Let's see. A Big 4 independent public accounting firm vs. the Democratic Party's go-to health care economics guy. Who has more presumptive credibility?
It's more than a little offensive to see the people whose party gave us entitlement programs with multitrillion-dollar unfunded liabilities (Social Security and Medicare), pension plans that are completely unsustainable (the federal government and many states), and year-over-year budget increases that almost always dwarf inflation -- in other words, people with absolutely no record of financial credibility on matters big and small -- go after Big 4 accounting firm PricewaterhouseCoopers and its "industry-funded" study on what would happen to insurance premiums under the BaucusCare iteration of ObamaCare with the eager assistance of their media apparatchiks.
Understand this: When PwC prepares a report for the health insurance industry projecting, in the Wall Street Journal's words, that "the Senate Finance Committee’s big health-care bill would raise health insurance premiums by thousands of dollars a year," one can be confident that it is based on exhaustively researched and thoroughly reviewed work.
Here's the whiny Democratic reaction to the firm's report:
"Distorted and flawed," said White House spokeswoman Linda Douglass. "Fundamentally dishonest," said AARP's senior policy strategist, John Rother. "A hatchet job," said a spokesman for Senate Finance Committee chairman Max Baucus, D-Mont.
One indication of the impotence of the response is the fact that the only "substantive" objection thus far is from an "MIT economist" who claims that "the industry report failed to take into account administrative overhead costs that he said will “fall enormously” once insurance polices are sold through new government-regulated marketplaces, or exchanges."
There's only one "little" problem: Economist Jon Gruber is hardly "independent." Did you know that Gruber's Wikipedia entry begins by noting that he has been "called the Democratic Party's 'most influential health-care expert' by the Washington Post"? The New York Times Prescriptions blog "somehow forgot" to share that little tidbit with its readers. Imagine that. (Update: It also "somehow" missed the $2,000 Gruber gave to John Kerry's presidential effort in 2004.)
PwC, in stark contrast, is an independent entity both in appearance and fact. The firm asserts that "Regulators have cited the PwC online independence system as the model for the profession." It and other public accounting firms go to extraordinary lengths to avoid conflicts of interest, and subject their reports to intense scrutiny before they are released.
Even without the professional help of PwC, common sense tells us that Gruber's contention is highly questionable.
This is supposedly how overhead will "fall enormously" under Max "Hatchet Job" Baucus's Senate bill:
Or perhaps you prefer this "fall enormously" model, courtesy of what is contained in House Bill 3200:
If you think these massive, unwieldy, out-of-control contraptions are going to enormously lower "administrative overhead" in the entire system, I want what you're smoking.
Oh sure, the government might (emphasis might) keep its own admin costs low -- by shifting the overwhelming share of the burden onto providers, intermediaries, and patients. Providers will be stuck doing work that will distract them from their primary caregiving tasks, and patients will have to navigate the byzantine mazes shown above. Both of those factors will work work to limit the supply of available time and resources for patient care and/or increase the cost of providing it because of having to employ more administrative help. Combine that with an increase in demand driven by overutilization of what will have become a supposedly "free" good for a large numbers citizens (and non-citizens), and you have the recipe for the very increases PwC cited.
If you don't believe PwC, all you have to do is look at the real-world disaster of CommonwealthCare aka RomneyCare in Massachusetts. As I noted in this previous post, costs have exploded, of course including administrative costs, while the system is on verge of imposing serious rationing of care.
Cross-posted at BizzyBlog.com.