The Real World – D.C.
Reason.tv has a characteristically good video about the failure of House and Senate leaders (and the president) to make negotiations about the health care bill transparent.
It’s probably not true, House Speaker Nancy Pelosi’s statement that “there has never been a more open process…” But even if it is, that doesn’t matter. Technology that can make the legislative process far more open is there, and the audience wishing to use it is there too.
The public’s expectations for open government have risen to what can be achieved—matching past practice is not good enough.
ObamaCare’s Cost Could Top $6 Trillion
Congressional Democrats are using several budget gimmicks to disguise the cost of their health care overhaul, claiming the House and Senate bills would cost only (!) about $1 trillion over 10 years. Now that critics have begun to correct for those budget gimmicks, supporters of ObamaCare are firing back.
One gimmick makes the new entitlement spending appear smaller by not opening the spigot until late in the official 10-year budget window (2010–2019). Correcting for that gimmick in the Senate version, Sen. Judd Gregg (R-NH) estimates, “When all this new spending occurs” — i.e., from 2014 through 2023 — “this bill will cost $2.5 trillion over that ten-year period.”
Another gimmick pushes much of the legislation’s costs off the federal budget and onto the private sector by requiring individuals and employers to purchase health insurance. When the bills force somebody to pay $10,000 to the government, the Congressional Budget Office treats that as a tax. When the government then hands that $10,000 to private insurers, the CBO counts that as government spending. But when the bills achieve the exact same outcome by forcing somebody to pay $10,000 directly to a private insurance company, it appears nowhere in the official CBO cost estimates — neither as federal revenues nor federal spending. That’s a sharp departure from how the CBO treated similar mandates in the Clinton health plan. And it hides maybe 60 percent of the legislation’s total costs. When I correct for that gimmick, it brings total costs to roughly $2.5 trillion (i.e., $1 trillion/0.4).
Here’s where things get really ugly. TPMDC’s Brian Beutler calls “the” $2.5-trillion cost estimate a “doozy” of a “hysterical Republican whopper.” Not only is he incorrect, he doesn’t seem to realize that Gregg and I are correcting for different budget gimmicks; it’s just a coincidence that we happened to reach the same number.
When we correct for both gimmicks, counting both on- and off-budget costs over the first 10 years of implementation, the total cost of ObamaCare reaches — I’m so sorry about this — $6.25 trillion. That’s not a precise estimate. It’s just far closer to the truth than President Obama and congressional Democrats want the debate to be.
Beutler and other supporters of ObamaCare can react to this news in two ways. They can continue to deny the enormous cost of the legislation they support. Or they can question how President Obama’s health plan came to be so blessedly expensive, and how (and by whom) they were duped into thinking it wasn’t.
Health Care Bill Improves Lawyers’ Financial Health
The great thing for legislators about a nearly 2000 page bill — such as, oh, the House’s latest health care salvo — is that very few people bother to read the whole thing. So it’s easy to bury little gifts to favored supporters. Or big ones.
For example, check out section 2531 — that’s pages 1431-33 for those following along at home — which has gone largely unnoticed in the major news cycle. These three pages of the bill reward states that refrain from setting (or repeal) any caps on medical malpractice rewards — and the accompanying lawyers’ fees! – by requiring the Secretary of Health and Human Services to provide them a bribe an “incentive payment.”
As Hans von Spakovsky notes at NRO’s Corner, this “alternative medical liability law” aims to eviscerate cost-saving measures that protect doctors from frivolous lawsuits that increase the cost of health care to the consumer. So this has nothing to do with providing better or cheaper care, covering the uninsured, or even eliminating waste and fraud. Instead, it’s a pure sop to one of the Congressional Democrats’ key constituencies: trial lawyers.
For more information on free market health care reform alternatives, please visit Cato’s Health Care website here.
Thursday Links
- Michael Tanner on the Obama health care speech: All sizzle, no substance.
- Why Main Street should embrace globalization. Plus, why international trade doesn’t cause unemployment at home.
- Should the IRS have the right to share your tax information with foreign governments? How about totalitarian ones? It may not be so far off.
- Libertarian news anchor John Stossel leaving ABC for Fox.
- Podcast- Obama: Hey, lets force everyone to have insurance, and fine Americans who don’t comply.
The Real Cost of a Government Takeover of Health Care
The Congressional Budget Office estimates that current health care “reform” legislation could cost around a trillion dollars over the coming decade. But that number likely is low.
Stephen T. Parente of HSI Network LLC says the CBO did not use the most current data. HSI figures the cost could be double the CBO estimate.
The biggest player in the health-care debate right now isn’t Nancy Pelosi, Harry Reid, or even President Obama. It’s the Congressional Budget Office, which is responsible for estimating the costs of proposed legislation. After the director of the CBO testified on July 16 that none of the health-reform bills in the House or Senate would reduce the rate of increase in federal spending on health care, congressional efforts fell into disarray. Many policymakers began searching for a way to get costs below the CBO’s frightening estimate of $1.1 trillion over ten years. Others attacked the CBO, calling its estimates irresponsible.
