The Militant Libertarian

I'm pissed off and I'm a libertarian. What else you wanna know?

Tuesday, August 25, 2009

Obama's Health Insurance Cartel

by Sheldon Richman

President Obama and other advocates of nationalized health insurance have tried a variety of sales pitches, which indicates their difficulty in getting traction with the public. The latest is “competition and choice.”

Who could be against those things?

Well, Obama for one, followed by House Speaker Nancy Pelosi, House member Barney Frank, and everyone else who favors what is question-beggingly called reform. The word reform suggests not just change but improvement. Therefore, to call the proposals to nationalize the medical-insurance industry reform is to assume precisely what is in dispute and must be proved. The argument is — or should be — over whether the proposed changes indeed are reform. To call them reform before the debate has even begun is to rig the discussion. It’s an old — and sadly effective — bit of sophistry.

But let’s get back to competition and choice. I contend that what Obama favors would produce the opposite of competition and choice: cartel and restriction. This is so clear that it’s hard to believe an intelligent person surrounded by economic advisers wouldn’t know this.

We’ll use HR 3200 as our guide. Most of the provisions of this bill are likely to be in any final legislation, with the possible exception of the government-operated insurance program, or “public option.”

The bill begins with a provision “to establish standards to ensure that new health insurance coverage and employment-based health plans that are offered meet standards guaranteeing access to affordable coverage, essential benefits, and other consumer protections.” No insurance policy would be deemed qualified unless it satisfied the conditions imposed by the government. This is important because under the bill, every individual would be mandated to have a “qualified” health plan. A sub-standard plan that nevertheless satisfied a particular consumer — such as low-cost high-deductible catastrophic coverage — would be forbidden.

According to the bill, a plan would be accepted as qualified only if, among other things, it:

covered preexisting conditions without limit;
accepted all applicants;
guaranteed renewal;
charged everyone, regardless of health status, the same premium within an area, with the exception of age and family variations defined either by the legislation or by state law;
had achieved the medical loss ratio defined by the Health Choices Commissioner (the ratio refers to the percentage of revenues paid in benefits; companies that fell short would have to give policyholders rebates);
imposed no annual or lifetime limit on coverage; and
was “equivalent … to the average prevailing employer-sponsored coverage.”

The “essential benefits package” would have to cover:

outpatient and emergency services;
professional services;
incidental services, supplies, and equipment;
prescription drugs;
rehabilitative and habilitative [?] services
mental-health and substance-use disorder services
preventive services (Obama has specified physical exams, mammography, and colonoscopy);
maternity care; and
well-baby and well-child care

The bill would also set up a Health Benefits Advisory Committee, a public-private panel of “experts,” “to recommend covered benefits and essential, enhanced plans.”

Read the rest here.

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