My $1 Trillion vs. Your $1 Trillion
Do you remember how, during the debate over proposals to create personal accounts for Social Security, opponents called the $1 trillion transition cost intolerable? Now, a $1 trillion floor for health care reform is seen as a sign of success. Says something about priorities, doesn’t it?
Three Worthwhile Health Care Videos
The first comes from the group Patients United Now. Keep this video in mind the next time you hear someone say that a new “public option” is not about a government takeover of the health care sector.
The next video comes from the Independence Institute in Colorado. It is a nice complement to my colleague Michael Tanner’s recent study, “Massachusetts Miracle or Massachusetts Miserable: What the Failure of the ‘Massachusetts Model’ Tells Us about Health Care Reform.”
Finally, a really disturbing video showing Christina Romer, chair of President Obama’s Council of Economic Advisors, refusing to admit to a congressman that the president’s reform plan would oust Americans from their current health plans.
It’s a shame what politics does to really smart people.
Remember When $1 Trillion Was Real Money?
Senate Finance Committee chairman Max Baucus (D-MT) has announced that he has reached agreement on scoring a series of options that will reduce the cost of his health care reform bill to just $1 trillion over the next 10 years. Whew. Now we can all rest easy.
Still, no agreement on the tax increases needed to pay that $1 trillion though.
Cato Experts Live-Blog ABC News Health Care Special
Cato health care experts Michael D. Tanner and Michael F. Cannon provided live commentary Wednesday night for ABC’s “Prescription for America,” a special program from within the White House on Obama’s health care reform proposal.
You can watch the program, and follow along below.
For more, visit Healthcare.Cato.org.
Ed Crane Describes a Libertarian Approach to Health Care Reform
Last week, Cato hosted an all-day conference on health care reform, which included expert opinions from across the political spectrum. Cato Founder and President Ed Crane started the event with a talk about a libertarian approach to reforming health care, which would reduce federal involvement, increase competition, decouple health care from employment and increase the amount of doctors available.
You can find all of Cato’s reasearch on health care reform at Healthcare.Cato.org.
Going Bankrupt Double-Quick
George W. Bush and the Republicans worked hard to ruin the U.S. government’s finances. The Obama administration and the Democrats are doing an even better job of wrecking the Treasury.
Treasuries headed for their second monthly loss, pushing 10-year yields up the most in almost six years, as President Barack Obama’s record borrowing spree overwhelmed Federal Reserve efforts to cap interest rates.
Notes, little changed today, also tumbled this week on speculation the worst of the economic recession is over. A private report today will show confidence among U.S. consumers gained in May for a third month, economists said. South Korea’s National Pension Service, the nation’s largest investor, plans to reduce the weighting of U.S. bonds in its holdings, the government said in a statement.
“It’s a disastrous market,” said Hideo Shimomura, who oversees $4 billion in non-yen bonds as chief fund investor at Mitsubishi UFJ Asset Management Co. in Tokyo, a unit of Japan’s largest bank. “I expected yields to rise but not this fast. We will see new highs in yields.”
The benchmark 10-year note yielded 3.61 percent at 6:29 a.m. in London, according to BGCantor Market Data. The 3.125 percent security due in May 2019 traded at a price of 95 30/32.
Ten-year rates rose about half a percentage point in May, extending an increase of 46 basis points in April. The two-month climb was the most since July and August of 2003. A basis point is 0.01 percentage point.
As borrowing costs rise, so will future deficits, requiring more borrowing, which will push up interest rates, hiking future deficits, requiring…
Just how are we going to finance trillions of dollars for health care reform while wrecking the economy with cap and trade? And then there’s the $107 trillion in unfunded liabilities for Social Security and Medicare.
Howard Baker and Universal Coverage
Add former Senate Majority Leader Howard Baker (R-TN) to the Church of Universal Coverage faithful:
Health care reform and universal coverage is [sic] indeed something [sic] whose time has [sic] come.
Baker joined fellow former Senate Majority Leaders Tom Daschle (D-SD) and Bob Dole (R-KS) to introduce a health care reform package. Daschle is already a high priest in The Church. For backing this proposal, Dole probably is too, but I don’t have any juicy quotes handy.
Panic Starting to Set in Among Advocates of Government-Run Health Care
Until now the usual suspects hoping to win a government takeover of America’s health care system appeared to be confident of victory. No longer, however. Some of them, at least, are starting to notice the fact that health care “reform” will be incredibly expensive at a time when the U.S. government has no money. Indeed, the problem is not that the Treasury is empty. Rather, it is filled with IOUs for which foreign creditors, such as China, now worry about collecting on.
