Among the issues most commonly discussed are individuality, the rights of the individual, the limits of legitimate government, morality, history, economics, government policy, science, business, education, health care, energy, and man-made global warming evaluations. My posts are aimed at thinking, intelligent individuals, whose comments are very welcome.

"No matter how vast your knowledge or how modest, it is your own mind that has to acquire it." Ayn Rand

18 October 2009

Government Health Care Insurance Cost Fraud

The Democrats and Max Baucus have pulled the wool over the American people's eyes big time.  Headlines everywhere said the CBO scored the "conceptual plan" of the Baucus Senate Finance Committee "bill" as costing $829 billion and yielding a reduction in the federal deficit of $81 billion.  In these fraudulent numbers they counted only a part of the costs known to be in the "conceptual bill", pretended cost savings for Medicare and Medicaid would occur, which will not occur, and counted tax revenues for 10 years, but cost outlays for only 7 years.  They also ignored the costs being dumped on the American people and the states entirely.

Ex-CBO director Donald Marron believes the Baucus "bill's" uncounted health care new federal spending costs bring the total federal government costs to $904 billion.  New mandates on state spending put $33 billion of additional costs on state governments.  Worst of all, the PriceWaterhouseCoopers study projects the insurance costs we private individuals are going to have to pay will go up by an additional $4000 per family by 2019 and single person coverage will be up by an additional $1500 by then compared to the situation without this bill.  The Massachusetts Taxpayers Foundation has provided a rule of thumb from the Massachusetts health insurance mandate experience: the private sector will pay for 60% of the total costs, while the government books will carry only 40% of the cost, to be passed on to the taxpayer.  So, the private sector will pay 1.5 times as much as the public sector.  Thus, the real cost of the Baucus plan, the lowest cost plan of the many in Congress, is (1.5) ($829 + 33) + $904  = $2,197 billion or $2.197 trillion.

Since 2003 Congress is supposed to have made cuts in Medicare payments to physicians according to law, but every year Congress has refused to allow the cuts, probably because they are very aware that physicians are already underpaid under Medicare.  Such payment reductions are counted on to save $234 billion in the next 10 years according to the Baucus "conceptual plan" and they are very unlikely to happen.  Removing these "savings" leaves one with a government spending increase of $153 billion.  The projected tax increase revenue is also going down from the earlier projections, because Congress is reducing the tax penalty for people who do not have qualified mandated health insurance plans.  Major individual penalties are apparently unpopular!

There are still other reasons that the government costs of this plan are likely to be badly underestimated.  For one thing, taxpayers are supposed to subsidize the costs of those making less than 400% of the poverty level income.  This means 91.5 million people under the age of 65 are eligible for such subsidies.  The CBO estimated that only 29 million of these 91.5 million will become subsidized health insurance plan holders.  The actual number may prove to be much higher, by some estimates, 45 million is a more likely number.

The PriceWaterhouseCoopers study of the costs due to the Baucus "conceptual plan" believes that it will cause health insurance costs to go up an additional 18%.  But, be aware that the costs are very dependent upon which part of the insurance market someone is in.  Those who work for a large employer will see their costs go up by an additional 11%.  Self-insured employers costs will go up by only 9%.  These are the lucky ones.  If you work for a small employer with fewer than 50 employees, the health insurance costs will go up by 28%!  On the other hand, those poor souls in the individual market (non-group) will see costs go up a whopping 49%.  If your employer opts to pay the penalty and to drop out or not offer insurance coverage, those individuals left on their own will see these huge 49% increases.  Of course some will qualify for the government subsidy to offset a portion of that cost increase.

It is always easier to bring on change that destroys than it is to change things for the better.  If you are an empty suit, albeit a well-tailored empty suit, you can promise change and transformation for America easily enough.  If you are a Marxist, the direction your change and transformation will take will prove dramatic for Americans and carry with it mass destruction on a scale most Americans cannot conceive of.  Americans voted for this change, which was hiding in plain sight behind an empty suit and fine, reassuring rhetoric to those who did not think about the meaning of what they were hearing.  In a democracy, even in America given our choice to ignore our Constitution and the sole individual-rights-protection reason for government, the sins of the majority are jackboot visited upon all without discrimination.

2 comments:

Lorne Marr said...

I guess you're implying that Mr. Obama is a Marxist which I don't agree with entirely. You're looking at the problem right now and seeing only the bad things, how it will cost more and more now. But in the end, in few years, maybe a decade, the result of this change will show positively. If the current system stayed in tact for ever, it would eventually destroy the whole country because of its unbelievable hunger for money. The proposed idea will cut a lot of expenses and will show itself as the right one in few years, you'll see. If you're interested, check out my article on long-term care insurance. Thanks for your post,

take care, Lorne

Charles R. Anderson, Ph.D. said...

Obama said he sought out Marxist professors in college and he has hired large numbers of Marxists for his administration, especially for positions he did not need to have approved by Congress. He is clearly a very committed socialist and if he has differences with Marxists, they appear to be small differences. He does work hard at appearing to be more moderate than a Marxist, but that appears to be simply misdirection.

The article you linked to sells long term care on the basis of the great cutbacks in service in the Canadian national system. It is conceivable that a U.S. government controlled health care system will reduce costs by paring back services and innovation drastically, but there is nothing in any past government operation to suggest that government will control costs by any means, however unacceptable. There is a reason why Federal Express offers next day deliveries more dependably and for less than the U.S. Postal Service.

Some proponents of government control of the health care system suggest the government will produce an effective electronic record of patient medical histories and status. These people slept through the decades long debacle of the government setting up new computer control systems for the Civil Aeronautics Board or the computer system fiascoes of the Immigration Customs and Enforcement Agency. Simply put, the government has a terrible track record in computerization and the sharing of information.

The aging of the American population is a legitimate reason for increasing health care costs. Another is that as we have become more wealthy, we start to see the advantage in spending more of our money on health. At some point one has enough clothes, the house is big enough, the car is quite sufficient, and we are certainly eating enough food. To be sure, many Americans should be paying down their debts, but they sure are not doing that by pushing ObamaCare!

The present needless health costs are largely due to state limitations on legal health plans, where these plans commonly have many benefits many people do not want to pay for. This problem is not being addressed by ObamaCare. Another reason is tort law, which ObamaCare will not address because the Trial Lawyers contribute huge sums of money to the Democrats. Private health insurance is already made much more expensive by government cost shifting from Medicaid and Medicare to the private insurers. In other words, private insurers are having to subsidize the freeloaders.

Another reason is that the regulatory system for drugs and medical devices adds greatly to their expense, sometimes in very wasteful ways. Then we discourage people from owning their own health care insurance, while encouraging company ownership of the insurance. Among many problems, this means the individual has no strong reason to be cost-conscious. ObamaCare actually refuses to allow people to buy high-deductible plans which make health insurance much more affordable.

In short, I have no idea how ObamaCare is to produce the long-term cost savings you have such faith in. It may make basic care less expensive for a fraction of the population, but it will do so only by a redistribution of wealth and it will make care more expensive in aggregate. As always when something costs someone very little, they will be more likely to use a lot of it. Many people will go to the doctor for every sniffle. The doctors will be worn out with paperwork and sniffle treatments and unable to perform life-saving health care functions. There really is little positive to offset the many negatives of further government control over our health care.