The mandate vs. the option: checkmate for the Dems?

Quick: can you tell me how the insurance purchase mandate bone is connected to the public option bone?

It’s explained pretty well by Richard Lowry in his column today in the New York Post.

The insurance purchase mandate, which would require every adult person in the U.S. to buy health insurance on pain of financial penalties, has been rejected or greatly scaled back because it is seen (correctly) as tyrannical and without the slightest hint of a pretense of a color of constitutionality.

Without the mandate, many young, healthy people would not buy insurance until they became sick and needed it.

The lack of healthy paying insurance customers would reduce the income of the insurance companies and force them to raise premiums on their existing customers.

This cost stress on insurance customers leads to the demand for the public option, a government run insurance program that offers insurance at lower premiums.

Thus, step by step, the unacceptability of mandates leads to the public option.

But the public option has its own devastating effects. By underpricing private insurers, it reduces the payments to, and thus the quality of care provided by, doctors and hospitals, even as it pulls more and more people away from the private insurance market, leading the country inevitably toward a single-payer government system.

But, in the best news of the day, Sen. Lieberman says he will join the Republicans in filibustering against any bill that contains the public option. Without Lieberman, and without Olympia Snowe (who also says she will oppose any bill with a public option), it’s hard to see how the Democrats can attain their holy grail of government controlled health care.

Back from dead
October 27, 2009

The public option is back. Its Lazarus act is hailed as a sign of how rosy the health- care debate looks for Democrats.

August is but a sepia-tinged memory. Passage of a sweeping bill is now considered a lock by the wisest Beltway pundits. And legislation may even include the most shining prize of all, the public option that liberals—no matter what the talking points for public consumption—consider a way station to the Valhalla of a government-controlled system.

The flush on ObamaCare’s cheeks, though, is not necessarily a sign of health. The return of the public option speaks to a key—perhaps decisive—substantive weakness in the legislation. It’s no accident that the public option came roaring back in the immediate aftermath of an insurance-industry-commissioned study arguing that ObamaCare would increase premiums.

The study made Democrats yelp so loudly because it hit on such a sensitive spot. The Democrats must make people believe their inherently unbelievable promise of vast new public benefits for free. Since this defies common sense, the determinedly common-sensical American people don’t buy it. A Gallup Poll finds 49 percent of people expect their costs to get worse under ObamaCare, compared with 22 percent who say they will get better. The skeptics are right.

States like Maine, Vermont, Massachusetts and New Hampshire that have imposed ObamaCare-style regulations have seen premiums jump for everyone. If people can wait to get sick until they obtain insurance, fewer healthy people will carry insurance. The cost of an older, sicker insurance pool naturally rises. To prevent this spiral of “adverse selection,” ObamaCare imposes a mandate requiring all adults to buy insurance. But Senate Finance Committee Dems—sensitive to its politically unpalatable requirements and fines—watered it down.

This only stokes the cost problem. According to the National Journal, MIT health economist Jonathan Gruber says that under this looser regime, the young and healthy will drop their insurance, and premiums will go up by 10 percent. Sarah Bianchi, the Kerry and Gore presidential campaigns’ chief domestic-policy adviser, fears the same dynamic.

This is exactly the point made by the much-reviled insurers. How to address this concern and placate a restive left? Revive the left-for-dead public option. Nancy Pelosi insists that the public option will achieve “the lowest cost for America’s working families,” who shouldn’t be left on their own “to negotiate with insurance companies.”

This is yet another chimera. To tamp down fears that a public option is a vehicle for a government takeover, the House bill has a relatively tepid version that will supposedly only attract 10 million people. If so, that won’t help the broader middle class much. If a more “robust” public option is designed to drastically undercut private insurance rates and pull in more people, the costs of the squeeze it puts on doctors and hospitals will be passed along to the private system. In this scenario, the public option will be like Medicare, a program beggaring the private system even as it grows out of control itself.

In short, the public option is a recycled means of pretending away ObamaCare’s costs. When the Office of the Actuary at Health and Human Services said the House bill would increase systemwide costs, the Democrats had a ready response—the bill is already being changed. The perfect bill that will bring greater coverage coupled with miraculously declining costs is always just over the horizon, a shimmering mirage of wishful thinking and willful dishonesty.

Eventually, Democrats will have to settle on a final bill and won’t be able to sweep its weaknesses under the rug of the next drafting process. Whatever its final form, it will raise taxes, cut Medicare and—in all likelihood—increase insurance premiums. If the last few months of polling are any guide, it will be under 50 percent approval. Its benefits, such as they are, won’t kick in until 2013, while the taxes will start immediately.

If this is inevitable, what’s a heavy lift?


Posted by Lawrence Auster at October 27, 2009 08:31 PM | Send

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