New ObamaCare bill: Are you ready for price controls on insurance premiums? Update: CBO can’t score bill this week

posted at 11:45 am on February 22, 2010 by Allahpundit

Not quite a year after he first started pushing Congress to pass something, The One finally puts his own plan on the table. Here’s the overview, the newsiest bit of which is a new federal Health Insurance Rate Authority to oversee “unreasonable” premium increases. And with that, it’s suddenly clear why there’s no public option in the package: As Tom Maguire notes, if things work out as badly as expected, America will come begging for a public plan soon enough.

The long run effects won’t be helpful for the insurance industry but they will be good for advancing the interests of the Democratic Party. A key Democratic goal of health reform (as was kicked around during the HillaryCare debacle) is to create a new middle-class entitlement. If this plays out like Social Security it will tie the middle class to their benefactors in the Democratic Party, which will forever position itself as the party of more generous benefits paid for by Someone Else.

A price control board can advance that same goal, since the Democrats can position themselves as the champions of lower prices for all. In the not-so-long run insurer won’t be able to make a reasonable profit and will exit the industry, and coverage will be scarce (but cheap!). At that point the collapse of the private market will be offered as further evidence of the desirability of a full government take-over of health care, or at least, the adoption of a stalking-goat “public option”.

They’re going to starve the beast, to borrow a line that’s suddenly back in vogue on the NYT op-ed page, and then replace it. That’s one easy point for the GOP to make at the summit on Thursday; another, anticipated last night by the Times and already in full swing this morning among GOP aides, is that having a price-control mechanism in place even before O-Care’s up and running tells you a lot about what the Dems expect will happen to premiums once this debacle passes. But those are big-picture long-term critiques whereas The One’s thinking short-term, i.e. whom does he need to demagogue to kick up just enough popular support to finally get this thing through Congress and off the table. The boss emeritus saw this coming two weeks ago after the uproar in California over the Anthem rate hikes and now here it is, just in time for the 60-day push. It’d be lovely to think the GOP will challenge him on this come Thursday, but let’s face it: Defending free-market insurance rate-setting while anti-Anthem populist outrage is roiling is a poison pill, particularly given their wariness of carrying the “party of big business” label into November. Expect them to challenge him on cost instead — estimated pricetag: $1 trillion over 10 years — and of course on unintended consequences to Medicare. We are, after all, the party of AARP now.

But maybe I’m worried for nothing. A big part of our new “bipartisan” White House’s strategy going forward is to create high-profile political theater that puts the “party of no” in a position of having to say no, so maybe this is all just a means to that end, with the price-control board to mysteriously drop out before final passage. Same with the emphasis this week on “transparency”: The One put his bill online this morning, he’s having a televised summit later this week, and, why look — he’s even stripped out Ben Nelson’s Cornhusker Kickback to prove what a stalwart opponent he is of backroom deals. Transparency! (The backroom deal with unions to raise the tax threshold on “Cadillac” plans remains intact, natch, albeit extended to everyone now, not just labor.) The perpetual campaign is indeed perpetual, my friends.

Stand by for updates as the punditocracy reacts. Exit question: According to the Times, Obama’s plan doesn’t include the Stupak amendment on abortion. What happens now in the House?

Update: Philip Klein runs the numbers and proclaims it essentially a more expensive version of Reid’s bill. Can’t wait.

To finance the changes, President Obama proposes raising taxes even more than the Senate plan does. Under Obama’s proposal, higher income workers would see their portion of the Medicare payroll tax double, to 2.9 percent. The tax would create a marriage penalty by applying to individuals earning over $200,000 and couples earning over $250,000. When the original version of the Senate health care bill was produced, the Medicare tax on those earning over $200,000 was supposed to be 0.5 percent. In the version that passed in December, the tax had been raised to 0.9 percent. And though it hasn’t even been made law yet, Obama is raising the payroll tax for the third time, to 1.45 percent (that’s on top of the 1.45 percent all workers already pay). This follows the historical pattern of payroll taxes, which have increased 20 times since first introduced in 1935, going from a combined total of 2 percent (including employer/employee contributions) to 12.4 percent today. When adding the new Obama tax, the rate would be almost 14 percent on higher incomes.

