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.

From the Washington Examiner

The newest bargain being proposed on health care in the Senate would give liberals a major expansion of Medicare by making more than 30 million Americans between the ages of 55 and 65 eligible for the financially exhausted program, previously just for senior citizens.

But by expanding an existing government-run insurance program (while cutting it by $500 billion?) Senate Majority Leader Harry Reid hopes to avoid defeat of his bill because of moderate member’s concerns over his plan to create a whole new health entitlement.

Writers Greg Hitt and Janet Adamy tell us that what’s being offered as the alternative to the government plan approved in the House is a non-profit, national private plan regulated by the federal government.

Liberals in the Senate are trying hard not to look too happy. The bill would ultimately make the government responsible for the new health plan and would create a genuine public option if the non-profit/private/public lash-up goes bust.

Reid was crowing again last night, but as Examiner colleague Susan Ferrechio points out, there is still no certainty that a bill will pass.

Read the rest of the column.

From The Hill

Senate Democrats’ newly unveiled healthcare bill could cost as much as $1.6 trillion over the next decade, nearly double the amount the Congressional Budget Office first predicted, a former CBO official said Friday.

In an estimate released this afternoon by the conservative-leaning American Enterprise Institute (AEI), departed CBO analyst Joseph Antos stressed his former employer’s prediction that the bill would cost $848 billion actually depends on future Medicare cuts and reforms Congress is unlikely to authorize or enforce.

Foremost among those assumptions, Antos said, is the so-called “doc fix” that lawmakers have debated vigorously this fall. The CBO expects changes to Medicare reimbursements payments to hospitals and physicians to save the federal government $245 billion over 10 years, but Antos contends Congress will never pass those rules — and thus, will end up losing money over the long term.

Antos’ AEI report also anticipates Senate Majority Leader Harry Reid’s bill would increase the deficit by about $270 billion over the next 10 years. While the official CBO score hints the opposite is true, Antos suggests lost or increased payments to Medicare recipients will ultimately shift the healthcare bill’s overall cost curve in the wrong direction.

However, it should be noted that the CBO admitted these limitations in its analysis of Reid’s proposal, released earlier this week.

“These longer-term calculations assume that the provisions are enacted and remain unchanged throughout the next two decades, which is often not the case for major legislation,” explained CBO Director Douglas Elmendorf, specifically noting the same concerns about lawmakers’ ability to pass and enforce both the “doc fix” and other Medicare payment provisions.

“The projected longer-term savings for the legislation also assume that the Independent Medicare Advisory Board that would be established by the bill is fairly effective in reducing costs—beyond the reductions that would be achieved by other aspects of the bill—to meet the targets specified in the legislation,” Elmendorf added.