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Will Obamacare Be Run from the West Wing?

Posted By Audrey Jones and Robert Moffit On December 10, 2009 @ 12:48 pm In Obamacare,Ongoing Priorities | Comments Disabled

The latest Senate leadership health care compromise is a “Bumper Sticker.” There are no details yet, but the Bumper Sticker tells us enough about where this compromise is heading: a massive concentration of political control over the health care system.

While the Senate leadership has decided to turn the outlines of their latest “breakthrough”- perhaps even the legislative text- to the Congressional Budget Office for a cost estimate, we know something about what they have in mind. The broad outlines tell taxpayers a great detail about where the congressional liberals are going with this scheme. Curiously, with the right tweaks, it could do something quite unusual: end up concentrating control over the nation’s health insurance markets, literally, in the West Wing of the White House.

Here’s how. Part One of this scheme would empower the United States Office of Personnel Management (OPM), the federal agency that runs the federal civil service, to enter into a contract with two large health insurers (probably the Blues and Kaiser) to sell health plans in the state- based health insurance exchanges set up in every state of the Union, under the Senate bill. According to the press reports, these giants will be “non-profits,” reflecting the Left’s ideological hostility to profit-making insurance, regardless of its performance or patient satisfaction. That probably means that the Blues or Kaiser will have the inside track on any contract and stipend from the government.

These two giants would then compete against private health plans everywhere in the country. Now the key issue is how the OPM will administer this process. (Precious details, details, details.) Presumably, OPM will determine the health benefits, medical treatments and procedures to be offered on the national scale – the federal government would set benefits in any case, whether the exact determination will be made by OPM or the Secretary of Health and Human Services. So, these two giant “private plans” will administer the federal government’s benefits package. Be sure of that. Even more important is how the OPM will set premiums. This again, is a crucial piece of the puzzle. Will the premiums simply reflect free market rates, or would the premiums reflect the White House’s policy agenda. Why the White House? Simple. The Director of OPM reports to one person: The President of the United States.

Free markets are not in vogue on Capitol Hill right now, and surely not in the West Wing. It’s a good guess that the premiums will reflect some form of administered pricing scheme, enabling OPM to secure below-market rates for its contractors and drive private sector competitors out of the markets, consolidating federal control over the insurance markets in the same way that a “robust” public option was designed to do at the beginning of this process. Same end, different means.

There is a third consideration. The health plans are to be “non-profits” and serve a public agenda, as defined by the Senate liberal leadership. But will these non-profits also be “non-loss” plans? Will they be eligible for federal bailouts if they lose money? Good question. It’s hard to imagine that the congressional liberals would allow their latest scheme of “non-profit” health plans to fail. When this is finally unveiled in the light of day, read that fine print closely. They hope you won’t do that. So annoy them.

A government sponsored oligopoly is not anything like real competition – real competition is open markets and a level playing field, anybody can play – and the so-called private plans are “private” in name only, and they are simply hired guns to serve as the vehicles of Washington’s political agenda.

Part II of the compromise [1] consists of an expansion of Medicare (including people as young as 55). And it’s big entitlement expansion. (That’s how the Congressional liberals now define “reform.”) Not surprisingly, Rep Anthony Weiner (D-NY) has applauded this part of the compromise as a big step toward the single payer option, and told the Los Angeles Times: “Expanding Medicare is an unvarnished, complete victory for people like me. It’s the mother of all public options.” Not to be outdone, the editors of The Washington Post said this morning: [2] “ The irony of this late breaking Medicare proposal is that it could be a bigger step toward a single payer system than the milquetoast public option plans rejected by Senate moderates as too disruptive of the private market.”

The prescription: Massive erosion of private coverage from “crowd out,” as employers with a large number of older employees have new incentive to dump them; higher Medicare costs, and even more debt, as millions more are added to the Medicare program, which already has a long-term debt of $38 trillion. Of course, Medicare expansion means more people covered under Medicare rates and artificially lower rates for doctors and hospitals. Even the K street crowd, desperate to be in with Capitol Hill’s current “In Crowd,” and so eager to get a pat on the head and that coveted “Seat at the Table,” is having second thoughts about this latest compromise. The AMA, which is obsessed about Medicare payment above all else, doesn’t like it. The American Hospital Association and the Federation of American Hospitals have urged their members to oppose the bill, as it would cut reimbursement rates to hospitals, which are already heavily burdened.

Already, the Senate bill provides for an expansion of Medicaid, a welfare program, up the income scales. Together, entitlement expansions can be expected to accelerate the erosion of the private health insurance coverage for millions of Americans. There is no reform here. Few politicians stop to look at the poor quality of care provided under Medicaid; fewer doctors take Medicaid patients, which is why so many Medicaid patients crowd into the emergency rooms. The politicians on the Hill with their Medicaid expansion will guarantee even more hospital emergency room over-crowding.

So much for the Big Compromise – Senator Harry Reid’s latest Breakthrough Moment. The end is pretty much the same: More government dependency, more poor quality care, combined with a staggering deficit. There is one thing that one could say may be new – depending how the Senators write the crucial details – more power to the President, who can guide and direct the shape of the health insurance markets through his Director of the Office of Personnel Management. That, at least, is a fresh approach to government control


Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org

URL to article: http://blog.heritage.org/2009/12/10/not-just-a-public-option-just-the-health-care-industry-being-run-from-the-west-wing/

URLs in this post:

[1] Part II of the compromise: http://www.foundry.org/2009/12/08/a-thinly-disguised-power-grab-the-latest-senate-compromise-on-the-government-run-health-plan

[2] the editors of The Washington Post said this morning:: http://www.washingtonpost.com/wp-dyn/content/article/2009/12/09/AR2009120903902.html

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