According to the Chamber of Commerce polls, strong majorities in every state they polled believe the health care bills will increase the deficit. In this case the public’s cynical instincts are almost certain to be more accurate than the computer models of the CBO. As David Dickson of the Washington Times reviewed yesterday, government health care programs have a history of cost overruns.

And not small overruns, like overdrawing your checking account — massive, order-of-magnitude cost overruns. Is that because politicians intentionally overstate the benefits and underestimate the costs of their proposals? Or just that computer models aren’t very good at predicting how entitlements programs change behavior? Either way, just look at the record: In 1967, the House Ways and Means Committee said the entire Medicare program would cost $12 billion in 1990. The actual cost in 1990 was $98 billion. In 1987, Congress projected that Medicaid would make special relief payments to hospitals of less than $1 billion in 1992. The actual cost, just five years after the projection, was $17 billion. Similarly, Medicare’s home care benefit was projected in 1988 to cost $4 billion in 1993, but the actual cost — again, just five years after the projection — was $10 billion.

The government is running a trillion-dollar annual deficit already, and Congress and the president propose to create a new program that promises to cover millions more people with health insurance, drag currently insured people onto government programs, and save billions of dollars in the process. No wonder levels of trust in government are at record lows.

Of course, that $848 billion only accounts for part of the federal government’s share of the tab.  There is other new federal spending.  My read is that the CBO estimates $998 billion of total new federal spending — though I’ll be waiting for former CBO director Donald Marron to provide a more authoritative tally.

And then there are costs that Reid and his comrades have pushed off the federal budget.  For example, the $25 billion unfunded mandate that Reid would impose on states.  Total so far: just over $1 trillion.

But the biggest hidden cost is that of the private-sector mandates.  In both the Clinton health plan and the Massachusetts health plan, the private-sector mandates –- the legal requirements that individuals and employers purchase health insurance –- accounted for 60 percent of total costs.  That suggests that if the Reid bill’s cost to federal and state governments is $1 trillion, then the total cost is probably $2.5 trillion, and Harry Reid — like House Speaker Nancy Pelosi — is hiding $1.5 trillion of the cost of his bill.

Without a cost estimate of the private-sector mandates, Reid has not yet satisfied the request made by eight Democratic senators for a “complete CBO score” of the bill 72 hours prior to floor consideration.

Fortunately, by law, the CBO must eventually score the private-sector mandates.  When that happens, the CBO will reveal costs that the bills’ authors are trying to hide. When that happens, the CBO will present the new federal spending on page 1, new state spending maybe on page 10, and the cost of the private-sector mandates on page 20 or something.  Democrats will tout the figure on page 1.  But the bill’s total cost will the sum of those three figures -– a sum that will reveal the costs that the bill’s authors have been hiding.

The House passed its bill without a complete CBO score.  The Senate should not follow suit.

I’ve written previously about this massive fraud here, here, here, and here.

(Cross-posted at Politico’s Health Care Arena.)

In “Bending the Productivity Curve: Why America Leads the World in Medical Innovation,” economist Glen Whitman and physician Raymond Raad conclude that the United States far and away outperforms other nations on medical innovation, but that the legislation moving through Congress threatens America’s ability to innovate.  From the executive summary:

To date…none of the most influential international comparisons have examined the contributions of various countries to the many advances that have improved the productivity of medicine over time…

In three of the four general categories of innovation examined in this paper — basic science, diagnostics, and therapeutics — the United States has contributed more than any other country…In the last category, business models, we lack the data to say whether the United States has been more or less innovative than other nations; innovation in this area appears weak across nations.

In general, Americans tend to receive more new treatments and pay more for them — a fact that is usually regarded as a fault of the American system. That interpretation, if not entirely wrong, is at least incomplete. Rapid adoption and extensive use of new treatments and technologies create an incentive to develop those techniques in the first place. When the United States subsidizes medical innovation, the whole world benefits. That is a virtue of the American system that is not reflected in comparative life expectancy and mortality statistics.

Policymakers should consider the impact of reform proposals on innovation. For example, proposals that increase spending on diagnostics and therapeutics could encourage such innovation. Expanding price controls, government health care programs, and health insurance regulation, on the other hand, could hinder America’s ability to innovate.

Raad will discuss the study this Friday at noon at a policy forum at the Cato Institute.

The summary is that you can look at the individual mandate as a tax, which is constitutional, or as a regulation forcing private actors to engage in a certain transaction, much like the minimum wage, which is also constitutional. I’ve also heard scholars mention auto insurance, which is an obvious analogue, and the Americans With Disabilities Act, which proved that the government can order businesses to install ramps, despite the fact that the constitution doesn’t explicitly give the federal government jurisdiction over entryways.

This doesn’t seem like the right level of analysis. Some taxes and regulations are within the ambit of federal powers; that doesn’t mean anything capable of being so described is. Some things not explicitly and specifically mentioned in Article I are nevertheless necessarily implicit in the enumerated powers; that doesn’t mean anything is. Auto insurance seems like a poor analogue because it’s a condition of access to government-maintained roadways. Ezra also mentions Massachusetts’ individual mandate, which seems rather beside the point in a discussion of the scope of Congress’ Article I powers. But bracket that. Even if you think the federal commerce power legitimately extends to legislation like the ADA, there’s intuitively a world of difference between saying that a commercial enterprise providing services to the public must provide them in such-and-such a fashion and insisting that private persons have to engage in a specified type of transaction just by dint of being alive. I don’t think the best reading of the Commerce Clause encompasses either, but it’s not that hard to conceive a reading that extends to the former but not the latter. I stress this just because I don’t think you have to be a libertarian or have a very restrictive view of the legitimate scope of federal power to believe there’s a genuine question here. The real form of the argument here looks an awful lot like: “Look, we’ve stretched commerce…between the several states so absurdly already, why are we even pretending it might be found to exclude anything?”

One result of the federal government paying for half or more is that it encourages the states to expand enrollment and benefits. It also makes it politically difficult to cut state Medicaid spending because of the accompanying loss of federal dollars.

