Yes-- it's unfortunate that progressive have had to compromise the plan away from complete universal coverage, but 50-70% of the uninsured gaining coverage is an accomplishment, especially when combined with reduced health care costs.

Incidentally, the Lewin Group, which Heritage used for its flawed analysis, is fully owned by one of the nation's largest insurance companies, United Health.

I don't have enough space here to document every one of the groups's spurious estimates, but let me give an example - perhaps one that might most cause concern. It is the claim that large numbers would remain uninsured under the reform legislation. How was this estimated?

Lewin first overestimated the number who would be dropped from private insurance, since the House bill severely limits that number in the first two years of implementation. In addition, employers who drop coverage would be subjected to a penalty, except for the very smallest firms.

Even assuming many were dropped, and adding to that the number already uninsured, Lewin appears to predict that substantial numbers of these would remain uninsured rather than using the proposed Exchange to purchase insurance via either the public option or a private insurer. The bill would require this, but permits individuals to opt out. However, if they do so, they too must pay a penalty based on their taxable income. For many except the poorest (whose insurance would be entitled to government subsidies), the penalty would equal the average cost of a basic plan premium on the Exchange. In other words, these individuals would be paying a premium, but getting nothing for it in return. It would seem logical to predict that most people who pay something would hope that it would buy them some insurance rather than contributing exclusively to subsidizing the insurance of others.

One could go on and on about the Heritage analysis distortions, but this illustration should provide a sense of how much spin is needed to make insurance reform seem unpalatable.

Oops. It was the Heritagitarians who commissioned the Lewin Group. Tusk, tusk!

Meanwhile, back at the ranch, here is the Lewinites' bottom line, given in full, except for figures and cartoons -- for who among us possesses that Harvard Victory School MBA degree that can alone qualify one to cope with an Executive summary?

[p. 38] G. Impact on National Health Spending

National Health Spending will reach $2.77 trillion in 2011. This includes expenditures for health services, prescription drugs and medical equipment. It includes the amounts spent by all payer groups including the federal government, state and local governments, employers and families. To illustrate the impact of the Act on national health spending, we estimated the Act's effect on health expenditures assuming that the program is fully implemented and enrollment is fully mature in 2011.

We estimate the change in national health spending separately for the scenario where all firms are eligible for the exchange and the scenario where only small firms have access. If all firms are eligible for the exchange, and therefore the public plan, national spending would increase by about $1.3 billion. Thus, the Act would reduce the number of uninsured by 32.6 million people without significantly increasing national health spending....

[p. 39] The overall increases in spending for the newly insured would be roughly offset by reductions in provider payments and administrative savings for those covered under the public plan. However, if eligibility for the exchange is limited to only small firms, national health spending under the Act would increase by $48.8 billion. Under either scenario, we estimate an overall increase in utilization of health services of roughly $42 billion for the newly insured and those obtaining improved coverage. In addition, utilization of health services would increase for people who shift from private coverage to the public plan. This reflects that Medicare, which the public plan is modeled on, does not include most of the utilization controls used by private insurers, such as precertification for high cost services. Studies have shown that these utilization controls can save up to 8 percent. (Our analysis is explained in Appendix A). This utilization effect would be $4.2 billion if only small firms have access to the public plan and $20.5 billion if all firms may enroll.

Provider reimbursement for the health services they provide would fall by about $45.0 billion if workers in all firms have access to the public plan. Providers now would be paid for services that under current law would have been provided free as uncompensated care, adding $17.5 [p. 40] billion to provider incomes. The Act also increases reimbursement rates for primary care services under Medicaid to Medicare levels over a three-year period by $8.4 billion.

These increases in reimbursement would be more than offset by reductions in payment for care provided to people enrolled in the new public plan. As discussed above, Medicare hospital payments are about 68 percent of what private insurers pay for comparable services. Physician services are also reimbursed at about 81 percent of private payer levels. By relying upon Medicare reimbursement plus 5 percent, the Act would result in reduced payments to providers for services provided to people who shift from private insurance to the public plan, which we estimate to be $96.4 billion.

If only individuals and workers in small firms are eligible to participate in the public plan, enrollment would be lower resulting in a reduction in provider reimbursement of only about $16.8 billion. In fact, provider reimbursement actually increases by $2.9 billion due to the smaller enrollment in the public plan under this scenario.

A portion of this net reduction in reimbursement will be recovered by providers through increases in charges to those who continue to be covered under private insurance. Studies have documented that about 40 percent of the shortfalls in reimbursement for the uninsured and people covered under government programs are recovered by increasing charges for services provided to privately insured people ..... Based upon these results, we estimate that the program would increase the cost-shift by about $30.0 billion, if all firms are eligible to participate in the public plan through the public plan.

Finally, we estimate an overall reduction in insurer administrative costs for private insurance and public programs of $16.6 billion under the scenario where all firms have access to the exchange. This reflects that there are economies of scale that can be realized by providing coverage through an organized purchasing entity such as the exchange. Also, the public plan would have no allowance for insurer profit and insurance agent and broker commissions, thus reducing the public plan premium.

I incline to doubt that the neocomrades of the Lewin Group originally intended to make this document public. Logically it ought to be classified "TOP SECRET--PARTY EYES ONLY" or the like. Mr. Newman is certainly right to draw attention to it.

What makes it specially worthy of attention is that we lay sheep get to see such a thing before the AEI/GOP/RNC/Heritage/Hoover Agitprop Arm has had a chance to adopt it for vulgar consumption.

That last sentence that I emphasized, for example, is almost shockin'ly spinless! The A. A. specialists would, I daresay, prefer that the question of overhead in the private or secret sector never be raised at all. To admit flat out that profits and commissions exist and that they raise prices is to be tolerated only in the very last ditch. Even then, the Party spinster should emphasize heavily that without such incentives, innovation in insurance products may be gravely retarded.

Or at any rate, that is the orthodox agitprop line about medical innovation. Perhaps when it comes to financial products, the neocomrades should just shut up in public entirely.

Happy days.