Weekly Newsletter: July 13, 2009
Rational Law-Breaking
This past weekend, a Wall Street Journal editorial shined additional light on one of the several difficulties associated with the Massachusetts health reform legislation enacted in 2006. The column notes that one of the Commonwealth’s insurers, Harvard-Pilgrim, found that many individuals were purchasing health coverage at times when they were incurring significant medical expenses, let their insurance coverage pay their bills, and then promptly dropped their coverage after recovering. Specifically, the insurer discovered that 40 percent of new enrollees in the past year stayed on their coverage for fewer than five months—and incurred more than six times expected expenses while covered.
Many Members may not be surprised by this phenomenon, caused largely due to 1) restrictions on insurance carriers to accept all applicants at all times—and charge individuals the same premium regardless of health status, 2) the many mandates and regulations driving up Massachusetts insurance premiums, and 3) the comparatively low taxes associated with violating the Commonwealth’s individual mandate to purchase insurance. Because the cost of coverage is so much more expensive in Massachusetts than the $900 tax for violating the individual mandate, many residents find it cheaper to pay the tax rather than a health insurance premium—knowing full well that in a medical emergency, insurance carriers will be forced to accept their application.
Members may be concerned that these kinds of perverse incentives—all of which exist in the Democrat health proposals currently being considered—would only lead to an upward spiral of insurance premiums that would raise, not lower, health costs for millions of American families. Members may also note that the kinds of coercive measures necessary to enforce compliance with these types of insurance mandates further argue against the government takeover of health insurance proposed by the majority.
Has Pelosi Read the Democrat Health Bill?
At her weekly news conference last Thursday, House Speaker Nancy Pelosi minimized the need for Members of Congress to scrutinize health legislation—and promptly reinforced her own point by demonstrating her lack of knowledge regarding the Democrat bill’s provisions. When asked if she would accept a pledge circulated by the organization Let Freedom Ring for Members of Congress to read health reform legislation before approving a bill that would impact the health care of hundreds of millions of Americans, the Speaker demurred, as The New York Times reported.
In that very same press conference, Pelosi provided demonstrable proof of her apparent reluctance to reading the Democrat health legislation. Congressional Quarterly reported that on Thursday the Speaker noted that “We will not be taxing [health] benefits in any bill that passes the House.” However, the bottom of page 457 of the Democrat “discussion draft” includes the following language—in capital letters and bold-faced print—regarding the financing mechanism for a new Comparative Effectiveness Research Trust Fund:
CHAPTER 34—TAXES ON CERTAIN INSURANCE POLICIES
Given this turn of events, many Members may advise Democrats to spend more time reading the Democrat “reform” legislation. Likewise, Members may oppose the concept of imposing an unprecedented tax on health benefits to fund effectiveness research conducted by a board of federal bureaucrats without any prohibitions on government programs like Medicare and Medicaid using that research to deny access to life-saving drugs and treatments.
Taxing Jobs—and Small Businesses—In a Recession
Press reports indicate that Democrats may once again attempt to release a Chairmen’s mark for health care legislation this week, after intraparty grumbling prompted the release’s postponement last week. Those same reports indicate that the majority of the bill’s new financing components—more than half a trillion dollars’ worth—will come from a new “surtax” on “high-income earners.”
Many Members may be concerned about the short-sightedness of such an approach, which would harm businesses and kill jobs. As more than half of all individuals in the top tax bracket report significant business income, these tax increases would harm small business owners, potentially resulting in significant job losses. Coming at a time when unemployment stands at its highest levels in 26 years, Members may believe that these new taxes would do nothing to control skyrocketing health care costs—but much to demolish and destroy American jobs.
Article of Note: Déjà Vu All Over Again
This past week The New Republic included an article by former Clinton Administration pollster Stan Greenberg that compared current public attitudes about health care reform to polls taken during the last attempt at comprehensive legislation in 1993-94; Greenberg writes that the similarities proved eerily striking:
“As I reached the last of the questions, I exclaimed: ‘Oh no. It can’t be. Nothing’s changed.’ Then and now, the country proclaimed its readiness for bold reform. In both instances, one-quarter say that the health care system ‘has so many problems that we need to completely rebuild it’; half the country sees ‘good things’ in the current system but believes ‘some major changes are needed.’ Then and now, about 60 percent of the public feel dissatisfied with the current health insurance system. Yet three-quarters are satisfied with their own health insurance–once again eerily parallel numbers….The country divides evenly on whether the greater risk is an unchanged status quo or government reforms that ‘create new problems.’ And, finally, Obama might want to pay attention to how closely his situation echoes Clinton’s. Then and now, more people favor the president’s health care plan than oppose it, but the supporters make up less than a majority.”
The article contains further cautionary notes: Only one-third of seniors support current Democrat proposals, quite possibly because such legislation would divert savings from Medicare to expand new entitlements for younger Americans. And the public remains dubious of what any reform would do to control costs—because, some Members would argue, the Democrat bills would likely increase them.
Some Members may not be surprised by these data, further validated by surveys showing opponents of Democrat health reform outnumber supporters. The polls confirm the belief that Americans remain highly skeptical about government’s ability to control health care costs, and want doctors and patients—not government bureaucrats—determining access to appropriate treatments. Members may view the Greenberg article as yet another reason why Democrats should follow the advice of their own Blue Dog Caucus, slow down the rush to enact a government takeover of the entire health care sector, and instead focus on effective reforms that slow the growth of costs without resorting to heavy-handed involvement by federal bureaucrats.