Price Waterhouse and Big Tobacco

There's a big scary new study out today from the health insurance lobby and PriceWaterhouseCoopers purporting to show that the Senate Finance Committee's reform bill -- funded by new excise taxes on "Cadillac" health plans -- would cause future health insurance premiums to spiral out of control.

Before this genie gets too far out of the bottle, just consider the track record of such industry-funded excise tax "research" by Price Waterhouse.

In the early 1990s, Price Waterhouse did similar handiwork on behalf of Big Tobacco, serving up allegedly hard data to bolster arguments that a new excise tax on tobacco (a proposed mechanism to fund Clintoncare) would destroy hundreds of thousands of good American jobs.

Dire predictions. But a subsequent review of Price Waterhouse's methods by an independent team at Arthur Andersen, revealed that Price Waterhouse's "grossly exaggerated" and "one-sided analyses" were so "flawed" as to produce "patently unreliable results."

To wit:

"The PW Report relied on methods and assumptions that create false and misleading results."

and:

"There are serious methodological problems and errors of omission (one-sided analyses likely to lead to misinterpretation) in ... the PW Report"

my favorite part:

"The PW Report... attributes 161,601 mining and construction jobs to the tobacco industry. This is approximately equal to the entire employment of the coal mining industry."

in sum:

"These and other serious flaws in the Price Waterhouse Report and the Tobacco Institute Estimates build upon one-another in a cumulative fashion to present grossly exaggerated and misleading estimates."

"The cumulative effect of PW's methods... is to produce patently unreliable results."

Cross posted from RollingStone.com.

Follow Tim Dickinson on Twitter: www.twitter.com/7im

Comments

[Heisenberg]

Did you check to see if the report issued by PWC for Big Tobacco was an audit or a consulting engagement? Tim, did you also look and see what reforms have been made within the accounting industry since Sarbanes Oxley? If you had, you would have realized that an independent audit is critically reviewed at each staff level. Also, getting an audit completed requires the signature of a partner who is unrelated to the audit. This person is as liable for any mistakes or falsehoods within the report as the auditors are. Fines and jail time will be given out to any person who makes fraudulent assertions in an audit.

[Tim303]

The yelling is going to get pretty loud in the next few days. Hang on to your hats, health reform supporters.

[schatsie]

Oh gosh, who should we trust, PW the shill for the Cigarette CEOs who lied to Congress OR Arthur Andersen, the ENRON enabler..????

Doggone it, who can you trust besides William Black?

[Vegas2]

Premium growth is rising faster than inflation and wages, however when the government gets done with healthcare, they will continue to rise faster than wages and inflation, however the government will continue to blame others and not themselves.

[Agent420]

Quite a statement to make without any references. Without those references, it is just your opinion and that means nothing.

[Tim303]

Why support the health insurance industry unless you are directly in their employ?

[JShep]

The potential of private insurance spiraling out of control is no different than the potential of government insurance spiraling out of control. Medicare & Medicaid are costing many times more than estimated. Medicare will go bankrupt within the next decade. The lowest cost government plan in the state of Mass. is costing 3x its estimated initial cost in just a few years. Please don't automatically assume that a government plan will be any less than private plans. The only "affordable" government plans will be those that are subsidised.

[Tim303]

Many of your "facts" are not correct. But there is one big difference. Like the UK NHS, Medicare is not a company but a matter of political will. If we want it, we will pay for it and keep it. Companies, however, are about making money. Problem.

[demockracy]

Uncontroversially, the U.S. spends twice as much as single-payer plans in other countries (and gets outcomes that rank 37th in the WHO survey comparing health care internationally). I'm not saying Medicare can't blow it, but the facts seem to favor single-payer over for-profit insurers.

As for government deficits, generally, despite the whining about how we're "running out of money" it only took a 3% rise in the topmost progressive income tax bracket for the Clinton administration to put the federal budget in surplus.

Gosh, could all this "controversy" simply be a way for our wealthy oligarchs to remain attached to their ill-gotten gains?... I wonder...

[LesleyAnne]

Too late. Apparently you haven't noticed, costs have already spiraled out of control. This is a strong case for the public option. If they want to continue to raise their costs, they can go out of business thank you very much. If anything, a public option will force them to reorganize. They will have no choice. They will be forced to compete for the first time. Wonder how well they'll do. I'm sure they will find a way to game whatever system we do put in place, even with a strong public option.

[Kim Klausner]

Read the original, "grossly exaggerated" Price Waterhouse report at http://legacy.library.ucsf.edu/tid/das99a00.