From National Review

We have some strong disagreements on the numbers,” President Obama said after Rep. Paul Ryan (R., Wis.) concluded his devastating critique of the Democrats’ budget claims, “but I don’t want to get too bogged down.” In the ensuing debate, what became clear is that the Democrats just don’t have an answer to Ryan’s arguments. They ducked, dodged, and changed the subject repeatedly, because Ryan’s numbers themselves are unimpeachable.

The Democrats are touting an estimate from the Congressional Budget Office that their health-care bill would reduce the deficit by around $130 billion over the next ten years. What Ryan pointed out — and what no Democrat even attempted to counter — is that this is because the legislation front-loads tax hikes and Medicare cuts and defers costs, forcing the CBO to score ten years of offsets with only six years of spending. Looked at on a level playing field, the true ten-year cost of the bill is $2.3 trillion rather than $950 billion, Ryan said.

Then he brought up another gimmick: The bill is full of double-counting. “Savings” are counted as offsets for new health-care spending and at the same time set aside to pay for future entitlements. For instance, the Democrats claim $52 billion in offsets as a result of increasing Social Security payroll-tax revenues. But these dollars are already claimed for future Social Security beneficiaries. They can’t pay for both. The Democrats take another $72 billion in premiums intended to fund a new long-term-care program and count them as offsets for other spending. Ryan pointed out that Senate Budget Committee chairman Kent Conrad has called this “a Ponzi scheme of the first order, the kind of thing that Bernie Madoff would have been proud of.”

Perhaps most important, Ryan confronted the Democrats with the issue of the “Doc Fix” — a separate bill that would have added $371 billion to the Democrats’ legislation if it hadn’t been stripped out. The Doc Fix would have prevented Medicare reimbursements to doctors from plummeting by 21 percent, a drop that Congress put into the bill to improve its CBO score but never planned to allow, most political observers agree.

Read the rest of the column

From the Cato Institute

By Michael Tanner 

In 301 AD, the Roman emperor Diocletian imposed price controls on most commodities and professions in the empire. The penalty for raising prices was death. Yet the controls failed utterly, leading to shortages, more inflation and the near collapse of the imperial economy.

Now, nearly two millennia later, President Obama seems determined to demonstrate how little we’ve learned.

Yesterday, the president proposed giving the federal government the power to regulate insurance premiums. Undoubtedly, this will be politically popular — at least, in the short term. Insurance companies aren’t exactly America’s most loveable industry. Recent premium hikes will result in real hardship for many Americans.

There is, of course, a certain arrogance in the assumption that Obama, Nancy Pelosi and a bevy of government bureaucrats know exactly what something should cost. No doubt, as soon as they finish setting insurance prices, they’ll move on to negotiating Tracy McGrady’s contract renewal.

But more important, attempts to control prices by government fiat ignore basic economic laws — and the result could be disastrous for the American health-care system.

Most people think of prices and costs as the same thing, but from an economic perspective, they aren’t. Prices are what people pay to receive a good or service. Costs are what it takes to produce the goods and services. In this case, limiting the prices that insurers can charge does nothing about the underlying costs of health care.

Insurers unable to charge more for an increasingly expensive product can be expected to trim costs in one of two ways:

• They can drop their most expensive customers — in this case, the sickest, who consume the most health care. Many companies are already doing this, a major source of dissatisfaction with the health-care system. In fact, the president wants to prohibit companies from doing this.
• They can cut back on their reimbursement rates to hospitals and physicians. But neither doctors nor hospitals, any more than insurance companies, are willing to operate at a loss. If payments fall below their costs, they’ll simply stop taking patients. One only has to look at government programs like Medicare and Medicaid to see how this works.

Medicare already reimburses at roughly 80 cents on every dollar of actual costs. Medicaid pays even less. As a result, more than a third of physicians have closed their practices to Medicaid patients; 12 percent no longer accept Medicare patients.

If private insurers begin similarly to cut back their reimbursements, some hospitals may go out of business, and some doctors may close their practices. Retirement in Florida may begin to look a lot better than another snowy New York winter. Others will stop accepting insurance or set up “concierge” practices in which they see only a small number of privately paying patients.

Thus, price controls on insurers will ultimately lead to rationing — the lack of available health-care goods and services.

Read the rest of the column.