A 2007 analysis on the exorbitant future costs of Medicaid by Jagadeesh Gokhale illustrates how the program’s price tag has skyrocketed since its creation in 1965 (see chart here). Over the decades, the states expanded their programs whenever the economy was growing and the tax revenues were flowing. When the economy went into recession and the revenue dried up, the states generally didn’t scale-back benefits and sometimes they asked for bailouts from the federal government. The 2009 stimulus package provided an estimated $87 billion in federal Medicaid money for the states.

If the economy remains stagnant over the next few years and state tax revenues fail to rebound, further pressure will mount on the federal government to continue bailing out state Medicaid programs. The nightmare scenario would be for the federal government to assume the full costs of Medicaid under state pressure.

California Gov. Arnold Schwarzenegger’s budget director, Michael Genest, recently raised the idea:

Genest, who is retiring at the end of the year, warned that California’s budget problems will persist even after the state works its way through this recession. He singled out Medi-Cal, the state’s Medicaid health-care program for the poor, as unaffordable for the state. If the program’s costs continue to climb 8 percent a year, the state will have little money left for anything other than schools and debt service by 2040, he said.

The health-care reform proposals now before Congress could further strain state budgets because they would expand Medicaid, Genest said.

Genest said Congress should overhaul Medicaid, now funded jointly by state and federal governments but run by the states. The federal government should cover more of the costs, give states more flexibility or even make a drastic switch and let federal officials take over Medicaid completely, he said.

“If you want to imagine a crisis, as a thought experiment, imagine all 50 states writing a letter to the federal government saying, ‘We’re no longer providing Medicaid.’ That would get Congress’ attention. And that’s about the only real leverage we have,” Genest said.

Current health care legislation in Congress threatens to increase state Medicaid spending. In the House passed bill, the federal government would pick up 100 percent of Medicaid’s expansion until 2015 when it would drop to 91 percent. However, the future is unpredictable and it’s not hard to imagine a future Congress keeping it at 100 percent federal funding.

According to the Congressional Research Service, the House bill also contains a provision that could be intended to create a justification for greater federal assumption of state Medicaid spending:

H.R. 3962 would require GAO to study federal matching payments made to state Medicaid programs to make recommendations on the FMAP formula to Congress. By February 15, 2011, GAO would be required to submit a report based on this study assessing the effect on the federal government, states, providers, and beneficiaries of making the following changes to the FMAP formula: (1) removing the 50% floor or 83% ceiling, or both and (2) revising the current FMAP formula to better reflect state fiscal capacity, state efforts to finance health and long-term care services, and to better adjust for national or regional economic downturns.

See this essay on the need for a return to fiscal federalism.

Update: The Washington Post reports this morning that the House health care reform bill contains an additional $23.5 billion Medicaid bailout for the states. The provision would extend by an additional six months (through 2011) the stimulus legislation’s “temporary” increase in the federal government’s share of total Medicaid spending.

“What changed?” Cohn asks. “A major factor, according to IMS, was the emerging details of health care reform . . . Put it all together, and you have more demand for name-brand drugs . . . enough to boost revenue significantly.” And:

“If this bill is implemented,” the report concludes on page 138, “an increase in prices on new drugs can be expected.”

How could this be happening?  Oh yeah:

That brings us back to the deal that the Pharmaceutical Researchers and Manufacturers of America, which represents those companies, made with the White House and Senate Finance Committee . . .

The industry agreed to embrace health care reform and, later on, launched a massive advertising campaign to promote the cause. In exchange, the White House and Senate Finance–which had been asking various industries to pledge concessions that would help pay for the cost of coverage expansions–promised not to seek more than $80 in reduced payments to drug makers.

To an industry as big and profitable as the drug makers, giving up $80 billion over ten years wouldn’t seem like much of a sacrifice–a point critics started making right away. But if IMS is right, the drug industry wouldn’t even be giving up $80 billion, in any meaningful sense of the term. If anything, it’d be making more money. Maybe quite a lot of it.

Which is what I predicted, both here and here.

Cohn concludes, “the drug industry has enormous leverage in Congress.” But Cohn still supports the president’s health care takeover. Or is it PhRMA’s health care takeover?

To use a technical phrase, this is hogwash. This new 6-1/2 minute video, narrated by yours truly, gives 12 reasons why Obamacare will lead to higher deficits – including real-world evidence showing how Medicare and Medicaid are much more costly than originally projected.

By the way, this video doesn’t even touch on the mandate issue, which Michael Cannon explains is not being counted in order to make the cost of government-run healthcare less shocking.

Either those taxpayer dollars will fund abortions, or the restrictions necessary to prevent taxpayer funding will curtail access to private abortion coverage. There is no middle ground.

Thus both sides’ fears are justified. Both sides of the abortion debate are learning why government should not subsidize health care. Tip of the hat to President Obama for creating this teachable moment.

Meanwhile, Catholics should be outraged at the United States Conference of Catholic Bishops (to which my grandfather served as counsel). Yes, the USCCB helped prevent taxpayer funding of abortions in the House bill. But at the same time, those naughty bishops have abandoned the Church’s doctrine of subsidiarity by endorsing the rest of the Democrats’ plan to centralize power in Washington.

As it happens, Caesar is the main source of funding for Catholic hospitals. That may explain why the bishops are so eager to render unto, ahem, Him.

Cross-posted at Politico’s Health Care Arena.

The narrow 220-215 victory in the House on Saturday night was a step forward on the road to a government takeover of the health care system.  But as close and dramatic as that vote was, that was the easy part.  The Senate must still pass its version of reform—which will not be the bill that just passed the House.  Nancy Pelosi was, after all, able to lose the votes of 39 moderate Democrats.  Harry Reid cannot afford to lose even one.  A conference committee must reconcile the two vastly different versions.  And then, Pelosi must hold together her 3 vote margin of victory (if it gets that far).  Yet several House Democrats who voted for the bill on Saturday said they did so only to “advance the process.” Their vote is far from guaranteed on final passage.  And, House liberals are almost certain to be disappointed by the more moderate bill that may emerge from the conference.

