Would ObamaCare Improve Public Health? Probably Not.
George Avery is an assistant professor of public health at Purdue University. In today’s Daily Caller, Avery rebuts claims that the Obama health plan would improve public health:
The idea that health care contributes significantly to population health is both intuitively appealing and untrue….
In fact, federal “reform” often hurts the public health system. Both public health and health care experts have criticized Medicare and Medicaid, enacted by Congress in 1965, for changing the focus of health care practitioners from prevention to treatment….
Requiring all Americans purchase health insurance, which the current bills hope to do, would not address the underlying socio-economic issues at the root of most public health problems….
Indeed, access to health care can help individual patients, but can also aggravate some public health problems…. High rates of surgical intervention increase the risk and spread of drug resistant infections like MRSA.
Avery is the author of the Cato Institute briefing paper, “Scientific Misconduct: The Manipulation of Evidence for Political Advocacy in Health Care and Climate Policy.”
Filed under: Cato Publications; General; Health, Welfare & Entitlements
A Tale of Two Frauds
The President has announced a government crackdown on Medicare and Medicaid fraud. The effort appears to be an attempt to make it easier for Americans to swallow the health care “reform” he’s trying to shove down their throats. As House Republican leader John Boehner correctly asked, “Why can’t we crack down on fraud without a big-government takeover of health care?”
As I’ve noted before, improper payments made by Medicare and Medicaid is may well be $50 billion more than the already appalling $100 billion annual figure the president cited. Administrative efforts to rein in fraud and abuse are welcome, but they won’t solve the huge and fundamental inefficiencies of these programs. Because the law requires government health care programs to quickly get payments out the door, Uncle Sam will always be engaged in a costly game of “pay and chase.”
The broader problem is that government programs aren’t subject to market discipline. Policymakers and administrators have little incentive to be frugal because they face few or no negative consequences when playing with other people’s money.
Most of us have noticed how good private companies can be at reducing fraud. I recently received a call about questionable charges on my Discover credit card. After quizzing me on a list of purchases made with my card in the past 24 hours, it became clear that someone had gotten control of my account. Discover immediately closed the account, opened an investigation, and removed me from any liability for the fraudulent charges.
What amazed me is that I only had about $300 worth of charges on my card. It’s not a big account and thus not a big money maker for Discover. Yet, within 24 hours of a string of suspicious charges, the company was right on top of it before I even realized anything nefarious was going on. Private markets don’t always work this well, but government programs almost never do.
Filed under: Health, Welfare & Entitlements; Tax and Budget Policy
Before Administering the Lethal Injection, Dr. Obama Offers to Sterilize the Needle
In a letter to congressional leaders, President Obama wrote of his openness to including Republican proposals in his health care legislation.
Dropping a few Republican ideas into a government takeover of health care is like sterilizing the needle before a lethal injection: a nice thought, but the ultimate outcome is the same.
- Two of the four Republican ideas – federal grants to states that adopt medical malpractice liability reforms, and ratcheting upward Medicare’s physician-price controls – would increase government spending.
- The president’s health savings accounts (HSAs) proposal would merely loosen the noose around consumer-directed health plans.
- Undercover investigations in Medicare and Medicaid are likely to be as unsuccessful as past efforts to combat fraud.
This is not bipartisanship. President Obama is creating the illusion of bipartisanship while taking the most partisan route possible: forcing his legislation through Congress via reconciliation.
(Cross-posted at National Journal’s Health Care Arena.)
Filed under: Cato Publications; General; Health, Welfare & Entitlements
Federal Aid to States Is Too Popular
The Economist’s Free Exchange blog asks: “[W]hy isn’t federal aid to states more popular, and popular enough to get through Congress, given that nearly every American lives in one?”
I would ask the blog’s author: How much more popular would he like it to be? As the following charts show, federal aid to state and local governments has catapulted to record levels.
As I’ve discussed elsewhere, Medicaid has been driving the growth in federal subsidies to state and local governments. But other areas, such as education, income security, and transportation, have also seen substantial increases.
