House Democrats Choose Dishonesty
I’m not a fan of the House Democrats’ proposed takeover of the health care sector. (If there’s one thing that legislation is not, it’s “reform.”) But at least House Democrats were honest enough to include the cost of the $245 billion bump in Medicare physician payments in their legislation, unlike some committee chairmen I could mention.
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.)
Filed under: Cato Publications; Health, Welfare & Entitlements
Taking Over Everything
“My critics say that I’m taking over every sector of the economy,” President Obama sighed to George Stephanopoulos during his Sunday media blitz.
Not every sector. Just
- health care
- energy
- local schools
- banks
- insurance companies
- automobile companies
- compensation at financial firms
- newspapers
- the internet
This president and his Ivy League advisers believe that they know how an economy should develop better than hundreds of millions of market participants spending their own money every day. That is what F. A. Hayek called the “fatal conceit,” the idea that smart people can design a real economy on the basis of their abstract ideas.
This is not quite socialism. In most of these cases, President Obama doesn’t propose to actually nationalize the means of production. (In the case of the automobile companies, he clearly did.) He just wants to use government money and government regulations to extend political control over all these sectors of the economy. And the more political control achieves, the more we can expect political favoritism, corruption, uneconomic decisions, and slower economic growth.
Filed under: Finance, Banking & Monetary Policy; Tax and Budget Policy
Obama’s Health Care Speech in Plain English
Hell of a speech last night, eh? Here are a few of my favorite gems.
Under this plan, it will be against the law for insurance companies to deny you coverage because of a pre-existing condition.
Translation: I, Barack Obama, ignoring thousands of years of failed price-control schemes, will impose price controls on health insurance. I will force insurers to sell a $50k policies for $10k. What could go wrong?
We were losing an average of 700,000 jobs per month.
True. And your employer mandate would kill hundreds of thousands of low-wage jobs that would never come back.
They will no longer be able to place some arbitrary cap on the amount of coverage you can receive in a given year or a lifetime. We will place a limit on how much you can be charged for out-of-pocket expenses…. And insurance companies will be required to cover, with no extra charge, routine checkups and preventive care.
Translation: Boy! Are we going to force you to buy a lot of coverage!
I will make sure that no government bureaucrat or insurance company bureaucrat gets between you and the care that you need.
…except for the bureaucrats I proposed to put between you and your doctor.
Some… supported a budget that would have essentially turned Medicare into a privatized voucher program. That will never happen on my watch. I will protect Medicare.
Translation: I will never let seniors control their own health care dollars. I will never give up Washington’s control over your health care decisions. Mmmmuuuuhahahahahaha!
…there are too many Americans counting on us to succeed.
Translation: There are too many lobbyists counting on me to succeed: drug-industry lobbyists, health-insurance lobbyists, physician-cartel lobbyists, large-employer lobbyists, hospital lobbyists….
It’s a plan that asks everyone to take responsibility for meeting this challenge – not just government and insurance companies, but employers and individuals.
Translation: I’m going to tax the hell out of you, but I don’t want you to notice how much I’m going to tax you. So I’m going to tax employers and insurance companies, and they’re going to pass the taxes on to you. Most of the taxes won’t even show up in the government’s budget. It’s all very clever. No, seriously – just ask my economic advisor Larry Summers.
It’s a plan that incorporates ideas from Senators and Congressmen; from Democrats and Republicans – and yes, from some of my opponents in both the primary and general election.
Translation: I may have savaged your ideas in the past, called them irresponsible…risky…dangerous…whatever. But that wasn’t about principle; I just wanted to become president. Now that I’m president, I need a win. So you’ll help me, won’t you? Hey, where’s Hillary?
Congress Abolishes Health Care Scarcity?
Reading the New York Times’s coverage of a Senate committee’s recent vote on health care legislation, I was struck by the following statement from Sen. Dodd:
If you don’t have health insurance, this bill is for you,” said Senator Christopher J. Dodd, Democrat of Connecticut, who presided over more than three weeks of grueling committee sessions. “It stops insurance companies from denying coverage based on pre-existing conditions. It guarantees that you’ll be able to find an insurance plan that works for you, including a public health insurance option if you want it.”
The bill would also help people who have insurance, Mr. Dodd said, because “it eliminates annual and lifetime caps on coverage and ensures that your out-of-pocket costs will never exceed your ability to pay.”
A basic understanding of economics should tell you this can’t be right. The federal government and the insurance industry have limited resources; the demand for health care is potentially unlimited. Therefore, no conceivable legislation can ensure that the demand for health care will never exceed the resources available to pay for it. All legislation can do is to shift who controls the allocation of scarce health care dollars—in this case away from patients and insurance companies and toward the federal government. Reasonable people can disagree about whether that’s an improvement, but it’s disingenuous to pretend that any legislation could “eliminate” caps on coverage or “ensure” that health care wants will never outstrip our ability to pay for them.