Among the more contentious issues:

Individual Mandate: This should’ve been low-hanging fruit. Democrats agreed on a mandate early in the process. But it became increasingly plain that a mandate would hit those with insurance as well as the uninsured — forcing people who are happy with their plan to switch to a different, possibly more expensive plan. With this mandate now being seen as a middle-class tax hike, qualms have developed.  The House bill contains a strict mandate, with penalties of 2.5 percent of income backed up by up to five years in jail.  The Senate Finance Committee, on the other hand, watered down the mandate’s penalties and delayed the mandates implementation.

Employer Mandate: The House bill also contains an employer mandate, a requirement that all but the smallest employers provide insurance to their workers or pay a penalty tax of up to 8 percent of payroll.  The Senate,  looking at unemployment rates over 10 percent, seems unlikely to include an employer mandate.

The Public Option: The House included, if not a “robust” public option, at least a semi-robust one.  But moderate Democrats in the Senate are clearly not on board.  Joe Lieberman (I-CT) says that he will join a Republican filibuster if the public option is included.  Harry Reid is trying various permutations: a trigger, an opt-in, an opt-out.  But as of now there is not 60 votes for any variation.

The Sheer Cost: Fiscal hawks like Sen. Evan Bayh (D-IN) say they will not support a bill that adds to the deficit or spends too much.  But the house bill cost a minimum of $1.2 trillion.

Taxes: The House plan to add a surtax on incomes of $500,000 or more a year has no support in the Senate. At the same time, the Senate plan to slap a 40 percent excise tax on “Cadillac” insurance plans is unacceptable to key Democratic constituencies like labor unions.

Abortion: Conservative Democrats insisted on a strict prohibition on the use of government funds for abortion.  The bill could not have passed without the inclusion of that provision.  House liberal swallowed hard and voted for the bill, despite what they called “a poison pill” anyway with the expectation that it will be removed later.  If the final bill includes the prohibition at least a couple liberals could defect.  If it doesn’t, conservative Democrats won’t be on board.

Immigration: The Senate Finance Committee included a provision barring illegal immigrants from purchasing insurance through the government-run Exchange.  The House Hispanic Caucus says that if that provision is in the final bill, they will vote against it.

As if these disagreements among Democrats wasn’t bad enough, public opinion is now turning against the bill.

President Obama has called for a bill to be on his desk before Christmas—the latest in a series of deadline that are so far unmet.  It is hard to see how Congress can meet this one either.  The Senate has not yet received CBO scoring of its bill and is not prepared to even begin debate until next week at the earliest.  That debate will last 3-4 weeks minimum, assuming there are 60 votes for cloture.  That means, the bill cant’ go to conference committee until mid-December, even if everything breaks the way Harry Reid wants.  Privately, Democrats are now suggesting late January, before the State of the Union address, is the best they can do.

The fat lady can go back to sleep—this isn’t over yet.

The American people don’t want the Democrats’ approach to health care generally. The more time the public has to digest ObamaCare, the more they dislike it:

And the Pelosi bill is the most expensive and extreme version of ObamaCare.  Opposition will climb higher when the public learns the bill costs some $1.5 trillion more than Democrats claim.

Even a majority vote would not necessarily indicate majority support for the Pelosi bill. Rep. Jim Cooper (TN) and other Democrats are voting aye only because they want to keep the process moving – i.e., because this isn’t the vote that counts.

Win or lose, tonight’s vote will be the high water mark for the Pelosi bill.

(Cross-posted at Politico’s Health Care Arena.)

Will the House pass healthcare this weekend — or not

My response:

In his post below, my colleague Michael Cannon links to his devastating analysis of the way House Democrats have buried the true cost of their healthcare scheme. This is legerdemain of the first order, but it is business as usual here in Washington. Here we have a Congress that cannot fix Medicare, which will go broke even before Social Security does, a Congress that still hasn’t met the October 1 budget deadline for the ninth year in a row, and it wants to fundamentally reorder healthcare in America with a scheme that no one understands and no one knows how to fund. Any private business that ran its affairs that way would long have been out of business.

Given this record of insanity, therefore, it is impossible to say whether the House this weekend will pass this 1,990-page monstrosity of a bill — whether enough sanity will come to enough members to kill the bill. One datum does loom large, however: Speaker Pelosi can afford to lose no more than 40 members of her caucus. Combine that, after Tuesday’s election results, with another datum — there are 49 House Democrats who sit in districts that John McCain carried — and one has to ask whether the insanity we see before us reaches to political suicide.

Yet whatever happens tomorrow, or in the Senate down the road, this cannot go on, simply because the money isn’t there to allow it to go on. On Tuesday at the polls and yesterday with the huge demonstration in front of the Capitol we are seeing what Charles Krauthammer this morning rightly calls the demolition of “the great realignment myth of 2008.” America is not a suicidal nation. The Founders and Framers gave us institutions that have endured for over two centuries and are the envy of the world. Whatever happens tomorrow, the seeds of sanity are in the American soil and soon will be springing forth.

It would be no more audacious (and much more honest) than the way they have gamed the CBO’s rules to hide $1.5 trillion of the cost of their legislation — which has to be the biggest fiscal obfuscation in the history of American politics.

Here’s how they did it.

C/P Politico

President Obama won the presidency with 66 percent of the vote among 18-to-29 year-olds. That’s a larger share than any presidential candidate has won in decades. Yet his health care overhaul could impose its greatest burdens on young adults, says Yelowitz.

Health care proposals moving through Congress would force most or all Americans to purchase health insurance (an “individual mandate”) and would impose price controls on health insurance (“community rating”) that would limit insurers’ ability to offer lower premiums to low-risk enrollees.

Those provisions would drive premiums down for 55-year-olds but would drive them up for 25-year-olds—who are then implicitly subsidizing older adults. According to the Urban Institute, many young people could see their premiums double, whereas premiums for older adults could be cut in half.

Read the entire thing.

We encourage you to submit questions once the event has started. Rep. Rosa DeLauro (D-CT) will participate in the chat alongside Cannon.

