Summary of the proposed health-care reform bills.

Nearly all Americans are interested in enacting health-care reform legislation. I think that is because we are a deeply generous, caring people. Surely the dominant interest in reform springs from concern for low-income Americans who cannot afford health insurance.

Recently 5 health-care reform bills have been passed by committees of the U. S. House and Senate. The bills differ in how to cover the costs, but are fairly similar in the proposed benefits. Ironically, about half of the uninsured will remain so if any combination of these bills is finally adopted.

The bills propose major and minor changes to nearly every aspect of American health-care, driving up everyone’s costs and leading us down the path toward rationing. Because each of the bills is so enormous and deals with so many subjects, including some almost unrelated to health-care, very few members of the public, few journalists, and almost certainly few members of Congress have much understanding of the bills’ contents. There remains widespread hope that the bills will address the important issues and leave what we like mostly untouched. Unfortunately, that hope is not justified. The bills exacerbate the most critical issues (like the Medicare and Medicaid financial crises) and leave millions of poor Americans without insurance. Much more could be accomplished with much less expenditure and far less perturbation.

Below I have set forth a summary of the good and bad things the bills would do, along with the really important reforms that they neglect. Highlighted words or phrases provide links to explanatory information. My intent is to update this list as the final bill takes shape, and in the meantime to edit and correct items in the summary as necessary. Please check back.


Good things the proposed bills would do:

1. Provide health insurance to some of the low-income Americans who are not now insured.

2. Make health insurance available to people with pre-existing conditions.

3. Eliminate annual or lifetime benefits caps.

4. Support the view that health-care should be every person’s right.

5. Make minor reforms to Medicare and Medicaid.

6. Provide some incentives to encourage more primary care physicians and rural doctors.

7. Promote certain experiments to seek medical cost reductions.

8. Reduce individual health plan cancellations.


Bad things the proposed bills would do:

1. Impose an excise tax penalty for simply being an American, with an exemption for those of us with “qualified” health insurance plans.

2. Attempt to force healthy young workers to pay much of the cost of insuring “everyone.”

3. Raid the Medicare Trust Fund to misapply hundreds of billions of dollars for non-Medicare purposes, accelerating the pending Medicare financial crisis.

4. Defraud the public by collecting 10 years’ taxes to provide only 5 to 7 years’ benefits.

5. Reduce consumer choices in health insurance plans by forcing all plans to provide a comprehensive list of benefits and a minimum actuarial payout.

6. Impose benefit mandates that many people would not choose and that raise all insurance premiums.

7. Indirectly greatly increase insurance premiums via benefit mandates and “guaranteed issue.”

8. Drive many individuals and families who do not have employer plans to drop their private health insurance plans because of unaffordable increases in premiums.

9. Create a major financial incentive for people without employer insurance to opt out of health insurance, paying a low “excise tax” penalty, and then buy “guaranteed issue” policies for only as long as they have a serious illness.

10. Provide financial incentives for small businesses not to provide health insurance to their employees, or to drop their present insurance plans.

11. Probably destroy the market for non-employer plans. (In New York State, for example, “guaranteed issue” and attendant drastic premium increases have meant a drop in individual coverage from almost 6% of working adults to a bit over 0.2%).

12. Increase drug prices through an industry-wide excise tax.

13. Increase medical device and equipment prices through an industry-wide excise tax.

14. Reduce or eliminate medical innovation by imposing new taxes on the industry.

15. Penalize doctors who prescribe expensive treatments, regardless whether or not they represent “best practice.”

16. Create a cost-shifting environment that leads inevitably to health-care rationing and bureaucratically guided limits on end-of-life care.

17. Eliminate many of the few reasons that exist for consumers to control health-care costs, most obviously Health Savings Accounts and various co-pays.

18. Impose huge added Medicaid cost burdens on all state budgets by mandating increases in eligibility (and penalties for not signing up).

19. Increase job-related costs for all but the very smallest businesses.

20. Discourage job creation in this major recession by imposing new job-related costs on employers and new taxes on the income groups likeliest to create jobs.

21. Apply the wrong fix to “Cadillac” health insurance plans—assess an excise tax on insurers instead of taxing the excess premiums to the insured.

22. Destroy Health Savings Accounts by mandating benefits that are totally incompatible with the high-deductible insurance plan concept.

23. Semi-destroy Medicare Advantage (a Medicare option particularly favored by lower-income and minority people, which is chosen by over 20% of Medicare beneficiaries)--forcing some 8.5 million Americans out of this program.

24. Encourage many doctors to quit their practices, by further increasing physician costs and reducing physician income.

25. Give unfair breaks (such as exemption from “Cadillac plan” excise taxes and waiver of co-pays) to union workers and union retirees—what does that have to do with “reform?”

26. Promote unionization of the health-care industry—what does that have to do with “reform?”

27. Make the Internal Revenue Service the health-insurance cop.

28. Impose a medley of unpopular new and/or increased taxes.

29.  Introduce a novel exercise in socialism which is clearly intended to be a major step toward a single-payer scheme: The proposed “public option.” It would be a sibling agency to Medicare and Medicaid, and would be in essence an enormous new health insurance company owned and operated by the Federal government. It does not relate to any of the declared goals of health-care reform.


Important things that the bills don’t even attempt to do:

1. Get most of the uninsured Americans insured—health insurance premiums will remain beyond the reach of most middle-income people.

2. Make health insurance affordable to average income individuals and families—the bills will result in higher premiums, widely estimated to be a 40% jump.

3. “Bend the curve” to lower health-care costs—the only idea that actually seems to work is to give consumers more reasons to be conscientious about costs, but the bills actually reduce such incentives.

4. Reduce the rapid escalation of health-insurance premiums. Other than vague ideas to reduce the national costs by improving “quality” and determining “best practices,” the bills provide nothing to reduce premium cost escalation.

5. Address the Medicare and Medicaid financial crises. The bills are designed to exacerbate these problems.

6. Rein in rapidly escalating Medicaid costs, a matter that is critical to state finances as well as Federal. The bills greatly expand eligibility and reduce some co-pay categories.

7. Eliminate ineligible enrollees in Medicaid and S-CHIP.

8. Meaningfully address Medicare and Medicaid waste and fraud (said to cost over $60 billion/year).  That actually doesn't even require legislation--the President could simply order more vigorous enforcement.

9. Reconcile Medicare and Medicaid payments with actual provider costs; underpayment by the Federal programs causes cost-shifting that distorts health-care economics and encourages providers to decline Medicare and Medicaid patients. 

10. Eliminate the painfully unfair scheme where employer-provided health insurance is tax-free and individual plans are not.

11. Establish a nationwide health insurance market. (That reform would be essentially cost-free!)

12. Increase health-insurance competition.

13. Lower drug costs.

14. Provide medical tort reform (including defensive medicine, it imposes a cost burden estimated to exceed $240 billion/year).

15. Eliminate the practice of defensive medicine (estimated to add at least $191 billion/year to American health-care costs).

16. Reform the FDA to reduce the astronomical cost of working a new drug candidate through the approval process.

17. Eliminate the FDA’s practice of protecting existing drugs from competition by setting impossible “efficacy” hurdles for new drug candidates.

18. Expedite FDA approval of new drugs, devices, and procedures.


And the questions:

1.  Is bad legislation in the name of a public good better than no legislation?

2.  Will moderate Democrats and liberal Republicans join the Congressional leadership to ram this atrocious legislation down the throats of the American public?

3.  Can the Congress summon the integrity to junk this wretched set of proposals and start over to reform American health-care in a sincere and bipartisan manner?