Posted from Wall Street Journal

The Baucus plan would make insurance even more expensive

Senate Finance Chairman Max Baucus finally unveiled his health-care plan yesterday to a chorus of bipartisan jeers. The reaction is surprising given that President Obama all but endorsed the outlines of the Baucus plan last week. But the hoots are only going to grow louder as more people read what he’s actually proposing.

The headline is that Mr. Baucus has dropped the unpopular “public option,” but this is a political offering without much policy difference. His plan remains a public option by other means, imposing vast new national insurance regulation, huge new subsidies to pay for the higher insurance costs this regulation will require and all financed by new taxes and penalties on businesses, individuals and health-care providers. Other than that, Hippocrates, the plan does no harm.

The centerpiece of the Obama-Baucus plan is a decree that everyone purchase heavily regulated insurance policies or else pay a penalty. This government mandate would require huge subsidies as well as brute force to get anywhere near the goal of universal coverage. The inevitable result would be a vast increase in the government’s share of U.S. health spending, forcing doctors, hospitals, insurance companies and other health providers to serve politics as well as or even over and above patients.

The plan essentially rewrites all insurance contracts, including those offered by businesses to their workers. Benefits and premiums must be tailored to federal specifications. First-dollar coverage would be mandated for many services, and cost-sharing between businesses and employees would be sharply reduced, though this is one policy that might reduce health spending by giving consumers more skin in the game. Nor would insurance be allowed to bear any relation to risk. Inevitably, costs would continue to climb.

Everyone would be forced to buy these government-approved policies, whether or not they suit their needs or budget. Families would face tax penalties as high as $3,800 a year for not complying, singles $950. As one resident of Massachusetts where Mitt Romney imposed an individual mandate in 2006 put it in a Journal story yesterday, this is like taxing the homeless for not buying a mansion.

The political irony here is rich. If liberal health-care reform is going to make people better off, why does it require “a very harsh, stiff penalty” to make everyone buy it? That’s what Senator Obama called it in his Presidential campaign when he opposed the individual mandate supported by Hillary Clinton. He correctly argued then that many people were uninsured not because they didn’t want coverage but because it was too expensive. The nearby mailer to Ohio primary voters gives the flavor of Mr. Obama’s attacks.

And the Baucus-Obama plan will only make insurance even more expensive. Employers will be required to offer “qualified coverage” to their workers (or pay another “free rider” penalty) and workers will be required to accept it, paying for it in lower wages. The vast majority of households already confront the same tradeoff today, except Congress will now declare that there’s only one right answer.

Read the rest at Wall Street Journal.

Posted from the Wall Street Journal

By MICHAEL O. LEAVITT

Responding to a building wave of opposition to the “public option,” the Obama administration is now signaling that it may dress up government health care in yet another set of clothes. This time, it will be called a health insurance “co-op.” Sen. Kent Conrad (D., N.D.) is floating the idea, Sen. Max Baucus (D., Mont.) has offered his initial support, and Sen. Chuck Schumer (D., N.Y.) has listed three conditions it needs to meet.

Mr. Schumer’s conditions are a national structure, federal financing, and a ban on federal appointees who have ties to the insurance industry. This “co-op” would be federally controlled, federally funded, and federally staffed. Expressing his opposition to smaller organizations and his demand for a national “co-op,” Mr. Schumer says, “It has to have clout; it has to be large.” He adds, “There would at least be one national model that could go all over the country,” which would require “a large infusion of federal dollars.”

I’m quite familiar with real co-ops. As a teenager, I filled my family’s tractor with fuel purchased at a farmer’s co-op, which was organized by local people to solve a common problem. My family got its electricity from a rural electric co-op. I was later a director of an “insurance reciprocal,” a form of a co-op. Co-ops are a part of American culture: people uniting to solve common problems. What the Democrats are proposing bears little resemblance to this.

The Democrats are insisting that their version of a “co-op” wouldn’t be government-run health care, but I ran Medicare and Medicaid as secretary of Health and Human Services, and I know this isn’t true. When Washington provides the money, names the directors and ultimately pays the bills, government controls health care. Lobbyists will lobby, Congress will respond, and bureaucrats will decide who gets care, what drugs are prescribed, what procedures are covered, and how much money providers can charge. This is true for Medicare, it’s true for Medicaid, and it would be true of Mr. Conrad’s “co-ops.”