The only thing I don’t like about this video is that I fear people may no longer want to watch the ones I narrate.

Meanwhile, in Harvard economist and Cato Institute senior fellow Jeffrey Miron’s dystopia, if your parents wind up with no money through bad luck or poor decision-making and then you get sick you’ll just die on the street for lack of money.

Did I really say such an outrageous thing? Well, I did not use exactly those words (as Matt makes clear), but yes, that is the logical implication of my position.

And I stand by it. Here’s why.

First, my assessment is that even with no government health insurance, hardly anyone would die on the street for lack of health care. The poor would use their income transfers to buy some health care or insurance. The poor would receive private charity. And health care would be far less expensive due to elimination of the distortions caused by government health insurance.

Second, my position is that government provision of health insurance is enormously inefficient: it means worse health care for everyone, and it wastes resources that can be put to other uses. So the negative of having a few people suffer without government health insurance must be balanced against the good of having better medical care for all and against the good that can be accomplished with those saved resources.

That good might be lower taxes for everyone, or more government spending on education, or greater public health spending to combat HIV in poor countries. Whatever the alternate uses turn out to be, one cannot escape the fact that a tradeoff exists between protecting the poor and other goals.

C/P Libertarianism, from A to Z

That is, the National Organ Transplant Act — which outlawed the sale of kidneys and other organs — for some reason included bone marrow.

NOTA’s criminal ban is unconstitutional because it arbitrarily treats bone marrow like nonrenewable solid organs instead of like other renewable or inexhaustible cells – such as blood or sperm — for which compensated donation is legal.  (That makes no sense because bone marrow, unlike kidneys, replenishes itself in just a few weeks, leaving the donor whole. )

The ban also fails constitutional muster because it irrationally interferes with the right to participate in safe, accepted, lifesaving, and otherwise legal medical treatment.

As Chip Mellor, president and general counsel of the Institute for Justice, said in a press release announcing the case:  “Bad things happen when the federal government exceeds its constitutional authority.  In this case, people actually die.  The Institute for Justice intends to stop that and to restore constitutional constraints that prohibit arbitrary limits on individual liberty.”

IJ brought this suit on behalf of adults with deadly blood diseases, the parents of sick children, a California nonprofit, and a world-renowned medical doctor who specializes in bone marrow research.  You can find more information here.  Perhaps more interestingly, IJ senior attorney Jeff Rowes is guest-blogging about the case all week at the Volokh Conspiracy.  Here’s his first post.

For example, check out section 2531  — that’s pages 1431-33 for those following along at home — which has gone largely unnoticed in the major news cycle.  These three pages of the bill reward states that refrain from setting (or repeal) any caps on medical malpractice rewards — and the accompanying lawyers’ fees! – by requiring the Secretary of Health and Human Services to provide them a bribe an “incentive payment.”

As Hans von Spakovsky notes at NRO’s Corner, this “alternative medical liability law” aims to eviscerate cost-saving measures that protect doctors from frivolous lawsuits that increase the cost of health care to the consumer.  So this has nothing to do with providing better or cheaper care, covering the uninsured, or even eliminating waste and fraud.  Instead, it’s a pure sop to one of the Congressional Democrats’ key constituencies: trial lawyers.

For more information on free market health care reform alternatives, please visit Cato’s Health Care website here.

He explains his findings below:

For real market-based reform, see Cato’s new Policy Analysis, “Yes, Mr. President: A Free Market Can Fix Health Care.“

Yglesias apparently still buys into the myth that the public option is, well, an option.

For people who receive health insurance through their employers, which is to say the vast majority of the Americans who currently have health insurance, the House bill would change very little. Or, rather, the biggest change would simply be the confidence that if, in the future, you cease to get health insurance from your employer (maybe you’ll lose your job or want to change jobs) that you’ll still be able to get health care. What’s more, of the minority of Americans who would be getting health care through the new “exchange,” the majority will probably sign up for private health insurance and everyone will have the option of doing so. If the government-run public plan is, for whatever reason, vastly more appealing than the private options then it will dominate. But if you believe the government can’t run health care well, there’s no reason to think that will happen. Whatever you think of that, though, the basic fact is that even if the public option does dominate the exchange most people will still have private employer-provided insurance.

That might be true if the new government-run program were going to compete on anything close to a level playing field.  But, because the public option is ultimately supported by the taxpayers, the playing field can never be level.   True, the bill does say that the new program is supposed to be self-sustaining, covering administrative and benefit costs entirely out of premium revenues.  But remember that Medicare Part B was originally supposed to support 50 percent of its costs through premiums.  That has shrunk to the point where premiums pay for less than 25 percent of the program’s cost.

And the government has a myriad of ways to prevent the true cost of the program from showing up in premium prices.  For example, the government-run plan will not have to pay state or federal taxes, and unlike private insurance plans, who can be sued in state courts, the government-run plan could only be sued in federal court.

At the very least, the program carries with it an implicit guarantee against future losses.  Suppose the public option prices its products too low and loses money.  Can you imagine that Congress is simply going to let it go bankrupt, go out of business?  Would a Congress that has bailed out banks and automobile companies because they are “too big to fail” resist subsidizing the government’s insurance plan if it began to lose money?   Even without the actual bailout, such an implicit guarantee has a value. For example, the implicit guarantees behind Fannie Mae and Freddie Mac were estimated to have saved those institutions $6 billion per year.

All of this means that the government-run plan would be significantly cheaper than private insurance, not because it would out-compete private insurance or because it was more efficient, but because it had unfair advantages.  The lower cost means that businesses, in particular, would have every incentive to dump workers from their current health insurance plan into the government plan.  And, if other provisions of the bill make insurance more expensive, as is likely, the incentive for employers to shift workers to the government plan would be even greater.   Estimates suggest that nearly 90 million workers could eventually be forced into the government plan.

As Robert Samuelson, dean of economic columnists, writes in the Washington Post, “a favored public plan would probably doom today’s private insurance.”

Samuelson is right.  There is nothing “optional” about a public option.  And that is just the way the Left wants it.