Update: Philip Klein updates to say that he’s tweaked his math. Turns out that The One’s actually doing a 2.9 percent capital gains tax on top of the Senate bill’s tax.

Update: Another reason why Thursday’s O-Care summit is useless: The new bill that’s supposed to provide a starting point for negotiations will come without any pricetag attached.

This morning the Obama Administration released a description of its health care proposal, and CBO has already received several requests to provide a cost estimate for that proposal. We had not previously received the proposal, and we have just begun the process of reviewing it—a process that will take some time, given the complexity of the issues involved. Although the proposal reflects many elements that were included in the health care bills passed by the House and the Senate last year, it modifies many of those elements and also includes new ones. Moreover, preparing a cost estimate requires very detailed specifications of numerous provisions, and the materials that were released this morning do not provide sufficient detail on all of the provisions. Therefore, CBO cannot provide a cost estimate for the proposal without additional detail, and, even if such detail were provided, analyzing the proposal would be a time-consuming process that could not be completed this week.


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Not true, ‘tort reform’ in my comment means addressing defensive medicine. I should have used a more common term.

bayam on February 22, 2010 at 5:00 PM

I didn’t make the connection because of the reasons you gave as incentives for doctors to recommend unnecessary tests/procedures. Particularly when you made it sound like an afterthought.

Tort reform is important, but re-aligning incentives is absolutely essential over the long term

And your use of the conjuction ‘but’ made it appear as if incentives were not strongly tied to tort reform (indicating perhaps the blame was being put on greed).

But I stand corrected.

gwelf on February 22, 2010 at 5:08 PM

ObaMao is trying to do an end-run around the legislative process because it’s too slow? Duh, it is supposed to be slow, as in deliberative. Any legislation that affects 1/5-1/6 of the economy and that is certain to adversely affect employment had better grind to a halt.

We had “urgent” speed on TARP and on the “stimulus” bill. Look how far down the hole we are because of that haste.

What is this? Pass in haste (defying the will of the respresented) and repent in leisure (into perpetuity).

onlineanalyst on February 22, 2010 at 5:10 PM

nazo311 on February 22, 2010 at 4:14 PM

That’s easy “The General Welfare Clause”. /s

chemman on February 22, 2010 at 5:18 PM

do not provide sufficient detail on all of the provisions. Therefore, CBO cannot provide a cost estimate for the proposal without additional detail

As I said earlier. Its all smoke and no substance. There’s no bill there, just more blather. If there was a bill it would be easy to take it apart, point by point.

dogsoldier on February 22, 2010 at 5:19 PM

No need for a public option if the gubmint is just going to regulate insurance companies like utilities, and make them de facto wards of the state.

redfoxbluestate on February 22, 2010 at 5:27 PM

have never experienced the hell of an HMO.

bayam on February 22, 2010 at 4:46 PM

This country needs a solution similar to what you see offered by Kaiser Permanente in California.
bayam on February 22, 2010 at 4:29 PM

My daughter did. They did their best to try and kill her. It was called Kaiser Permanente of California, Fontana Branch

chemman on February 22, 2010 at 5:28 PM

Barack Obama…doubling down on stupid.

MechEng5by5 on February 22, 2010 at 5:33 PM

There are only 2 possibilities I see with stinky BO. He is either an idiot or he is intent on “changing” (aka as destroying) this country.
yubley on February 22, 2010 at 11:55 AM

I vote for the second choice. He means to fundamentally transform this country. Too bad most people weren’t listening.

Nalea on February 22, 2010 at 5:41 PM

We can only hope Scott B. is a bit more conservative on healthcare than he is on the next bailout.

BROWN TO VOTE WITH DEMS ON JOBS BILL
http://firstread.msnbc.msn.com/archive/2010/02/22/2209186.aspx

CTSherman on February 22, 2010 at 5:42 PM

For some time I have been saying that this so-called health summit is nothing more than an infomercial for the democrat rats thinking of deserting a rotting ship of state. Now John Boehner says the same thing. Perhaps he too reads Hot Air!!!!:

House Republican Leader John Boehner (R-OH) issued the following statement in response to the partisan health care proposal posted online by the White House for discussion at the upcoming bipartisan health care summit:

“The President has crippled the credibility of this week’s summit by proposing the same massive government takeover of health care based on a partisan bill the American people have already rejected. This new Democrats-only backroom deal doubles down on the same failed approach that will drive up premiums, destroy jobs, raise taxes, and slash Medicare benefits.

