Thursday, July 30, 2009

Baucus-Grassley Won't Work Either

Senator Grassley, Republican of Iowa, is one of a long list of Republicans whose main desire is to show that he can broker a compromise with Democrats. Whether or not this is virtuous activity depends upon what is in the compromise. The Baucus-Grassley compromise, now being fashioned in the Senate, is no better than than the worst of the Congressional plans. Shifting around the deck chairs on the Titanic will not keep the Titanic afloat.

Requiring all insurance companies to sell insurance to folks with pre-existing conditions at the same price as they sell to folks without health problems distorts the market mechanism. Ultimately it means that young people (who generally don't need health insurance) will end up subsidizing older folks who smoke too much, drink too much and eat too much. Is this a good result? This also provides an incentive for folks with "bad" lifestyles to continue them and folks with "good" lifestyles to toss them aside. One reason for leading a healthy lifestyle is to avoid the health care expense that might result from leading an unhealthy lifestyle. This provision on pre-existing coverage takes away that incentive and, in fact, provides exactly the reverse incentive.

The best analogy is to the auto insurance market. Should you charge the same auto insurance rates to folks with bad driving records as you do to folks with good driving records? It is easy to see that that would be unfair and inefficient. Would it be a good idea to require all auto insurance plans to insure gas and oil purchases and tire changes and purchases? No. Then why require such stupidity with health insurance. Why not simply require a catastrophic health care policy, which is basically what most states require for auto insurance. Let people pay their own predictable, routine health care expenses

Meanwhile abortion is covered in both the House and Senate version of this bill. Does an 80 year old person need abortion coverage? Under Obamacare they have it. They also have Aids coverage, just in case. If you have "politically favored" diseases, then you're covered. Too bad if you have heart trouble or cancer (the main killers of human beings in the US). If you are also over 65, then the British system shows your get to go the back of the line. In effect, the British have decided that people over 65 are not worth saving and not worth "wasting" health care expenses on. This, presumably, is the future of Obamacare where wasteful healthcare spending (such as that on heart disease and cancer) can be eliminated for folks over 65. That is where we are headed.

Folks with pre-existing conditions and no insurance (which would not be the case if catastrophic was required by law), could be handled by something equivalent to medicaid requiring means testing. Over time, a law requiring catastrophic insurance for everyone would eliminate this problem.

The Baucus-Grassley compromise is a complete disaster. It basically paves the way for moving everyone eventually to medicare and a single payer national health care system. Don't be fooled.

The reason the health care system is broken is medicare, medical lawsuits, and tax free employer-provided health care for employees. Phase out medicare, provide tort reform and tax health care plans provided by employers. Then the simple requirement that everyone should have "catatrophic" health insurance will provide adequate health care coverage while controlling health care costs.