By: Health Insurance
Submitted: 2009-12-10 22:47:49 | Word Count: 433
The health care reform bills (really health insurance or health care financing reform bills) in Congress at the moment have been carefully crafted to gain the desired response from the Congressional Budget Office. The response desired was the confirmation that each bill would "bend the curve down" when, in fact, neither bill will do that. Classic government 'smoke and mirrors' if ever there was.
The problem with that, as Bob Laszewski points out in his blog today is that there is tremendous front-loading that must occur in the initial four years in order for the 'smoke and mirrors' to get to the point where the CBO review appears to be favorable...with appears the operative term.
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This front-loading will add to the normal inflationary and demand-driven premium increases since the insurers will need to boost their reserves in order to survive the 2014 to 2020 time period when the hits occur. These front-loaded premium rates, instead of being in the 8% to 10% range, will easily appear as being in the 10% to 12% range or even higher depending upon the financial strength of the various insurers at the beginning of the build-up.
The higher rates will be tied back to Congress' passage of health care reform, and that will lie squarely at the doorstep of the Democrats who pushed it through. There are several election cycles between now and then, and those could be brutal from the Democrats' perspective.
Even if "health care reform" was favored by a solid majority of voters, this heavy front-end cost pressure would not sit well; and the majority of voters do not favor it as current polls show. The political costs appear to be vastly under-rated by the Senate and House leadership. Reid has his problems in trying to win re-election in Nevada, and Pelosi comes from among the most liberal areas in our country. Both are out-of-touch but for differing reasons.
There will be a big political price to be paid if this Congress produces as flawed a resulting law as seems destined at this point.
All we have to do is survive long enough to reap the benefits of that political price, and then hope that the damage can be undone as the balance of power shifts.
