But that doesn't come close to measuring its true cost. The bill uses various accounting gimmicks to hide its true cost. For example the bill doesn't include more than $200 billion needed to prevent a 21 percent cut in Medicare next year. [The CBO "score" actually assumes Reid cuts Medicare 23 percent -- Ed.] That cost has been spun off into a separate bill, even though the Senate voted down that approach last month.

Moreover (as Jeffrey H. Anderson notes), much of the spending is back-loaded. The bill doesn't start spending until 2014, and only costs $9 billion that year. But by 2019, the annual cost hits $196 billion. The minority staff of the Senate Budget Committee reports that, if you factor out all the budget gimmicks and look at the 10 years of actual implementation, the cost is closer to $2.5 trillion.

And, while Reid brags that the bill will reduce the deficit by $127 billion over the next 10 years (which is about $50 billion less than the deficit the government ran last month alone), even that tiny savings depends on budget gimmicks and the willingness of future Congresses to make huge cuts in Medicare spending. Any wagers on the chances of that actually happening? In fact, even the CBO warns that it will be "difficult" to achieve the predicted savings.

Perhaps more important, much of the cost has simply been shifted from the federal budget onto the backs of workers, businesses and state governments. Judging by previous reforms, as much as 60 percent of the cost won't show up in government accounting.

To pay for all the new spending, Reid would enact at least 15 new or increased taxes totaling more than $493 billion.

But the cost alone doesn't begin to describe how intrusive this bill would be for the average American. For instance, it would require everyone to buy a government-designed insurance plan, even if it was more expensive than their current policy. Failure to comply brings a penalty of up to $6,750 for a family of four.

Another provision would mandate that employers provide insurance to their workers. If they fail to do so, and if even a single worker qualified for federal subsidies, the employer could be fined up to $750 per employee. The CBO estimates that those penalties will amount to more than $28 billion.

Unemployment is now 10.2 percent, and the Senate bill will make it more costly to hire workers. And because the penalty only applies in the case of subsidy-eligible workers, it is low-wage and unskilled workers that will suffer the most.

Of course, the plan contains the government-run "public option" that many experts believe will ultimately crowd out private insurers. And don't be misled by Reid's "opt-out" provision: It comes with so many restrictions that it will be nearly impossible for a state to actually opt out.

Besides, there won't be any opting out of the taxes that will ultimately be necessary to pay for it.

Finally, the bill sets the stage for government-imposed rationing. If you think the recent controversy over mammograms is something, just wait until the dozens of new boards, commissions and agencies created by this bill get to work. The "reform" also gives the secretary of Health and Human Services broad new powers to determine "quality," "efficiency" and "appropriate utilization."

At first, these restrictions would only apply to government programs like Medicare, but they'd create the framework for eventual extension to private insurance.

If Reid gets the 60 votes he needs to pass this, US taxpayers, businesses and patients can expect to pay a high price for this congressional feast.

According to the Chamber of Commerce polls, strong majorities in every state they polled believe the health care bills will increase the deficit. In this case the public’s cynical instincts are almost certain to be more accurate than the computer models of the CBO. As David Dickson of the Washington Times reviewed yesterday, government health care programs have a history of cost overruns.

And not small overruns, like overdrawing your checking account — massive, order-of-magnitude cost overruns. Is that because politicians intentionally overstate the benefits and underestimate the costs of their proposals? Or just that computer models aren’t very good at predicting how entitlements programs change behavior? Either way, just look at the record: In 1967, the House Ways and Means Committee said the entire Medicare program would cost $12 billion in 1990. The actual cost in 1990 was $98 billion. In 1987, Congress projected that Medicaid would make special relief payments to hospitals of less than $1 billion in 1992. The actual cost, just five years after the projection, was $17 billion. Similarly, Medicare’s home care benefit was projected in 1988 to cost $4 billion in 1993, but the actual cost — again, just five years after the projection — was $10 billion.

The government is running a trillion-dollar annual deficit already, and Congress and the president propose to create a new program that promises to cover millions more people with health insurance, drag currently insured people onto government programs, and save billions of dollars in the process. No wonder levels of trust in government are at record lows.

Of course, that $848 billion only accounts for part of the federal government’s share of the tab.  There is other new federal spending.  My read is that the CBO estimates $998 billion of total new federal spending — though I’ll be waiting for former CBO director Donald Marron to provide a more authoritative tally.

And then there are costs that Reid and his comrades have pushed off the federal budget.  For example, the $25 billion unfunded mandate that Reid would impose on states.  Total so far: just over $1 trillion.

But the biggest hidden cost is that of the private-sector mandates.  In both the Clinton health plan and the Massachusetts health plan, the private-sector mandates –- the legal requirements that individuals and employers purchase health insurance –- accounted for 60 percent of total costs.  That suggests that if the Reid bill’s cost to federal and state governments is $1 trillion, then the total cost is probably $2.5 trillion, and Harry Reid — like House Speaker Nancy Pelosi — is hiding $1.5 trillion of the cost of his bill.

Without a cost estimate of the private-sector mandates, Reid has not yet satisfied the request made by eight Democratic senators for a “complete CBO score” of the bill 72 hours prior to floor consideration.

Fortunately, by law, the CBO must eventually score the private-sector mandates.  When that happens, the CBO will reveal costs that the bills’ authors are trying to hide. When that happens, the CBO will present the new federal spending on page 1, new state spending maybe on page 10, and the cost of the private-sector mandates on page 20 or something.  Democrats will tout the figure on page 1.  But the bill’s total cost will the sum of those three figures -– a sum that will reveal the costs that the bill’s authors have been hiding.

The House passed its bill without a complete CBO score.  The Senate should not follow suit.

I’ve written previously about this massive fraud here, here, here, and here.

(Cross-posted at Politico’s Health Care Arena.)

In “Bending the Productivity Curve: Why America Leads the World in Medical Innovation,” economist Glen Whitman and physician Raymond Raad conclude that the United States far and away outperforms other nations on medical innovation, but that the legislation moving through Congress threatens America’s ability to innovate.  From the executive summary:

To date…none of the most influential international comparisons have examined the contributions of various countries to the many advances that have improved the productivity of medicine over time…

In three of the four general categories of innovation examined in this paper — basic science, diagnostics, and therapeutics — the United States has contributed more than any other country…In the last category, business models, we lack the data to say whether the United States has been more or less innovative than other nations; innovation in this area appears weak across nations.

In general, Americans tend to receive more new treatments and pay more for them — a fact that is usually regarded as a fault of the American system. That interpretation, if not entirely wrong, is at least incomplete. Rapid adoption and extensive use of new treatments and technologies create an incentive to develop those techniques in the first place. When the United States subsidizes medical innovation, the whole world benefits. That is a virtue of the American system that is not reflected in comparative life expectancy and mortality statistics.

Policymakers should consider the impact of reform proposals on innovation. For example, proposals that increase spending on diagnostics and therapeutics could encourage such innovation. Expanding price controls, government health care programs, and health insurance regulation, on the other hand, could hinder America’s ability to innovate.

Raad will discuss the study this Friday at noon at a policy forum at the Cato Institute.

In three of the four general categories of innovation examined in this paper — basic science, diagnostics, and therapeutics — the United States has contributed more than any other country, and in some cases, more than all other countries combined. In the last category, business models, we lack the data to say whether the United States has been more or less innovative than other nations; innovation in this area appears weak across nations.

