How America's Health Care System Can Go From Bad To Worse

Why do I write this blog? Does anyone even read it? If they read it, do they just not care enough about the issues to comment on it?

I write this blog for one reason only: to educate people about political issues. I don't write often because of the sheer amount of research I insist on doing before writing. It is also a huge time commitment in writing (as you can see from the length of my posts). I don't want to throw generalities out there to confuse people; I want to make sure I have my facts straight so I can present the information in a clear and comprehendable manner. It is the scientist and teacher in me.

Having said that, I feel a need to address the Universal Health Care proposals being prepared in Congress. Several people have been going back and forth on the issue on Facebook, so I wanted to put together my comprehensive take on the subject.

Most of my analysis does not come from the text of the bills themselves (I have looked at them, but at 167 pages for the Kennedy Bill, and with the number of blanks and things left to be filled in, it would have been a pain to read through it all). Instead, I have relied on the Congressional Budget Office (CBO) assessment of the bills in question. The important things to remember are that the CBO is non-partisan, and by their own admission, they have probably underestimated the costs because entire sections of the bill were not factored into their analysis. The CBO analysis is available from their website here.

The official title of the Kennedy/Dodd bill is Quality, Affordable Health Care for All Americans: Effective Coverage for All Americans. The CBO estimates that over the next 10 years (under current law), the number of uninsured people will rise from 50 million to 54 million. The CBO also estimates that over that same time period, 39 million people would obtain health insurance through the provisions of this bill. Problem solved, right? Not so fast! They also estimate that this bill will actually reduce the number of people covered by employer-provided or self-purchased insurance, to the tune of about 23 million people! That means that we get a net decrease in the number of uninsured people of 16 million in 10 years. Shoot, I could have gotten them 3/4 of the way there without adding the estimated $1,300,000,000,000 to the federal deficit over 10 years: stop counting the up to 12 million illegal immigrants who are in our country as being uninsured!

May I just pause here for a moment and point out that insuring 16 million people for ten years at a cost of $1.3 trillion works out to a new federal entitlement of over $81,000 per person covered!!!

But all of those people who would be helped couldn't afford health insurance, right? Wrongo, Mary Lou! You see, the bill specifies that it only provides subsidies to people who make between 150-500% of the federal poverty level (FPL). For 2009, the FPL was $22,050 for a family of four. That means that to be eligible for an insurance subsidy, you have to make between $33,075 and $110,250 per year! How does the administration justify asking someone who makes $30,000 per year and can't afford insurance to subsidize the health insurance costs for someone making $100,000 per year?!? What about the poor people? What happens to them? Absolutely nothing, at least under this bill. The bill does say that states might be expected to expand Medicaid coverage to pick up those below 150% of the FPL, but that cost is not included in this bill.

What if you want to "opt-out" of the insurance? What if you are like me, a healthy, not-quite-middle-aged, (fairly) active man who doesn't smoke, drink, do drugs, drive above the speed limit, and who only goes to the doctor about once a year? What if I don't want to pay for insurance? The bill would impose a fine (read that as a tax) on anyone who does not have health insurance! How much would that penalty be? We don't know. Why not? Because the authority to set the penalty (or to waive it) rests, not with our elected representatives in Congress who would have to answer for any increases in the tax, but rather with the Secretary of the Treasury! That's right, folks, Tim "Turbo Tax" Geithner will get to impose arbitrary fines on anyone who doesn't comply! The bill would exempt those making less than 150% of the FPL from these fees.

Insurers would also be required to issue insurance to all applicants, regardless of sex, age, health history, preexisting conditions, lifestyle choices, etc. The plans would be required to allow parents to insure their children up to the age of 27! I'm sorry, but by 27 my kids will have been long gone (in one way or another). They won't be living with me, driving my car, eating my food, or riding on my insurance policy. At 27, they better have learned to grow up! There would also be no lifetime cap on benefits. Now, I know what some of you are thinking: that sounds great - it's way better than my insurance now! Yes, dear reader, it may be, but when you want better insurance, you have to pay more for it. Normally, insurance companies charge their high-risk customers more to absorb the added costs associated with their increased care, and they set limits to avoid huge losses. Now who will bear those costs? If they can't charge the heroin-using, bungee-jumping, stunt-man more for his health insurance than they charge you and I, then they will have to raise the rates for everyone! Also in the analysis that the costs for the premiums would be tied to the rate of medical price inflation, "so that individuals would (on average) pay a higher portion of their income for [insurance] premiums over time."

