Model Massachusetts?

Cross-posted from Critical Condition on National Review Online.

If you wonder what will happen to health insurers under Obamacare, all you have to do is look at Massachusetts. Despite the fact that 97 percent of Massachusetts residents have health insurance, the cost of that insurance is the highest in the nation. A 2009 study from the Commonwealth Fund found that the average employer-sponsored family plan cost $13,788 in Massachusetts in 2008, 12 percent above the national average.

 But did near-universal coverage reduce the cost of health insurance over time? No. In fact, the cost of family health insurance increased 40 percent in Massachusetts from 2003 to 2008, 21 percent faster than the rate of growth nationally.

And in Boston, just as in Washington, politicians don’t take responsibility for their role in causing the problem. Instead, they blame it all on the insurance companies. The Associated Press is reporting today that Massachusetts insurance commissioner Joseph Murphy is effectively instituting insurance price controls statewide, forcing insurers to absorb health-care inflation by themselves (h/t Mike Shedlock):

Insurance Commissioner Joseph Murphy said he had rejected 235 of 274 proposed rate increases because they included “excessive increases and rates unreasonable relative to the benefits provided.”

Blue Cross Blue Shield of Massachusetts, the state’s largest private insurer, said in a statement: “We share concerns about the current rate of premium increases, but arbitrary government price controls will not solve the problem and will likely cause unintended harmful consequences.”

Michael Widmer, president of the Massachusetts Taxpayers Foundation, which represents insurers, health care providers and an array of area businesses, termed the action “arbitrary and capricious.”

Is it conceivable that politics played a role in Murphy’s ruling?

The announcement had political overtones: Gov. Deval Patrick, a Democrat, is seeking re-election this fall against a field that includes Republican Charles Baker, the former president of Harvard Pilgrim Health Care.

Patrick is staking himself out as the guardian of small businesses and middle-class voters, and trying to cast Baker as an industry protector. The governor argues that small businesses are limiting their hiring because they cannot cope with double-digit health care premium increases…

“The governor’s actions today represent an election-year gimmick which fails to address the underlying causes of increased health care costs,” said Baker spokesman Rick Gorka.

Patrick aides sought to bring attention to the governor’s announcement by inviting reporters to his appearance at the Chelsea Clock Co. It occurred moments after the Division of Insurance released its statement.

The theatrics harkened back to testimony Patrick gave last month before a legislative committee reviewing the provider cost-increase cap. Aides also assembled reporters for that event, and Patrick emerged to accuse Baker and Treasurer Timothy Cahill, waging an independent run for governor, of inaction on the issue.

The insurance division rejected the rate filings through an emergency regulation announced by Governor Patrick in February.

Innovation Out The Window?

Cross-posted from Critical Condition on National Review Online.

Consumer-driven health plans — health-insurance plans that cover catastrophic health expenses while letting individuals pay for more routine expenses out-of-pocket — are arguably the greatest innovation in health-care payment of recent years. They require lower premiums than conventional plans and help curb health-care inflation by incentivizing consumers to shop for health care on price, quality, and service. They are also a promising approach to providing basic health care for the poor. (For more information on what they do and why they work, peruse the work of Regina Herzlinger and John Goodman.)

The Patient Protection and Affordable Care Act is somewhat vague in how it treats consumer-driven plans. It reduces the amount that people can save in certain types of tax-free health savings accounts (HSAs). It restricts policyholders’ ability to buy over-the-counter medications using HSAs. It appears to leave the Secretary of Health and Human Services in charge of whether or not HSAs qualify for the state-based insurance exchanges that the new law creates.

But there are already some alarming signs that consumer-driven plans will be significantly curtailed by Obamacare. In a recent op-ed in the Wall Street Journal, Indiana governor Mitch Daniels wrote that his use of consumer-driven plans as a supplement to Medicaid would be barred by the new law:

[We must] plan for the termination of our Healthy Indiana Plan. This is the program that’s currently providing health insurance to 50,000 low-income Hoosiers. With its health savings account–style personal accounts, it has been enormously popular among its participants. I hope those folks will do all right when they are pitched into [traditional] Medicaid.

