Sunday, July 19, 2009

PelosiCare Analysis Continued

On Friday, we outlined how the House version of Obamacare (PelosiCare) requires everyone to get “approved” medical coverage (H.R. § 101) or face a fine equal to 2.5% of your gross taxable income. (H.R. § 401).

Here are more details of the bill:

How Does The Public Option Work

PelosiCare creates a new Public Health Insurance Option.

So how does it work? We don’t know. The exact details of the Public Option plan will be established by a Health Choices Administrator (HCA), who will report to the Health and Human Services secretary.

However, we do know the following:

• The Public Option plan will have four tiers: (1) a basic level, (2) an enhanced level, (3) a premium level and (4) a creatively-named “premium plus” level (it’s double-plus good!). (H.R. § 203). The price difference from one level to the next may not exceed 10%.

• The HCA may negotiate directly with providers (H.R. § 224), and may require such "cost savings measures" as value-based purchasing, bundling of services, differential payment rates, performance based payments, price caps, etc. If physicians/providers want to participate they must agree to the rates established. (H.R. § 225).

• The HCA may negotiate directly with drugs companies. (H.R. § 223).

Who Qualifies For the Public Option

To qualify for the Public Option, individuals must not be eligible to join another “acceptable” plan either through an employer, Medicare, Medicaid, Tricare, the VA, or a state health plan. (H.R. § 202).

Employers are required to provide qualified private insurance. If they refuse, they will be fined 8% of the employee’s wages. (H.R. § 412). This decreases to between 0% and 6% for small businesses that earn less than $400,000 (those earning less than $250,000 pay 0%).


For all persons legally in the country and not eligible for Medicaid, PelosiCare promises subsidies to help pay the premium costs for an acceptable policy (either Public Option or private insurance). (H.R. § 242). However, persons who receive health care through an employer are not eligible for such subsidies (consider this an incentive for people to avoid working).

The subsidies range between 70% and 97% of premiums, depending on family income. (H.R. § 242).

To be eligible for a subsidy, family income must be between 133% and 400% of the poverty level. (H.R. § 242). Depending on family size, this means:

• Family Size 1, income between $14,403 and $43,320.
• Family Size 2, income between $19,378 and $58,280.
• Family Size 3, income between $24,352 and $73,240.
• Family Size 4, income between $29,326 and $88,200.
* uses 2008 data

FYI, according to the Census Bureau, 61% of households (one or more persons) earned less than $60,000 in 2005. Thus, expect around 60% of Americans to be eligible for a subsidy. . . and the other 40% to flee.

No payments may be made under this plan for illegal aliens. (H.R. § 246).

How Does Congress Plan To Pay For PelosiCare

Good question. The numbers are nonsense. No full CBO estimate of the bill’s costs has been completed to date, but the bill is currently estimated to cost more than $1.65 trillion over ten years.

An estimated $781 in tax hikes are planned from the following two sources:

1. The fining of employers discussed above (H.R. § 412). This is estimated to bring in $237 billion over ten years; and

2. An income tax surcharge at the following rates: 1% for income above $350,000, 1.5% for income above $500,000, and 5.4% for income above one million dollars. (H.R. § 441). However, this will go up automatically to 2%, 3% and 5.4% when the cost projections prove to be false. This is estimated to bring in $544 billion.
An additional $525 billion is estimated to "saved" from reducing payments to private insurers and drug makers. Fortunately, it’s unpatriotic to pass those costs on to private customers, right?

The remaining $344 billion will come from ________.

New Requirements For Qualified Plans

As noted previously, PelosiCare generously allows individuals to acquire “acceptable coverage” from “qualified” private medical plans.

To be considered a “qualified” plan, the private insurance must do the following:

• The plan may not exclude pre-existing conditions. (H.R. § 111).

• The plan may only vary the rates it charges for age, family size, and geography. (H.R. § 113).

• The plan may not terminate your coverage unless you stop paying the premiums. (H.R. § 112).

• The plan must use “cost sharing” measures, such as requiring co-payments. (H.R. § 117).

• The plan may not discriminate “without regard to personal characteristics extraneous to the provision of high quality health care or related services.” (H.R. § 152).

• The plan must offer an “essential benefits package” that is consistent with the standards TO BE established by the HCA. (H.R. § 124). In other words, the crux of the plan will be figured out later.
The HCA can also require rebates to enrollees whenever the plan does not meet a medical loss ratio defined by the HCA. (H.R. § 116). This provision is not clear in the bill, but it appears to be a profit-cap.

Cost Savings


And they’re going to stop waste, fraud and abuse. (H.R. § 226).


The bill. . .

