Wednesday, October 14, 2009

National Center For Policy Analysis: Baucus Bill Will Force Me to Triple My Expenditures on Insurance

What Will It Force You To Pay?

According to the National Center For Policy Analysis, PricewaterhouseCoopers has analyzed the Baucus bill and found the following:

"* For individuals making $34,140 (three times the Federal Poverty Level) the Baucus health care proposal could mandate up to $4,097 in annual premiums, a sum which could have been spent on over nine months of food, almost four months of housing or well over a year of utilities.
* For a family of four making $69,480 (300 percent above poverty) the Baucus bill mandates annual health insurance premiums of $8,338, which would be worth the equivalent of over 10 months of food, four months of housing or almost two years of utilities.
* For individuals earning $45,520 (400 percent above poverty) Baucus mandates $5,462 for health insurance, or over a year of food, four months of rent or a year and a half of utilities.
* For families earning $92,640 (400 percent above poverty) Baucus mandates $11,117 in health premiums, the equivalent of over a year of food, five months of housing or two years of utilities."

According to the NCPA, those numbers include the subsidies for health insurance in the Baucus bill; i.e. these costs are after subsidies. If true, when I look at that and compare it to what I currently pay for catastrophic insurance to go with my health savings account, the Baucus plan will (if passed) force me to spend more than three times what I currently pay for insurance, none of it going into savings.

Frankly, this makes me very angry. I have other needs and if the State forces me to spend at this level for unwanted insurance, my overall quality of life will decline, and I will probably have to increase the fees I charge for my services.

Upon reading about these mandates, one of my friends said:

"That's just for insurance??? They probably have deductibles so anyone needing any care would have to pay that ON TOP OF that amount for insurance? you would not necessarily get ANY medical care!"

She added:

"Man, with that much money per year I could do so much more with wellness care AND a health savings account. How on earth could anyone think it will save us money to use this plan? Propaganda and lack of info will enroll a nation in a plan that wastes our money and leaves us without the true health care you and I desire!

Who will benefit? Government workers & pharmaceutical companies, and whoever else has their hand in the cookie jar! It really bothers me this stupid plan."

Reading the original document put out by PricewaterhouseCoopers (you can download it at the NCPA site), I feel amazed that people would pay more than $1000 per month ($13K per year) for medical insurance for a family of four right now (before "reform"). That amounts to spending $250 monthly on every member. That would buy 30 pounds of grass-fed ground beef; up to 8 acupuncture or herbal treatments in my office; ten bottles of vitamin D3; and at least two "preventive" visits to a physician's office.

It seems to me that one would get more value, i.e. more real health care, by taking most of that $250 and actually spending it on health care every month, rather than throwing it in the insurance hole. By health care, I don't mean drugs and surgery (disease care), I mean quality food, stress reduction, play, exercise, vacation, necessary supplements, consultation with a health care professional, herbal medicines, etc. But I think differently than most people.

I pay a much lower premium because I elect to carry only catastrophic insurance with a $5K deductible per individual. I pay for real ongoing health care (quality food, vitamin D3, herbal medicines, etc.) out pocket as I go along, and put the difference in savings. I have not yet found out if the "reform" will allow me to continue with this choice, or will force me to pay triple for something I don't use.

PricewaterhouseCoopers estimates that with the Baucus "reform" that $13K per annum cost of medical insurance will increase to $26K per annum (family of four) by 2019. Without the reform, it will increase to $22K by 2019. A large part of the increase is simply inflation (decline of the value of the dollar). I expect the price tag in either case will ultimately be much higher since I expect dramatic inflation in the near future as a result of the FED flooding the market with "stimulus" money.


Ashley said...

I am very, very upset about this as well. Not only because of what this means for my personal finances, but also because I'm going to school for my ND. I worry about how these changes will affect my future practice and fees. I don't want my money going towards a system of medicine (allopathic) that I don't utilize or believe in. Do people really think that having insurance is going to make us any healthier as a nation? With a few exceptions, allopathy harms more people than it helps.