From John Goodman’s Health Blog 

Hint: It’s not about health care.

Ask yourself this question: What is the one health system characteristic every developed country has, except the United States?

If you answered: Every other country has made health care a right, you’re wrong. Citizens of Canada have no right to any particular health care service. They have no right to a CT scan or open heart surgery. They don’t even have a right to a place in line. The 100^th Canadian waiting for heart surgery isn’t entitled to the 100^th surgery.

If you answered: Every other country guarantees essential care to all its citizens, you’re wrong. Citizens of Canada and Britain are routinely denied prompt access to basic health care.

If you answered: Every other country guarantees access to care, regardless of ability to pay, you’re wrong again. In Britain people routinely go to the private sector and pay out-of-pocket for care they cannot get from the state. Canadians come to this country. In both cases, lack of ability to pay is a barrier to care.

If you answered: Other countries make primary care more accessible because there is no barrier of money, you’re wrong once more. Americans get more primary care than Europeans. Even uninsured Americans get as much or more primary care as Canadians get.

So what really is the difference?

Answer: Other countries have nationalized, or collectivized, their health care systems. So far we have not.

In the United States, whether you have insurance at all, what kind of insurance you have, where you get it, what price you pay — these decisions are primarily made by individuals and employers in the private sector. In other countries, they are made by government.

In terms of democratic theory, in other countries people get to vote on what kind of insurance you have and you get to vote on theirs. In the United States the health insurance of most working-age families is based on individual choice, not public choice.

As for day-to-day operations, the U.S. health care system is actually far more similar to the systems of other countries than most people realize. Critics tend to exaggerate the role of out-of-pocket payment in the United States and minimize its role in other countries. In fact, U.S. citizens pay about 13¢ out of pocket every time they spend $1 on health care and this is well below the OECD average (20¢) and even and below that of Canada (15¢)!

Despite all the claims about how different the U.S. system is from the Canadian system, the two systems are far more similar than they are different. Both countries pay doctors the same way; both rely heavily on third-party payment; and both ration by waiting. In Canada, when people see a doctor, the visit is free. In the U.S., it’s almost free. In fact, it’s probably fair to say that there are fewer differences between U.S. and Canadian health care on average than there are among the various types of health plans within the U.S.

The real issue, then, is not about health care at all. It’s about collectivism. It’s about whether we are going to make decisions in one-sixth of our economy privately or publicly. It’s about private sector institutions versus government and ultimately the ballot box.

Read the rest of the column

From Fox News

House Speaker Nancy Pelosi said Thursday she does not have the votes to pass the Senate’s version of a health insurance bill that is now in severe jeopardy of being scrapped.

Just days ago, that was the most viable option for keeping alive President Obama’s top domestic priority, but with the election of Republican Scott Brown to the U.S. Senate in Massachusetts, the fragile coalition of Democrats has broken apart as lawmakers bicker over which portions of the $900 billion, 10-year Senate bill they will and won’t accept.

Emerging from a closed-door meeting with her caucus, the House speaker vented frustration with the massive version of the legislation.

“In its present form without any changes I don’t think it’s possible to pass the Senate bill in the House,” said Pelosi, D-Calif. “I don’t see the votes for it at this time.”

Read the rest of the story

Patient advocate and health policy expert, Betsy McCaughey explains why some major parts of the Democrats healthcare reform are unconstitutional and how the overhaul puts many patients in peril, particularly the elderly.

From the Cato Institute

In 2006, Massachusetts enacted a sweeping health insurance law that mirrors the legislation currently before Congress. After signing the measure, Gov. Mitt Romney (R) wrote, “Every uninsured citizen in Massachusetts will soon have affordable health insurance and the costs of health care will be reduced.” But did the legislation achieve these goals? And what other effects has it had? This paper is the first to use Current Population Survey data for 2008 to evaluate the Massachusetts law, and the first to examine its effects on the accuracy of the CPS’s uninsured estimates, self-reported health, the extent of “crowd-out” of private insurance for both children and adults, and in-migration of new Massachusetts residents.