Governor Daniels, arguably the country’s most innovative health-care reformer, was granted a Medicaid waiver by the Bush administration to try a consumer-driven approach. Daniels’s plan rerouted existing Medicare disproportionate-share hospital payments into health care for the poor. While those under 122 percent of the Federal Poverty Level (currently $22,050 for a four-person family) remained on traditional Medicaid, everyone else, up to 200 percent of the FPL, was eligible for the Healthy Indiana Plan. The plan has been exceptionally popular, and harbors a sizable waiting list for entry.

By contrast, Obamacare bluntly forces states to expand Medicaid from 100 percent of the FPL to just 133 percent, but for a fully implemented cost exceeding $100 billion per year. Governor Daniels was able to bring health care to more people, at a far lower cost per capita, than Obamacare will — but he may no longer have that option.

If Governor Daniels’s interpretation of Obamacare is correct, the law will reduce health-care options for Indiana’s poor, will place long-term strain upon Indiana’s budget, and will force the state to drastically curtail its coverage of those above 133 percent of the FPL. What were those “top ten benefits” of Obamacare again?

Judging Bloggers by Their Books

Cross-posted from @TAC.

Earlier this month, Tyler Cowen posted the ten books that have influenced him the most, and “encourage[d] other bloggers” to do the same. Ross Douthat of the New York Times called Cowen’s invitation “irresistible,” which, judging by the number of bloggers who responded, it was. The Top Ten Influential Books Game gave bloggers easy material — namely, themselves — for a quick post. It also gave them a chance to prove that they are part of the club (that is, the club of influential bloggers).

Most importantly, Cowen’s Influential Books Game gave bloggers an excuse to promote themselves by composing lists designed to excite the maximum of reader admiration. Which is not to say that any lists were insincere: on the contrary, the top bloggers ended up sounding all very smart and thoughtful precisely because they really are just the sort of people whose lives were changed by reading Nietzsche. Still, as vehicles of self-promotion, some lists were better than others. To succeed, an Influential Books List needs to satisfy several competing criteria, namely: erudition (it should show how widely the blogger has read), plausibility (it should not claim that the blogger read Principia Mathematica at age 10), inventiveness (it should be unpredictable), freedom of thought or freedom from dogma (it should not unwittingly depict the blogger as an ideologue) and gumption (it should show that the blogger is unafraid to defend unpopular opinions).

Given these constraints, it is not surprising that bloggers generally agreed on what types of books should be included. I list them below. Who came up with the most impressive list? Let’s take a look! The contestants: Bryan Caplan, Matt Continetti, Tyler Cowen, Ross Douthat, Arnold Kling, Will Wilkinson, Matthew Yglesias. The categories, identified by the “signal” each is designed to send:

1. “I admit that I was pretty silly at age 18.”

• Caplan: Ayn Rand, The Virtue of Selfishness
• Continetti: None
• Cowen: None (Cowen cites Ayn Rand but, showing gumption, does not express any adult reservations about her.)
• Douthat: G.K. Chesterton, Orthodoxy. “What Ayn Rand is to young libertarians,” Douthat writes, “Chesterton is to teenage Catholic conservatives.”
• Kling: None
• Wilkinson: Frank Herbert, Dune; Ayn Rand, Atlas Shrugged
• Yglesias: Maxine Hong Kingston, Tripmaster Monkey. Kingston, Yglesias explains, convinced him not “to be the kind of jerk who thought education was being ruined by PC demands to represent more women and minority writers.”

Best choice: Yglesias. Showing both erudition and freedom of thought, Yglesias conquered at age 18 a dogma that is uncritically accepted by seasoned intellectuals. Second prize goes to Douthat, whose early discovery of Chesterton shows erudition.

Worst choice: Continetti. Continetti admits that he grew up reading Ayn Rand and Rush Limbaugh, but still cites big conservative names such as Russell Kirk and Irving Kristol on the sophistic grounds that Rand and Limbaugh are “where you start, not where you end up.” Excluding Rand and Limbaugh, even though they influenced you, betrays dogmatism (only Russell Kirk is worth of serious attention!) and lack of gumption. If you like Ayn Rand or Rush Limbaugh, say so!

