Ranking US Health Care II

Health Insurance Co. profitability, via Mark Perry at Carpe Diem,

Health Insurance Companies Rank #86 By Industry Profit Margin, Earning $98 on Average Per Policy

[h/t Coyote]

Update: From Calvin Woodward (AP) -

…
Health insurance profit margins typically run about 6 percent, give or take a point or two. That's anemic compared with other forms of insurance and a broad array of industries, even some beleaguered ones.

Profits barely exceeded 2 percent of revenues in the latest annual measure. This partly explains why the credit ratings of some of the largest insurers were downgraded to negative from stable heading into this year, as investors were warned of a stagnant if not shrinking market for private plans.
…

See: FACT CHECK: Health insurer profits not so fat

Ranking US Health Care

One of the “statistics” cited by critics of US health care is the number 37, assigned by the World Health Organization.

As Carl Biailk (WSJ) observed,

Among all the numbers bandied about in the health-care debate, this ranking stands out as particularly misleading. It is based on a report released nearly a decade ago by the World Health Organization and relies on statistics that are even older and incomplete.

No single ranking can capture the complexity of the US health care system, and this ranking appears to be particularly poor in evaluating actual performance.

See Ill-Conceived Ranking Makes for Unhealthy Debate

About to Get Very Ugly

On Wednesday, Democrats blocked S. 1776, designed to fix the Medicare physician payment formula. In doing so, they may have gained a mortal enemy in the AMA.

To this point, the AMA was cautiously optimistic about reform possibilities. This seems to have evaporated:

Congress created the Medicare physician payment system, and Congress needs to fix this problem once and for all to fulfill its obligation to seniors, baby boomers and military families. Permanent repeal of the Medicare physician payment formula is essential to comprehensive health system reform.

[AMA deeply disappointed Senate has failed seniors, baby boomers and military families by blocking S. 1776]

Coupled with last week’s health insurance industry shot across the bow, this can only mean a very noisy Senate-House ObamaCare legislation merger, and even more contentious full body approval.

If this legislation moves forward, Congressional Democrats are about to learn a very costly lesson: once the groups you invited to dinner discover they’re actually on the menu, nobody sticks around very long, including and especially your voting constituents, who are directly affected by this legislation. That's most of America.

Severe Economic Dishonesty

Now that we’re back in high season for health care reform debate, here’s another example of politicians blatantly ignoring the truth, and their own past statements. This example is exceptionally disturbing, given the size of the economic impact this reform will have, along with universal personal effects, not just protected groups or special interests.

The Baucus Bill, as it has become known, is being touted by the Obama Administration as "deficit neutral," and even more aggressively as reducing the overall deficit. This is a bald-faced lie.

Peter Orszag, current Office of Management & Budget (OMB) Director, has put his stamp of approval (unsurprisingly) on the Baucus Senate proposal, going as far as calling it "fiscally responsible," in response to a CBO finding last week that would supposedly reduce $81 billion from the deficit over 10 years.

It isn’t, and it won't, and he knows it. Mr. Orszag's previous job was head of CBO (Congressional Budget Office), where he stated in 2008 that "The federal budget is on an unsustainable path." This was before the financial meltdown, and largest post-WWII incremental deficit spending stimulus, much less a multi-trillion dollar additional entitlement.

Devilish detail: CBO is forced to score legislation given static projections, which are almost universally false, and refrain from ruling on the overall economic veracity of those projections. As Gene Epstein notes in last Monday's Barron's,

The problem, [Douglas] Holtz-Eakin [also ex-CBO director] explained, is that when it comes to "scoring" a specific piece of proposed legislation, the CBO's hands are tied. It cannot use its discretion to question the plausibility of a proposed bill. It must, therefore, "accurately assess the legislative fantasy presented to it."

Basically, the projections are a joke.

Further, in 2008 Mr. Orszag (see above) apparently thought that Medicare physician reimbursement would increase, but now mysteriously believes the opposite, which drives the "deficit reduction" numbers conclusion:

But a big component of the new bill was that physician payment rates under Medicare continue to be cut, one of the very things CBO director Orszag had specifically dismissed as unlikely. So OMB director Orszag might have explained, in the interests of fiscal responsibility, why he had changed his mind.

Taxes must and will go up as a result of Baucus, and there will still be major dislocations and deficits as a result of the "revised" proposal. The representation of this proposed legislation to date has been excessively economically dishonest.