Subsidizing state and local government is quite popular with federal, state, and local policymakers and associated special interests. It’s doubtful the average citizen is aware that so much of their state’s spending is derived from their federal tax dollars. However, I suspect that most folks (who aren’t on the take) would frown upon the concept of sending money to Washington only to have politicians send it back to the states via the federal bureaucracy. While there may be popular support for many of the state programs funded with federal dollars, citizens need to understand that federal subsidization of state and local government has fueled unhealthy government growth at all levels.
Senator Bunning’s Unappreciated Gifts
Sen. Jim Bunning (R., Ky.) blocked “extended” unemployment benefits beyond their scheduled expiration on February 27. That thwarted bill would also have put off, again, a scheduled 21 percent cut in Medicare payments to physicians. Democrats were outraged. But why?
Bunning just wanted to use leftover “stimulus” money to pay for the benefits. Why not? Such transfer payments accounted for over 80 percent of stimulus spending last year.
Besides, as Federal Reserve policymakers noted, the evidence is overwhelming (see here and here) that extending unemployment benefits from six months to nearly two years has raised the unemployment rate by a percentage point or two. I’ve waited since 1991 for someone to prove I’m wrong about that. Nobody has, because nobody can.
If the maximum duration of jobless benefits were trimmed by 13 to 20 weeks (which is all that’s at stake), they would still be far more extended than ever before. But the unemployment rate by the time of this November’s elections would be much lower than otherwise. Would Democrats prefer to go into the elections with an unemployment rate near 10 percent or a rate below 9 percent?
As for Medicare, slashing payments to physicians is the Democrats’ favorite way of paying for expanding Medicaid enrollment and health-insurance subsidies for the non-poor. If they really think that will work, how can they possibly object to saving money sooner rather than later?
[Cross-posted at The Corner]
Filed under: Health, Welfare & Entitlements; Tax and Budget Policy
State and Local Subsidies
Earlier this week I criticized the U.S. Conference of Mayors for going to Washington and groveling for more federal handouts. Let me provide some more background for my criticisms with a look at federal budget data. The first chart shows that since 1960, total federal subsidies to state and local government have increased an astounding 1,173%.
Several readers have asked me what particular programs account for this large increase in state aid. The federal budget breaks down the total figures into categories. Not surprisingly, health subsidies — mainly Medicaid — account for almost half of the current total and are the driving force behind the massive overall increase:
This Week in Government Failure
Over at Downsizing Government, we focused on the following issues this week:
- Central Michigan defeated Troy in the “Bailout Bowl,” but taxpayers are the biggest losers.
- The 2010 census will pave the way for subsidies to state and local governments.
- Secure property rights and government support help make U.S. farmland a good investment. But what about the property rights of taxpayers?
- The federal government’s IT budget increases by $5 billion while Uncle Sam’s private sector counterparts make do with less.
- New York’s fraud-ridden Medicaid program is a prime example why government involvement in healthcare is part of the problem, not the solution.
Medicaid’s Cash Cab
As Congress hashes out an agreement behind closed doors to expand the government’s role in health care, a Medicaid story out of New York serves as another reminder that government is part of the health care problem, not the solution. Audits released by the state’s comptroller found $169 million in misspent funds, including a $196,000 cab bill for a woman who took a daily $300 taxi ride to visit her son in Albany for three years.
The following are some of the findings:
- $53 million in overpayments for Medicaid recipients who had multiple identification numbers.
- $20 million that was nearly spent because the state’s computer system failed to catch a clerical error. Auditors caught it before it was paid out.
- $5.4 million in overpayments to 10 hospitals that billed for discharging a patient when, in fact, the patient had been transferred to another facility. Hospitals receive higher payments for discharges rather than transfers.
- $1.2 million paid for services that were not medically necessary or not provided.
According to the state’s comptroller, “[T]he state Medicaid system is leaking millions of dollars… Safeguards designed to protect the taxpayers by detecting waste, fraud and abuse keep failing.” However, this is business as usual when it comes to New York’s notoriously fraud-ridden Medicaid program, as a Cato essay on fraud and abuse in federal programs notes:
The former chief investigator of the state’s Medicaid fraud office believes that about 10 percent of the state’s Medicaid budget is consumed by pure fraud, while another 20 to 30 percent is consumed by dubious spending that might not cross the line of being outright criminal.
