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Last week, the Senate “proudly” announced a late-night healthcare “breakthrough” that abandoned the “Public Option” in exchange for “privately run non-profit” healthcare “exchanges” (read: “co-ops”) and expansion of Medicare and Medicaid. Now, all the details are still coming in, so this will have to be brief.

The highlight of this compromise is that it “expands Medicare” (a goal they should of focused on from the beginning) by dialing back the enrollment age to “55 & up” (currently, you must be at least 65 or disabled to enroll in Medicare). Allowing more people to join Medicare, younger people that place less of a burden on the system paying in premiums every month, theoretically would help improve solvency and extend the life of the program.

However, there are restrictions on enrollment. Only people that can’t get private insurance (either due to their condition or poverty), or small businesses with less than 50 employees and can’t afford private insurance, will be eligible to join… ergo, the private insurance industry is not losing one single customer to the government program. That means ZERO competition and ZERO incentive to bring prices down. If the entire point of a government run system is to “compete” with private insurance to help force prices down, this compromise does nothing to encourage that.

Most “supporters” of this compromise defend it on the (mistaken) belief that it is “a foot in the door” towards later expanding Medicare even further… perhaps the “40+” crowd ten years from now, and “30+” ten years after that. If you support this compromise based on that hope alone, here’s why you are making a Fool’s Bargain:

The ONLY reason the Democrats were able to strike this bargain with Republicans at all is because (listen closely) women aged 55+ are post-menopause, meaning there’s no “abortion issue” to contend with. Republicans will NEVER allow a government healthcare program to insure women of child-bearing age that might need an abortion for whatever reason (even to save their own life). It was (relatively) easy to get Republicans (and Blue-dog Democrats) to agree to expanding Medicare to seniors aged 55 and up, but Democrats that are looking ten/twenty years down the road thinking they’ll be able to expand Medicare to even younger people, are deluding themselves.

One person told me, “Later on, they’ll only need 50 votes” to expand Medicare. I replied, “They only need 50 votes NOW to pass a strong Public Option” using budget reconciliation. And let’s not forget that this compromise does NOTHING to increase competition.

Another feature of the Senate compromise is a new Federal law that “requires private insurers to spend at least 90% of their revenue towards providing healthcare.” This is an open invitation to “creative accounting”, the likes of which haven’t been seen since the days of Enron and their accounting firm “Arthur Andersen”. In the final days of Enron, it was revealed that the multi-billion dollar energy company was paying their accounting firm $350 million dollars a year… nearly $1million dollars a day… to avoid paying ANY income taxes. You don’t spend that kind of money to avoid paying taxes unless you stand to lose FAR more if you don’t.

A few years ago, there was some controversy in the movie industry where the producers of a major blockbuster (I forget which) was refusing to pay its star (or director, or somesuch, I forget which) on the grounds that their contract specified they would be paid “a percentage of the net profit”. Despite earning nearly a billion dollars worldwide, the film’s producers argued there was no “NET” profit (after subtracting liabilities from the gross) and that the film actually lost money, and therefore did not own them anything. The film’s producers were taken to court and won.

Expect to hear many many more instances like this if insurance companies are forced to spend “90% of their revenue” providing services. They will argue that they “didn’t make as much money as the government claims” through creative accounting. They will find ways to get out of paying the full 90%, mark my words.

If the goal of insurance reform is “to provide AFFORDABLE healthcare to EVERY American”, this latest compromise fails miserably. But as I said, there are still many more details to work out before one can pass final judgment. But clearly, at this point, any compromise that appeases Republicans by forbidding the government from competing with the private insurance industry will do NOTHING to bring prices down… which was the entire point of healthcare reform in the first place!
 

Postscript Link of interest: MediaMatters posted an excellent in-depth debunking of “Climate-gate” and those hacked/stolen emails.
 


 

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