Health Care Priorities
As Washington debates a big increase in federal health care spending, I came across these two articles on what a splendid job the government is doing managing its current health programs.
Harvard professor Malcolm Sparrow recently testified that roughly $100 billion or more of Medicare and Medicaid dollars go down the drain each year due to fraud. It’s easy to rip these programs off because of their vast size and electronic claims processing. Medicare processes more than 1 billion of claims each year.
This Washington Post article last year described one particular example of the fraud. A high-school drop-out managed to bilk Medicare out of $105 million by submitting a 140,000 false claims from her laptop computer.
So we’ve got $100 billion or so of taxpayer’s hard-earned money being stolen each year from our current public health care plans. You would think that with today’s giant budget deficit that the highest priority of policymakers would be to reform these programs to reduce the unbelievable and disgusting amounts of graft. But no, many in Congress and President Obama have decided that current government health care works so well that they want to expand it.
President Obama wants to create a new “public health option” to “keep insurance companies honest.” Hey Mr. President, you should do something about the $100 billion of dishonesty in current public health plans, instead of hitting up taxpayers to fund an even more bloated health care budget.
The Co-op Cop-out
Faced with rising opposition to a so-called “public option” in health care reform, some Democrats are floating the idea of establishing health insurance “co-operatives” as an alternative. Opponents of a government takeover of the health care system should not be fooled.
A “co-op” can be defined as a business owned and controlled by its workers and the people who use its services, in this case presumably the people whom it insures. In that sense, government provision of some sort of legal framework or seed money to help establish health insurance co-ops seems relatively harmless but also relatively pointless. The U.S. already has some 1,300 insurance companies. Adding a few more would accomplish…what?
It is suggested that the “co-ops” would be nonprofits, and therefore would offer better service and lower costs. But many insurance companies, including “mutual” insurers and many “Blues,” are already nonprofit companies. Furthermore, states already have the power to charter co-ops, including health insurance co-ops. In fact, health care co-ops already exist. Health Partners, Inc. in Minneapolis has 660,000 members and provides health care, health insurance, and HMO coverage. The Group Health Cooperative in Seattle provides health coverage for 10 percent of Washington State residents.
If the new co-ops operate under the same rules as other nonprofit insurers, why bother?
And there’s the rub. Supporters of government-run health care have no intention of letting the co-ops be independent enterprises. In fact, Sen. Charles Schumer (D-NY) makes it clear, for example, that the co-op’s officers and directors would be appointed by the president and Congress. He insists that there be a single national co-op. And Congress would set the rules under which it operates. As Sen. Max Baucus (D-MT) says, “It’s got to be written in a way that accomplishes the objectives of a public option.”
If a “co-op” is run by the federal government under rules imposed by the federal government with funding provided by the federal government, that is government-run health insurance by another name.
Filed under: Government and Politics; Health, Welfare & Entitlements
Irony! Get Your Red-Hot Health-Care Irony!
Someone forwarded me an email update from our friends at the Center for American Progress Action Fund (motto: “Disagree with us? Then you hate progress.”).
In one blurb, CAPAF’s crack team of spin-disclosers chides Republicans for discussing health care reform using the language recommended by pollster Frank Luntz, who “advised Republicans to fearmonger” Obama’s proposals to death! Or something.
The same email had another blurb titled, “INSURANCE COMPANIES AT THE TABLE?” There, CAPAF’s crack team of spin-disclosers describe how “health insurance companies and lobbying groups” stood beside President Obama last week to announce their support for reducing spending growth. The blurb continues:
However, days later, the insurance companies tried to walk back their promises, saying Obama had overstated their commitments. Richard Umbdenstock, the president of the American Hospital Association, wrote to his company’s state and local affiliates to “clarify” that “[t]he groups did not support reducing the rate of health spending by 1.5 percentage points annually.” However, the letter to Obama signed by Umbdenstock and the other insurance leaders specifically pledged…
“Umbdenstock and the other insurance leaders”?? Since when do we classify hospitals as insurance companies? And if “the insurance companies…sa[y] Obama had overstated their commitments,” why not quote the insurance companies? Could they not find such a quote?
It’s as if CAPAF’s crack team of spin-disclosers has decided to blame every development that might threaten a — ahem — government take-over of health care on the insurance companies. Now why might they want to do that? Could it be because insurance companies are less popular than hospitals?
And how would CAPAF’s crack team of spin-disclosers know that? By listening to a . . . pollster?
Filed under: Government and Politics; Health, Welfare & Entitlements
How Does It Feel to Be at the Table Now?
