Despite November’s New Deal magnitude political earthquake, surviving House Democrats just laughed off their historic 63 seat loss and reelected ultra-left San Francisco Democrat Nancy Pelosi as House Minority Leader, a position she will now apparently hold for life. Somehow Democrats are convinced that the American people will come to realize the error of their ways and turn to embrace taxation that seizes most of their money for the government to spend, rejecting traditional American prosperity. Good luck with that.
But Democrats have now repeated the folly by choosing Debbie Wasserman Schultz (D-FL) to head the Democratic National Committee. Schultz is just as left wing as Pelosi, but less soft spoken and even more transparently unreasoned.
Schultz wasted no time in demonstrating this. She said regarding the Medicare reforms in Paul Ryan’s House GOP budget plan, “No longer would Medicare be a guarantee of health insurance coverage. Instead Medicare would become little more than a discount card. This plan would literally be a death trap for seniors.”
But it was Debbie Wasserman Schultz, Nancy Pelosi, and the rest of the House Democrats who already voted for the death trap for seniors in whooping through Obamacare during their temporary and final House majority of last year. The best that can be said of them is that now that they have passed the bill they still don’t understand what is in it.
The Deadly Democrat Medicare Cuts
While the Democrats still do not understand what they have done with Obamacare, the government’s actuaries and accountants do, and have been telling us in official government publications and documents. The 2010 Financial Statement of the United States Government, published by the Treasury Department in December, is the most clear. That report discloses repeatedly in several tables of data that the total of future cuts in payments to doctors and hospitals under Medicare as provided in current law due to Obamacare and President Obama’s Medicare reimbursement policies is $15 trillion!
Indeed, the Treasury report effectively touts the draconian Medicare cuts due to Obamacare, stating, “The 2010 projection is lower than the 2009 projection in every year of the projection period almost entirely as a result of the Affordable Care Act (ACA), which is projected to significantly lower Medicare spending and raise receipts.”
That $15 trillion is such a big number that it is hard to understand what it means. But the government’s own actuaries and accountants have been explaining that as well. Medicare’s Chief Actuary reports that even before these cuts already two-thirds of hospitals were losing money on Medicare patients. With $15 trillion in future cuts, health providers will either have to withdraw from serving Medicare patients, or eventually go into bankruptcy. The unworkable, draconian effect of these Medicare cuts is why the U.S. Government Accountability Office issued a disclaimer of opinion on the Statement of Social Insurance component of the federal government’s 2010 Financial Statement, saying, “Unless providers could reduce their cost per service correspondingly, through productivity improvements, or other steps, they would eventually become unwilling or unable to treat Medicare beneficiaries.”
Ryan’s Reforms Are Better for Seniors
Unlike Ryan’s Medicare reforms, the draconian, unworkable, Obamacare cuts to Medicare apply to seniors already retired today. Ryan exempts from any change all seniors retired today and everyone over age 55.
For future, new retirees starting in 2022, seniors will enjoy the freedom to choose private health insurance coverage from among a menu of guaranteed, government approved and regulated plans. Exactly the contrary to Schultz’s uninformed criticisms, Medicare would precisely be a guarantee of health insurance coverage. The problem that the socialist Schultz has is that this would be private health insurance coverage.
Seniors won’t have that problem. Under Ryan’s reforms, all of Medicare would be like the popular Medicare Advantage program, under which one fourth of seniors have already chosen a private insurer for superior Medicare coverage. It would be the same as well as the health insurance system that federal employees enjoy, where workers each choose among a menu of private health insurance alternatives.
Under Ryan’s reforms, each senior would enjoy control over $15,000 for the year to start to devote to the private health insurance of their choice. That amount would also grow each year under an index of price growth. Yes, more well-off seniors may pay more over time for their coverage than under the current system. That is where the cost savings come from. But it is not a matter over which reasonable people can differ that taxpayers cannot afford the current Medicare system, with its unfunded liabilities rapidly growing towards $100 trillion.
In addition, the Ryan plan would provide more each year for lower income seniors to protect them from rising costs. More would be paid as well for those who were sicker so that plans could finance their more expensive care.
Ryan’s brilliant plan also harnesses the competition and innovation of the free market to provide better coverage for seniors at lower cost. Private insurers will compete to find ways to reduce costs for seniors, and innovate with different benefits to better serve and attract customers. Seniors would be free to choose Health Savings Accounts for their coverage, which would maximize patient power and control over their own health care, with powerful market incentives to control and reduce costs. In the Medicare Part D prescription drug program, precisely these market mechanisms were proven to reduce health costs 40% below projections, while Medicare Advantage shows how market competition leads to better benefits for seniors. Of course, the socialists like Pelosi and Schultz that run today’s Democrat party do not understand any of this.
Ryan’s careful, well thought-out reforms are well designed to avoid any harm to the vulnerable, while avoiding bankruptcy for America, and allowing prosperity to return. It is childish, immature, and unworthy of public service for the Democrats to criticize the Ryan plan falsely and harshly with absolutely no reform plan of their own. There is no reasonable way to characterize the Ryan plan as changing Medicare into “little more than a discount card,” as Schultz does unreasonably.
