The High Cost of Free Health Care

December 22, 2009

With a mere 5 votes out of 435, the House managed to pass their version of a health care bill. The bill (HR 3962) includes the infamous public option which will inevitably drive competing private insurers out of the market if it is included in a final compromise bill. The provision to prohibit the denial of coverage for pre-existing conditions will add to the cost of health care insurance which will lead to higher premiums or will put push many (if not most) health care companies out of the market. In addition, employers with more than a $500,000 annual payroll will have to pay an 8% tax on gross payroll if they do not provide health care to their employees. (At an assumed average payroll of $25,000 per employee, that represents a company with only 20 employees.)

On December 21st, the Senate voted 60 to 39 for cloture to stop further Republican efforts at a filibuster. Getting a few hold-out Democrats to vote for cloture was an example of old fashioned back-room Chicago politics at its worst. CNN said,

"Democrats call it compromise. Republicans call it bribery. But both sides agree that special deals are why the Senate is on track to pass a health care bill by Christmas. It wasn't clear whether Senate Majority Leader Harry Reid had the support needed to move ahead with his chamber's health care bill until Sen. Ben Nelson, the last Democratic holdout, had a change of heart this weekend. He agreed to support the bill in return for compromise language on federal funding for abortion and more money for his home state of Nebraska. As a part of the deal, the federal government will pay 100 percent of Nebraska's tab indefinitely for expanding Medicaid for low-income Americans."

Senate Majority Leader Reid even went so far as to say

".. those who missed out on the perks can blame themselves. I don't know if there is a senator that doesn't have something in this bill that was important to them. And if they don't have something in it important to them, then -- [it] doesn't speak well of them,"

With 60 solid votes in the Senate, final passage in that body is assured. The next step is for a joint committee to convene to work out a compromise between the very different elements of the House bill and the Senate bill. With Democratic control of the committee, it's likely the final bill be closer to the House version and will include the most costly elements of both.

It's a certainty there will be an overwhelming variety of provisions that will raise taxes or an assortment of fees, force insurance companies to raise premiums and cut back on coverage provided by Medicare. As I heard the President confidently state that this bill would reduce the deficit, I thought that this President is either woefully ignorant of basic economics or he is the best liar in recent history.

There is no way in the world that this bill can reduce health care costs, insurance premiums and the Federal deficit. And I'm appalled at the blatant self-serving position of many Senators who voted to move the Senate bill onward toward certain passage. I hate to be a pessimist, but this looks like the beginning of the end of the best health care system in the world. Even worse, it will greatly limit the funds that drug companies are willing to invest in new research because of political restrictions on what the insurance companies will be able to charge for new drugs that cost billions to discover and develop. But the worst outcome of this legislation is not the cost; it's the unavoidable consequence of having to ration health care and of making critical health care decisions by bureaucrats rather than by health care professionals.

Of course, this is just my not so humble opinion.

Vern Jacobs

www.vernonjacobs.com