Obama's Health Plan — A Missed Chance

Instead of offering a genuinely fresh approach, President Barack Obama has unveiled a health plan that essentially splits the difference between two bad partisan bills that are hugely unpopular with the American people. The dubious hallmarks of the House and Senate bills — hundreds of billions in tax hikes, trillions in new health care spending, job-killing mandates on individuals and businesses, and onerous Washington regulations on one-sixth of the U.S. economy — are all in the president's plan.

The American public has seen this movie before and has rejected it, yet Obama decided to release it once more, hoping for a better review.

He would continue to require both individuals and employers to pay for health insurance or face fines and penalties. Rather than reform Medicaid, the president would expand it, the most dysfunctional health program in the country and one that politicians would not want to be their health plan. And Obama would increase fees on insurers and other health companies — fees that will be passed along to consumers in the form of higher premiums.

The big new idea in the president's plan is to federalize regulation of health insurance, creating a Health Insurance Rate Authority to conduct "reviews of unreasonable rate increases and other unfair practices of insurance plans." This might sound appealing, but do we really want to give Washington — with its trillion-plus-dollar deficits — more control over the health sector? This new "rate authority" would be a first step toward imposing price controls on private insurance.

Obama clearly is not trying to bridge the divide between Republicans and Democrats as a starting point for a dialogue at Thursday's summit. If he were, he would have included medical liability reform, meaningful interstate purchasing of health insurance and other ideas Republicans support that would provide more competition in the health insurance market and help reduce rising health insurance premiums.

In fact, the Obama plan snubs the GOP by calling for increased taxes on companies inside and outside the health sector, and for a payroll tax on the non-wage interest and dividend income of wealthier Americans. These higher taxes will drive up the cost of health insurance, depress innovation and delay the economic recovery.

Rather than eliminating special interest deals like "the Cornhusker Kickback," "the Louisiana Purchase" and the labor-union exemption, the president's plan basically extends the sweetheart deals to others. All states get more favored treatment for expanding Medicaid, and the threshold for taxing high-cost health plans is raised, while the tax will not take effect until 2018.

All of these deals will cost money. While the Congressional Budget Office won't be able to estimate the bill's costs until it gets actual legislative language, we know that the proposal outlined by the president will cost even more than the Senate bill's staggering $2.4 trillion price tag over 10 years.

Health spending will continue to rise, premium costs will increase, at least 24 million people will remain uninsured and the system of subsidies to individuals and businesses will continue to allow politicians to pick winners and losers. Moreover, because the president's plan is built upon the Senate bill, it would include cuts to Medicare that will jeopardize care for seniors.

It's unfortunate that Obama shunned the bipartisan path to a health reform compromise in favor of this split-the-difference partisan plan modeled after the House and Senate bills. It offers Republicans little upon which to build a conversation that could lead to genuine compromise at Thursday's summit.

Published in AOL News, February 22, 2010.

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Instead of offering a genuinely fresh approach, President Barack Obama has unveiled a health plan that essentially splits the difference between two bad partisan bills that are hugely unpopular with the American people. The dubious hallmarks of the House and Senate bills — hundreds of billions in tax hikes, trillions in new health care spending, job-killing mandates on individuals and businesses, and onerous Washington regulations on one-sixth of the U.S. economy — are all in the president's plan.

The American public has seen this movie before and has rejected it, yet Obama decided to release it once more, hoping for a better review.

He would continue to require both individuals and employers to pay for health insurance or face fines and penalties. Rather than reform Medicaid, the president would expand it, the most dysfunctional health program in the country and one that politicians would not want to be their health plan. And Obama would increase fees on insurers and other health companies — fees that will be passed along to consumers in the form of higher premiums.

The big new idea in the president's plan is to federalize regulation of health insurance, creating a Health Insurance Rate Authority to conduct "reviews of unreasonable rate increases and other unfair practices of insurance plans." This might sound appealing, but do we really want to give Washington — with its trillion-plus-dollar deficits — more control over the health sector? This new "rate authority" would be a first step toward imposing price controls on private insurance.

Obama clearly is not trying to bridge the divide between Republicans and Democrats as a starting point for a dialogue at Thursday's summit. If he were, he would have included medical liability reform, meaningful interstate purchasing of health insurance and other ideas Republicans support that would provide more competition in the health insurance market and help reduce rising health insurance premiums.

In fact, the Obama plan snubs the GOP by calling for increased taxes on companies inside and outside the health sector, and for a payroll tax on the non-wage interest and dividend income of wealthier Americans. These higher taxes will drive up the cost of health insurance, depress innovation and delay the economic recovery.

Rather than eliminating special interest deals like "the Cornhusker Kickback," "the Louisiana Purchase" and the labor-union exemption, the president's plan basically extends the sweetheart deals to others. All states get more favored treatment for expanding Medicaid, and the threshold for taxing high-cost health plans is raised, while the tax will not take effect until 2018.

All of these deals will cost money. While the Congressional Budget Office won't be able to estimate the bill's costs until it gets actual legislative language, we know that the proposal outlined by the president will cost even more than the Senate bill's staggering $2.4 trillion price tag over 10 years.

Health spending will continue to rise, premium costs will increase, at least 24 million people will remain uninsured and the system of subsidies to individuals and businesses will continue to allow politicians to pick winners and losers. Moreover, because the president's plan is built upon the Senate bill, it would include cuts to Medicare that will jeopardize care for seniors.

It's unfortunate that Obama shunned the bipartisan path to a health reform compromise in favor of this split-the-difference partisan plan modeled after the House and Senate bills. It offers Republicans little upon which to build a conversation that could lead to genuine compromise at Thursday's summit.

Published in AOL News, February 22, 2010.

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About the author