Re-Post from HotAir:
Until now, the health-insurance industry has mainly held its fire against the ObamaCare proposals in Congress, hoping that its givebacks would be enough to sate the Democratic class warfare that erupted this summer. Now, however, they have apparently taken off the gloves with a new analysis by accounting firm PriceWaterhouse Coopers. The study predicts that the Baucus plan would increase premiums for an average American family by $4,000 per year, a breathtaking increase from a plan that purports to save costs:
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.
The critique, coming one day before a critical Senate committee vote on the legislation, sparked a sharp response from the Obama administration. It also signaled an end to the fragile detente between two central players in this year’s health-care reform drama.
Industry officials said they intend to circulate the report prepared by PricewaterhouseCoopers on Capitol Hill and promote it in new advertisements. That could complicate Democratic hopes for action on the legislation this week.
That prompted a rather snide — and laughable — response from the Obama administration:
“Those guys specialize in tax shelters,” said Nancy-Ann DeParle, director of the White House Office of Health Reform. “Clearly this is not their area of expertise.”
Er, what? Health insurance premiums are not the area of expertise for health-insurance companies? Accounting is not the expertise of accounting firms? We can compare that to the White House, whose expertise thus far has been in getting elected, and not much else — certainly not economics, military strategy, or governance.
This doesn’t surprise me in the least. The Baucus plan is chock-full of fees and taxes, which Democrats keep insisting will punish those meanie insurance executives and doctors who steal tonsils and feet for big, big money. As with all such penalties on producers, the costs get borne by the consumers. Given the wide-randing taxes on medical devices and the “fees” Baucus envisions for an industry with an average profit margin of 3.3%. I’d actually guess that the $4,000/year increase may shoot a little low.
If we want to make health care more available and more affordable, we need to avoid imposing new costs on the industry and remove pricing opacity. This isn’t brain surgery, another discipline for which this White House doesn’t have expertise.
This isn’t a $4000 “increase” – this is the insurance companies saying that the senate is being to soft on healthy people.
They are greedy. The only reason the insurance companies went along with health care reform, was that they were going to get mandatory universal enrollment. They are saying that with all the exceptions and ways to opt out of coverage that the senate is adding, too many young healthy people will decide NOT to enroll. This (they argue) will cause the risk pool to be more expensive to cover, and could drive up premiums 10 years from now about $4000 more than we are already projecting.
The insurance companies would prefer that young healthy people are FORCED more forcibly to enroll. This (they argue) will keep costs down by keeping people who are cheaper to cover in the pool.
I am sure this has nothing to do with insurance companies being pissed that all these young healthy people will be taking money out of their bottom line, more likely these insurance companies are just trying to save the American consumer more money by pointing out that the senate 10 year projection of cost may be low. Insurance companies have such a strong track record of finding ways to hold the line on the premiums they charge, I am so glad they brought this to our attention. (those nice insurance companies)
PJ – “The insurance companies would prefer that young healthy people are FORCED more forcibly to enroll. This (they argue) will keep costs down by keeping people who are cheaper to cover in the pool.”
Please provide factual information of this from a representative of the health care insurance industry…or is this just an opinion? Where is there some sort of documentation (video or writing) showing that they prefer people to be forced? Can you provide an instance where someone from the insurance industry stated or implied “The only reason the insurance companies went along with health care reform, was that they were going to get mandatory universal enrollment.”, or is this a liberal opinion? Can you show us “the strong track record”, as you put it, of finding ways to hold the line on the premiums they charge? Is there some sort of actual documentation of this, from the health insurance industry? Do you have any proof of these allegations, other than he said or she said?
If, as you have stated, is true…what does it matter as far as there reasoning goes? Isn’t the real issue the fact that it will cost more to Americans, regardless of the industries reasoning for exposing the truth?
hmmm…very curious.
Oh, and if this plan would have been implemented 20 years ago, where would all the money have come from that has paved the way for reasearch and development, like the fight against cancer, aids, Parkinson disease, etc. What about all the money that the evil health insurance companies has pumped into finding news medicines and treatments to increase the quality of life for the sick.
If socialized medicine would have been implemented 20 years ago, where would we be now (regarding the instance above)? Who is going to pay for the billions of dollars for research in the future, when the insurance companies can no longer compete and make enough profits to generate this type of research? Will the bill be passed on to the tax payer? If so, is this accounted for in the current proposal? If it is, then where is it? Is it adequate enough to cover the projections of research and development over, let’s say, the next ten years. If so, then what is the projections and where did it come from?
When answering these questions, PJ, keep in mind, people come here from all over the country, because of our health care system You can argue that it is the rich that does that, and that may be true. But doesn’t it say something when the wealthy from other countries, who can afford to go wherever they want…CHOSE AMERICA???? Isn’t it the private sector that has made our industry the choice among the world? What makes you think the government can do better, and at a cheaper cost. When does the lowest bidder every do it best? Isn’t it true that you usually get what you pay for? Would this be any different.
I really would like to understand your take on all these questions, Pj…;)
Once again my former party has sought to slay the dragon, only to burn the village.
Chet:
Sorry – I should have ramped up the sarcasm a bit more in the final paragraph. I thought it was abundantly clear that having cleared any antitrust or monopoly laws from their own sector, and creating local monopolies almost everywhere, insurance companies have created a very profitable niche, COMPLETELY IGNORING EVER RISING PREMIUMS. (that is the beauty of monopoly) I thought I was really ringing the sarcasm bell, just in case anyone thought I was being serious, with that “those nice insurance companies” thing at the end. I will try to be more straight forward in future posts. The point of that sarcastic last paragraph is to point out that it is preposterous to believe that the insurance companies, having already demonstrated a complete lack of concern for the household economic impact of insurance premiums would suddenly see the light, and decide to bring this important piece of information forward as a public service to hold health care premiums down. This is political hardball with the Senate Finance committee plain and simple. The insurance companies are seeing the universal mandate start to slip (along with their potential profits) and they are pushing back. The $4000 is their 10 year projection. Do you trust their sudden change of heart regarding holding the line on premiums and the accompanying projected cost estimate more than you trust the CBO estimate?
