It's time to stop playing defense on the healthcare issue. The country overwhelmingly supports the public option, I believe the White House is committed to the public option, and if public option can be made the ONLY viable option for Democrats, we will win.
Given the obvious benefits of the public option it is utterly extraordinary that the White House is playing defense on this issue. When one further considers that the Baucus Plan will cause an explosion in private health insurance premiums and INCREASE the rate of healthcare cost inflation, it is simply inexplicable that CBO cost estimates of a public option have been dominating media coverage.
It's time to go on offense. The Baucus Plan will be an economic disaster on the order of the burst housing bubble, and it's time we start making that argument.
Let's start with a few basic facts. Healthcare cost inflation has been running double the general rate of inflation for decades. Healthcare costs are the entire issue in this debate; achieving universality is essential, but it is only possible if healthcare costs are constrained. The mandates in the Baucus Plan will artificially and forcibly increase demand, further fueling healthcare cost inflation. And the cost of increased healthcare inflation DWARF the costs of any public option. Consider that even if the Baucus Plan didn't increase the rate of healthcare inflation, by failing to reduce healthcare inflation to the level of the general inflation rate we will be spending an additional $1.4 trillion PER YEAR in year 10 of the Baucus Plan, or more than the CBO's estimate of the entire 10 year cost of the Kennedy-Dodd Plan!
To put it another way, if can just reduce the healthcare inflation rate by ONE POINT, from the 6.9% rate for 2008 to 5.9%, we will reduce healthcare expenditures in this country by more than the CBO's estimated cost of the Kennedy-Dodd bill. The public option, by creating a government program that will compete with the rapacious private health insurance industry, is the only means (short of single-payer) of reining in runaway healthcare cost inflation.
As I've explained, it is preposterous as a matter of basic economics to believe that the healthcare cost inflation rate will be reduced by the compulsory increase in demand for private health insurance contained in Baucus's mandates. If you don't believe that (or didn't take Econ 101 in school), the just look at Massachusetts. Romney's mandates in Massachusetts, even though not as broad as the mandates in Baucus's plan, have caused private health insurance premiums to EXPLODE, causing the costs of the four Commonwealth Care plans in Massachusetts to increase at a rate of 9.4% in the current fiscal year, far higher than the national rate of increase.
This is from a Harvard Medical School analysis of the Massachusetts plan:
The reform has been more expensive than expected (as shown below), costing $1.1 billion in
fiscal 2008 and $1.3 billion in fiscal 2009. The plan does nothing to control skyrocketing health care costs. Even before the health reform, health costs in Massachusetts were among the highest in the world, approximately 25% higher than the U.S. average. Since the reform’s passage, premiums have continued to escalate. The costs for the four (subsidized) Commonwealth Care plans rose 9.4 % in 2009, significantly higher than increases in inflation or wages.
The reasons for this are very simple. Again, from the Harvard Medical School study:
By mandating that uninsured residents purchase private health insurance, the law reinforced the economic and political power of health insurance firms. Thus, the reform augments the already high administrative costs of health care. Moreover, the agency that administers the new law (the “Connector”) adds an extra 4 to 5 percentage points to the already high overhead of private health insurance policies.
To top it off, Massachusetts reduced the number of uninsured by barely half. In sum, Massachusetts's version of the Baucus mandates hit a disastrous trifecta: higher healthcare costs and premiums, higher administrative expenses and a complete failure to come even close to universality.
Unsurprisingly, Massachusetts's government is rapidly concluding that its plan is unsustainable, with even many democrats agreeing that the costs will soon require cutbacks in the program that will again send the number of uninsured skyrocketing and require modifications that permit health insurance company to sell policies with crap coverage - higher co-pays, higher deductibles, more restrictive coverage caps, etc.
Baucus's plan will be a multi-trillion windfall to the healthcare and insurance industries and a complete disaster for the rest of us. Basic economics tell us so, and Massachusetts' experience tells us so. So why aren't we relentlessly attacking the Baucus plan? It makes sense both from a substantive economic perspective and as a matter of political strategy, because if the Baucus plan is destroyed then the public option becomes the only viable option for democrats.
Right now the Baucus plan and similar republican-lite plans are sucking the air out of the healthcare debate in Washington, D.C., and it will continue to do so no matter how much we support the public option. The first objective must be to undermine the Baucus plan by attacking it purely on economic and cost arguments. If the politicians and the media want to focus on costs, that's fine: WE WIN ANYWAY.
If nothing else, please take a moment when calling and e-mailing to support the public option to argue vehemently that WE CANNOT AFFORD THE BAUCUS PLAN; the Baucus Plan will cause healthcare cost inflation to explode and the costs of that explosion will DWARF the costs of even the most ambitious public option.
If you want to save the Public Option, let's start by destroying the Baucus plan. We'll not only start fixing the healthcare problem in this country, we may very well be saving the economy.