We find evidence that Massachusetts’ individual mandate induces uninsured residents to conceal their true insurance status. Even setting that source of bias aside, we find the official estimate reported by the Commonwealth almost certainly overstates the law’s impact on insurance coverage, likely by 45 percent. In contrast to previous studies, we find evidence of substantial crowdout of private coverage among low-income adults and children. The law appears to have compressed self-reported health outcomes, without necessarily improving overall health. Our results suggest that more than 60 percent fewer young adults are relocating to Massachusetts as a result of the law. Finally, we conclude that leading estimates understate the law’s cost by at least one third, and likely more.

Our results hold important lessons for the legislation moving through Congress. As in Massachusetts, there has been no effort to estimate the cost of the private health insurance mandates that legislation would impose on individuals and employers. The costs may therefore be far greater than legislators and voters believe, while the benefits may be smaller than the conventional wisdom about Massachusetts suggests.

Read the study

From the Politico

At 7:16 a.m., the Senate passed on a 60-39 party line vote a sweeping health care bill that will tighten insurance regulations, provide insurance for 31 million more Americans and cost $871 billion over the next decade.

“This is for my friend Ted Kennedy, aye,” said Sen. Robert Byrd as he cast his vote.

Clearly exhausted, Senate Majority Leader Harry Reid mistakenly voted no before changing his vote to yes, which got a laugh in the chamber, especially from Senate Republican Leader Mitch McConnell.

After the vote, Reid joked, “I spent a very restless night last night trying to figure out how I could show some bipartisanship and I think I was able to accomplish that for a few minutes.”

Senate Republican Jim Bunning was absent for the vote.

With Vice President Joe Biden presiding over the session, Democrats gathered in the chamber before sunrise on the day before Christmas to cast a vote long in coming but in the end, hardly a surprise, a 60-39 tally that was the fourth time in as many days that Democrats proved they could muster the winning margin.

Reid opened the Senate floor at 7 a.m. and channeled Ted Kennedy: “The work goes on. The cause endures… and yet here we are, minutes away from doing what others have tried but none have achieved.”

Republican leader Mitch McConnell responded: “This fight isn’t over. My colleagues and I will work to stop this bill from becoming law. That’s the clear will of the American people — and we’re going to continue to fight on their behalf.”

From the Wall Street Journal

And tidings of comfort and joy from Harry Reid too. The Senate Majority Leader has decided that the last few days before Christmas are the opportune moment for a narrow majority of Democrats to stuff ObamaCare through the Senate to meet an arbitrary White House deadline. Barring some extraordinary reversal, it now seems as if they have the 60 votes they need to jump off this cliff, with one-seventh of the economy in tow.

Mr. Obama promised a new era of transparent good government, yet on Saturday morning Mr. Reid threw out the 2,100-page bill that the world’s greatest deliberative body spent just 17 days debating and replaced it with a new “manager’s amendment” that was stapled together in covert partisan negotiations. Democrats are barely even bothering to pretend to care what’s in it, not that any Senator had the chance to digest it in the 38 hours before the first cloture vote at 1 a.m. this morning. After procedural motions that allow for no amendments, the final vote could come at 9 p.m. on December 24.

Even in World War I there was a Christmas truce.

The rushed, secretive way that a bill this destructive and unpopular is being forced on the country shows that “reform” has devolved into the raw exercise of political power for the single purpose of permanently expanding the American entitlement state. An increasing roll of leaders in health care and business are looking on aghast at a bill that is so large and convoluted that no one can truly understand it, as Finance Chairman Max Baucus admitted on the floor last week. The only goal is to ram it into law while the political window is still open, and clean up the mess later.

***

• Health costs. From the outset, the White House’s core claim was that reform would reduce health costs for individuals and businesses, and they’re sticking to that story. “Anyone who says otherwise simply hasn’t read the bills,” Mr. Obama said over the weekend. This is so utterly disingenuous that we doubt the President really believes it.

The best and most rigorous cost analysis was recently released by the insurer WellPoint, which mined its actuarial data in various regional markets to model the Senate bill. WellPoint found that a healthy 25-year-old in Milwaukee buying coverage on the individual market will see his costs rise by 178%. A small business based in Richmond with eight employees in average health will see a 23% increase. Insurance costs for a 40-year-old family with two kids living in Indianapolis will pay 106% more. And on and on.

