Health Reform, Or Is It?

Today, as promised, President Obama released his new health reform proposal three days in advance of Thursday’s Blair House summit. Senate Minority Leader Mitch McConnell (R-KY) said he will attend, so at least some Republicans will be there. It’s anybody’s guess whether we get health reform this year. To me, it looks like we’ll either get a watered down bill or nothing but more political posturing. I’ll bet every Congress for the next 10 years passes another health reform bill too. I just hope we don’t end up with the aimless policy making like we’ve had with energy legislation since the 1973 energy crisis.

A quick look at President Obama’s plan certainly raises concerns about busting the budget more than it already is. He would:

  1. Increase tax credit subsidies for low-income Americans to buy health insurance
  2. Close the Medicare prescription drug “donut hole”
  3. Lower the penalties on individuals who don’t buy health insurance
  4. Provide $40 billion to help small businesses afford health insurance
  5. Delay the excise tax on “Cadillac” insurance plans from 2013 to 2018 and raise the thresholds
  6. Delays the excise taxes on medical device manufacturers to 2013 and health insurers to 2014

Mr. Obama estimates his plan would save $100 billion over FY11-FY20 and $1 trillion over FY21-FY30, however those estimates depend upon a lot of changes in health decision making by patients and by providers that may or may not occur. Health insurers are already jacking up rates to beat the gun. Health monopolies are buying up competitors as fast as they can to beat the gun. If we can have “too big to fail” financial institutions, why not “too big to fail” health providers? Doctors need to provide more cost effective diagnoses and treatments, but too many are quitting the professional in disgust at the way they have to practice medicine. We’re not training enough nurses, so we’re importing them from overseas. There’s a jobs program in reverse. Meanwhile, the average American is overweight, doesn’t exercise, and eats a lot of low nutrition fast food at the urging of a lot of slick advertising.

Let’s wake up people: It’s going to take a lot more than a weak health reform bill this year to fix our health system. If we do nothing, we can just wait for higher health insurance rates to drive the next march on Washington.

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About Pete Davis 99 Articles

Affiliation: Davis Capital Investment Ideas

Pete Davis advises Wall Street money managers on Washington policy developments that affect the financial markets. President of his own consulting firm since 1992, Davis Capital Investment Ideas, he draws on 11 years of experience as a Capitol Hill economist with the Joint Committee on Taxation (1974-1981), the Senate Budget Committee (1981-1983), and Senator Robert C. Byrd (1992). He worked in the House and Senate, and for Republicans and Democrats.

Davis brought the first computer policy model, the Treasury Individual Income Tax Model, to Capitol Hill in early 1974, when he became a revenue estimator on the Joint Committee on Taxation. He formulated the 1975 rebate, the earned income tax credit, the 1976 estate tax rates, the 1978 marginal tax rates, and the Roth-Kemp tax cut. He left Capitol Hill in 1983 for the Washington Research Office of Prudential-Bache Securities, where he advised investors for seven years.

Davis has long written a newsletter on the Washington-Wall Street connection for his clients; Capital Gains and Games is his first foray into the blogosphere.

Visit: Capital Gains and Games

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