“This week’s summit clearly has all the makings of a Democratic infomercial for continuing on a partisan course that relies on more backroom deals and parliamentary tricks to circumvent the will of the American people and jam through a massive government takeover of health care.

Dhuka on February 22, 2010 at 5:45 PM

Now John Boehner says the same thing. Perhaps he too reads Hot Air!!!!:

The world would be a better place if everyone with a (R) behind their name read Hot Air. The libbies can stay away, though– no need for them to get a behind-the-scenes peek at the Vast Right Wing Conspiracy in action.

RachDubya on February 22, 2010 at 5:53 PM

You’re not in charge. You’re guys were in power for 8 years and your ideas failed miserably, pretty much without exception. The American people categorically rejected your everything you stand for. Now get out of the way.
crr6 on February 22, 2010 at 12:18 PM

We were in power (having full control of the executive, and both houses of the legislative, branch,) for most of 6 years.

That ended more than three years ago.

At least you should make some effort to be accurate when you insult people, and try to order them about.

massrighty on February 22, 2010 at 5:59 PM

You really don’t see a correlation between an industry being heavily regulated by the government and companies in that industry having unwieldy bureaucracies?

Airlines are heavily regulated but you don’t see Southwest with internal procedures from the Stone Age. My point is that too many people assume that quality American health care is somehow tied to these monolithic and inefficient insurance companies, when it’s not.
But there are many structural reasons why health care is so expensive in this country. The US is no longer a profit generation machine that can afford a health care system that is vastly more expensive than anything else in the world without covering the entire population. The status quo isn’t going to work over the long haul, esp. with an aging population. Ask any corporate CEO how health care costs affect US competitiveness, not to mention the budget deficit.

bayam on February 22, 2010 at 6:11 PM

Deese Which peoples don’t need all dat monies anyway. Power to the pohh peoples.

We pohh people we needs us some moh fwee healthcair……and you Lyin ‘Publicans you people gets all the fancy doctuhs and stuff you need.

Finally we gonna get what the richies have has foh years (that y’all been stealing frum us anyways.

OBAMA….OBAMA…….you richies wuhkin foh us now…..OBAMA…..(insert hypnotic cult like chant here).

Hot Airians this is where we live now………Obamas America!!!

PappyD61 on February 22, 2010 at 6:16 PM

CBO can’t score bill this week because it is just more multi-colored smoke Obowma wants to blow up your a%s…

Seven Percent Solution on February 22, 2010 at 6:16 PM

Romeo13 on February 22, 2010 at 2:55 PM

Add “affordable housing” a la CRA, Fannie and Freddie as regulated government programs…

onlineanalyst on February 22, 2010 at 6:17 PM

PappyD61 on February 22, 2010 at 6:16 PM

Hah! You crack me up! Reminds me of this:

We gone turn it around. We aint’ gonna have to pay no moe bills. Run the AC all night long…

Key West Reader on February 22, 2010 at 6:21 PM

Another related point is that we citizen/voters should be pressing our state legislatures/assemblies to force the state insurance commissions to broaden the allowable choices of insurance and lessen the mandated coverages. A menu of insurance coverage should be on offer.

onlineanalyst on February 22, 2010 at 6:30 PM

Obama has become a Nixon clone.

Johan Klaus on February 22, 2010 at 6:31 PM

GOOD NEWS!!!
The White House may be investigated for violations of 18 USC Sec. 211.

If there is no investigation, this proves conspiracy to avoid prosecution, and makes any successive charges more severe.
Of course, we’ll have to dig deep to find any news of these proceedings.
I gotta say, yippee yaiyo kaiyai!

Cybergeezer on February 22, 2010 at 6:33 PM

The price of healthcare will skyrocket. All the taxes, fees and additional costs will be passed onto the consumer. It will be a reason for the government to say “See? that’s why we wanted a public option. The only way to ensure cheap insurance is for the government to control it”.
This crap has been planned from the getgo.

