Senate Democrats now appear to be jettisoning the idea of creating a new government program to snuff out compete with private insurance companies. It was an audacious proposal from the start, as it made their health care plan even more left‐wing than the Clinton plan, which voters soundly rejected for being too statist.
Yet it was always a sideshow that helpfully distracted the Left, the Right, and the mainstream from what shrewd Democrats and their allies at AHIP have really wanted all along: an individual mandate forcing all Americans to purchase health insurance under penalty of law.
As I argue in this Cato study, an individual mandate gives government more (and more immediate) control over Americans’ health care than even the so‐called “public option” would. As it has in Massachusetts, an individual mandate will allow government to control what kind of insurance you buy, how much you pay, how insurers pay doctors, where doctors report to work, how doctors practice medicine, and what kind of medical care you get.
The question now is whether the Left, the Right, and the mainstream will recognize the Senate health care bill for what it is: a massive $450 billion bailout for private insurance companies that will drive health insurance premiums and taxes higher while reducing quality, all for the benefit of a small cadre of Democrats with a preternatural need to control other people’s health care.
(Cross‐posted at Politico’s Health Care Arena.)
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Leaders of the Church of Christ, Scientist, are pushing to get a provision into the health care bill that would mandate equal treatment for “spiritual healing,” such as Christian Science prayer treatments. Sens. John Kerry and Orrin Hatch are trying to get it inserted into the Senate bill, according to the Washington Post.
Kerry’s spokeswoman, Whitney Smith, told the Los Angeles Times that insurers would not be forced to cover prayer. Instead, she said, “the amendment would prevent insurers from discriminating against benefits that qualify as spiritual care if the care is recognized by the IRS as a legitimate medical expense. Plans are free to impose standards on spiritual and medical care as long as both are treated equally. It does not mandate that plans provide spiritual care.”
So far the provision has not been included in either the House or the Senate bill, but efforts are continuing. The Post reports that “opponents of spiritual care coverage — a coalition of separation‐of‐church‐and‐state advocates, pediatricians and children’s health activists — say such a provision would waste money, endanger lives and, in some cases, amount to government‐funded prayer.”
To a lot of us, this sounds ridiculous. Pray if you think it helps. But why should that be the government’s business? And why on earth would we want the government to mandate that insurers cover prayers?
But if you want government health care, then this is the world you have chosen. We’ve already seen pitched battles over whether abortion should be covered by government programs, or government‐subsidized programs, or insurance plans that participate in the government “exchange.” The House bill eliminates a tax penalty for same‐sex couples who receive health benefits from employers, but so far the Senate bill does not. The House bill provides grants to states for “home visitation” programs in which nurses and social workers counsel pregnant women and new mothers in low‐income families, coaching them on “parenting practices” and skills needed to “interact with their child to enhance age‐appropriate development” — a program that some American families would surely find Big Brother‐ish.
But that’s the reality of government‐funded and directed health care. If the government is paying for it, then every inclusion or exclusion — abortion, fertility treatments, prayer, same‐sex couples, acupuncture, homeopathy — becomes a matter for political decision. And political decisions become the subject of political activity and lobbying, by groups ranging from Big Pharma to small insurance companies to nurses to Catholic bishops to Christian Scientists. No wonder lobbying is up in our increasingly politicized economy, particularly in the health care arena.
You can’t have government pay for something as personal and intimate as health care, and not find the government poking around in the bedroom, the medicine cabinet, the sickroom, and the chapel.
Senate Majority Leader Harry Reid (D‑NV) has finally unveiled his massive 2,074-page health care bill. The Congressional Budget Office reports that the insurance‐expansion provisions would cost the feds $848 billion over 10 years. To raise those funds, the bill would tax wages, medical devices, prescription drugs, sick people, health insurance premiums (twice), HSAs, FSAs, HRAs, and — why not? — cosmetic surgery. The remainder would supposedly come from $491 billion of Medicare cuts, even though Medicare’s chief actuary says such cuts are “unrealistic” and “doubtful.” But don’t worry. Somehow, this thing’s gonna reduce the deficit.
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.)
