By Ronald Bachman
It turns out that “Joe the Plumber” gave us the real insight to the ultimate goals of the Obama presidency and the current Congress: redistribution of wealth. Centralized government power, federal control and redistribution of wealth seem to be behind many of the proposed “reforms.” This includes more than $1 trillion in redistributed wealth in the guise of health reform.
The targeted major financial losers in the morphing House and Senate proposals will be Medicare beneficiaries; adults under age 30; owners of individual health policies; Americans insured under small group employer plans and health-conscious Americans.
There are four methods to implement redistributive health reform, in which government draws from targeted populations to reallocate wealth and benefits to politically favored groups.
1) Lower government funding for Medicare
2) Add taxes and fees on private insurance and medical supplies
3) Implement price controls on premiums
4) Mandate costly coverage
According to the Congressional Budget Office, the proposed health plans would take up to $500 billion from Medicare. The 22 percent of Medicare beneficiaries covered by Medicare Advantage would be hardest hit, with an immediate reduction in benefits of 14 percent, totaling up to $114 billion in reduced funding. Up to 47 million may be added to insurance rolls without any commensurate plan to add doctors. Lower physician reimbursements will likely lead to longer waiting, less time with a doctor, lower quality of care and fewer available specialists.
Adults under age 30 will pay substantially more for private health insurance. Proposed price controls outlaw actuarially sound pricing. The Senate H.E.L.P. committee proposal requires that young adult premiums cannot be less than one-half[1] the premiums for adults age 64. The Senate Finance Committee proposal would allow young adult premiums to be one-quarter[2] of premiums for those ages 64. For the more flexible Finance Committee bill alone, estimated premiums would increase by 59-63 percent[3] for ages 18-24, according to PricewaterhouseCoopers (PwC). Insurers looking at a merging of the bills have predicted an increase of 100 percent or more.
Owners of individual policies will average premium increases of 47 percent[4], according to a PwC analysis of the Finance committee work. PwC predicts that by 2019 costs will increase beyond expected medical inflation of $2,600[5] per year for individuals and $6,600[6] for family coverage. A report by Oliver Wyman estimates that in most cases the increase for individuals will be 60-73 percent[7] more than today (beyond the expected normal inflation). Added costs and spending in the H.E.L.P. committee bill would only increase premiums to a higher level.
PwC expects that by 2019, small group premiums would increase by an additional $2,100[8] for single coverage and $5,400[9] for family coverage. Eight in 10 uninsured individuals work mainly in small businesses; hiking premium costs for individual and small group plans will only increase the number of uninsureds. It is no wonder that the CBO estimates that by 2019, there will still be 25 million uninsured individuals.[10]
Healthy Americans would be disadvantaged for their efforts at prevention, early intervention, wellness, and improved eating and exercise habits. The H.E.L.P. Committee proposal would make it illegal for insurers and employers to reward and incentivize good healthy habits to control blood pressure and cholesterol. Responsible citizens would pay for the lack of personal responsibility in others.
The funds taken from all these groups would be redistributed to the lower income nonelderly, community organizing groups, and entities relying on government grants and funding for special interest project funding.
“Starting in 2014, nonelderly people with income below 133 percent of the FPL (approx. $30,000) would generally be made eligible for Medicaid; the federal government would pay a share of the costs of covering newly eligible enrollees that varies somewhat from year to year but ultimately would average about 90 percent.[11]” States would be required to cover the additional 10 percent. This means free coverage for 14 million[12] lower-income citizens who might currently be covered by private insurance and pay part of the cost themselves. Additional federal subsidies are provided for those earning up to three times the federal poverty level or $66,000[13]. Up to 49 percent, or more than 148 million Americans, may become eligible for government subsidies.
Organizations relying on government grants and funding of special interest projects will enjoy the 421 references to grants and subsidies included in the Senate H.E.L.P. proposal. Billions of dollars are allocated for studies, research, development, implementation and other consulting arrangements by the many new committees, departments, working groups, panels, boards and other new government entities.
