In today’s Wall Street Journal, I debate ObamaCare‘s individual mandate. Here’s the teaser:

Should Everyone Be Required to Have Health Insurance?

Yes, says Karen Davenport of George Washington University, because it’s the key to making health care more affordable and accessible. No, says Michael F. Cannon from the Cato Institute, because it will make health care more costly and scarce.

I did not write that unfortunate title, which uses the passive voice to conceal who’s doing the requiring. Hint: we ain’t talking about your conscience. I like to say that if we banned the passive voice–e.g., doctors are paid on a fee-for-service basis–it would take two minutes to realize that government creates most of our health care problems, and we would repeal all subsidies, mandates, and regulations within two hours.

Davenport’s article makes one claim to which I was not able to respond: that under ObamaCare, “global payment approaches and other payment changes are designed [gaa! passive voice!] to improve care for patients with chronic illnesses.” Fortunately for humanity, I already dispatched that claim last week in a blog post titled, “Oops, Maybe ObamaCare’s Cost Controls Won’t Work after All.”

So here are your assignments for today. Read both articles. Don’t forget to take the quiz. Then, watch the related 2008 video I posted under the title, “Does Karen Davenport Owe Me $40?“, and decide for yourself whether Karen Davenport does indeed owe me $40. If you think yes, be sure to tell her so in an email to the address provided at the end of her article.

WSJ Debate: Should the Government Require You to Purchase Health Insurance? is a post from Cato @ Liberty - Cato Institute Blog

ObamaCare has always hung by an absurdity.  ObamaCare supporters claim that the Constitution’s words “Congress shall have the Power…To regulate Commerce…among the several States” somehow give Congress the power to compel Americans to engage in commerce.  This ruling exposes that absurdity, and exposes as desperate political spin the Obama administration’s claims that these lawsuits are frivolous.

This ruling’s shortcoming is that it did not overturn the entire law.  Anyone familiar with ObamaCare knows that Congress would not have approved any of its major provisions absent the individual mandate.  The compulsion contained in the individual mandate was the main reason that most Democrats voted in favor of the law.  Yet the law still passed Congress by the narrowest of all margins — by one vote, in the dead of night, on Christmas Eve — and required Herculean legislative maneuvering to overcome nine months of solid public opposition.  The fact that Congress did not provide for a “severability clause” indicates that lawmakers viewed the law as one measure.

Despite that shortcoming, this ruling threatens not just the individual mandate, but the entire edifice of ObamaCare.  The centerpiece of ObamaCare is a three-legged stool, comprised of the individual mandate, the government price controls that compress health insurance premiums, and the massive new subsidies to help Americans comply with the mandate.  Knock out any of those three legs, and whole endeavor falls.

Moreover, the individual mandate is not the law’s only unconstitutional provision.

These lawsuits and the continuing legislative debate over ObamaCare are about more than health care.  They are about whether the United States has a government of specifically enumerated powers, or whether the Constitution grants the federal government the power to do whatever the politicians please, subject only to a few specifically enumerated restraints.  This ruling has pulled America back from that precipice.

Federal Court Declares ObamaCare’s Individual Mandate Unconstitutional is a post from Cato @ Liberty - Cato Institute Blog

Today’s NPR story, “Health Law Hardly At Fault For Rising Premiums,” was much fairer than its headline (and the sub-heads, if that’s what we call them).   ObamaCare is “hardly at fault for rising premiums?”  Really?  The story quotes an insurance-industry flack who well establishes what the Obama administration’s own regulations confirm: ObamaCare will be a major driver of premium increases for some health plans.  A sub-head calls such claims “misinformation.”  Oh?  The article does more to bolster those claims than the administration’s flack does to knock them down.  A more accurate headline would have been, “Health Law at Fault for Rising Premiums? In Some Cases, Yes.”

One wonders whether, in some posh Versailles salon, there’s an editor who already knows what the headline should be — never mind what the article says.