Suzan Robertson said...

Wow that is totally insane. We don't have "health" insurance and we don't want it. If we are forced to pay those premiums, I really don't know what we would do. Maybe leave the country and live somewhere where the word liberty means something.

Health Test Dummy said...

I, in no way admonish this bill whatsoever, for sure, but I calculated it out and that figure for my salary range is about what I pay monthly for insurance for my two boys (company pays for mine and hubby is not on there, because we can't afford it).

But you say it's triple what you currently pay? Interesting.

Still, I HATE this horrible 'socialized health' idea. Hate it, hate it, hate it.

Health Test Dummy said...

Scratch that. I recalculated and it would be x3 of what I am paying now.

Ross said...

Something got miscopied in the quoted numbers or the original source is badly mistaken. The income and poverty multipliers don't match up at all.

When I compare the actual proposal to COBRA costs for my current coverage, the result is quite competitive. I make more than 400% of the poverty income and currently would pay $1900/month or $22,800/year to maintain my current coverage without employer assistance.

Also, when I went independent last year, I basically had no choice but to pay the exorbitant COBRA fees as it was impossible to get equivalent family coverage for a better price here in sunny California.

At $11,117/year, this proposal represents better than a 50% discount for coverage for my family.

Now, I do fall into the category of people who does not consider health insurance optional (pregnant wife, small child, etc.) and would find a way to get coverage even if that means leaving the country for Canada or New Zealand in order to prevent a medical disaster from forcing me into bankruptcy. I understand and agree with your argument that people should be allowed to opt-out, but for those of us who would opt-in anyway, the costs are substantially better than the current situation.

Charles R. said...

Don, you left out half of the story.

The analysis by Price Waterhouse was commissioned and paid for by the health insurance industry. PWC is well known for being able to provide you the results you want and are willing to pay for.

The push-back on this report, and how deceptive it is, was so great that they felt obligated to issue a disclaimer:

America's Health Insurance Plans engaged PricewaterhouseCoopers to prepare a report that focused on four components of the Senate Finance Committee proposal:

Insurance market reforms and consumer protections that would raise health insurance premiums for individuals and families if the reforms are not coupled with an effective coverage requirement.

An excise tax on employer-sponsored high value health plans.

Cuts in payment rates in public programs that could increase cost shifting to private sector businesses and consumers.

New taxes on health sector entities.

The analysis concluded that collectively the four provisions would raise premiums for private health insurance coverage.

As the report itself acknowledges, other provisions that are part of health reform proposals were not included in the PwC analysis.

The report stated on page 1:

"The reform packages under consideration have other provisions that we have not included in this analysis. We have not estimated the impact of the new subsidies on the net insurance cost to households. Also, if other provisions in health care reform are successful in lowering costs over the long term, those improvements would offset some of the impacts we have estimated."

So basically, as requested, Price Waterhouse Cooper included in their analysis everything that would increase costs, while avoiding any analysis of those features that would reduce costs.

This was just propaganda from the insurance industry, not anything resembling an objective analysis.

Don said...


Do you have any analysis that has shown costs will decline?

Why should I expect a decline in costs when the plan basically repeats the Massachusetts plan, which has NOT reduced costs to individuals.

And when I have NEVER seen a government plan meet a budget, or cost less than a private plan.

As it stands, if the plan forces me to switch from my HSA insurance to anything listed in this analysis, I will pay 3 times more than what I pay now. I doubt I will qualify for subsidies that will offset that increase.

Finally, why do you believe politicians rather than PWC or any other actuarial firm? Politicians notoriously lie or simply lack information. Obama told us he would pull out of Iraq and restore civil liberties. Haven't seen any of that happen.

People commonly paint this picture that shows the private sector as run by crooks and liars, and the government run by saints who want to protect us from those evil, profit-seeking businesses. That's certainly the way politicians want you to think, so you will hand more and more power over into their "benevolent" hands.