Ideal Choice: The best youthful obsession I can think of is C.S. Lewis’s obsession with the Sagas of Icelanders and other Norse legends. For a libertarian, love of Icelandic sagas has the added benefit of plausibly leading to an interest in stateless societies.

2. “My interests are more diverse than you know!”

• Caplan: Thomas Reid, Essays on the Intellectual Powers of Man
• Continetti: Herman Wouk, War and Remembrance
• Cowen: Proust, Remembrance of Things Past
• Douthat: Roger Angell, Late Innings
• Kling: Bill James, The Baseball Abstract, 1987
• Wilkinson: Stephen Hawking, A Brief History of Time
• Yglesias: Maxine Hong Kingston, Tripmaster Monkey (doing double duty here)

Best Choice: Cowen. A prolific writer and academic economist, he’s also read all of Proust! Now there’s a cosmopolitan. Second prize goes to Douthat and Kling, although they lose points for lack of inventiveness, as it’s slightly cliche for writers to love baseball.

Worst Choice: Several bloggers show questionable literary taste, but Caplan shows none at all. Scottish philosopher Thomas Reid appears seemingly at random as the only book on his list (apart from Zarathustra) that isn’t ideological or related to economics, and then, as it turns out, only because Reid helped cure Caplan of his Randianism. As Yglesias notes, Caplan’s interests are strikingly narrow.

Ideal Choice: Proust is hard to beat, though I think the best choice might be Rabelais. A taste for Rabelais is as plausible as a taste for Proust yet requires even more erudition. Someone like Yglesias could have plausibly cited Borges, another good choice. Many of these bloggers could have done simply by citing a volume of poetry.

3. “I have read deeply enough in the Western Canon to consider the Great Books my friends.”

• Caplan: Nietzsche, Thus Spoke Zarathustra
• Continetti: Plato, The Republic; Smith, The Wealth of Nations
• Cowen: Plato, Dialogues
• Douthat: Francis Fukuyama, The End of History and the Last Man
• Kling: None
• Wilkinson: Aristotle, Nicomachean ethics
• Yglesias: Nietzsche, Genealogy of Morals

Best Choice: Yglesias. Wilkinson also cites the Genealogy of Morals, but in Yglesias’s case you can tell that Nietzsche really got him thinking. Wilkinson’s choice of the Nicomachean Ethics and Continetti’s choice of The Republic lack inventiveness, as they rank too high on the list of best books of all time.

Worst Choice: Douthat. Douthat tries a shortcut by citing Fukuyama as a “gateway drug to Plato and Aristotle, Machiavelli and Nietzsche.” If you were truly intoxicated with the Great Books, however, you would not lump them together so blithely. Douthat’s choice shows lack of erudition and suggests Great Books curriculum dogmatism. Second worst is Continetti’s choice of Adam Smith, which lacks plausibility. Does Continetti really expect us to believe that he has read and pondered the entire Wealth of Nations?

Ideal Choice: Genealogy of Morals is good, but a bit too obvious for a young intellectual. I would go with another difficult but compelling philosopher such as Spinoza or Pascal (with a slight preference for Spinoza, as Jeeves’s favorite philosopher).

4. “I am not afraid to defend a book that you may hate.”

• Caplan: Rand, Rothbard, Mises; Paul Johnson, Modern Times; Murray and Herrnstein, The Bell Curve
• Continetti: Robert Kagan, Dangerous Nation
• Cowen: Ayn Rand, Capitalism: The Unknown Ideal; Camille Paglia, Sexual Personae
• Douthat: Aldous Huxley, Brave New World
• Kling: Amity Shlaes, The Forgotten Man
• Wilkinson: Ayn Rand, Atlas Shrugged; Murray and Herrnstein, The Bell Curve
• Yglesias: None.