In general, Americans tend to receive more new treatments and pay more for them — a fact that is usually regarded as a fault of the American system. That interpretation, if not entirely wrong, is at least incomplete. Rapid adoption and extensive use of new treatments and technologies create an incentive to develop those techniques in the first place. When the United States subsidizes medical innovation, the whole world benefits. That is a virtue of the American system that is not reflected in comparative life expectancy and mortality statistics.

Policymakers should consider the impact of reform proposals on innovation. For example, proposals that increase spending on diagnostics and therapeutics could encourage such innovation. Expanding price controls, government health care programs, and health insurance regulation, on the other hand, could hinder America's ability to innovate.

The summary is that you can look at the individual mandate as a tax, which is constitutional, or as a regulation forcing private actors to engage in a certain transaction, much like the minimum wage, which is also constitutional. I’ve also heard scholars mention auto insurance, which is an obvious analogue, and the Americans With Disabilities Act, which proved that the government can order businesses to install ramps, despite the fact that the constitution doesn’t explicitly give the federal government jurisdiction over entryways.

This doesn’t seem like the right level of analysis. Some taxes and regulations are within the ambit of federal powers; that doesn’t mean anything capable of being so described is. Some things not explicitly and specifically mentioned in Article I are nevertheless necessarily implicit in the enumerated powers; that doesn’t mean anything is. Auto insurance seems like a poor analogue because it’s a condition of access to government-maintained roadways. Ezra also mentions Massachusetts’ individual mandate, which seems rather beside the point in a discussion of the scope of Congress’ Article I powers. But bracket that. Even if you think the federal commerce power legitimately extends to legislation like the ADA, there’s intuitively a world of difference between saying that a commercial enterprise providing services to the public must provide them in such-and-such a fashion and insisting that private persons have to engage in a specified type of transaction just by dint of being alive. I don’t think the best reading of the Commerce Clause encompasses either, but it’s not that hard to conceive a reading that extends to the former but not the latter. I stress this just because I don’t think you have to be a libertarian or have a very restrictive view of the legitimate scope of federal power to believe there’s a genuine question here. The real form of the argument here looks an awful lot like: “Look, we’ve stretched commerce…between the several states so absurdly already, why are we even pretending it might be found to exclude anything?”

Well, a slim majority of the U.S. House of Representatives seems to think such a draconian (and probably unconstitutional) measure is just fine because that is one of the provisions of the health care reform bill they just passed. A person, or group of people, who are unable to think through the consequences of their actions and often resort to oppression of others are either clueless or despotic.

Thinking and compassionate people understand that there may be many good reasons why people do not buy, or do not wish to buy, health insurance. The health care bill is Exhibit A to demonstrate that a majority of Congress is now clueless when it comes to economic sense or understanding about how the U.S. Constitution was designed to protect individual liberty.

No provision gives government the power to require people to buy health insurance, let alone fine and/or send them to jail for non-purchase.

Sen. Jack Reed, Rhode Island Democrat, tried to justify the constitutionality of the health bill by saying it was like the "draft." This recalls a debate 30 years ago between Gen. William Westmoreland and Milton Friedman about whether the United States should go to an all volunteer army.

Westmoreland said he "did not want to command an army of mercenaries," to which Friedman replied, "Then sir, you would prefer to command an army of slaves." (To his credit, Westmoreland changed his view many years before his death, upon seeing the success of the all-volunteer army.)

Implicitly, members of Congress like Mr. Reed seem to believe the American people are the "slaves of government," not the other way around as the Founding Fathers intended. Sound — and constitutional — proposals for health care reform may be found on the Web sites of the Cato Institute and the National Center for Policy Analysis.

Exhibit B exposes those in the Obama administration, Congress and in certain state governments who say they believe government can collect more tax revenue to fund the health care bill and "cap-and-trade," as well as other counterproductive and coercive government activities, by increasing tax rates on the "rich."

Perhaps they have failed to notice that there is strong empirical and theoretical evidence that the maximum marginal U.S. federal income tax rates, plus high state marginal rates, are already above the revenue and national welfare maximizing rates.

If the Bush tax rate cuts are repealed and if the proposals for funding health care and the energy bills by increasing marginal tax rates are passed into law, it is a certainty that total long-run tax revenues will be lower, not higher, and that economic growth and employment will be lower.

Ah, but this concept is just too complex for the clueless who work in Washington. (They seem to have missed the widely reported fact that many of the highly taxed in New York, California and elsewhere are moving to lower-tax states, a number of which have no state income tax.) Check the Institute for Research on the Economics of Taxation Web site for first-rate analyses and papers on tax rate/revenue issues.

Exhibit C: Members of Congress have just introduced the "Foreign Account Tax Compliance Act," which would force foreign financial institutions, trusts, corporations and tax advisers to provide extensive information about U.S. account holders, owners, guarantors and clients.

The reporting provisions would be so costly and onerous (and in many cases violate local law and privacy rights), and the fines so draconian, that few foreign entities would continue to operate and/or invest in the United States.

At a time when the United States is running record deficits and needs large amounts of foreign capital to finance these deficits, it is clueless to drive away trillions of dollars to try to obtain a few extra billion dollars of tax revenue. If the Internal Revenue Service wishes to go after Americans who it believes are evading taxes, it should do so directly. The IRS has no business bullying foreign private companies and governments to make them its unwilling agents. The Center for Freedom and Prosperity has extensive information on this issue.

Exhibit D: Those in the administration and Congress who blame "deregulation" for the financial crisis and, in particular, portions of the Glass-Steagall Act, which was partially repealed a decade ago, and are now proposing many counterproductive regulatory proposals. Peter Wallison, former general counsel of the U.S. Treasury and now a senior fellow at the American Enterprise Institute, has just produced an excellent paper debunking this myth.

Mr. Wallison shows the "crisis was caused by the government's own housing policies, which fostered the creation of 25 million subprime and other low-quality mortgages — almost 50 percent of all mortgages in the United States — that are now defaulting at unprecedented rates ... the fact that two-thirds of these weak mortgages are now held by government agencies, or were produced by government requirements, shows the demand for these mortgages — and the financial crisis — originated in Washington." The clueless in Congress, rather than abolishing Fannie Mae and Freddie Mac, which were responsible for much of the crisis, continue to encourage them to make loans to those who will be unlikely to be able to service their mortgages, thus setting up the next crisis.

The good news is, at some point, it is likely that a majority of the voters will understand that many of their elected representatives are either clueless or have little regard for the U.S. Constitution and will vote out the rascals.

One result of the federal government paying for half or more is that it encourages the states to expand enrollment and benefits. It also makes it politically difficult to cut state Medicaid spending because of the accompanying loss of federal dollars.

A 2007 analysis on the exorbitant future costs of Medicaid by Jagadeesh Gokhale illustrates how the program’s price tag has skyrocketed since its creation in 1965 (see chart here). Over the decades, the states expanded their programs whenever the economy was growing and the tax revenues were flowing. When the economy went into recession and the revenue dried up, the states generally didn’t scale-back benefits and sometimes they asked for bailouts from the federal government. The 2009 stimulus package provided an estimated $87 billion in federal Medicaid money for the states.

If the economy remains stagnant over the next few years and state tax revenues fail to rebound, further pressure will mount on the federal government to continue bailing out state Medicaid programs. The nightmare scenario would be for the federal government to assume the full costs of Medicaid under state pressure.

