The Public Policy

A Trillion Dollars in Incompetence

The Kennedy health care bill is out of its mind and out of control.

By 6.16.09

Send to Kindle

Bonaparte famously said to "never ascribe to malice that which can adequately be explained by incompetence."

Thus stands the Kennedy health care bill, placeholder for the hard left dream of a government takeover of the American health system. The bill is a taxpayer-supported monument to the lethal stupidity of this statist objective that will leave Americans with fewer choices, more government control over medical decisions, higher taxes, and a smaller private health insurance market (mostly union health plans paid for by taxes on the health benefits of non-union workers) that punishes efforts to reward healthy behavior.

Over ten years: 16 million more people with new insurance, 23 million forced into public plans. A trillion dollars at least. By way of comparison, from 1997 to 2006 the number of people with private health insurance grew by 5.4 million, while Medicaid and SCHIP coverage grew by 13 million for a total of 18.4 million. Total cost to the government: $40 billion. Total health care spending over that time period increased by one trillion. Meanwhile, most of the public health care coverage increase during that time -- 60 percent according to a Harvard University study -- displaced private health insurance coverage.

Could the Kennedy bill be any more inefficient at using taxpayer dollars to subsidize misshapen forms of health care coverage? Of course it could. And it is.

Yesterday President Obama told the American Medical Association that "a big part of what led General Motors and Chrysler into trouble were the huge costs they racked up providing health care for their workers -- costs that made them less profitable and less competitive with automakers around the world."

"If we do not fix our health care system America may go the way of GM -- paying more, getting less, and going broke."

Which is why Section 133 of the Kennedy bill grandfathers in every union-negotiated health plan that apes union health plans for workers and prohibits companies from transferring workers into the public "option."

Worried about the cost of retiree health benefits? No problem. "There is established in the Treasury of the United States a trust fund to be known as the Retiree Reserve Trust Fund that shall consist of such amounts as may be appropriated or credited to the Trust Fund as provided for in this subsection to enable the Secretary to carry out the program under this section. Such amounts shall remain available until expended." ("Such amounts" is Washingtonspeak for bottomless pit.) It pays for insurance benefits and 80 percent of claims from $15,000 to $90,000 for all retirees (ages 54-64). Initial cost of this "trust fund": $10 billion.

The Kennedy bill pays for $1 trillion in ineptitude in four ways.

First, it borrows. But who's counting or keeping track?

Second, it creates "Gateways" that are supposed to create groups of purchasers to reduce the cost of insurance. In fact, since insurance companies have already made it clear that they can provide guaranteed coverage without regard to the size of purchasing pools, why are such Gateways necessary? Because, as agents of the federal government, Gateways collect a tax on the insurance premiums of the young, healthy and health-conscious to subsidize the cost of insurance for those who now have no incentive to improve their health.

In fact, insurance plans that actually do a better job of controlling costs or keeping premiums low with better quality are punished under the Kennedy bill: "Any State or participating State shall assess a charge on health plans and health insurance issuer (with respect to health insurance coverage) if the actuarial risk of the enrollees of such plans or coverage for a year is less than the average actuarial risk of all enrollees in all plans or coverage in such State for such years."

Third, in order to subsidize the sort of health plans that broke the bank at GM, the Kennedy bill taxes the health benefits of others, particular those in self-insured corporations that are doing the most innovative things to improve quality and reduce costs.

Fourth, the Kennedy bill gives a Medical Advisory Council power to determine what new technologies and benefits can be covered and are introduced. It's the same technique Obama wants to use to curb the rate of growth in Medicare. John McCain suggested paying for his health care tax credit plan with Medicare savings. During the election, Obama said that "would mean fewer places to get care, and less freedom to choose your own doctors…. I don't think that's right."

Today, Obama would slash payments and choices to seniors -- mostly the sickest -- to help pay for GM-type health plans, retiree slush funds, and the mass relocation of middle-class Americans into a richer version of the Indian Health Service. On top of that, the Kennedy bill costs $1 trillion to "cover" 16 million new people in the process. By tossing 40 million out of private insurance no less. Not only is it not right. It's incompetent.

Like this Article

Print this Article

Print Article
About the Author
Robert M. Goldberg is vice president of the Center for Medicine in the Public Interest and founder of Hands Off My H ealth, a grass roots health care empowerment network. His is new book, Tabloid Medicine: How the Internet is Being Used To Hijack Medical Science For Fear and Profit, was published last month by Kaplan.