That’s the health care equivalent of negotiating with Tony Soprano.

But regardless of how much lipstick they put on this pig, it still is a government takeover of the health care system that would all but eliminate private insurance and force millions of Americans into a government-run system. Apparently the House leadership has decided that if at first you can’t get the votes by being honest about your true intentions, lie, lie, again.

One explanation for Majority Leader Harry Reid (D-NV) including the government-run program — supporters call it a “public option”; I prefer Fannie Med — in the Senate bill is that Fannie Med’s popularity is on the rise.  Another explanation is that Reid had to include it to remain majority leader and get left-wing Nevadans to work for his re-election.

But a third explanation, not inconsistent with the others, is that the savvier Democrats know that all they need to nationalize health care is an individual mandate.  So they’ll let Fannie Med take a beating, and then pass the more sweeping individual mandate when opponents are too exhausted and distracted by their “victory” over Fannie Med to notice.

(Cross-posted at Politico’s Health Care Arena.)

Reid’s Option: Does it help or hurt the chances for healthcare passage by Christmas?

My response:

Like every other part of ObamaCare, the “opt-out” proposal for the “public option” is a mystery — and almost certainly will continue to be even after the likely 1,500-page bill emerges, if ever it does. Will residents in states that opt-out be able to opt-out of the taxes needed to support the public option? (Please don’t say the public option will be self-supporting: we’re grown-ups.) Healthy taxpayers in North Dakota, after all, have no incentive to subsidize unhealthy New Yorkers. But if states can opt out of the tax part, then we’ll have “adverse selection” at the state level, the very thing the “individual mandate” is meant to stop at the individual level. Yet if states won’t be able to opt out of the tax component, then what’s the incentive for states to opt out of the public option? All pay, no benefit, is a sucker’s game.

This is all smoke and mirrors. And it’s laughable to think that the Congressional Budget Office can score any of this, when nobody knows what “this” is. For all the backroom dealings so far, enough has taken place in public to enable the public to see what’s going on, and it’s not pretty. It’s the usual something-for-nothing gimmickry, like last week’s “doc-fix” joke. The vote on that is the best predictor so far of where this whole thing is going. When labor tells us they might accept a tax on high-value insurance plans if it doesn’t hit the middle class, we know the money isn’t there. May ObamaCare rest in peace until more sober people are able to attend to what’s really required to straighten out the health care mess that Congress created in the first place.

The promise of the public plan is a mirage. Its political brilliance is to use free-market rhetoric (more “choice” and “competition”) to expand government power. But why would a plan tied to Medicare control health spending, when Medicare hasn’t?

Read the whole thing.

Support for a government guarantee of health insurance starts dropping sharply as the country starts debating the topic. It’s not clear from this graphic, provided by Gallup, but support is at 64 percent in June, 55 in July, and 51 in late September, well after the Long Hot August and just after President Obama’s health care blitz that included his primetime speech to Congress and highly publicized rallies in Minnesota and Maryland. Note also that the question doesn’t mention any downsides of the government guarantee; respondents apparently had figured those out for themselves.

Oddly enough, if you search the New York Times site for this question, nothing comes up. And if you Google the question, the Times isn’t in the search results. It’s almost as if they didn’t want to publicize their very interesting finding. You can find a reference to it here and documentation here.

Another interesting take on support for health care “reform” can be found here — a graph of all the polls on health care plans offered by the president or in Congress, from January to present, showing opposition rising. Also from pollster.com: President Obama’s slipping approval numbers on health care.

(Cross-posted at Politico’s Health Care Arena.)

The whole idea that Fannie Med would be an “option” is a ruse.

Like the three “public options” we’ve already got – Medicare, Medicaid, and the State Children’s Health Insurance Program – Fannie Med would drag down the quality of care for publicly and privately insured patients alike.  Yet despite offering an inferior product, Fannie Med would still drive private insurers out of business because it would exploit implicit and explicit government subsidies.  Pretty soon, Fannie Med will be the only game in town – just ask its architect, Jacob Hacker.

Now the question before us is, “Should we allow states to opt out of Fannie Med?”  It seems a good idea: if Fannie Med turns out to be a nightmare, states could avoid it.

But the state opt-out proposal is a ruse within a ruse.

Taxpayers in every state will have to subsidize Fannie Med, either implicitly or explicitly.  What state official will say, “I don’t care if my constituents are subsidizing Fannie Med, I’m not going to let my constituents get their money back”?  State officials are obsessed with maximizing their share of federal dollars.  Voters will crucify officials who opt out.  Fannie Med supporters know that.  They’re counting on it.

A state opt-out provision does not make Fannie Med any more moderate.  It is not a concession.  It is merely the latest entreaty from the Spider to the Fly.

(Cross-posted at National Journal’s Health Care Experts blog.)

Stan Brock just wants to help. The former co-star of “Wild Kingdom” wants to deliver free medical, dental and vision care to the poor. Whereas most politicians talk about “bending the cost curve” in health care, Brock simply wants to break it – to provide care free of charge, at the hands of unpaid volunteer doctors and dentists using donated equipment.

Brock’s group, Remote Area Medical, wants to bring its services to Washington, and soon. He wants his volunteer eye doctors to grind new glasses on the spot for those having trouble seeing.

He wants his dentists to pull rotten teeth and perform root canals in badly neglected mouths. He wants to give checkups and HIV tests to the uninsured and the underinsured. No questions asked.

The only question is whether the bureaucrats will let him do it.

That sounds like hyperbole.  It’s not.  Read the whole thing (it’s short) and you’ll learn how in-state clinicians shamelessly use monopolistic licensing laws to protect themselves from competition — even at the cost of denying medical care to poor people.

Yesterday, Cato released a study where I advocate breaking up the state’s licensing monopolies and making state-issued licenses portable.  Such a law would completely solve Remote Area Medical’s problem.

This Cato study by economist Shirley Svorny reveals how clinician licensing laws do more harm than good.

(Cross-posted at Cato@Liberty Politico’s Health Care Arena.)

