Richard Epstein, prominent University of Chicago law professor, agrees with my conclusion that the Senate health care bill will kill private health insurance. I have concluded that the “guaranteed issue” and the “community rating” provisions of the Reid bill are a poison pill to end health insurance as we know it. The result would be a situation in which government single payer would be the only alternative.
Lost in the shuffle has been its intensely coercive requirements on health insurance issuers, especially in the individual and small group markets. Taken together, these restrictions are likely to drive them out of business and run afoul of the constitutional guarantee that all regulated industries have to a reasonable, risk-adjusted, rate of return on their invested capital.
The perils of the Reid bill are made evident in a recent Congressional Budget Office (CBO) report that focused on the bill’s rebate program, which holds that once an insurance company spends more than 10% of its revenues on administrative expenses, its customers are entitled to an indefinite statutory rebate determined by state regulatory authorities subject to oversight by the Secretary of Health and Human Services. Defining these administrative costs is a royal headache, but everyone agrees that they are heaviest in the small group and individual markets, where they typically range between 25% and 30%, without the new regulatory hassles.
I don’t believe that this is an unforeseen outcome, a “bug.” I think it is a feature. A feature added by leftist staff members of Reid’s office who hold the same antipathy to private insurance that is typical of the left. They have also larded up the most basic mandated benefits with options of little appeal to most purchasers of health insurance. Look at the list.
Next, it’s the government that requires extensive coverage including “ambulatory patient services, emergency services, hospitalization, maternity and newborn care, mental health and substance abuse disorder services, prescription drugs, rehabilitative and habilitative [sic!] services and devices, laboratory services, preventive and wellness services and chronic disease management, pediatric services, including oral and vision care.” The price squeeze gets even tighter because in every required area of care a collection of government standards will help set the minimum level of required services.
This is what the “gold plated plans” that are to be taxed out of existence contain. Medicare does not offer these services.
The whole intent is to destroy the private insurance market. It’s not a bug; it’s a feature.
Tags: Congress, Democrats, health care
A feature added by leftist staff members
This says quite a lot. So much governance today is done by staff and the permanent bureaucracy, a group self selected for those prone to meretricious meddling, and those prone to Stalinist vision of the One Ring to rule all.