These increases are solely the result of ObamaCare—above and far beyond the status quo—because its strict restrictions on underwriting and risk-pooling would distort insurance markets. All but a handful of states have rejected regulations like “community rating” because they encourage younger and healthier buyers to wait until they need expensive care, increasing costs for everyone. Benefits and pricing will now be determined by politics.

As for the White House’s line about cutting costs by eliminating supposed “waste,” even Victor Fuchs, an eminent economist generally supportive of ObamaCare, warned last week that these political theories are overly simplistic. “The oft-heard promise ‘we will find out what works and what does not’ scarcely does justice to the complexity of medical practice,” the Stanford professor wrote.

• Steep declines in choice and quality. This is all of a piece with the hubris of an Administration that thinks it can substitute government planning for market forces in determining where the $33 trillion the U.S. will spend on medicine over the next decade should go.

Unnoticed by the press corps, the Congressional Budget Office argued recently that the Senate bill would so “substantially reduce flexibility in terms of the types, prices, and number of private sellers of health insurance” that companies like WellPoint might need to “be considered part of the federal budget.”

With so large a chunk of the economy and medical practice itself in Washington’s hands, quality will decline. Ultimately, “our capacity to innovate and develop new therapies would suffer most of all,” as Harvard Medical School Dean Jeffrey Flier recently wrote in our pages. Take the $2 billion annual tax—rising to $3 billion in 2018—that will be leveled against medical device makers, among the most innovative U.S. industries. Democrats believe that more advanced health technologies like MRI machines and drug-coated stents are driving costs too high, though patients and their physicians might disagree.

“The Senate isn’t hearing those of us who are closest to the patient and work in the system every day,” Brent Eastman, the chairman of the American College of Surgeons, said in a statement for his organization and 18 other speciality societies opposing ObamaCare. For no other reason than ideological animus, doctor-owned hospitals will face harsh new limits on their growth and who they’re allowed to treat. Physician Hospitals of America says that ObamaCare will “destroy over 200 of America’s best and safest hospitals.”

• Blowing up the federal fisc. Even though Medicare’s unfunded liabilities are already about 2.6 times larger than the entire U.S. economy in 2008, Democrats are crowing that ObamaCare will cost “only” $871 billion over the next decade while fantastically reducing the deficit by $132 billion, according to CBO.

Yet some 98% of the total cost comes after 2014—remind us why there must absolutely be a vote this week—and most of the taxes start in 2010. That includes the payroll tax increase for individuals earning more than $200,000 that rose to 0.9 from 0.5 percentage points in Mr. Reid’s final machinations. Job creation, here we come.

Other deceptions include a new entitlement for long-term care that starts collecting premiums tomorrow but doesn’t start paying benefits until late in the decade. But the worst is not accounting for a formula that automatically slashes Medicare payments to doctors by 21.5% next year and deeper after that. Everyone knows the payment cuts won’t happen but they remain in the bill to make the cost look lower. The American Medical Association’s priority was eliminating this “sustainable growth rate” but all they got in return for their year of ObamaCare cheerleading was a two-month patch snuck into the defense bill that passed over the weekend.

The truth is that no one really knows how much ObamaCare will cost because its assumptions on paper are so unrealistic. To hide the cost increases created by other parts of the bill and transfer them onto the federal balance sheet, the Senate sets up government-run “exchanges” that will subsidize insurance for those earning up to 400% of the poverty level, or $96,000 for a family of four in 2016. Supposedly they would only be offered to those whose employers don’t provide insurance or work for small businesses.

As Eugene Steuerle of the left-leaning Urban Institute points out, this system would treat two workers with the same total compensation—whatever the mix of cash wages and benefits—very differently. Under the Senate bill, someone who earned $42,000 would get $5,749 from the current tax exclusion for employer-sponsored coverage but $12,750 in the exchange. A worker making $60,000 would get $8,310 in the exchanges but only $3,758 in the current system.

For this reason Mr. Steuerle concludes that the Senate bill is not just a new health system but also “a new welfare and tax system” that will warp the labor market. Given the incentives of these two-tier subsidies, employers with large numbers of lower-wage workers like Wal-Mart may well convert them into “contractors” or do more outsourcing. As more and more people flood into “free” health care, taxpayer costs will explode.

