Futures and Options

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Monday, March 22, 2010

10 Things Every American Should Know About Health Care Reform

MoveOn.org, bastion of unbiased information, has put together a list of , “10 Things Every American Should Know About Health Care Reform“.  As expected, this “information” is effectively an advertisement and it is quite deliberately misleading.  Let’s go through the list point by point.

The claim:

1. Once reform is fully implemented, over 95% of Americans will have health insurance coverage, including 32 million who are currently uninsured.

The reality:

Currently, only 15% of the US population is uninsured (46 million uninsured individuals per the 2007 Census Bureau data and a current US population of 307 million).  If we only count persons who are legal US Citizens (this includes both native-born citizens and naturalized citizens), then only 12% are uninsured (80% of uninsured are US citizens, so 80% multiplied by 15% gives us 12%).  This paints a very different picture as we begin to see that this bill will spend trillions of dollars over the next decade but will only improve the number of insured by 7% to 10%.  That’s not a lot of juice for the amount of squeezing being done.  In addition, we must also account for the fact that large numbers of currently non-covered individuals are either children who would be covered under their parents’ existing insurance but whose parents have neglected to register them, or young professionals who choose to opt-out of employer-paid health care because they do not believe it is necessary to have coverage.  The net result when such factors are accounted for is that the bill exists to benefit only about 4% to 8% of the total population.

The claim:

2. Health insurance companies will no longer be allowed to deny people coverage because of preexisting conditions—or to drop coverage when people become sick.

The reality:

By eliminating the right of a business to deny coverage to people who are guaranteed to cost more than they pay in premiums the bill effectively mandates that prices increase across the board.  Let’s use a perfect analogy to illustrate why this is so.  Imagine if the exact same thing were required for car insurance companies.  In such a world, you could buy a wrecked car and then file a claim to make the insurance company pay for repairs despite the damage being preexisting.  Obviously premiums would increase significantly.  Perhaps you think that this simply means that insurance for persons who require more care will only be more expensive to those particular people, but this is not so as the bill regulates an insurance company’s ability to recoup costs from clients who are very expensive to insure.  The only way for insurance companies to guard against such losses will be to increase everyone’s premium, regardless of your risk level.

The claim:

3. Just like members of Congress, individuals and small businesses who can’t afford to purchase insurance on their own will be able to pool together and choose from a variety of competing plans with lower premiums.

The reality:

This is already a reality.  In fact, the company for which I currently work is part of such a pool.  To claim that this is a benefit of the Obama bill is disingenuous at best and downright deceitful at worst.  MoveOn.org is simply exploiting voter ignorance for political gain.  They know that most Americans are not sufficiently familiar with current regulations to understand that such pools of small businesses already exist and so they are dishonestly touting such pools as benefits of the Obama bill.

The claim:

4. Reform will cut the federal budget deficit by $138 billion over the next ten years, and a whopping $1.2 trillion in the following ten years.

The reality:

Once again we are into territory that is either disingenuous or deliberately deceitful.  As with claim #3, MoveOn.org is exploiting voter ignorance for their own political ends.  On the surface, this looks good, until one realizes that “deficit” is not synonymous with “debt”.  The federal budget deficit is a yearly number that represents how much money is being borrowed to run the government for that particular year.  The federal debt is the total amount of money that the government still needs to pay back from all previous years combined.  It is possible to reduce the deficit without there being any corresponding reduction in total debt at all, and this is all that is actually being claimed.  In fact, because there are no claims that the deficit will be eliminated, MoveOn.org is effectively admitting that overall debt will continue to grow even after the supposed $1.2 trillion in deficit reduction.  There is also the deliberately misleading wording where it appears at first glace that the $1.2 trillion in deficit reduction will occur in 10 years, even though the reality is that this deficit reduction comes in the 10 years after the first ten years where the reduction is only $138 billion.  This means that the supposed $1.2 trillion in deficit reduction occurs in 20 years, not 10.  Long story short, this claim actually admits that the Obama bill will spend more money than it saves over the next 20 years.

The claim:

5. Health care will be more affordable for families and small businesses thanks to new tax credits, subsidies, and other assistance—paid for largely by taxing insurance companies, drug companies, and the very wealthiest Americans.

The reality:

When business are taxed, they inevitably pass those costs on to the consumers. Any benefit in tax credits to consumers will be counterbalanced by increases in premiums, especially given that claim number 2 essentially guarantees that premiums will increase across the board. This also contains the hidden premise that it is acceptable to levy large taxes on “the very wealthiest Americans” even though such taxes amount to punishment for success.  This claim is nothing more than an appeal to those who are bitter over the success of others and who wish to lay claim to the fruits of other people’s success.

The claim:

6. Seniors on Medicare will pay less for their prescription drugs because the legislation closes the “donut hole” gap in existing coverage.

The reality:

This claim assumes that there are no other variables, such as increases in the costs of drugs due to pharmaceutical companies needing to recoup the punitive taxes that this bill would impose.  Additionally, the Medicare Part D coverage gap (the “donut hole”) is a legitimate and intended design feature of Medicare Part D coverage that was designed to discourage the tendency of some physicians to prescribe drugs with less discrimination than might otherwise occur.  The maximum cost that a senior may incur while in this gap is $4,250.25, or about $360/month.  Less than a car payment for many people.  Additionally, there are already programs for low-income seniors so that they are not affected by the Part D coverage gap.

The claim:

7. By reducing health care costs for employers, reform will create or save more than 2.5 million jobs over the next decade.

The reality:

Interestingly, this is the only claim for which MoveOn.org has no source listed, which suggests that it’s, well, just a wee bit made-up. It is also a claim that economists understand is effectively impossible to track or measure in any real-world scenario.  The fact that there is absolutely no way to ever verify or disprove this claim makes it fantastically useful propaganda, but also makes it worthless as a legitimate statement of the benefits of the Obama bill.

The claim:

8. Medicaid will be expanded to offer health insurance coverage to an additional 16 million low-income people.

The reality:

Admitting that a mismanaged program which is swimming in red ink will be expanded is not the best way to sell the Obama bill.

The claim:

9. Instead of losing coverage after they leave home or graduate from college, young adults will be able to remain on their families’ insurance plans until age 26.

The reality:

Many, perhaps even most, plans currently have similar allowances. For example, I could have stayed on my parents’ insurance until I was 24, a full two years _after_ graduating from college and being hired into my first job with benefits.  Had I remained in school, I would have been able to stay on my parents’ insurance even longer.  MoveOn.org is yet again taking advantage of voter ignorance for their own political gain.  MoveOn.org is fully expecting that most people will lack the familiarity with their current insurance plans to know that this sort of feature is already offered on many plans.  As I said before when responding to claim number 3, to claim that this is a benefit of the Obama bill is disingenuous at best and downright deceitful at worst.

The claim:

10. Community health centers would receive an additional $11 billion, doubling the number of patients who can be treated regardless of their insurance or ability to pay.

The reality:

Increasing funds to community health centers is a great thing in theory, but it doesn’t change the fact that we cannot afford the current level of spending, much less a doubling of it.

So, there you have it.  10 things that every American should know about health care reform and the actual truth behind each one.

posted by Zenmervolt at 17:57  

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In ignorantia confidenter praegredi.