NPR Story Was Hardly Biased, but the Headline? is a post from Cato @ Liberty - Cato Institute Blog

“The Affordable Care Act offers new benefits like preventive care with no out-of-pocket cost and tools to help fight unreasonable premium increases that will save money for consumers.” — Jessica Santillo, a spokeswoman at the Department of Health and Human Services

The Cognitive Dissonance of ObamaCare Supporters is a post from Cato @ Liberty - Cato Institute Blog

First, a dozen insurers said they would stop writing child-only health insurance policies.  Now, according to the Wall Street Journal:

By forcing the exit of Principal Financial Group — which ran a profitable, $1.6 billion health insurance business — ObamaCare has now left 840,000 Americans to find another source of coverage.

According to The New York Times, other insurers may soon follow:

More insurers are likely to follow Principal’s lead, especially as they try to meet the new rules that require plans to spend at least 80 cents of every dollar they collect in premiums on the welfare of their customers…

“It’s just going to drive the little guys out,” said Robert Laszewski, a health policy consultant in Alexandria, Va. Smaller players like Principal in states like Iowa, Missouri and elsewhere will not be able to compete because they do not have the resources and economies of scale of players like UnitedHealth, which is among the nation’s largest health insurers.

Mr. Laszewski is worried that the ensuing concentration is likely to lead to higher prices because large players will no longer face the competition from the smaller plans. “It’s just the UnitedHealthcare full employment act,” he said.

Let’s remember what President Obama told a joint session of Congress just one year ago:

So let me set the record straight here.  My guiding principle is, and always has been, that consumers do better when there is choice and competition.  That’s how the market works… And without competition, the price of insurance goes up and quality goes down.  And it makes it easier for insurance companies to treat their customers badly — by cherry-picking the healthiest individuals and trying to drop the sickest, by overcharging small businesses who have no leverage, and by jacking up rates.

Everybody got that?

ObamaCare Prods Yet Another Insurer to Flee the Market is a post from Cato @ Liberty - Cato Institute Blog

From the Minneapolis Star-Tribune:

Two of Minnesota’s biggest health plans said Thursday they have temporarily suspended sales of individual health insurance policies because of uncertainty related to the new federal health reform law.

The moves by Blue Cross and Blue Shield of Minnesota and HealthPartners came on the same day some of the federal government’s most-heralded consumer protections came into effect…

The insurers that have suspended individual sales say they are awaiting guidance on new rules, including those around coverage of kids with pre-existing conditions…

Pam Lux, a spokeswoman for Eagan-based Blue Cross, said she expects the suspension of individual sales to be brief but could not say if it would be days or weeks.

ObamaCare Leads Minnesota Insurers to Suspend Sales is a post from Cato @ Liberty - Cato Institute Blog

An interesting update on the politics of ObamaCare appears in CongressDailyPM (subscription required):

The marking of six months since the signing of the healthcare law should be a moment of celebration by Democrats, especially as several popular provisions go into effect today. But the political realities of the midterm elections have made trumpeting the law, which remains unpopular with large swaths of the electorate, a delicate balancing act for Democrats…

House leaders tell their members to address the healthcare law in a way that best suits their districts…

some Democratic members in the House and Senate instruct staff not to write talking points on the law’s six-month provisions…

a former administration official questions if Democrats’ efforts to sell the bill are making any significant headway…

It’s little wonder, really.

But still.  Wow.

Many Supporters Not Willing to Trumpet ObamaCare’s Achievements is a post from Cato @ Liberty - Cato Institute Blog

USA Today and Politico Pulse report that ObamaCare has prompted BlueCross BlueShield of North Carolina to rebate $156 million to its customers in the individual market.  This may seem like good news.  It’s actually bad news, particularly for BCBS’s sickest customers.

Pre-ObamaCare, BCBS’s customers – whether healthy or sick – had coverage with an insurer that had already pre-funded their future medical needs. Competition protected them from BCBS skimping on care: if BCBS got a reputation for skimping, it would have a hard time enrolling new customers.

