Nothing New With Obama's Health Plan
Last night President Obama finally presented his own health care proposal to a joint session of Congress. Those who were hoping for something new were disappointed. Despite the low public approval ratings this summer of the House Democrats' health care bill, the plan he presented was virtually identical, with the same often-repeated contradictions that have appeared regularly in his stump speech.
"When health care costs grow at the rate they have," the president said, "it puts greater pressure on programs like Medicare and Medicaid." That's right, Mr. President-so why propose a new public plan that will have similar cost problems? Medicare was meant to pay for itself when it began in the 1960s, but its future deficits stretch into trillions of dollars. Now the president claims that his plan, just like Medicare, will pay for itself.
Americans are rightly concerned about adding another $900 billion government health plan when government debt is expected to increase by $9 trillion over the next decade, with debt held by the public reaching 75% of GDP in 2019. Although Mr. Obama said last night that he "will not sign a plan that adds one dime to our deficits-either now or in the future," he also said that "reducing the waste and inefficiency in Medicare and Medicaid will pay for most of this plan." But politicians have been promising to reduce waste in Medicare and Medicaid for decades. These ephemeral savings have never happened.
The president has said many times that Americans will be able to keep their plans, as he did last night: "Nothing in this plan will require you or your employer to change the coverage or the doctor that you have. Let me repeat this: nothing in our plan requires you to change what you have."
But the vast web of regulations on insurance companies laid out by the president virtually ensures that some insurance plans will go out of business. Some Americans will not be able to keep their coverage or their doctor.
Consider that insurance companies won't be able to cap the amount of coverage people receive; that people will have a limit on how much they pay out of pocket; and that insurance companies will be required to provide checkups and preventive screenings at no charge. This will mean that insurance companies will be providing a more costly service.
The president describes the insurance plans subject to the new regulations as "lower-priced insurance." But Main Street America knows that you can't have higher-cost insurance that covers more people at a lower price. Americans will gradually move to the public option, and private plans will lose customers and go out of business.
While the president continued to repeat, as he has said many times before, that "consumers do better when there is choice and competition," his health exchange, described last night as "a marketplace where individuals and small business will be able to shop for health insurance at competitive prices," actually reduces choice and competition. All the health insurance plans in the exchange would have to comply with the new regulations, and tax credits to help with health insurance purchases could only be used inside the exchange.
Hence, innovation in insurance plans, such as plans covering catastrophic occurrences with high deductibles paid by the patient, would be forbidden in the exchange. Take a low-cost plan that covered only large claims, such as breaking a leg or being diagnosed with cancer-it would not meet the president's criteria. That's like saying that all auto insurance policies have to cover oil changes and new brake pads.
Catastrophic high-deductible plans are not only part of competition and choice, but encourage lower medical costs through shopping around. When people have to watch the dollars they spend, they look more closely at the costs. Lasik eye surgery and cosmetic surgery, unlike many medical procedures, have declined in cost over the past decade because they are not covered by insurance and are paid for out of consumers' own pockets. If auto insurance covered oil changes, we'd never see the massive advertising campaigns by Jiffy Lube and AutoZone.
Mr. Obama said that he "will continue to seek common ground in the weeks ahead. If you come to me with a serious set of proposals, I will be there to listen."
Representative Tom Price, physician and Georgia Republican, should take the president up on his offer. His Empowering People First bill would let people have tax deductions for health insurance premiums that they pay, just as employers do. The poor would be given refundable tax credits in advance to help pay premiums. States would be required to set up risk pools-state nonprofit insurance associations-for those with chronic conditions who might otherwise be uninsurable.
Mr. Price proposes that employers offer a monetary sum to workers so that they can purchase whatever insurance plan they choose in the open market, just like a portable pension plans. Employers would still enjoy the same tax benefit for providing coverage, but workers would be able to choose from an entire range of options that they could carry with them when they change jobs. Now employees are generally limited to one plan, and lose that coverage when they change jobs.
Or how about The Patients' Choice Act of 2009, proposed by Wisconsin Congressman Paul Ryan and Senator Tom Coburn of Oklahoma, also a physician? Their bill uses state exchanges as portals where Americans could take new tax credits and choose private insurance. All insurance plans that are licensed in a state could participate in the state's exchange.
The president's health care plan, like his speech, is full of contradictions and uncertainty. We cannot save money by promising to provide everyone with better health care while outlawing the most sensible plans. Clear-thinking Americans will continue to be skeptical.