A 2005 investigation by the New York Times found remarkably brazen examples of fraud and abuse in New York’s Medicaid. The article noted that the program has “become so huge, so complex, and so lightly policed that it is easily exploited… [T]he program has been misspending billions of dollars annually because of fraud, waste, and profiteering.”
With the massive and complex expansion of Medicaid and other health programs in the pending legislation, we can expect a gargantuan expansion in fraud and abuse. The good news, I suppose, is that the government will need a massive hiring of new health care auditors, which should reduce the nation’s unemployment rate.
For more on fraud and abuse in government healthcare, see here.
Whip (Health Care) Inflation Now?
During the runaway inflations of 1974 and 1979, Presidents Ford and Carter suggested that inflation was caused by the profligacy of American households. President Ford’s infamous “Whip Inflation Now” speech, for example, said, “Here is what we must do, what each and every one of you can do: To help increase food and lower prices, grow more and waste less; to help save scarce fuel in the energy crisis, drive less, heat less.”
Much of the recent discussion of health care costs likewise treats this as a problem caused by a demonic private insurance industry, and therefore requiring such “reforms” as expanding Medicaid to the non-poor and Medicare to the non-old.
The facts are quite different, as shown in “The Evolution of Medical Spending Risk” by Jonathan Gruber of MIT and Helen Levy of the University of Michigan, in the latest Journal of Economic Perspectives.
Gruber and Levy calculate that real private health care spending per person (in 2007 dollars) “increased from about $700 to $3,500 between 1960 and 2007, a five-fold increase.” They note that “private out-of-pocket spending has not quite doubled.” Yet “government health spending over the same period . . . increased from about $250 to $3,5000, a 13-fold increase.”
In fairness, the quality of health care has been hugely improved since 1960. And prices of physician services (which are often incorrectly compared with the overall consumer price index) have risen no faster than prices of non-medical services.
In any case, President Obama’s claim that the pace of total public and private spending on health care could somehow be “contained” by greatly increasing government spending clearly flunks 3rd grade arithmetic.
Unless the hidden agenda is to impose draconian wage and price controls and political rationing on health care providers, all the rhetorical pretense about proposed health care legislation being a way to hold down overall spending on health care is like saying the solution to chronic drunkeness is more booze.
Filed under: General; Health, Welfare & Entitlements; Tax and Budget Policy
Obama on Health Care: Half Right
President Obama gave what seems like his thousandth exclusive health care interview last night, this one to ABC News’s Charles Gibson. In trying to sell his health care plan, the president warned that if Congress does not pass legislation controlling health care costs, the federal government “will go bankrupt.” He also warned that unless health care is reformed, “your premiums will go up.”
The president is absolutely correct about that. The only problem is that, according to the president’s own chief health care actuary, the bills that Congress is now considering do nothing to restrain either federal health care spending or total health care costs. In fact, Rick Foster, chief actuary at the Center for Medicare and Medicaid Services (CMS) says that if Congress passes the bill now before the Senate, health care spending will actually increase by $234 billion more over the next 10 years than if we did nothing.
And, according to the Congressional Budget Office, the congressional bills do little or nothing to reduce the growth in insurance premiums. Even if a bill passes, premiums will roughly double by 2016, and keep rising after that. But for millions of Americans the bill will actually make things worse. According to CBO, the Senate bill would actually increase insurance premiums by 10-13 percent for Americans who buy their insurance through the non-group market, that is those who don’t receive insurance from their employer. Those 10-13 percent increases are over and above the increases that would occur if we did nothing.
On the other hand, if the president were really serious about controlling health care costs and lowering premiums, he wouldn’t need to spend trillions of dollars and take over one-sixth of the US economy; he could try some of the ideas written about here, and here, and here.
