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Obama's "New" Health Care Idea

February 25, 2010

By David Gratzer

Health-care proposals from the White House follow a set pattern. The President identifies a real problem; he talks about the need for bipartisan action; he finally proposes a partisan solution that has been tried somewhere and failed miserably. Most of 2009, for example, was spent tackling the problem of “bending the curve” of health costs with the President ultimately championing a British-style government committee to guide Medicare treatment decisions. The British government is so taken with this idea that they are now distancing themselves from their own committee.

With Obamacare tanking in the polls, the President met with his advisors — and promptly stuck to his usual pattern. On Monday he suggested that rising insurance premiums are a problem and that bipartisan ideas are welcome. And then he touted the latest “new” idea: tough federal powers to review and reject insurance premium increases.

Superficially, it sounds like a potentially popular idea. There are three nagging problems. First, holding show-trials for the worst premium increases won’t limit health inflation for most Americans. Second, the plan is not as tough as advertised. And finally, the same approach has already failed at the state level.

Time and again, liberals have pinned the blame for health-care cost inflation on America’s for-profit care system. The explanation doesn’t hold up. If the problem is profit, then why are Medicare and Medicaid costs rising faster than private sector costs in 2009, according to the government’s own statistics? If the problem is profit, then why did Canadian public-sector health inflation rise almost as quickly as American private sector health inflation in 2009, even though Canada literally bans private insurance?

Yes, some Americans will face steep premium hikes this year. Their plight shouldn’t be ignored. But the President’s job is not to be the micromanager-in-chief. The President’s stated health reform goal in 2009 was to fight health inflation across the American economy. And America’s problem with health inflation is mostly seen in constant, routine increases of a few points over core inflation. While it might feel good to stomp on the worst increases, be sure that most rate hikes will slip through the new process unchallenged.

How can we be sure? Start with the fine print. Media reports make it sound as if President Obama will now be the supercop of health insurance. But the text of the President’s own proposal merely promises that “the state or the Secretary (of Health)” will review increases. A new Health Insurance Rate Authority will “provide needed oversight at the federal level and help states determine how rate review will be enforced and monitor insurance market behavior.” In other words, Washington will create a new, redundant bureaucracy to help the states to do what many of them do already.

This brings us to the third problem. Twenty-five states formally review health insurance premium increases. What happened to premiums in those states over the last decade? You already know the answer: they went up. Liberals insist this was because of a “lack of political will,” or the “lack of resources” - as if iron will or federal resources are needed to an unpopular premium increase.

The truth is more complicated. Take Massachusetts. The state has already implemented universal health reforms closely resembling ObamaCare. And, yes, state bureaucrats already review private sector rate increases. Yet premiums didn’t just rise since the 2006 reforms – they’ve risen much faster than average.

Two explanations stand out. First, rates rose because demand rose. Massachusetts now has universal coverage, so the insurance pool expanded substantially. And growing rates of preventable illness mean Massachusetts - like America - isn’t as healthy as it used to be. Also, new technologies increased basic costs.

Premiums also rose because lawmakers imposed dozens of insurance benefit mandates on Massachusetts consumers as a gift to provider lobbies. If the law says every consumer must buy gold-plated coverage, how can state officials say no to premium increases linked to those increased benefits?

ObamaCare already includes several federal benefit mandates, so the cycle will repeat itself nationally if the plan becomes law. Worse, the President is now appeasing Democratic senators with fifty state health exchanges instead of one national market. State benefit mandates will create cost pressure side-by-side with federal mandates, forcing federal bureaucrats to plow through overlapping regulatory systems to decide what’s fair and what isn’t.

Like so many features of the President’s plan, the tougher “new” rate review authority means more bureaucracy, more regulation, and more confusion, without much promise of better care, lower prices, or better access.

Original Source: http://townhall.com/columnists/DavidGratzer/2010/02/25/obamas_new_health_care_idea

 

 
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