The Moth Returns to the Candle

After months of leaving the drafting of a health care bill to Nancy Pelosi and Harry Reid, President Obama stepped into the breach today with his own proposal–or a summary of a proposal, anyway. You can read the summary on the White House web site. Obama’s proposal (not yet a bill) tries to “bridge the gap” between the Senate and House versions. It offers a cornucopia of goodies: health insurance subsidies for families up to $88,000 in income, more money for drugs under Medicare, billions for “community health centers,” $40 billion in small business subsidies, and much more.
Still, the plan promises to save money, even as it provides health insurance for tens of millions more Americans. This will be done in part by reducing “waste, fraud and abuse” in Medicare. But if it is so easy to eliminate billions and billions of dollars in “waste, fraud and abuse,” why haven’t we done it already? Why don’t we go ahead and do it now? Let’s eliminate tens of billions in “waste, fraud and abuse” first, and then take up the rest of the President’s proposal. Somehow, I don’t think the administration wants to bet that the purported savings will actually materialize.
And even with those purported savings, taxes will go up substantially. There will be a new tax on high-value health insurance benefits. Medicare taxes will be raised, even as Medicare benefits are reduced. $23 billion will be stolen from the pharmaceutical industry, raising prices on all prescription and non-prescription drugs. Obama’s proposal steals $67 billion from health insurance companies, which will raise the cost of everyone’s health insurance. It steals $20 billion from medical device manufacturers, thereby raising the price of all medical devices.
Even more chilling than these tax increases are the President’s proposed limitations on individual freedom. Young people, for whom health insurance is often an economically wasteful purchase, will be deprived of choice. Those who prefer not to buy health insurance will pay a tax instead. (Actually, this is the main way in which the Democrats’ proposals will reduce the numbers of the uninsured–they will force young, healthy people to buy insurance that for them is overpriced and which they don’t want.)
The Senate bill included a “grandfather” provision that allowed those who like their current coverage to keep it. Actually, the Senate proposal would rapidly have driven those independent policies out of existence. Obama’s proposal is even worse; it imposes draconian requirements on grandfathered policies that guarantee that if you like the insurance you already have, you will lose it almost immediately.
Worst of all is the plenary authority the President’s proposal would give the federal government to review insurance premiums and determine whether they are “excessive.” Price controls are simultaneously the most tempting and the most damaging measures that governments can impose. If the President’s proposal becomes law and the federal government, rather than the marketplace, takes charge of insurance rates, the inevitable result will be that private insurers will exit the health insurance market and the path to socialized medicine will be wide open.
These observations are based on a quick review of the White House’s summary proposal. No doubt there will be much more to be said when an actual bill is written. For now, the Congressional Budget Office has said that it cannot evaluate the true cost of Obama’s proposal because it is so vague. Clearly, however, Obama’s plan incorporates nearly all of the features that the American people have already rebelled against when they were being proposed by Pelosi and Reid. One exception is the “public option.” Obama’s plan does not include government-run insurance; but then, it doesn’t need to. Once the federal government is setting premiums for all private insurance companies, all insurance will be, in effect, government insurance. This is how national socialism, Barack Obama’s preferred modus operandi, works.
What seems remarkable to me is that the Democrats have chosen to go back to the health care well. Their initial effort to enact a vast, transformative health care bill on a few hours notice, before the public knew what they were up to, was a disaster. Eventually, the Democrats gave up and President Obama promised to forget about health care for a while and focus “like a laser” on job creation. That promise lasted, perhaps, for a couple of weeks. Now the Democrats are back on health care, sort of like Napoleon returning to Waterloo.
Will the result be any different? I don’t think so. Most Americans have decided, sensibly, that they don’t want the federal government to take over their health care. Obama’s proposal, which is basically a blend of the Democrats’ House and Senate bills, will do nothing to change their minds.

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