1. Contains no real cost savings, just cost shiftings.
2. Provides few details of how the Public Option will work.
3. Does nothing to address costs imposed on states and providers by illegal aliens.
4. Leaves the current nightmarish bureaucratic system in place.
5. Promises subsidies at an unsustainable rate.
6. Uses math that simply does not add up.


LawHawkSF said...

Andrew: That's the most nonsensical "plan" I've ever read. It sounds like the botox has finally passed from Pelosi's eyebrows to her alleged brain. But if I'm right, all I need to do is get married, have seven or eight kids, get a job that pays $12,000 a year with no medical plan, and I'll have low-cost medical insurance for life. Did I get that right?

AndrewPrice said...

Lawhawk, That seems to be what they want. It's interesting that this plan will actually give people an incentive to find employers who DON'T provide health care.

Tennessee Jed said...

Andrew - thanks for a great post. It is insane what is being perpetrated on the U.S. taxpayer. And watching Obama try and turn this into another crisis is sickening. My Tennessee legislators (House and Senate) are solidly opposed, but I am concerned to many will be bribed.

AndrewPrice said...

Jed, you're welcome. I figured people would like to know what this bill does (and doesn't do).

I am concerned that they are going to take this bill and the senate bill into the reconciliation committee, craft something horrible (like this or worse) and then rush it through for a lightening vote.

Then your reps would come home and say, "we had to do something and we didn't have a choice. . . it was that bill or nothing." As if that is a real excuse.

Tennessee Jed said...

If they do that, I will never vote for any of them again. Doing nothing is actually preferable to this bill.

StanH said...

Wow Andrew, that’s our government at work, breathless in it’s absurdity. This should be required reading for all Americans. Lawhawk’s thumbnail synopsis is a coarse that many in this country will take, the dregs will take advantage and grow the welfare state two-fold, not good.

AndrewPrice said...

StanH, this bill is stunning in its incompetency. I'm not sure what more can be said about it than that.

Fortunately, it sounds like the Republicans won't support it and even many key democrats are calling it DOA.

We just need to keep up the pressure on them.

CrisD said...

This is what happens when people think they can "fix" things easily. That is what drove the whole hopenchange bandwagon.
I cannot believe how many people that I know who voted for this administration believe this is good but I happen to know that if I say ANYTHING they roll their eyes. Thanks educational have successfully dumbed down these "do-gooders."

My head explodes when I see Obama stickers still on cars. You may be on to something with calling it the Pelosi plan..

Writer X said...

Andrew Price for the Senate! Are there any vacant seats in your state? Seriously, you communicate the details of this horrid plan better than any elected official.

AndrewPrice said...

CrisD, The problem is that these things are difficult for average people to understand because (1) they're written in a very complex manner and (2) most people just don't want to spend the hours it takes to sort through 1000 pages line by line.

So they trust that their leaders know what they're doing. And this is even more true with the left because they want a leader who will take care of them. So they listen to the rhetoric and they never question it. . . until it doesn't turn out the way they are promised.

AndrewPrice said...

Writer X, Senate? What did I ever do to you?! Just kidding, I'd love to get a little more influence with our government. I don't think it's that difficult to fix these things.

Sadly, it take $20 mill to run for Senate now and I'm about $19.9999 million short.

CrisD said...

That's right about senate. If you are a dem and do not get on board with Pelosi and big shots then they never advance you into power positions.
I know this happens on the right.
BTW, how do you think they are doing? How would you rate them in this terrible minority position they have? ( I can't believe I just typed "minority position" Mmmmm. lol.)

AndrewPrice said...

CrisD, I think the Republicans are starting to "get it." They seem to have found a backbone and some unity, and they are finally making good decisions.

They stood up almost to a member to Cap/Trade, they managed to get card check killed, they seem to have killed the second stimulus, and they have been pretty steadfast in opposing ObamaCare and PelosiCare. They also seem to finally be taking the attack to Obama.

What I want to see next is that they start to talk about their vision of the country. If they do that, then I think they'll be in great shape for 2010.

USS Ben USN (Ret) said...

"So how does it work? We don’t know. The exact details of the Public Option plan will be established by a Health Choices Administrator (HCA), who will report to the Health and Human Services secretary."

This is done purposely so they can deny, deny deny and make outrageous promises.
Once it passes (IF it does) HCA and HHS can run the program the way Obamuh wants and we all know what he's about.

I reckon the good news in all this is how fast Obama and the Democrats are self-destructing.
Like Icarus they are flying too close to the sun, and Americans are beginning to see that the emporor is wearing a Chicago mob suit and flaunting the Constitution.

Great post, Andrew!
I'm slowly but surely catchin' up. :^)

AndrewPrice said...

Ben, take your time. There is a lot of information to take in. :-)

I think that keeping the law vague is part of the plan. That's how they always handle controversial laws, they punt to the agency, which can act without as much public scrutiny.

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