Best Choice: Douthat missed a chance to score big here. When a religious conservative praises Brave New World, it’s almost certain that he picked up his admiration from biotechnology skeptics such as Leon Kass and Francis Fukuyama. If I am right, then Douthat should have showed more gumption by citing the oft denounced Leon Kass.

Worst Choice: Caplan. Caplan, showing dogmatism, lists a panoply of libertarian ideologues whom non-true-believers find tedious.

Ideal Choice: Herbert Spencer might work for a libertarian. Conservatives have no shortage of hated writers, from Joseph de Maistre and George Fitzhugh to Carl Schmitt. I could not find a liberal blogger citing anything very radical. I suppose only moderate progressives such Yglesias and Ezra Klein read Tyler Cowen’s blog.

5. “I may have my biases, but I have still learned from the other side.”

• Caplan: None
• Continetti: None
• Cowen: John Maynard Keynes, General Theory
• Douthat: Christopher Lasch, The Revolt of the Elites
• Kling: None.
• Wilkinson: Rawls, A Theory of Justice
• Yglesias: Fyodor Dostoevsky, Notes From the Underground

Best Choice: Cowen’s choice of Keynes is excellent, but Yglesias truly shines here. By citing Dostoevsky, the religious anti-utopian, Yglesias shrewdly overcomes the problem that conservatives have not produced great works to rival those of Mill, Locke or Rawls. Yglesias acknowleges the aesthetic power of reactionary ideas — which shows freedom of thought — but ultimately dismisses them with the memorable epigram, “sober thinking about big issues is boring.” An outstanding performance.

Worst Choice: Douthat’s choice of Christopher Lasch shows lack of inventiveness, as Lasch has long been conservatives’ favorite leftist. But Continetti and Caplan show no interest in understanding the other side whatsoever. When asked to cite your influences, you should at least try to establish that you’ve considered other points of view!

Ideal Choice: You can’t beat Yglesias’s choice here. A liberal would also do well to cite Joseph Schumpeter, the most brilliant conservative of the past century. Conservatives and libertarians could be more inventive than to cite Rawls. Charles Taylor, Foucault, Habermas, Amartya Sen — any of these would be more interesting choices.

6. “I have a well-formed, coherent worldview.”

• Caplan: Rothbard, Mises, Richard Posner
• Continetti: Burke’s Reflections; Russell Kirk, The Conservative Mind; Irving Kristol, Neoconservatism
• Cowen: Hayek, Individualism and the Economic Order
• Douthat: Chesterton, Orthodoxy; C.S. Lewis, The Screwtape Letters
• Kling: None.
• Wilkinson: Hayek, Law, Legislation and Liberty; Cowen, In Praise of Commercial Culture
• Yglesias: Derek Pargit, Reasons and Persons; Susan Moller Okin, Justice, Gender and the Family

Best Choice: This is a dangerous category, as being enamored with the canonical writers of your ideology shows lack of freedom of thought. I like Kling here, none of whose choices seems to have been chosen for ideological reasons. Cowen and Yglesias also excel by making clear that the lessons they have learned from various books are narrow, not ultimate.

Worst Choice: Caplan and Continetti again show dogmatism by citing a string of works popular only among like-minded readers.

Ideal Choice: The best strategy is not to cite a famous worldview-forming work at all.

7. “Gosh, I sure was precocious as a kid!”

• Caplan: Rothbard
• Continetti: None
• Cowen: Plato’s Diaologues
• Douthat: James Hibbert, Wolfe at Quebec
• Kling: None
• Wilkinson: Stephen Hawking, A Brief History of Time
• Yglesias: Nietzsche, Genealogy of Morals

Best Choice: Cowen. In Cowen’s case, you really can believe that at age 12 he had his nose buried in the Apology of Socrates.



Worst Choice: None is really a bad choice here. Douthat’s tale of how he learned so much “historical arcana,” however, seems artificial, as it turns out that the book in question did not actually make a deep impression on him.

Ideal Choice: Plato’s Dialogues. It’s surprising that not more teenagers read Plato, whose dialogues are often very entertaining. Other plausible and erudite choices would be lively classical historians such as Herodotus or Suetonius. For the blogger with a reputation for braininess, Godel, Escher Bach would work nicely.

