March 29, 2010
What Cost for Healthcare Reform?
At the Battle of Asculum, the Greek General Pyrrhus managed to defeat a larger Roman Army, but at great cost – losing perhaps ten percent of his men. The early biographer Plutarch claims, that as Pyrrhus was congratulated on his victory he wryly noted that with one more such victory he should lose the war.
In 2008 healthcare reform of some type was wildly popular. Protection of Medicare, reform of prescription drug coverage, extensive liability reform, the formation of insurance pools, de-regulation of state insurance restrictions, and a host of other smaller reforms all polled well with the American people.
The legislation which has emerged is wildly unpopular. That is a tragedy, for significant parts of the bill must form the basis for any changes to health care markets. Health exchanges, insurance de-regulation, some limits to pre-existing conditions, taxing of high cost plans, reduction of tax breaks for health spending would be part of any plan. A complete repealing of this legislation is tossing the baby out with the bathwater.
Much of the fiscal solvency of the legislation is a mirage. While the CBO has it running a small surplus over the next decade, that is true only under three tall assumptions; Congress reduces Medicare payments by $500 billion over ten years, virtually everyone takes advantage of the insurance purchase provisions in the bill and there is a significant reduction in insurance costs. Anyone with a lick of sense must question all three of these assumptions. If even one proves wrong this bill adds significantly to the deficit and debt.
One obvious flaw is the seeming inconsistency of requiring insurance companies to provide coverage at the drop of a hat. A clever and healthy young adult must know that there’s no reason to buy insurance, you can simply wait until you become ill. The bill’s authors argue that this group will have access to subsidized health care plans, and failure to participate will result in a fine. Some state attorneys general may challenge the constitutionality of this provision. I don’t think it matters much, because the fine is about equal to one month’s insurance coverage for a health 21 year old. I’d wait for insurance until I was sick.
The potential flaws in this bill are so enormous that to opponents of the bill it looks like planned failure, designed to usher in a national health service. Some of these opponents wear funny hats and say outrageous things; but, it is folly to doubt that freedom trumps federal health care for many, if not most Americans. This will likely be clear in November.
The bill is also a tax hike that even if necessary (as some tax increases surely are), will cause job losses. It also has provisions that dis-incentivize firms from growing over 50 workers, taxes wheelchairs, artificial joints and oddly, kills call center jobs in Indiana.
Sadly, I think we have another decade of the health care fights. By the way, elephants and donkeys were widely used at the Battle of Asculum.
About the Author
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