California Gov. Arnold Schwarzenegger’s budget director, Michael Genest, recently raised the idea:

Genest, who is retiring at the end of the year, warned that California’s budget problems will persist even after the state works its way through this recession. He singled out Medi-Cal, the state’s Medicaid health-care program for the poor, as unaffordable for the state. If the program’s costs continue to climb 8 percent a year, the state will have little money left for anything other than schools and debt service by 2040, he said.

The health-care reform proposals now before Congress could further strain state budgets because they would expand Medicaid, Genest said.

Genest said Congress should overhaul Medicaid, now funded jointly by state and federal governments but run by the states. The federal government should cover more of the costs, give states more flexibility or even make a drastic switch and let federal officials take over Medicaid completely, he said.

“If you want to imagine a crisis, as a thought experiment, imagine all 50 states writing a letter to the federal government saying, ‘We’re no longer providing Medicaid.’ That would get Congress’ attention. And that’s about the only real leverage we have,” Genest said.

Current health care legislation in Congress threatens to increase state Medicaid spending. In the House passed bill, the federal government would pick up 100 percent of Medicaid’s expansion until 2015 when it would drop to 91 percent. However, the future is unpredictable and it’s not hard to imagine a future Congress keeping it at 100 percent federal funding.

According to the Congressional Research Service, the House bill also contains a provision that could be intended to create a justification for greater federal assumption of state Medicaid spending:

H.R. 3962 would require GAO to study federal matching payments made to state Medicaid programs to make recommendations on the FMAP formula to Congress. By February 15, 2011, GAO would be required to submit a report based on this study assessing the effect on the federal government, states, providers, and beneficiaries of making the following changes to the FMAP formula: (1) removing the 50% floor or 83% ceiling, or both and (2) revising the current FMAP formula to better reflect state fiscal capacity, state efforts to finance health and long-term care services, and to better adjust for national or regional economic downturns.

See this essay on the need for a return to fiscal federalism.

Update: The Washington Post reports this morning that the House health care reform bill contains an additional $23.5 billion Medicaid bailout for the states. The provision would extend by an additional six months (through 2011) the stimulus legislation’s “temporary” increase in the federal government’s share of total Medicaid spending.

The House of Representatives has now passed its version of health care reform — a gargantuan 2,000-page, 70-pound collection of mandates, regulations, and subsidies that may well be among the most expensive pieces of legislation in U.S. history.

When the bill was first introduced, the Congressional Budget Office estimated that it would cost $1.1 trillion over the next 10 years. However, as is the way with government programs, that cost has already begun to grow. By the time the "managers amendment" and certain provisions had been added to the bill, the final product was projected to cost more than $1.7 trillion.

In theory, this increase in spending would be partially offset by $628 billion in Medicare cuts, giving the bill a "net" cost of slightly more than $1 trillion. But how likely is it that those cuts will take place? After all, this is an administration that is paying seniors $250 to make up for the fact that they didn't get a Social Security cost-of-living increase this year (because the cost of living didn't increase). And Congress is in the process of repealing a scheduled increase in Medicare premiums.

To see how this may play out, look what Congress is doing about the so-called "doc fix."

Under current law, there is supposed to be a 21 percent cut in reimbursements to Medicare providers next year. But no one in Washington seriously believes that Congress will let that happen. In fact, those cuts have been supposed to take place every year since 2003. And every year Congress postpones them until the following year.

However, in order to pretend that their bill costs less than it actually does, the Democrats simply assume that this time Congress will let those cuts take effect. Then, in an unparalleled display of cynicism, they have introduced a separate bill repealing those cuts at a cost of $200 billion.

That means that the cost of the "doc fix" isn't technically part of health care reform. And your household budget would look so much better if you didn't have to pay your mortgage and car payment. (The Senate tried to do something similar, only to have the cynical ploy rejected 53-47, with 13 Democrats refusing to play along.)

Moreover, the CBO provides 10-year projections of a bill's cost, between 2010 and 2019 in this case. Yet, while the taxes and other revenue measures in the bill kick in immediately, most of the spending doesn't take effect until 2014.

So the "10-year" cost projection includes only six years of the bill. Wouldn't it be great if you could count a whole month's income, but only two weeks' expenditures in your household budget?

If we look at the bill more honestly over the first 10 years that the programs are actually in existence, say from 2014 to 2024, it would actually cost nearly $3 trillion.

There has been a lot of talk recently about "bending the curve" of health care spending, but as the actuaries at the Centers for Medicare and Medicaid Services (CMS) recently noted, the House bill bends the curve in the wrong direction — increasing government health care costs.

All this new spending will be accompanied by equally massive federal tax hikes, roughly $500 billion over the first 10 years — $770 billion if the penalties for failing to comply with the mandate are included.

Furthermore, much of the bill's cost is shifted off the federal books onto businesses, individuals, and state governments. These business and individual mandates are the equivalent of tax increases, but those costs aren't included in the bill's cost estimates.

Under the House bill, many small businesses that do not currently provide health insurance would have to do so, or they may face a new tax of up to 8 percent of payroll. Other businesses that do offer insurance, but whose benefits are not as comprehensive as the government mandates, will have to purchase new, more expensive policies. This cost may not be included in a CBO "score," but it is a very real cost for businesses — especially at a time of 10.2 percent unemployment.

Similarly, individuals will also have to buy insurance that meets the government's minimum benefit standards or pay up to 2.5 percent of their income as a penalty. That added burden is a cost, too.

So is the cost of increased insurance premiums — and nearly everyone agrees that insurance premiums will go up under reform, especially for younger and healthier people.

And state governments will have to pick up at least part of the cost for the bill's Medicaid expansion. In fact, already strapped states could have to come up with as much as $34 billion.

This is all taking place at a time when the government is facing an unprecedented budgetary crisis. The U.S. budget deficit hit $1.4 trillion in 2009, and we are expected to add as much as $9 trillion to the national debt over the next 10 years, a debt that is already in excess of $12 trillion and rising at a rate of nearly $4 billion per day.

Social Security will begin running deficits in 2016, and Medicare even sooner than that. Under current projections, government spending will rise from its traditional 20-21 percent of our gross domestic product to 40 percent by 2050. That would require a doubling of the tax burden just to keep up.

Add a multi-trillion-dollar health care bill on top of that, and we risk permanently damaging our economy and leaving our children and grandchildren an unconscionable burden of debt and taxes.

There is now widespread consensus that our health care system needs some kind of reform.

But surely it must be possible to control health care costs, improve quality, and extend coverage to more people without bankrupting the nation.

Health care reform now goes to the Senate. There are 3 trillion reasons to hope they are not as fiscally reckless as their counterparts in the House.

Whatever your views on abortion, the fight over abortion in the Obama health plan illustrates perfectly why government should stay out of health care.

When the government subsidizes health care, anything you do with that money becomes the voters' business. And rather than allow for choice between different ways of doing things, the government typically imposes the preferences of the majority — or sometimes, a vocal minority — on everybody.

On Saturday, the House of Representatives passed their version of President Obama's health care overhaul. Among other things, the legislation would subsidize private health insurance for millions of Americans.

To appease pro-life Democrats, Speaker Nancy Pelosi (D-Calif.) allowed them to insert an amendment to prohibit taxpayer dollars from touching any health insurance plan that covers abortion. House Majority Whip Jim Clyburn (D-S.C.) says the bill would have come up 10 votes short without it.