The overall goal of these health “reform” proposals does not seem to be about health or health care. They do not seem to improve access, quality or lower costs. They do not address the current high number of uninsured individuals. The CBO estimates the bill, after spending $829 billion on special interest groups, will leave 25 million people[14] without insurance. That will increase government dependence, government employment and government consultants.
Citizens, organizations and companies receiving government subsidies tend to vote for more government and subsidies. Politicians can pander to those voters by promising more. The strategy seems clear: reallocation of wealth for power and votes. The implementation tactics can work in the short run, but the changes will kill the Goose that Lays the Golden Eggs – this economy.
Regular citizens challenging the health plans have lambasted for asking questions. Joe the Plumber was attacked for discovering the truth. But he understands that government spending of his children’s future and the unprecedented redistribution of wealth through health reform is not the change he wants or voted for. For many, it reeks of out-of-control, irresponsible spending.
Ronald E. Bachman FSA, MAAA, is a Senior Fellow at the Georgia Public Policy Foundation, an independent think tank that proposes practical, market-oriented approaches to public policy to improve the lives of Georgians. He is also a Senior Fellow at the Center for Health Transformation, an organization founded by former U.S. House Speaker Newt Gingrich. Mr. Bachman worked as an outside expert with members of Congress and the Clinton administration during the 1993-94 health reform. Nothing written here is to be construed as necessarily reflecting the views of the Foundation or the Center for Health Transformation or as an attempt to aid or hinder the passage of any bill before the U.S. Congress or the Georgia Legislature.
© Georgia Public Policy Foundation (December 4, 2009). Permission to reprint in whole or in part is hereby granted, provided the author and his affiliations are cited.
By Ronald Bachman
It turns out that “Joe the Plumber” gave us the real insight to the ultimate goals of the Obama presidency and the current Congress: redistribution of wealth. Centralized government power, federal control and redistribution of wealth seem to be behind many of the proposed “reforms.” This includes more than $1 trillion in redistributed wealth in the guise of health reform.
The targeted major financial losers in the morphing House and Senate proposals will be Medicare beneficiaries; adults under age 30; owners of individual health policies; Americans insured under small group employer plans and health-conscious Americans.
There are four methods to implement redistributive health reform, in which government draws from targeted populations to reallocate wealth and benefits to politically favored groups.
1) Lower government funding for Medicare
2) Add taxes and fees on private insurance and medical supplies
3) Implement price controls on premiums
4) Mandate costly coverage
According to the Congressional Budget Office, the proposed health plans would take up to $500 billion from Medicare. The 22 percent of Medicare beneficiaries covered by Medicare Advantage would be hardest hit, with an immediate reduction in benefits of 14 percent, totaling up to $114 billion in reduced funding. Up to 47 million may be added to insurance rolls without any commensurate plan to add doctors. Lower physician reimbursements will likely lead to longer waiting, less time with a doctor, lower quality of care and fewer available specialists.
Adults under age 30 will pay substantially more for private health insurance. Proposed price controls outlaw actuarially sound pricing. The Senate H.E.L.P. committee proposal requires that young adult premiums cannot be less than one-half[1] the premiums for adults age 64. The Senate Finance Committee proposal would allow young adult premiums to be one-quarter[2] of premiums for those ages 64. For the more flexible Finance Committee bill alone, estimated premiums would increase by 59-63 percent[3] for ages 18-24, according to PricewaterhouseCoopers (PwC). Insurers looking at a merging of the bills have predicted an increase of 100 percent or more.
Owners of individual policies will average premium increases of 47 percent[4], according to a PwC analysis of the Finance committee work. PwC predicts that by 2019 costs will increase beyond expected medical inflation of $2,600[5] per year for individuals and $6,600[6] for family coverage. A report by Oliver Wyman estimates that in most cases the increase for individuals will be 60-73 percent[7] more than today (beyond the expected normal inflation). Added costs and spending in the H.E.L.P. committee bill would only increase premiums to a higher level.
