Critical Condition

Comfortably Numb

The insurance companies have now recognized that the Baucus bill constitutes a threat to them, and have commissioned PricewaterhouseCoopers to produce a study with the unsurprising conclusion that forcing insurers to take all comers will increase prices.  Losing the insurers at this late hour is a blow to the White House’s hopes of keeping key industries aboard as the Baucus bill approaches a Finance Committee vote tomorrow. In addition, the study is giving Republicans ammunition against the Baucus bill, with the most damaging piece being the conclusion that, according to AHIP president Karen Ignani: “Between 2010 and 2019 the cumulative increases in the cost of a typical family policy under this reform proposal will be approximately $20,700 more than it would be under the current system.”

$20,700 over a decade seems like a lot to put on the “typical family.”  The Senate Finance Committee is rightly worried about this, from both a political and a substantive perspective, and they sent some rebuttal points to the Politico’s Carrie Budoff Brown, the first of which caught my eye: “The majority of people obtaining insurance (85 percent) would be eligible for subsidies, so they would not feel any premium increase.”

Note that the rebuttal point doesn’t deny that there would be increases, only that 85 percent of folks getting insurance would not feel any increases, because they would get taxpayer subsidies.  There are two main problems with this. First, somebody is paying for those subsidies, namely the American taxpayer, so I suspect we would all feel it if costs increased as much as the PWC study indicates. Second, trying to prevent people from feeling actual health-cost increases is one of the reasons that American health-care costs so much in the first place. The huge increase in third party payment over the last four decades, from both government and private insurers, has coincided with a quadrupling of health-care costs, and the proposed mandate plus subsidy approach will only add to that numbness.