the salt makers

While many Americans are upset by ObamaCare’s $1 trillion price tag, Congress is contemplating other changes with little analysis or debate. These changes would create a massively unfair form of income redistribution and create incentives for many not to buy health insurance at all.

Let's start with basics: Insurance protects against the risk of something bad happening. When your house is on fire you no longer need protection against risk. You need a fireman and cash to rebuild your home. But suppose the government requires insurers to sell you fire "insurance" while your house is on fire and says you can pay the same premium as people whose houses are not on fire. The result would be that few homeowners would buy insurance until their houses were on fire.

The same could happen under health insurance reform. Here's how: President Obama proposes to require insurers to sell policies to everyone no matter what their health status. By itself this requirement, called "guaranteed issue," would just mean that insurers would charge predictably sick people the extremely high insurance premiums that reflect their future expected costs. But if Congress adds another requirement, called "community rating," insurers' ability to charge higher premiums for higher risks will be sharply limited.

Thus a healthy 25-year-old and a 55-year-old with cancer would pay nearly the same premium for a health policy. Mr. Obama and his allies emphasize the benefits for the 55-year old. But the 25-year-old, who may also have a lower income, would pay significantly more than needed to cover his expected costs.

Like the homeowner who waits until his house is on fire to buy insurance, younger, poorer, healthier workers will rationally choose to avoid paying high premiums now to subsidize insurance for someone else. After all, they can always get a policy if they get sick.

To avoid this outcome, most congressional Democrats and some Republicans would combine guaranteed issue and community rating with the requirement that all workers buy health insurance—that is, an "individual mandate." This solves the incentive problem, and guarantees that both the healthy poor 25-year-old and the sick higher-income 55-year-old have heath insurance.

But the combination of a guaranteed issue, community rating and an individual mandate means that younger, healthier, lower-income earners would be forced to subsidize older, sicker, higher-income earners. And because these subsidies are buried within health-insurance premiums, the massive income redistribution is hidden from public view and not debated.

If Congress goes down this road, health insurance premiums will increase dramatically for the overwhelming majority of people. Even if Congress mandates that everyone have health insurance, many will choose to go without and pay the tax penalty. If you think people are dissatisfied with health care now, wait until they understand that Congress voted to mandate hidden premium increases and lower wages.

There are wiser and more equitable ways to ensure that every American has access to affordable health insurance. Policy experts and state policy makers have experimented with different solutions, including high risk pools and taxpayer-funded vouchers subsidized for those who are both poor and sick. Medicaid, charity care, and uncompensated care provided by hospitals cover some of these costs today.

These solutions are imperfect, but so are the reforms being proposed in Congress. Congress should be explicit about who will pay more under its plans.

Yes, there are death panels. Its members won't even know whose deaths they are causing. But under the health care bill sponsored by Senate Finance Committee Chairman Max Baucus, Montana Democrat, death panels will indeed exist - oh so cleverly disguised as accountants.

The offending provision is on Pages 80-81 of the unamended Baucus bill, hidden amid a lot of similar legislative mumbo-jumbo about Medicare payments to doctors. The key sentence: "Beginning in 2015, payment would be reduced by five percent if an aggregation of the physician's resource use is at or above the 90th percentile of national utilization." Translated into plain English, it means that in any year in which a particular doctor's average per-patient Medicare costs are in the top 10 percent in the nation, the feds will cut the doctor's payments by 5 percent.

Forget results. This provision makes no account for the results of care, its quality or even its efficiency. It just says that if a doctor authorizes expensive care, no matter how successfully, the government will punish him by scrimping on what already is a low reimbursement rate for treating Medicare patients. The incentive, therefore, is for the doctor always to provide less care for his patients for fear of having his payments docked. And because no doctor will know who falls in the top 10 percent until year's end, or what total average costs will break the 10 percent threshold, the pressure will be intense to withhold care, and withhold care again, and then withhold it some more. Or at least to prescribe cheaper care, no matter how much less effective, in order to avoid the penalties.

The National Right to Life Committee concludes that this provision will cause a "death spiral" by "ensur[ing] that doctors are forced to ration care for their senior citizen patients." Every 10th doctor in the country will fall victim to it. Libertarian columnist Nat Hentoff calls the provision "insidious" and writes that "the nature of our final exit" will be very much at risk.

For all the trouble to the doctors and all the added risks to elderly patients, this provision will raise just $1 billion over six years for the federal Treasury. That doesn't account, though, for the added costs to the government - and thus to taxpayers - of tracking all this data per doctor and per patient, and then trying to collect the penalties from doctors after they already have been paid for their services.

