The text of the bill can be found here.
Eliminating Private Health Insurance
The gist of the whole thing is to eliminate the private insurance for healthcare industry altogether. For-profit insurers are given the option to convert to not-for-profit organizations if they wish. All things considered I can't imagine why they'd want to.
The bill goes on to make it illegal to offer private health insurance for anything not considered to be "medically necessary" under the terms of the bill. Essentially the industry will be limited to providing insurance for cosmetic surgeries and laser vision correction. The bill covers everything else.
The bill recognizes that this will eliminate a tremendous number of jobs, and therefore gives the people working those jobs 2 years of unemployment benefits and first crack at the newly minted government positions filling the void.
Also created in the bill is a centralized electronic database for medical records. Considering the creation of this system, one wonders how many fewer jobs there will be for admin/clerical positions due to the lessened amount of paperwork. This will undoubtedly not be a one-to-one replacement of private workers with government workers.
Start Up Costs
The bill addresses paying for the "start-up" costs of eliminating an entire tax-paying industry and replacing it with tax funded employees. How do they plan to do it? Well by inflating the dollar and backing it with Treasury Bills of course! Who buys these Treasurys? Foreign countries. For those not paying attention to why this is currently a ridiculously tenuous strategy at best, I'll point you to Peter Schiff.
Paying the Freight
Aren't we in a massive recession? How will we pay for it? Here's how (from Section 211):
A. Existing sources of Federal Government revenues for health care.
Yeah, umm, OK I'm going to doubt this one is lending anything at all to this program considering the "stimulus" wants to pile $87 billion extra into Medicare already.
B. Increasing personal income taxes on the top 5 percent income earners.
Since it happened over the weekend, potentially you may have missed the news that Obama now officially has every intention of ending the Bush Tax Cuts. Plenty has already been made of how stupid this is, and Heritage does a good job of talking about why. This bill, if approved, by its own language, would not go into actual effect until after the Bush Tax Cuts have expired. This means that the top 5 percent income would go from paying about 17.5% back to paying over 20% tax rates, and then plus some indiscriminate amount more to pay for the universal health care plan.
The cutoff for the top 5% is somewhere in the vicinity of $150,000, meaning that anyone making over $150,000 is already looking at paying an additional $3,750 a year after the BTC's get rolled back. And we have no clue how much more their taxes will be raised after those taxes get rolled back.
The top 5% of the income earners are already paying the freight on over 60% of federal taxes. Looks like we're heading for even less people paying the freight on even more federal tax. And this is to say nothing of the fact that eventually, in the long run, who is going to actually want to be in the top 5%? I could imagine a lot of people preferring to hover just underneath the bracket for the sake of not having to pay the extra tax, further disincetivizing individual growth, along with the overall growth of the country.
C. Instituting a modest and progressive excise tax on payroll and self-employment income.
I saw some commenter on the HuffPo article linked above state that he knew so many people that were going to start their own businesses now that they wouldn't be tied to a job just for the sake of affording insurance. I wonder how much more these people will pay in these progressive self-employment taxes than they would have just paid out of pocket for their own health insurance anyway?
Obviously nobody in Congress is going to do that kind of analysis for us.
D. Instituting a small tax on stock and bond transactions.
Does it strike anybody but me as completely ridiculous that we would start taxing stock and bond transactions smack in the middle of the worst recession we've seen since the Great Depression? Businesses need venture capital right now more than anything. Even the people at HuffPo recognize this. So why in the world would we disincentivize the purchase of stocks and bonds by taxing them more?
The bill also claims "system savings" as a source of financing, stating that creation of the much talked about centralized electronic medical records system would vastly reduce paperwork. Additionally the program calls for centralized bulk purchasing of medications as providing savings.
What the bill doesn't acknowledge, however, is that these can only be applied once in any cost-benefit analysis, and only as present value discounts against the up front costs. Any projected savings are likely to be infinitessimal over the life of such a program.
