Democratic presidential hopeful Barack Obama needs to go back to the drawing board. His recently released health-care plan is so riddled with problems that it’s difficult to find a single positive thing to say about it.
It combines all the time-tested-terrible ideas for health insurance. Obama would declare the entire United States a guaranteed-issue zone, which means people would not need to bother to purchase insurance until, well, they were sick.
This bit of genius has made individual health insurance in New Jersey and New York unaffordable for most people. He funds his system with a payroll tax, just the pay-or-play mandate that is sure to kill jobs, decrease wages, and, do little for overall insurance coverage.
Hawaii has a similar policy. It was once heralded as the future of health reform. Today, approximately one in ten residents in the Aloha state lack health insurance.
And it’s not just wages and jobs he’d attack. Obama promises to repeal the Bush tax package, which is to say he’d increase marginal tax rates on income and increase taxes on capital accumulation.
Why not promote health by punishing work and thrift?
Obama, like any good Democrat, prefers the bureaucratic hand to the invisible one. His plan would create a new national bureaucracy to approve, regulate, and broker insurance plans.
He calls it a National Health Insurance Exchange. It’s modeled after Republican presidential hopeful Mitt Romney’s connector in Massachusetts, which so far has managed, among other achievements, to deem the current insurance of 200,000 residents inadequate. Bay state residents will soon be paying more for a government-approved plan.
Supposedly, Obama’s exchange would create a national clearinghouse for high-quality insurance. But in reality, it would increase the price of insurance by at least the average uninsured person’s marginal tax rate. That’s because the new regulations would jack up the standard package to include every mandate the Harvard faculty and Teddy Kennedy deem an irreplaceable feature of true health insurance.
Like managed competition, a government created exchange charged with increasing competition is untenably at odds with itself. If politicians want to create a national market for health insurance, they can simply pass a bill — like the one sponsored by John Shadegg (R., Ariz.) — that allows Americans to cross state lines to purchase an insurance product approved in any state.
This would instill real competition in the health-insurance market, place a check on state politicians who reward politically powerful groups with mandated coverage, and, in so doing, drive down prices.
But, alas, that’s too simple and wouldn’t create endless meetings and six-figure taxpayer supported jobs for essential public-policy personnel.
The only bad idea that Obama’s plan fails to adopt is the individual mandate, which, ironically, would make his plan better as it would blunt some of the most immediate effects of the guaranteed issue adverse selection death spiral, which is a fancy way of saying that when everyone is able to buy health insurance at any time, the only time anyone one will buy it is when they are really, really, sick.
The most laughable part of Obama’s plan is the assertion that it will save “up to $2,500” per person. A $2,500 increase would be more believable. Other than foisting costs onto to the general taxpayer through taxpayer-underwritten reinsurance for large claims and a new health-care program for those who, well, want some taxpayer funded insurance, nothing in the plan promises to reduce true costs.
One would expect the Democratic plans to get better, more specific, and refined, as each new hopeful unveils an improvement on the last candidate’s trial balloon. Obama’s plan is rather a vague compendium of tired regulation and wishful thinking. It’s so weak that it’s almost inspirational. No one, not even the American electorate, could be suckered into believing that the same people who bring us Amtrak will provide us with cost effective, efficient, health care.
If health care really is to be the No. 1 domestic issue this election season, it’s time for conservatives to go on the offense and offer most Americans what they really want, affordable security that they won’t lose their private health care, not increased taxes to fund an expensive government-run scheme.
Sally C. Pipes is president and CEO of the Pacific Research Institute and author of Miracle Cure: How to Solve America’s HealthCare Crisis and Why Canada Isn’t the Answer.
