Digging Deeper Into Healthcare

Obama’s healthcare plan sounds so benign on the surface. You keep your doctors, you keep your insurance with your employer, but if you need help buying insurance, we’re there for you. But after looking over the details of his plan, I feel a little sick. His plan effectively puts an end to free market solutions in healthcare.

Obama’s proposed National Health Insurance Exchange will eliminate our choices. Every company joining the Exchange will be required to offer comprehensive, kitchen-sink policies.

Why is this a problem? Don’t we all want great coverage?

This kind of policy, covering routine expenditures at lower out of pocket costs, has created an enormous disconnect in consumers minds between cost and value. Virtually no one with insurance knows or cares what their doctor is charging anymore – their only concern is their co-pay. “What do I care? Insurance covers it.” This has contributed to increasing medical costs. They charge so much because they can. Insurance companies have the motive and ability to get costs down, but that only works for their customers, not the uninsured. The uninsured, should they be so unfortunate to have any assets or income beyond the poverty level, are on the hook for substantially more than what an insurance company would cover as “reasonable and customary” contracted costs.

Obama’s mandated gold-plated policies will further distort the marketplace and contribute to further increases in costs. We don’t need medical coverage for our hangnails, and we certainly don’t need the Federal government subsidizing it. But the Exchange “will require that all the plans offered are at least as generous as the new public plan.” Every company will have to cover pre-existing conditions, mental health, maternity and preventive care.

If we, as consumers and taxpayers, have choices, maybe we won’t want to pay for the kitchen sink. Maybe we’d rather take our chances with a higher deductible, and handle our routine medical issues out-of-pocket. That would certainly reconnect us as individuals to the value of medical services relative to costs. But we won’t have those options. Plus, innovations like convenient, cost-effective, retail clinics – where you see a nurse for minor matters instead of waiting for hours and paying more to see a doctor – will fall by the wayside. Our ever-competent, ever-wise Federal government has everything handled. Why does that not comfort me?

Obama will have more than a little to say about how healthcare providers and insurance companies run their business.

In markets that don’t meet standards for “competition”, the Obama’s plan will dictate what insurance companies can spend on administration or keep in profit. And everywhere, insurance companies may only charge Federally approved “fair and stable” premiums.

While all insurance companies may not be required to participate in the Exchange, not having Comrade Obama’s approval will hurt them in the marketplace. They won’t realistically be able to compete against federally subsidized care.

Obama’s plan imposes new reporting and regulatory requirements on providers, including standards on “diversity” and “culturally effective” care, and “holding [providers] accountable for any differences found” in care provided to “disparate” patients.

Obama will prevent insurers from “overcharging” physicians for malpractice insurance.

Government telling business what to sell and how much to charge and how much they can profit, all the while mandating cultural sensitivity for their disparate customers? And that’s only the beginning.

It takes some serious doublethink to get your mind around what Obama says is “allowing flexibility for state health reform plans.” States can “continue to experiment, provided they meet the minimum standards of the national plan.” States rights? Anyone? Hello? Is Obama using the Constitution for anything other than toilet paper?

More doublethink is needed to get around expanding eligibility for the Medicaid and SCHIP programs, yet ensuring “these programs continue to serve their critical safety net function”. Wait a second. If it’s truly a safety net, eligibility should be limited. Expand too far, and it’s not a safety net, it’s an entitlement.

Obama’s plan would reimburse some small employer health plans for a portion of catastrophic costs, but only if they guarantee such savings are used to reduce the cost of workers’ premiums.

And it wouldn’t be an Obama program if it didn’t have a sliding scale of tax credits, so that the “rich” are left holding the bag.

Contrast this with the relative simplicity of McCain’s plan, McCain would provide a tax credit of $2,500 to individuals or $5,000 for families, as long as you can prove you’re covered. It doesn’t matter whether the plan is privately purchased or received through an employer. A partial offset to the tax credit is ending the Federal income tax exclusion for the employee on employer provided insurance. But despite Obama’s phony lamentations to the contrary, McCain’s plan proves to be a net tax cut to most people.

Currently, people in higher tax brackets benefit more from the health insurance tax exclusion. If you’re in the 15% bracket, and your employer pays for a $5,000 health insurance policy for you, it’s worth $750 to you. The 28% bracket? It’s worth $1,400, and so on. Assuming your employer keeps your plan when McCain’s tax credit went into effect, if you’re in the lower bracket, your net tax change is a reduction of 4,250. The 28% bracket – $3,600. While the net benefit of the plan is progressive in nature, everyone is eligible for the credit.

While Obama throws around the claim that his plan provides three times the amount of tax relief to middle-class families, the studies he cites exclude the effect of their health care plans. Mighty convenient to leave hundreds of billions of McCain’s tax credits out of the equation, Senator Obama. Do you think that skewed the numbers just a little?

Obama also tries to paint McCain’s plan as the end of employer-based coverage. Realistically, few employers will drop insurance coverage without increasing base pay, not if they want to retain good employees. And, is increased portability as a result of less linkage to the employers necessarily a bad thing?

McCain’s plan with regard to the difficult to insure, people with pre-existing conditions, is to work with Governors on guaranteed coverage, not command how it will be done nationwide.

McCain is at least leaving us with more choices in the market, even if those choices will be heavily subsidized. McCain’s plan is no conservative dream, but Obama’s healthcare takeover is waking-in-a-cold-sweat screaming night terrors.

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2 thoughts on “Digging Deeper Into Healthcare

  1. We tried the guaranteed coverage for all applicants routine in Kentucky in 1994. You’ve never seen bad public policy at work until you have seen 41 health insurance companies pull out a state on the same day. We have long-since reversed our little HillaryCare-inspired experiment, but our market still hasn’t recovered. Your analysis is right, based on Kentucky’s experience.

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