Rhetoric vs Reality, Part 2

The President's new healthcare reform proposal is touted by the White House as worthy of the Obamessiah:

The proposal will make health care more affordable, make health insurers more accountable, expand health coverage to all Americans, and make the health system sustainable, stabilizing family budgets, the Federal budget, and the economy. . . The President’s Proposal builds off of the legislation that passed the Senate and improves on it by bridging key differences between the House and the Senate as well as by incorporating Republican provisions that strengthen the proposal.

In fact, Obama's plan is claimed to cost $950 billion, or $75 billion more than the Senate bill. This likely is an underestimate -- the proposal could cost $1.5 trillion or even as much as $2.5 trillion. The Congressional Budget Office has yet to speak.

And Obama appears to ignore small-government and free market Republican principles, says the Wall Street Journal:

The coercive flavor that animates this exercise is best captured in the section that purports to accept the Senate's "grandfather clause" allowing people who like their current health plan to keep it. Except that "The President's Proposal adds certain consumer protections to these 'grandfathered' plans. Within months of legislation being enacted, it requires plans . . . prohibits . . . mandates . . . requires . . . the President's Proposal adds new protections that prohibit . . . ban . . . and prohibit . . . The President's Proposal requires . . ." After all of these dictates, no "grandfathered" plan will exist.

Meanwhile, the new White House plan further vitiates the remnants of cost-control that remained in the House and Senate bills. Now the highly vaunted excise tax on high-cost insurance plans won't kick in until 2018, whereas it would have started in 2013 in the Senate bill, and this tax will only apply to coverage that costs more than $27,500.

Very few plans ever reach that threshold, and sure enough, this is the same $60 billion deal the White House cut in December with union leaders who have negotiated very costly benefits. Now it is extended to all to avoid the taint of political favoritism.

While the White House claims to eliminate the "Cornhusker Kickback," the Medicaid bribe that bought Nebraska Senator Ben Nelson's vote, political appearances are deceiving. As with the union payoff, what the White House really does is broaden the same to all states, with all new Medicaid spending through 2017 and 90% after 2020 transferred to the federal balance sheet. Governors will love this ruse, but national taxpayers will pay more.

And more again, because the White House has adopted the House's firehose insurance subsidies. People earning up to 400% of the poverty line--or about $96,000 for a family of four in 2016--will qualify for government help, and, naturally, this new entitlement is designed to expand over time.

Obama's plan for private health insurers is particularly radical. I have detailed the current system of state insurance regulation, lack of interstate competition, absurd state insurance mandates; such over-regulation drives up insurance premiums. This might logically suggest shifting insurance regulation from the state to Federal sphere.

But that's not the President's plan. Instead, Obama would add a new layer of regulation called the Health Insurance Rate authority on top of the states. This doubtlessly is intended to thwart supposedly price-gouging insurers -- except health insurers aren't unusually profitable. More regulation won't necessarily reduce healthcare costs; indeed, it's closer to covert rationing.

In fact, Obama's insurance ideas aren't cost control, but rather central planning and price controls, which won't work:

Insurance premiums are rising too fast; therefore, premium increases should be illegal. Q.E.D. The result of this rate-setting board will be less competition in the individual market, as insurers flee expensive states or regions, or even a cascade of bankruptcies if premiums are frozen and the cost of the care they are expected to cover continues to rise.

That's what happened to AIG and to California's electric utilities a decade ago. Obama's plan could cause additional collapse among insurers, potentially provoking even bigger bail-outs.

Conclusion: President Obama didn't move to the center--he's confirmed his leftist course. And, apart from empty words, he's abandoned his earlier cost containment commitments. As Reason magazine's Peter Suderman says:

So is it any better? If by "better" you mean "includes more spending and more taxes than the Senate bill," then the answer is yes!

Maybe that's intentional--Obama's healthcare proposal is so bad it makes the "public option" more plausible.

(via Roger Kimball, Fausta's blog)