After a long day of acid, partisan debate, Senate Democrats held ranks early Monday in a dead-of-night procedural vote that proved they had locked in the decisive margin needed to pass a far-reaching overhaul of the nation’s health care system.

The roll was called shortly after 1 a.m., with Washington still snowbound after a weekend blizzard, and the Senate voted on party lines to cut off a Republican filibuster of a package of changes to the health care bill by the majority leader, Harry Reid of Nevada.

The vote was 60 to 40 — a tally that is expected to be repeated four times as further procedural hurdles are cleared in the days ahead, and then once more in a dramatic, if predictable, finale tentatively scheduled for 7 p.m. on Christmas Eve.

Both parties hailed the vote as seismic.

Democrats said it showed them poised to reshape the health system after decades of failed attempts.

“Health care in America ought to be a right, not a privilege,” said Senator Christopher J. Dodd, Democrat of Connecticut. “Since the time of Harry Truman, every Congress, Republican and Democrat, every president, Democrat and Republican, have at least thought about doing this. Some actually tried.”

Republicans said that the bill was fatally flawed and that voters would retaliate against Democrats at the polls in November.

“It’s obvious why the majority has cooked up this amendment in secret, has introduced it in the middle of a snowstorm, has scheduled the Senate to come in session at midnight, has scheduled a vote for 1 a.m., is insisting that it be passed before Christmas — because they don’t want the American people to know what’s in it,” said Senator Lamar Alexander, Republican of Tennessee.

Mr. Alexander added, “Our friends on the Democratic side seem determined to pursue a political kamikaze mission toward a historic mistake.”

Each side blamed the other for the extraordinary series of votes — at dawn Saturday, after midnight Monday, at dawn again on Tuesday, at 1 p.m. on Wednesday and finally on Christmas Eve, when most Americans will be sequestered for the holiday.

The Democrats charged the Republicans with obstinately throwing every procedural obstacle in their way, including filibusters and the full 30 hours of debate allowed under the rules after each filibuster is broken by a vote of 60 senators.

The Republicans charged the Democrats with recklessly rushing to adopt a dizzyingly complex 2,700-page bill that would affect virtually every American, and would reshape one-sixth of the nation’s economy at a cost of $871 billion over 10 years.

“If the Republicans want to exercise every single right they have under the rules, they can keep us here until Christmas Eve, no doubt about it,” said Senator Tom Harkin, Democrat of Iowa. “But to what end, I ask? To what end? We’re going to have the vote at 1 a.m. that requires 60 votes, and then why stay here until Christmas Eve to do what they know we’re going to do?”

Senator John Cornyn, Republican of Texas, said he and his colleagues had a duty to fight until the last minute.

“There is nothing inevitable about this,” Mr. Cornyn said. “The only thing I think inevitable about it is in the light of the unpopularity of what is being jammed down the throats of the American people, there will be a day of accounting. We don’t know when that day of accounting will be. Perhaps the first day of accounting will be Election Day 2010.”

Adoption of the legislation is not a certainty.

The Senate bill, once completed, must be reconciled with the bill adopted by the House last month, and there are substantial differences between the two. The House measure, for instance, includes a government-run health insurance plan, or public option, that was dropped from the Senate bill.

The House speaker, Nancy Pelosi, has said the House would not just accept the Senate bill. And some Senate Democrats have warned that they could turn against the bill if changes made during negotiations with the House are not to their liking.

Read the rest at New York Times.

Washington is captivated by the Senate melodrama over the so-called public option, salivating at the ring of Harry Reid’s political bell (see below). But the most important health-care questions continue to be about the policy substance—particularly those that Democrats don’t want asked.

Foremost among them is: How will ObamaCare affect insurance premiums in the private health-care markets? Despite indignant Democratic denials, the near-certainty is that their plan will cause costs to rise across the board. The latest data on this score come from a series of state-level studies from the insurance company WellPoint Inc.

At the request of Congressional delegations worried about their constituents—call it a public service—WellPoint mined its own actuarial data to model ObamaCare in the 14 states where it runs Blue Cross plans. The study therefore takes into account market and demographic differences that other industry studies have not, such as the one from the trade group America’s Health Insurance Plans, which looked at aggregate national trends.

In all of the 14 states WellPoint scrutinized, ObamaCare would drive up premiums for the small businesses and individuals who are most of WellPoint’s customers. (Other big insurers, like Aetna, focus on the market among large businesses.) Young and healthy consumers will see the largest increases—their premiums would more than triple in some states—though average middle-class buyers will pay more too.

Not even two hours after Wellpoint had presented its materials on the Hill, Democrats were already trashing it—which, considering that it runs to some 238 pages and took weeks to prepare, must have required remarkable powers of digestion and analysis.

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From the New York Times

WASHINGTON (AP) — Quick quiz: What do these enterprises have in common? Farm and construction machinery, Tupperware, the railroads, Hershey sweets, Yum food brands and Yahoo? Answer: They’re all more profitable than the health insurance industry.

In the health care debate, Democrats and their allies have gone after insurance companies as rapacious profiteers making ”immoral” and ”obscene” returns while ”the bodies pile up.”

Ledgers tell a different reality. Health insurance profit margins typically run about 6 percent, give or take a point or two. That’s anemic compared with other forms of insurance and a broad array of industries, even some beleaguered ones.

Profits barely exceeded 2 percent of revenues in the latest annual measure. This partly explains why the credit ratings of some of the largest insurers were downgraded to negative from stable heading into this year, as investors were warned of a stagnant if not shrinking market for private plans.

Insurers are an expedient target for leaders who want a government-run plan in the marketplace. Such a public option would force private insurers to trim profits and restrain premiums to compete, the argument goes. This would ”keep insurance companies honest,” says President Barack Obama.

The debate is loaded with intimations that insurers are less than straight, when they are not flatly accused of malfeasance.

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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.

By by Stanley Goldfarb — The president’s plan to reduce health-care costs mostly depends on reducing the cost of the premiums of those “villainous” insurance companies. This plan is premised on the idea that insurance companies have large profits and administrative expenses that can be pared down without any real impact on the payments to those who provide health care. It also assumes that health-care costs have risen because of the rise in insurance premiums. Unfortunately, logic and data do not support either contention. If Obama’s plan passes, the country may spend the next five years vainly waiting for reduced insurance premiums to control health care costs.

The first obvious problem with this plan is that every incentive exists for for-profit insurance companies to maximize profits, hence their designation as for-profit companies. No publicly traded for-profit company can survive if it loads up on administrative costs to keep down profits. If the profits of health-care insurance companies were very high, then obviously an argument could be made to utilize those windfall profits to underwrite the cost of insuring the uninsured. In fact, the health insurance segment of the insurance business is just not terribly profitable.

The health-insurance industry ranked 86th among U.S. industrial sectors, according to Yahoo finance. The average profit margin for the industry as a whole was a mere 3.3 percent of revenues. Certainly there is some money to wring out of this margin, but to “bend the curve” of the growth of 17 percent of the U.S. economy, reducing these profits will not suffice. Reducing premiums will instead reduce the payment to physicians and hospitals, as that is the largest expense to these companies, somewhere between 80 to 95 percent depending on the particular firm. Reduce the premium and reduce the payment–or drive the company out of business. And perhaps this is the ultimate goal.

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