Archive for March, 2010
ObamaCare’s $28 Billion Medicaid Gimmick
In a recent oped, I explain that the Democrats’ health care legislation:
would set in motion political forces that would make additional spending inevitable. It would create new constituencies for government spending, hook existing constituencies on even more government spending, and promise implausible cuts in existing subsidies to constituencies that are highly organized and vocal. For example, the Obama plan assumes that Congress will cut future subsidies to private insurers, hospitals, doctors, home health agencies, and others who provide health care to the elderly. Yet those constituencies form a nearly unstoppable political force; Obama adviser Tom Daschle calls it the “patient-provider pincer movement.” They will come back to Congress, year after year, until Congress reinstates their subsidies.
Keith Hennessey provides an example that demonstrates how this is a deliberate strategy to hide the true cost of the legislation:
The reconciliation bill would therefore create a new Medicaid (not Medicare) “primary care doctor payment cliff,” beginning after 2014. Just as Congress is under unbearable pressure now from doctors to prevent Medicare payments to doctors from being cut, the reconciliation bill would create exactly the same thing in Medicaid, beginning January 1, 2015.
If you assume Congress will not allow that newly created Medicaid funding cliff to bite beginning in 2015, they will spend an additional $29 B in the first decade, beginning in 2015.
This is an intentional gimmick designed to reduce by $29 B the scored cost of the reconciliation bill.
Does any serious student of Congress believe this legislation would cost only $1.2 trillion? Or would reduce the deficit?
The Rule of Law vs. Calvinball
At National Review‘s The Corner, Daniel Foster quotes Rep. Alcee Hastings (D-FL) on how Congress gets things done:
There ain’t no rules here, we’re trying to accomplish something…All this talk about rules…When the deal goes down…we make ‘em up as we go along.
A clip on YouTube provides part of the quote:
Hastings provides a helpful reminder that a constitution, rules of legislative procedure, and budgetary rules are not enough to ensure the rule of law. Those who seek to amass power — and even those who seek to disperse it — will nevertheless be tempted to treat government like a game of Calvinball:
The debate over the Obama health plan is a case in point. Press reports indicate that House Democrats will not “deem” the Obama health plan to have passed the House, but will instead hold an actual vote on it. That’s good news. But it hardly washes clean the sins of those who wrote and shepherded the Obama health plan through Congress. As I document elsewhere, it took more than the usual amount of underhandedness to bring ObamaCare this far.
ObamaCare’s Actual Price Tag
My oped at FoxNews.com explains just how well Democrats have hidden the full cost of the Obama health plan:
To hear Democrats tell it, the CBO projects the legislation would cost a mere $940 billion over the next 10 years….the actual cost of the bill is nearly $3 trillion….
Yet this legislation would set in motion political forces that would make additional spending inevitable. It would create new constituencies for government spending, hook existing constituencies on even more government spending, and promise implausible cuts in existing subsidies to constituencies that are highly organized and vocal…
When Congress inevitably fails to implement the Obama plan’s spending cuts, and expands its subsidies to more and more people, the cost of this legislation will grow beyond $3 trillion.
The CBO did an admirable job of projecting the cost of this legislation as written. But the text of the legislation does not reflect the reality it would create.
Giving the Obama health plan the effect of law will not make those costs disappear.
ObamaCare Cost-Estimate Watch, Day #275
The sun has now set and risen again a total of 275 times since it first shone down on the Obama health plan. Barring some unforseen snag, the House of Representatives will hold the final vote on that legislation around 6pm EDT today.
It will do so without ever laying eyes on a complete cost estimate. By design, the official Congressional Budget Office cost estimates are incomplete, omitting one category of costs that likely totals $1.5 trillion, and fraudulently concealing other costs.
The most incredible part is that the media have shown zero interest in exposing the largest category of hidden costs: the private-sector mandates, which likely total $1.5 trillion. But perhaps the media will report on such costs in the future. The surest way would be for Congress to require the CBO to include them in its official cost estimates.
Former CBO Director: ObamaCare Would Add $562 Billion to Federal Deficits
In The New York Times, former Congressional Budget Office director Douglas Holtz-Eakin strips away the budget gimmicks that Democrats use to hide the cost of the Obama health plan:
Removing the unrealistic annual Medicare savings ($463 billion) and the stolen annual revenues from Social Security and long-term care insurance ($123 billion), and adding in the annual spending that so far is not accounted for ($114 billion) quickly generates additional deficits of $562 billion in the first 10 years. And the nation would be on the hook for two more entitlement programs rapidly expanding as far as the eye can see.