The amendment incensed pro-choice Democrats. The bill's subsidies would be so pervasive that prohibiting the use of taxpayer dollars for abortion coverage would restrict access to such coverage even for women who don't use the subsidies. Rep. Diana DeGette (Colo.) says she and 40 other pro-choice Democrats "are not going to let this into law."

Democratic leaders are searching for a compromise, but there is no way to split the baby here. Either the government will force taxpayers to fund abortions, or the restrictions necessary to prevent taxpayer funding will reduce access to abortion coverage. There is no middle ground. Somebody has to lose. Welcome to government-run health care.

The same thing happens, in all areas of health care, whenever government foots the bill. Do you think chiropractic is nonsense? Too bad, the government forces you to pay for it through Medicare.

Faith healing seem like quackery too you? Sorry, Charlie. Medicare and Medicaid force you to pay for faith healers at prices "comparable with those of real health care providers," according to law professors David Hyman and Charles Silver.

The problem extends far beyond those trivial examples. The government uses price and exchange controls to pay health care providers. We call those controls Medicare's "fee-for-service payment system" in polite company. Yet the effects are anything but genteel.

Researchers believe Medicare's exchange controls encourage unnecessary services, which account for at least one third of its $430 billion budget, according to the Dartmouth Atlas. Those controls actually penalize doctors and hospitals that coordinate care, use electronic medical records, or try to reduce the estimated 100,000 annual deaths due to medical errors. Congress has "reformed" Medicare's exchange controls approximately once in the program's 43-year history, with a "payment system" that encourages an estimated $12 billion of avoidable hospitalizations per year.

President Obama's economic advisor Larry Summers sums it up: "Price and exchange controls inevitably create harmful economic distortions. Both the distortions and the economic damage get worse with time."

Should grandma want to escape Medicare's price and exchange controls — if she would rather see a doctor that operates under less-perverse financial incentives — too bad. If she would prefer a smaller network of doctors that provides safer, more convenient, coordinated care, she's out of luck. The choice of what kind of medicine she receives belongs to the majority, or a vocal minority.

To be fair, the Medicare Advantage program allows some seniors to escape the traditional Medicare program's price and exchange controls. But Medicare Advantage has its own perversities, thanks to a separate price-and-exchange-control scheme the government uses to pay participating insurers. And in keeping with the overall hypothesis, Democrats are trying to eliminate Medicare Advantage, anyway.

Pro-choice Democrats want to preserve access to private abortion coverage. Pro-life Democrats want to preserve the right to choose whether to fund abortions. Fair enough. But any vote for government subsidies is a vote against choice.

Get government out of health care, and you'll be able to make choices for yourself. Not before.

WARNINGS:

•This product will increase your health insurance premiums. Millions who are satisfied with their current, low-cost health plans would have to switch to more expensive plans, solely because Congress decided they weren't buying enough coverage.

The legislation would increase premiums even further over time, as drug companies, chiropractors, acupuncturists, fertility specialists and other special interests lobby Congress to force you to purchase coverage for their services too.

•This product will reduce the quality of your health care. America's health care sector is often inconvenient, poorly coordinated, and makes less use of information technology than your local supermarket. Research shows that medical errors kill as many as 100,000 Americans per year.

Markets would solve those problems, but government thwarts doctors and entrepreneurs who try to improve quality. Medicare — by far the largest purchaser of medical services in the world — actually penalizes doctors and hospitals that reduce medical errors.

The House bill would cement those deficiencies in place with yet another massive government program, and create new quality problems, like insurers skimping on care and customer service for the sickest patients.

•This product probably won't make you healthier. The House bill would expand coverage, but at a steep cost and with zero evidence that doing so is a cost-effective way of improving health.

Little research supports the notion that broadly expanding insurance coverage makes people healthier. Medicare established near-universal coverage for the elderly, yet research shows that program didn't save a single life in its first 10 years of operation. Whether it has had any subsequent impact on mortality rates — positive or negative — remains an open question.

•This product will make you poorer. The House bill contains at least $2 trillion in explicit and implicit taxes. Tax rates for wealthy Americans would rise to 45 percent, with an ever-expanding definition of "wealthy." For the middle class, effective tax rates would average 60 percent to 70 percent and exceed 100 percent in some cases.

•This product will make your children poorer. Since the bill would actually increase the federal budget deficit, the tax burden would grow over time.

The bill purports to cut Medicare spending, but those cuts are not likely to happen. Want proof? At the same time House Democrats promise future spending cuts, they are gutting $210 billion of spending cuts promised by past Congresses.

And like most government health care programs, this bill's actual costs will exceed current projections. In 1967, Congress predicted that Medicare would cost $12 billion in 1990. Medicare's actual cost that year was $110 billion. Oops.

When this bill causes the deficit to explode, Congress will come after your children's paychecks. Congress has increased Medicare taxes on average once every four years — and Medicare's still $90 trillion in the hole. House Speaker Nancy Pelosi, D-San Francisco, suggests that maybe Congress should impose a European-style value-added tax.

•This product will make you irrational. Spending other people's money has a way of making people nutty. Pelosi thinks that under her legislation, "There is a cap on what you pay in but there is no cap on the benefits that you receive." Limited costs, but unlimited benefits? Really?

After a few years of Pelosicare, you yourself may vote both to eliminate wasteful health care spending and to protect all existing hospitals and doctors' jobs. And you'll wonder why Congress can't do both!

But hey, why not be irrational? Socialized medicine socializes the cost of that, too.

•This product will make you resent immigrants. The House bill would offer hidden subsidies to undocumented immigrants in a new national health insurance "exchange." Turning America's health care sector into a welfare magnet for immigrants will fuel anti-immigrant sentiment. Pretty soon, we're France — in more ways than one.

•This product will make you feel like you're being watched. When taken in combination with its Senate counterpart, the bill would create a national identification system to monitor compliance with its mandates and determine eligibility for its subsidies. With the ability to collect data on every American, the government will always find new uses for any national ID system.

The Pelosi bill is neither safe nor effective. If it were medicine, the Food and Drug Administration would have to ban it.

“What changed?” Cohn asks. “A major factor, according to IMS, was the emerging details of health care reform . . . Put it all together, and you have more demand for name-brand drugs . . . enough to boost revenue significantly.” And:

“If this bill is implemented,” the report concludes on page 138, “an increase in prices on new drugs can be expected.”

How could this be happening?  Oh yeah:

That brings us back to the deal that the Pharmaceutical Researchers and Manufacturers of America, which represents those companies, made with the White House and Senate Finance Committee . . .

The industry agreed to embrace health care reform and, later on, launched a massive advertising campaign to promote the cause. In exchange, the White House and Senate Finance–which had been asking various industries to pledge concessions that would help pay for the cost of coverage expansions–promised not to seek more than $80 in reduced payments to drug makers.

To an industry as big and profitable as the drug makers, giving up $80 billion over ten years wouldn’t seem like much of a sacrifice–a point critics started making right away. But if IMS is right, the drug industry wouldn’t even be giving up $80 billion, in any meaningful sense of the term. If anything, it’d be making more money. Maybe quite a lot of it.

Which is what I predicted, both here and here.

Cohn concludes, “the drug industry has enormous leverage in Congress.” But Cohn still supports the president’s health care takeover. Or is it PhRMA’s health care takeover?

First, Saturday's House vote was the first time that either chamber of Congress voted — albeit by a razor-thin, three-vote majority — to force all Americans to purchase health insurance.

Second, Speaker Nancy Pelosi, D-Calif., cajoled a majority to vote for the bill, even though a majority of the House does not support it.

