White House Fights Back On AHIP Study, With Typical Venom

13 Oct, 2009 by William Teach

Print this article Font size -16+

During the Bush years, one of my biggest complaints, and certainly a complaint of most supporters, was that he and his administration just wouldn’t fight for his policies. But, then, you never heard the Bush administration consistently insulting, demeaning, demonizing, assaulting, abusing, and denigrating private citizens and entities that oppose, criticize, and/or take exception to what they were doing. The Bush admin was entirely too nice.

Enter the Obama administration, which seems to consistently forget the spirit of the 1st Amendment, which is the ability to speak without fear of reprisal, and, I seriously doubt that the Founders meant for the Executive Branch to go after the private sector like a lawyer in a really nasty divorce case.

Reality Check: AHIP’s “Study” Hard to Take Seriously

Well, isn’t that nice?

This morning America’s Health Insurance Plans (AHIP), the health insurance companies’ lobbying operation, released a study it commissioned in an attempt to confuse the debate around health reform. Linda Douglass of the White House Health Reform Office didn’t mince words in her reaction:

“It comes on the eve of a vote that will reduce the industry’s profits,” Douglass told TPMDC. “It is hard to take it seriously. The analysis completely ignores critical policies will lower costs for those who have insurance, expand coverage and provide affordable health insurance options to millions of Americans who are priced out of today’s health insurance market or are locked out by unfair insurance company practices.”

Well, duh. If you reduce the industry profits, people who hold stock will lose vast amounts of money, too. And, private insurers will have to increase their rates. Is there anyone in the Obama admin who understands basic economics?

Here’s an extended Reality Check to set the record straight:

AHIP CLAIM: Health reform will cause health care premiums to rise faster than they would under the current system.

REALITY: The Congressional Budget Office and other analysts confirm that the current Senate Finance Committee (SFC) health reform proposal will lower health care premiums in the exchange and make health insurance more affordable for families. AHIP’s study reaches its flawed conclusion for at least three reasons:

Notice, this only mentions those in the exchange, ie, the government is pretty much running it. So, the White House is already being disingenuous, ie, lying. For those not in the exchange, costs will skyrocket. The whole point is to get people into the exchange, moving towards single payer.

Selective analysis: the AHIP study picks and chooses which policies to consider, ignoring the full benefits of the SFC proposal. For example the AHIP analysis completely ignores:

Very selective.

Grandfather policy that assures that if you like the plan you have, you can keep it.

Except, you will not like it much because the cost will skyrocket. And, if you want to make any minor change, well, say goodbye to it, because you will have to go through the exchange (except for certain companies which will have a 5 year grace period.) With skyrocketing costs to companies, they will dump their plans, pay the fines, and tell their employees to have fun in the exchange. Basic economics

AHIP CLAIM: Fees on health insurance providers, pharmaceutical manufactures and device makers will be passed through to individuals and families.

REALITY: This claim does not withstand scrutiny for at least three reasons:

First, the idea that every dollar of assessment will be passed on to consumers is not credible — especially given the policy design. Second, these fees are intended to recapture part of the benefits these businesses will get from reform. Third, the fees help improve and expand coverage and thus reduce the $1,000 hidden tax tens of millions of Americans pay for the uncompensated care of the uninsured.

Basic economics again. The WH gives it a cute try with those three rebuttals, however, the taxes imposed on those companies, and the artificially low mandated costs will severely reduce profits. Basic economics says if taxes and costs go up, so do selling prices.

What do these companies do with profits? Well, if you develop drugs and medical devices, besides compensating your employees and shareholders, you plow it back into development. So, the government health plans will reduce development. The U.S., with 2 percent of the worlds population, develops 50% of the worlds medicines, and are a leader in medical devices. Kiss that goodbye.

Overall, yes, we need some reform. But, with government, there are always unintended consequences. Look what the end result was with Cash For Clunkers. Look at the massive costs with Medicare and Medicaid. Do you want to get your health insurance from the DMV? What if government ran health care?