Post-ObamaCare, BCBS no longer needs that pile of cash, so they’re returning it to their customers. That hurts sick enrollees because BCBS is doling it out to all enrollees – not just the sick enrollees whom that money is supposed to serve. This cash-out is actually a transfer from the sick to the healthy.

Also, every BCBS customer who is sick or becomes sick in the future will have less protection against their insurer skimping on care. Competition used to discourage insurers from providing lousy access to care, but under ObamaCare competition will reward skimping. Under ObamaCare’s price controls, insurers that gain a reputation for providing quality coverage to the sick will attract sick people and go out of business.  Insurers that gain a reputation for providing lousy access to care will drive away sick people and thrive.

ObamaCare’s Premium Refunds: Bad News for the Sick is a post from Cato @ Liberty - Cato Institute Blog

During the (initial) congressional debate over ObamaCare, President Obama vilified Anthem Blue Cross of California for a 39 percent rate increase.  On Wednesday, the Hartford Courant reported that ObamaCare itself may increase premiums by similar amounts:

Health insurers are asking for immediate rate hikes of more than 20 percent in Connecticut for some plans, citing rising medical costs and federal health reform laws as reasons…

In what might appear to be an oddity, companies are citing a huge range of effects that the health care reform mandates will have on plan prices — from near zero to well over 20 percent. The reason is that among all the plans, some already deliver the provisions required by health reform, while others do not…

Anthem Blue Cross and Blue Shield in Connecticut, by far the largest insurer of Connecticut residents, said in a letter that it expects the federal health reform law to increase rates by as much as 22.9 percent for just a single provision — removing annual spending caps. The mandate to provide benefits to children regardless of pre-existing conditions will raise premiums by 4.8 percent, Anthem said in the letter. Mandated preventive care with no deductibles would raise rates by as much as 8.5 percent, Anthem said.

It was unclear how those separate factors would add up for Anthem’s plans, but those potential increases were all on top of rising medical costs.

If those increases are cumulative, ObamaCare could increase premiums for some Connecticut residents by more than 36 percent.

Compare that to what President Obama said in his weekly radio address on February 20:

The other week, men and women across California opened up their mailboxes to find a letter from Anthem Blue Cross. The news inside was jaw-dropping. Anthem was alerting almost a million of its customers that it would be raising premiums by an average of 25 percent, with about a quarter of folks likely to see their rates go up by anywhere from 35 to 39 percent…

And as bad as things are today, they’ll only get worse if we fail to act… We’ll see exploding premiums and out-of-pocket costs burn through more and more family budgets.

It sure seems like President Obama promised that ObamaCare would make things better.  Instead, it pushed us out of the frying pan and into the fire.

HHS Secretary Katheleen Sebelius said that Anthem Blue Cross of California’s 39 percent rate increase “just doesn’t make a lot of sense to people across America.”  She said those “extraordinary” increases threaten “to make health care unaffordable for hundreds of thousands of Californians, many of whom are already struggling to make ends meet in a difficult economy.”  Will she say the same about ObamaCare’s premium increases?  Or will she threaten to put Anthem Blue Cross and Blue Shield of Connecticut out of business for its insolence?

ObamaCare & Health Insurance Premiums: Out of the Frying Pan, into the Fire is a post from Cato @ Liberty - Cato Institute Blog

An Obama administration “fact sheet,” released alongside the interim final rules for several of ObamaCare’s cost-increasing mandates, claims those mandates will reduce the “hidden tax” imposed by uncompensated care:

By making sure insurance covers people who are most at risk, there will be less uncompensated care and the amount of cost shifting among those who have coverage today will be reduced by up to $1 billion in 2013.

According to research by the Urban Institute, that “hidden tax” isn’t very large:

Private insurance premiums are at most 1.7 percent higher because of the shifting of the costs of the uninsured to private insurers in the form of higher charges.

As the Congressional Budget Office repeatedly lectures Congress, “Uncompensated care is less significant than many people assume.”

