Monday, February 22, 2010

National Anthem

The NYT is reporting, Obama to Urge Oversight of Insurers' Rate Increases.

Apparently what has happened is that in part due to adverse selection, with an increasingly sick pool of potential and actual insureds, Anthem Blue Cross of California, has put into effect a 39% rate increase in its individual coverage.

The Times reports that half the states do not regulate health insurance rate increases, and California is one of them.

So, in an effort to add pizzazz to the faltering healthcare reform effort, the President is now proposing to Federalize state insurance programs, even though he has not agreed to Republican proposals to allow health insurance to be sold across state lines.

Maybe it would be better for the 25 states that do not now regulate rate increases to do so. I don't know why they don't, and maybe setting up a bureaucracy to do so would cost Californians more than it would save. Regulatory capture by the regulated industry is, after all, is the way of the world.

As if the Feds don't have enough to do, they now need to grow the government some more by getting directly involved in intrastate matters.

What happens with Anthem in California should stay in California. There's no need to go national.

If the Dems had simply worked matters out within the House and Senate caucuses, they could have come up with a reasonably popular proposal. Even if it were not "comprehensive", there's always tomorrow. Bill Clinton could certainly have pushed through a national healthcare reform to provide catastrophic health insurance to all Americans, paid for by "sin taxes" on alcohol and tobacco products. But he chose to go whole hog with a micromanaging plan that made it illegal to see the doctor of your choice if doing so violated the referral system. Well, that bill did not even get to a vote.

What we see in this last-minute maneuvering by the President is a desperate attempt to seize on a transitory issue of the day with no opportunity for the public to understand Anthem's rationale (which may be phony), put in a new Federal mandate that had no Congressional hearings, no time for comments by interested parties, no evaluation of costs vs. benefits, etc., in order to push through "reform" that has been rejected by Americans in poll after poll and was even the major issue causing, of all states, Massachusetts to give "Ted Kennedy's seat" to the 41st Republican vote in the Senate.

Major legislation should be bipartisan to be durable. Democratic initiatives such as Social Security, Medicare and major civil rights legislation all had significant Republican support. Health care should follow that pattern.

In the meantime, the Federal government is lurching from one financial crisis to another, with dishonest accounting for the housing bailouts and the pretense that its interventions do a net good to the economy. Rather, it is mainlining the opiate of more and more credit (borrowing and lending) into an addict that needs to detox.

Today on TV I saw an ad for mortgages from Lending Tree. It's easy to borrow from them, they say.

Except for lower housing prices and lots of pain, and a temporary retrenching in battered financial companies how much has fundamentally changed from the credit bubble of the aughties?

Answer: not enough.

Government at all levels have already taken on massive current responsibilities and even more massive future ones. This includes pension obligations at the state level as well as Medicare and Social Security unfunded Federal obligations.

The idea that an irresponsible Federal government should extend its powers and take on yet more responsibilities flies in the face of common sense. Let it show it can do things right with its current job before it gets a promotion.

The American people "get it". A recent WaPo poll showed that by 3:2, Americans prefer a Federal government that provides relatively fewer benefits in return for taxing and spending less. It's not a poll that Barack Obama can easily wriggle away from. Picking on an ancient issue of possibly excessive (how to define?) rate increases by insurers at the last minute in order to bring more power to Washington is the wrong way to govern and also is philosophically out of step with the people who elected him.

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