8. “I’ve got some serious candlepower up here.”

• Caplan: Hard to say, since the most difficult works are all in his field
• Continetti: None
• Cowen: Quine, Word and Object
• Douthat: None
• Kling: Again, it’s hard to say, as the most difficult works are all in his field.
• Wilkinson: David Armstrong, Universals: An Opinionated Introduction
• Yglesias: Daniel Dennett, Consciousness Explained; Richard Rorty, Philosophy and the Mirror of Nature

Best Choice: Cowen. Though an economist by training, Cowen has still read some rather hefty philosophy. (Yet he somewhat undercuts his victory in this category by drawing a “meta-lesson” from Quine about how to arrive at a deeper understanding than the one you already have. This often means that the reader has not actually understood the book in question.) Yglesias’s choices are good, but he loses points for lack of inventiveness by picking the two recent works of analytic philosophy that non-philosophers might have actually read.

Worst Choice: This category isn’t really fair to Continetti and Douthat, since they’re competing against academic economists and amateur philosophers. Still, apart from Continetti’s implausible choice of Adam Smith, neither selected any book that would really strain the old bean.

Ideal Choice: The ideal choice would separate the real brains from the pretenders by revealing that the blogger understands and could independently derive, say, Godel’s incompleteness theorem. The ideal blogger would cite Roger Penrose’s The Emperor’s New Mind, while making clear that he doesn’t accept the conclusions.

9. “There’s no way the rest of you guys have read anything as obscure as this.”

• Caplan: None (works in his own field don’t count)
• Continetti: None
• Cowen: Susan Love Brown, The Incredible Bread Machine
• Douthat: None
• Kling: None
• Wilkinson: None
• Yglesias: Thomas Kuhn, The Copernican Revolution

Best Choice: Surprisingly, only Yglesias and Cowen compete in this category, which is ripe for displays of inventiveness. Yglesias cleverly picks a famous author’s less famous book. Cowen admits that he picked up libertarianism very early on, but from a surprising source.

Worst Choice: No bad choices here. Continetti, Kling and Wilkinson picked science fiction books, but only the most popular within their genre.

Ideal Choice: So many possibilities! I’m going to go with an actual personal choice, namely, Chateaubriand’s Genius of Christianity, a monumental apology for Western civilization that is hard to find in English translation.

10. “I may be highly literate but I’m not a snob.”

• Caplan: Ayn Rand, Atlas Shrugged
• Continetti: Harlan Ellison, Deathbird Stories
• Cowen: None
• Douthat: Tolkien, Lord of the Rings
• Kling: Neal Stephenson, The Diamond Age
• Wilkinson: Frank Miller, The Dark Knight Returns
• Yglesias: None.

Best Choice: I’m not competent to judge comic books, fantasy or science fiction, so I’ll have to call a tie between Continetti, Kling and Wilkinson. Douthat’s choice of Tolkien lacks inventiveness. Also, his defense of fantasy goes a bit overboard. Sure, fantasy “re-enchants” the world (read: it’s about gods and spirits and stuff) but that’s a far cry from saying that it captures “more reality” than the alternatives. At most, it captures a neglected piece of reality. In fact, while it does re-introduce supernatural spirits, fantasy also simplifies natural human spirits, so the results is actually a net loss of enchantment.

Douthat’s re-enchantment theory also fails to account for the appeal of its cousin genre, science fiction, which is fantastical but not supernatural. Finally, both genres appeal almost exclusively to geeky males who (as our blogging contestants themselves prove!) normally prefer non-fiction. This suggests that the appeal of fantasy is not in its supernatural elements but its elaborate system-building.

Worst Choice: No bad choices here. Ironically, Cowen, a leading anti-snob, is the least tempted by popular culture!