Likewise, these mandates’ effect on uncompensated care will be less significant than the Obama administration would like you to think.  Using data from the Centers for Medicare & Medicaid Services and a reasonable assumption of 6-percent annual growth, total private health insurance premiums in 2013 will be in the neighborhood of $1.1 trillion.  So the administration is boasting that these mandates will reduce the 1.7-percent “hidden tax” imposed by uncompensated care to 1.61 percent.

Indeed, the whole of ObamaCare may not do much to reduce the “hidden tax” of uncompensated care. After Massachusetts enacted a nearly identical law, the Urban Institute reports, “high levels of emergency department (ED) use have persisted in Massachusetts. Specifically, ED use was high in Massachusetts prior to health reform and has stayed high under health reform.”  A lot of uncompensated care comes in through the ED.

Finally, notice how a 1.7-percentage-point premium surcharge is a bad thing if President Obama is ostensibly rescuing you from it, but a good thing if he’s imposing it on you.

ObamaCare Regs’ Effect on Uncompensated Care Overblown is a post from Cato @ Liberty - Cato Institute Blog

The Obama administration thinks it has discovered the perfect formula to cram legislation through in a hurry:  Demonize some prominent firm within an industry you plan to redesign, and then pass a law that has nothing to do with the accusation against the demonized firm.  They did this with health insurance and now they’re trying it with finance.

With health insurance, the demon was Anthem Blue Cross Blue Shield of California, which Obama accused of raising premiums by “anywhere from 35 to 39 percent.” Why didn’t some curious reporter interview a single person who actually paid 39% more, or quote from a letter announcing such an increase?  Because it didn’t happen.  Insurance premiums are regulated by the states, and California wouldn’t approve such a boost.  Yet the media’s uncritical outrage over that 39% rumor helped to enact an intrusive, redistributive health bill that has nothing to do with health insurance premiums (which remain regulated by the states).

Today, the new demon de jour is Goldman Sachs, a handy scapegoat to promote hasty financial rejiggering schemes  The SEC’s suspiciously-timed civil suit against Goldman looks as flimsy as the last month’s health insurance story.  It also looks unlikely to win in court.

As Washington Post columnist Sebastian Mallaby explains, “This is a non-scandal. The securities in question, so-called synthetic collateralized debt obligations, cannot exist unless somebody is betting that they will lose value.”  In such a zero-sum contest, big investors who went long knew perfectly well that other investors had to be taking the other side of the bet.  Goldman lost $90 million by betting this CDO would go up; John Paulson went short.

Columnists have moralized about the unfairness of the short investor (Paulson) negotiating the terms of this deal with a long investor, ACA Management, which had the last word. This too, notes Mallaby, “is another non-scandal.  An investor who wants to bet against a bundle of mortgages is entitled to suggest what should go into the bundle. The buyer is equally entitled to make counter-suggestions.  As the SEC’s complaint states clearly, the lead buyer in this deal, a boutique called ACA that specialized in mortgage securities, did precisely that.”

Like the earlier fuming about Anthem California, this new SEC publicity stunt is likewise irrelevant to the pending legislation.  Congress hopes to get standardized derivatives traded on an exchange. But synthetic collateralized debt obligations dealing with a customized bundle of securities could not possibly be traded on an exchange, and would therefore be untouched by reform.

Losses sustained by a few financial speculators on one exotic derivative had nothing to do with starting a global recession in December 2007 or the related financial crisis of September 2008. The core of the latter crisis was mortgage-backed securities per se, yet Goldman was only the 12th largest private MBS issuer in 2007.  Fannie Mae and Freddie Mac were and are the biggest risk; any reform that excludes them is a fraud.

The SEC’s dubious civil suit against Goldman is a wasteful diversion at best. It has nothing to do with the Obama administration’s suicidal impulse to impose more tough regulations and taxes on banks to encourage them to lend more.