Filty dirty communists.

darwin on February 22, 2010 at 4:07 PM

Correction: All the taxes, fees, and additional costs will be passed along to the taxpayers. Those who pay no taxes or who have tax credits (as in transfer of wealth from the haves to the have nots) will be getting a nice free ride.

What’s with this nonsense of treating the up-to-26-year-olds as dependents. S-CHIP threw a bunch of high-earning people and slacker “children” into the eligibility pool. What is with this rewarding of non-productivity and achievement?

onlineanalyst on February 22, 2010 at 6:48 PM

Obama will have us all as wards of the State. So he can be the Daddy he never had.

spmat on February 22, 2010 at 6:54 PM

Just hypothetically, if this bill makes it through to a vote, do you think Scott Brown would vote for it or against it? He only promised not to vote for the Pelosi/Reid bill, not Obama’s bill; and with him voting for Obama’s jobs bill, it’s got me wondering… Thanks fro any insight!

-Aslan’s Girl

Aslans Girl on February 22, 2010 at 6:54 PM

All this does is set up the excuse for reconciliation!

Obama,
“vote with us Repubs and share the blame for passing a bill the American people will run us out of town for,

or stand against us and we will pass a bill alone, that the American People will run us out of town for!”

Tough call huh Repubs?

I say Pinnochio and the Dimwit party is holdin aces and eights The Dead Mans Hand!

Don’t even bother to go Repubs you’ve got 11/02/2010, looks like a full boat aces and twos!

dhunter on February 22, 2010 at 7:19 PM

Chavez just instituted price controls in Venezuela too…jus sayin.

elduende on February 22, 2010 at 7:42 PM

analyzing the proposal would be a time-consuming process that could not be completed this week.

Obama’s got more tricks up his sleeve than a Chicago politian. Anyone who votes for ObamaCare, without knowing the costs are in real trouble with the American people on election day.

TN Mom on February 22, 2010 at 7:54 PM

Update: CBO can’t score bill this week

The new bill that’s supposed to provide a starting point for negotiations will come without any pricetag attached.

Too vague to fail.

RD on February 22, 2010 at 8:30 PM

Moreover, preparing a cost estimate requires very detailed specifications of numerous provisions, and the materials that were released this morning do not provide sufficient detail on all of the provisions. Therefore, CBO cannot provide a cost estimate for the proposal without additional detail, and, even if such detail were provided, analyzing the proposal would be a time-consuming process that could not be completed this week.

Well, isn’t that convenient?

conservnut on February 22, 2010 at 8:40 PM

The boss emeritus saw this coming two weeks ago after the uproar in California over the Anthem rate hikes and now here it is, just in time for the 60-day push. It’d be lovely to think the GOP will challenge him on this come Thursday, but let’s face it: Defending free-market insurance rate-setting while anti-Anthem populist outrage is roiling is a poison pill, particularly given their wariness of carrying the “party of big business” label into November.

Not (necessarily) if they can blame the Anthem premium increases on the lack of tort reform, which affects not only the price of medical services but also the quantity.

In fact *both* price issues can be laid at the Dems’ feet.

Republicans should be able to say, look what has happened in California since you locked us out of the room last year and didn’t take our advice on tort reform — Anthem could have been reducing premiums for their customers today if not for your obstructionism.

Of course this has to actually be true :) Anthem may be able to help their case — and the Republicans’ — by publishing their year-over-year profit margins and holding them up against Apple or Microsoft.

RD on February 22, 2010 at 9:18 PM

Scott Brown will likely support some form of socialized medicine. Just a hunch.

True_King on February 22, 2010 at 9:30 PM

This is even worse. WTF?

Red Cloud on February 22, 2010 at 9:36 PM

Update: Another reason why Thursday’s O-Care summit is useless: The new bill that’s supposed to provide a starting point for negotiations will come without any pricetag attached.

Dat’s cool. Somebody told me there’s a pot of gold just past that unicorn that’ll take me wherevers I wants ta go here in Utopia. And all the good stuff is free….