This gets at precisely why I don't want politicians dictating my life or how I spend my money. Simply put, politicians are actually more likely to lie, cheat, and steal, simply because they have no competition in their business. They have guns and police forces and as soon as they write the laws, they can use those forces to make any of us to do whatever they want to serve their own interests. No insurance company can force me to get any medical procedure, or to waste my life in a stupid war. Government routinely does such things.

This battle is not about big daddy government saving us from the evil insurance companies.

Charles R. said...

"Finally, why do you believe politicians rather than PWC or any other actuarial firm?"

I do believe PWC. They stated they left out any cost saving aspects of the bill in their analysis. That was their own statement, not that of any politicians.

Don said...


Put more succinctly, I wonder why you think I should trust politicians trying to sell me on giving them more of my money (taxes) and more control over my life (expenditures), without any proof that their plan will benefit me, and without any evidence that government can control costs, and not trust an entity (PWC or private insurance companies) who (in the absence of government intervention) can't force me purchase anything that they have to offer, but have to win my loyalty by showing superior results?

Senta said...

Boy, great timing for the poor insurance companies. With unemployment so high, they have been losing a lot of money on employer-sponsored health care. And a lot of unemployed people don't buy health insurance because they would rather eat.

So now the government fixes the price of insurance and forces people to buy it. This will also cause the cost of employer-sponsored health insurance to rise, so the employers will have to lay off/outsource more people. What a system!

This is not health care. It's a gift to the insurance and pharmaceutical industries. Period.

Charles R. said...

"....have to win my loyalty by showing superior results?"

So how does an insurance company with a monopoly in a state have to show superior results? And since something like 80% of the health insurance market is overly concentrated, that's what we have: monopolies controlling the markets. They have no requirement or even incentive to provide a quality product.

(And that's largely because they have an anti-trust exemption, so they are insulated from government regulations. So it's not, as you argued, BECAUSE of government regulations.)

Their only fealty has to be to their shareholders, who want them to spend as little money on care as they can get away with, so their profit margins go up and Wall Street pumps up their stock price.

Corporations are by nature designed to make money. If they can do that by providing a quality product, they will. If they can do better by providing a shoddy product, they will do that, and the health insurance companies have shown that's what their choice is.

I have never said, and never will make blanket generalizations like you have made here:

People commonly paint this picture that shows the private sector as run by crooks and liars, and the government run by saints who want to protect us from those evil, profit-seeking businesses.

That's a perfect straw man argument. Private enterprise does some things well, and government does some things well. For instance, the VA hospital system, which is obviously government run, is rated at or near the top in both patient satisfaction and outcomes. That is not anecdotal, that is factual.

But I'm gathering you would do away with the VA healthcare system, because by definition it's a bad thing, right?

Dyea said...

So Don, you

1.) Made no refutation to Charles statement that "Price Waterhouse Cooper included in their analysis everything that would increase costs, while avoiding any analysis of those features that would reduce costs."

and 2.) Recommended that Charles distrust "politicians" but emphatically trust bought and paid for "statistics" commissioned by a mega-corps with millions or billions to lose.

I am not in favor of the mandatory aspects of this bill but when I read posts on the health care subject here I get the impression that you are so emotionally involved in your argument that you would rather make your case than hold yourself to a rigorous standard in your logic so that your argument is sound.

Just a thought

Don said...


How can I refute his point? I didn't even try because he correctly quoted the document showing that they did not include those items in their analysis. Instead, I implicitely I accepted his point when I asked him for a better analysis, if he has access to one.

Then, I pointed to Massachusetts. It is a fact that costs to individuals have increased under the universal plan, contrary to the promises of the politicians. Show me I am wrong.

The rest of my response focused on what I see proponents of this bill doing, namely painting it as "benevolent government fighting evil corporations." I will repeat my point:

Absent government interference, no private corporation can force me to purchase an insurance policy or any other product. Only the government can force me to purchase something I don't want, under penalty of imprisonment or fine.

As for the millions or billions the insurance companies stand to lose, have you ever thought about how many people work for insurance companies? How many will lose their jobs if these companies start losing money because they can't compete with a government plan that only looks cheap because it is financed by deficit spending?

