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The Unhealthy Bill
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Unless you live in a cave, you’ve heard that the big Health Care bill was passed on Sunday.  I’ve already posted my opposition to the bill and the results of my trip to Washington, DC earlier this month.  I’m disappointed in the passage of the bill for a lot of reasons, but will use this space to address why I believe this bill will increase  health insurance premiums.  For details on the bill that just passed, which are subject to change based on the Senate’s treatment of reconciliation, click here.

My biggest concern is what proponents of the bill call “expansion of coverage to 30M+”.  One of the reasons that health insurance is costly and increasing rapidly is the massive cost-shifting from Medicare/Medicaid to private insurance (group or individual).  According to the Kaiser Foundation, at the end of 2006 there were 96M people enrolled in Medicare and Medicaid.  That’s about 1/3 of our population.  Those Federally underwritten programs notoriously under-pay providers (physicians, hospitals, pharmacies) for their services.  This is why many physicians refuse to take Medicare patients, because they (the physicians) have to serve those patients at an operating loss.  But for every provider that does accept Medicare/Medicaid, including every hospital, those costs are shifted directly to private-pay customers.  That means people who buy insurance.  So, if your insurance carrier has to reimburse providers for services based on an inflated cost schedule to offset the providers’ loss on their Medicare/Medicaid patients, they in turn must increase premiums to individuals and businesses to make up the difference.  It’s actually quite simple.

The other problem with the “expansion of coverage” is that it just isn’t true.  Who says that because more people are enrolled in Medicare/Medicaid that there will be more physicians, let alone physicians that will take them?  In fact, as people leave the ranks of the insured to join the ranks of Medicare/Medicaid, they will find fewer doctors who will see them.  Expand coverage?  I don’t think so.  Expand a government program? You got it.  Enrollment in Medicare will not mean more care to an individual.

Lastly, the mandates.  Taxes are another issue, I’m mean the mandates on employers and individuals.  The employer mandates are ridiculous for 2 reasons.  One, I know employers.  They want to provide coverage to their employees because they are their best asset.  The smaller the employer, the more intimately they know their people and care for them personally.  If they can’t afford health insurance now, they certainly can’t afford a tax penalty.  And I don’t care that it’s only employers with 50+ employees.  What, they have bigger margins because they have more noses to count?  Beside, that can always be changed with an Executive Order, right?  Second, the penalties in this bill are less than what California employers are paying anyway.  So the government will either not receive the tax from this mandate because the employer chooses to keep private insurance as long as they can, or the government will get the tax money AND the employee on the Medicare roll for less than what it costs to insure them.  Dumb, dumb, dumb.

I’m afraid that the future only holds higher increases in health insurance.  Maybe not this year, but as the Medicare/Medicaid rolls grow, so will your premiums.  And as premiums raise and insurance-buyers drop out, it will force the eventual socialization of medicine.  A business simply cannot compete with its own regulator, especially when it’s regulator is an incompetent mess like Medicare, with its billions in annual fraud costs, who wants you out of the business. 

Purves Insurance is located, Davis, CA and will be working harder than ever to find alternatives for its health insurance customers.