Writes Jonathan Cohn at the New Republic:
Attention fellow liberals who want health care reform: You are in danger of losing the fight for universal health insurance. And it’s not only–or even primarily–because of the public plan.
It’s because of the money.
Well, contrary to the belief of many on the Left, money does matter. As much as we all might wish, money does not grow on trees. And running the printing presses isn’t the panacea that some believe.
Cohn seems surprised that the Congressional Budget Estimate came in so high, but a complete bill almost certainly would cost even more. Thankfully, the government-takeover bandwagon has hit a large bump, and even larger barriers must be overcome for health care “reform” to triumph.
“Why Health Care Reform Could Fail Again”
Former Clinton administration adviser Stanley Greenberg has an illuminating article in The New Republic. Greenberg compared the polls he did during the Clinton health care debate to his recent polling on President Obama’s proposed reforms:
Perhaps I should know better than to have sensed any profound changes in the country. And, when I got the results for the new survey, I looked at each question warily, remembering how it all went badly wrong. As I reached the last of the questions, I exclaimed: “Oh no. It can’t be. Nothing’s changed.”…
The country divides evenly on whether the greater risk is an unchanged status quo or government reforms that “create new problems.” And, finally, Obama might want to pay attention to how closely his situation echoes Clinton’s. Then and now, more people favor the president’s health care plan than oppose it, but the supporters make up less than a majority.
If anything, I found on most of these questions that the desire for change and support for reform was slightly stronger 16 years ago, underscoring the importance of learning some lessons from that history…
Our inability to talk credibly about how we would reduce health care spending or costs for individuals and the country built a contradiction into all our efforts–the more we talked about the comprehensiveness of our plans, the more voters worried this would yield higher premiums or higher taxes. Very quickly, voters came to conclude that their families would face higher costs.
And those dynamics are still in play. In my recent polling, I found that voters are skeptical about claims that reform will reduce costs and personal health outlays. Claims about simplicity, information-technology modernization, and best practices don’t seem to be enough to persuade them otherwise…
It may surprise you that Obama has already lost seniors, according to our current survey–only one-third approve of his plan. It doesn’t take a rocket scientist to see there isn’t much in it for them. There is already talk of carving out major savings from Medicare and, unlike during Clinton’s battle, no offer of a new drug benefit. Clearly, they need to see health care gains for themselves too…
With few illusions about the old system, union households are strong supporters of Obama’s proposal. Yet the members will ultimately judge whether the plan is good for their families–and I’m certain that all the talk about taxing insurance contributions has not gone unnoticed…
[W]hile voters have great confidence in Obama and his administration, they are worried about the deficits and spending and the government bailouts of the irresponsible. So, while voters want to see a rebalancing away from greed and toward the public good, almost half the citizenry is worried the government may get it wrong.Ross Perot is a distant memory, but his more libertarian, blue-collar male voters are very much alive. They are pretty certain government will mess this up–and only about 30 percent support Obama’s health care plan right now. With Republicans reciting their mantra about no “government takeover” of health care, the plan’s opponents have found a common text…
Most are not at all satisfied with a system that has forced them to trade higher wages for continued health insurance coverage and other compromises. But those personal compromises to get satisfactory coverage will mean people can live a little longer with the status quo and want to make sure the proposed changes really will make things better for their families.
Those who support real health care reform should take note.
Sen. Kennedy’s Budget-Breaking “Reform” Bill
It appears that the Obama administration has decided to disown the venerable Senator. No wonder. The Congressional Budget Office estimated the ten-year cost of Sen. Kennedy’s bill at $1 trillion, but admitted that its analysis was incomplete.
Now the consulting group HSI Network, LLC comes foward with an estimate of $4 trillion:
The Senate Committee on Health, Education, Labor and Pensions (HELP) have proposed a health reform bill called the Affordable Health Choice Act (AHC) that seeks to reduce the number of uninsured and increase health system efficiency and quality. The draft legislation was introduced on June 9th, 2009. The proposal provided adequate information to suggest what the impact would be of AHC using the ARCOLA™ simulation model. AHC would include an individual mandate as well as a pay or plan provision. In addition, it would include a means-tested subsidy with premium supports available for those up to 500% of the federal poverty level. Public plan options in three tiers: Gold, Silver and Bronze are proposed in a structure similar to that of the Massachusetts Connector, except that it is called The Gateway. These public plan options would contain costs by reimbursing providers up to 10% above current reimbursement rates. There is no mention of removing the tax exclusion associated with employer sponsored health insurance. There is also no mention of changes to Medicare and Medicaid, other than fraud prevention, that could provide cost-savings for the coverage expansion proposed. Below, we summarize the impact of the proposed plan in terms of the reduction on uninsured, the 2010 cost, as well as the ten year cost of the plan in 2010 dollars.