And what about the TRILLIONS in tax dollars the government stands to lose?

If the bill is defeated, insurance companies will have to compete for my business. I will be able to choose to forego insurance whenever I decide it meets my need. On the other hand, if it passes, I will be forced to purchase insurance that fits the law, and to pay taxes to support the government subsidies, either directly or by increased costs to me of products and services produced by those who will be shouldering the burden. Yes, I oppose this vigorously.

As for the PCW numbers: Ross commented above that he pays $1900 per month (nearly $23K per annum) for a family of four. That comes to $475 per person, more than 3 times what I pay. The PCW report states that the current nationwide average for a family of 4 is about $13K. So, based on Ross's input, the PCW report, if anything, underestimates current and future costs.

Right now I have the option not to pay that $475 per month premium . I pay only about $150 per month for my current medical insurance policy, because I chose catastrophic only with an HSA. So Ross is already paying 3 x what I pay. If the pending bill forces me to purchase a policy like Ross's, it will increase my costs by 3x. So I fail to see how the PCW data is misleading in the cost, other than leaving out subsidies or theoretical savings.

As for subsidies, I will either pay directly for them via my taxes, or indirectly via increases in costs of goods and services I purchase from those who do get increased taxes, or through inflation as a result of the government borrowing or printing money to cover the costs of the system. There is no free lunch.

I don't know yet if this Baucus plan would force me to purchase greater coverage, but it sure looks like they want everyone to have plans that I rejected because of cost. Government always promises they will give us more for less, but I have never seen it happen yet.

More below...

Don said...

Next, I didn't recommend that Charles distrust politicians,or emphatically trust PCW, I asked him for a reason why he trusts or I should trust politicians more than PCW. Essentially, I asked for evidence that politicians and promoting this bill are more trustworthy than PCW or other interested parties.

If the politicians are more trustworthy, I wonder why they are fighting against citizen requests to post the bill for at least 72 hours before any vote on it, so that we can comment on it?

BTW the fact that someone pays for an analysis does not automatically mean that the analysis is false. When I go to an auto mechanic, I ask him to give me his diagnosis. Although he stands to profit, his reputation rests on giving me an accurate diagnosis.

So the burden of proof falls on those who support this bill. It is your job to show me that it will reduce my costs and improve my health care.

It comes down to this: You want to use the government to take my liberty and hard-earned money from me, promising in return things I don't want and which I doubt the gov't can deliver, and when I resist it, you consider me unreasonable and "emotional."

This seems to me to exemplify the authoritarian (agricultural) mindset that Daniel Quinn calls "the Taker." There's only one way to live, and that is as a slave to the authorities.

Perhaps you don't mind being robbed, but I resist it.

Steve said...

I too hate the Baucus Bill, but the bill coming out of the House will be a good one.

BTW none of the health bills being concerned are socialized health care bills, because none of them are a single payer.

So I have a simple question; Who here thinks the US should end the Medicare Health Care System?

Ross said...

Personally, I feel that every dollar spent on insurance company employees is worse than wasted, it's spent against our medical interests.

Some fraction of those private insurance employees whose jobs you're concerned about are paid to find ways to deny you access to coverage. Their entire goal at work is to seek out ways to game the rules to make sure that if you're a risk, you don't have coverage.

Another group of insurance company employees are paid to deny claims and on followup make it harder for you to get full compensation for claims. You may not see the impact of this directly, but if you talk to your doctor, each office has to hire one or two people just to fight against this group. Hospitals have entire departments dedicated to this task. You and I pay for both sets of salaries.

Still a third group of insurance company employees are paid to go to state and national government officials and convince them not to interfere with their revenues and profits.

Sorry, but this registered Republican is offended not just at the $10 billion in profit that the insurance companies fleeced from the health care market last year, but almost every penny of the $400 billion in medical insurance company revenue that was paid out of pockets like mine and did not make it into the pockets of doctors, hospitals, testers, equipment makers, etc.