This is far from the only part of Baucus-Pelosi-Obamacare that would almost certainly lead to rationing of care, especially for the elderly. The proposed "health care exchange," along with Obamacare's independent review panels and a national health board, will be empowered to make aggregate decisions - based on statistics, not on an individual patient's needs - about what sorts of care will be allowed and what won't. As it is in Great Britain, where thousands of cancer patients each year die prematurely due to lack of treatment, the inevitable result of government care could be the same for many Americans as if an actual panel decided case-by-case to euthanize them. The Baucus provision would only exacerbate this bureaucratic preference for death by proxy.

Zach

Does anyone really think this is going to solve our problems?



Zach

Who says more government is the answer? Just consider California a microcosm of the whole US.

This study measures and reports the cost of regulation to small business in the State of California. It uses original analyses and a general equilibrium framework to identify and measure the cost of regulation as measured by the loss of economic output to the State’s gross product, after controlling for variables known to influence output. It also measures second order costs resulting from regulatory activity by studying the total impact – direct, indirect, and induced. The study finds that the total cost of regulation to the State of California is $492.994 billion which is almost five times the State’s general fund budget, and almost a third of the State’s gross product. The cost of regulation results in an employment loss of 3.8 million jobs which is a tenth of the State’s population. Since small business constitute 99.2% of all employer businesses in California, and all of non-employer business, the regulatory cost is borne almost completely by small business. The total cost of regulation was $134,122.48 per small business in California in 2007, labor income not created or lost was $4,359.55 per small business, indirect business taxes not generated or lost were $57,260.15 per small business, and finally roughly one job lost per small business.

Zach

For all the commotion we heard about Bush and the Patriot act, the policy which Obama supports extending, are these same people decrying the death of the freedom to choose to purchase services such as health care? A common counterargument is, "car insurance is mandated!" The problem with this argument is that 1) this is a state mandate, not a federal mandate, and 2) an individual must decide to drive a car before they are subject to this charge, rather than being penalized for merely existing. In the latter, the individual cannot choose not to participate without being penalized. This is simply astounding. I can only hope that such an outrageous mandate would be overruled by the Supreme Court.

Sen. John Ensign (R-Nev.) received a handwritten note Thursday from Joint Committee on Taxation Chief of Staft Tom Barthold confirming the penalty for failing to pay the up to $1,900 fee for not buying health insurance.

Violators could be charged with a misdemeanor and could face up to a year in jail or a $25,000 penalty, Barthold wrote on JCT letterhead. He signed it "Sincerely, Thomas A. Barthold."

Zach

With his public option stalled on the tracks, a centerpiece of President Obama's health care agenda is emerging. This new one would require insurers to cover those who have pre-existing conditions — while making them charge prices that ignore those conditions.

This would immediately inflate the prices of everyone else's insurance premiums while incentivizing millions to quit carrying coverage year-round. In doing so, it would undermine private insurance and pave the way for a government-run plan.

Furthermore, it would make it harder for the rest of the uninsured — the vast majority of whom don't have expensive pre-existing conditions — to afford coverage.

It's essential that we solve the problem of ensuring health care access to those with pre-existing conditions. But this serious issue should be dealt with in a sensible way, not in a manner that would make matters much worse.

The president's proposed experiment, like so much of his health care agenda, has already been tried in Massachusetts. Bay State insurers are banned from denying coverage or charging higher premiums to those with pre-existing conditions.

Massachusetts residents are also required by law to buy health insurance, even if they don't want it. But many did the math, realized the fine for not carrying insurance was lower than the cost of carrying it, and decided to pay the fine rather than buy the plan.

Why carry insurance year-round when you can just wait until you get sick or injured and then sign up for "insurance" (wink, wink) to cover you?

Naturally, there has been an increase in the number of Massachusetts residents who buy coverage for a few months, run up high medical bills, then dump the coverage.

One Massachusetts insurance company, Harvard-Pilgrim, estimates that from April 2008 to March 2009, 40% of its new enrollees stayed with it for less than five months. These short-term enrollees incurred $2,400 in average monthly costs compared with a companywide average of $350, according to the Wall Street Journal.

Most Americans aren't comfortable with forcing people to pay the full cost of coverage for a pre-existing condition when it's prohibitively expensive and they can't possibly afford it. But most Americans' intuitive sense of justice also recoils at the other extreme: the view that those who cost far less should be required — by law — to pay the same as those who cost far more.