Third, Pelosi did all this before the Congressional Budget Office could report that the bill costs far more than supporters claim.

Forcing Americans to purchase health insurance has been a goal of the American left since the Roosevelt administration — that's Teddy, not Franklin.

Despite Weak Support

Though Congress enacted Medicare in 1965, neither chamber had ever voted to force people under age 65 to buy health insurance.

The Clinton health plan would have done so, but it never even came up for a vote.

That makes Saturday's vote historic, especially since the House bill is more radical than the Clinton plan. It would not only make health insurance compulsory, but would also create a government program — the public option — that supporters hope will displace private health insurance.

One might expect such a radical bill to lack majority support — and indeed it does. According to public opinion polls, most of the public opposes it, as do most House members.

Pelosi got a majority of the House to vote for it anyway. Some moderate Democrats, like Rep. Jim Cooper of Tennessee, fear the enormous cost, but voted aye just to keep the process moving.

Unknown Cost

More important, some 40 pro-choice Democrats voted for the bill, and then immediately vowed to kill it. They object to an amendment offered by Rep. Bart Stupak, D-Mich., and inserted on the House floor that they say would restrict a woman's freedom to purchase private abortion coverage with her own money.

Rep. Diana DeGette, D-Colo., says, "We're not going to let this into law."

Very few of those 40 members would need to switch their votes to wipe out PelosiCare's three-vote margin of victory when the bill comes back to the House for final passage.

But if Democratic leaders alter the Stupak amendment, a similar number of pro-life Democrats (and the bill's lone Republican supporter) say they will kill the bill.

In other words, Pelosi assembled a three-vote majority for the idea of a health care overhaul, but there may be no bill that could command a majority for final passage.

If Saturday's vote had sent the bill to the president rather than the Senate, the outcome likely would have been different. And there's even more to come that could disrupt that narrow majority.

Pelosi brought the bill to a vote before the CBO could estimate the costs it would impose on the private sector.

The CBO has estimated only the on-budget costs to the federal government ($1.3 trillion) and state governments ($34 billion).

If Congress forces people to purchase health insurance, that mandate imposes further costs on individuals and employers.

Federal law requires the CBO to estimate the cost of any private-sector mandates that exceed $139 million per year, but the agency has yet to do so.

Its only statement on the issue, which came the day before the House vote, is that the bill's private-sector mandates "would greatly exceed" that threshold.

Reckless Lawmaking

Indeed, if history is any guide, the private-sector mandates will double the cost of the bill.

In both the Clinton health plan and the Massachusetts health plan, similar mandates accounted for 60% of total costs, according to the CBO and the Massachusetts Taxpayer's Foundation, respectively.

In the coming weeks, then, we can expect the CBO to report that the total cost of the House bill is not $1 trillion, but in the $2 trillion to $3 trillion range.

Holding the vote before that number becomes public was an impressive feat, though not exactly responsible governance.

To use a technical phrase, this is hogwash. This new 6-1/2 minute video, narrated by yours truly, gives 12 reasons why Obamacare will lead to higher deficits – including real-world evidence showing how Medicare and Medicaid are much more costly than originally projected.

By the way, this video doesn’t even touch on the mandate issue, which Michael Cannon explains is not being counted in order to make the cost of government-run healthcare less shocking.

Either those taxpayer dollars will fund abortions, or the restrictions necessary to prevent taxpayer funding will curtail access to private abortion coverage. There is no middle ground.

Thus both sides’ fears are justified. Both sides of the abortion debate are learning why government should not subsidize health care. Tip of the hat to President Obama for creating this teachable moment.

Meanwhile, Catholics should be outraged at the United States Conference of Catholic Bishops (to which my grandfather served as counsel). Yes, the USCCB helped prevent taxpayer funding of abortions in the House bill. But at the same time, those naughty bishops have abandoned the Church’s doctrine of subsidiarity by endorsing the rest of the Democrats’ plan to centralize power in Washington.

As it happens, Caesar is the main source of funding for Catholic hospitals. That may explain why the bishops are so eager to render unto, ahem, Him.

Cross-posted at Politico’s Health Care Arena.

The narrow 220-215 victory in the House on Saturday night was a step forward on the road to a government takeover of the health care system.  But as close and dramatic as that vote was, that was the easy part.  The Senate must still pass its version of reform—which will not be the bill that just passed the House.  Nancy Pelosi was, after all, able to lose the votes of 39 moderate Democrats.  Harry Reid cannot afford to lose even one.  A conference committee must reconcile the two vastly different versions.  And then, Pelosi must hold together her 3 vote margin of victory (if it gets that far).  Yet several House Democrats who voted for the bill on Saturday said they did so only to “advance the process.” Their vote is far from guaranteed on final passage.  And, House liberals are almost certain to be disappointed by the more moderate bill that may emerge from the conference.

Among the more contentious issues:

Individual Mandate: This should’ve been low-hanging fruit. Democrats agreed on a mandate early in the process. But it became increasingly plain that a mandate would hit those with insurance as well as the uninsured — forcing people who are happy with their plan to switch to a different, possibly more expensive plan. With this mandate now being seen as a middle-class tax hike, qualms have developed.  The House bill contains a strict mandate, with penalties of 2.5 percent of income backed up by up to five years in jail.  The Senate Finance Committee, on the other hand, watered down the mandate’s penalties and delayed the mandates implementation.

Employer Mandate: The House bill also contains an employer mandate, a requirement that all but the smallest employers provide insurance to their workers or pay a penalty tax of up to 8 percent of payroll.  The Senate,  looking at unemployment rates over 10 percent, seems unlikely to include an employer mandate.

The Public Option: The House included, if not a “robust” public option, at least a semi-robust one.  But moderate Democrats in the Senate are clearly not on board.  Joe Lieberman (I-CT) says that he will join a Republican filibuster if the public option is included.  Harry Reid is trying various permutations: a trigger, an opt-in, an opt-out.  But as of now there is not 60 votes for any variation.

The Sheer Cost: Fiscal hawks like Sen. Evan Bayh (D-IN) say they will not support a bill that adds to the deficit or spends too much.  But the house bill cost a minimum of $1.2 trillion.

Taxes: The House plan to add a surtax on incomes of $500,000 or more a year has no support in the Senate. At the same time, the Senate plan to slap a 40 percent excise tax on “Cadillac” insurance plans is unacceptable to key Democratic constituencies like labor unions.

Abortion: Conservative Democrats insisted on a strict prohibition on the use of government funds for abortion.  The bill could not have passed without the inclusion of that provision.  House liberal swallowed hard and voted for the bill, despite what they called “a poison pill” anyway with the expectation that it will be removed later.  If the final bill includes the prohibition at least a couple liberals could defect.  If it doesn’t, conservative Democrats won’t be on board.

Immigration: The Senate Finance Committee included a provision barring illegal immigrants from purchasing insurance through the government-run Exchange.  The House Hispanic Caucus says that if that provision is in the final bill, they will vote against it.

As if these disagreements among Democrats wasn’t bad enough, public opinion is now turning against the bill.

President Obama has called for a bill to be on his desk before Christmas—the latest in a series of deadline that are so far unmet.  It is hard to see how Congress can meet this one either.  The Senate has not yet received CBO scoring of its bill and is not prepared to even begin debate until next week at the earliest.  That debate will last 3-4 weeks minimum, assuming there are 60 votes for cloture.  That means, the bill cant’ go to conference committee until mid-December, even if everything breaks the way Harry Reid wants.  Privately, Democrats are now suggesting late January, before the State of the Union address, is the best they can do.

