‘Reform’ horrors: O’s Total Disconnect – Pacific Research Institute

‘Reform’ horrors: O’s Total Disconnect

The New York Post, September 30, 2009

The disconnect is just about perfect: President Obama’s utopian promises for what his health-care agenda would bring are the opposite of what the plans on the table would produce.

In his Sept. 9 speech before Congress, he laid out three principles. “It will provide more security and stability to those who have health insurance. It will provide insurance to those who don’t. And it will slow the growth of health care costs for our families, our businesses and our government.” He’s also been crystal-clear that any reform cannot add to our massive deficit.

Yet his marketing just doesn’t describe the product.

Stability and security: Every Democratic plan would break this promise — and in multiple ways.

For starters, every bill would make everyone buy a plan that offers a government-designed benefits package. So, while they wouldn’t directly force people to shift plans, they’d force most employers to change what they offer their workers — and employer-provided coverage is the top way Americans get insurance.

Worse, the mandates would price many employers out of the insurance market — dumping their employees onto the government-provided backup, whether that’s the “public option” that liberals prefer or the “co-ops” being offered as a compromise. The Lewin Group has estimated that “reform” will push 119 million people out of their current coverage.

Second, the Democratic plans largely come up with some cash by looting GOP-created programs. Democrats want to cut over $100 billion from Medicare Advantage, for example — a “reform” that will force millions of seniors back into traditional Medicare, a state-of-the-art plan for 1965.

Obama’s answer to this problem? Pure denial: Pressed by ABC’s George Stephanopoulos on the issue, he replied, “No, these folks are going to be able to get Medicare that is just as good.”

Other Democratic plans would restrict Health Savings Accounts — which, when coupled with a high-deductible plan, now meet the health-care needs of millions of Americans. Same for Flexible Spending Accounts, which are also on Congress’ chopping block. In both cases, “reform” is a two-fer — a tax increase and reduction in coverage.

Insurance for those who don’t have it. Well, not if you’re an illegal alien — after hemming and hawing, the bills now are on track not to cover illegals. Yet these people make up some 20 percent of the uninsured.

And the bills don’t so much “cover” the rest of today’s uninsured as simply force them to buy a policy: Middle-class Americans would have to spend up to 12 percent of their income on insurance alone or face fines — that is, taxes — on penalty of jail.

“Reform” will bring some subsidies for lower-income people’s insurance — at the cost of making everyone else’s premiums more expensive. We’ll see an ever-larger share of middle-class income devoted to insurance premiums — but not to their actual health care.

Plus, when things don’t work out as expected, Congress will likely do what Massachusetts did under similar circumstances — exempt many uninsured from the mandate and put many more on Medicaid, forcing costs on taxpayers.

Slow the growth of spending. Obama’s basic promise is that, through some magic of government administration, we can expand coverage to everyone who doesn’t have it, make sure that no one pays any costs when they go to the doctor — and yet somehow keep prices and spending from rising.

That is: Supply will stagnate, demand will skyrocket — yet prices and total spending won’t increase. Without question, these plans will explode spending — just as happened in the late 1960s in the wake of Medicare’s passage.

There are ways to bend the cost curve, but Congress won’t hear of them. Princeton health economist Uwe Reinhardt, a longtime advocate of universal heath care, recently told a reporter for Kaiser Health Care News, “All of the bills that have emerged from Congress have had only very weak gestures toward cost control.”

The only arrow for slowing spending in the government’s quiver is price controls — a fact made clear by House Speaker Nancy Pelosi, who is open and adamant about imposing Medicare’s low, money-losing prices on providers via a “public option.” Yet price controls always reduce supply and produce lines and rationing. Easing that rationing will require the government to spend more money than projected, adding more to the deficit.

During the campaign, Obama pledged not to force everyone to buy insurance, and promised $2,500 per family in savings from reform. Now he offers generalized support for a bill that is set to include a global mandate, fines on the middle class of up to $1,900 and huge tax hikes.

“Everyone in this room knows what will happen if we do nothing,” he said in the speech before. “Our deficit will grow. More families will go bankrupt. More businesses will close. More Americans will lose their coverage when they are sick and need it most. And more will die as a result. We know these things to be true.”

In fact, this list of horrors is exactly what will happen if America is saddled with the plan Obama is pushing Congress to pass.

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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