A completely healthy person who exercises, doesn't smoke, and eats and drinks in moderation should not be required to pay as much for coverage as a chronic drinker or reformed smoker who's requiring expensive treatment for liver or lung disease.

And those who wait until they're sick to buy insurance should not be able to buy it at the same price as those who have been paying into the insurance pool all along.

Beyond issues of fairness, Obama's proposal would raise prices, reduce access for the uninsured who don't have expensive pre-existing conditions, and cause a mass exodus from the insurance ranks.

A better solution exists. Rather than requiring insurers to cover all comers at the same rate, we should further strengthen the high-risk pools operating in most states. Thirty-four states already have high-risk pools to help cover those who are uninsured and have pre-existing conditions.

We should increase federal support for these pools and incentivize their establishment in all 50 states. Some of the federal funds that go to covering emergency-room care for such patients could be shifted to these pools, as reliance on emergency-room care is reduced.

Perhaps Obama fails to anticipate that his proposal would lead millions of Americans to drop their insurance. But perhaps he doesn't. For if people start buying insurance only when they need care, insurers' revenue will decline but their costs will not, and insurers will have no choice but to raise costs substantially for those who remain.

As prices rise, two things will happen: More people will follow suit in treating insurance as a just-in-time good, and the public outcry against higher insurance premiums will escalate. And then who will ride to the rescue on the white horse? The government.

"You see," the president would say, "private insurance has been tried, and it hasn't worked. We need to do what works."

The predictable result would ensue.

To give the administration its due, it has repeatedly said the public option is not an end in itself, but rather the means to an end.

Is anyone really surprised about this? Obama will say anything to get his health care plan through congress. That any president will do this is nothing new, but to do so to take over 1/6 of the US economy is despicable. This reminds me of the secret tapes with LBJ and Ted Kennedy, as reported by NPR:

Johnson maneuvered every step of the way getting this bill through Congress, and one of the things he did — and this is a little dicey in today's climate — was suppress the costs. So this young kid gets elected from Massachusetts, Ted Kennedy, in 1962, and Johnson is explaining to him [over the phone] how you get a health bill through. And what he tells him is don't let them get the costs projected too far out because it will scare other people:

"A health program yesterday runs $300 million, but the fools had to go to projecting it down the road five or six years, and when you project it the first year, it runs $900 million. Now I don't know whether I would approve $900 million second year or not. I might approve 450 or 500. But the first thing Dick Russell comes running in saying, 'My God, you've got a billion-dollar program for next year on health, therefore I'm against any of it now.' Do you follow me?"

We believe, after looking at the evidence, my co-author [David Blumenthal] and I, that if the true cost of Medicare had been known — if Johnson hadn't basically hidden them — the program would never have passed. America's second-most beloved program would never have happened, if we had had genuine cost estimates.

Is Obama outright lying? No, but the essentials are the same...play down the costs or consequences so no one will know what hits them. And what about his promise to 'include language to ensure budget neutrality?' It sounds great, but once he and the current congress are mostly out of office there will be nothing stopping them from ignoring that 'language.'

Congress' chief budget officer is contradicting President Barack Obama's oft-stated claim that seniors wouldn't see their Medicare benefits cut under a health care overhaul.

The head of the nonpartisan Congressional Budget Office, Douglas Elmendorf, told senators Tuesday that seniors in Medicare's managed care plans would see reduced benefits under a bill in the Finance Committee.

The bill would cut payments to the Medicare Advantage plans by more than $100 billion over 10 years.

Elmendorf said the changes would reduce the extra benefits that would be made available to beneficiaries.

Critics say the plans are overpaid, while supporters say they work well.

Obama says cuts to Medicare providers won't reduce seniors' benefits.

Zach

The fact that doctors, by in large, do not support Obama's health reform is shockingly under-reported. It's important to remember that one of the most cited reasons for physicians going into early retirement or choosing another profession is excessive government intervention and mandates. This ultimately takes decisions from physicians and hinders their ability to practice medicine. As this poll points out, the problems are only going to be exacerbated as a physician shortage looms even without excessive government meddling. The solution? Do what the NHS does: recruit physicians from third world countries where physician standards are lower than in the US.

Doctor opposition to health care overhaul proposals is broad and deep, revealing concerns not just about soaring costs, declining care, possible rationing and a lack of limits on malpractice suits, but also about government competence and motives, detailed responses to a new IBD/TIPP Poll show.