Ultimately, though perhaps currently unintentionally, this bill is going to marginalize the amount of money a physician that works for a participating entity can earn. The bill offers that fees paid toward physicians will be negotiated up front. This means the baseline budget will be established based on current salaries. Many doctors will be unlikely to feel any difference up front.
However, Section 202 tells us that the "budget shall be negotiated anually, based on past expenditures, projected changes in levels of services, wages and input, costs and proposed new and innovative programs."
State Directors will be in charge of determining how much physicians are paid, and these State Directors will ultimately answer to a National Board.
Overall, this will eventually lead to a pay-grade system similar to that of federal government employees. The ever evil "profit motive" will disappear from the medical field as an incentive for doctors to aspire to great things, and the system as a whole will descend into mediocrity.
Doctors will be able to opt out of the federally reimbursed system in order to set up their own private practices, in which they can be paid in full via private transaction. These doctors, driven by the aforementioned profit motive, will ultimately become the best, not to mention most expensive, doctors in the country. Think James Andrews, of pro football shoulder surgery fame.
The only problem with this, obviously, will be that only the rich who can afford it out of pocket will be able to afford the best service, and the rest of us will be left to mediocre doctors who could care less who walks in the door next.
Personally I really think I'd rather my doctor's office not turn into the DMV.
About that National Board
The National Medical Board will be 100% coercive in nature, and will be appointed strictly at the discretion of the President. It will be made up of 15 members, and will contain a minimum of one of each of the following:
A. Health Care Professionals
B. Representatives of Institutional Health Care
C. Representatives of Health Care Advocacy Groups
D. Representatives of Labor Unions
E. Citizen Patient Advocates
I have no problem with a board made up of some combination of A, B, and E, but C and D are unconscionable. Health Care lobbyists and Labor Unions should not be allowed to have any presence on a national board of directors determining what is or is not good for our health care.
Back to Reality
I think a lot of people who read this bill will think it makes a lot of sense. The problem with those people is that they don't actually think about long term effects of such a bill.
It sounds great to someone who can't afford their own health insurance to be told they'd have "free" healthcare. They feel like they're being given a leg up in life in general, and some may feel vindicated that the "rich" are being forced to pay the freight for them. The problem in that outlook is that you haven't taken anything back from the "rich," you've just given them more power to make decisions over your life. Since you're not paying anything, you don't care what the government does, so you don't bother to pay attention. But the people paying the freigh most certainly care, and they're going to get what they want for their money. Nothing in the system changes other than the way the power is concentrated, and it only gets concentrated higher up.
Do we, as a country need to aid the health care industry in becoming more efficient? It's undoubtedly a great debate. There appears an urgency growing to do something about an industry that is being painted as criminally inefficient and overly profitable.
I would hope one would realize what a contradiction that is. Criminally inefficient companies simply cannot be profitable, much less overly profitable, because other, more efficient companies come in and get the business instead. The only entity that can be as inefficient as it pleases and still charge us whatever it wants is the federal government.
This bill wants to take 15 years to phase this plan in. Since an air of emergency and bile against an industry that is perceived as inefficient is what drives the yearning that the federal government replace the industry altogether, I ask you, the reader, if you feel 15 years is an acceptable phase-in period. I sure don't.
I think the industry should be more efficient, yes. But I don't believe for a second that it isn't already as efficient as the market allows it to be. I think, if anything, the government would be better off to incentivize the industry to expand its electronic capabilities as far as record keeping via grants or tax breaks. Rest assured, I sure as hell don't believe the government could ever make the health care industry more efficient.
Incalculable start up costs? Even further incalculable operational costs? Stifling of economic growth via over-taxation to support those incalculable costs? Disincentivizing personal and overall growth? Mediocre, DMV-like service at the doctor's office? Lobbyists and Unions determining Health Care Policy? Further concentration of political power at the highest levels?
Count me out.
UPDATE: See my follow up post about what a reasonable solution would be.