To read the Czar’s review of HR 3200, pages 1-100, please click here.
The Czar, honestly, did not expect the national attention his effort produced, and is grateful for the cheerleading to press on. Thanks, too, to Jonah Goldberg for his assistance and support.
Speaking of pressing on, the Czar has completed reading pages 101-200 and has the following new observations about HR 3200.
Section 201 introduces a critical concept, and no doubt this is one of the primary reasons proponents of this bill think this is a slam-dunk way to cut costs out of healthcare: the Health Insurance Exchange (HIE). Pages and pages go on, describing the HIE: but there is, nowhere in the bill, any actual definition for it.
But the Czar knows what it is, because similar concepts exist elsewhere. It’s basically a stock exchange; but instead of stock, it’s insurance plans that are bought and sold. Insurance companies can throw their basic, advanced, and premium insurance plans into a market exchange. The government then picks the cheapest and best plans to incorporate into America, Inc.’s new offerings. Is your plan too expensive? If so, America, Inc. doesn’t take it. If yours lower than your competitors’? We’ll take a look at it.
This is the first real concept of how, theoretically, costs could go down,because it means that America, Inc., only selects the cheapest plans of all those submitted into the marketplace. Of course, an exchange only works to lower some cost because other costs go up. The implication here is that the government would always take the lowest costing offerings, meaning private insurers get stuck with more expensive ones. Ergo: private insurer premiums will go up in the HIE.
At last, in §206 (b) Risk Pooling is finally discussed. So the government understands the concept at least, because the proposal mentions it by name. If you don’t know what risk pooling is, it’s why you can even afford insurance at all. Basically, the more people who buy into a health insurance package (the pool of people), the more the risk is spread around. 99.9% of the people in your pool don’t get sick every month, but you keep paying into it. When that 0.1% does get sick, there’s all that money available to cover their expenses. When, unfortunately, it’s your turn to get sick, you fall into the 0.1% and there’s money for your expenses. As a result, the more people who join the pool, the lower your premiums become.
But §206(b) announces that America, Inc., will use risk pooling to lower costs. What this means is that millions and millions of Americans (by choice or otherwise) will leave the private insurance plans to join America, Inc.’s: meaning that your risk pool will shrink dramatically. Ergo, your premiums will go up.
Again, the supporters of this bill believe that risk pooling will guarantee lower costs for public plan participants, which is actually true, initially. But the HIE and risk pooling are both guarantees that anyone with private healthcare plans will see their premiums balloon up. So why on earth would stay with a private healthcare plan? This is what the Czar meant when he said, yesterday, that you cannot compete with a government monopoly. People will effectively be given a simple choice: join our plan, or see your own plans skyrocket in price.
Of course, as private insurers see their premiums skyrocket, the prices of the plans in the HIE will increase. Yes, the government will continue to pick the lowest priced plans for the public option, but over time those plan prices will trend upward as all plans increase in price to cover the diminished risk pools within their own plans.
This is why the DoD spends $90 on a conventional hammer. It costs a pile of money to do business with the government.
Title II, Subtitle C—Individual Affordability Credits. Yup. Democrats like anything with the word credit attached…except of course tax credit.
Section 314. The HHS will crack down on any employer tampering with the government’s risk pool. For example, if an employer steers employees away from the public plan, this means the government’s own risk pool goes down, and so premiums for public plans go up a tiny bit. As a result, the HHS can penalize that employer for tampering with the risk pool. Of course, true with any monopoly, the opposite does not hold true: Blue Cross/Blue Shield, for example, will not be able to penalize the HHS for robbing policy holders out if its risk pool.
Page 186, Line 21: If you are an employer, and you elect not to provide health benefits, you will be taxed 8% for each employee’s compensation paid that year.
Now we get to how the plan is supposed to pay for itself. What follows are lots of pages on how employers and employees will be taxed for this based on what percentage of health benefits the provide. The problem is, you don’t know how much money this will actually raise, so the various percentages, intended to factor together to pay for all this, are largely guesswork by the authors of the bill. To be fair, assuming everything goes perfectly, this could save money on healthcare. The problem is that if any piece does not go as hoped, everything unravels. The question is at what rate, and to what extent. The bill does not provide alternatives, backup strategies, or cost containment options for any one of these percentage plans.
So pages 101-200 can be summarized as follows: a health insurance exchange will be established to that the government can take the lowest price plans at the expense of all others. Also, risk pooling will be used to save money. As we have seen, the exchange immediately put many private insurers at an immediate disadvantage; risk pooling by the government will dramatically swell premiums for the same private insurers, who will in turn compensate for this by raising premiums across the board. This will raise prices in the exchange, so that ultimately the government plan will see premium prices increase. Ergo: initially the public plan will lower costs at the expense of the private plans, but in the long term, all costs will increase.
Additionally, funding to pay for the exchange purchases will come by taxing employers on a sliding scale based on how much they participate. All employers will be taxed a minimum of 8% per employee paycheck, net. Of course, these percentages are established by projections, so a change in the actual participation by various-sized employers will result in a net loss for the government, meaning that taxes will increase further to compensate the plan. But make no mistake: even if everything goes perfectly according to projection, corporate taxes will increase.
The Czar has some more shocking revelations for you in pages 201-300. You can find out how the money is starting to be spent. And why.
To read the Czar’s review of HR 3200, pages 201-300, please click here.