65% of the 1,376 practicing physicians who responded to a mailed questionnaire over the last two weeks said they opposed health care plans that have emerged from the administration and Congress. Just 33% supported them.

Perhaps the most shocking result: 45% of these professionals said they would consider closing their practices or retiring early if the reforms now under consideration were enacted.

Zach

This is the second time in a week I'm giving props to Obama. The first was for calling Kanye West a jack-ass. The second is for checking the out of control leftists screaming "racism."

Lots of respect for this...but I still hate the government.

President Barack Obama said Friday that angry criticisms about his health care agenda are driven by an intense debate over the proper role of government — and not by racism.

"Are there people out there who don't like me because of race? I'm sure there are," Obama told CNN. "That's not the overriding issue here."

I am, in part, very glad that our country is having an in-depth discussion on our health care system. It's forced me to learn quite a bit about our system and the many misleading claims of the left. Many times, however, the new information I acquired did nothing more than uncover more answers. What are some of the jewels? Well, the true number of uninsured is much lower than the oft cited '47 million,' in 2007 only about eight-tenths of one percent of Americans in lived in families that filed for bankruptcy as a result of medical costs (rather than the 'every 30 seconds' as cited by Obama), and I now get to reasonably answer another question I've had...how often are individuals truly dropped from their coverage for getting sick? Congressional staffers went through millions of policies from three large insurance companies over a five year period and found that less than one half of one percent of policies were rescinded (less than 0.1% for one of the companies).

Here's the next question I'm itching to know: what percentage of Americans who apply for private coverage are turned down for pre-existing illnesses? My guess is that it won't be nearly as much as they would have us believe.


In his speech to Congress last week, President Barack Obama attempted to sell a reform agenda by demonizing the private health-insurance industry, which many people love to hate. He opened the attack by asserting: "More and more Americans pay their premiums, only to discover that their insurance company has dropped their coverage when they get sick, or won't pay the full cost of care. It happens every day."

Clearly, this should never happen to anyone who is in good standing with his insurance company and has abided by the terms of the policy. But the president's examples of people "dropped" by their insurance companies involve the rescission of policies based on misrepresentation or concealment of information in applications for coverage. Private health insurance cannot function if people buy insurance only after they become seriously ill, or if they knowingly conceal health conditions that might affect their policy.

Traditional practice, governed by decades of common law, statute and regulation is for insurers to rely in underwriting and pricing on the truthfulness of the information provided by applicants about their health, without conducting a costly investigation of each applicant's health history. Instead, companies engage in a certain degree of ex post auditing—conducting more detailed and costly reviews of a subset of applications following policy issue—including when expensive treatment is sought soon after a policy is issued.

This practice offers substantial cost savings and lower premiums compared to trying to verify every application before issuing a policy, or simply paying all claims, regardless of the accuracy and completeness of the applicant's disclosure. Some states restrict insurer rescission rights to instances where the misrepresented or concealed information is directly related to the illness that produced the claim. Most states do not.

To highlight abusive practices, Mr. Obama referred to an Illinois man who "lost his coverage in the middle of chemotherapy because his insurer found he hadn't reported gallstones that he didn't even know about." The president continued: "They delayed his treatment, and he died because of it."

Although the president has used this example previously, his conclusion is contradicted by the transcript of a June 16 hearing on industry practices before the Subcommittee of Oversight and Investigation of the House Committee on Energy and Commerce. The deceased's sister testified that the insurer reinstated her brother's coverage following intervention by the Illinois Attorney General's Office. She testified that her brother received a prescribed stem-cell transplant within the desired three- to four-week "window of opportunity" from "one of the most renowned doctors in the whole world on the specific routine," that the procedure "was extremely successful," and that "it extended his life nearly three and a half years."

The president's second example was a Texas woman "about to get a double mastectomy when her insurance company canceled her policy because she forgot to declare a case of acne." He said that "By the time she had her insurance reinstated, her breast cancer more than doubled in size."

The woman's testimony at the June 16 hearing confirms that her surgery was delayed several months. It also suggests that the dermatologist's chart may have described her skin condition as precancerous, that the insurer also took issue with an apparent failure to disclose an earlier problem with an irregular heartbeat, and that she knowingly underreported her weight on the application.

These two cases are presumably among the most egregious identified by Congressional staffers' analysis of 116,000 pages of documents from three large health insurers, which identified a total of about 20,000 rescissions from millions of policies issued by the insurers over a five-year period. Company representatives testified that less than one half of one percent of policies were rescinded (less than 0.1% for one of the companies).