On Monday, the Obama administration held a well-publicized love-fest with lobbyists for the health care industry. It turns out that rather than a “game-changer,” the event was a fraud. And the industry got burned.
At the time, President Obama called it a “a watershed event in the long and elusive quest for health care reform“:
Over the next 10 years — from 2010 to 2019 — [these industry lobbyists] are pledging to cut the rate of growth of national health care spending by 1.5 percentage points each year — an amount that’s equal to over $2 trillion.
By an amazing coincidence, $2 trillion is just enough to pay for Obama’s proposed government takeover of the health care sector.
Yet The New York Times reports that isn’t the magnitude of spending reductions the lobbyists thought they were supporting:
Hospitals and insurance companies said Thursday that President Obama had substantially overstated their promise earlier this week to reduce the growth of health spending… [C]onfusion swirled in Washington as the companies’ trade associations raced to tamp down angst among members around the country.
Health care leaders who attended the meeting…say they agreed to slow health spending in a more gradual way and did not pledge specific year-by-year cuts…
My initial reaction to Monday’s fairly transparent media stunt was: “I smell a rat. Lobbyists never advocate less revenue for their members. Ever.” The lobbyists are proving me right, albeit slowly. (Take your time, guys. I don’t mind.)
Filed under: Cato Publications; Government and Politics; Health, Welfare & Entitlements
Cato and the Bailouts: A Correction for the NY Times ‘Economix’ Blog
At the New York Times Economix blog, economist Nancy Folbre of the University of Massachusetts writes:
The libertarian Cato Institute often emphasizes the issue of corporate welfare, but it’s remained remarkably quiet so far on the topic of bailouts.
Excuse me?
Since she linked to one of our papers on corporate welfare, we assume she’s visited our site. How, then, could she get such an impression? Cato scholars have been deploring bailouts since last September. (Actually, since the Chrysler bailout of 1979, but we’ll skip forward to the recent avalanche of Bush-Obama bailouts.) Just recently, for instance, in — ahem — the New York Times, senior fellow William Poole implored, “Stop the Bailouts.” I wonder if our commentaries started with my blog post “Bailout Nation?” last September 8? Or maybe with Thomas Humphrey and Richard Timberlake’s “The Imperial Fed,” deploring the Federal Reserve’s help for Bear Stearns, on April 14 of last year?
Cato scholars appeared on more than 90 radio and television programs to criticize the bailouts during the last quarter of 2008. Here’s a video compilation of some of those appearances.
Folbre complains that some people seem more concerned about welfare — TANF, in the latest federal acronym — than about welfare for bankers — TARP. Google says that there are 138 references to TANF over the past 13 years or so on the Cato website, and 231 references to TARP in the past few months.
Now she has a legitimate point. Welfare for the rich is at least as bad as welfare for the poor. And as much as welfare for the poor has cost taxpayers, the new welfare for banks, insurance companies, mortgage companies, and automobile industries is costing us more. Samuel Brittan of the Financial Times has written that “reassignment,” an economic policy that changes individuals’ ranking in the hierarchy of incomes, is far more offensive than a policy of redistribution, which in his idealized vision would merely raise the incomes of the poorest members of society. By that standard, taxing some businesses and individuals to subsidize the high incomes of others is certainly offensive. Of course, Brittan underemphasized the harm done by welfare to people who become trapped in dependency. But there’s good reason to oppose both TANF and TARP, and Cato scholars have done both.
Lest the good work of Cato’s New Media Manager Chris Moody go under-utilized, here’s a probably incomplete guide to Cato scholars’ comments on the bailouts of the past few months. (Note that it doesn’t include blog posts, of which there have been many.) Quiet? I don’t think so:
Filed under: Finance, Banking & Monetary Policy; Health, Welfare & Entitlements; Tax and Budget Policy
‘Health Status Insurance’ Provides Real Alternative to Universal Care
So screams the headline of John Cochrane’s oped in today’s Investor’s Business Daily. An excerpt:
Markets can provide long-term, secure health insurance while enhancing choice and competition. Given the chance, they will…
This is not pie in the sky. The market for individual health insurance is already innovating to provide better long-term insurance. Well before it was required by law, insurance companies started offering “guaranteed renewable” policies.
Once you buy in, you have the right to continue coverage even if you get sick, and your premiums do not rise if you get sick.
UnitedHealth Group recently announced a product that gives customers the right to buy medical insurance in the future, at a premium that depends only on their current health status.
For a small premium, you can protect yourself against the risk that your health premiums will escalate. This is only a small step away from full health-status insurance.
The oped is based on Cochrane’s recent Cato policy analysis, “Health-Status Insurance: How Markets Can Provide Health Security.”
You can also hear Cochrane and Johns Hopkins University health economist Brad Herring discussing health-status insurance at this Cato policy forum, held today.
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