Filed under: General; Health, Welfare & Entitlements
FEHBP Plan Is No ‘Moderate Compromise’
Senate Majority Leader Harry Reid (D-NV) has announced that he has reached a super secret compromise on how to deal with the so-called public option for health reform. While Reid said the agreement was too important to actually tell anyone what is in it, most of the details have been leaked to the press.
Rather than set-up a completely government-run insurance plan to compete with private insurance, Congress would establish a program similar to the Federal Employees Health Benefit Program (FEHBP), which currently covers government workers, including Members of Congress. The FEHBP offers a variety of private insurance plans under a program managed by the US Office of Personnel Management (OPM). Each year OPM uses the Federal procurement process to solicit bids from insurance companies to be one of the plans offered. Premiums can vary, but participating plans operate under stringent rules. As a model, the FEHBP is apparently acceptable to moderate Democrats because the insurance plans are private rather than government entities, while liberals like it because it is government regulated and managed.
In addition, the compromise plan would expand Medicare, allowing workers ages 55 to 65 to “buy in” to the program, and may also expand Medicaid.
A few reasons to believe this is yet another truly bad idea:
- In choosing the FEHBP for a model, Democrats have actually chosen an insurance plan whose costs are rising faster than average. FEHBP premiums are expected to rise 7.9 percent this year and 8.8 percent in 2010. By comparison, the Congressional Budget Office predicts that on average, premiums will increase by 5.5 to 6.2 percent annually over the next few years. In fact, FEHBP premiums are rising so fast that nearly 100,000 federal employees have opted out of the program.
- FEHBP members are also finding their choices cut back. Next year, 32 insurance plans will either drop out of the program or reduce their participation. Some 61,000 workers will lose their current coverage.
- But former OPM director Linda Springer doubts that the agency has the “capacity, the staff, or the mission,” to be able to manage the new program. Taking on management of the new program could overburden OPM. “Ultimate, it would break the system.”
- Medicare is currently $50-100 trillion in debt, depending on which accounting measure you use. Allowing younger workers to join the program is the equivalent of crowding a few more passengers onto the Titanic.
- At the same time, Medicare under reimburses physicians, especially in rural areas. Expanding Medicare enrollment will both threaten the continued viability of rural hospitals and other providers, and also result in increased cost-shifting, driving up premiums for private insurance.
- Medicaid is equally a budget-buster. The program now costs more than $330 billion per year, a cost that grew at a rate of roughly 10.7 percent annually. The program spends money by the bushel, yet under-reimburses providers even worse than Medicare.
- Ultimately this so-called compromise would expand government health care programs and further squeeze private insurance, resulting in increased costs and higher insurance premiums, and provide a lower-quality of care.
No wonder Senator Reid wants to keep it a secret.
$98 Billion in Improper Payments
The Obama administration and its allies in Congress want the federal government to expand its role in subsidizing health care. We are told that this expansion will restrain rising health care costs. But an OMB report yesterday that the government made $98 billion in improper payments last year — $55 billion of which came from Medicare and Medicaid — ought to raise suspicions about that claim.
According to Reuters, OMB Director Peter Orszag told reporters that the embarrassing figures from Medicare and Medicaid demonstrate the need for health care reform. I would concur if “reform” meant reducing the government’s role in health care. However, he means the opposite, which raises the question of how giving more money to an already waste-prone and bureaucratic federal health system can possibly make sense for the economy.
The administration has promised to cut down on improper payments with the aid of a new executive order. According to the Associated Press:
Under the executive order, every federal agency would have to maintain a Web site that tracks improper payments, error rates and outstanding payments. If an agency doesn’t meet targets for reducing error rates for two years in a row, the agency director and responsible official will have to directly report to OMB to explain the delinquency and new actions they will take.
Somehow I doubt this will amount to much of a deterrent. The AP also said the administration plans to impose penalties on government contractors who receive improper payments. But last month it was reported that “the Department of Defense awarded nearly $30 million in stimulus contracts to six companies while they were under federal criminal investigation on suspicion of defrauding the government.”