If existing laws and litigation governing rescission are inadequate, there clearly are a variety of ways that the states or federal government could target abuses without adopting the president's agenda for federal control of health insurance, or the creation of a government health insurer.

Later in his speech, the president used Alabama to buttress his call for a government insurer to enhance competition in health insurance. He asserted that 90% of the Alabama health-insurance market is controlled by one insurer, and that high market concentration "makes it easier for insurance companies to treat their customers badly—by cherry-picking the healthiest individuals and trying to drop the sickest; by overcharging small businesses who have no leverage; and by jacking up rates."

In fact, the Birmingham News reported immediately following the speech that the state's largest health insurer, the nonprofit Blue Cross and Blue Shield of Alabama, has about a 75% market share. A representative of the company indicated that its "profit" averaged only 0.6% of premiums the past decade, and that its administrative expense ratio is 7% of premiums, the fourth lowest among 39 Blue Cross and Blue Shield plans nationwide.

Similarly, a Dec. 31, 2007, report by the Alabama Department of Insurance indicates that the insurer's ratio of medical-claim costs to premiums for the year was 92%, with an administrative expense ratio (including claims settlement expenses) of 7.5%. Its net income, including investment income, was equivalent to 2% of premiums in that year.

In addition to these consumer friendly numbers, a survey in Consumer Reports this month reported that Blue Cross and Blue Shield of Alabama ranked second nationally in customer satisfaction among 41 preferred provider organization health plans. The insurer's apparent efficiency may explain its dominance, as opposed to a lack of competition—especially since there are no obvious barriers to entry or expansion in Alabama faced by large national health insurers such as United Healthcare and Aetna.

Responsible reform requires careful analysis of the underlying causes of problems in health insurance and informed debate over the benefits and costs of targeted remedies. The president's continued demonization of private health insurance in pursuit of his broad agenda of government expansion is inconsistent with that objective.

Millions of Americans finally got to hear the Democrats' pitch on health care reform, made by their top salesman. But they heard nothing new — just a lot of discredited myths recycled as the truth.

For the record, we support improving our health care system. As is, it has too many rules, too much government spending and too few market forces to keep costs low and quality high.

We spend north of $2 trillion every year on health care — 17% of our GDP, the most of any wealthy nation. If that sounds like a lot, remember this: An estimated 47% of that already is spent by the government. And government's share will grow even without "reform."

Look closely at the plans so far to emerge from Congress. What the Democrats have proposed, in essence, is a government takeover of nearly one-fifth of our nation's economy. When brought up in Congress, this idea has been rejected repeatedly. Yet, somehow, the idea never dies.

That's why the president's speech Wednesday night was a big disappointment.

Rather than a breakthrough that would remove government's stranglehold on a once-healthy market and move us toward true reform, we heard a lot of old bromides and myths — things we just can't let go uncorrected. Too much is at stake.

So following are 15 of the biggest misconceptions — and there are many more, we assure you — that we found in the speech:

• "The uninsured . . . live every day just one accident or illness away from bankruptcy. These are not primarily people on welfare."

Actually, of the 46 million people the census estimates don't have insurance, some 20 million have incomes above average and could afford to buy it, according to a study by former Congressional Budget Office Director June O'Neill.

Of the remaining 26 million uninsured, an estimated 13.7 million are poor. They are eligible for Medicaid — the state health care programs for the poor. But many, too, are illegals — about 8 million.

Though they're eligible, research from the Blue Cross and Blue Shield Association suggests as many as 14 million uninsured Americans qualify for public coverage, but don't enroll. And as many as 6 million are enrolled, but don't report it to the government, according to the National Center for Policy Analysis.

That leaves about 5 million people with no care.

By the way, according to the Census Bureau, America now has 37 million people in poverty. But Medicaid enrollment covers 55 million people — at a cost of $350 billion a year.

Based on this, no one should be without care. Which leads us to wonder: Is nationalizing our health care system really necessary to take care of people who already have care available to them?

• "Many other Americans . . . are still denied insurance due to previous illnesses or conditions that insurance companies decide are too risky or expensive to cover."

This statement betrays a profound ignorance of what insurance is. If you can buy insurance after you've gotten sick, it's not really insurance, is it? And why have insurance at all? It's an incentive to simply wait until you get sick, then make someone else pay for it.

To see how absurd this is, let's take the same concept to auto insurance. Why not let people buy insurance after they get in an accident? One reason, of course, is it leads to fiscal and personal recklessness.

• "There are now more than 30 million American citizens who cannot get coverage . . . every day, 14,000 Americans lose their coverage."

