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."


"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