Ideal Choice: It may not be a perfect choice, but you couldn’t go wrong by citing P.G. Wodehouse. An admiration for Wodehouse is highly plausible and also shows erudition, since all voracious readers love him. Surprisingly, no took up the obvious challenge here, namely, to make a plausible defense of an author whom everyone else thinks unworthy of consideration. Douthat, however, gets extra credit for defending Stephen King as a “runner up” influential author.

Overall Winners: Tie between Yglesias and Cowen. (Cowen, however, should be handicapped since he started the “contest” and thus may have designed it so he would win.)

Just so there’s no misunderstanding, I should acknowledge that the Top Ten Influential Books Game was not set up as a competition nor was it taken as such (at least not explicitly). In “judging” the winners, I have my tongue in cheek. Still, this exercise confirms some general impressions, in particular that Cowen is a freakishly clever polymath and that, of those who have made blogging their trade, Yglesias has the most depth. The others are all very smart, worth reading, and brilliant in their areas of comfort, but not of the same general caliber.

Is The Healthcare War Ending, Or Beginning?

Rasmussen Reports: 55% favor repeal of Obamacare.

Conventional wisdom holds that, now that the Patient Protection and Affordable Care Act of 2009 is law, it will be politically, if not mathematically, impossible for Republicans to repeal it. Republicans will need a majority in the House, a filibuster-proof majority in the Senate, and the Presidency—which seems impossible. On top of that, as I write in my previous post, Democrats believe that the law's immediate benefits will outweigh any drawbacks.

But a surprising development over the past few days has been the coalescence in the conservative blogosphere of a movement to repeal Obamacare, and replace it with better reforms. This stance initially elicited resistance from elected Republicans, but is gaining consensus among them as well. For his part, the President says, "Go for it."

But now, there is data that suggests that the "Repeal and Replace" campaign is not as crazy as it sounds. Rasmussen Reports, a prominent Washington polling service, finds that 55% of Americans favor repeal (h/t The Weekly Standard):

The latest Rasmussen Reports national telephone survey, conducted on the first two nights after the president signed the bill, shows that 55% favor repealing the legislation. Forty-two percent (42%) oppose repeal. Those figures include 46% who Strongly Favor repeal and 35% who Strongly Oppose it.

In terms of Election 2010, 52% say they’d vote for a candidate who favors repeal over one who does not. Forty-one percent (41%) would cast their vote for someone who opposes repeal.

Not surprisingly, Republicans overwhelmingly favor repeal while most Democrats are opposed. Among those not affiliated with either major party, 59% favor repeal, and 35% are against it.

Most senior citizens (59%) also favor repeal. Earlier, voters over 65 had been more opposed to the health care plan than younger adults. Seniors use the health care system more than anyone else.

A number of states are already challenging the constitutionality of that requirement in court, and polling data released earlier shows that 49% of voters nationwide would like their state to sue the federal government over the health care bill.

Rasmussen Reports will track support for the repeal effort on a weekly basis for as long as it remains a significant issue. The next update will be released Monday morning.

Stay tuned.

The Top Ten ‘Benefits’ of Obamacare, Seven of Which Aren’t

Cross-posted from Critical Condition on National Review Online.

Democrats, such as Sen. Dick Durbin (D., Ill.), say they are eager to campaign against Republicans who seek to repeal their health-care legislation. "The Republicans will have to stand up and say we want to repeal those things and I think that will be hard, because people will begin to realize these are commonsense changes," said Durbin.

Indeed, as Grace-Marie Turner mentioned in National Review, Democrats have posted a list of the "Top Ten Immediate Benefits" that they argue that individuals will gain from the legislation.

But there is no such thing as a free lunch, and many of these "benefits" are accompanied by unmentioned costs. If you require that every restaurant serve Kobe beef instead of USDA Choice, diners might see that as a "benefit" — until their waiter gives them the check.

Let's go through the Democrats' top ten, point-by-point:

1. Prohibit pre-existing condition exclusions for children in all new plans. This will increase the cost of insurance for everyone else. Net negative.
   
2. Provide immediate access to insurance for uninsured Americans who are uninsured because of a pre-existing condition through a temporary high-risk pool. High-risk pools are a good way to improve coverage of those with pre-existing conditions, which is why John McCain advocated them in the 2008 Presidential campaign. Unfortunately, the Democratic bill doesn't do enough to make them feasible. Net neutral to positive.
   
