The House and Senate health care legislation resembles a game show more than deliberate exercise in public policy. As confusing and confused legislation language is translated into dollars and cents, how much Americans will find themselves paying for health care? It looks more and more like a giant game of chance.
Not only is Congress leaving the current inequities created by the federal tax treatment of health insurance in place, it is busy creating new ones.
Family Premiums. The Congressional Budget Office (CBO) estimates that under the House bill, the average premium in 2016 will be $15,000 and the average cost sharing will be $5,500 for a family policy or a total of $20,500. Under the Senate bill, the average premium will be $14,100 and the average cost sharing will be $5,000 for a family policy or a total of $19,100. Is the higher cost House plan better? How do we know? If the Senate can come in $1,400 lower than the House, could the price tag be lowered by another $1,400? If not, why not?
Under the House bill, a family of four with income of $30,000 will receive the $20,500 value for just $1,100, or less than $100 per month. The family will receive premium and cost sharing subsidies from their neighbors worth $19,400. Under the Senate bill, a family of four with income of $30,000 will receive premium and cost sharing subsidies worth $16,800, still quite generous. These subsidies are so generous in fact, that the House and Senate leaders don’t want millions of Americans to have them to buy private health insurance.
The Medicaid Solution. So, instead of providing these taxpayer subsidies, the House and Senate will put 15-20 million people into the Medicaid program where they are not eligible for the subsidies at all. It is “cheaper” for Congress to put people into Medicaid program, a welfare program, which pays doctors and hospitals at least 20-25 percent less than private health plans. Moreover, as the Chief Actuary of the Centers for Medicare and Medicaid Services warns, the cost will be lower under Medicaid because access to care will be more limited than under private coverage. Don’t expect the same level or quality of medical services.
New Inequities. Millions of low-income Americans who are insured through their employers will not be eligible for these new subsidies either. What do we suppose will happen when they find out that their neighbors- who make more money than they do- are receiving these huge taxpayer subsidies courtesy of Congress while they are locked into an employer plan with no choices and higher cost sharing?
For a family of four with income is above $78,000, the Senate bill, at least superficially, looks better. This family’s total premium and cost sharing will be $12,900 compared to $13,800 under the House bill. For a family of four with income of $90,100, the family’s costs under the Senate bill is $14,200 or $2,400 less than under the House bill.
Mass Dependency. If the Senate manages to pass its 2074 page bill, the House and Senate leadership will somehow split the differences behind closed doors. If this massive legislation passes both Houses again and becomes law, health policy becomes a powerful new political tool for the congressional redistribution of health care. In a few years, more than half of all Americans will be receiving direct subsidies from government through Medicare, Medicaid, and the new subsidies. Politicians will be able to add disposal income to a family’s budget by increasing the subsidies. By making more Americans dependent on government, the congressional champions of this style of governance are betting that this legislation will keep them in power for many years to come.
But they are also gambling on probability models to predict behavior. But, like all central planning schemes, people do not always behave the way the central planners expect. In fact, referring to the provisions of the House bill (H.R. 3962), the Chief Actuary of the Centers for Medicare and Medicaid Services (CMS) the patterns of behavior are “impossible to predict.” Costs will explode if CBO has underestimated the number of employers that will drop their private health coverage. If just one state figures out the windfalls that could be realized by dropping out of Medicaid, and saving itself billions by escaping the collateral federal mandates, others will surely follow. States Are already strapped with rising Medicaid costs, costs aggravated by the provisions of the House and Senate bills. A state-based Medicaid meltdown would shift more than a trillion dollars of cost to the federal taxpayers.
The health care legislation headed for the Senate floor next week is not sound public policy. It is a giant game of chance. Millions of Americans stand to lose. A lot.