The bottom line is that Congress would spend a lot more; steal funds from education, Social Security and long-term care to cover the gap; and promise that future Congresses will make up for it by taxing more and spending less.
What could possibly go wrong? Best line: the CBO “is required to take written legislation at face value and not second-guess the plausibility of what it is handed. So fantasy in, fantasy out.” (The Congressional Budget Fantasy Office has a nice ring to it.)
Holtz-Eakin is currently president of the American Action Forum.
Filed under: General; Government and Politics; Health Care; Tax and Budget Policy
Yglesias Is Baffled
Progressive blogger Matthew Yglesias says he is baffled by my previous post here about whether urban sprawl is the result of individual choice or government regulation. Ben Adler, a Newsweek blogger, weighs in as well.
You can read my detailed response to Yglesias on the Antiplanner blog. In a nutshell, Yglesias claims that my argument is a “complicated counterfactual hypothetical about whether or not most people would still prefer to live in large single-family homes even in the absence of regulatory restrictions.” In fact, my argument is that the government regulation that he claims forces people to live in urban sprawl does not even exist.
Innovation: the Most Important Kind of Health Care Reform
In the Orange County Register, I explain how ObamaCare would stifle innovations in health insurance and medical delivery:
Economist Glen Whitman and physician Raymond Raad found that, when it comes to basic medical sciences, diagnostics (e.g., MRIs and CT scanners), and therapeutics (e.g., ACE inhibitors and statins), the United States often produces more medical innovations than all other nations.
America’s health insurance markets are not following suit, despite the ready availability of innovations that can improve the delivery of care, insure the “young invincibles,” and provide secure coverage for the sick. Bringing those innovations to consumers requires tearing down regulatory barriers to competition — the very barriers that the Obama plan would stack higher.
Such innovations include comparative-effectiveness research, coordinated care, insurance policies that persuade the “young invincibles” to purchase coverage, and health insurance that comes with a total-satisfaction guarantee.
CBO: ObamaCare Would Increase Deficits by $59 Billion
Of course, it depends on what the meaning of “the Obama health plan” is.
If the Obama plan is understood not to include the $208 billion Medicare “doc fix” that the House removed from its bill to pass separately, and if the Obama plan would be sealed in an impenetrable vault within the National Archives, never again to be touched by God or man, then yes, the Congressional Budget Office predicts the Obama plan would reduce federal deficits by $138 billion over the next 10 years and by maybe one-half percent of GDP in the 10 years after that.
If, however, the doc fix is actually part of the Obama plan, and that law would be subject to normal political forces plus the new political dynamics the law would create, then the CBO predicts the Obama plan would increase federal deficits by $59 billion over the next 10 years and maybe one-quarter percent of GDP in the subsequent decade.
So really, the Obama plan’s impact on the deficit comes down to which one of those scenarios best describes the Obama plan, and which one is a partisan fantasy.
WWJC?
Or, whom would Jesus coerce? That’s the question that comes to mind when I read the Center for American Progress’ latest attempt to argue that, if Jesus were a member of Congress, He would vote for President Obama’s individual mandate.
I was raised Catholic, and I don’t remember Jesus teaching that we should put people in jail for not buying health insurance. As I recall, He let the priest and the Levite go their merry ways.
OK, technically all the CAP report claims is that the Obama plan is consistent with Catholic social teaching.
The authors invoke all the right Catholic doctrines: “human dignity, solidarity, special status of the poor … concern for the common good … stewardship.” Except they omit the Catholic doctrine of subsidiarity, which teaches that problems should be addressed at the most local level possible.
They left out what Pope John Paul II wrote about the welfare state in a 1991 encyclical:
By intervening directly and depriving society of its responsibility, the Social Assistance State leads to a loss of human energies and an inordinate increase of public agencies which are dominated more by bureaucratic ways of thinking than by concern for serving their clients and which are accompanied by an enormous increase in spending.
They sidestep the small matter of whether the legislation would actually force taxpayers to finance abortions, which Catholic doctrine teaches is the taking of innocent human life.
They note that “the Catholic Health Association is the largest provider of nongovernmental health care in the United States,” and the CHA has essentially endorsed the Obama plan. They do not mention the material fact that the CHA therefore depends on the government for much of its revenue, and is susceptible to retribution if it doesn’t play ball.
