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

13 October 2009

Obama's cut in the average family's insurance premium

When Obama was running for the presidency and in the last presidential debate, he said
we estimate we can cut the average family's premium by about $2,500 per year.
He also promised "a net federal spending cut", but added $1.4 trillion to the federal deficit in his first 8 months in office, notes Mark Tapscott in a Washington Examiner editorial. So what is he actually producing on health care based on the Baucus Senate Finance Committee "conceptual outline"?  On this we must bear in mind that because it is only a "conceptual outline" the true costs and "benefits" are simply guesswork.  Add this to the CBO's very long history of huge underestimates.  We must also be wary of the fact that this "conceptual outline" will be melded with the other Senate bill and with the 3 House bills to produce something that will more likely than not be more expensive and more intrusive.

The Baucus conceptual plan does this or more likely more than this:
  • Increases government spending by $829 billion
  • Adds another 13 million people to Medicaid and children's programs
  • Gives subsidies to 23 million more to buy mandated health insurance in insurance exchanges
  • $426 billion in Medicare and Medicare Advantage benefit cuts
  • $201 billion in new taxes on health insurance companies with very comprehensive health insurance plans
  • $180 billion in new taxes on medical devices and drugs
  • $83 billion in higher income taxes
  • $25 billion in new taxes on employers
  • $4 billion in fines for those who do not purchase health insurance, or will not validate it to the IRS (me)
Of course the politician's will to make the Medicare cuts will wilt after this law is passed, so much of that will not likely happen.  157 House Democrats sent Nancy Pelosi  a letter objecting to the tax on the very comprehensive health insurance plans, which many union members have, so that may not happen also.  Pelosi is now talking about the business accounting nightmare of implementing a European value added tax (VAT) instead.

But one thing is sure:  the massive government spending increases of this bill will have to be paid for or the deficit will increase greatly.  Usually, the Democrats favor letting the deficit grow, thus creating a huge sinkhole under the country in the end.  Another sure thing is that all of the taxes on business get passed on to the people in higher purchasing prices for goods and services in the end!  Though Obama promised to bring down health care costs, note also that some of the taxes are explicitly on health care goods and services and will drive those costs up very effectively.

So, in addition to the higher taxes and higher costs of many goods and services, what will be the effect on the cost of our health insurance premiums?  A study of that issue by PricewaterhouseCoopers has found this:
  • The cost of coverage for the average family now is $12,300, without Baucus it will be $18,400 in 2016, but with Baucus it will cost $2900 more yet in 2016!
  • The cost for an individual is now $4,600, the cost in 2016 without Baucus is $6,900, but with Baucus it will be $1,000 higher yet.
So, instead of reducing the average family's health insurance premium by $2,500 a year, Obama is going to increase it by $2,900 a year for a net difference between promise and delivery of $5,400 per year!  A few families will have this partially offset by a tax subsidy.  Everyone will face the higher prices on goods and services due to the added taxes, however.  And probably everyone will have to cope with the inflation or the lower value of the dollar due to the added deficits we will run, despite the pretense to the contrary.

Just in case you are counting, this addition to government net spending breaks another Obama campaign promise.  This huge increase in family health insurance premiums breaks still another campaign promise.  This guy either simply has no control over his promiscuous promises, or he is a very Machiavellian character who thinks we will not remember them for 8 months, or he thinks the People are incredibly stupid.

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