On the future health care bill

Below are some of arguments made in favor of the Health Care bill HR 32000 and contains my comments on the arguments in favor of this bill. It seems now (Sept 24, 2009) that that bill will not be passed but the arguments are still relevant.

1. A large part of the cost of the bill (HR 3200) will be made up by savings from Medicare by making it more efficient But Medicare is running or will run a huge deficit. It seems more appropriate to apply the savings in Medicare to cutting the deficit in Medicare rather than some other program. Will the plan have provisions for these savings? What are the tentative provisions if they have any? The bill is sure to cost money (the CBO estimated a trillion dollars over 10 years for one version of the bill) but the savings in Medicare are hypothetical at this point.

2. Medicare is much more efficient than insurance companies. Their expense ratio is only 2% (or whatever) wherease insurance companies have a much higher expense ratio But Medicare will run a very large deficit in the future. Social security also has a lower expense ration than any pension plan, but they also have a large deficit. I conjecture that somehow the low expense ratio and large deficits are releated. Anyway, as mentioned above, the CBO scored a proposal an said it would cost close to a trillion dollars so the new bill will probably be very expensive even if efficient.

3. A public insurance company will provide competition for private insurance companies and lower costs But will the public company at least break even? Usually when one tries to raise money for a new company that will be listed on the stock exchanges, there is always a detailed prospectus that describes in detail the business plan of the company. Large investors carefully read the prospectus before investion. Lacking details on the public company one has to take it on faith that the public insurance company will not add greatly to the deficit. Let me point out Social Security and Medicare costs are or will be much greater that what was envisioned when the programs were started.

The idea of a public insurance company seems to have been replaced by co-ops. Still missing is any prospectus and the arguments against the public insurance companies applies to co-ops.