There is one supreme Democratic idiocy in the health care debate which has not received enough attention. The entire focus of the Democratic proposals — whether HR3200, the Senate HELP Committee bill, the Baucus Concepts, or the Obama non-plan — is to increase the cost of private health insurance.
That may sound counter-intuitive, because all the rhetoric from the Democrats is about reining in costs and bending the cost curve. But when Democrats talk about reining in costs, what they really mean is de facto rationing determined by Democratically (large D) appointed panels for those people on government-run plans.
As for private health insurance, by contrast, the Democratic proposals will do nothing to lower costs and everything to increase costs. All the new mandatory benefits (no pre-existing condition, no caps, etc.) are desirable, but by imposing those benefits uniformly across the country with no alternatives such as health savings accounts (i.e. catastrophic coverage), the cost of private health insurance will rise. There is no way to expand coverage provisions across the board without increasing costs.
There could be innovative ways to make these provisions available as needed through national insurance markets with subsidized or pooled coverage for people with pre-existing medical conditions, without increasing the cost for everyone. But no alternatives to one-size-fits-all health insurance plans are allowed by the Democrats driving the health care legislation.
A good example is the elimination of catastrophic coverage, which would not fit the definition of “acceptable” coverage under the pending proposals. This coverage provides for a high deductible so that the patient pays, say, the first $5000 of health care bills with the insurance kicking in after that point. The cost of this insurance is dramatically lower than coverage which kicks in at the first dollar, often in an amount greater than the deductible.
Health savings accounts and other forms of catastrophic coverage allows patients to manage their own health care costs, to price shop, and to keep any savings below the deductible amount. There is no government spending involved, price competition is entered into the system, and the patient is protected against bankruptcy from high medical bills.
Encouraging price competition through consumer choice should be encouraged, not eliminated. To eliminate such insurance completely, and to refuse to consider alternatives such as national insurance markets which lower private coverage costs, shows that something else is at play.
The Democratic proposals seem designed to raise the cost of private insurance. This will have two effects. The first is job destruction. The proposals mandate that employers, other than the smallest employers, provide “acceptable” health coverage. In this one fell swoop, the Democrats have increased the cost of hiring or keeping employees. Anyone who has run a business (I have, Obama has not) will understand that raising the cost of an employee results in fewer employees.
The Democrats often respond that these mandates will not apply to small employers, typically those companies with fewer than 50 employees. Great logic. Create incentives not to grow the company because at a certain point these new costs (which apply not only to new employees, but to everyone) kick in. It is a good thing we didn’t beat down Google, and Microsoft, and all the other huge companies which started small by forcing mandates on them when they hit 50 employees.
The second effect of raising private health insurance costs will be to force companies to make the economic choice of paying the health care tax rather than providing private health coverage. This will mean pushing the nation towards a single-payer system (Obama’s stated goal) subsidized not by general tax revenues but by employer health care taxes.
As more people move to the government-run option, and as the government-run option requires subsidies (which all government health programs do, regardless of how they start), the employer health care taxes will need to increase. While billed as low cost competition, in reality the so-called public option is just a precursor to higher taxes on employers.
Everyone sees that we are in a jobless recovery. Yet people are surprised. There is no reason for surprise. Employers see what is coming down the road through increased private health insurance costs or higher health care taxes, and they are not willing to take the risk.
Democratic health care mandates will lead to greater incentives to shift employment resources to other countries, where there are no such costs. Add to it other tax increases from cap-and-trade and personal tax increases on successful employers, and we are setting ourselves up for the type of permanent double-digit unemployment which has existed for decades in western Europe.
If the Democrats have their way, hiring domestic employees will take place only as a last resort, when all other means of production have failed. While the Democrats do not want to destroy domestic jobs, they are too beholden to the left-wing of their party to see what is right in front of their faces.
A year or two from now, you can thank these “job killers for health care reform” for our still jobless recovery.
UPDATE: Everyone is a day late on the point of my post, but finally the message is getting out – New Bill Would Raise Rates, Says Insurance Group:
After months of collaboration on President Obama’s attempt to overhaul the nation’s health-care system, the insurance industry plans to strike out against the effort on Monday with a report warning that the typical family premium in 2019 could cost $4,000 more than projected.
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