Democrat Tom Carper, chairman of the Senate subcommittee on federal financial management, seemed to partly understand the broader meaning of the improper payment estimates:
It goes without saying that these results would be completely unacceptable in the private sector, as they should be in government, especially at a time of record deficits…Unfortunately, these numbers may still be just the tip of the iceberg since they don’t even include estimates for several major programs, including the Medicare prescription drug plan.
Yes, Senator, which is precisely why bigger government – be it stimulus, bail outs, or health care reform – is an inferior option to letting the marketplace provide for our wants and needs.
Carper is also right about the $98 billion figure being the “tip of the iceberg.” As has been noted here before:
The Government Accountability Office estimates that the two major government health programs are currently losing a combined $50 billion annually to such payments. But that estimate probably low-balls the actual losses. Harvard’s Malcolm Sparrow, a top specialist in health care fraud, estimates that 20 percent of federal health program budgets are consumed by improper payments, which would be a staggering $150 billion a year for Medicare and Medicaid.
See this essay for more on fraud and abuse in government programs.
State ‘Opt-Out’ Proposal: a Ruse within a Ruse
President Obama and his congressional allies want to create yet another government-run health insurance program (call it Fannie Med) to cover yet another segment of the American public (the non-elderly non-poor).
The whole idea that Fannie Med would be an “option” is a ruse.
Like the three “public options” we’ve already got – Medicare, Medicaid, and the State Children’s Health Insurance Program – Fannie Med would drag down the quality of care for publicly and privately insured patients alike. Yet despite offering an inferior product, Fannie Med would still drive private insurers out of business because it would exploit implicit and explicit government subsidies. Pretty soon, Fannie Med will be the only game in town – just ask its architect, Jacob Hacker.
Now the question before us is, “Should we allow states to opt out of Fannie Med?” It seems a good idea: if Fannie Med turns out to be a nightmare, states could avoid it.
But the state opt-out proposal is a ruse within a ruse.
Taxpayers in every state will have to subsidize Fannie Med, either implicitly or explicitly. What state official will say, “I don’t care if my constituents are subsidizing Fannie Med, I’m not going to let my constituents get their money back”? State officials are obsessed with maximizing their share of federal dollars. Voters will crucify officials who opt out. Fannie Med supporters know that. They’re counting on it.
A state opt-out provision does not make Fannie Med any more moderate. It is not a concession. It is merely the latest entreaty from the Spider to the Fly.
(Cross-posted at National Journal’s Health Care Experts blog.)
Filed under: Cato Publications; General; Health, Welfare & Entitlements
Yes, Mr. President, a Free Market Can Fix Health Care
At his White House forum on health reform back in March, President Barack Obama offered:
If there is a way of getting this done where we’re driving down costs and people are getting health insurance at an affordable rate, and have choice of doctor, have flexibility in terms of their plans, and we could do that entirely through the market, I’d be happy to do it that way.
In a new Cato study titled, “Yes, Mr. President, a Free Market Can Fix Health Care,” I take up the president’s challenge and explain that markets are indeed the only way to achieve those goals. I also explain how Congress can remove the impediments that currently prevent markets from doing so:
- Give Medicare enrollees a voucher (adjusted for their means and health risk) and let them purchase any health plan on the market,
- Reform the tax treatment of health care with “large” health savings accounts, which would give workers a $9.7 trillion tax cut (without increasing the deficit) and free them to purchase secure coverage that meets their needs,
- Free consumers and employers to purchase health insurance across state lines (i.e., licensed by other states), which could cover up to one third of the uninsured,
- Make state-issued clinician licenses portable, which would increase access to care and competition among health plans, and
- Block-grant Medicaid and the State Children’s Health Insurance Program, just as Congress did with welfare.
Unlike the president’s health care proposals (which, as Victor Fuchs explains, would merely shift costs), these reforms would reduce costs, expand coverage, and improve health care quality – without new taxes, government subsidies, or deficit spending.
Would a free market be nirvana? Of course not. But fewer Americans would fall through the cracks than under the status quo or the government takeover advancing through Congress.
There is a better way.