[Cross-posted at NRO's The Corner]

SEC vs. Goldman Sachs: Legislation by Demonization is a post from Cato @ Liberty - Cato Institute Blog

• Alan Reynolds: The truth about health insurance premiums and profits.

• An overview of the many hurdles the health care bill still faces in the House.

• Study: Public schools dishonest about the true cost of education. This video explains it all in less than three minutes.

• Will conservatives ultimately oppose the war in Afghanistan? Join us for a lively discussion this Thursday at Cato featuring Joe Scarborough, Grover Norquist, Rep. Tom McClintock (R-CA) and more. Registration free. Will be broadcast online live Thursday at the link.

• Podcast: “Documenting Human Rights Abuses in Venezuela” featuring Ian Vásquez. (Don’t tell Sean Penn.)

Monday Links is a post from Cato @ Liberty - Cato Institute Blog

Congressman Paul Ryan (R-WI) takes the President to task for cooking the books on projected health care costs, most egregiously with the “doc fix” — namely, assuming Medicare slashes physician payments by 21.3% this year and subsequently lets them fall continuously in real terms.

What nobody seems to have noticed is that the same phony “doc fix” taints the new “Health Spending Projections Through 2019” from Centers for Medicare and Medicaid Services (CMS).

Drew Altman, president and CEO of the Kaiser Family Foundation, tries to downplay the CMS forecast “that the public sector will start paying more than half of the nation’s health care bill starting in 2012, and that government spending will grow faster than private spending from 2009 to 2019 (an average of 7.0% per year vs. 5.2%).”

Worrying about such spending trends is a foolish “ideological battle over the role of government,” says Altman, because rapid increases in government health spending is “just the byproduct of economic and demographic trends” (recession and an aging population).   “Is government health spending out of control?” he asks; answering “NO” in capital letters.  “The report simply underscores the need to control health care costs in the public and the private sectors alike.”

On the contrary, the reason government health care spending is projected to slow down to 7% a year is, the CMS explains, “due principally to the 21.3% reduction in physician payment rates . . . mandated in current law.”

Putting aside such “doctored” projections, “health spending by public payers ($1.2 trillion) is projected to have grown much faster in 2009 (8.7 percent) than that of private payers (3.0 percent).”

That was not because of high inflation in costs of medical goods and services (which should not differ much between government and private payers), but because the government has only in recent years been heavily subsidizing health insurance for the unemployed and drug insurance for seniors, and actively expanding the enrollment of Medicaid programs which (being “free”) often lure people out of employer-sponsored plans.

What Congressional Democrats call “reform” is, in fact, much more of the same—more non-poor people getting Medicaid and other subsidies that are yanked away if you work too hard.

No, It’s Not Health Inflation

Describing  runaway entitlement spending as “health inflation” is terribly misleading (even when Rep. Ryan does it), because doing so confuses rising prices with rising utilization of medical goods and services by people who are insulated from actual costs by taxpayer-financed subsidies.

Government subsidies also raise costs to those using private insurance.  The CMS notes that 2009’s 4.6% increase “private health insurance premium spending per employee . . . resulted in part from an increase in the proportion of high-cost claims—many of whom have temporary COBRA coverage” [emphasis added], which is 65% financed by taxpayers.

By contrast, health inflation per se is projected to be 2.8% this year — comparable to other labor-intensive service industries and also down from 3.2% in 2009 and 3% in 2008.     Morevoer, “out-of-pocket spending is projected to have grown 2.1 percent in 2009, down from 2.8% in 2008.”

What about all the uninformed media fuss about health insurance companies supposedly “asking for” premium increases of “up to” 39%?

If President Obama really wanted to find out how quickly typical health insurance premiums have been increasing, he could have a staffer call the Bureau of Labor Statistics and ask for Table 3A of the “Consumer Price Index Detailed Report Tables Annual Averages 2009.”  It turns out the consumer price index for health insurance premiums fell by 3.2% in 2009.

