Let's see. A Big 4 independent public accounting firm vs. the Democratic Party's go-to health care economics guy. Who has more presumptive credibility?
It's more than a little offensive to see the people whose party gave us entitlement programs with multitrillion-dollar unfunded liabilities (Social Security and Medicare), pension plans that are completely unsustainable (the federal government and many states), and year-over-year budget increases that almost always dwarf inflation -- in other words, people with absolutely no record of financial credibility on matters big and small -- go after Big 4 accounting firm PricewaterhouseCoopers and its "industry-funded" study on what would happen to insurance premiums under the BaucusCare iteration of ObamaCare with the eager assistance of their media apparatchiks.
Understand this: When PwC prepares a report for the health insurance industry projecting, in the Wall Street Journal's words, that "the Senate Finance Committee’s big health-care bill would raise health insurance premiums by thousands of dollars a year," one can be confident that it is based on exhaustively researched and thoroughly reviewed work.
Here's the whiny Democratic reaction to the firm's report:
"Distorted and flawed," said White House spokeswoman Linda Douglass. "Fundamentally dishonest," said AARP's senior policy strategist, John Rother. "A hatchet job," said a spokesman for Senate Finance Committee chairman Max Baucus, D-Mont.
One indication of the impotence of the response is the fact that the only "substantive" objection thus far is from an "MIT economist" who claims that "the industry report failed to take into account administrative overhead costs that he said will “fall enormously” once insurance polices are sold through new government-regulated marketplaces, or exchanges."
There's only one "little" problem: Economist Jon Gruber is hardly "independent." Did you know that Gruber's Wikipedia entry begins by noting that he has been "called the Democratic Party's 'most influential health-care expert' by the Washington Post"? The New York Times Prescriptions blog "somehow forgot" to share that little tidbit with its readers. Imagine that. (Update: It also "somehow" missed the $2,000 Gruber gave to John Kerry's presidential effort in 2004.)
PwC, in stark contrast, is an independent entity both in appearance and fact. The firm asserts that "Regulators have cited the PwC online independence system as the model for the profession." It and other public accounting firms go to extraordinary lengths to avoid conflicts of interest, and subject their reports to intense scrutiny before they are released.
Even without the professional help of PwC, common sense tells us that Gruber's contention is highly questionable.
This is supposedly how overhead will "fall enormously" under Max "Hatchet Job" Baucus's Senate bill:
Or perhaps you prefer this "fall enormously" model, courtesy of what is contained in House Bill 3200:
If you think these massive, unwieldy, out-of-control contraptions are going to enormously lower "administrative overhead" in the entire system, I want what you're smoking.
Oh sure, the government might (emphasis might) keep its own admin costs low -- by shifting the overwhelming share of the burden onto providers, intermediaries, and patients. Providers will be stuck doing work that will distract them from their primary caregiving tasks, and patients will have to navigate the byzantine mazes shown above. Both of those factors will work work to limit the supply of available time and resources for patient care and/or increase the cost of providing it because of having to employ more administrative help. Combine that with an increase in demand driven by overutilization of what will have become a supposedly "free" good for a large numbers citizens (and non-citizens), and you have the recipe for the very increases PwC cited.
If you don't believe PwC, all you have to do is look at the real-world disaster of CommonwealthCare aka RomneyCare in Massachusetts. As I noted in this previous post, costs have exploded, of course including administrative costs, while the system is on verge of imposing serious rationing of care.
Cross-posted at BizzyBlog.com.
—Tom Blumer is president of a training and development company in Mason, Ohio, and is a contributing editor to NewsBusters
Editor at Large
Comments Policy
Look both Parties have a Problem with reality
October 13, 2009 - 09:19 ET by richb313Both Political Parties have a disconnect with reality. Both Parties promise pie in the sky solutions when the reality is a bit more complicated. By refusing to deal with reality both Parties have over spent and under produced. Scocial Security, Medicare, Medicaid, Farmers Subsidies (Really Subsidies to ADM and other Mega Agriculture Firms) just to name a few have become so ingrained there is no practical way to undo the damage. Anytime someone tries to deal with the problems realistically they are demonized by both sides (Bush on Scocial Security and Immigration Reform and Guest Worker Program).
It is all about temporary political advantage and who gets the power. This is the lens that all things are done in Washington. It is not about the debate over which methods might work or not.
You should add
October 13, 2009 - 09:31 ET by general companyBush's energy policy, considering the left is now ridiculing him for not passing one. Problem was, the liberals didnt want any energy in the bill, just taxes and bans on coal and oil.
My Gov. thinks I am dangerous, so be careful
"Television is a freak show" Bernie Goldberg
"Dem Pedigree of Economist
October 13, 2009 - 09:46 ET by notonmywatch"Dem Pedigree of Economist Disputing It"
ugh come on
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Graphical conservative commentary - animations & pictures for posting on forums: http://ubama.org/chu...
Pedigree indeed
October 13, 2009 - 10:14 ET by Tom BlumerI'd surmise that perhaps Gruber's $2,000 contribution to Kerry in 2004 was the admission ticket to becoming "the Democratic Party's 'most influential health-care expert.'"
Yeah, the NYT missed that too. (/fake shock)
Tom
October 13, 2009 - 10:03 ET by Candance MooreIt's also worth noting that Medicare outsources much of their overhead to third party administrators, so they pay a flat rate and much of the time/hassle is absorbed in the private sector.
Indeed ....
October 13, 2009 - 10:21 ET by Tom Blumerthat is the case. It then probably becomes "payments to vendors" and is kept out of "administrative overhead."
if our government
October 13, 2009 - 10:34 ET by Candance Mooreactually had to count the total cost of legwork and "free labor" they impose on society, it would tell a different story. They've created an entire niche of lawyers who fight them over disability claims and clog up the court systems to no end. I know for a fact that right now in North Carolina the waiting list to have a court hearing on disability enrollment is two years.
But nah, they're way more efficient than private companies....
Medicare Myth
October 13, 2009 - 11:15 ET by slickwillie2001The liberal myth that Medicare somehow achieves lower administrative costs than private insurers is just that, a myth. It is however central to the liberals' push for government healthcare. The Heritage Foundation issued a report that showed that "On a per-person basis Medicare’s administrative costs are actually higher than those of private insurance–this despite the fact that private insurance companies do incur several categories of costs that do not apply to Medicare."
Obamacare's Public Plan Is Built On a Medicare Myth: http://patterico.com
"Public figures for Medicare’s administrative costs count only what it takes to print reimbursement checks. Normal operating costs — rent, management, health insurance, taxes, capital to start a business and new equipment — which private insurers must include in their administrative costs, are counted elsewhere in the federal budget.
Official Medicare administrative costs simply exclude what most companies must include. No administrative cost savings exist in the public plan, and the true costs will never be counted because they’ll be hidden in the federal budget."
Thanks for that reminder
October 13, 2009 - 12:01 ET by Tom BlumerI put an Update up at BizzyBlog about it, while sadly noting that Heritage had a lot to do with giving RomneyCare its original legitimacy.
$omething happened to cause that. What could it po$$ibly have been?