HELP Affordable Health Choices Act
- Uninsurance is reduced by 99% to cover approximately 47,700,000 people
- Subsidy – Tax Recovery = Net cost:
- $279,000,000,000 subsidy to the individual market
- $180,000,000,000 subsidy to the ESI market with
- Net cost: $460,500,000,000 (annual)
- Net cost: $4,098,000,000,000 (10 year)
- Private sector crowd out: ~79,300,000 lives
HSI figures that a lot more people will take advantage of federal health insurance subsidies, driving costs up far more than indicated by the CBO figure. (H/t to Phil Klein at the American Spectator online.)
Of course, no one knows what the bill would really cost in operation. But the history of social insurance and welfare programs is sky-rocketing expense well beyond original projections. Go back and look at the initial cost estimates for Medicare and Social Security, and you will run from the room simultaneously laughing and crying.
Health care reform would be serious business at any moment of time, but especially when the country faces $10 trillion in new debt over the next decade on top of the existing $11 trillion national debt. And with the $100 trillion Medicare/Social Security financial bomb lurking in the background, rushing to leap off the financial cliff with this sort of health care legislation would be utterly irresponsible.
Cato on Health Care Reform
We are now facing some of the most sweeping changes health care has seen in decades. Reform is needed, but increasing government control over one-sixth of the economy and over important personal and private decisions — as many of the proposals aim to do — would harm American taxpayers, health care providers, and patients.
This week, the Cato Institute launched Healthcare.Cato.org, which highlights Cato’s contributions to the health care debate. The resources provided on the site provide in-depth analyses of health care issues and reform initiatives, and underscore the ways in which free-market reforms, increased consumer choice, and energized competition — not more government control — improve the quality and cost-efficiency of health care.
Please check back regularly for updates and new resources!
Update: The Cato Institute Conference on Health Care Reform will be Webcast live from 9:00-5:00 PM Wednesday.
Featured speakers:
- Rep. Paul Ryan (R-WI)
- Rep. Michael C. Burgess, M.D. (R-TX)
- Rep. Jason Altmire (D-PA)
- Karen Davenport, Director of Health Policy, Center for American Progress
- Douglas Holtz-Eakin, Former Director, Congressional Budget Office, and Director of Domestic and Economic Policy for the McCain presidential campaign
- Tom G. Donlan, Barron’s
- Karen Tumulty, Time Magazine
- Susan Dentzer, Health Affairs
- John Reichard, Congressional Quarterly
Full schedule of events and Webcast, here.
What’s a Trillion Dollars Among Friends?
If you’re Barack Obama, money is no object. The national debt exceeds $11 trillion. We’ve had about $13 trillion worth of bail-outs over the last year. The deficit this year will run nearly $2 trillion. The Congressional Budget Office warns of a cumulative deficit of some $10 trillion over the next decade.
Now Obama-style health care “reform” will add another $1 trillion in increased spending over the same period. And the ultimate cost likely would be higher, perhaps much higher. Reports the Congressional Budget Office:
According to our preliminary assessment, enacting the proposal would result in a net increase in federal budget deficits of about $1.0 trillion over the 2010-2019 period. When fully implemented, about 39 million individuals would obtain coverage through the new insurance exchanges. At the same time, the number of people who had coverage through an employer would decline by about 15 million (or roughly 10 percent), and coverage from other sources would fall by about 8 million, so the net decrease in the number of people uninsured would be about 16 million or 17 million.
These new figures do not represent a formal or complete cost estimate for the draft legislation, for several reasons. The estimates provided do not address the entire bill—only the major provisions related to health insurance coverage. Some details have not been estimated yet, and the draft legislation has not been fully reviewed. Also, because expanded eligibility for the Medicaid program may be added at a later date, those figures are not likely to represent the impact that more comprehensive proposals—which might include a significant expansion of Medicaid or other options for subsidizing coverage for those with income below 150 percent of the federal poverty level—would have both on the federal budget and on the extent of insurance coverage.
Then there is the more than $100 trillion in unfunded Medicare and Social Security benefits.
Just who is going to pay all these bills?
Don’t worry, be happy.
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