Over at Think Progress, Matt Yglesias takes me to task for saying that the so‐called public option in the House’s health care bill “would all but eliminate private insurance and force millions of Americans into a government‐run system.”
Yglesias apparently still buys into the myth that the public option is, well, an option.
For people who receive health insurance through their employers, which is to say the vast majority of the Americans who currently have health insurance, the House bill would change very little. Or, rather, the biggest change would simply be the confidence that if, in the future, you cease to get health insurance from your employer (maybe you’ll lose your job or want to change jobs) that you’ll still be able to get health care. What’s more, of the minority of Americans who would be getting health care through the new “exchange,” the majority will probably sign up for private health insurance and everyone will have the option of doing so. If the government‐run public plan is, for whatever reason, vastly more appealing than the private options then it will dominate. But if you believe the government can’t run health care well, there’s no reason to think that will happen. Whatever you think of that, though, the basic fact is that even if the public option does dominate the exchange most people will still have private employer‐provided insurance.
That might be true if the new government‐run program were going to compete on anything close to a level playing field. But, because the public option is ultimately supported by the taxpayers, the playing field can never be level. True, the bill does say that the new program is supposed to be self‐sustaining, covering administrative and benefit costs entirely out of premium revenues. But remember that Medicare Part B was originally supposed to support 50 percent of its costs through premiums. That has shrunk to the point where premiums pay for less than 25 percent of the program’s cost.
And the government has a myriad of ways to prevent the true cost of the program from showing up in premium prices. For example, the government‐run plan will not have to pay state or federal taxes, and unlike private insurance plans, who can be sued in state courts, the government‐run plan could only be sued in federal court.
At the very least, the program carries with it an implicit guarantee against future losses. Suppose the public option prices its products too low and loses money. Can you imagine that Congress is simply going to let it go bankrupt, go out of business? Would a Congress that has bailed out banks and automobile companies because they are “too big to fail” resist subsidizing the government’s insurance plan if it began to lose money? Even without the actual bailout, such an implicit guarantee has a value. For example, the implicit guarantees behind Fannie Mae and Freddie Mac were estimated to have saved those institutions $6 billion per year.
All of this means that the government‐run plan would be significantly cheaper than private insurance, not because it would out‐compete private insurance or because it was more efficient, but because it had unfair advantages. The lower cost means that businesses, in particular, would have every incentive to dump workers from their current health insurance plan into the government plan. And, if other provisions of the bill make insurance more expensive, as is likely, the incentive for employers to shift workers to the government plan would be even greater. Estimates suggest that nearly 90 million workers could eventually be forced into the government plan.
As Robert Samuelson, dean of economic columnists, writes in the Washington Post, “a favored public plan would probably doom today’s private insurance.”
Samuelson is right. There is nothing “optional” about a public option. And that is just the way the Left wants it.
Speaker Pelosi is set to unveil a health care bill today including yet another version of the so‐called public option. This one would let providers “negotiate” reimbursement rates with the government‐run program.
That’s the health care equivalent of negotiating with Tony Soprano.
But regardless of how much lipstick they put on this pig, it still is a government takeover of the health care system that would all but eliminate private insurance and force millions of Americans into a government‐run system. Apparently the House leadership has decided that if at first you can’t get the votes by being honest about your true intentions, lie, lie, again.
Let’s simplify things and say there are essentially two parts to the health care bills moving through Congress: an individual mandate that would effectively nationalize health care, and a government‐run program that would explicitly nationalize it slowly, over time.
One explanation for Majority Leader Harry Reid (D‑NV) including the government‐run program — supporters call it a “public option”; I prefer Fannie Med — in the Senate bill is that Fannie Med’s popularity is on the rise. Another explanation is that Reid had to include it to remain majority leader and get left‐wing Nevadans to work for his re‐election.
But a third explanation, not inconsistent with the others, is that the savvier Democrats know that all they need to nationalize health care is an individual mandate. So they’ll let Fannie Med take a beating, and then pass the more sweeping individual mandate when opponents are too exhausted and distracted by their “victory” over Fannie Med to notice.
(Cross‐posted at Politico’s Health Care Arena.)