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June 11, 2009

AMA Pans ObamaCare; Dems Freak Out

Democratic commentators today are hopping mad that the American Medical Association preempted the President's scheduled speech on healthcare by unequivocally stating that it opposes any healthcare reform that includes a public insurance option.

While committed to the goal of affordable health insurance for all, the association had said in a general statement of principles that health services should be “provided through private markets, as they are currently.” It is now reacting, for the first time, to specific legislative proposals being drafted by Congress.

But in comments submitted to the Senate Finance Committee, the American Medical Association said: “The A.M.A. does not believe that creating a public health insurance option for non-disabled individuals under age 65 is the best way to expand health insurance coverage and lower costs. The introduction of a new public plan threatens to restrict patient choice by driving out private insurers, which currently provide coverage for nearly 70 percent of Americans.”

If private insurers are pushed out of the market, the group said, “the corresponding surge in public plan participation would likely lead to an explosion of costs that would need to be absorbed by taxpayers.”

Typically, Democrats responded to the AMA by, well, lying about their own healthcare plan. After accusing the AMA of having Stockholm Syndrome and "collective battered wife syndrome" Kevin Drum writes:


(1) A public plan wouldn't drive out private insurers unless it turns out that private insurers are actually less efficient than the post office. In which case they'd deserve it. (2) Nor would a public plan restrict choice — unless the AMA's members deliberately tried to sabotage it by refusing to participate. (3) And there would only be a surge in signups if the public plan turned out to be a better deal, which would likely mean lower overall costs even if a greater percentage of those costs was paid for out of taxes.

He clealy hasn't even read the Democratic proposal, which includes a private plan killer:

The bill gives the Secretary of Health and Human Services authority to limit premiums and profits of health plans by forcing plans to rebate to enrollees premiums above a certain margin.

Specifically, §2704(a) is the “Requirement to provide value for premium payments.” A health plan must report how much of their premium revenues are used for clinical services, how much for “activities that improve health care quality,” and how much for “all other non-claims costs.”

§2704(b)(1) then tells the Secretary to look at how much other health plans spent on “all other non-claims costs,” and based on that survey, set an allowable percentage for this category. Plans are then required to rebate premiums if they go above this amount. This is direct (but confusing) regulation of premiums and profit margins.

I found the labeling of this section interesting. It appears that this section will be the justification for the claim that this bill reduces health care costs. Loosely phrased, it appears their argument will be “We’re reducing health care costs by forcing plans to lower their administrative costs and profits.”

Ed Morrissey explains:

The people behind this plan intensely dislike the notion of health-care providers making a profit. The bill gives these people a lever to have government decide how much profit each insurer will be allowed to get from their business. Note that this has nothing to do with the quality of care provided, nor of the costs to the government. Literally, two insurers could charge the government the same amount of money for the same procedures and services, but if one is 20% more efficient than the other, the government will penalize the more efficient insurer.

So on the one hand we have people like Kevin Drum, who persist in claiming that the proposed reform will result in increased efficiency. On the other hand, the actual text of the proposed law, which penalizes efficiency.

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posted by Gabriel Malor at 11:38 AM

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