It would be most helpful if the media would actually do their jobs and report this.


Kudos to Gene Epstein - CBO to OMB: A Tangled Tale (Barron's, subscription required)

See also: The Baucus Bill Is a Tax Bill (Douglas Holtz-Eakin, WSJ)

Danger Will Robinson! Economic Danger!

ObamaCare is a looming economic disaster.

It will pile on to the largest post-WWII deficit stimulus in US economic history, creating huge additional tax disincentives to start businesses, and crowding out productive private investment.

Incentives are the gravitational force of economics. Removing incentives stalls economic growth, most often via taxes. Obama’s idea to fund his plan fails miserably, and taxes the largest economic producers:

The House bill proposes to raise the highest personal income tax rate by 5.4 percentage points. This is on top of the Obama administration's plan to raise the top rate by another 4.6 percentage points next year. The combined 10-percentage-point increase raises the top income tax rate to 45%—an economic growth-destroying level not seen since the early 1980s. Sen. Max Baucus (D., Mont.) proposes, instead, to tax some health insurance premiums.

In neither bill do higher taxes finance the proposed additional spending. Should the Medicare savings fail to materialize, as we* believe they will, the spending in either bill will add more than $100 billion per year in perpetuity to the already soaring national debt. [my emphasis – Pub.]

*John F. Cogan, R. Glenn Hubbard, and Daniel Kessler, Doubling Down on a Flawed Insurance Model, WSJ, 9/25/09

Notably, these new taxes start in 2010, a really stupid idea when we're still in an economic recovery, but health insurance full-coverage doesn't begin until 2013, comfortably after the 2012 election. Also note the indefinite expiration “in perpetuity” cost. That's not funded, either.

Barack's economic timing could not be worse: leftover misguided Depression-era, unfunded social welfare programs like Social Security, Medicare and Medicaid are about to step on the baby - boomer demographic landmine, effectively bankrupting them before the inevitable temporary ineffective politically expedient non-fix "fix."

Somehow, President Obama thinks adding to the problem will solve it.

He’ll make it far worse.

When is a Tax Not a Tax?

When is a tax not a tax?

Apparently, when President Obama says so.

On the Sunday shows this weekend, Mr. Obama continued his sale of health reform. Among his comments on ABC’s “This Week” program was the statement “For us to say you’ve got to take responsibility to get health insurance is absolutely not a tax increase.”

George Stephanopoulos, to his credit, pressed Mr. Obama on this, looking up the definition of tax in the Merriam-Webster dictionary.

[full exchange available here.]

President Obama seems confused by this health care tax increase, because those who would be required to purchase insurance would receive some benefit in return. But The Wall Street Journal observed, “what doesn't count as a nontax under Mr. Obama's definition? All taxes can be justified in the name of providing some type of service, however wasteful.”

[Obama’s Nontax Tax, WSJ, 9/21/09]

As we (and many others) previously remarked, requiring people to spend their money is absolutely a tax. And because many of the affected people currently pay $0, choosing not to carry health insurance, it is an increase. So if the reform proposal backed by Mr. Obama passes, including mandatory coverage, it will be a tax increase.

Farewell, Free Speech

The debate over health care has taken a frightening new turn. David Henderson of EconLog blogs about the HHS threatening Humana and demanding it stop mailer because its information runs counter to the current administration's narrative on health care reform.

One of the ways that governments try to "win" debates is to make debate by the other side illegal. This is what HHS is doing, at the behest of Senator Baucus.

The HHS threatened to take action against Humana if it didn't stop sending out its mailer.

For years, various commentators have said that Friedrich Hayek, in The Road to Serfdom, and Milton Friedman, in Capitalism and Freedom, exaggerated the dangers to freedom of speech from government control. But also for years, drug companies have feared criticizing the FDA because the FDA has so much discretionary control over their economic livelihoods. Now HHS has upped the ante. Will the defenders of freedom of speech step up to defend Humana's rights, as opposed to Humana's statements. How many people will there be who disagree with what Humana said, but who defend (I don't even need "to the death"--I'll settle for a letter and postage stamp) their right to say it?

When we allow the government to exercise its might to strip us of our basic right to speech, to stifle opposition at its whim, then we are in deep trouble. Then, we are on the road from freedom to tyranny. To serfdom.