Bleeding Hearts Battle Over Bill: Con
Scrap it and Start Over
By Jeremy B. Merill
National Editor, CMC ’12
To hear Democrats and progressives discuss health care reform is to be told (implicitly, of course) that the health care reform bill currently waiting for Congressional approval follows as a solution to the problems in our nation’s health care systems as closely as food is the solution to hunger or sleep to fatigue. This assertion is not only obviously false but has also cost the Democrats support among the American people.
I am often asked why I don’t support the Democrats’ bill; too often, that question is followed by another one: “Don’t you know that 40 million Americans don’t have health care?” Yes, I know that. I also know that many people can’t get coverage and that costs are rising. I even acknowledge that society as a whole bears a moral imperative to care for its sick and elderly. But all these facts don’t add up to support for the health care bill. Not only will the current plan not achieve its goals, but other ideas floated in the past few months’ shameful excuse for a national discussion would work better. In other words, the “Affordable Health Choices Act of 2009” is one step forward but two steps back.
Here are some of the “benefits” in the current bills, and why they’re not so beneficial:
1. Deficit Neutrality – As David mentions opposite this article, the CBO has touted the bill as lowering the deficit by more than a hundred billion dollars over ten years. Unfortunately, this depends on a 21% reduction in Medicare payments to doctors that is scheduled to occur… but everyone knows it won’t. Those savings disappear once that $247 billion pretend cut is added back in.
2. Mandate – The mandate will do more harm than good. Those of you who have taken Econ 50 will recall the phrase “price elasticity of demand.” The individual mandate will drive price elasticity of demand for health insurance pretty close to zero, allowing the near-oligopolistic insurance companies to raise prices with impunity. After Massachusetts passed an individual mandate in 2007, health insurance costs skyrocketed at the fastest rate in the nation. (For more, see Nicholas Rowe’s “Massachusetts Has Got It Wrong” in the October 2009 Port Side.)
3. Subsidies – Keep remembering Econ 50. Subsidies create “dead weight loss,” which means money spent by government and consumers for the last unit of health insurance is more than the value of that health insurance to the consumer. In other words, subsidies mean we’re throwing money down a hole.
4. Abortion Near-Ban – The House bill contains the wholly repugnant Stupak Amendment, which would ban federal dollars from paying for any health plan that covers abortions. This would mean that subsidized plans on the “exchange” could not cover abortions, making abortion effectively unavailable for many lower-income women who cannot afford an expensive medical procedure on their own. The Senate bill would make the abortion ban contingent on state legislatures, saving California and Massachusetts women, but putting those in Nebraska, Kansas and much of the rest of the country at risk.
Here are some better ideas that will actually achieve the goals of healthcare reform:
1. Free markets, not exchanges – We don’t need special “exchanges” for other important goods. Let us deregulate many portions of the health insurance industry to allow companies to offer competing health insurance plans.
2. Remove state-level barriers to competition – In many states, legislatures have set stringent, specific regulations for what insurance plans must provide. These onerous restrictions, while often well-intentioned, make it impossible for insurance companies to offer the same product in multiple states. This greatly increases overhead costs. By replacing those barriers with reasonable federal rules, America could have a true, nationwide free market for health insurance, with all the downward pressures that will exert on prices.
3. Remove illogical tax benefits to employer-based policies – Health insurance plans paid for by employers are not subject to an income tax, while those paid for by individuals are paid for out of after-tax income. So, in effect, employers get a 33% discount on providing health insurance for their employees over what their employees would pay themselves. There’s no reason to keep this policy. Let’s level the playing field.
4. Make the consumer the customer – When the consumers of health care do not pay for it, they have no incentive to keep costs down. If we encourage individual policies, consumers will be able to choose plans that best fit their needs. The current health care bills will do more harm than good. It’s time for the Democrats – and the Republicans, if they decide to be productive – to acknowledge the bills’ faults, scrap them, and start over. A new bill can achieve the goal of true health care reform without breaking the bank or risking the collateral damage that the current bills will cause. Let’s not walk away from reform, but start over.