• Political intimidation. The experts who have pointed out such complications have been ignored or dismissed as “ideologues” by the White House. Those parts of the health-care industry that couldn’t be bribed outright, like Big Pharma, were coerced into acceding to this agenda. The White House was able to, er, persuade the likes of the AMA and the hospital lobbies because the federal government will control 55% of total U.S. health spending under ObamaCare, according to the Administration’s own Medicare actuaries.

Others got hush money, namely Nebraska’s Ben Nelson. Even liberal Governors have been howling for months about ObamaCare’s unfunded spending mandates: Other budget priorities like education will be crowded out when about 21% of the U.S. population is on Medicaid, the joint state-federal program intended for the poor. Nebraska Governor Dave Heineman calculates that ObamaCare will result in $2.5 billion in new costs for his state that “will be passed on to citizens through direct or indirect taxes and fees,” as he put it in a letter to his state’s junior Senator.

So in addition to abortion restrictions, Mr. Nelson won the concession that Congress will pay for 100% of Nebraska Medicaid expansions into perpetuity. His capitulation ought to cost him his political career, but more to the point, what about the other states that don’t have a Senator who’s the 60th vote for ObamaCare?

Read the rest of the column.

From the Wall Street Journal

Your excellent editorial “The ‘Cost Control’ Bill of Goods” (Dec. 14) doesn’t emphasize a potential stealth cost-control aspect proposed in the bill. It will start pilot programs that would transfer the gatekeeper role to doctors at the bedside, a role currently held by “payers” (HMOs and government-agency insurers, including Medicare and Medicaid).

The transfer will be via capitation fee payments, making clinics “responsible” for the cost of care of “insured lives” for one year. Like the more powerful payers, such clinics must restrict orders for care—or go broke. The clinicians’ other choice is to be left out of the income stream, if they are not incorporated in a comprehensive “provider accountable care organization.” These will bid for capitation fee rates at payer population auctions of the insured lives to be serviced.

The illusion of many pundits and policy makers is that mini provider gatekeepers can control costs after the very powerful payer gatekeepers have failed for decades. The problem for patients is the dilemma of all managed-care gatekeepers: cost, quality, access; pick any two. It is not pleasant to think that one’s gatekeeper doctor will have to decide whether to order surgery for your painful hip or only to increase the dose of Ibuprofen—a choice that patients won’t know about, since managed-care corporations and capitated doctors rationing care are carefully hidden behind the Orwellian double-speak of “pay for quality, not quantity,” “well care, not sick care,” “responsibility,” “accountability,” “pay for outcomes,” and other artful illusions.

The economic reality is that no rationing of care supply will ever control costs, when the problem is demand inflation driven by popular insurance tax subsidies too sacred to repeal. Consider that when federal fiscal “necessity” overwhelms empty slogans, scores of new bureaucracies created in ObamaCare would be able to implement Draconian rationing in collusion with subservient insurance and “provider” corporations. The high costs, as well as the rationing powers included in the more than 2,000 pages of the Obama Care Senate legislation are very real.

Robert W Geist, M.D.
St. Paul, Minn.

From Fox News

WASHINGTON – With a self-imposed Christmas deadline at stake, Senate Majority Leader Harry Reid engineered a last-minute compromise in the health care debate that has won the support of the lone Democratic holdout and clinched the required 60 votes to pass a sweeping overhaul of the U.S. health care system.

Marathon negotiations among the White House, Senate Democratic leaders and Sen. Ben Nelson, a conservative Democrat from Nebraska, produced fresh concessions that will mean additional abortion restrictions in the legislation and funding to cover poor people for Nelson’s state and more.

“I know this is hard for some of my colleagues to accept and I appreciate their right to disagree. But I would not have voted for this bill without these provisions,” Nelson said at a news conference in the Capitol.

Democratic leaders offered Nelson a deal similar to the $300 million in Medicaid assistance Sen. Mary Landrieu of Louisiana got for her support, numerous sources told Fox News.

When asked about this, Sen. Kent Conrad, a key Democratic leader involved in the negotiations with Nelson, said, “Oh, it’ll be much more.”

Obama devoted his weekend radio and Internet address to the issue he campaigned on in 2008.

“Now — for the first time — there is a clear majority in the Senate that’s willing to stand up to the insurance lobby and embrace lasting health insurance reforms that have eluded us for generations,” Obama said. “Let’s bring this long and vigorous debate to an end.”

Read the rest of the story.

