Investor’s Business Daily, March 8, 2010
During his 35th speech on health care at the White House last Wednesday, President Obama called on Congress to give his reform package an “up-or-down vote” before the Easter recess, with or without Republican support. House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid claim to have the votes to do it.
But going it alone by resorting to the controversial reconciliation process may prove politically costly for Democrats. After all, a majority of Americans oppose their health reform proposal. The latest CNN poll showed that only 25% of Americans like the president’s plan.
If the Democrats pass some version of reform a big if Republicans could find themselves in a position to turn public displeasure into electoral success. The GOP should seize the opportunity by pledging to repeal ObamaCare if they take control of Congress this fall.
Not only would such a strategy represent good politics, it would be good policy, as ObamaCare is poised to bankrupt the country.
After all, the tax increases go into effect this year but the benefits do not kick in until 2014 or later.
The president puts the cost of his reform plan at $950 billion over 10 years. But the eventual price tag will likely exceed $2 trillion. And that’s just the cost to taxpayers. ObamaCare will force ordinary patients to pay ever more for health care.
Take the guaranteed issue provision a cornerstone of the Democrats’ reform plan that would bar insurers from denying coverage to individuals because of pre-existing conditions or health status. Although popular, guaranteed issue is expensive. States that have implemented this regulation have seen premiums rise 227%.
That shouldn’t be surprising. If insurance is available on demand, only people who have an acute need for it will pay premiums. Consequently, the insurance pool will be composed exclusively of sick people with high medical costs. Insurers will have to jack up premiums to cover the cost of treating these folks.
The Democrats’ plan attempts to balance the cost of guaranteed issue with an individual mandate requiring all Americans to obtain insurance. Supporters of the mandate claim that it will lower overall health costs by drawing everyone into the insurance pool. Premiums from the young and healthy many of whom previously went without policies or might have waited until they got sick to buy them can subsidize care for the aged and infirm.
But the individual mandate will not lower health costs it will raise them.
People generally go without insurance because it’s too expensive or because they’d rather spend their money on other goods or services. Simply passing a law requiring people to buy insurance won’t make policies more affordable.
By the time the mandate is in full effect, the average individual insurance policy is expected to cost about $5,000. The fines for noncompliance are far less, $695 or 2.5% of income, whichever is higher, starting in 2016.
For most healthy individuals, it would make more sense to forgo insurance and pay the fine than to shell out thousands of dollars a year for an individual policy.
Further, if they became ill, they could get a policy right away because of guaranteed issue.
With the young and healthy exiting the insurance pool, once again only the sick will remain. Premiums will spiral ever higher.
In fact, according to Milliman, an actuarial consultancy, combining guaranteed issue with an individual mandate could achieve the “the opposite of what was intended: an increase in cost for health insurance and in the number of uninsured Americans.”
The president has made much of the fact that his new bill may incorporate four policy ideas from Republicans, including medical liability reform and steps to use undercover investigations by doctors to expose fraud in Medicare and Medicaid.
But these gestures are little more than window dressing. Any savings generated by these measures would pale in comparison to the backbreaking cost increases the rest of the bill will engender.
When President Obama set out to reform the health care system, he named cutting costs as one of his primary goals. His proposal would accomplish just the opposite, raising the cost of care for Americans. The president may come to regret trying to force his unpopular reform package through starting on Election Day.
Pipes is president and CEO of the Pacific Research Institute. Her latest book is “The Top Ten Myths of American Health Care.”