NCPA - National Center for Policy Analysis


December 10, 2009

The public option isn't the worst thing about the Senate health care bill; it is riddled with fiscal gimmicks and heavy-handed regulations that will increase health care costs, explode the deficit, and drive up insurance premiums for many people who have private insurance today, says Paul Howard, Director of the Center for Medical Progress at the Manhattan Institute.

There are three major strikes against the bill, says Howard.

Strike One:

  • President Obama has promised that he will not sign a health care bill that would cost more than $900 billion for ten years, and the Congressional Budget Office (CBO) has scored the Senate bill under that price tag.
  • But according to Jeffrey Anderson, a Senior Fellow at the Pacific Research Institute, just 1 percent of the 10-year costs of the Senate's health bill fall in the first four years (2010-2013); costs escalate rapidly starting in 2014.
  • The minority staff of the Senate Budget Committee estimates the fully implemented cost of the Senate bill for the 10 years 2014-2023 at close to $2.5 trillion.

Strike Two:

  • President Obama made a bold promise: "I won't sign a bill that doesn't reduce health care inflation so that families as well as government are saving money." 
  • The CBO predicts that under the Senate bill, coverage costs for individual-insurance subsidies, Medicaid expansion and tax credits to small businesses will rise at about 8 percent annually.
  • Expansion of eligibility for Medicaid and SCHIP (the State Children's Health Insurance Program) under the Senate bill would thrust 15 million more Americans into a program that already costs over $300 billion annually.
  • The Senate bill would create another entitlement program on top of Medicaid and Medicare: The Community Living Assistance Services and Supports (CLASS) program, which will offer long-term-care insurance.

Strike Three:

  • The Senate bill contains a version of insurance regulations currently in force in several states called community rating (charging everyone the same rate) and guaranteed issue (mandating that insurers sell to all applicants, regardless of health status).
  • These policies have driven up insurance costs in every state they've been tried in, as younger, healthier applicants drop coverage rather than pay higher costs.
  • In a recent study, researchers Stephen Parente and Tarren Bragdon estimated that repealing these regulations could lower insurance premiums by 42 percent.

Source: Paul Howard, "Three Strikes against Obamacare," National Review, December 8, 2009.


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