The fat lady can go back to sleep—this isn’t over yet.

Young adults make up just 17% of the population but account for 31% of the uninsured. The legislation before Congress would force young adults to purchase health insurance at prices far higher than the market would charge. The legislation would use that hidden tax to reduce premiums for their parents, who typically have higher incomes.

We can see how the Democrats' legislation would work by comparing premiums in California and New York. Like that legislation, New York requires insurers to charge young adults the same premiums as older adults. California does not.

According to eHealthInsurance.com, the median premium for a 25-year-old in New York is around three times as expensive as in California ($410 versus $134 a month). In addition, young adults living in California can choose from nearly 10 times as many health plans.

Since about one-third of young adults already reject health insurance at current prices, even more of them would avoid coverage if Congress drives those prices higher. Congress anticipates that response. Each bill includes an "individual mandate," which would force U.S. residents to purchase health insurance, whether they want it or not, on penalty of fines or imprisonment.

Why would Congress compel young adults to purchase health insurance they don't want to buy, at prices higher than they have already rejected? There are at least four possible reasons.

First, young adults may be unaware that insurance in the individual market is really quite affordable. Yet profit-maximizing private insurers have every incentive to communicate that information.

Second is the legitimate concern that the uninsured impose costs on the rest of us when they need medical care and can't pay their bills. But that cannot justify such a mandate, because those costs are a trivial 2.2% of total health care spending. Indeed, MIT health economist Jonathan Gruber and others find that the uninsured as a group pay more for their care than those with health insurance.

Third, lawmakers may consider it "wrong" that young adults prefer to spend their money on mobile phones and lattes instead of health insurance. Simply put, Congress may believe that young adults are ignorant or stupid - which is reflected in labeling catastrophic plans as "young invincible" plans. (Ironically, many older adults have themselves not purchased life insurance, disability insurance, or long-term care insurance - all key elements of responsible financial planning.)

If lawmakers' only motivation were the belief that young adults are stupid, they would simply require young adults to purchase coverage at prevailing prices. Economists Kate Bundorf of Stanford University and Mark Pauly of the University of Pennsylvania estimate that one-quarter to three-quarters of the estimated 46 million uninsured Americans could afford coverage if they wanted it. In California, most young adults likely would qualify for and could afford the inexpensive plans on eHealthInsurance, with premiums as low as $672 per year.

A fourth reason is to redistribute income from young adults to older adults. Forcing young adults to purchase health insurance, and forcing them to pay actuarially unfair premiums, effectively taxes the young to subsidize the old. Never mind that median family income for households headed by someone in his 50s ($60,000) is nearly double that for households headed by someone in their 20s ($33,000).

A desire to redistribute income is the only thing that can explain a policy of forcing young adults to pay above-market premiums for health insurance. Gruber estimates that one bill before Congress would charge young adults at least 62% more than those low-cost California plans, even if they qualify for government subsidies. Young adults could end up paying hundreds or thousands of dollars more, many of them for a product they didn't want in the first place.

That would be a curious way for the President to repay some of his biggest supporters.

"Nothing could be further from the truth," he has said.

Yet it's hard to see the 1,994-page bill that the House passed last night as anything else. After all, the bill uses the command "shall" -- as in "you shall do this," "businesses shall do that" and "government shall do some other thing" -- 3,345 times.

Not a great deal of choice or options there.

To make sure that we obey these "shalls," the bill would create 111 government agencies, boards, commissions and other bureaucracies -- all overseen by a new health-care czar bearing the Orwellian title "commissioner of health choices."

All this would come at a true cost of more than $1.3 trillion over 10 years. And virtually every aspect of health care would be subject to federal regulation.

For example, the government would force every American to buy health insurance and would control what benefits those policies must include. Even those who now have health plans and are happy with them would have to switch to policies that include the government-required benefits -- insurance that might well be more expensive, thanks to the new benefits you won't get to choose.

Another mandate would require that even small businesses provide their workers with a government-devised minimum package of insurance benefits. This could cost hundreds of thousands of jobs -- and force some workers to accept insurance benefits rather than higher wages.

Those insurance products that now give Americans the most choice and flexibility would be severely restricted. Health-savings accounts would be almost eliminated and Flexible Spending Accounts cut back.

Even if the final bill doesn't include the so-called public option, private insurance would be so regulated as to become little more than a public utility, operating much like the electric company, with the government regulating nearly every aspect of its operation.

And the public option itself holds the potential for driving most private insurance out of business, with millions of American workers dumped into the government-run program.

Programs like Medicaid, meanwhile, would be dramatically expanded, and federal subsidies would be extended to people earning as much as 400 percent above the poverty level (or $88,000 a year for a family of four), putting millions more Americans on a form of the dole.

Doctors, too, would find themselves micromanaged from Washington. For example, providers who perform too many tests or procedures would see their Medicare reimbursements cut.

That means every time a doctor decides on a treatment, he or she would have to ask: "Does the government think I'm doing this too much? Will I be penalized if I order this test?"

The government would also undertake comparative- and cost-effectiveness research and use the results to impose practice guidelines on providers.

Medicare would see even more micromanagement, as the government develops a "high value" reimbursement system by 2012. (Many "reform" supporters hope to see these guidelines extended to nongovernment insurance as well.)

Finally, Americans would have to pay nearly $730 billion in new taxes, fees and penalties over the next 10 years to fund this huge government expansion.

No doubt, we do need to fix the problems in our health-care system, but health care represents one-sixth of the US economy -- and some of the most important personal and private decisions in our lives.

Given that the government has mismanaged everything from "cash for clunkers" to the swine-flu vaccine (not to mention the Iraq war and the response to Hurricane Katrina), how much of our health-care system do we really want it to control?

The American people don’t want the Democrats’ approach to health care generally. The more time the public has to digest ObamaCare, the more they dislike it:

And the Pelosi bill is the most expensive and extreme version of ObamaCare.  Opposition will climb higher when the public learns the bill costs some $1.5 trillion more than Democrats claim.

Even a majority vote would not necessarily indicate majority support for the Pelosi bill. Rep. Jim Cooper (TN) and other Democrats are voting aye only because they want to keep the process moving – i.e., because this isn’t the vote that counts.

Win or lose, tonight’s vote will be the high water mark for the Pelosi bill.

(Cross-posted at Politico’s Health Care Arena.)

When Democrats announced the bill, House Speaker Nancy Pelosi claimed the bill cost only-only!-$894 billion over the next ten years. But outside analysts, including the Congressional Budget Office, suggest that the real cost will be far, far higher.

The CBO, for example, points out that the bill would actually increase government spending by slightly more than $1 trillion. Democrats reported a lower "net" number by subtracting revenues from penalties paid by individuals and businesses that fail to comply with the bill's insurance mandate. But even that does not reflect the bill's true cost.

The Democratic leadership simply shifted some of the bill's cost to other bills. For example, for purposes of the health care bill, the Democrats assume that a currently scheduled 21 percent cut in Medicare reimbursements will take affect next year. However, at the same time, they have introduced a separate bill repealing those cuts at a cost of $250 billion, so that cost isn't technically part of health care reform. And your household budget would look so much better if you didn't have to pay your mortgage and car payment. (The Senate just tried to do something similar, only to have the cynical ploy rejected 53-47, with 13 Democrats refusing to play along.)