As noted above, the bulk of the 30-plus million uninsured actually can get coverage — and in many cases, qualify for existing government programs. But how about 14,000 Americans losing their coverage each day? A little math shows this is just a scare statistic.

Multiply it out, and it comes to 5.1 million people losing coverage in a year. Sound scary? Consider that, according to the census, 46.3 million Americans don't currently have insurance — 600,000 more than last year. That means that, along with 14,000 Americans losing their coverage each day, another 12,400 Americans are signing up for it — even in the middle of a brutal recession.

Those who lose insurance do so usually because they've lost a job. Most are without insurance for a couple of months or so. The best way to boost the number of insured — and one that "costs" nothing — is to cut taxes, ease regulations and slash government spending. Those policies are all proven job creators.

• "We spend one-and-a-half times more per person on health care than any other country, but we aren't any healthier for it."

This is a non sequitur. We spend one and a half times more per person, true. But because our health care here is better. That's right — better. True, our life expectancy of 78.1 years — which is up sharply from just a decade ago — ranks us 30th in the world in longevity. But look a little closer at the data.

The U.S. homicide rate is two to three times higher than in other industrial nations. And we drive a lot more than others, so our auto fatality rate of 14.24 deaths per 100,000 people is higher than in Germany (6.19), France (7.4) or Canada (9.25). Add to this, we eat far more than other countries on average, contributing to higher levels of heart disease, stroke, diabetes and cancer.

When all those factors are figured in, according to a recent study by Robert Ohsfeldt of Texas A&M and John Schneider of the University of Iowa, Americans actually live longer than people in other countries — thanks mainly to our excellent health care.

• Rising health care premiums are "why American businesses that compete internationally — like our automakers — are at a huge disadvantage."

Well, right and wrong. Soaring health care premiums are a problem for some. But who's to blame for this? Government health care programs, which make up 47% of all health care spending, are the biggest drivers of rising insurance premiums.

For example, Medicare forces doctors and hospitals to give patients 20% to 30% discounts on their care and drugs. Sounds great. But who pays for the "discount"? Private insurers, that's who. And they pass it on to businesses. This is yet another case of government causing a problem, then blaming the victim.

Even so, in some industries health care premiums are an enormous problem and competitive liability. This is certainly true of the auto and steel industries. But they have no one to blame but themselves.

They gave gold-plated benefit packages to their unions during the fat times, and now that times are lean, want us — taxpayers — to make good on their extravagant promises.

This is why so many big businesses support nationalized health care. It bails them out of their own bad decisions — and by those imposed by government. Just last week a congressional oversight panel announced that taxpayers were unlikely to recoup much of the $81 billion they spent to bail out GM and Chrysler. That's another indirect health care tax your children and grandchildren will have to pay.

• "Finally, our health care system is placing an unsustainable burden on taxpayers. . . . If we do nothing to slow these skyrocketing costs, we will eventually be spending more on Medicare and Medicaid than every other government program combined."

Are we supposed to believe that adding more government will bring down government costs?

Medicare is already spending more than it is taking in through payroll taxes. Medicare trustees expect the Hospital Insurance Trust Fund part of the program to be insolvent by 2019. From now through 2017, it will need $342 billion of taxpayers' money in order to keep paying hospital insurance benefits alone. Over the next 50 years or so, Medicare's shortfall is expected to hit $37 trillion — an almost unbelievable deficit nearly three times our current GDP.

If Medicare has done one thing, it's proved that government programs always cost more than their original projections. Citing the runaway costs of Medicare is an argument against, not for, further government intervention.

• "On the right, there are those who argue that we should end the employer-based system and leave individuals to buy health insurance on their own. . . . I believe it makes more sense to build on what works and fix what doesn't, rather than try to build an entirely new system from scratch."

Discouraging employer-based coverage and encouraging individuals to buy their own insurance would help. But only if lawmakers make two real reforms, neither requiring a "new system from scratch."

First, Washington must give tax credits for premiums paid on individual policies. That would make them more affordable for more people. Second, Washington has to make it easier for Americans to have health savings accounts. HSAs hold costs down because account holders self-ration treatment. They also give people more control over their health care.

• "Nothing in this plan will require you or your employer to change the coverage or the doctor you have."

Shawn Tully, Fortune editor at large, dug into the legislation and found that for "Americans in large corporations, 'keeping your own plan' has a strict deadline. In five years, like it or not, you'll get dumped into the exchange," a government program in which heavily regulated private companies sell insurance policies.