The big news is that net college prices — what students pay after aid– have actually decreased over the last 15 years. While sticker prices were rising much faster than incomes and inflation, what students were actually paying dropped. The implication of this is so obvious that Mr. Magoo couldn’t mistake it: Student aid, much of which comes through taxpayers, enables schools to charge ever-higher prices with near impunity.

Back to the Quick and the ED. To some degree, Miller sees declining net price as a triumph for federal aid, making college more affordable even as prices explode:

This story should be encouraging for legislators that fought hard to win Pell Grant increases over the last few years. The steepest decreases in net price occur beginning in the 2007-2008 academic year, the same time Congress began passing legislation that boosted the maximum Pell Grant award several times. This at least suggests that the money spent on the program did play some role in lessening the financial burden for students and was not completely eaten up by sticker price increases.

On the flip side, Miller at least acknowledges that:

The net price figure also lessens the pressure on schools to actually take proactive steps to lower their costs. If the price you list isn’t actually what you charge, then why should anyone care what the listed price is and how high it gets? Net price thus serves as a kind of smokescreen that gets colleges at least partially off fo[r] charging an arm and a leg.

So what’s wrong with this analysis? 

Most important is that Miller softpedals the aid effect, suggesting that the main negative consequence of  ever-increasing assistance is that it bleeds off a bit of the pressure for schools to lower costs. But it likely has a much more destructive effect than that, not just curbing efficiency pressures, but enabling schools to constantly charge and spend more.  It’s a likelihood that student-aid defenders try to dispel by citing studies that cover very short periods of time, or that simply pronounce that we don’t know that it happens. That it probably happens, however, has been borne out empirically, and it’s readily ackowledged by prominent higher educators including former Harvard president Derek Bok, former Stanford vice president William F. Massy, and former University of Iowa president Howard Bowen. Indeed, the latter’s “law” couldn’t be more blunt: “Universities will raise all the money they can and spend all the money they raise.”

Miller’s other major failing is that he completely ignores that all this aid has to come from somwhere, and that “somewhere” is largely taxpayers. (OK, first it’s China.) Just to give you a sense of the impact on taxpayers, College Board data show that between the 1998-99 and 2008-09 academic years, total federal aid — including grant money recipients don’t have to pay back, and loans they (sometimes) do — rose from $61.1 billion to $116.8 billion. Add state aid to that, and the total goes from $66.6 billion to $126.2 billion.

And what are some of the major downsides of these forced third-party payments? Miller mentions a few pricing difficulties for students, but makes no mention of the potentially huge negative consequences for the nation: Encouraging lots of people to attend college who simply aren’t prepared for it; cranking out many more degrees than the job market demands; and potentially slowing economic growth by taking funds from productive uses and giving it to efficiency-averse colleges and students. 

The big finding in the latest College Board data, which the Quick and the ED nails, is that net college prices have been going down. The important story, however, is that this is bad news for the country. Unfortunately, the Quick and the Ed misses that almost completely.

Regarding recent polling that shows that a new Fannie Med (my term) commands majority support among the public, Landrieu quipped, “I think if you asked, ‘Do you want a public option, but it would force the government to go bankrupt?’, people would say no.”

Real health care reform wouldn’t bankrupt taxpayers or the government.

If there is a way of getting this done where we’re driving down costs and people are getting health insurance at an affordable rate, and have choice of doctor, have flexibility in terms of their plans, and we could do that entirely through the market, I’d be happy to do it that way.

In a new Cato study titled, “Yes, Mr. President, a Free Market Can Fix Health Care,” I take up the president’s challenge and explain that markets are indeed the only way to achieve those goals.  I also explain how Congress can remove the impediments that currently prevent markets from doing so:

1. Give Medicare enrollees a voucher (adjusted for their means and health risk) and let them purchase any health plan on the market,
2. Reform the tax treatment of health care with “large” health savings accounts, which would give workers a $9.7 trillion tax cut (without increasing the deficit) and free them to purchase secure coverage that meets their needs,
3. Free consumers and employers to purchase health insurance across state lines (i.e., licensed by other states), which could cover up to one third of the uninsured,
4. Make state-issued clinician licenses portable, which would increase access to care and competition among health plans, and
5. Block-grant Medicaid and the State Children’s Health Insurance Program, just as Congress did with welfare.

Unlike the president’s health care proposals (which, as Victor Fuchs explains, would merely shift costs), these reforms would reduce costs, expand coverage, and improve health care quality – without new taxes, government subsidies, or deficit spending.

Would a free market be nirvana?  Of course not.  But fewer Americans would fall through the cracks than under the status quo or the government takeover advancing through Congress.

There is a better way.

(Cross-posted at Politico’s Health Care Arena.)

By all means, model a new government program after Medicare, which:

• Drags down the quality of care for all patients, both publicly and privately insured
• Literally kills people by fueling the epidemic of deaths due to medical errors (as many as 100,000 annually)
• Is responsible for the fragmented delivery system about which the Left complains
• Has required one tax increase every four years, still has an unfunded liability approaching $90 trillion, and will therefore be the driving force behind income-tax rates essentially doubling by mid-century
• Has been expanded well beyond its original mission
• Didn’t save a single life in (at least) its first 10 years of operation
• Coerces people to choose it over private insurance
• Restricts enrollees’ freedom to spend their own money on medical care
• Is easily (and persuasively) parodied as a tool of the devil

Pleeeeease don’t throw me into that briar patch.

Improving “population health” generally means “helping people live longer.”

To paraphrase, Reinhardt then writes:

If helping people live longer were our objective in health reform, we could do better than universal coverage. But health reform is not (solely or primarily) about helping people live longer. It is (also or primarily) about other things, like relieving the anxiety of the uninsured.

I applaud Reinhardt for acknowledging a reality that most advocates of universal coverage avoid: that universal coverage is not solely or primarily about improving health.

Will Reinhardt go further and acknowledge that, since universal coverage is largely about some other X-factor(s), that necessarily means that advocates of universal coverage are willing to let some people die sooner in order to serve that X-factor?