But I keep coming back to the absurdity of suggesting that using government coercion to achieve social change is the Christian thing to do. The authors do not channel Christ so much as Richard III:
And thus I clothe my naked villany
With old odd ends stolen forth of holy writ,
And seem a saint when most I play the devil.
Or to put it differently, they cast their lots with Caesar, not Christ.
Precedents in Government Growth
As an opponent of government growth, I’m interested in what we can learn from history to help us reverse the trend going forward. We need to understand the mechanisms of government growth if we are to combat the disease.
In a new Federal Reserve Bank of St. Louis article, Thomas Garrett and coauthors provide a useful overview of explanations for the federal government’s historical growth. They note that while the economic depression of the 1930s helped boost the size of the government, the severe recession of the 1890s did not do so. What was the difference between the 1890s and the 1930s?
The authors identify a number of factors that paved the way for sustained federal growth beginning in the 1930s:
- Path Dependency. Governments have inertia such that once a program is in place it is difficult to remove. When new programs are added during crises, they take root and aren’t cancelled when the crisis passes. Thus, government programs tend to accumulate over time.
- Tax Bases. The addition of new tax bases provides the means of government expansion. The best example is the addition of the federal income tax in 1913, which fueled huge government growth in subsequent decades. This can be called “feeding the beast.”
- Ideology. The rise of populism and progressivism during the late 19th and early 20th century broke down the traditional American resistance to big government.
I would add an additional cause of growth: legislative precedent. Politicians push the envelope on their allowable powers, and they build on the power grabs of prior policymakers. This is evident, for example, when you look at the steady destruction of federalism over the last century due to the growth in federal aid to the states.
“What Do You Do, Sir?”
Brandon Dutcher of the Oklahoma Council of Public Affairs recently wrote a commentary for The Oklahoman featuring (in the print edition) a chart I created of percent change in the state’s ACT scores and per pupil revenues over time. (Hint: one line’s pretty flat, the other goes up lots.)
Some folks didn’t like what this chart reveals, and so offered a variety of excuses for it in today’s letters to the editor. I’ve just responded with a letter to the editor of my own, reproduced here:
It is an unfailing characteristic of human nature that, when faced with evidence undermining their accomplishments or beliefs, people look first to excuses in the hope of deflecting the blow. So it’s no surprise to see a letter to the editor discounting Oklahoma’s relatively flat ACT scores despite rising spending on the grounds that the ACT “was never meant” “as a tool for evaluating the success of the common education system.” The only problem with this claim is that it’s absolutely false. According to the official ACT publication ”The Sensitivity of the ACT to Instruction“:
Consistent with [its co-founder’s] intent, the ACT is an educational achievement test that measures the typical content and skills learned from college preparatory curricula. Consequently, the ACT can … provide direct feedback to high school teachers about the effectiveness of their teaching.
Another excuse offered for Oklahoma’s education productivity collapse is that student achievement is limited while “the amount of money that can be potentially spent on education has no limit.” Oklahoma taxpayers will be pleased to learn they have limitless financial resources, but this is no defense of the status quo. If it was foolish to think in 1990 that spending 40% more on a state monopoly school system would substantially improve student learning, then the same is presumably true today. That, it seems to me, was the point of Mr. Dutcher’s op-ed.
To answer that same letter-writer’s question about the initial year of comparison for the chart’s percent change calculations, it is 1990 (as could have been surmised from the fact that the reported changes for 1990 are both zero).
That’s the end of my letter, but I can’t help adding an observation that would have exceeded the word count. While everybody likes to be right all the time, the strategies for approximating that desired state vary considerably in their effectiveness. The best is the one most famously touted (though not necessarily followed) by John Maynard Keynes: “When the facts change, I change my mind. What do you do, sir?” The sooner we adopt an education system that is actually effective and efficient, the sooner people can stop being wrong defending the current profligate monopoly.
This Week in Government Failure
Over at Downsizing Government, we focused on the following issues this week:
- Another day, another cost overrun at the Pentagon. This time it’s the Joint Strike Fighter.
- Office of Personnel Management director John Berry has a hissy fit over Cato shining a light on excessive wages and benefits for government employees at a time when the private sector is bleeding jobs.
- Nationalizing federal higher education subsidies is still a loser for taxpayers. The best solution is to get rid of them altogether.
- Sugar subsidies aren’t so sweet for consumers and manufacturers who use it in their products.
- The only way to stop ACORN from getting taxpayer money is to kill the programs that fund it.
- Greece is turning to privatization to help solve its debt problems. The U.S. should do the same.
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