Workers who buy their own insurance or begin coverage through small businesses will also be forced into the exchange if their plans change in any way, because it's then considered a new plan. Since plans generally change policies every year, Tully says, "it's likely that millions of employees will lose their plans in 12 months."

According to a July study by the Lewin Group and the Heritage Foundation, health reform could cause as many as 88 million Americans to lose their private, employer-based coverage.

• "If you lose your job or change your job, you will be able to get coverage. If you strike out on your own and start a small business, you will be able to get coverage. We will do this by creating a new insurance exchange."

The president says this is "a marketplace where individuals and small businesses will be able to shop for health insurance at competitive prices." But it won't be a real marketplace. Participating insurers will be saddled with a host of mandates. Those that don't like the regulations will be left out. There'll be little room for competition.

The Cato Institute's Michael Tanner has said that "in practice, at least as demonstrated in Massachusetts," an exchange "can quickly devolve into a regulatory body."

• "Some of people's concerns have grown out of bogus claims . . . The best example is . . . that we plan to set up panels of bureaucrats with the power to kill off senior citizens. . . . It is a lie, plain and simple."

As far as we know, there is no provision for a death panel buried in the 1,018-page bill. But we do know how Dr. Ezekiel Emanuel, the administration's health care czar, feels about treating those who need the most help.

"When the worse-off can benefit only slightly while better-off people could benefit greatly, allocating (treatment) to the better-off is often justifiable."

So the federal government won't be actively killing the old and the sick. It will just let them die by denying them the care that will supposedly be available to every American.

• "There are those who also claim that our reform effort will insure illegal immigrants. This, too, is false — the reforms I'm proposing would not apply to those who are here illegally."

Tough words are one thing, enforcement is another. As IBD's Sean Higgins reported last week: "Some independent analysis indicates — contrary to Obama's claim — that the House health bill could result in coverage being extended to illegal immigrants."

It starts with the mandate for everyone to buy insurance, including illegals. Their choices will be presumably through the "exchange," and they won't be eligible for subsidies to buy. But the non-partisan Congressional Research Service warns there's no verification mechanism. An amendment by GOP Rep. Dean Heller of Nevada, to use electronic immigration records to verify eligibility for subsidies, was shot down by Democrats.

Enforcement woes are nothing new. The U.K.'s nationalized system treats as many as a million illegal immigrants a year because eligibility verification at the point of service is nearly impossible. It's now giving up the ghost of trying because illegals have won the right to be treated at taxpayer expense as a "human right." That's brought new waves of "health tourism" as word spreads.

Cabinet officials, such as Labor Secretary Hilda Solis, support union demands to give amnesty to 12 million illegals. If so, they will get public health care. And hospitals that continue to treat illegals through emergency rooms, are reimbursed through Medicaid.

• "My health care proposal has also been attacked by some who oppose reform as a 'government takeover' of the entire health care system . . . Unfortunately, in 34 states, 75% of the insurance market is controlled by five or fewer companies. . . Without competition, the price of insurance goes up and the quality goes down."

Obama is right about limited numbers of insurers in states. They're the last ones able to survive the layers of bureaucratic mandates and regulations without going bankrupt.

The fastest way to create choice for consumers isn't by adding a government option, but by breaking down trade barriers across state lines. By letting citizens buy insurance from any state, a truly competitive market can develop, with choices in coverage, service and price. It would be far better if each American could buy health insurance from any of the nation's 1,300 insurers, not just a handful in their own states.

• "Despite all this, some . . . argue that these private (insurance) companies can't fairly compete with the government. And they'd be right if taxpayers were subsidizing this public option. But they won't be. . . . (The public option) would . . . keep pressure on private insurers to keep their policies affordable and treat their customers better . . ."

When the government acts as both producer and regulator of its own and everyone else's products, the playing field is tilted because there's a basic conflict of interest. It's also a recipe for cronyism and corruption. Witness Fannie Mae and Freddie Mac.

We looked at the after-tax margins of some big health insurers over the last 12 months. Here's what we found: Among HMOs, Humana, 3.1%. Cigna, 4%. Wellpoint, 5%. United Health Group, 4.4%. Broader health insurers, like Unum (8.6% after-tax margin) and AFLAC (12.3%), do a bit better.

The point is, these are not outrageous profits. And the health care industry's $13 billion in 2008 profits pale in comparison to the $65 billion in annual fraud in Medicare alone.