If you count that cost honestly, the bill's cost rises to nearly $1.3 trillion. And that still understates the bill's cost.

The CBO provides ten year projections of a bill's cost, between 2010 and 2019 in this case. But most provisions of the health bill don't take effect until 2014. So the "10-year" cost projection only includes six years of the bill. Again, consider your household budget. Wouldn't it be great if you could count a whole month's income, but only two weeks expenditures? If we look at the bill more honestly over the first 10 years that the programs are actually in existence, say from 2014 to 2024, it would actually cost more than $2.3 trillion. And, this doesn't include approximately $200 billion in additional spending for public health programs, a reinsurance program for retiree health care, and new preventive care programs that was added to the bill after it was submitted for official "scoring." So call the total cost somewhere in excess of $2.5 trillion.

There has been a lot of talk recently about "bending the curve" of health care spending, but as the actuaries at the Centers for Medicare and Medicaid Services (CMS) recently noted, the House bill bends the curve in the wrong direction — increasing government health care costs.

All this new spending will be accompanied by equally massive federal tax hikes, roughly $500 billion over the first 10 years, $700 billion if the penalties for failing to comply with the mandate are included.

Furthermore, much of the bill's cost is shifted off the federal books onto businesses, individuals, and state governments. These business and individual mandates are the equivalent of tax increases, but those costs aren't included in the bill's cost estimates. Nor is the cost of increased insurance premiums, though nearly everyone agrees that insurance premiums will go up under reform, especially for younger and healthier people. And state governments will have to pick up at least part of the cost for the bill's Medicaid expansion. In fact, already strapped states could have to come up with as much as $34 billion.

And, it could get worse. The bill promises to pay for part of the cost with $500 billion in cuts to Medicare over the next 10 years. But how likely is it that those cuts take place? After all, this is an administration that is paying seniors $250 to make up for the fact that they didn't get a Social Security cost of living increase this year (because the cost of living didn't increase). And, Congress is in the process of repealing a scheduled increase in Medicare premiums.

If those cuts don't happen, that just means more taxes or more debt passed on to our children and grandchildren.

So far much of the debate over health care reform has been focused on the details of the bill. But, eventually the public is going to notice the price tag. When they do, House Democrats, especially those who claim to be fiscally responsible Blue Dogs, may have a lot of explaining to do.

A billion dollars here, a trillion there, and pretty soon it adds up to real money.

Will the House pass healthcare this weekend — or not

My response:

In his post below, my colleague Michael Cannon links to his devastating analysis of the way House Democrats have buried the true cost of their healthcare scheme. This is legerdemain of the first order, but it is business as usual here in Washington. Here we have a Congress that cannot fix Medicare, which will go broke even before Social Security does, a Congress that still hasn’t met the October 1 budget deadline for the ninth year in a row, and it wants to fundamentally reorder healthcare in America with a scheme that no one understands and no one knows how to fund. Any private business that ran its affairs that way would long have been out of business.

Given this record of insanity, therefore, it is impossible to say whether the House this weekend will pass this 1,990-page monstrosity of a bill — whether enough sanity will come to enough members to kill the bill. One datum does loom large, however: Speaker Pelosi can afford to lose no more than 40 members of her caucus. Combine that, after Tuesday’s election results, with another datum — there are 49 House Democrats who sit in districts that John McCain carried — and one has to ask whether the insanity we see before us reaches to political suicide.

Yet whatever happens tomorrow, or in the Senate down the road, this cannot go on, simply because the money isn’t there to allow it to go on. On Tuesday at the polls and yesterday with the huge demonstration in front of the Capitol we are seeing what Charles Krauthammer this morning rightly calls the demolition of “the great realignment myth of 2008.” America is not a suicidal nation. The Founders and Framers gave us institutions that have endured for over two centuries and are the envy of the world. Whatever happens tomorrow, the seeds of sanity are in the American soil and soon will be springing forth.

It would be no more audacious (and much more honest) than the way they have gamed the CBO’s rules to hide $1.5 trillion of the cost of their legislation — which has to be the biggest fiscal obfuscation in the history of American politics.

Here’s how they did it.

C/P Politico

Why support a costly federal mandate that may include directives and programs ill-suited to California, when there are existing programs in place? The proposed federal program would not be free; Gov. Schwarzenegger has said it would cost California an additional $1 billion per year. Given that cost, rather than signing on for expensive federally mandated policies that may or may not meet the needs of California, California legislators should be pressed to re-order spending priorities to fund existing programs.

California already has a program for middle-class individuals with pre-existing conditions. However, California's Major Risk Medical Insurance Program is seriously underfunded. California's high-risk-pool policies have the lowest cap on payments of any state – $75,000 a year. It is estimated that a half million Californians are uninsurable in private markets, making them eligible for an MRMIP subsidized policy. Yet, the program costs so much and offers such limited benefits that fewer than 10,000 Californians are enrolled.

California already has a program to serve residents of medically underserved communities. Over 600 primary health care delivery sites serve over 1.6 million patients, with grants from the federal Health Center Program. Ranked as one of the 10 most-effective federal programs by the Office of Management and Budget, the Health Center Program offers a program in place with the potential to improve access to health care. However, the centers rely heavily on state funding to provide care.

California already has a program to insure individuals who are poor and disabled. Like MRMIP, Medi-Cal is seriously underfunded. Medi-Cal spending per enrollee in fiscal year 2006 was $2,740 compared with the U.S. average of $4,575. Reimbursement rates are so low that many private physicians refuse to serve Medi-Cal patients. Stories abound about the lack of access to both primary and specialty care for Californians insured through Medi-Cal, and it is only getting worse.

Adequate funding requires a realignment of state spending priorities. However, the state Legislature seems incapable of taking steps that would reduce spending in other areas, such as privatizing some prison facilities or contracting with other states to provide prison services.

Similarly, the Legislature is unwilling to take a firm position on cutting state funding for higher education. Despite recent fee increases, student fees remain relatively cheap.

Reducing funding for higher education and prisons would free funds to help the needy and those with preexisting conditions buy health care. It's a matter of setting priorities.

Other adjustments won't have as big a fiscal impact but, for example, licensing hairdressers, contractors and other professionals may be something California can do without – many states manage without state licensing. Politicians have to say no to strong political constituencies when their interests do not align with those of the state at large.

California has programs in place to help individuals with preexisting conditions and those who are too poor to buy insurance. A new round of programmatic changes at the federal level which would impose federal mandates on California and won't solve the underlying problem – a lack of sound priorities in state funding.

Never mind the everyday budget gimmicks House Democrats have used, such as removing $250 billion of deficit spending to be voted on separately. Or claiming their bill would cost just $894 billion — around $400 billion less than the CBO actually projected. We've seen this kind of trickery plenty in recent years; to suppress an inconvenient cost estimate of its proposed Medicare drug entitlement, the Bush administration threatened to fire Medicare's chief actuary.

Deceptions on this scale are child's play, at least when compared to what has to be the biggest fiscal obfuscation in the history of American politics: The current leadership has rigged the legislation so that 60 percent of its total cost will not be made public by the CBO in advance of the House vote. Here's how they did it.

The centerpiece of the bills currently under consideration is not the "public option," but the "individual mandate" — a legal requirement that all U.S. residents purchase health insurance, on penalty of fines and/or imprisonment.