(Cross-posted at Politico’s Health Care Arena.)
Filed under: Cato Publications; General; Health, Welfare & Entitlements
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
Climate Change and Health Care: Free Lunches?
In the debate over health care reform, advocates of expanded government health insurance suggest we can pay for this by making Medicare and Medicaid more efficient.
In Paul Krugman’s most recent column, he makes a similar claim about reducing greenhouse gas emissions:
The evidence suggests that we’re wasting a lot of energy right now. That is, we’re burning large amounts of coal, oil and gas in ways that don’t actually enhance our standard of living — a phenomenon known in the research literature as the “energy-efficiency gap.” The existence of this gap suggests that policies promoting energy conservation could, up to a point, actually make consumers richer.
Both claims of a “free lunch” are heroic, at best.
In the case of health insurance, Medicare and Medicaid are inefficient, but to make them more efficient we have to reduce government subsidy for health insurance, not expand it.
In the case of energy efficiency, more energy-efficient practices exist (e.g., replacing incandescent light bulbs with CFLs), but they are expensive: if they actually made consumers richer, most would be using them already.
Now the fact that expanded government health insurance and increased energy efficiency would cost more, not less, does not prove they are bad ideas (that’s a separate discussion). But it means society must evaluate a tradeoff, not just assert we can have something for nothing.
C/P Libertarianism, from A to Z
Filed under: Energy and Environment; Government and Politics; Health, Welfare & Entitlements
Govt Bureaucrats Already Interfere in Medical Decisions
Among the many whoppers President Obama packed into his recent address to Congress, he declared that once he creates “a publicly-sponsored insurance option, administered by the government just like Medicaid or Medicare…I will make sure that no government bureaucrat or insurance company bureaucrat gets between you and the care that you need.”
Just like Medicaid and Medicare? Medicaid and Medicare don’t get in between patients and the care that they need? Really??
That was too much for a correspondent of mine, a government bureaucrat who oversees other government bureaucrats who come in between patients and the care that they need. He writes:
I am government bureaucrat…and I just happen to be reviewing cases, albeit involving Medicare and Medicaid, where the government has inserted itself between the patient and the care prescribed by the physician.
Some time ago the Center for Medicare and Medicaid Services contracted with a consulting firm…to audit Medicare and Medicaid providers. Pursuant to this contract, [the firm] audited certain hospital records. In the cases I am reviewing, [the firm] would perform a computer analysis looking for situations where a hospital admitted a patient only to discharge the patient the next day. (This is just one of the many things they audited for; e.g., the use of intense care rehabilitation in joint replacement cases).
[The firm] then reviewed the hospital’s justification for the admission and, when [it] “determined” that the admission was not appropriate, the hospital would be required to repay the money it had already been paid – the audit dated back to 2003. The cases proceed through a reconsideration process and if it’s still determined that the hospital admission was improper, the case ends up on my desk for adjudication.
I happen to have six of those cases now, from three different hospitals. In all six cases the patients had significant chronic health problems and all were having acute episodes at the time of admission. Of the six, five were senior citizens, and one was having problems with a pregnancy. In each case a “panel of experts” determined that, based on the medical evidence, the hospital’s admitting doctor was unjustified.
Setting aside the medical issues, which in each case were significant, you and I both know that a large factor in the admitting doctor’s decision is the potential liability for the hospital. I am sure in each case the doctor considered just what would happen if he sent the patient home they died. Even if liability would not ultimately attach to the hospital, the cost of fighting such a lawsuit would be considerable. Of course, the so-called panel of experts does not have to worry about medical malpractice, so that issue does not figure into their consideration.
It is extremely rare for the patient to be held financially liable in such cases. So, one could argue that they got the treatment they needed and didn’t even have to pay for it. But, how long will it be before hospitals become so “gun-shy” that they refuse to admit patients for care, fearing that they will not be reimbursed by Medicare?
By the way, [that] contract was just a trial run. CMS has contracted with a number of audit firms to conduct a similar and on-going program review nationwide. So we will be seeing these “20-20 hindsight” reviews of doctor’s decisions for a long time.