• "I will not sign a plan that adds one dime to our deficits — either now or in the future. Period. And to prove that I'm serious, there will be a provision in this plan that requires us to come forward with more spending cuts if the savings we promised don't materialize."

From the folks who brought us a $10 trillion deficit over the next decade, that's hard to swallow. The White House has assured us the public option would be funded by premiums. So, it's hard to know what he means by savings or spending cuts.

Although Medicare and Medicaid, are slated for $313 billion in cuts, the government has yet to eliminate the $65 billion or so that goes to waste and fraud. They don't need health reform to do that, they can do it now.

• "The only thing this plan would eliminate is the hundreds of billions of dollars in waste and fraud as well as unwarranted subsidies in Medicare that go to insurance companies — subsidies that do everything to pad their profits and nothing to improve your care."

Speaking of waste and fraud, as we said, why can't it be done today instead of waiting for some health care reform bill to pass? The president proposes $313 billion in Medicaid and Medicare cuts, saying $110 billion would come from reducing scheduled increases in Medicare payments.

"That would encourage health care providers to increase productivity," White House budget director Peter Orszag told reporters. $110 billion would come from ending payments to hospitals to treat uninsured patients. But much of that comes from treating illegals, who aren't supposed to be eligible for the public option.

Another $75 billion would come from "better pricing of Medicare drugs," Orszag said.

What he doesn't get is that some $10 billion of Medicare funding goes to dubious expenditures like hospitals padding bills because they are paid too little and must make up lost revenue in volume.

Cutting payments more means more padding, as the Mayo Clinic has warned. That means rationing. The Democrats' plan may not be explicitly mean to ration, but not paying a fair and market-determined price for services will ensure less of it for patients.

President Obama began his speech by noting it's "been nearly a century since Theodore Roosevelt first called for health reform" and that "nearly every president and Congress, whether Democrat or Republican, has attempted to meet this challenge in some way."

"A bill for comprehensive care reform was first introduced by John Dingell Sr. in 1943," he also pointed out. "Sixty-five years later, his son (Rep. John Dingell, Michigan Democrat now in his 28th term) continues to introduce that same bill at the beginning of each session."

Could it be, we wonder, that the reason why health reform of the kind the Dingells and Democrats have been pushing for 100 years has gone nowhere is that Americans want nothing to do with it? What is it about "No!" that they don't understand?

"But what we have also seen in these last months is the same partisan spectacle that only hardens the disdain many Americans have toward their own government. Instead of honest debate, we have seen scare tactics..."

Finally, something we can agree on. Scare tactics are wrong and odious.

President Barack Obama demanded Congress act now on health reform, warning more Americans would die if Washington again does nothing to expand care and cut the costs of insurance.

Sigh...

A South Carolina Republican lawmaker shouted "You lie" at President Barack Obama as he addressed Congress on Wednesday. The congressman later apologized for his "lack of civility."

Alright, so that was inappropriate. But I saw Obama sneer in his direction as if to say "stop spreading your disinformation." What a friend google is...

In what he called the "first myth" being spread by critics of his proposal for a government-run health care system, Obama said they are wrong in claiming illegal immigrants will be covered: "That is not true. Illegal immigrants would not be covered. That idea has not even been on the table." Obama said.

Well, Mr. President, that idea must have been tucked under a stack of background briefing papers over there in the corner of the table because the Congressional Research Service (CRS) says this about H.R. 3200, the Obamacare bill approved just before the recess by the House Energy and Commerce Committee chaired by Rep. Henry Waxman, D-CA:
"Under H.R. 3200, a 'Health Insurance Exchange' would begin operation in 2013 and would offer private plans alongside a public option…H.R. 3200 does not contain any restrictions on noncitzens—whether legally or illegally present, or in the United States temporarily or permanently—participating in the Exchange."

Honestly, I thought the speech was pretty good, even if inappropriately partisan at times. However, I cannot for the life of me understand how he can continue to offer specifics on any health plan that he is allowing to be written by the same neanderthals who wrote the stimulus bill. He has no idea what's going to be in it, yet he's setting a price tag of $900 billion. Why is this insane? At its start, in 1966, Medicare cost $3 billion. The House Ways and Means Committee estimated that Medicare would cost only about $ 12 billion by 1990 (a figure that included an allowance for inflation). This was a supposedly "conservative" estimate. But in 1990 Medicare actually cost $107 billion. It wasn't easy passing Medicare, but no one remembers the initial promises and projections of the program and now it's become a sacred, bloated untouchable cow. The same will happen with the public option...and we'll all be worse off for it.