Did the GOP capitulate on healthcare?
– James Pethokoukis is a Reuters columnist. The opinions expressed are his own –
You can’t beat something with nothing” often passes for political wisdom in Washington. In 1994, Republicans defeated Bill and Hillary Clinton’s healthcare reform plan with pretty much nothing — well, at least with nothing positive.
Republican congressional solidarity, along with help from business group attack ads and the Clintons’ own political miscues, were enough to doom the landmark legislative effort. Back then, “No” was sufficient.
But 2009 is not 1994. A “Just say no” strategy seem laughably insufficient this time around. Economic anxieties are much higher, the Democrat president more popular, the Democrat-controlled Congress more committed and aggressive.
Want even more evidence of the changed economic and political landscape?
Just take a look at the 248-page Patients Choice Act, a comprehensive GOP healthcare reform plan drafted by Senators Tom Coburn and Richard Burr, and Representatives Paul Ryan and Devin Nunes.
A big feature of the plan calls for redirecting the $300 billion-a-year tax exclusion for employer-based health benefits into refundable tax credits to purchase private plans.
The real reason healthcare is so expensive is because healthcare companies decided that we should pay more to increase their shareholder value and executive pay. How can so many of these companies tell us that over the past years that healthcare costs would climb anywhere from 7% – 17% and then have their stock prices soar from less than $10 per share to some as close as $100 per share? It’s quite obvious where the money went. Look at UnitedHealth Group Inc. Chairman and CEO William McGuire’s 2006 compensation. He received $1.6 billion in unexercised stock options. The Wall Street Journal reported that the timing of McGuire’s stock options, when UnitedHealth stock was at its lowest so he would benefit as much as possible raised the possibility that they had been backdated. UnitedHealth Group’s medical loss ratio for 2005 was 78.6%. That means that UnitedHealth retained for its own intrinsic uses, including profits, 21.4% of premiums paid. Profit for 2005 was $3.3 billion. For that performance, CEO McGuire receives $1.6 billion in unexercised stock options. Take a look at other healthcare stock prices and executive compensation and you’ll see the same pattern.