There are many good reasons to have a deep conversation about how health insurance works in this country, because there is a lot of things wrong with it. What we’re getting from Obama and Congress, however, is a PR campaign designed to distract us from the fact that they would like to change not health insurance, but practically everything about health care itself.

Reports have it that Obama’s pollsters recently suggested that the President try to make the private insurance industry the villains of the piece. This has several virtues: it’s always rhetorically good to have a single, easily-demonized bad guy; and if it works, it conveniently will distract everyone from the fact that the true objective is far deeper than simply to make insurance cheaper for those who currently have none.

(What is the true objective? By God in Heaven, I wish I knew so we could debate it openly. But the true objectives of health reform are one thing Obama and Congress are keeping a deep dark secret. I can read legalese, but I can’t predict the unintended consequences of far-reaching thousand-page laws any more than Nancy Pelosi can.)

So the rhetorical device being used against those of us who would rather know what we’re getting into, as opposed to hoping blithely that the reforms will do what Obama promises, is this: the health insurance market needs some new competition.

In a truly remarkable moment, HHS Secretary Sebelius let the cat out of the bag this morning when she said that, although a public option isn’t a strict requirement, the President is committed to some structure that will, through the miracle of competition, induce private insurance companies to “do the right thing.”

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Americans are rightly concerned that a government-run health care plan will lead to changes with their own health insurance. It doesn’t take a rocket scientist to draw the conclusion that employers will drop coverage once the government starts meddling with the financial incentives.

This is a problem for the White House, and it’s why President Obama uses every opportunity to tell Americans, “If you have insurance that you like, then you will be able to keep that insurance.”

Unfortunately for Obama, Americans don’t believe him. Why? Maybe because he’s done nothing to back it up. Propaganda czar Linda Douglass’ “reality check” video is comical in that her defense of “You can keep your own insurance” cites nothing but Obama’s own statements as evidence — as if he’s an independent arbiter.

The Heritage Foundation (where I work) last month asked The Lewin Group, a highly respected health care policy and management consulting firm, to examine the impact of H.R. 3200 on private insurance. Lewin reported 88.1 million Americans could be transitioned out of their current plan as employers opt out of continuing their existing coverage. The chart below reveals the consequences for people living in Maine, Montana, Nebraska, New Mexico, Pennsylvania and Virginia.

As you can see, Obama’s rhetoric simply doesn’t add up when the numbers are crunched. It’ll take more than repetition from White House to sway the American people on this one.

As the Senate Finance Committee takes its health care overhaul negotiations into the August recess, President Obama and key Senate negotiators are still struggling to find a way to afford the flagging health care overhaul proposal’s trillion dollar price tag. Their latest proposal, a new tax on so-called “gold-plated, Cadillac” health insurance policies, is receiving broad support from legislators and administration officials who see it as yet another opportunity to pay for an expansion of government by soaking the “rich” – a perception that is, thanks in large part to existing government policies, incredibly wrong.

The term “Cadillac” has been used for years to refer to health insurance policies that cover an inordinate number of unnecessary treatments and procedures. Sen. Charles Grassley (R-IA), ranking minority member of the Senate Finance Committee and the Republican most closely working with the Democratic majority to pass President Obama’s health overhaul, said negotiators are “taking an intense look at” the proposal as a way of raising revenues to offset the $1 trillion the Finance overhaul bill is expected to cost.

Senator Olympia Snowe (R-ME), also a Finance Committee member, called the idea a “practical option” for “creating disincentives for the most expensive [health insurance] policies,” and Sen. John Kerry (D-MA) said his proposal to tie the maximum permitted coverage to the average level of benefits provided federal employees, and to tax the health insurance of those whose policies cost or cover more, is “gaining support” in the Senate.

This is being shopped to the public as just another tax on the super-wealthy, with Obama administration officials pointing to the “$40,000-a-year health insurance policies” carried by a handful of top Wall Street executives as examples of such unnecessarily luxurious coverage. However, a tax on “Cadillac” health insurance policies would end up disproportionately affecting middle- and lower-income Americans across the board, as well as the entire insured populations of several states.
The reason for this is the profusion of mandatory minimum coverages state governments require to be included in health insurance policies sold within their states’ borders. This results in residents being forced into uniformly high-priced, coverage-heavy “Cadillac” insurance policies as a result of state law, not their own choice.

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