Manhattan Institute for Policy Research.
search  
 
Subscribe   Subscribe   MI on Facebook Find us on Twitter Find us on Instagram      
 
 
   
 
     
 

RealClearMarkets

 

A Very Unhealthy Health Bill

July 16, 2009

By Diana Furchtgott-Roth

The same week as the federal budget deficit exceeded $1 trillion for the first time, three committees of the House of Representatives are considering a health-care reform bill that would add another $1 trillion to the deficit.

Meanwhile, two Senate committees are working on their own $1 trillion bills. Eventually, the House and Senate will pass their respective bills and then in the autumn or winter struggle to meld them into one.

The House draft, ironically entitled America’s Affordable Health Choices Act of 2009, has so much wrong with it that it is difficult to know where to start-or stop.

The House drafters include a new public health insurance plan, an 8% tax on employers who do not offer health insurance to employees, a mandate for everyone to have insurance, and requirements on whom insurers must cover, what benefits must be provided, and how much profit is permitted-with excess profits returned to enrollees. This would solidify government domination of all health care in America.

The stage for this Herculean effort, one Democrats regard as historic, was set by President Obama and by the Democrats’ solid majorities in both chambers. “We have no choice but to change the health care system, because, right now, it’s broken for too many Americans,” the president declared on July 14.

The cost of the House bill has not been fully calculated. The Congressional Budget Office took the unusual step of doing a back-of-the envelope estimate without having seen the final 1,018-page bill. This gives new meaning to pulling numbers out of thin air. Even so, CBO assumes the bill would add over $1 trillion to the budget deficit over 10 years.

Texas Republican Joe Barton, ranking Republican on the House Energy and Commerce Committee, will offer an amendment on July 20 to assist people with “pre-existing conditions” and special health care needs to get affordable health insurance on the private market.

Rather than regulating the entire health care system, Mr. Barton would give money to states to set up high-risk pools that would write the insurance or reinsure companies that cover higher-risk beneficiaries. The cost would be $16 billion over ten years.

Even with vast expenditure and new regulatory oversight, the House bill would not cure one of the major problems of American health insurance: the large number of uninsured.

CBO estimates that without any changes in our health care system, the number of uninsured Americans will rise from 47 million now to 54 million in 2019. Even with a mandate for insurance, CBO reckons that the number of uninsured would fall to 17 million by 2019. That would still be a significant number, and suggests that for all the additional spending, the House bill is importantly flawed.

The House would penalize individuals who do not buy insurance by charging them 2.5% of their modified adjusted gross income. For many low-income uninsured, the penalty will be less than the cost of insurance and may prove to be no incentive at all.

In any case, the Democrats’ premise may be flawed. It seems to assume that people without health insurance don’t get adequate health care-and cannot afford insurance.

However, a new study by economics professors June and Dave O’Neill of Baruch College shows many people have jobs and income and simply elect not to buy insurance. In effect, they are self-insured.

Through government data on income and spending, the O’Neills find that 43% of those without insurance are uninsured by choice. They observe that most households with income of over $55,000 (more than twice the poverty level) do buy insurance. They conclude that others in that income level can also afford to buy insurance, yet choose not to.

While it is open to argument that $55,000 is the right threshold, surely some households with much more income appear to be opting out of insurance.

The remaining 57%- about 28 million people-are uninsured because they cannot afford premiums. These involuntarily uninsured generally have lower earnings and less education. Substantial proportions are young, foreign-born, and unmarried. About 33% have no high school diploma and 40% have no job.

Nevertheless, many of the uninsured do receive medical care through Medicaid, public and private charities, and free care provided by hospitals and physicians.

Interestingly, many of the uninsured receive care comparable to that delivered by the Canadian single-payer system. For instance, 65% of uninsured American women age 40 to 69 had mammograms within the past five years, the same percentage as Canadian women. Thirty-one percent of uninsured American men ages 40 to 64 were screened for prostate cancer, compared with 16 percent of Canadians.

The House bill would drive more people towards the new public health-care plan championed by Mr. Obama, or to Medicaid, the federal-state plan for low-income people. It would motivate some or many employers, especially those with low-wage workers in the retail, leisure, and hospitality sectors to drop insurance and instead pay penalties of 8% of payroll, effectively steering employees to the new public plan.

The misnamed America’s Affordable Health Choices Act of 2009 is unaffordable, adding at least $1 trillion to the federal budget deficit. It will restrict choices, forcing private insurance companies out of business. Many less-expensive ideas, such as Mr. Barton’s amendment, are worth considering before giving near-total control of the health care sector to Uncle Sam.

Original Source: http://www.realclearmarkets.com/articles/2009/07/16/a_very_unhealthy_health_bill_97311.html

 

 
PRINTER FRIENDLY
 
LATEST FROM OUR SCHOLARS

Reclaiming The American Dream IV: Reinventing Summer School
Howard Husock, 10-14-14

Don't Be Fooled, The Internet Is Already Taxed
Diana Furchtgott-Roth, 10-14-14

Bad Pension Math Is Bad News For Taxpayers
Steven Malanga, 10-14-14

Proactive Policing Is Not 'Racial Profiling'
Heather Mac Donald, 10-13-14

Smartphones: The SUVs Of The Information Superhighway
Mark P. Mills, 10-13-14

Failing The Subways -- On Track For Debt And Decay
Nicole Gelinas, 10-13-14

The Free Speech Movement Won, But Free Speech Lost
Sol Stern, 10-12-14

Book Review: 'Breaking In' By Joan Biskupic
Kay S. Hymowitz, 10-10-14

 
 
 

The Manhattan Institute, a 501(c)(3), is a think tank whose mission is to develop and disseminate new ideas
that foster greater economic choice and individual responsibility.

Copyright © 2014 Manhattan Institute for Policy Research, Inc. All rights reserved.

52 Vanderbilt Avenue, New York, N.Y. 10017
phone (212) 599-7000 / fax (212) 599-3494