I agree that the current bills in congress will do nothing or make the situation worse, but I disagree as to why that is. In my opinion, those bills do nothing or make the situation worse because they are written to protect the interests of private for-profit insurance companies. Public option, I can live with. Single payer, I can live with. Non-profit insurance companies I can live with. Status quo? Not so much.

Don said...


The insurance industry has a profit margin of only 3.3%. There are 85 other industries with greater profit margins.

From a WSJ article (link below):

"If that's what constitutes windfall profits, most of corporate America would qualify. Take aerospace or machinery -- both 8.2% in 2007. Chemicals had an average margin of 12.7%. Computers: 13.7%. Electronics and appliances: 14.5%. Pharmaceuticals (18.4%) and beverages and tobacco (19.1%) round out the Census Bureau's industry rankings. The latter two double the returns of Big Oil, though of course government has already became a tacit shareholder in Big Tobacco through the various legal settlements that guarantee a revenue stream for years to come."

If 3.3% profit is a reason to nationalize an industry, then I guess we have even more reason to nationalize computers, electronics and appliances, pharmaceuticals and beverages and tobacco.

Ah yes, beverages...Congress can pass a law requiring that everyone purchase 4 cases of Coca Cola every month, to "keep costs down" and eliminate "obscene profits" and "make beverages available to everyone." (sarcasm intended)

Don said...


So where will I find that better analysis?

"(And that's largely because they have an anti-trust exemption, so they are insulated from government regulations. So it's not, as you argued, BECAUSE of government regulations.)"

How do you figure that? If they have an exemption, that means regulations are exempting them and thus protecting them from competition. That means Government is protecting them from competition.

The monopolies are created by government intervention preventing competition -- like laws the laws you appear to favor, which prevent people from purchasing insurance across state lines/ preventing companies from selling across state lines. Allowing interstate sale of insurance would introduce competition. Or laws the make it difficult if not impossible to start a new insurance company.

You complain about overconcentration and monopolies on the one hand, then oppose one of the changes that would introduce competition and eliminate intrastate monopolies. Hmmm...

I know of NO example of any monopoly that has arisen without government producing it, and this is no exception.

Don said...


"This is not health care. It's a gift to the insurance and pharmaceutical industries. Period."

Congressional proponents of the bill seems to agree with you. According to the Washington Post, they plan to finance the plan by "imposing a series of fees on insurance companies, drugmakers, medical device manufacturers and other sectors of the health industry that stand to gain millions of new customers under the legislation."

Don said...

Charles and Steve,

I would get rid of the VA and Medicare. Not suddenly, but I would phase them out.

Do you realize that we had no Medicare until 1965? Before then, people saved for their own needs. They could save because they weren't being taxed for Medicare, and because the dollar was stable, still backed by gold and silver.

As for the VA, it exists to serve the military. It is a part of the war machine. That is a whole other subject, but I will say, I oppose all aggression. Not so for politicians. If we didn't have wars, would we need a VA?

Ross said...


Your response discussed the $10 billion profit number and how "that's not so bad." but I'm not hugely concerned with insurance company profits. I'm much more concerned about how the other 96.7% of gross revenues are spent to prevent and interfere with effective health care. All of the employee groups that I mentioned who act against our health-care interests are paid from gross revenue, the $400 billion number, and not from profits.

I believe that non-profit insurance companies in a mandatory coverage system would be a fundamentally different kind of beast and we would rid ourselves not just paying for the profit but also paying for the whole structure built to maintain and perpetuate those profits. Exactly how much would be saved isn't clear, but the Swiss have non-profit insurance and (fully subsidized) mandatory coverage and the fraction of health care revenue pulled aside by insurance is substantially smaller than in the US.

Steve said...

I would get rid of the VA and Medicare. Not suddenly, but I would phase them out.

Do you realize that we had no Medicare until 1965?

Yep and many people who retired before Medicare could no longer afford health care. I know I will not change your mind on this subject, but I wonder how many of those who oppose government run health care actually know Medicare is Government Run Health Care.

