Archive for the ‘Health, Welfare & Entitlements’ Category
ObamaCare’s ‘Sweetheart Deal’ for PhRMA
The New Republic’s Jonathan Cohn reports that back in March, IMS Health projected slightly negative revenue growth for the pharmaceutical industry but recently changed that projection to 3.5-percent annual growth from 2008 through 2013.
“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?
Filed under: General; Health, Welfare & Entitlements
Obamacare Will Be a Budget Buster
Does anyone think that a huge new entitlement program will lead to lower budget deficits? Sounds implausible, yet proponents of government-run healthcare claim this is the case according to the official estimates from the Congressional Budget Office and Joint Committee on Taxation.
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.
Filed under: Government and Politics; Health, Welfare & Entitlements; Tax and Budget Policy
Abortion Funding and Health Care
President Obama’s approach to health care reform — forcing taxpayers to subsidize health insurance for tens of millions of Americans — cannot not change the status quo on abortion.
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.
Filed under: Government and Politics; Health, Welfare & Entitlements
Health Care: Not Close to Over
The fat lady hasn’t even started to warm up yet.
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 Pelosi Bill’s High Water Mark
Democrats are having difficulty corralling 218 votes for the Pelosi bill because Americans do not want government to be as big and as powerful as the House leadership does. Pro-life Democrats do not want a government so big that it can force taxpayers to fund abortions. Pro-choice Democrats do not want a government so big that it uses subsidies to restrict access to abortion coverage. Other Democrats don’t want a government so big that it turns the United States into a welfare magnet.
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.)
Filed under: General; Health, Welfare & Entitlements
This Cannot Last
This morning, Politico Arena asks:
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.
Disguised Health Care Costs: The $1.5 Trillion Fraud
If House Democrats hold a vote on their health-care overhaul this weekend, they might as well vote to abolish the Congressional Budget Office too.
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.
C/P Politico
New Study: Young People Will Pay More Under Obamacare
A new study by Cato Adjunct Scholar Aaron Yelowitz concludes that the cost of President Obama’s health care plan would fall inordinately upon younger Americans, meaning they are in essence being asked to subsidize the care of their elders:
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.
Cato Health Care Expert Michael Cannon to Debate Rep. DeLauro (D-CT) Online at 2pm EST Today
Cato director of health policy studies Michael F. Cannon will participate in a live online chat today at the New Haven Register. The event starts at 2pm EST and will last for an hour.
We encourage you to submit questions once the event has started. Rep. Rosa DeLauro (D-CT) will participate in the chat alongside Cannon.
Don’t Copy Europe’s Mistakes
In this new video, Eline van den Broek of the Netherlands needs only about four minutes to explain why government-run healthcare in Europe is a mistake and why the problems in the U.S. healthcare system are the result of too much government, not too little.
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.
Filed under: Government and Politics; Health, Welfare & Entitlements; International Economics and Development; Tax and Budget Policy
‘Letting the Sick Die on the Street’
Blogger Matt Yglesias has described my CNN op-ed on health care as follows:
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
The Constitutional Right to Save Lives
Our friends at IJ have filed an exciting new lawsuit, one that, if successful, could save the lives of more than 1,000 people a year: people who die needlessly of assorted blood diseases (including leukemia) because the federal government criminalizes the offering of even modest compensation for bone marrow donation.
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.
Filed under: Health, Welfare & Entitlements; Law and Civil Liberties
Health Care Bill Improves Lawyers’ Financial Health
The great thing for legislators about a nearly 2000 page bill — such as, oh, the House’s latest health care salvo — is that very few people bother to read the whole thing. So it’s easy to bury little gifts to favored supporters. Or big ones.
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.
Filed under: Government and Politics; Health, Welfare & Entitlements; Law and Civil Liberties
The Myth of ‘Market Failure’ in Health Care
One argument in favor of a government overhaul of the health care system is that the free market had its chance, and failed when it comes to providing the best possible care. But as David Goldhill discovered while researching for the September cover article in The Atlantic, the United States has anything but a free-market health care system.
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.“
Putting Private Insurance Out of Business
Over at Think Progress, Matt Yglesias takes me to task for saying that the so-called public option in the House’s health care bill “would all but eliminate private insurance and force millions of Americans into a government-run system.”
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.
Can’t Achieve Public Option Without Deception
Speaker Pelosi is set to unveil a health care bill today including yet another version of the so-called public option. This one would let providers “negotiate” reimbursement rates with the government-run program.
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.
Filed under: General; Health, Welfare & Entitlements
Are Savvier Democrats Playing Rope-a-Dope?
Let’s simplify things and say there are essentially two parts to the health care bills moving through Congress: an individual mandate that would effectively nationalize health care, and a government-run program that would explicitly nationalize it slowly, over time.
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.)
“Opt-Out” Smoke and Mirrors
At today’s Politico Arena the editors ask:
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.
Samuelson: the Fannie Med Mirage
In yesterday’s Washington Post, economics columnist Bob Samuelson had a fantastic piece on the Democrats’ plan to create yet another government-run health insurance program for yet another population of Americans. Here’s the money quote:
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?
Slipping Support for Government Health Insurance
Here’s a striking graphic of the results of continuing New York Times/CBS News polling on the question, “Do you think the federal government should guarantee health insurance for all Americans, or isn’t this the responsibility of the federal government?”
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.
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