Sen. Chuck Grassley, the ranking Republican on the Senate Finance Committee, is from Iowa farm country. He knows co-ops, and hopefully he also knows a plan for a government takeover when he sees it. He’s said he’s against a “public option,” no matter what it’s called. Yet Senate Finance Committee Chairman Baucus, describing what he wants out of “co-op” legislation, spoke plainly, as reported by Politico earlier this summer, when he said, “It’s got to be written in a way that accomplishes the objective of the public option.”

Our health-care system needs real reform. We need to abolish the unfair tax that favors employer-sponsored insurance over self-purchased insurance. We need to foster a more vibrant private market with greater competition and choice. We need to make prices transparent and give consumers more freedom to pursue health-care value.

Every American needs to have access to affordable health insurance. But we don’t need a “public option” that would jeopardize the employer-provided insurance of millions—an option that employers would be able to choose at their employees’ expense. And we don’t need the government running a bunch of so-called “co-ops,” rationing care at taxpayers’ expense.

The Democrats are getting worried that the Trojan Horse they have offered in the form of a “public option” has been spotted for what it is. So now they are looking for a new way to get government-run health care through the gates.

Let none of us be co-opted by their latest ploy.

Mr. Leavitt, former secretary of Health and Human Services (2005-2009), has served as the administrator of the Environmental Protection Agency and as governor of Utah (1993-2003).

Posted from OpposingViews.com

Faced with rising opposition to a so-called “public option” in health care reform, some Democrats are floating the idea of establishing health insurance “co-operatives” as an alternative. Republicans like Sens. Olympia Snowe (Maine) and Charles Grassley (Iowa), who are desperately devoted to the idea of bipartisan compromise, have pronounced themselves “intrigued” by the idea.

A closer look suggests that the only thing intriguing about the co-op alternative is whether it is a completely meaningless construct or simply camouflage for the “Public Plan” option.

A “co-op” can be defined as a business owned and controlled by its workers and the people who use its services, in this case presumably the people whom it insures. In that sense, government provision of some sort of legal framework or seed money to help establish health insurance co-ops seems relatively harmless but also relatively pointless. The U.S. already has some 1,300 insurance companies. Adding a few more would accomplish…what?

States already have the power to charter co-ops, including health insurance co-ops. In fact, health care co-ops already exist. Health Partners, Inc. in Minneapolis has 660,000 members and provides health care, health insurance and HMO coverage. The Group Health Cooperative in Seattle provides health coverage for 10 percent of Washington State residents. PacAdvantage, a California co-op, covers 147,000 people. By all accounts the people insured through these co-ops are happy with their choice. But there is no evidence that they are significantly less expensive or more efficient than other insurers.

The new co-ops would presumably have to advertise like other insurance companies, build physician networks, pay competitive reimbursement rates, and in general act like, well, every other insurance company. It is suggested that the new federal co-ops would be nonprofits, and therefore would offer better service and lower costs. But many insurance companies, including “mutual” insurers and many “Blues,” are already nonprofit companies. If the new co-ops operate under the same rules as other nonprofit insurers, why bother?

And there’s the rub. Supporters of government-run health care have no intention of letting the co-ops be independent enterprises that operate by the same rules as other insurers. This is not really about creating more choices and competition. In fact, Sen. Charles Schumer (D-N.Y.) makes it clear, for example, that the co-op’s officers and directors would be appointed by the president and Congress. He insists that there be a single national co-op. And Congress would set the rules under which it operates. As Sen. Max Baucus (D-Mont.) says, “It’s got to be written in a way that accomplishes the objectives of a public option.”

If it looks like a duck, walks like a duck, and quacks likes a duck, it’s probably a duck.

Moreover, several previous attempts by governments to set up co-ops have, in fact, failed. Perhaps the largest such failure was the Florida Community Health Purchasing Alliance, which was set up by the State of Florida in 1993, and at one time covered 98,000 people. It was unable to attract small business customers and ultimately went out of business in 2000. Does anyone really believe that a Congress that is busy bailing out banks and automobile companies because they are ‘too big to fail” is going to sit idly by while one of these new co-ops suffers a similar fate?

If a “co-op” is run by the federal government under rules imposed by the federal government with funding provided by the federal government, it’s simply government-run health insurance by another name. Opponents of a government takeover of the health care system should not be fooled.