Health Cost Projections to 2019: The Doc Fix Trick Again is a post from Cato @ Liberty - Cato Institute Blog

In a recent paper, I showed that the health care legislation passed by the House and Senate would impose punitive implicit tax rates on low- and middle-income workers.  Those bills would also result in higher health insurance premiums over time because they would create large financial incentives for healthy people to drop coverage and only purchase it when they become sick.

The health care proposal that President Obama released yesterday essentially splits the difference on most areas of disagreement between the two bills.  But a preliminary analysis shows that ObamaCare 3.0 would make these perverse incentives even worse.  Families of four earning $22,000 under the Senate bill (100 percent of the federal poverty level) or $30,000 under the House bill or the Obama plan (133 percent FPL) would face the following effective marginal tax rates as they climb the economic ladder:

• Senate bill – Average: 62 percent.  High: 73 percent.
• House bill -  Average: 74 percent. High: 82 percent.
• Obama plan – Average: 72 percent. High: 90 percent.

In other words, over broad ranges of income, families of four would see their take-home pay rise by an average of 28 cents of each additional dollar earned.  In some cases, it would rise as little as 10 cents for each additional dollar earned.  Using smaller changes in income reveals the Obama plan would create EMTRs as large as 200 percent or higher.  That is, earning more money would leave many families worse off financially.

In addition, by requiring insurers to cover all applicants without regard to illness, each of these health plans would remove any penalty on waiting until you are sick to purchase coverage.  Therefore — even after accounting for all relevant taxes, subsidies, and penalties — these plans would create large financial incentives for healthy people to drop out of the market, which would cause premiums to rise for those who remain.  That would in turn encourage more healthy people to drop out, which would cause premiums to rise further, and so on.  Those perverse incentives are much worse under the Obama plan than under the House or Senate bills.  Here are the maximum financial incentives to drop coverage that each plan would create for families of four:

• Senate bill: $8,000
• House bill: $7,800
• Obama plan: $9,900
  

By increasing the financial incentives to drop coverage, the Obama plan would cause private insurance markets to unravel even faster than the House and Senate bills would.

ObamaCare 3.0: Higher Implicit Taxes, Quicker Death Spiral is a post from Cato @ Liberty - Cato Institute Blog

Or it may even be worse.

This morning, President Obama released his latest health care blueprint, which he hopes will breathe life into his moribund effort to overhaul one-sixth of the U.S. economy.  The new blueprint is almost exactly the same as the House and Senate health care bills that the public have opposed since July.  It mostly just splits the difference between the two.

One new element, however, is the president’s proposal to impose a new type of government price control on health insurance premiums.  I explain here how those price controls are a veiled form of government rationing that helped sink the Clinton health plan.

If anything, those price controls make the president’s new plan even more bureaucratic and government-heavy.  The Senate bill would take an ill-advised stab at cost-control by imposing a tax on the highest-cost health plans.  That president proposes to pare back that excise tax and instead have a panel of federal bureaucrats cap the growth in health insurance premiums for all health plans.  Those new government powers could make it even harder for people to obtain the coverage and care that they need.

Meet the New Plan, Same as the Old Plan is a post from Cato @ Liberty - Cato Institute Blog

Senate Democrats now appear to be jettisoning the idea of creating a new government program to snuff out compete with private insurance companies.  It was an audacious proposal from the start, as it made their health care plan even more left-wing than the Clinton plan, which voters soundly rejected for being too statist.

Yet it was always a sideshow that helpfully distracted the Left, the Right, and the mainstream from what shrewd Democrats and their allies at AHIP have really wanted all along: an individual mandate forcing all Americans to purchase health insurance under penalty of law.

As I argue in this Cato study, an individual mandate gives government more (and more immediate) control over Americans’ health care than even the so-called “public option” would.  As it has in Massachusetts, an individual mandate will allow government to control what kind of insurance you buy, how much you pay, how insurers pay doctors, where doctors report to work, how doctors practice medicine, and what kind of medical care you get.