Do Not Ask for Whom the Bell Tolls
But it is not only the health care of seniors that will be savaged by Obamacare. What is emerging from the broad, vague language of the 2,700 plus pages of the Obamacare law is the termination of the ability of America’s health care system to provide the best, most advanced, cutting edge health care in the world, up until now a major component of the highest standard of living in the world previously enjoyed by the American people.
That first clearly arose in December, when HHS Secretary Kathleen Sebelius issued regulations claiming and providing authority for federal regulation of health insurance premiums, a power that Congressional Democrats and the Obama Administration denied was in the law when they passed it. Based on what we see emerging from the more advanced Obamacare experiment in Massachusetts, what the New Left Democrats who have seized control of America’s health care have in mind can now be more clearly recognized.
Obamacare mandates many new benefits to be provided by insurers, such as “free” preventive care, unlimited lifetime benefits, coverage on parents’ plans until age 26, guaranteed issue, community rating, and the many benefits required in the mandated benefits package, exacerbated by the special interest political swarm that will be created by Obamacare. But what Sebelius and her associated health care rationers are indicating is that they will not allow the health insurers more money to pay for the extra costs of these required benefits.
What they are thinking is that this will force insurers to squeeze down on the payments to doctors and hospitals, just as the Obama Democrats have done for Medicare. They are thinking that doctors and hospitals will then be left with no choice but to squeeze down on their patients, rationing and denying them costly care.
And if the insurance companies cannot pull this off, recovering their increased costs by cutting down on the doctors and hospitals, then the Obamacare leftists will be perfectly happy with the insurers just going out of business, as some have already begun to do, ultimately leading to their beloved, Cuban-style, single-payer, government health care monopoly.
Romneycare, adopted in Massachusetts in 2006 (under former Governor Mitt Romney), was a perfect forerunner of Obamacare, with individual and employer mandates, expanded Medicaid, expensive new entitlement subsidies well beyond that, and costly new regulations increasing insurance costs. And the above scenario is exactly what has been playing out in Massachusetts, at least four years farther along than Obamacare. As Sally Pipes explained in an excellent March 24 Washington Post commentary, “Massachusetts is the blueprint for Obamacare, and [Governor Deval] Patrick is among those who want his state’s plan to serve as a national model.” Yet, “almost five years into his state’s Romneycare plan, it turns out that spending is out of control, threatening public-sector budgets and private-sector wealth generation.”
So what Governor Patrick is now pursuing is giving more power to insurers to ration and restrict care, under even more restricted premium payments. First Patrick is proposing to restrict Massachusetts residents to the choice of only Health Maintenance Organizations (HMOs), repackaged under the name of Accountable Care Organizations (ACOs), which we also see referenced in the Obamacare statute.
Secondly, to make sure the government can enforce the scheme, Patrick is also seeking power for the government to regulate the prices insurers can pay to doctors and hospitals for health care. The ultimate vision is to impose on doctors and hospitals what is called a “global payment system,” under which health care providers are given a fixed budget on what they can spend for their patients’ health care for the year. If their patients need more, it is up to the doctors and hospitals to determine who gets the health care and who does not, who gets the best care and who gets the cheaper, second or third rate care, who lives and who dies.
As Pipes explains, “There is talk across the nation of a failed health-care payment system, under which providers make more money the more care they provide. There is less frank talk of the alternative: a managed care system in which providers make less money — or even lose money — the more care they provide.” Under this system, doctors and hospitals actually “get paid more for doing less” in providing you and your loved ones health care. Under today’s health care system, “a sick patient is a revenue center for a physician, clinic or hospital and is therefore sought after, catered to and welcomed,” Pipes adds. But under the brave, new world of Romneycare/Obamacare, “a patient is a cost center and, over time, the opposite must be true.”
As a result, Pipes concludes, “single payer is the logical, indeed, likely extension of Romney-Obamacare.”
The Bell Actually Tolls for Thee Democrat Party
With Pelosi, Schultz, and Obama in control, today’s Democrat party is transforming itself into an outright socialist party. The die is now being cast to go into next year’s elections with the issues framed around the Republicans calling for taxes and spending to be limited to their historical, postwar levels, as Ryan proposes, and the Democrats calling for higher taxes to finance higher spending.
But there is no way the American people are going to vote for the loss of traditional American freedom and prosperity, and the decline of America that would represent. Even core, base constituencies that the Democrats are relying on for bushels of votes are not for that. Recent immigrants, for example, came to America precisely for that traditional American freedom and prosperity, not to vote for decline into the socialist states they just escaped.
That is why 2012 is shaping up into an even bigger political earthquake than 2010, bigger perhaps even than 1932, leaving the Democrat party restricted to control in a few urban political machines across the country, as America votes overwhelmingly to restore the American Dream.
Peter Ferrara is Director of Policy for the Carleson Center for Public Policy and a Senior Fellow for the Heartland Institute. He served in the White House Office of Policy Development under President Reagan, and as Associate Deputy Attorney General of the United States under the first President Bush. He is the author of America’s Ticking Bankruptcy Bomb: How the Looming Debt Crisis Threatens the American Dream, and How to Turn the Tide Before It Is Too Late, forthcoming from HarperCollins.