PwC expects that by 2019, small group premiums would increase by an additional $2,100[8] for single coverage and $5,400[9] for family coverage. Eight in 10 uninsured individuals work mainly in small businesses; hiking premium costs for individual and small group plans will only increase the number of uninsureds. It is no wonder that the CBO estimates that by 2019, there will still be 25 million uninsured individuals.[10]
Healthy Americans would be disadvantaged for their efforts at prevention, early intervention, wellness, and improved eating and exercise habits. The H.E.L.P. Committee proposal would make it illegal for insurers and employers to reward and incentivize good healthy habits to control blood pressure and cholesterol. Responsible citizens would pay for the lack of personal responsibility in others.
The funds taken from all these groups would be redistributed to the lower income nonelderly, community organizing groups, and entities relying on government grants and funding for special interest project funding.
“Starting in 2014, nonelderly people with income below 133 percent of the FPL (approx. $30,000) would generally be made eligible for Medicaid; the federal government would pay a share of the costs of covering newly eligible enrollees that varies somewhat from year to year but ultimately would average about 90 percent.[11]” States would be required to cover the additional 10 percent. This means free coverage for 14 million[12] lower-income citizens who might currently be covered by private insurance and pay part of the cost themselves. Additional federal subsidies are provided for those earning up to three times the federal poverty level or $66,000[13]. Up to 49 percent, or more than 148 million Americans, may become eligible for government subsidies.
Organizations relying on government grants and funding of special interest projects will enjoy the 421 references to grants and subsidies included in the Senate H.E.L.P. proposal. Billions of dollars are allocated for studies, research, development, implementation and other consulting arrangements by the many new committees, departments, working groups, panels, boards and other new government entities.
The overall goal of these health “reform” proposals does not seem to be about health or health care. They do not seem to improve access, quality or lower costs. They do not address the current high number of uninsured individuals. The CBO estimates the bill, after spending $829 billion on special interest groups, will leave 25 million people[14] without insurance. That will increase government dependence, government employment and government consultants.
Citizens, organizations and companies receiving government subsidies tend to vote for more government and subsidies. Politicians can pander to those voters by promising more. The strategy seems clear: reallocation of wealth for power and votes. The implementation tactics can work in the short run, but the changes will kill the Goose that Lays the Golden Eggs – this economy.
Regular citizens challenging the health plans have lambasted for asking questions. Joe the Plumber was attacked for discovering the truth. But he understands that government spending of his children’s future and the unprecedented redistribution of wealth through health reform is not the change he wants or voted for. For many, it reeks of out-of-control, irresponsible spending.
There is a clear populist movement demanding that government lower spending, eliminate pork barrel projects, stop the redistribution of wealth policies, and rely on the intelligence and ingenuity of the American people to solve their own problems. Health reform is needed, but sensible people want it focused on the uninsured and those in real need of financial support. Americans are a generous people. We can help those who need help without destroying the world’s greatest health care system and economy.
Ronald E. Bachman FSA, MAAA, is a Senior Fellow at the Georgia Public Policy Foundation, an independent think tank that proposes practical, market-oriented approaches to public policy to improve the lives of Georgians. He is also a Senior Fellow at the Center for Health Transformation, an organization founded by former U.S. House Speaker Newt Gingrich. Mr. Bachman worked as an outside expert with members of Congress and the Clinton administration during the 1993-94 health reform. Nothing written here is to be construed as necessarily reflecting the views of the Foundation or the Center for Health Transformation or as an attempt to aid or hinder the passage of any bill before the U.S. Congress or the Georgia Legislature.
© Georgia Public Policy Foundation (December 4, 2009). Permission to reprint in whole or in part is hereby granted, provided the author and his affiliations are cited.