Peter J. Fotos

1
Health Reform at the Federal Level

• Peter J. Fotos
• Director of Government Relations
• The Heartland Institute

2
Health Insurance Coverage in the U.S.
53
3
Understanding the 45.7M Uninsured
4
Are 14,000 Americans Losing Coverage Per Day?

• President Obama on July 22, 2009 If we dont
  act, 14,000 Americans a day will lose their
  health insurance.
• The number of uninsured is a problem, but this
  quote is greatly exaggerated.
• In fact, the total number of people covered by
  health insurance has increase every year since
  the U.S. Census began keeping track in 1987.
• Furthermore, the number of people with health
  insurance increased in 2007 to an all-time high
  of 253 million.
• The percentage of uninsured within the population
  is the same as in 1998.
• About 15 of the U.S. is uninsured.

5
What is a Public Plan Option?

• This is a government-sponsored plan that would
  serve as an alternative in competition with
  private insurance plans.
• Proponents say a public option will operate on
  a level playing field with private insurance
  plans.
• BUT, a public option plan would be
• Financed by taxpayers
• Managed by government bureaucrats and
• Open to everyone.
• Presumably, this option would be modeled after
  Medicare.
• But now that public opinion is starting to turn,
  Democrats may propose a government-sponsored
  co-op also known as Fannie Med.

6
Yes, Admin Costs Are Cheaper in Government Plans
Because

• Kerry Weems and Benjamin Sasse have examined the
  administrative costs of public and private plans
  and came to four conclusions
• Private insurers build networks that exclude
  low-quality providers
• Private insurers must negotiate rates
• Private insurers must combat fraud and
• Private insurers must incur the admin costs of
  marketing.
• Medicare only covers 58 of beneficiaries health
  care expenses, which is why many opt to buy
  private supplemental coverage.

7
Will the Public Plan Option Really Compete?

• The plan will be heavily subsidized to keep costs
  down.
• As people move to government-sponsored health
  care, costs will increase rapidly forcing the
  Treasury to increase outlays to keep premiums
  artificially low.
• Lacking the same benefit, private insurance rates
  will escalate.
• The Lewin Group says enrollment will reach 131
  million.
• Like Medicare, spending in the public option will
  be controlled over time by paying less for
  services, drugs, and technology.
• Reimbursement for doctors are at 81 of private
  rates.
• Reimbursement for hospitals are at 71 of private
  rates.
• Proponents argue that a public plan will force
  the private plans to modernize, but that means
  they will forced to accept all comers, ending the
  ability to manage risk.
• Level playing field? CBO also says that without
  subsidies, the public plan will not have lower
  premiums than those charged by private insurance
  plans.

8
Can We Afford This When Medicare and Medicaid
Costs are Sky High?

• Medicare and Medicaid alone account for 4 of GDP
  today and will rise to 9 by 2035.
• Medicares current unfunded liability stands at
  37.8 trillion or 333,585 per household.
  Medicare will be bankrupt in 8 years (2017).
• Medicaid now costs over 400 billion per year and
  is projected to cost 5 trillion over the next 10
  years alone (this is without any change to
  current law).
• CBO estimates that individual and corporate
  income tax rates would have to rise by about 90
  to finance the projected increase in spending
  through 2050 without the new public plan
  option.

9
Summary

• A Public Plan option is a way for President
  Obama to make good on his hollow campaign promise
  to allow Americans to keep the health plan they
  want.
• The CBO has released a preliminary analysis of
  the Kennedy/Dodd legislation
• 1.2-1.6 trillion price tag
• 58 billion in new taxes on individuals.
• 36 billion in individual mandate penalties.
• 52 billion in taxes on employers from the new
  pay-or-play mandate.
• At least 500 billion to increase Medicaid
  eligibility.
• All this and.
• Over 33 million people will remain uninsured.

10
What Do Americans Think?

• Recent polling by the Kaiser Family Foundation
  found that the Public Plan is only popular until
  people understand its consequences.
• Only 32 support it when told that the government
  plan will have an unfair advantage over the
  private insurance companies.
• CNN recently released a poll showing 54 of
  Americans say their medical insurance costs will
  increase if the Obama plan becomes law, with only
  17 feeling their costs will decrease.
• August Rasmussen poll shows more people are
  opposed to ObamaCare (53) than support (42).
• Everyone agrees that there are inequities in the
  current health care system, but most of that has
  been created by Congress through the federal tax
  code.

11
Caveats Must Be Presented

• Free-market reforms would require some Americans
  to change their current health care plans too.
• For example
• Tax credits
• Standard health insurance deduction
• Large HSAs
• Cross-state purchasing
• Medicaid block grants