3. Prohibit dropping people from coverage when they get sick in all individual plans. Insurers shouldn't drop people when they get sick, unless they have an extremely good reason, such as misrepresentation of a pre-existing condition. The onus should be on insurance companies, therefore, to investigate these things up front before taking consumers' money. This mandate will have the side effect of making applications for insurance more onerous. Net positive.
   
4. Lower seniors' prescription-drug prices by beginning to close the donut hole. As a flat-out subsidy, yes, this will appear to seniors to be a straightforward benefit. But it is accompanied by a far larger cut: the obliteration of Medicare Advantage. Net negative.
   
5. Offer tax credits to small businesses to purchase coverage. The tax credits will not be enough to compensate for two things: (1) an Obamacare-driven acceleration in the rise of the cost of health insurance; (2) the employer mandate, which requires that any small business with more than 50 employees provide health insurance to every employee or pay a fine equal to $2,000 multiplied by the entire number of employees in that company. Net negative.
   
6. Eliminate lifetime limits and restrictive annual limits on benefits in all plans. Yet another mandated "benefit" that will drive up the cost of health insurance. Net negative.
   
7. Require plans to cover an enrollee's dependent children until age 26. See #6, though if this provision increases the number of young people with health insurance, it could improve the risk pool and have a salutary effect on insurance costs. Net neutral to positive.
   
8. Require new plans to cover preventive services and immunizations without cost-sharing. See #6. Another clumsy mandate that will drive up the cost of insurance. Most plans already encourage prevention — but prevention has no impact on long-term health care costs, since we all have to eventually die of something. Net negative.
   
9. Ensure consumers have access to an effective internal and external appeals process to appeal new insurance plan decisions. Yeah, except that a new government agency, the Independent Medicare Advisory Board, is now empowered to bar reimbursement for any insurance claims it deems fit. And its decisions, enacted by unelected bureaucrats, can't even be appealed by Congress, let alone consumers. We know from experience that once Medicare stops reimbursing for something, private insurers usually follow. Net negative.
   
10. Require premium rebates to enrollees from insurers with high administrative expenditures and require public disclosure of the percent of premiums applied to overhead costs. Once again, this is a mandate that will only drive up insurance costs. If an insurer is required to spend 85 percent (say $850 of every $1,000) of premiums on patient care (hence $150 in "overhead"), but the company needs to spend $200 on administrative costs to ensure that its plans run effectively, they will simply raise premiums by $333 in order to ensure that the percentage of premiums spent on overhead remains the same. Net negative.
    

So, of the Democrats' top ten "benefits," seven have direct, opposing costs of an even greater magnitude. The remaining three provisions, if we're lucky, might work out. But we haven't even gotten started with all of the other mandates and tax increases in the law for which there are no upsides. The Democrats' list demonstrates that we have a long way to go before our political class understands the very basics of how insurance works.

Progressives Hate the Bill, Too

Cross-posted from Critical Condition on National Review Online.

For those who are dismayed by yesterday's outcome, and are thinking about what to do next, read this piece in the Huffington Post. In it, Firedoglake founder Jane Hamsher describes 18 myths about the health care bill, from the progressive point of view.

Her criticisms of Obamacare are withering, and are important to understand. Her 18 myths (with detail in the full article) are:

1. This is a universal health care bill.
   
2. Insurance companies hate this bill.
   
3. The bill will significantly bring down insurance premiums for most Americans.
   
4. The bill will make health care affordable for middle class Americans.
   
5. This plan is similar to the Massachusetts plan, which makes health care affordable.
   
6. This bill provides health care to 31 million people who are currently uninsured.
   
7. You can keep the insurance you have if you like it.
   
8. The "excise tax" will encourage employers to reduce the scope of health care benefits, and they will pass the savings on to employees in the form of higher wages.
   