The question now is whether the Left, the Right, and the mainstream will recognize the Senate health care bill for what it is: a massive $450 billion bailout for private insurance companies that will drive health insurance premiums and taxes higher while reducing quality, all for the benefit of a small cadre of Democrats with a preternatural need to control other people’s health care.

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

Curtain Call for the ‘Public Option’ Sideshow is a post from Cato @ Liberty - Cato Institute Blog

Senate Majority Leader Harry Reid (D-NV) has finally unveiled his massive 2,074-page health care bill.  The Congressional Budget Office reports that the insurance-expansion provisions would cost the feds $848 billion over 10 years.  To raise those funds, the bill would tax wages, medical devices, prescription drugs, sick people, health insurance premiums (twice), HSAs, FSAs, HRAs, and — why not? — cosmetic surgery.  The remainder would supposedly come from $491 billion of Medicare cuts, even though Medicare’s chief actuary says such cuts are “unrealistic” and “doubtful.”  But don’t worry.  Somehow, this thing’s gonna reduce the deficit.

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.)

Reid Health Bill Perpetuates the $1.5 Trillion Fraud is a post from Cato @ Liberty - Cato Institute Blog

• Why America leads the world in medical innovation.

• If the health care overhaul bill were a medical product it would have to come with a warning label, which could read something like this: Warning: This product will increase your health insurance premiums, make your children poorer and won’t make you healthier. That’s not all. There’s more.

• Unintended Consequences: Could government efforts to redesign cities to make them more pedestrian friendly, concentrate jobs in selected areas, and increase mass transit actually raise C02 emission levels?

• What does it say about politicians who think Americans who don’t buy health insurance should be subject to a $250,000 fine and/or five years in jail?

• The president is on his first official trip to Asia. Here’s an outline as to how the United States should engage the region.

• Podcast: “Obama’s Credibility on the Dollar“

Wednesday Links is a post from Cato @ Liberty - Cato Institute Blog

Here’s a poor, unsuccessful letter to the editor I sent to The Washington Post:

“Like Car Insurance, Health Coverage May Be Mandated” [July 22, page A1] paints a misleading picture of proposals to require Americans to purchase health insurance – i.e., an “individual mandate.”

First, the article lacks balance.  It cites three politicians who support an individual mandate but none who oppose it, a group that includes a majority of Republicans.  The article claims an individual mandate “has its roots in the conservative philosophy of self-reliance,” even though most conservatives, including the movement’s flagship magazine National Review, oppose the idea.  The closest the article comes to offering an opposing perspective is one conservative who has supported an individual mandate in the past and may yet again, just not yet.

Second, the article makes the demonstrably inaccurate claims that an individual mandate “lowers overall costs” and “help[s] keep premiums down” by adding more young and healthy people to the insurance market.  Forcing healthy people to purchase insurance does not affect premiums for sicker purchasers, because insurers set premiums according to each purchaser’s health risk.  The article confuses a mandate with price controls, which force low risks to pay more so that high risks can pay less.

Finally, if an individual mandate reduced overall costs, then health care spending would be falling in Massachusetts, which enacted the nation’s only individual mandate in 2006.  Instead, overall health spending is rising, and the rate of growth has accelerated under the mandate.  Rising health spending implies rising health insurance premiums, which has also been the Massachusetts experience.

Washington Post Misrepresents Individual Mandates is a post from Cato @ Liberty - Cato Institute Blog

Today, Senators Tom Coburn (R-OK) and Richard Burr (R-NC), along with Reps. Paul Ryan (R-WI) and Devin Nunes (R-CA) announced that they will introduce a health care reform bill.  If my reading of the bill summary is correct, their bill would:

• Mandate that states create a new regulatory bureaucracy called a “State Health Insurance Exchange,”
• Mandate that all plans offered through those exchanges meet federal regulatory standards,
• Mandate “guaranteed issue” in those exchanges,
• Mandate “uniform and reliable measures by which to report quality and price information,”
• Impose price controls on those plans by prohibiting risk-rating,
• Launch a government takeover of the “insurance” part of health insurance, by means of a “risk-adjustment” program intended to cope with the problems created by price controls, and
• Fall just short of an individual mandate by setting up (mandating?) automatic enrollment in exchange plans at “places of employment, emergency rooms, the DMV, etc.” — essentially, trying to achieve universal coverage by nagging Americans to death.