Since premiums would be capped at a percentage of income, all people obtaining health insurance through this program would have to submit proof of income to the Dept. of Health & Human Services every year. I am sure that they could verify the income of a proposed 39 million Americans every year without any increased staffing, right? lol The cost of all those additional bureaucrats is not factored into this analysis, but according to PayScale.com, the average employee of the federal government makes almost $69,000 per year. And how much will all of those stamps cost us to send in those monthly or quarterly proof-of-income statements? Over $63,000,000 per year(assuming $0.43 per stamp, quarterly proof required (just like Medicaid), and one stamp per envelope).

There is also a provision in the bill to give subsidies to small businesses (under 50 employees) who provide health benefits to their employees. However, the firm would only be allowed to take the money for three years, so my guess is that after those 3 years are up and the cost to the employer goes up, the insurance coverage will go away. But it will give the administration time to claim that all of these new people were provided with insurance for a brief period anyway.

The projected cost for this bill also includes several dubious means of reducing costs. First, it assumes that employers that choose not to offer insurance coverage any more will take the money they were spending on insurance and give it to the employees. Uhh huh! Riiiight! Because every company is just itching for ways to give employees more money during a horrible economy, right?!? The CBO report counts on that money being taxed by the IRS and counts that as offsetting some of the cost of the program (approximately $257 billion). Good luck with that! The CBO assumes the fee for not having insurance will be about $100 per person (yeah right!) providing about $2 billion over 10 years. They also factor in a reduction in spending for Medicaid and CHIP at $38 billion, but if you just put the money in your left pocket instead of your right pocket, are you really spending any less?

Some other factors not included in the analysis of the cost of the bill:

• Would form a Medical Advisory Council to establish minimum levels of benefits and to set the level of insurance people would have to obtain to avoid the No Insurance Tax.
• Would require insurance companies to pay out a minimum percentage of claims paid relative to the amount of premiums collected. This insures that no insurance company can be profitable. It also means that if they have not met their quota as the end of the year approaches, they will get to waste money so as not to be penalized by the government! You have to love this stuff!
• Would require health insurance companies to adopt measures to simplify financial and administrative transactions (such as claims processing). Yeah, because the DMV is a model of efficiency, right?!? In fact, name one governmental agency that requires less paperwork and red tape than an equivalent private business. Can you? I can't.

And let's not lose sight of the bottom-line issue here: there is nothing in the Constitution that allows the federal government the right to do any of this! In fact, the 10th Amendment specifically says that they do not have the authority! If this were a state government proposing this, I would still be against it, but not as vehemently. We must stop the federal government from grabbing control of 17% of our economy. And if you don't think this is the government grabbing control, you obviously didn't learn your lesson from the banks and the auto industry.

Please don't forget that there is no such thing as free health care. The reason the health care system is out of control in this country is not a lack of government regulation, but is because we don't see how much all those tests we are having performed actually cost. We have insulated ourselves by allowing insurance companies to handle it for us. It is as insidious as automatic income-tax withholding: when you don't see it, you don't miss (or appreciate) it.

I hope someone actually reads this. I hope that someone besides my family actually cares. If this gets through Congress, our country is doomed financially. I don't say that to inspire fear; I say it out of desperation. Please look at the graph at the top of this CBO page, and notice the growth in projected spending for Medicare and Medicaid.Now imagine adding another layer of health care costs onto the federal deficit, one that is projected to lead to at least $1,000,000,000,000 in new deficits in its first ten years.

We cannot keep spending like there is no tomorrow, or there will be no tomorrow for our children!