/lib welcher off.

ted c on February 22, 2010 at 10:14 PM

Well, it looks to me as though we will see if we have a government by Obama or by the people. He’s heard NO in a wide variety of ways on health care over the last few months…. protests, large and small, direct contact with elected representatives, public opinion polls and “real” public opinion polls in VA, NJ and MA. What’s it gonna be?

CC

CapedConservative on February 22, 2010 at 11:08 PM

Price controls…I smell a Chavez…I mean rat.

Army Brat on February 23, 2010 at 1:06 AM

having a price-control mechanism in place even before O-Care’s up and running tells you a lot about what the Dems expect will happen to premiums once this debacle passes.

admittedly i don’t visit here for the quality of analysis, especially in economics, but this is remarkably stupid. particularly since a few lines later you mention that rates are going up right now.

and this is just economics 101 fail:

coverage will be scarce (but cheap!)

sesquipedalian on February 22, 2010 at 12:09 PM

The next time you drop in to condescend, try to know what you’re talking about. Rates went up when the CA government passed new laws increasing their expenses. The huge profit they posted is strictly a one-time thing from the sale of part of their business. It won’t help them in the next quarter.

And “scarce but cheap” is simply a description of price controls and rationing. The price controls make it cheap, but suppliers can’t make enough profit, so since the supply can’t raise prices to balance out the demand, it winds up being rationed.

Maybe economics is beyond you.

There Goes The Neighborhood on February 23, 2010 at 2:31 AM

The problem that I see is that the state insurance commissioners really have had problems in controlling costs. They have the power, but the influences are huge.

A national approach was recommended by the GOP plan, too, wasn’t it?

AnninCA on February 23, 2010 at 8:09 AM

A national approach was recommended by the GOP plan, too, wasn’t it?

AnninCA on February 23, 2010 at 8:09 AM

It was. But, unusually, their plan is actually better.

Dark-Star on February 23, 2010 at 9:58 AM

My point is that too many people assume that quality American health care is somehow tied to these monolithic and inefficient insurance companies, when it’s not.
But there are many structural reasons why health care is so expensive in this country. The US is no longer a profit generation machine that can afford a health care system that is vastly more expensive than anything else in the world without covering the entire population. The status quo isn’t going to work over the long haul, esp. with an aging population. Ask any corporate CEO how health care costs affect US competitiveness, not to mention the budget deficit.

bayam on February 22, 2010 at 6:11 PM

I agree that the status quo is not acceptable but the biggest problem is not healthcare or health insurance – it’s expanding government entitlements that will explode our national debt.

Monolithic and inefficient insurance companies may not be the answer (I never said they were – just the free market) but a monolithic and inefficient government is the perfect example of a solution worse than the problem.

gwelf on February 23, 2010 at 10:17 AM

There is a reason that Obama didn’t originally take the reigns on health care reform and submit his own proposal. Because we now see that he doesn’t know what the hell he is doing. The CBO can’t estimates costs because no baseline estimates accompany the bill and the whole thing is based upon Unicorn scat and leprechaun farts.

Heftyjo on February 23, 2010 at 12:50 PM

There Goes The Neighborhood on February 23, 2010 at 2:31 AM

+100
Thanks for the common sense view.
It is totally beyond some people!LOL!

Badger40 on February 23, 2010 at 1:31 PM

Because we now see that he doesn’t know what the hell he is doing.
Heftyjo on February 23, 2010 at 12:50 PM

To be honest, I have always known he didn’t know what in the hell he was doing.

Badger40 on February 23, 2010 at 1:32 PM

Not (necessarily) if they can blame the Anthem premium increases on the lack of tort reform, which affects not only the price of medical services but also the quantity.

In fact *both* price issues can be laid at the Dems’ feet.

Republicans should be able to say, look what has happened in California since you locked us out of the room last year and didn’t take our advice on tort reform — Anthem could have been reducing premiums for their customers today if not for your obstructionism.

Of course this has to actually be true :) Anthem may be able to help their case — and the Republicans’ — by publishing their year-over-year profit margins and holding them up against Apple or Microsoft.

RD on February 22, 2010 at 9:18 PM

–California enacted tort reform about 25 years ago. The rate increases in CA had nothing to do with that.

Jimbo3 on February 25, 2010 at 12:22 PM

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