(Cross-posted at National Journal’s Health Care Experts blog.)

So when Speaker Pelosi says the House bill would cost under $900 billion, what she actually means is that it would cost around $2.25 trillion.

Democrats say they’re motivated by the need to increase competition in health insurance markets.  Right.

According to Business Week:

David Hyman, a professor of law and medicine at the University of Illinois College of Law and adjunct scholar at the Cato Institute…considers it unlikely that repeal would fundamentally change the nature of the market. While it might increase competition in some markets, he says, it could actually decrease it in others, such as those where small insurers survive because they have access to larger providers’ data. Changes to the act could therefore hurt smaller companies more than larger ones, he says.

Because the act doesn’t outlaw the existence of a dominant provider but simply prohibits collusion, says Hyman, a repeal would fall short of breaking up existing market monopolies that are blamed for artificially inflating prices. The current move against [the] McCarran-Ferguson [Act], he says, “has more to do with the politics of pushing back against the insurance industry’s opposition to health reform than it does with increasing competition in health-insurance markets.”

Combined with what The New York Times described as the Obama administration’s “ham-handed” attempt to censor insurers who communicated with seniors about the effects of the president’s health plan — the Times editorialized: “the government’s Centers for Medicare and Medicaid Services had to stretch facts to the breaking point to make a weak case that the insurers were doing anything improper” — it’s hard to argue that this is anything but Democrats threatening to use the power of the state to punish dissidents.

When Republicans were in power, dissent was the highest form of patriotism.  Now that Democrats are in power, obedience is the highest form of patriotism.

But here’s the clincher: the recommendations would cost money!

The panel acknowledged that its recommendations would increase costs and called for a higher federal reimbursement to school districts, capital investments and money to train cafeteria workers to make the changes. Food costs for breakfasts could rise as much as 9%, and for lunches as much as 25%, if all the recommendations were enacted, the committee said. (source: LA Times)

We should be grateful that the authors at least acknowledge the budgetary impacts of their recommendations. So often it is assumed that school nutrition programs can and should be changed regardless of the costs to taxpayers. Last week I taped a television debate show called Two Way Street (the show is scheduled to air in January, so check your local listings!) with a woman called Ann Cooper, the “Renegade Lunch Lady” (here’s Ann’s website). Ann is on a mission to “change the way our children are eating”. Her intentions are good, and I certainly agree with her that our woeful agriculture policies are skewing incentives towards certain food groups and away from fruit and vegetables.

Having said that, Ann’s experience with school cafeterias was, from what I can gather, gained in East Hampton, NY and Berkeley, CA. Hardly representative samples of consumers across America (although she has reportedly worked in Harlem and New York City, also).  So often “success” in these sorts of places is seen as a scalable blueprint for the rest of the country.  Indeed, Ann used her time on the show to encourage viewers to contact their member of Congress and urge increased Federal funding for nutrition programs.

On the contrary, I would argue that people instead encourage their congresscritters to devolve their ill-gotten power over school nutrition programs back to the local school districts, where they can make the best assessment of the costs and benefits of different plans, given local needs and resources.

David Goldhill is the CEO of the Game Show Network and author of “How American Health Care Killed My Father,” in the September 2009 issue of The Atlantic.

In this Cato video, Goldhill explains why a consumer-driven health care sector would never produce the often horrific problems we see in American medicine, and why the legislation moving through Congress fails to address those problems.

See Goldhill’s complete remarks here.

Ironically, even though universal coverage is presumably about helping the sick, the Democrats’ pursuit of universal coverage demonstrates not how much, but how little they care about their neighbors’ health.

Economists Helen Levy and David Meltzer explain, in a book published by the Urban Institute, “There is no evidence at this time that money aimed at improving health would be better spent on expanding insurance coverage than on…other possibilities,” such as clinics, hypertension screening, nutrition campaigns, or even education.  In the Annual Review of Public Health, they explain further:

The central question of how health insurance affects health, for whom it matters, and how much, remains largely unanswered at the level of detail needed to inform policy decisions…Understanding the magnitude of health benefits associated with insurance is not just an academic exercise…it is crucial to ensuring that the benefits of a given amount of public spending on health are maximized.

If Democrats were serious about improving health, they would first gather evidence about which of those strategies produces the most health per dollar spent.  (As I recommend elsewhere, the $1.1 billion Congress allocated for comparative-effectiveness research should just about do the trick.)  Democrats would then fund the most cost-effective strategies, which may or may not include broader insurance coverage.

But the fact that Democrats are pursuing universal coverage without any such evidence necessarily means that they are willing to sacrifice potentially greater health improvements to achieve…whatever else they hope universal coverage will achieve.

Universal coverage is not about improving public health.  It is about subordinating health to some X-factor that supporters value even more.

Which leads to an even more intriguing question: what is that X-factor?

Financial security?  (If so, would universal coverage achieve that?  Or are there better strategies?)  Political power?  Dependence on government?  Industry subsidies?  The appearance of compassion?

I’d like to see that question put to the group.

(Cross-posted at National Journal’s Health Care Experts Blog.)

The two are intimately connected by a simple proposition: “Most people want more housing and health care than they can afford.” Of course, for “housing” or “health care” one could substitute whatever one wishes: food, clothing, cars, education, entertainment, vacations, you name it. Economists call this the problem of scarcity, and it’s the beginning of economics.

In a free society, most individuals, families, and firms will deal with that problem through such homely measures as creating and husbanding wealth, planning for the future, and living within their means. Some, however, will be indifferent to such discipline and will demand more than they can afford. Enter thus ACORN and the Dems — the party of government. ACORN, like our president, is in the “community organizing” business — a euphemism for putting (some) people in a position to better demand things from government. Some of those demands are perfectly legitimate: reduce crime; fix the potholes. But others, the demands ACORN specializes in, are not thus “common.” They can be satisfied, in a world of scarcity, only by taking from some and giving to others.

