Uncertainties and unresolved problems flood the media. Most prominent at the moment is health-care insurance, and most prominent within it is Public Option and President Obama’s oft-repeated statement that the Medicare account must be deficit-neutral. Tremendous efforts are being made to add taxes (some of which may fall upon those earning less than $250,000, breaking an Obama promise). The House Democrat bill adds a surtax of 5.29 percent on incomes above $500,000 for individuals and $1 million for married couples. . The Senate Finance bill proposes to tax at 40 percent luxurious health-care policies, if they exceed $8,000 per person and $21,000 per family.
Efforts to reduce the Medicare account have led to further decreasing the reimbursement to doctors (a recurring attempt). To keep the overall figure acceptable to the President, Senate Majority Leader Harry Reid proposed to remove a costly provision from the Senate bill and make it a separate bill by itself. That’s the provision to decrease doctors’ reimbursement by 21% for each of the next ten years. This sleight-of-hand would have concealed the non non-deficit-neutrality. It was voted down.
Existing reductions in Medicare reimbursements mean doctors and hospitals have to raise prices in the private market amounting to a 1.2 percent increase in health costs. That and the added taxes proposed in the bills will drive up costs, which is why these costs have to be passed on by private insurers to customers in the form of increases in their premiums.
For this increase, private insurers, the present target of the Obama Team, should not be blamed. Blame the law and the Congress that writes it. When Humana, Inc., sent out a notice to its Medicare Advantage customers that Medicare Advantage was at risk, information in Senator Baucus’s finance bill, Senator Baucus turned bully, falsely accusing Humana of not telling the truth.
Insurance companies are likely to be the biggest losers. Humana makes much of its profit by administering Medicare’s plans. It faces a loss of $100 billion under Senator Baucus’s bill, according to the October 19 editorial in The Wall Street Journal.
What happens if the costs of government health care get too high? They can be cut back. The sustainable growth rate (SGR) calls for decreasing reimbursement if costs get too high. But it is limited by Senate Finance Committee Chairman Baucus to a one-year instead of a ten-year basis, which makes it look smaller.
Public Option, which seemed dead in the Senate a week ago, has taken on a new life by the weekend of Oct. 23-25. The Washington Post did a survey which found 57% favor Public Option. But the survey was a double-fault. Responses depend on how the questions are phrased, and the questions in the Post’s survey were not clearly phrased, so respondents did not know what they were voting on. In addition, only one-third of the respondents were Republicans. Conservatives tend to be against the Public Option, so the survey results were erroneously weighted in favor of Public Option.
Republicans warn that Public Option won’t lower costs and will give government too much power. Private insurers fear it will give them too many unprofitable customers. It can be written to permit states to opt out of it if they wish or to opt in. Olympia Snowe, the only Republican who has voted for any part of the Obama health-care plan—her vote therefore weights heavily—is for it. House and Senate Leaders are both interested in it. House Speaker Nancy Pelosi, who has long insisted she must have Public Option in the House bill, is comfortable with it.
Private insurers are mixed. Some are against the Baucus plan. The opposition is driven by weakened mandates for Coverage and more taxes. Lured by prospect of millions of new customers if all the uninsured were to be insured, the industry is weakened by the mandate to lessen Coverage. Not all uininsured are likely to be included. The President himself referred to only 30 million. The America’s Health Insurers Plans, AHIP, hired the auditing firm of Price-Waterhouse-Coopers which found that a $12,300 cost would rise to $25,900 in ten years on average under the Senate Finance bill. Cost up, Coverage down.
What would Milton Friedman say? Since Jan. 20, 2009, the government has taken out of the hands of corporate enterprise, partially or wholly, ownership or operation of the housing industry, the banking industry, the two biggest auto companies, the student-loan industry, and energy. Since Oct. 23 the government has taken out of the hands of private industry, the setting of the income of executives of the seven biggest financial firms which accepted (or were forced to accept) bail-out money. Since Oct. 23 the government has been moving to extend its take-over to non-financial enterprises, to consumer-finance enterprises, and soon to the health-care industry. What percentage would Milton Friedman give socialist corporate enterprise now? Would he consider that our economy has become enough like Sweden’s for us to be reclassified from capitalist to socialist?
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