New York Post, July 20, 2009
State Policy Network, July 22, 2009
Health care reform is turning into the ultimate bait and switch.
Candidate Barack Obama promised Americans savings of $2,500, expanded coverage and no generalized tax increase in the form of an individual mandate. Yet President Obama is endorsing the 1,000-plus-page bills working their way through this liberal Congress — which promise to expand government while exploding costs.
In its current form, “health-care reform” will bury future generations in government debt even as politicians and bureaucrats struggle to stop the hemorrhaging by cutting back Medicare and hammering the private sector with taxes. The entire effort is a case study in exactly why politics should be kept out of the examination room.
The Congressional Budget Office estimates the total cost of the House’s current draft at more than $1 trillion over a decade. Even after socking high earners with new taxes, burdening employers who don’t offer insurance with an 8 percent tax on employment and major reductions in Medicare and Medicaid, the CBO says the effort will add $239 billion to our national debt. After paying this tab, we won’t even have universal coverage. Seventeen million people (half illegal immigrants) will still be uninsured.
Politicians are attacking the messenger. New York Sen. Charles Schumer dismissed the CBO as “a little bit wacky,” complaining that it doesn’t give enough credit for future savings from prevention and government efficiency. In fact, the CBO went to great lengths last December to telegraph exactly how it would evaluate reform proposals in nearly 400 pages of straightforward analysis of how various adjustments would affect costs and coverage.
There is simply no evidence that much of what politicians are claiming as savings will ever drain a dollar out of the system. Preventive care costs more than it saves. Technology is expensive to put in place. Savings will come, if at all, years into the future.
The only meaningful spending reductions in Democratic plans come from paper-based reductions in Medicare and Medicaid. Pure smoke and mirrors. The likelihood of these programs actually getting fewer dollars over the next decade is slim, as cuts to doctors and providers will translate into cuts in care to seniors who will howl. Deficits will grow larger.
No wonder then that CBO head Douglas Elmendorf responded candidly when asked in a Senate hearing if the current plans would put a damper on costs. “The cost curve is being raised,” he replied.
Elsewhere, Elmendorf was just as direct, telling the senators, “The legislation significantly expands the federal responsibility for health-care costs.” Senate Majority Leader Harry Reid’s caustic response was to suggest that Elmendorf try running for Congress. Plainly, the politicians can neither make tough choices nor tell the truth.
The consequences of the current plans for the nation are on display in a laboratory called Massachusetts. All the ingredients save the government-run health-care option have been in place for more than three years now in the Bay State: Medicaid is expanded. A public bureaucracy runs an insurance exchange that sets policy and brokers insurance.
Employers have a “pay or play” mandate. Individuals must spend up to 10 percent of pre-tax income to buy insurance or face hefty fines. Insurance companies can’t say no due to health status. Government subsidies are available for households of four with incomes up to $66,000.
Massachusetts even has the delusional politicians. “My state was able to put a plan in place that got everybody health insurance,” said ex-Gov. Mitt Romney, the plan’s father, on “Meet the Press” in late June.
The reality in Massachusetts is quite different. The plan immediately exploded costs. Universal coverage hasn’t been achieved, and never will be, on account of the exemptions for affordability. The majority of newly insured were simply added to taxpayer-supported plans. Taxes were raised almost immediately, with smokers plopping down another $1 a pack for the cause.
It’s not even clear that the most needy have benefited. Many, grouse advocates for the poor, simply traded free care funded by a state pool for an insurance policy that primary-care doctors don’t want to accept, because it pays them so little for providing care.
The state is still spending millions on free care, yet safety-net hospitals are feeling the pinch of lower reimbursement from Medicaid-level rates. Boston Medical Center is suing the state, arguing that it will have to close its doors if things don’t change.
Health plans report ominous signs as well. The CEO of a major insurer notes that some people are clearly gaming the system by signing up for insurance when they get sick, getting treatments covered and then dropping coverage.
The Bay State’s system can’t keep going as is. An official commission recently recommended that the state radically change how doctors and hospitals are paid, moving to global budgets and per-person rather than per-procedure reimbursement. In other words, the next step is a brave new world of staff-model HMOs and single-payer, government-run health care.
That’s the logical end point of the path that Congress is trying to make us all walk. Our care will be rationed, and we will face long waiting lists. Medicaid for everyone.