9. This bill employs nearly every cost control idea available to bring down costs.
   
10. The bill will require big companies like Wal-Mart to provide insurance for their employees.
    
11. The bill "bends the cost curve" on health care.
    
12. The bill will provide immediate access to insurance for Americans who are uninsured because of a pre-existing condition.
    
13. The bill prohibits dropping people in individual plans from coverage when they get sick.
    
14. The bill ensures consumers have access to an effective internal and external appeals process to challenge new insurance plan decisions.
    
15. This bill will stop insurance companies from hiking rates 30%-40% per year.
    
16. When the bill passes, people will begin receiving benefits under this bill immediately.
    
17. The bill creates a pathway for single payer.
    
18. The bill will end medical bankruptcy and provide all Americans with peace of mind.

As she summarizes, "Real health care reform is the thing we've fought for from the start. It is desperately needed. But this bill falls short on many levels, and hurts many people more than it helps."

Bloated General Hospitals: One Problem Obamacare Would Make Worse

Cross-posted from Critical Condition on National Review Online.

As I recounted in an earlier post, Democrats have attempted to portray health insurers as greedy and cruel as a way of building political support for their health-care legislation. The implication has been that insurers, ever hungrier for profits, have jacked up rates in order to exploit vulnerable Americans.

But Democrats have a strong political incentive to distract the public from one of the real villains of rising health-care costs: bloated general hospitals.

In an excellent article in today’s Wall Street Journal (subscription required), Avery Johnson and Suzanne Sataline describe how hospitals have demanded dramatically higher reimbursement rates from insurers — as much as 54 percent — and routinely threaten to cut off patients covered by those insurers if they don’t get their way. Because many large hospitals have monopolistic positions within their local areas, they usually do get their way.

Health insurers are fighting demands by hospitals for sharply higher reimbursement rates by threatening to drop the hospitals from their health-plan networks, and blaming them for higher insurance premiums.

“We’ve never seen the kind of increases we’re seeing right now” from hospitals, says Aetna Inc. President Mark Bertolini. Five years ago, a typical rate increase was about 5 percent, but this year Aetna granted 50 “must have” rate increases of more than 20 percent, Mr. Bertolini says.

In a fresh battle, Stellaris Health Network, a four-hospital system in Westchester County, N.Y., just asked a unit of health insurer WellPoint Inc. to increase its payments by 16 percent this year-in part, so that Stellaris could fund a new cancer center, according to the insurer...

Hospitals argue that low Medicare rates and cuts to Medicaid mean that hospitals have to get money from elsewhere, and increasingly that is private insurers. Rising ranks of uninsured Americans have led to more uncompensated care and have swelled the rolls of Medicaid, exacerbating the problem.

But insurers contend that in recent years big hospital systems have been buying up smaller medical centers and using their dominance in a region to demand big rate increases. America’s Health Insurance Plans, a trade organization, points to data showing hospital markets are 47 percent more concentrated than they were 13 years ago...

Even tense negotiations usually result in a last-minute accord, but in some cases they fall apart. In 2008, Saint Luke’s Health System, based in Kansas City, Mo., with 11 locations in Missouri and Kansas, initially asked UnitedHealth for a 54 percent increase over four years, the insurer said. Last year, the contract ended without an agreement. UnitedHealth lost the hospitals from its network.

While it is true that hospitals are increasingly burdened by underpayments from Medicare and Medicaid, they regularly attempt to get others to bail them out of their own inefficient practices. Hospitals are the largest employers in many congressional districts, and they use their political sway to squash entrepreneurial competitors, such as specialized, physician-owned hospitals.

Indeed, the Senate bill would bar the construction of new physician-owned hospitals and would restrain existing specialty hospitals from expanding. These specialty hospitals, by focusing on a specific disease area such as heart surgery, usually offer better-quality care at lower prices than do their larger counterparts. Those lower prices translate into lower health-care costs, and thereby lower insurance premiums, and thereby broader access to health care.

Instead, by protecting large hospitals from competition and innovation, the Senate bill will increase health-care costs and insurance premiums, and thereby even further squeeze those individuals, families, and employers who struggle to afford health insurance.