From the New York Post

By BETSY MCCAUGHEY

Forget the public option, abortion and all the other divisive questions in the health-care debate: The most important issue for patients and their doctors is the transfer of decision-making power from bedside to the federal government.

The bill that Sen. Harry Reid aims to pass in the Senate would mandate that every American enroll in a “qualified” insurance plan. And page 149 states that “qualified” health plans can do business only with a doctor who “implements such mechanisms to improve health-care quality as the secretary [of Health and Human Services] may by regulation require.”

But “mechanisms to improve health-care quality” covers everything in medicine.

Never before has the federal government intruded into medical decisions made by doctors for privately insured patients, except on such narrow issues as drug safety. Now, in the name of quality, the secretary of Health and Human Services would be empowered to regulate your MD’s decisions on everything from cardiac and cancer care to childbirth.

The delegation of power is so broad, it’s conceivable that Washington will be telling your cardiologist when it’s appropriate to use stents or imaging tests — and directing your gynecologist about the use of pelvic sonograms.

What makes this especially troubling is that government will be imposing its regulations with an eye on reducing the cost of your care, even if you’re paying for it yourself: The explicit purpose of “reform” is to reduce what everyone consumes and to discourage some from getting more care than others.

That’s one reason the Senate bill puts a 40 percent tax on “Cadillac” plans — a category that will cover the top 20 percent of plans, according to the Congressional Budget Office. In its Nov. 30 report, the CBO predicts that many employers will downgrade what they provide their workforce to avoid the tax, while others will pass the cost along in the form of lower take-home pay. If you think this bill won’t hurt you because your employer provides a generous health plan, think again.

Despite President Obama’s promises, the Senate bill expressly reduces the care under Medicare. Baby boomers retiring soon will get less than seniors get now. Page 1189 gives the secretary of Health and Human Services “authority to modify or eliminate coverage of certain preventive services,” based on what the US Preventive Services Task Force recommends. This is the same group that just called for cutting back on mammograms.

Whatever your age, and whether you’re in a public program or the richest “Cadillac” plan, you’ll also lose out if you need to be hospitalized — you’ll find fewer nurses on the floor, less diagnostic equipment, longer waits for tests and an overall environment of scarcity.

Why? Because the Reid bill forces hospitals into financial distress.

Read the rest of the column.

From the Cato Institute

From the Wall Street Journal

Government guidelines would likely have forbidden the test I used to discover my wife’s cancer.

By SENATOR TOM COBURN – I recently suggested that seniors will die sooner if Congress actually implements the Medicare cuts in the health-care bill put forward by Senate Majority Leader Harry Reid. My colleagues who defend the bill—none of whom have practiced medicine—predictably dismissed my concern as a scare tactic. They are wrong. Every American, not just seniors, should know that the rationing provisions in the Reid bill will not only reduce their quality of life, but their life spans as well.

My 25 years as a practicing physician have shown me what happens when government attempts to practice medicine: Doctors respond to government coercion instead of patient cues, and patients die prematurely. Even if the public option is eliminated from the bill, these onerous rationing provisions will remain intact.

For instance, the Reid bill (in sections 3403 and 2021) explicitly empowers Medicare to deny treatment based on cost. An Independent Medicare Advisory Board created by the bill—composed of permanent, unelected and, therefore, unaccountable members—will greatly expand the rationing practices that already occur in the program. Medicare, for example, has limited cancer patients’ access to Epogen, a costly but vital drug that stimulates red blood cell production. It has limited the use of virtual, and safer, colonoscopies due to cost concerns. And Medicare refuses medical claims at twice the rate of the largest private insurers.

Section 6301 of the Reid bill creates new comparative effectiveness research (CER) programs. CER panels have been used as rationing commissions in other countries such as the U.K., where 15,000 cancer patients die prematurely every year according to the National Cancer Intelligence Network. CER panels here could effectively dictate coverage options and ration care for plans that participate in the state insurance exchanges created by the bill.

Additionally, the Reid bill depends on the recommendations of the U.S. Preventive Services Task Force in no fewer than 14 places. This task force was responsible for advising women under 50 to not undergo annual mammograms. The administration claims the task force recommendations do not carry the force of law, but the Reid bill itself contradicts them in section 2713. The bill explicitly states, on page 17, that health insurance plans “shall provide coverage for” services approved by the task force. This chilling provision represents the government stepping between doctors and patients. When the government asserts the power to provide care, it also asserts the power to deny care.

