Healthcare Reform Part 8: The Public is not Falling for Cost Estimate Chicanery

Early this year, 60% of the public supported healthcare reform. The latest polls show that support for the current proposals is now below 40%.  Among those who are more informed on the subject, the level of support is even lower.  Why is public support falling and why does Congress persist in trying to pass an unpopular proposal?

New legislation is generally supported if it can be demonstrated that it will provide a benefit that exceeds the projected cost.  Benefits are expected to supplement or improve on existing ones rather than to eliminate a benefit for one group in order to provide a benefit elsewhere.  The bills currently being considered fail these standards. 

The first benefit that reform was to achieve was the lowering of healthcare costs.  It is clear to the public that this goal will never be met by current proposals.  The Senate has tried to divert attention from the fact that healthcare costs will rise significantly under the current proposals by changing the subject from a reduction in healthcare costs to a reduction in the deficit and also by manipulating the data to make it seem that the cost of the proposals is far less than it actually is. 

The Congressional Budget Office, on the basis of assumptions supplied by the Senate, found that current bill would reduce the deficit by 132 billion dollars over ten years.  In fact, a deficit reduction that is dependent on reductions in the cost of Medicare is highly unlikely to be realized.  Congress has been unable to cut Medicare in the past and there is nothing in the current bill that is likely to produce a different result. 

Moreover, imposing new taxes and Medicare cuts immediately but withholding the introduction of benefits for four years has hidden the true cost of the Senate proposal.  The true cost of the proposal may be 1.4 trillion rather than the 871 billion dollars that the Congressional Budget Office found using Senate assumptions.  This chicanery has contributed to the public distrust of the Senate proposals.

Not content with changing their goal from one of cost reduction to one of deficit reduction while simultaneously disguising the true cost of its proposal, Congress has further alienated the public by reneging on promises to maintain current benefit levels and to retain current tax rates for lower income individuals.

One benefit that is being eliminated is Medicare Advantage.  Congress calls this an “overpayment to insurance companies”.  While it does cost 12% more than standard Medicare, this is not an overpayment but rather the cost of additional prescription payments and vision, dental, or quality benefits.  The elimination of Medicare Advantage means that these seniors will now pay for these services.  Moreover, as people are forced into standard Medicare, they will experience more denials of claims since Medicare has a 6.5% denial rate instead of the 3.5% that occurs with private insurers.  While insurers should be taken to task for some denials of service, increasing government involvement will not solve all prior problems.  In fact, it will create new ones.

Another take-away is the 500 billion dollar cut in standard Medicare, ostensibly to reduce waste, fraud and abuse.  However, these are not targeted cuts to identified misuse but across-the-board reductions that will result in fewer services as physicians, hospitals, and nursing homes that are already being underpaid by Medicare are forced to pass along the cuts by reducing services.

Potential tax increases include a tax on manufacturers of Medical Devices that will surely be passed on to the consumer, taxes on Health Savings Accounts, taxes on high end insurance policies, and taxes on small employers that will be passed to employees in the form of higher co-pays and deductibles. 

Very little publicity has been given to the fact that Medicaid will undergo a huge expansion.  The Federal cost projections do not include the cost to the states after the first four years during which states are exempt from paying their share of Medicaid.  Since states must balance their budgets, they will have to increase taxes to cover these new costs.  Worse yet, the Senate bill granted a permanent exemption to Nebraska in order to secure their senator’s vote.  Other exceptions were given to Louisiana, Massachusetts, Connecticut, and Vermont.  The citizens of other states will have to assume these burdens.   

Congress may be risking the wrath of the public because many there genuinely believe that the majority of the public has a moral obligation to make sure that the 45 million who are uninsured get insurance, that no one should experience bankruptcy as the result of unmanageable medical bills, and that government intervention is necessary to insure that everyone receives optimal care.  Their ultimate goal is laudable, but their haste to achieve a quick result has resulted in an unwillingness to subject their methods to the debate and scrutiny that would yield a better approach. 

In their speeches celebrating the acquisition of a 60th Senator to vote for the bill, Senate leaders dwelt on the fact that 30 million more Americans would have coverage, and that coverage could no longer be denied because of pre-existing conditions.  But at what cost?  Of the 30 million covered, the 15 million who will go on Medicaid represent the population who cannot currently afford care. If the true cost of the legislation is 1.4 trillion or 140 billion a year, it is costing society $9,300 per year per low-income man, woman, and child covered.  This cost will entail tax increases for the middle class and the wealthy, premium increases for the privately insured, and by reduced services for the elderly.  How can this be worth it?

There are many other shortcomings in the current Congressional proposals.  The bill establishes 118 new commissions that will make life miserable and expensive for consumers, insurers, and physicians.  The cost of policies will rise rapidly as every interest group applies to have mandated coverage for their pet program.  The generous salaries and benefits common to government employees will raise the cost of premiums as government departments expand to insure the enforcement necessary to carry out the will of the Congress.  Politicians will try to gain points with favored constituents by increasing the benefits to some and having the ‘other guy’ pay (as was done with Medicaid).

While all of this is going on, there will still be uninsured, there will still be those who receive sub-optimal care, costs will still increase, and the waiting times common to England and Canada will begin to appear.  This will result in calls for stricter government controls.

Is it any wonder that public support has fallen?

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rabbjo
Posts: 2

HEALTH INSURANCE
Reply #2 on : Mon December 21, 2009, 23:28:07

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Thanks for updating the status on Medical Insurance industry today. But there Low cost medical coverage on group, family, or individual available at http://bit.ly/7bwEx2

Lynn
Posts: 2

Agreement in Total with Article
Reply #1 on : Mon December 21, 2009, 21:50:10

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I agree totally with everything said in this article. One additional comment or question would be:

1) How long until my medicare premium doubles each
month and my coverage decreases 20%

2) How long before the public, liberals included, realize that they (especially the middle class) have experienced increased premiums, increased taxes, increases fees, and less benefits.

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