‘Reform’ at your expense

New York Post, November 17, 2009

The health-reform bill that the Senate will soon debate may differ markedly from the one written by Speaker Nancy Pelosi that passed the House — but both would raise the cost of health care for ordinary Americans.

Such an approach is at odds with the chief goal of reform — to increase access to care by reducing the cost.

The Empire State is ill-equipped to deal with higher health costs. New York’s health system is already one of the most expensive in the country, with total private and public health-care spending of more than $6,500 a person a year. Only two other states and the District of Columbia spend more. Meanwhile, 13.6 percent of New York residents are uninsured.

But Congress seems hell-bent on making life harder for ordinary New Yorkers. Several recent reports confirm this. A recent analysis done by PriceWaterhouseCoopers, the large insurer Wellpoint and consulting firm Oliver Wyman (using WellPoint’s membership data) showed that an average New York family with two children covered by a basic individual-market policy would see its premiums rise 82 percent under Sen. Harry Reid’s version of the bill, which includes new excise taxes on insurers, drug companies and medical-device firms, which would all be passed on to consumers.

(It’d be even worse in other states: A 25-year-old man in Kentucky, for instance, would see his monthly premium rise from $61 to $181 — nearly a threefold jump.)

New York’s small businesses would fare somewhat better. Premiums for a New York City-based firm with eight employees would rise 6 percent if the reform plan takes root.

A big part of that 6 percent hike would come from the Senate’s plan to tax so-called “Cadillac” high-cost insurance plans. Because insurance in New York is already so expensive, the tax would hit many workers’ policies. By 2014, New Yorkers would be forking over $33 million to the federal government in “Cadillac” taxes alone.

Democrats claim that government subsidies would help families adjust to the higher cost of insurance. But those subsidies won’t offset many people’s hikes. For example, premiums for a two-child family with annual income of $66,150 would still go up 24 percent under the Senate’s plan — after the subsidy is taken into account. That’s an extra $80 a month.

It’s easy to understand how “reform” will raise health costs — by imposing onerous new regulations on insurance. For instance, reforms passed by the House and under consideration in the Senate would mandate that all policies cover such benefits as pediatric dental services and maternity coverage — even if you don’t want such coverage. The reform package’s new minimum-benefit requirements alone would add $245 a month to the average New York family’s premium.

What should lawmakers be doing instead? First, prune needless regulations and mandates. Such action would allow insurers to offer a variety of plans that meet individual consumers’ needs and budgets. It would also lower costs, as benefit mandates add from 20 to 50 percent to the cost of a basic insurance policy.

When Congress set out to reform the US health-care system, its primary goals were to lower health costs and improve access to insurance. The leading House and Senate health-reform proposals would do the opposite — and make average Americans worse off in the process.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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