By Dick Morris on December 9, 2009

Faced with a massive center-right uprising, the Obama liberals have been forced to abandon a public option. But in doing so, they are throwing the Medicare program under the bus.

Already, we have been asking how you can treat a growing number of elderly with a Medicare program that this bill cuts by $500 billion dollars. Now, by adding tens of millions of people 55-64 to the program, it makes it even more financially untenable.

Nonetheless, a brief congratulations to all on having seemingly killed the public option. Without our efforts, it would be en route to becoming law. Now there will not be a government owned, government run and government subsidized insurance company that will put all others out of business.

But the current proposal Reid is loudly trumpeting is horribly flawed as well.

It has all of the old flaws (minus the public option) in that the government, through the Secretary of Health, will decide who gets what treatment at what cost and will force rationing through an artificial scarcity on all people, particularly the elderly. And it still has such high premiums for young uninsured people that it will compete with student loans for the honor of being their number one headache.

But the compromise itself is flawed. Here’s why:

1. By breeching the historic dividing line between private and public plans now at 65, it opens the door for an expansion of Medicare to become just the single payer we are trying to stop.

2. How can you expand Medicare, potentially to tens of millions more people while cutting it by $500 billion?

3. The cuts in doctor and hospital reimbursement rates written into this bill will force hundreds of thousands of medical providers to refuse to treat Medicare patients. By applying these low reimbursements to patients 55-64, now, you are driving doctors out of the profession and discouraging others from entering it. A permanent scarcity of doctors will be the inevitable result.

4. The expansion of Medicaid to 150% of the poverty level imposes huge new financial burdens on states. It will cost Texas $3 billion, Pennsylvania $2 billion, California $2 billion, and Florida $1.3 billion. It will cost Arkansas and Louisiana $500 million each. This is net of federal aid and only counts the 10% share of expanded Medicaid costs the states must pay.

The federal purchasing program that solicits bids from insurance companies and offers the policies to members of Congress actually functions quite well. It does tend to widen coverage and hold down costs and, at least in its current form, does not pretend to be an insurance company, just a kind of broker.

If the program is unchanged in the new law, its work could be valuable in helping consumers choose adequate and affordable insurance. But who knows whether Reid will try to ramp it up to be a government run and owned insurer?

The strategic message from all of this is that we have them on the run! We have forced Obama to retreat from a very dangerous excursion into socialism. Our pressure is working and we must keep it up.

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