(Mike Chamberlain) – Senator Harry Reid takes to the pages of the Review-Journal today to defend his health care, I mean, health insurance reform bill. He claims “[t]his bill will save lives, save money and save Medicare.” But this bill will definitely not do the first two and is unlikely to accomplish the third.
Reid doesn’t offer a single idea in his piece that would address the cost of health care. His entire discussion is founded on the flawed, false and, frankly, fabricated premise that insurance company profits are a major driver of health care costs. Every suggestion involves attacking insurance companies – forcing them to cover more people and more procedures while reducing their ability to either pass those costs on or to charge people who consume more health care more for health insurance.
In fact, some of the measures he discusses are certain to increase the cost of health care. According to Reid,
The bill provides protection from unfair out-of-pocket costs, and restricts arbitrary limits on the amount of coverage you can receive. We end discrimination based on gender and limit insurers’ ability to charge more based on age. We will also allow young adults to stay on their parents’ insurance. The bill also eliminates co-pays and deductibles for preventive services, putting an emphasis on wellness and prevention.
Each of these items is designed to shift costs from the health care consumers to health insurance providers. This will force insurance providers to charge all of their customers higher rates to cover the increased outlays since they will be largely prohibited from charging more to those on whom they are forced to spend more. In addition, it will exacerbate the problems caused by insulating health care consumers from the actual costs of care. This increases demand for these services, thus further driving up costs. (This effect was discussed in this presentation by then-CBO director, Peter Orszag, who is now President Obama’s Budget Director, and we noted it in an earlier post here.)
Several other measures within the proposed legislation will necessarily raise the cost of health care and health insurance. Beginning on p. 2010, the proposal imposes taxes on a series of industries essential to the delivery of life-saving and life-improving goods and services.
Section 9010 of the bill, entitled “Imposition of Annual Fee on Health Insurance Providers” (p. 2026), socks health insurance providers with an additional $6.7 billion in annual taxes simply for the privilege of offering health insurance coverage. We’re interested to hear an explanation of how these additional taxes will reduce the cost of health insurance, or health care for that matter.
Section 9009 (p. 2020) imposes $2 billion in taxes annually on companies that manufacture and import medical devices, while Section 9008 (p. 2010) hits pharmaceutical companies with $2.3 billion in new fees every year. These added levies are certain to increase the costs of the very devices and medicines that are critical to improving life spans and quality of life.
The bill offers nothing but lip service to tort reform, something that may actually reduce health care costs. In its 2000+ pages only a single 109-word section entitled “Sense of the Senate Regarding Medical Malpractice” (see * below) even remotely involves the idea. Reining in runaway lawsuit costs might detract from the vital task of crushing private insurance carriers.
Reid touts the supposed transparency of the process, asserting “[t]he bill has also been posted numerous places online for all to read, including on the front page of my own Web site: http://reid.senate.gov.” (This is, in fact, where we accessed it to find the sections referenced above.) Either someone needs to inform his Number 2 in the Senate of this or the bill he submitted to the Congressional Budget Office for scoring is not the same bill he’s talking about. So much for transparency.
Reid and his allies are scrambling in an attempt to salvage this legislation. If they actually supported proposals that would reduce health care costs rather than bashing health insurers they might be more successful. Kind of makes you think that reducing the cost of health care isn’t really the point after all.
P.S. – And you say you want transparency? Here’s some transparency for you. Page 869 contains a section entitled “Subtitle C – Provisions Relating to Part C; Sec. 3201 Medicare Advantage Payment.” It begins as follows (I’ve changed the formatting somewhat):
(a) MA BENCHMARK BASED ON PLAN’S COMPETITIVE BIDS.—
(1) IN GENERAL.—Section 1853(j) of the Social Security Act (42 U.S.C. 1395w–23(j)) is amended—
(A) by striking ‘‘AMOUNTS.—For purposes’’ and inserting AMOUNTS.—‘‘
(1) IN GENERAL.—For purposes’’;
(B) by redesignating paragraphs (1) and (2) as subparagraphs (A) and (B), respectively, and indenting the subparagraphs appropriately;
(C) in subparagraph (A), as redesignated by subparagraph (B)—
(i) by redesignating subparagraphs (A) and (B) as clauses (i) and (ii), respectively, and indenting the clauses appropriately; and
(ii) in clause (i), as redesignated by clause (i), by striking ‘‘an amount equal to’’ and all that follows through the end and inserting ‘‘an amount equal to—
‘‘(I) for years before 2007, 1/12 of the annual MA capitation rate under section 1853(c)(1) for the area for the year, adjusted as appropriate for the purpose of risk adjustment;
And it goes on from there. Clear as mud, right?
* – The entire text of the section “Sense of the Senate Regarding Medical Malpractice”:
It is the sense of the Senate that—health care reform presents an opportunity to address issues related to medical malpractice and medical liability insurance; States should be encouraged to develop and test alternatives to the existing civil litigation system as a way of improving patient safety, reducing medical errors, encouraging the efficient resolution of disputes, increasing the availability of prompt and fair resolution of disputes, and improving access to liability insurance, while preserving an individual’s right to seek redress in court; and Congress should consider establishing a State demonstration program to evaluate alternatives to the existing civil litigation system with respect to the resolution of medical malpractice claims.
So much for tort reform.
(Mr. Chamberlain writes the Cranky Hermit blog)