Government only drives up reform costs

Freedom New Mexico

Finally ending what has been one of the more excruciating legislative episodes in recent history, the Senate Finance Committee has approved the Baucus bill. It happened after months of debate and negotiation on health care legislation.

Now the real battles can begin.

The Baucus bill, named for committee chairman Max Baucus of Montanta, is now slated to be merged with another bill passed by the Senate Health Committee. That will produce a bill all senators can vote on on the Senate floor.

Meanwhile on the House side, where three committees have produced three different bills, work has begun on merging them.

The major difference in the proposals is the Baucus bill does not contain a “public option” — a government-run “insurance” company to compete with private insurers — while all the others do.

It would mandate that almost all Americans buy health insurance, limit deductibles and co-payments (which would virtually outlaw Health Savings Accounts, a promising innovation) provide federal subsidies for some Americans, expand Medicaid and outlaw rejecting applicants for insurance because of pre-existing health conditions.

It would be paid for by new taxes on insurance companies and on “Cadillac” insurance plans, and cuts to Medicare providers.

It is far from a done deal.

The first problem relates to the real cost of any bill that promises to insure tens of millions of Americans and reduce overall health care spending.

The Baucus bill was able to pencil out at “only” $829 billion over 10 years by offloading numerous costs onto states and the private sector.

And the promise of savings in Medicare is almost certainly ephemeral. Under current legislation, payments to Medicare providers already have been subject to decreases, but every year Congress has decided not to make those cuts. The likelihood that Congress would choose to alienate seniors by doing so in the future is low to say the least.

Many of the holders of expensive “Cadillac” insurance plans are union members, a key Democratic constituency.

Alternately, a so-called “millionaire’s tax” on high-income consumers would hurt numerous small businesses. Moderate and conservative Democrats, without whom the Democratic majorities in Congress would be shaky or nonexistent, generally oppose such taxes.

Meanwhile Medicare, the government’s premier health care program, is headed for insolvency in six to nine years. Nothing in any of the proposals solves this problem, and some proposals would make it worse.

It is also dawning on many Americans that the reforms proposed in Congress amount to redistributing health care, meaning that some people — significantly, seniors on a Medicare program already tottering and health care providers — will get less care than they get now.

That’s one reason American Health Insurance Plans, the lobby for the country’s health insurance providers, which had initially cooperated closely with the White House, came out with a study predicting the bills currently in play would increase health care costs and insurance premiums more than if nothing were done.

If health “reform” in its current form eventually dies in Congress this year, that would hardly be a tragedy. It would be an opportunity to rethink the system, recognize the problem is not too little government involvement but too much, and develop proposals that might actually have a chance of reducing health care costs.

Tort reform, putting a lid on medical malpractice awards, would be one approach. Allowing people to buy insurance across state lines would be another. Letting individuals take the same tax deductions for health insurance that businesses are allowed would be another.

When you’re on the wrong road, stepping on the gas seldom fixes things. Instead, let’s look for savings that first would make health care more affordable, give those reforms some time to work, and consider more far-reaching reforms later.