And that’s what the housing and health care debates today are largely about. And it’s why on both, the Dems are having difficulty getting their act together, because however much they turn a blind eye toward scarcity or pretend that they all agree, the truth is that they represent discrete constituencies, with discrete conflicting interests. That’s what happens when we’re all thrown into the common pot. What once was decided by individuals, reflecting their own particular interests, is now decided by government — and it’s a Hobbesian war of all against all.

The AP report on ACORN last week illustrated that nicely. ACORN has been in the forefront of those browbeating banks, under the Community Reinvestment Act, to provide housing loans to people who couldn’t afford them. Banks were reluctant to make those loans, of course — until the government stepped in to “guarantee” them. Well, we’ve seen where that ended: we’re all paying the price, especially those who couldn’t afford the homes in the first place, and will be for years to come. AEI’s Peter Wallison details some of that fiasco in this morning’s Wall Street Journal, placing a finger on none other than Barney Frank, who parades now as our savior.

But the same something-for-nothing mindset is at work in the health care debate. Here again, many people want more health care than they can afford, which means that someone else will have to pay for it — the government having nothing except what it takes from us. The pretense that it is otherwise — or that they can redistribute more equitably than the market does — is what drives the Dems to their pie-in-the-sky schemes — until some among them realize that it is they and their constituents who are being taken for a ride. At that point, either the recalcitrant are silenced, with some temporary sop, or the bottom falls out of the scheme, which is what many of us are hoping for here. If not, the housing debacle will prove in time to be a pale harbinger of the health care debacle, at least for those who live to see it.

C/P Politico’s Arena

Gee, I wonder if the insurers’ deceptions and dishonesty will reach even half the number of people that President Obama’s did during his address to Congress.

(Cross-posted at National Journal’s Health)

Unfortunately, House Democrats have since decided that dishonesty is the better strategy.  They, like Senate Democrats, now plan to strip that additional Medicare spending out of health “reform” and enact it separately.  (Democrats are already trying to exempt that spending from pay-as-you-go rules, making it easier for them to expand our record federal deficits.)  Why enact it separately?  Because excising that spending from the “reform” legislation reduces the cost of health “reform”!

But why stop there?  Heck, enact all the new spending separately, and the cost of “reform” would plummet!  Enact the new Medicaid spending separately, and the cost of “reform” would fall by $438 billion! Do it with the subsidies to private health insurance companies, and the cost of “reform” would plunge by $773 billion!  All that would be left of “reform” would be tax increases and Medicare payment cuts.  Health “reform” would dramatically reduce federal deficits!  Huzzah!

Except it wouldn’t, because at the end of the day Congress would be spending the same amount of money.

The only good news may be this.  If this dishonest budget gimmick succeeds, then Congress will have “fixed” Medicare’s physician payments.  Absent that “must pass” legislation, the Democrats health care takeover would lose momentum, and would have to stand on its own merit.  That would be good for the Republic, though not for the legislation.

(Cross-posted at Politico’s Health Care Arena.)

Baucus may know something I don’t.  But here’s what I do know.

1. To subsidize Paul, Democrats need to rob Peter.  And Peter ain’t gonna like that, whether “Peter” is union members, small businesses, insurance companies, medical-device manufacturers, sick people, or the middle class broadly.
2. Of course, the government already does a lot of Peter-robbing and Paul-paying in health care. Democrats could subsidize Paul #2 by cutting subsidies to Paul #1.  But again, Paul #1 — whether “he” be seniors, doctors, hospitals, insurance companies, pharmaceutical manufacturers, medical-device manufacturers, home health agencies, skilled nursing facilities, etc. — ain’t gonna like that.
3. Members of Congress, including Democratic senators, tend to listen to those Peters and Paul #1s.
4. Democrats could try to rob future generations, but they (particularly President Obama) have painted themselves into a corner on that one by promising not to add to the deficit.  And with regard to deficit spending, the public appears to be in no mood.

Heck, I’m sure that Baucus knows a lot of things I don’t know.  But I doubt he knows any magical incantations that’ll make those challenges go away.

(Cross-posted at Politico’s Health Care Arena.)

Broder writes, “Obama has steered the enterprise to the point that odds now favor a bill-signing ceremony.  But the hardest choices still lie ahead….”  Whaa??  How can the odds be better than 50-50 if the biggest fights haven’t even happened yet?

Broder’s optimism continues, “Two things will be needed to reach [a majority in the House and 60 votes in the Senate]: first, a plausible plan for making affordable and comprehensive health insurance available to millions…. And second, a way of financing the coverage….”  But that’s been the whole challenge all along.  Is Broder actually acknowledging that Democrats aren’t any closer to a signing ceremony than they were six months ago?

Broder says Democrats can meet the second challenge by taxing high-cost health plans — “a step that would require Obama to face down his labor union allies.”  You mean Obama should lean on Democrats to tax a crucial part of their own base?  One that’s already activating to block that tax?

Broder also thinks Obama should lean on his fellow Democrats to roll the doctors and hospitals in their states/districts by including more (some? any?) “delivery system reforms” in the legislation.

Sure.  No problem.  What could go wrong?  This is practically a done deal.

(Cross-posted, sarcasm and all, at Politico’s Health Care Arena.)

President Obama on Wednesday attempted to preempt the announcement that Social Security recipients will not get an increase in their benefit checks for the first time in three decades, encouraging Congress to provide a one-time payment of $250 to help seniors and disabled Americans weather the recession.

Obama endorsed the idea, which is expected to cost at least $13 billion, as the administration gropes for ways to sustain an apparent economic rebound without the kind of massive spending package that critics could label a second stimulus act.

This is outrageous on four levels:

1. If the president thinks the economy needs more stimulus, he should say that explicitly and have an honest debate.

2. This is the wrong kind of stimulus. Any further stimulus should consist of reductions in marginal tax rates, such as a cut in the corporate income tax (or better yet, repeal).

3. All Social Security recipients already have a moderate guaranteed income, and many have significant income beyond their Social Security benefits. This kind of transfer has no plausible justification as redistribution for the needy.

4. Sending checks to seniors is a blatant attempt to buy their support for Obamacare, which promises to cut Medicare spending substantially.

C/P Libertarianism, from A to Z