Needless to say, I am troubled.

The bill summary is self-contradictory.  On the one hand, it lists “No Tax Increases” as a core concept.  Do its authors not know that imposing price controls on health insurance premiums imposes a tax on healthier-than-average consumers?  And where do they think the money for “risk-adjustment” payments will come from?  Heaven?

The bill sponsors seem to want to cement in place the monopoly regulation that currently exists at the state level — when they’re not encouraging Congress to take over that function.  Have they abandoned their colleague Rep. John  Shadegg’s (R-AZ) proposal to allow for competitive regulation of health insurance?

And if Massachusetts created an “exchange” on its own, why do other states need federal legislation?

The bill includes some ideas for which I have more sympathy, like its tax-credit proposal and expanding health savings accounts.

But the above provisions would sow the seeds of a government takeover of health care — so much so that The Washington Post‘s Ezra Klein is salivating:

The word of the day is “convergence.” That — and that alone — is the definitive message of the conservative health reform alternative developed by Sens. Tom Coburn (Okla.) and Richard Burr (N.C.), as well as Rep. Paul Ryan (Wisc.). For now, some of the key provisions are about as clear as mud. The plan’s changes to the tax code, in particular, are impossible to discern. So I’ll do another post when I can get some clarity on those issues. The politics, however, are perfectly straightforward.

A superficial read of the Patients’ Choice Act — which I’ve uploaded here — would make you think you’re digging into a liberal bill. A fair chunk of the rhetoric is lifted straight from Sen. Ted Kennedy’s office. “It is time to publicly admit that the health care system in America is broken,” begins the document. “Health care is not a commodity in the traditional sense,” it continues. “States should provide direct oversight of health insurers to make sure they are playing by fair rules,” it demands. The way we pay private insurers in Medicare “wastes taxpayer dollars and lines the pockets of insurance executives,” it says. Elsewhere, it praises solutions that have worked in several European countries.”

And though it’s still too early to say how the policy fits together, it’s clear that many traditionally Democratic concepts have been embraced. To put it simply, the plan wants to encourage a version of the Massachusetts reforms — which it calls a “well-known, bi-partisan achievement of universal health care” — in every state. There are some differences, of course. The plan doesn’t have an individual mandate. It doesn’t have an obvious tax on employers. But it strongly endorses State Health Insurance Exchanges. And that, for Republicans, is a radical change in policy.

This idea — present in every Democratic proposal but absent in Arizona Sen.John McCain’s plan — would empower states to create heavily regulated marketplaces of insurers. The plans offered would have to “meet the same statutory standard used for the health benefits given to Members of Congress.” Cherrypicking would be discouraged through risk adjustment, which the PCA calls “a model that works in several European countries.” The government would automatically enroll individuals in plans whenever they interacted with a government agency and states would be able to join into regional cooperatives to increase the size of their risk pool.

In essence, Coburn, Burr, and Ryan are abandoning the individual market entirely. Like Democrats, they’re arguing that individuals cannot successfully navigate the insurance market, and they need the protection of government regulation and the bargaining power that comes from a large risk pool. This is literally the opposite approach from McCain, who attempted to unwind the employer-based insurance and encourage families to purchase health coverage on the individual market. The core elements of this plan, in other words, make it the same type of plan Democrats are offering. A plan that enlarges consumer buying pools rather than shrinks them. It’s pretty much exactly what I’d expect a Blue Dog Democrat to propose. And it’s further evidence that the argument over health reform is narrowing, rather than widening. And it’s narrowing in a direction that favors the Democrats.

The Coburn-Burr-Ryan-Nunes Mandate-Price-Control Bill is a post from Cato @ Liberty - Cato Institute Blog