The CBO is actually being kind to the would-be reformers. Its analysis likely understates — by at least $1 trillion — the true costs of expanding health coverage as current Democratic legislation contemplates. Over the last few months, my colleagues and I at the consulting firm Health Systems Innovations have provided cost estimates of health-care reform to both Republican and Democratic members of Congress, and we’ve posted these estimates on our website as well. We believe that the Democratic bills currently under consideration in the House and Senate would cost $2.1 trillion and $2.4 trillion, respectively — much higher than CBO’s figures.
The Attempted Murder of HSAs
There may be nothing that more scares advocates of government-controlled health care than giving patients control over their medical treatment. Thus, it should come as no surprise that the current versions of health care “reform” would kill off Health Savings Accounts (HSAs).
Explains John Fund in the Wall Street Journal:
Eight million Americans, according to the Treasury Department, are covered by plans with low-cost premiums and high deductibles that are designed for large, unexpected medical costs. Money is also set aside in a savings account to cover the deductibles, and whatever isn’t spent in one year can build up tax-free. Nearly a third of new HSA users, according to Treasury figures, previously had no insurance or bought coverage on their own.
These policies will be severely limited. The Senate plan says a policy deemed “acceptable” must have insurance (rather than the individual) pay out at least 76% of the benefits. The House plan is pegged at 70%. That’s not the way these plans are set up to work. Roy Ramthun, who implemented the HSA regulations at the Treasury Department in 2003, says the regulations are crippling. “Companies tell me they could be forced to take products off the market,” he said in an interview.
This level of micro-management is a good argument in principle against the sort of “reform” currently being promoted on Capitol Hill. But the proposed rules likely were drafted in order to eliminate HSAs as an option. Explains Ryan Ellis of American Shareholders:
If an insurance plan must pay for 70 or 76 percent of all health care costs, it would be next to impossible for it to qualify as a high-deductible health plan. No HDHP, no HSA contribution.
The only hope a plan would have would be to do the following:
- Have a deductible no higher than the HDHP minimum ($1150 single, $2300 family in 2009)
- The out of pocket limit would have to be an identical amount
- The plan would have to cover all allowable preventive care on a first-dollar basis (annual physical, prenatal and well-child, immunizations, smoking cessation, weight loss programs, and early screening services)
Any HDHP which is this generous would have very little premium savings relative to a tradtional health insurance plan. If the typical HDHP today shaves about 33 percent off your premium, a plan like this might only shave off about 10 percent. There would be very little incentive to get an HSA-qualified insurance plan.
HSAs are an imperfect vehicle, an attempt to deal with the perverse incentives created by Washington’s favorable tax treatment of employer-provided health care. But the limitations inherent to HSAs should impel us to expand, not eliminate vehicles to enhance consumer choice. The more we find out about health care “reform,” the more obvious it is that patients would be the biggest losers.
Brainstorming for (Your) Dollars
The Wall Street Journal reports [$]:
President Barack Obama’s health-care plan is in jeopardy because of serious concerns that costs will spin out of control. As much as anyone, it’s White House budget director Peter Orszag’s job to save it…
After his TV appearances, he went straight to the Senate Finance Committee, where he spent three hours with committee aides brainstorming about how to pay for the trillion-dollar legislation. At one point, they flipped through the tax code, looking for ideas.
Note, of course, that finding new sources of tax revenue doesn’t do anything about cost concerns. But for those “fiscal conservatives” who worry more about the deficit than about the government ending up with all our money, new revenue to match new spending may alleviate their concerns. (By the way, this WSJ article also has interesting vignettes about Orszag’s encounters with libertarian writer Virginia Postrel and my former colleague Andrew Biggs.)
For a review of some of the ideas Orszag and his friends have found as they flipped through the tax code — such a charming metaphor for the reality of the ruling class looking for opportunities to extract more of the money we earn — click here.
Ponnuru: Stop Socialized Medicine, in All Its Forms
As usual, National Review‘s Ramesh Ponnuru offers sound advice on how Republicans, etc., should approach the Democrats’ health care reforms:
Karl Rove’s WSJ op-ed on health care reflects the thinking of a lot of Republicans. He concludes, “Defeating the public option should be a top priority for the GOP this year. Otherwise, our nation will be changed in damaging ways almost impossible to reverse.” In my view, Rove is defining Republican goals too narrowly.
Congress and the president can expand federal control of the health-care system a great deal without a “public option” (that is, a new government program to provide health insurance to people who choose it). They could set mandatory minimum standards for health insurance, impose price controls, mandate that individuals or employers buy insurance, and so forth. If Republicans say that the public option is the chief defect of liberals’ approach to health care, they may be leaving themselves with no rationale for opposing these steps if the Democrats drop it—which they might just do. (Or they might cosmetically weaken the public option in various ways. They could, for example, set up a “trigger” that brings the option into being only if certain conditions in the health market are met, and then design those conditions so that they will be met.)
The public option appears to be one of the biggest political vulnerabilities of the Democrats’ emerging health-care plan, but it isn’t the only one, and it shouldn’t be targeted to the exclusion of the plan’s other features—or of its general government-first orientation. Republicans ought to be making the case against individual mandates and employer mandates as well, both of which are disguised tax increases.
It isn’t incumbent on Republicans to see that a health-care bill passes Congress. To warrant conservative support, a bill should have no public option—but also no mandates and no price controls. Which is to say: No government-directed health-care system.
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