an unsustainable path before adding yet another spending program to the pile. Yet the people in Congress are like train operators throwing coal on a steam engine as the train approaches a bridge that is out. Congress is going to spend us into another financial crisis. I think it is unavoidable.

Here's a list of talking points about the Senate plan from the Senate Republicans:

  • Page 324 includes an $8 billion tax on individuals that have non-government "approved" health plans.
  • Page 348 levies a $28 billion tax on businesses that cannot afford to offer insurance to their employees.
  • Page 1979 raises an almost $150 billion tax on many middle-class workers using so-called "Cadillac" health insurance plans.
  • Page 1997 will cost families and individuals an additional $5 billion by prohibiting the use of savings set aside for health care expenses through health savings accounts, flexible spending accounts or health reimbursement accounts for the purchase of non-prescription or over the counter medicines.
  • Page 2010 will make the cost of lifesaving medicine more expensive by taxing pharmaceutical research firms an additional $22.2 billion.
  • Page 2020 will ultimately lead to increases in the cost of advanced medical devices like pacemakers by raising taxes on medical device manufacturers an additional $19.3 billion.
  • Page 2026 will increase the health care premiums paid by millions of Americans through a new $60.4 billion tax on health insurance companies
  • Page 2040 increases the Medicare payroll tax on those earning more than $250,000. This new tax would cost $53.8 billion.
  • Page 2044 will eliminate a tax break in current law on Blue Cross / Blue Shield Providers and Beneficiaries, which equals about half a billion dollars annually, if at least 85 percent of revenues are not spent on clinical services. This new tax will result in higher premiums.
  • Page 2045 will create a $5.8 billion tax for patients receiving elective cosmetic surgery.

You can read the whole plan yourself or just look up the page numbers mentioned above. Judge for yourself.

Share |      By Randall Parker at 2009 December 02 08:33 PM  Economics Health

Clarium said at December 2, 2009 10:46 PM:

"Page 2040 increases the Medicare payroll tax on those earning more than $250,000. This new tax would cost $53.8 billion. "

Shows how biased the Republicans are... it said that tax was a "cost." No its not, it is a means of raising revenue. Is the USD 54 billion in revenue per year? I suppose I would agree with that would be a "good" tax. According to wikipedia, the EITC costs (this can be seen as a transfer payment or as a subsidy for low-cost labor) about USD 36 billion in 2004 to put that into perspective. I suppose taxing the wealthy (i.e. people in the value-transference class) to raise USD 54 billion per year is a good idea.

Yes, I am aware it is not a solution because of the enormous extent of the problems. Other measures should be tackled too such as reducing immigration.

Bob Badour said at December 3, 2009 5:47 AM:

From the taxpayers' perspective, it is absolutely and without question a cost.

Bob Badour said at December 3, 2009 5:56 AM:

The biggest problem I have with this proposed law is the Page 2045 part. WTF!?! Over 2000 pages? That's insane.

CamelCaseRob said at December 3, 2009 6:17 AM:

I posted something similar on Half-Sigma. The elite on the left, because of their belief that they are morally superior, think that they should have the right to spend everyone's money in excess of that required for basic food, clothing, shelter, medical care, education, and some minimal entertainment. So, this bill is basically them taking away from "us" money they want to spend on those who don't have adequate medical care. They don't think we should have this money to spend, anyway.

Flat Broke said at December 3, 2009 7:58 AM:

-I suppose taxing the wealthy (i.e. people in the value-transference class) to raise USD 54 billion per year is a good idea.-

Newsflash: For commie democrats and asshole Obama, "wealthy" will be whites making lots less than $250,000. And why is raising more money for the idiot Fed gov't a good idea? Gee, I wonder what they'll spend it on?

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