- Motley Fool- msnbc.com
Jump to full article: MSNBC, 2009-10-16
Author: Jordan DiPietro
Intro: This new Motley Fool series examines things that just aren't right in the world of finance and investing. Here's what's got us riled today. . . .
This all comes out despite a report released last week by the nonpartisan Congressional Budget Office (CBO) stating that the legislation in question would reduce the federal deficit by $81 million by 2019 and would probably extend coverage to about 29 million Americans who currently lack insurance.
Why you should be indignant: Where to begin? There are at least three very good reasons to be apprehensive of PwC's report.
* Because the report is commissioned by AHIP, a group that represents health policies from companies like Aetna (NYSE:AET), Aflac (NYSE:AFL), and Humana (NYSE:HUM), PwC should have been extra careful to dispel any apparent conflict of interests. However, instead of performing tremendous due diligence, PwC seemed to have produced a report with too many holes to poke through and too much room left to be guessing about the legitimacy of their work. . . .
Well, you can choose to believe PwC's report or you can choose not to. Before you reach any conclusion, consider this: In the early 1990's PwC performed similar studies for the tobacco industry, which included bigwigs like Phillip Morris International (NYSE:PM) (then part of Altria) and Reynolds American (NYSE:RAI). They provided supposedly hard data that showed how a new excise tax on tobacco would destroy hundreds of thousands of jobs.
The report was apparently so lopsided that another consulting firm, Arthur Andersen, reviewed PwC's work. They found "serious methodological problems and errors of omission (one-sided analyses likely to lead to misinterpretation) in both the PW Report and the [tobacco industry's Tobacco Institute] Estimates." Ultimately, the string of blunders made by PwC led Andersen to report that "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 of job loss from an increase in the federal excise tax on tobacco products."
There are some eerie similarities here considering that one of the methods considered for funding health-care reform is a tax on some very expensive "Cadillac" health-care plans. Looks to me like another case of lobbyists hiring consulting groups to find data that supports their claims instead of performing a comprehensive, objective analysis.
This report has conflict of interest written all over it. Ill-timed. Factually debatable. Contrary to reports by the CBO. I'm not buying one word of it.
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