The Right Prescription
The Bad Road to Baucus
Everything you’ll wish you had known about healthcare after the Baucus bill passes.
(Page 2 of 3)
• One-third are covered by Medicaid or Medicare.
• One-third have private insurance, the vast majority having their policies bought by their employers.
The number of people who actually buy insurance on the private market is minuscule. Only 6 percent of the non-elderly population buys its own insurance. The remainder is in a market shaped by government regulations. This leaves 15 percent of the population without coverage. They are uninsured either because:
a) They don’t get coverage from their employer, or
b) They can’t or won’t buy in the private market.
These numbers have remained essentially unchanged since 1994.
After the Clinton effort, many states tried to extend coverage with two sledgehammer provisions:
a) “Guaranteed issue,” which says that companies must offer insurance to everyone who wants to but it, and
b) “Community rating,” which says that everyone must be charged the same price, regardless of their health condition.
Among these people are likely to be freelancers, employees of very small firms, and young people who feel they don’t need insurance because they are relatively healthy. Also among them, however, are people who are too sick to work or have chronic conditions and high medical expenses. Guaranteed issue and community rating tries to load all the costs of paying for these very sick people onto that small portion of the population that doesn’t get its coverage through employment.
New York has done a beautiful job of showing how this works. In the 1990s, under Governor Mario Cuomo, New York adopted both community rating and guaranteed issue. The result was that premiums soared to $9,000 a year for individuals and $22,000 for families. The portion of New Yorkers who buy their own insurance shrank from 5 percent to 0.2 percent. Unsurprisingly, the percentage of uninsured remained the same.
The Baucus bill is also relying on guaranteed issue and community rating.
Baucus is an improvement over Clintoncare in that it at least tries to round up more than the 6 percent in the private market to shoulder the costs of high-cost customers. Baucus proposes draconic cuts in Medicaid and Medicare — although it also requires the states to expand their Medicaid coverage. It also taxes the “Cadillac” plans, defined as policies valued at more than $8,000 for individuals and $21,000 for families. (Notice you can only buy “Cadillacs” in New York.) Apparently, Congressional Democrats do not yet realize that the people who own these Cadillac policies are their oldest and most reliable constituency, the labor unions. As we discovered when GM was going under, every car that rolls off the assembly line carries $3,000 in employee and retiree health benefits.
Last spring the insurance companies, shepherded by industry lobbyist Karen Ignagni, struck a “grand bargain” with the White House. The companies would accept guaranteed issue and community rating in exchange for a mandate that everyone has to buy insurance. This would ensure them wide enough pools to cover high-cost customers. The Baucus bill originally included a $1,700 penalty for being uninsured but this has been whittled to $750, which ensures that nobody will buy a $4,000 policy to avoid it. So the insurance companies were to be left holding the bag. When they fought back with a study claiming the Baucus bill would drive the cost of policies up to $9,700 for individuals and $26,000 for families (the exact levels achieved in New York), President Barack Obama called them “liars” and threatened to cancel their antitrust exemption under McCarran-Ferguson. Thus, by stumbling around long enough, he has finally hit on an effective solution.
The problem is that both insurance companies and their customers try to game the system. It’s unavoidable. The insurance companies “cherry pick,” attempting to avoid high-cost customers while signing up those who are in good health. They want to exclude “prior conditions” and put small print in their policies allowing them to drop coverage if people get really sick. This is what makes them so unpopular. As the regulatory vice has tightened, however, they have reverted to these practices more and more to try to preserve their slim profits. (The industry’s 3 percent margin is one of the lowest in any industry.)
Pingback| 10.20.09 @ 6:51AM
Twitter Trackbacks for The American Spectator : The Bad Road to Baucus [spectator.or links to this page. Here’s an excerpt:
Robert Rosencrans| 10.20.09 @ 8:09AM
This health care farce has also turned into a "screw the elderly" extravaganza with higher premiums and cuts in service for Medicare/Medicaid and allowing the insurance companies to charge 4 to 6 times as much to the elderly in premiums. I'm convinced that something happens to people's minds once inside the beltway, separating them from the rest of society.
http://news.yahoo.com/s/mcclat.....hy/3336609
"As you get older, you start consume more health care," explained House Education and Labor Committee Chairman George Miller , D- Calif. "Age rating is a common practice in insurance underwriting," added Sen. Jeff Bingaman , D- N.M. , a member of the Senate Health and Finance Committees
So are gender differentials, he was told. Why are they being eliminated?
"I don't know all the answers," Bingaman said. "You'll have to ask someone else," said Miller.
Senate staffers explained one reason for the difference this way: Age-based premiums can be justified by consumers' experience, while gender-based differentials relying somewhat on potential pregnancy has the look of being blatantly discriminatory.
Experts have determined that age-based premiums can be justified as six to seven times as high as those charged the lowest risks.
owyheewine| 10.20.09 @ 9:21AM
The Baucus bill is over 1500 pages. How could that be realistically looked at as anothing but a government take over?
I like the proposal in the article.
I would also propose a KISS constitutional amendment that would prohibit any law or Federal regulation from exceeding the length of the Constitution, and repeal all of those that do.
Tim| 10.20.09 @ 10:30AM
Anyone that really believes that these characters in charge won't pull the plug on Grandma are using way too much of California's "Medical Pot"
These guys are into population control as well as Media control. They are devotees of what we were warned about in the book 1984.
Former Chairman Mao would be proud of some of these Neo Communists currently working in DC.
