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The Obama-Kennedy Health Care reform

Medicare is now insolvent. Its hospitalization insurance fund will not be able to pay for services after 2017 unless new financing is found. Its projected unfunded liabilities (payments above revenues) between now and 2082 total $36 trillion.

Medicare underpays physicians and hospitals. (So do Vermont's Catamount Health, which pays at Medicare rates, and Medicaid, which pays even less.) Obama and his allies are planning to finance much of their "reform" by further cutting payments to providers.

But when Medicare payments are cut, providers contrive to do more billable services to keep up their revenue. So as underpayments increase, the government will have to force providers to ration care to hold down total payments, and penalize providers who earn too much.

Underpayments by government health care programs are essentially a hidden tax on health care covered by private insurance. Because government underpays, providers overcharge private insurers to close the shortfall. This cost shift results in ever-higher insurance premiums, and struggling employers start thinking about simply dropping their employee coverage. This is not a workable model.

The Obama-Kennedy plan is not single payer, because it allows private insurance to continue (under federal regulation). But it contains a "public option" program designed like Medicare. This is supposed to provide competition with private insurers.

Since the ultimate goal of Obama, Kennedy and their allies is single payer, it is perfectly clear that government benefits and favoritism enjoyed by the government-sponsored "public option" plan will allow that plan to underprice its private competitors. Eventually employers will have no choice but to dump their employees into the government plan - even if they are charged a penalty for doing so. This is single payer on the installment plan.

Obama recently remarked that "no one will take away" your current health plan, "no matter what". But a week later he amended that to say that the government won't take away your current plan - but you might lose your current plan because your employer, who owns your plan, might be forced to choose the cheaper "public option" plan.

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