Of course, the president’s IMAC proposal would make those powers much more explicit and sweeping.
If the president thinks it’s a good idea to give the federal government more power to ration medical care, he should say so. It’s a defensible position.
But to claim that’s not what he’s proposing, or that the government doesn’t do that already, is a . . . oh, what’s the word . . . ?
Filed under: Cato Publications; General; Health, Welfare & Entitlements
Weekend Links
- Jack of all trades and master of none: What happens when the government gets so big that it fails to fulfill its most important role.
- The hard truth about end-of-life care in America.
- If current trends continue, the U.S. government will soon spend a greater portion of GDP on Medicare and Medicaid than Canada now spends on its entire single-payer government-run system. Here’s a way to fix that.
- How about a little honesty from time to time in the tobacco policy debate?
- More drug-related chaos along the Mexican border.
- Go North Young Man! Will Wilkinson becomes “forever Canadian.”
Deficits, Spending, and Taxes
The White House and the CBO announced this week that:
The nation’s fiscal outlook is even bleaker than the government forecast earlier this year because the recession turned out to be deeper than widely expected, the budget offices of the White House and Congress agreed in separate updates on Tuesday.
The Obama administration’s Office of Management and Budget raised its 10-year tally of deficits expected through 2019 to $9.05 trillion, nearly $2 trillion more than it projected in February. That would represent 5.1 percent of the economy’s estimated gross domestic product for the decade, a higher level than is generally considered healthy.
What is the right response to these deficits?
One view holds that most current expenditure is desirable — indeed, that expenditure should ideally be much higher — so the United States should raise taxes to balance the budget. Taxes are a drag on economic growth, however, and unpopular with many voters, so this view presents politicians with an unhappy tradeoff.
The alternative view holds that a substantial fraction of current expenditure is undesirable and should be eliminated, even if the revenue to pay for it could be manufactured out of thin air. To be concrete:
- Medicare and Medicaid encourage excessive spending on health care.
- The invasions of Iraq and Afghanistan encourage hostility to the U.S. and thereby increase the risk of terrorism.
- Drug prohibition generates crime and corruption.
- Agricultural subsidies distort decisions about which crops to grow, and where.
- And much, much more.
So, under this view, the United States can have its cake and eat it too: improve the economy and reduce the deficit without the need to raise taxes.
This approach is not, of course, politically trivial, since existing expenditure programs have constituencies that will fight their elimination.
But thinking about these two views of the deficits is nevertheless useful: it shows that discussion should really be about which aspects of government are truly beneficial, not just about the deficits per se.
Chait Calls Out Conservatives on Rationing
I’ve been struggling with how to respond to an article by The New Republic’s Jonathan Chait, who accuses conservatives of hypocrisy and Republicans of whorishness when it comes to wasteful spending in Medicare and other government health programs. I have grudgingly decided that a good fisking is the only way to go.
Chait writes:
Two weeks ago, President Obama offered to cut several hundred billion more dollars out of the Medicare and Medicaid budget to help make room for health care reform. This sort of gesture ought to appeal to conservatives, right? Apparently not. The Heritage Foundation warned, “At a time when Medicare is dangerously close to bankruptcy, it is shortsighted to funnel funds into the creation of another government-run program instead of shoring up Medicare.” A National Review editorial complained, “These cuts in Medicare and Medicaid payments are nothing more than reimbursement reductions with no empirical or economic basis to justify them.”
A couple of problems here. Chait takes the National Review quote out of context. The magazine’s most recent issue states: “Republicans should not have only harsh words for Obama’s ideas. If he truly believes that he can squeeze hundreds of billions of dollars from federal health programs, then he should be encouraged to do so. But the savings should be banked before they are spent.” The Heritage quote is odd in that it suggests that conservatives should make “shoring up Medicare” a priority. But it makes essentially the same argument. Chait gives a false impression when he suggests that all conservatives are knee-jerk opponents of reducing wasteful Medicare spending.
No empirical basis to justify them? Since when do conservatives require an empirical basis to justify cutting social spending?
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