Politics & Policy

‘Explaining’ Obamacare . . . by Bashing Insurers

The president is attacking the insurance industry in a desperate attempt to shore up support for a deeply flawed bill.

President Obama’s favorite explanation for why his health-care reform plan is unpopular is that he needs to explain it “more clearly.”

Explain it more clearly? After dozens of presidential health-care speeches and town halls, and even a bipartisan “summit,” people understand Obamacare quite well. They just don’t like it. In the latest Rasmussen polls, 53 percent of voters oppose the legislation, and 57 percent think it will hurt the economy if it becomes law. Clarity is killing Obamacare because voters understand that it will raise health-care costs and explode the deficit, creating a permanent new drain on the economy.

Desperate Democrats have decided that if they can’t sell their plan, they’ll just attack the Evil Insurance Companies. Hence the president’s latest proposal for a federal regulator that would have the power to approve (read: deny) insurance-premium rate increases that are considered “excessive,” a ploy based on Anthem’s recent announcement that it will raise rates for individual plans in California by up to 39 percent.

Obama’s plan is a bad, poll-driven idea that would wreak havoc on the individual insurance market. State insurance experts interviewed in the New York Times this week explained why: Rate reviews at the state level are primarily designed to make sure that insurers will remain solvent and can pay their claims. The experts called this the “ultimate consumer protection.”

“You’re not necessarily helping the consumer if you keep the rates artificially low,” one state regulator told the Times. “What’s worse for the consumer: having a premium increase or having to pay the full amount of a medical expense because the company is out of business?”

The president also ignores the logic of competitive markets: If one insurer raises rates above what is justified by underlying costs, competitors will undercut them, shaving off market share and profits.

For instance, according to eHealthInsurance.com, a 40-year-old single male resident of Santa Monica, Calif., has 124 plans to choose from, starting at $88 a month for an Anthem Blue Cross plan. If a 39 percent increase hit this plan, its new cost would be about $122 a month — leaving it vulnerable to competition from Kaiser Permanente or Aetna.

A 2009 survey from eHealthInsurance also found that individual health-insurance premiums are less expensive in California than the national average: $150 a month versus $161. New York — a state with many of the health-care regulations found in Obamacare — was more than twice as expensive as the national average: $339. Individual insurance markets undoubtedly need more competition, but the Democrats’ embrace of heavy-handed regulations and mandates would drive prices up, not down.

This brings us back to why the president is talking about insurance companies, and not about the fine print in his plan. Skeptical voters know that the administration is cherry-picking its budget numbers to make the Democrats’ legislation look much cheaper than it really is. For instance, the president claims that the nonpartisan Congressional Budget Office scores the Democrats’ legislation with a small savings in its first ten years and lowers the deficit by $1 trillion the following decade.

This estimate reflects what David Brooks calls “gimmicks and dodges [that are] designed to get a good score from the Congressional Budget Office but don’t genuinely control runaway spending.” The score leaves out $300 billion in Medicare physicians’ payment increases that were dropped from earlier versions of the Democrats’ legislation because it made the price tag look too high. The estimate also depends on massive reimbursement cuts to Medicare and Medicaid providers that are unlikely to ever actually materialize.

Major legislation, the CBO also observes drily, does not often remain unchanged for 20 years. Translation: Good luck collecting that $1 trillion.

The administration and its allies have been trying to have it both ways by invoking the CBO score as if it was handed down by God’s own accounting office, while ignoring CBO assumptions that don’t fit their narrative — like the fact that their favorite demonstration projects and pilot programs don’t save any real money.

Once you peel off the gimmicks, the legislation will create a massive new health-care entitlement that the country cannot afford. Attacking insurance companies is meant to distract voters — and wavering Democrats in Congress — from Obamacare’s glaring deficiencies. If it becomes law, expect this to be a health-care “cure” that’s worse than the disease.

– Paul Howard is director of the Manhattan Institute’s Center for Medical Progress and managing editor of MedicalProgressToday.

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