The CBO describes an individual mandate as "an unprecedented form of federal action" whose closest analogue in federal law is the draft. But as President Obama told a joint session of Congress, the rest of the legislation won't work unless the federal government forces Americans to purchase health insurance.

President Clinton's ill-fated health plan had an individual mandate, too. Back in 1994, the CBO decided that since "the mandatory premiums . . . would constitute an exercise of sovereign power," the agency would treat all premiums as federal revenues, including them in the federal budget.

That revealed to the public the full cost of Clinton's health plan. Clinton's secretary of health and human services, Donna Shalala, called the CBO's decision "devastating." Journalist Ezra Klein writes that it "helped kill the bill."

Rather than admit the individual mandate's unpopularity and move on, congressional Democrats simply ensured that its costs would not appear in the federal budget this time around by gaming the CBO's rule for what constitutes "federal revenues."

The CBO explains it will not count mandatory premiums as federal revenues if the individual mandate leaves consumers with what the CBO considers a "sufficient" or "meaningful" or "substantial" degree of choice among health plans. That rule is both amorphous and arbitrary. (For example, it presumes that the freedom not to purchase health insurance — which an individual mandate would eliminate — is not "meaningful." Millions of Americans would disagree.) More important, evading that rule doesn't make an individual mandate any less compulsory, or any less costly. It just hides those costs by pushing them off-budget.

Obama budget director Peter Orszag laid the groundwork for this feat. While director of the CBO in 2007 and 2008, he fostered a more collaborative relationship between the CBO and members of Congress, which enabled the agency to provide behind-the-scenes guidance to Democrats crafting their mandate. That's why the cost of the Democrats' individual mandates appears nowhere in the half-dozen or more "preliminary cost estimates" the CBO has completed on various Democratic health-care bills.

In Massachusetts, which has enacted what is essentially the Democrats' health plan, mandatory premiums account for about 60 percent of overall costs, according to the Massachusetts Taxpayers Foundation. On-budget government spending is just 40 percent. By my count, mandatory premiums accounted for a similar share of the Clinton health plan's projected cost.

So while the CBO estimates that the coverage expansions in the House Democrats' legislation would trigger about $1 trillion of new federal spending over ten years, the actual cost of those coverage expansions is more like $2.5 trillion.

The CBO exists to bring honest accounting to the federal government. House Democrats are gaming the CBO, subverting this purpose. Anyone who cares about honest accounting or transparency in government should put the brakes on this vote until the American people have all the facts.

President Obama won the presidency with 66 percent of the vote among 18-to-29 year-olds. That’s a larger share than any presidential candidate has won in decades. Yet his health care overhaul could impose its greatest burdens on young adults, says Yelowitz.

Health care proposals moving through Congress would force most or all Americans to purchase health insurance (an “individual mandate”) and would impose price controls on health insurance (“community rating”) that would limit insurers’ ability to offer lower premiums to low-risk enrollees.

Those provisions would drive premiums down for 55-year-olds but would drive them up for 25-year-olds—who are then implicitly subsidizing older adults. According to the Urban Institute, many young people could see their premiums double, whereas premiums for older adults could be cut in half.

Read the entire thing.

Those provisions would drive premiums down for 55-year-olds but would drive them up for 25-year-olds—who are then implicitly subsidizing older adults. According to the Urban Institute, many young people could see their premiums double, whereas premiums for older adults could be cut in half.

Massachusetts benefits from another type of subsidy that props up its regime of mandates and price controls: large subsidies from the federal government. In contrast, the United States as a whole has no external party it can exploit to subsidize a nationwide Massachusetts-style health care overhaul—unless Congress finances that overhaul through additional deficit spending, which is really just another way of taxing the young to subsidize the old.

The irony is that Barack Obama won the presidency with 66 percent of the vote among adults aged 18 to 29. That's a larger share than any presidential candidate has won in decades. Yet his health care overhaul could impose its greatest burdens on young adults.

We encourage you to submit questions once the event has started. Rep. Rosa DeLauro (D-CT) will participate in the chat alongside Cannon.

Among the many Republican complaints about Democratic health reform plans, one – chiefly heard of late from Senate Minority Leader Mitch McConnell – is that it would "cut Medicare."

That McConnell can go home and sleep at night after uttering that charge is a grand testament to the jaded, disconnected, and often surreal nature of Washington politics.

What McConnell is doing is engaging in the time-honored tradition of "Mediscare": pandering to seniors – a crucial political constituency because they are well-organized and turn out to vote in high numbers – by suggesting that one of their pet entitlement programs is imperiled.

This effective tactic has most often been the bailiwick of Democrats, back when Republicans were the party of fiscal discipline and made pronouncements about getting federal deficits and entitlement spending under control (boy does that seem like a long time ago now). That McConnell and the GOP have now embraced it with gusto demonstrates how screwed we are as a country, because neither main political party is at all serious about facing fiscal reality.

Now, let's be clear. The Democrats do cut Medicare, by more than $500 billion under the bills now being considered. And, while the Democrats claim that all they are doing is eliminating "fraud, waste, and abuse," the reality is that under the Democratic bills, seniors will get less.

For example, roughly 10.2 million seniors currently receive their health care through the Medicare Advantage program. That program offers many seniors benefits not included in traditional Medicare, including preventive-care services, coordinated care for chronic conditions, routine physical examinations, additional hospitalization, skilled-nursing facility stays, routine eye and hearing examinations and glasses and hearing aids.

The bills currently making their way through Congress would cut payments to Medicare Advantage plans by $100 billion to $150 billion. In response, many insurers are expected to stop participating in the program, while others will probably increase premiums. Millions of seniors will likely be forced off their current plans and back into traditional Medicare. The Congressional Budget Office makes it clear that, at the very least, the cuts "would reduce the extra benefits that would be made available to beneficiaries through Medicare Advantage plans."

The Democratic cuts also hit traditional Medicare. For example, the bills would reduce reimbursements for diagnostic imaging – things like CT scans, MRIs and X-rays – by as much as 25 percent. And the Senate Finance Committee's bill would penalize doctors who perform too many procedures or tests. Providers whose utilization is in the 90th percentile or above, compared with national averages, will have their Medicare reimbursements cut.

The whole point of such provisions is to reduce services. But none of this justifies the Republican's hypocrisy on this issue.

For example, Republicans just finished voting unanimously against an attempt to block a Democratic proposal to stop a 21 percent reduction in Medicare provider payments scheduled to go in effect next year, the so-called "doc fix." And, earlier this year, Republicans released an alternative budget that contained even bigger reductions in Medicare spending than the Democrats now propose.

That was the fiscally responsible position to take. The "doc fix" was not paid for and would have added an additional $250 billion to the federal deficit. That's why 13 fiscally responsible Democrats joined Republicans in voting against this bill.

And, Medicare is already facing unfunded liabilities of $50 trillion to $100 trillion. As a percentage of GDP, Medicare costs are expected to rise from 2.7 percent today to 9.4 percent by 2050. Unless we are prepared to completely mortgage our children's future, Republicans were right to propose cuts in their budget proposal.

But now, sensing political advantage, Republicans are in danger of reverting to the fiscally irresponsible "big-government" conservatism that all but destroyed the Republican brand during the Bush years.

There are many good reasons for opposing the Democrat's health reform. It is government takeover of the health care system that would dramatically increase both taxes and insurance costs, while all forcing millions of Americans into a government-run system. There is no need for Mediscare – especially for a party that so desperately needs to return to its fiscally responsible, limited-government roots.