While I disagree with you on this subject, I must say you in consistent in your position. So is any one else willing to give up their Medicare?

Don said...


No matter how you do it, private or public, insurance is a middle man taking a cut of your available health care dollars. The way around this is to pay your dollars directly to the people who provide health care. As I said, get catastrophic insurance and use income and savings to pay for the maintenance care.

In New York a physician tried to set up a practice where people would pay him $79 per month and $10 per visit (unlimited visits) to actually get health care without introducing the third party drain. The New York state insurance regulators told Dr. Muney that his plan is an insurance policy and he has to be licensed to sell insurance.

"In other words, for about $1,000 per year, his patients do not have to worry about routine illnesses or anything else that can be taken care of in Dr. Muney's offices. " quoted from the following:

I like Mr. Jones's comment:

"Give me a break. The government cries out of one side of its mouth that society has an obligation to ensure that every person has access to health care; then, out of the other side, it berates doctors who do something to make that goal a reality. What the government really wants is complete control of everything. If the government really cared about the people, New York state would have no problem with what Dr. Muney is doing. In fact, the state should be recommending that idea to doctors all over the state. "

I don't hear of any such ideas in Congress's "reform" either.

A perfect illustration of how the State prevents free market from providing low cost health care.

This fellow points out that his wife ( a pediatrician) and her patients have the exact same trouble with Medicaid. Payment is denied:

Government health care runs up against costs too -- and political solutions can be nasty @

Don said...


Joanne at Open Mind Required said...

As a veteran who takes advantage of the one benefit I have for serving four years, I would not like to see the VA go away. I carry no health insurance, and the VA is a backup in case anything happens to me. I think it's a wonderful benefit for all who have served in the Armed Forces.

Charles R. said...

"I know of NO example of any monopoly that has arisen without government producing it, and this is no exception."

Ummm, Don. You speak as if there is some clear, inviolable, distinction between government and business. As if you have business lined up on one side and government lined up on the other.

Where do you think the idea for the anti-trust exemption came up? It came from business, and it came through bribery of politicians.

It wasn't the government out-of-the-blue imposing this exemption. It was the result of lobbying from the businesses that would benefit from it.

You act as if the insurance companies just got up Christmas morning and found it under the tree.

Charles R. said...

And if we're comparing medical insurance, Don, I have pretty much the same kind of policy you have. Basically high-deductible ($5K), catastrophic coverage.

And I spend the same amount or more as you do on 'healthy living." I buy grass-fed beef, belong to a health club so I can swim, spend a lot of money on supplements and have for years.

The difference is I'm 55, so my insurance is $550/month. And my insurance company raised my rates 20% last year for no stated reason. And because there is a monopoly in my state, I have no choice but to take whatever they give me at whatever they charge me.

A public, not-for-profit health insurance option would at least give me a choice and provide competition to the private insurance companies in my state.

And this idea you keep bringing up about allowing insurance companies to sell across state lines has been debunked thoroughly by everyone who actually studies this issue, and doesn't just repeat Republican talking points. As I stated before, it will cause a race to the bottom, and no effective accountability.

Don said...


Of course monopolies came from bribery of politicians. I never said otherwise. It is the collusion of business and government. But without government interference, no monopoly would arise. Government is the key to monopoly.

No one has proven that interstate commerce in insurance would have ill effects. Your idea that all insurance companies would move out of state holds no water. Then the competitive advantage would go to those who did not move out of state. Besides, as I said, we don't need laws regulating insurance companies. The consumers and the market can regulate them by voting with dollars.

I repeat, regulations prevent competition. Take a look at what New York State did to squash the competition Dr. Muney would have given to other physicians and insurance companies.

By the way, I am not a Republican and I am not repeating Republican talking points. I am a market anarchist.

As for society, what we have is a small group of people running a protection racket, lording over the populace, using fear tactics and force (claiming to "protect" us from various bogey men) to extract from us what they want.

Our species lived for millions of years without this and, if we finally realize that we can't go on with agriculture, we will probably return to the tribal way again, because that is what works for our species.