Yet these charaters never learn. People want Freedom and while millions have been wiped out through the years fighting for it, at the end of the day, Freedom rules because it is a God given right that won't be contained....
that is something that you can't teach at Harvard or in any other brick building it is something that every human is born with....it's in the DNA.
trying to control freedom is more than wrong, it's futile!
RC| 10.20.09 @ 11:02AM
I like where you are going with your Neo Communist comment. It fits exactly in one phrase what these people are "Neo Coms".
Bruce | 10.20.09 @ 6:54PM
Think "Soylent Green."
Old(er) age is a time when health issues are more important than ever, and here we go getting screwed again. The only way to prevent this kind of crap is to make members of Congress and the President subject to the same plans as the rest of us shmucks who pay the bills - not allow them to contaminate the hallowed ground of our military heros by getting treatment at Walter Reed.
Robert Rosencrans| 10.20.09 @ 10:40AM
Here's Robert Reich with the Democrat "Throw Grandma/Grandpa Under the Bus" plan.
http://newsbusters.org/blogs/p.....oresPaging Congressman Alan Grayson! Here is a quote that validates what you said about those EVIL Republicans: "We're going to have to, if you're very old, we're not going to give you all that technology and all those drugs for the last couple of years of your life to keep you maybe going for another couple of months. It's too expensive…so we're going to let you die." Aha! So it turns out that Grayson was right when he said "Republicans want you to die quickly." Only one "little" problem here. That quote did not come from a Republican. In fact it came from the very liberal former Labor Secretary Robert Reich who is now an economics adviser for Barack Obama.
Bruce | 10.20.09 @ 7:06PM
Thanks for the link to that story, Robert - but the link as given was incorrect. After a search I found the correct page (assuming it wasn't screwed up by length), which I have shortened via Tiny URL as follows:
http://tinyurl.com/yj2pdpj
Ken (Old Texican)| 10.20.09 @ 11:29AM
I'm sending Rush a new buzz-word phrase as soon as I finish this post To Congress " You Are Fired!"
Rush follows TEAM AMERICA on twitter.
www.myteamusa.org now free admission to membership.
Richard Johnston | 10.20.09 @ 1:07PM
Mr. Tucker, your article states: "She told ERISA horror stories to convince people the insurance companies were acting irresponsibly. But insurance companies were prevented from acting arbitrarily by state laws. ERISA plans could be highhanded because they were exempt from state laws."
I believe this is a bit misleading, although I am certain not intentionally. Insured and self-insured plans alike are immune from any meaningful civil liability for anything from breach of contract up to and including fraud or wrongful death. This unavoidably has a deleterious impact on their behavior and in fact encourages arbitrary and wrongful behavior.
It is of course true that state regulations do apply to insurers, but ERISA nonetheless unduly curtails the ability to take an insurance company OR a self-insured plan to court. It makes it unduly difficult to win a case and it provides wholly insufficient remedies if you are able to win.
See generally http://problemiserisa.blogspot.com
Thanks.
Jim O'Brien| 10.20.09 @ 8:41PM
We still have the best medical care in the world, and that is a result of free enterprise: 1) great doctors and hospitals; 2) a steady stream of new drugs and procedures developed with private risk capital; and 3) very competent private insurance companies. To the extent we have a health care "crisis", the problems are almost all the result of government legislation, regulation, and now major Congressional threats to both doctors and patients. Congress will cause a shortage of doctors and a drastic reduction in the quality of medical care for patients, while at the same time increasing the expense of insurance and medical care. It's the "perfect storm", or put more accurately, the "perfect screwup".
The socialists, Obama and his party in Congress, are about to destroy the great medical care we enjoy, while at the same time threatening our entire economy by dictating socialized medicine. Obama and his fellow travelers apparently learned nothing from the collapse of the former USSR and other socialist "paradises". They think the government can run a medical system for over 300 million people, when in fact the government can't even run Amtrak, or stop illegal immigrants from entering the U.S.
JBobs| 10.21.09 @ 9:10AM
The socialists promise utopia but instead ensure just the opposite. Honesty and integrity are merely words used by our leaders to deceive us. Morality is now the perversion. Our nation's future becomes increasingly dark with each passing day of this administration. As citizens we ultimately will be faced with a choice: Capitulate, and die meekly. Resist, and die fighting.
Jim O'Brien| 10.21.09 @ 3:12PM
"Live free or die." - State motto on NH license plates.
Dr. Gregory Garamoni | 10.21.09 @ 6:25PM
Mr. Tucker:
This is an excellent article that puts things in perspective.
You state: "the states have reverted to the old game of favoring big players by setting up barriers to competition. " I find this quite plausible, have seen similar assertions elsewhere, but have not yet seen any supporting evidence. Could you or any of your readers point to any studies? I am familiar with data on the costs of state mandates. I am looking for data on state barriers to competition.
Dr. Gregory Garamoni
Doctors on Strike for Freedom in Medicine
http://www.doctorsonstrike.com
Dr. Gregory Garamoni | 10.21.09 @ 6:42PM
Richard Johnson states, "ERISA nonetheless unduly curtails the ability to take an insurance company OR a self-insured plan to court. It makes it unduly difficult to win a case and it provides wholly insufficient remedies if you are able to win."
I have been following the health care debate for several months, and this is only the second time I've seen a call for ERISA reform. Why? Are there any legislators leading the charge on this important issue?
Dr. Gregory Garamoni
Doctors on Strike for Freedom in Medicine
http://www.doctorsonstrike.com
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