Read the rest of the column.

From National Review Online

The public option isn’t the worst thing about the Senate health-care bill.

By Paul Howard — Joseph Lieberman’s words, “I’m going to be stubborn on this,” must be giving Harry Reid heartburn.

Lieberman may caucus with the Democrats, but he’s more than willing to go his own way — especially when it comes to his staunch opposition to the “public option,” a proposed government-run insurance plan that would compete with private insurers. “Once the government creates an insurance company or plan, the government or the taxpayers are liable for any deficit that government plan runs, really without limit,” Lieberman told the Wall Street Journal.

Other moderate Democrats in the Senate, like Mary Landrieu of Louisiana and Ben Nelson of Nebraska, have made similar criticisms — but none as unequivocally as the junior senator from Connecticut.

So let’s all cheer Senator Lieberman on. There’s a legitimate concern that a public option could eventually use Medicare payment rates to undercut private-insurance premiums, gradually taking over the market. (Democrats insist that the public plan now in play could not work that way — but once it’s in operation, all bets are off. Medicare, after all, was never supposed to set hospital and physician payments — but it didn’t take long before that’s just what it was doing.)

But we should also be wary of a pyrrhic victory. Even if the public option dies, the Senate bill is riddled with fiscal gimmicks and heavy-handed regulations that will increase health-care costs, explode the deficit, and drive up insurance premiums for many people who have private insurance today.

STRIKE ONE
President Obama has promised that he will not sign a health-care bill that would cost more than $900 billion for ten years, and the CBO has scored the Senate bill under that price tag. But according to Jeffrey Anderson, a senior fellow at the Pacific Research Institute, just 1 percent of the ten-year costs of the Senate’s health bill falls in the first four years (2010–2013). Costs escalate rapidly starting in 2014. The minority staff of the Senate Budget Committee estimates the fully implemented cost of the Senate bill for the ten years 2014–2023 at close to $2.5 trillion.

STRIKE TWO
Over the summer, President Obama made a bold promise: “I won’t sign a bill that doesn’t reduce health-care inflation so that families as well as government are saving money.” In that case, the president should tell Harry Reid to head back to the drawing board.

The Congressional Budget Office predicts that, under the Senate bill, coverage costs for individual-insurance subsidies, Medicaid expansion, and tax credits to small businesses will rise at about 8 percent annually. Expansion of eligibility for Medicaid and SCHIP (the State Children’s Health Insurance Program) under the Senate bill would thrust 15 million more Americans into a program that already costs over $300 billion annually.

To add insult to injury, the Senate bill would create another entitlement program on top of Medicaid and Medicare: the Community Living Assistance Services and Supports (CLASS) program, which will offer long-term-care insurance.

CLASS is supposed to be supported entirely through premiums, with no federal subsidies. However, the program is apt to attract sicker enrollees, because their premiums would be higher in the private market than premiums for healthy enrollees. But since these sicker enrollees will cost more to care for, there will eventually be intense political pressure for federal subsidies to keep the program going. The structure of the program would also allow Congress to use premium funds in the early years ($72 billion) to offset coverage costs for the uninsured — making the bill seem deficit-neutral.

Senator Nelson has called CLASS “a Ponzi scheme of the first order, the kind of thing that Bernie Madoff would have been proud of.”

STRIKE THREE
The Senate bill contains a version of insurance regulations currently in force in several states called community rating (charging everyone the same rate) and guaranteed issue (mandating that insurers sell to all applicants, regardless of health status). These policies have driven up insurance costs in every state they’ve been tried in, as younger, healthier applicants drop coverage rather than pay higher costs.

In a recent study for the Manhattan Institute on New York’s individual-insurance market, researchers Stephen Parente and Tarren Bragdon estimated that repealing these regulations could lower insurance premiums by 42 percent.

The Senate bill will drive up other insurance costs as well. Almost everyone would be required to buy expensive policies with limits on out-of-pocket spending, no caps on lifetime spending, and mandatory coverage for services that many consumers would not buy on their own, like orthotics. This is a recipe for health-care inflation.

Read the rest of the column.