Wednesday, October 14, 2009

How to destroy a governing coalition

If the Democrats in Congress eventually pass anything like the Baucus bill it will in a stroke destroy the coalition that brought Obama and the party to power in 2008. When citizens, especially young voters, discover what's in the bill they will either revolt to a third party or disengage and allow the Republicans to return to power.

The bill, as Wendell Potter has testified, should be called the Health Insurance Industry Profit Protection and Enhancement Act. The whole thing makes no sense. Individuals will be required to buy health insurance from private industry. If they don't they will be financially penalized. But not penalized too much. On yesterday's Thom Hartmann show he had on John "The dog ate my research" Lott to talk about the bill. The two showed a rare agreement in the horrible nature of the bill. Lott pointed out that the cost of the penalty is less than the cost of coverage, and that when you take away the insurance company's right to charge more for existing conditions there becomes an economic incentive to forgo insurance and wait until you actually get sick, then go buy insurance for treatment. If and when you get better you can then drop the insurance.

The problem is that the entire scheme cannot succeed because it contains three mutually exclusive goals: 1) Cover all Americans; 2) Lower the costs, and 3) Protect the existing health insurance industry. All of the maneuvering is necessary to avoid switching to a rational system of single payer, which would of course make private health insurance more or less superfluous. Obama's problem is that he wants to please the insurance companies, which is impossible if you also want to lower costs and cover all Americans. The result is the convoluted Baucus bill which will probably turn out to be a high-cost disaster to Americans but a boon to the insurance companies, and relegate the Democrats back to minority status.

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