Baucus Bill Would Destroy Private Health Insurance; Increased Regulations Undermine Competitiveness

Some breathed a sigh of relief that a new health care bill introduced by Sen. Max Baucus does not include government insurance. This solace is premature. The Montana Democrat's bill proposes new regulations that would doom the private insurance industry.

The lion's share of President Obama's Wednesday address to Congress pushed Mr. Baucus' plan. Because a direct government takeover of health care sparked violent public protests, the new strategy is to take smaller bites out of private care. The president still promises more service for less cost with greater government involvement, which is impossible.

It takes chutzpah for Democrats to claim that a bill that taxes health insurance will encourage more people to get private insurance. The claim that new taxes - or "fees" as the bill calls them - will not increase costs makes no sense. Democrats may pretend they can get tax revenue without raising prices, but any increased cost caused by taxation would be passed on to the consumer.

According to the Baucus bill, any insurance plan that caps benefits would be prohibited. It doesn't matter if the cap is $1 million or $10 million. There's no way to avoid greater costs with such mandated expansiveness of coverage. The same rule applies to any ban on higher fees for pre-existing conditions, a prohibition that is in every Democratic health care plan.

There is a tax for those who don't buy insurance, which ranges from $750 for the poorest individual to $3,800 for families. This doesn't come close to covering costs even with limited benefits. In 2008, average health insurance costs were $4,704 for individuals and $12,682 for families. If there were no penalty for having pre-existing conditions, people would simply pay the tax and wait until they got sick to buy insurance. This would raise costs dramatically because sicknesses tend to be worse when care is deferred to the last possible moment.

The Baucus bill also raises taxes on pharmaceutical manufacturers, clinical laboratories and the makers of medical devices. At every turn, costs are increased with no way for industry to recoup the money. Over time, this will drive private companies out of business.