Healthcare Reform Sausage Not Fit For Consumption

As healthcare "reform" heads for passage, president Obama will soon have bragging rights for getting legislation passed that no one has before.

Although the Senate and House versions are different, the odds are something will pass. Moreover the odds are very high the final bill will resemble legislation passed by the Senate.

Senate House Clash

Please consider Senate Democrats Move Toward Clash With House on Health Measure

Senate Democrats, after securing a hard-fought Christmas Eve victory on health-care legislation, now move toward a battle over taxes and other issues with the U.S. House as lawmakers look to merge their differing bills.

The two chambers took different paths toward covering tens of millions of uninsured Americans. And when they begin reconciling their measures next month, they’re likely to clash over issues that include whether to set up a new government-run insurance program to restricting federal funds for abortion.

Finding agreement on financing the legislation “may be the toughest of all,” said Senator Charles Schumer, a New York Democrat.

The House adopted a 5.4 percent income surtax on individuals earning more than $500,000 and couples earning over $1 million to pay for its $1.05 trillion bill. Senate Democrats would fund their $871 billion bill, which passed on a final vote of 60-39 yesterday, in part by placing a 40 percent excise tax on the costliest health-insurance policies. That provision is opposed by labor unions, which are among the party’s strongest backers.

Because it required all 58 Senate Democrats and two independents to stick together to get the 60 votes needed to secure passage of the chamber’s health-care bill, Thurber said it’s likely the Senate will win out on most issues. “The narrow majority in the Senate makes it almost a necessity to go with the Senate position,” Thurber said.

House negotiators “will have to capitulate on most main differences,” agreed Rogan Kersh, a public policy professor at New York University.

Drugmakers including Whitehouse Station, New Jersey-based Merck & Co. have a number of fights on their hands. Lawmakers are pushing for the industry to spend more than the $80 billion that it promised to help patients in the Medicare program for the elderly afford prescription drugs.

Negotiating Power

The House measure calls for the government to capitalize on its buying power to negotiate prices for medicines; the Senate bill calls for $2.3 billion in yearly industry fees.

“This fight isn’t over,” Senate Minority Leader Mitch McConnell, a Kentucky Republican, said. “My colleagues and I will work to stop this bill from becoming law.”

Healthcare Bill Flaws

• The bill does not open up competition between states.
• The Senate version of the bill does not provide for group bargaining of drugs by Medicare and that is what will likely pass.
• The bill does not allow drug imports in from Canada.
• Drugmakers won a 12-year period of exclusive sales for brand-name drugs before facing competition from generic rivals. This will benefit companies like Amgen and Genentech while driving up costs for consumers. President Obama wanted a 5-7 year period.
  
• The bill will hurt struggling small business owners who already are reluctant to hire.
• The bill does allow states to opt out of paying for abortions. This is folly given the huge ongoing costs of unwanted births.
• The senate bill granted special favors to senators from several states to buy their vote.
  

Arguably, the one of the few good things in the bill is coverage of preexisting conditions. The rest looks like rancid sausage. The biggest problem is there is not a single thing in the bill guaranteed to lower health care costs. We have to take it on faith that the plan will save money.

It won't.

However, when your goal is to get something (anything), passed it should be no surprise that the package is as flawed as it is.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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