Statesman Pulls A Hamstring - Texas Scorecard

The Austin American Statesman endorsed the Baucus health care plan passed out the Senate Finance Committee earlier this week by a 14-9 vote. No news there. However, the Statesman leans on the rickety sawhorse that a federally-mandated health plan will fix the "broken and financially unsustainable [system] for consumers and businesses." This cannot be.

First, the Statesman insists the individual mandate provided by the bill is necessary, while admitting that the mandate is not universal. In other words, those people who already have insurance will pay for those who do not have — either by choice or by circumstance — health insurance. Costs will inevitably increase for consumers and taxpayers.

As former CBO director Douglas Holtz-Eakin explains, the increased costs for more expensive health insurance "will be passed on to consumers by either directly raising insurance premiums, or by fueling higher health-care costs that inevitably lead to higher premiums."

In his WSJ editorial, Mr. Holtz-Eakin cites a Joint Committee on Taxation report showing that 87% of the burden would fall on Americans making less than $200,000, and more than half on those earning under $100,000.

Second, the Statesman lauds the creation of health insurance co-ops as a means for individuals and small business to gain access to lower cost insurance. This goes unsubstantiated.

The Statesman’s extensive coverage of the abusive and wasteful practices at the Pedernales Electric Co-op is evidence enough that co-ops are flawed. Co-ops would, as the Statesman argues, compete with for-profit companies but that would not necessarily lead to price reductions as the Statesman strongly implies.

Indeed, co-ops are effectively government-sanctioned monopolies. If the experience of electric co-ops is replicated in insurance markets, costs for individuals served by co-ops could very well be higher than if barriers to interstate purchases of health insurance were made legal in the existing market. Co-ops are not an improvement.

Finally, the Statesman repeats the fiction that the $829 billion plan will lower the decifit in the future. Mr. Holtz-Eakin points out that purported decreases in federal spending rest of the assumption that Medicare provider reimbursements will be cut.

That is a false and dangerously naive proposal. "It is beyond fantastic to promise that future Congresses, for 10 straight years, will allow planned cuts in reimbursements to hospitals, other providers, and Medicare Advantage (thereby reducing the benefits of 25% of seniors in Medicare).

The very fact that this Congress is pursuing an expensive new entitlement belies the notion that members would be willing to cut existing ones." Health care needs repair, but the Baucus plan is reform in name only.