My assertion that insurance companies have only gone along because of the guarantee of the universal mandate is not my own political analysis. You can find this in dozens of articles relating to why the insurance companies have “gone along” so far. (Including the WaPo article you linked. it is also rather obvious, don’t you think?)
You can read the post you linked for more information about the insurance companies take on shifting the cost of coverage by dropping the cheap to cover young people from the pool. Again, aside from being present in the article you linked, it is rather obvious, and certainly true. (removing low risk, cheap to cover people from the pool, raises the average cost of coverage for the rest of the pool. By the way, this is the cost analysis reason why allowing illegal immigrants to buy into the pool would lower the cost of coverage for everyone, they are younger and healthier than the average legal US citizen)
Not arguing your points, just want you to support them with facts. I can get speculation, opinions, and articles all over the internet, but true FACTS are hard to come by.
Oh, again, the insurance’s motivation is really a non-issue with most tax payers. What is an issue is that it will cost an estimated $4,000 more per year, per family. That is a real issue that hits the pocket book.
Sorry if this seems like a rant or something. I took my ambien several minutes ago and it is kicking in. Time to sign off for the night.
Cheers!
Chet:
Regarding socialized medicine and R&D.
Insurance companies do not spend money on medical R&D. In a round about way they may invest in R&D if they are buying stock in GE or Glaxo or some other medical equipment, medical technology, or pharmaceutical company.
I think your bigger question may be about the effects of government intervention in the marketplace, and its effect on innovation. For instance, medical technologies in the UK are presently evaluated in terms of their cost benefit in regard to whether they will be approved for coverage under the national health plan. This drives market innovation in the direction of technologies that are life saving AND cost saving. (this in the UK is an ever raging ethical/moral/fiscal debate) Presently the US NIH spends $30 billion a year financing biomedical research, this is on par with what the pharmaceutical industry claims to spend on its research. Most of the NIH focus is on basic research which becomes the publicly available foundation upon which state of the art medical technologies and pharmaceutical advances are built. These NIH efforts focus on advancing our understanding and ability to improve human health. Pharmaceutical industry research is about bringing a profitable product to market. Most of their research is never released to the public and does not advance our body of scientific knowledge. Companies are in business to make money. The ethical responsibility of a CEO is to the shareholder, not to the cause of advancing medicine. If a pharma company is making $500 million a year selling a drug that treats diabetes, why on earth would they bring a one time vaccine to market that CURES diabetes? Relying only on the profit motive (the unregulated free market) to bring medical innovation into the market place will bring many expensive long term treatments for chronic conditions, and few if any cures (cures are NOT profitable, nor is advancing the state of science by releasing your data). Not surprisingly, pharma companies do not cure diseases, government research does. So to answer your question, if socialized medicine had been implemented 20 years ago, where would we be today? Well, fewer US companies would have closed up shop and set up manufacturing facilities overseas or in Canada to escape the crushing health care costs in the US. US companies could better compete with the rest of the industrialized world. Unemployment would be lower. People would not fear loosing their health care if they lost their job, and as a result the workforce would be more mobile and more people would find a job they liked. The US public would be healthier, infant mortality lower, obeseity lower, life expectancy higher. There would be less poverty and less bankruptcy. Overall the standard of living would be better. Pharma companies would have to compete with generic drug makers, and “also ran” drugs that offer no therapeutic benefit as the “next generation” variant would not make it to market. Pharma companies would have to turn to actual innovation, or concentrate on manufacturing existing efficacious drugs while the NIH expanded its focus into therapeutic dose forms. As a result, the pace of novel drug treatments would increase. A health insurance niche would form for “gold plans”. Insurance companies would sell supplemental policies that would provide insurance coverage above and beyond the basic coverage provided by the national health plan. This would cover things like, experimental drug therapies, cosmetic and other elective surgery, and other high cost low marginal benefit medical procedures. The US would still have the best health care in the world for the very very rich, and would also have the best health care in the world for the least among us.
Speaking of facts – that last post of mine was complete crystal ball nonsense. I was answering your question (where would we be now), but, I have no real way of changing history from 20 years ago and checking on the outcome.
And speaking of facts – check out these
“The study projects that the legislation would add $1,700 a year to the cost of family coverage in 2013″ (NOT $4000/yr)
The total cumulative difference by 2019 will be $4000. (again NOT $4000/yr)
Here is my source:
http://politicalintegritynow.com/2009/10/democrats-on-the-ropes-health-insurance-industry-gives-stark-warning-about-baucus-bill-cost/
Here is an economist explaining why the CBO projection is better than the Price Waterhouse projection.
“The PricewaterhouseCoopers study also assumes that proposed taxes on high-cost insurance, new levies on insurers and other health industry firms, and Medicare cuts will be directly passed on to privately insured policyholders.
Critics of the study said it tilted those assumptions too far toward a worst case, ignoring the bill’s potential to curb costs.
For example, the tax on high-cost health insurance that Baucus is proposing could lead employers and individuals to switch to lower-cost plans and avoid the levy. If that happens, there would be no additional costs to pass on to consumers.
The study “assumed the tax would have no behavioral effect, contrary to every other tax in the history of civilization,” said economist Len Nichols of the nonpartisan New America Foundation. “