Medicare

Entitlement creep exemplified (or why we’re going broke)

by Michael Fumento on December 29, 2009

in Healthcare

  • 1965, Medicare health insurance authorized for all Americans over age 65 along with Medicaid that covers both seniors and the poor. Somehow for 190 years Americans were able to make do without it.
  • 2006, Largest expansion of Medicare since origin in also covering prescription drugs but only to and beyond a certain point, leaving what’s referred to as a “doughnut hole.”
  • 2009, With the nation running a historic deficit that’s skyrocketing and having just passed a budget-busting health care bill in the Senate, Sen. Maj. Leader Harry Reid declares of the “doughnut hole” we must “forever end this indefensible injustice for American’s seniors.”

Moderates Criticize Health Care Bill As It Advances in Senate; Experts Gave Bill A “Failing Grade”

by Hans Bader on November 23, 2009

in Health and Illness, Healthcare, Insurance, Labor, Legal, Politics as Usual, Regulation, Sanctimony

On Saturday, the Senate voted 60-to-39, along party lines, to press towards passage of a massive health care bill, by blocking a Republican filibuster.  Senators ignored the fact that the bill received a failing grade from health care experts like the Dean of Harvard Medical School, since it will raise taxes, deficits, and medical costs, while reducing lifesaving medical innovations.

Afterward, however, the bill drew criticism even from moderate Democrats who usually support the Obama administration, which backs the bill.  Veteran Washington Post editorialist David Broder called the bill a “budget buster in the making,” saying it will violate President Obama’s “pledge that health insurance reform will not add to our federal budget deficit over the next decade.”  He pleaded with the Obama administration and Congress not to “pass along unfunded programs to our children and grandchildren.”

In the Examiner, a Democrat who backed Obama in 2008 criticized the administration for backing a health care bill that violates Obama’s campaign promises by raising taxes on the middle class, citing the bill’s many tax increases, such as its tax on uninsured people and taxes on cosmetic surgery and other medical procedures.

Earlier, Tennessee Governor Phil Bredesen (D) criticized ObamaCare for driving up state spending and budget deficits, calling it “the mother of all unfunded mandates.”

Washington Post columnist Robert Samuelson today called ObamaCare a generational rip-off.  Earlier, he noted that the health care bill is “hypocritical” and “dishonest” and aggravates the worst features of the “status quo.”

In the Senate, all Democrats voted for the bill.  But many received payoffs for doing so.  And there really are no “moderate” Democrats left in the Senate: most of its so-called “moderate” Democrats are not moderate or conservative on anything except on a handful of social issues needed to survive in a “red state,” like gun control.  No Senate Democrat today deviates from the liberal party line as often as the moderate Democrats who once served in the Senate, like Senators Alan Dixon of Illinois and J. James Exon of Nebraska.

As I noted yesterday, Senate Majority Leader Harry Reid (D-Nev.) lined up the 60 votes through payoffs to wavering Senators and powerful unions (some mismanaged unions will receive a taxpayer bailout of their health plans, to the tune of up to $10 billion).

The Dean of Harvard Medical School recently gave Obama’s health care plan a “failing grade,” saying it will harm America’s health and finances, and hamper medical innovations needed to save patients’ lives.  Dean Jeffrey S. Flier wrote in The Wall Street Journal that along “with dozens of health-care leaders and economists,” he had concluded that the bill “will markedly accelerate national health-care spending,” would harm care “by overregulating the health-care system in the service of special interests such as insurance companies,” and would reduce “our capacity to innovate and develop new therapies” that save lives.

Other experts agree.  The health care “reform” bill backed by President Obama “would reduce senior care,” increase “medical costs,”  and “could jeopardize access to care for millions,” report health care experts at the federal Centers for Medicare and Medicaid Services.  The House recently passed a similar bill by the razor-thin margin of 220 to 215.

The bill will raise taxes on the middle class.  It will increase taxes on individuals, employers, and hospitals, impose new taxes on medical devices and cosmetic surgery, and levy a 40% tax on health-care plans above $8,500.  It will increase the deficit, drive up state government spending, and cost taxpayers at least twice as much as predicted.  It is one of the most expensive bills of all time.

It contains special-interest pork, such as payoffs for trial lawyers, and racial preferences that drew criticism from the U.S. Commission on Civil Rights. The bill restricts national competition in health insurance, which is permitted in countries with cheaper health care.

ObamaCare spends money on frills like “cultural competency,” while cutting spending on crucial things like anesthesia.

“ObamaCare is all about rationing,” and tax increases, says one of Obama’s own economic advisers, Martin Feldstein.

Fact-checkers say Obama is lying about health care. Obama often contradicts himself. In the very same speech, Obama claimed that Medicare is “unsustainable” and “running out of money,” then contradicted himself by claiming that “Medicare is a government program that works really well,” making it a model for national health care.

CNN noted that Obama’s plan would take away “5 freedoms,” contradicting Obama’s claim that the bill will leave you free to choose your doctor and keep your healthcare plan without government interference.

The bill does nothing to curb massive waste and fraud in existing government health care systems like Medicare and Medicaid, even though it proposes to make massive cuts in Medicare (cuts so painful that most of them will never happen: year after year, Congress waives “the annual cut in fees paid by Medicare to physicians” mandated by an earlier law.  The cuts were added to the bill only to reduce its apparent cost.  As economist and former Congressional Budget Office director Douglas Holtz-Eakin notes in The Wall Street Journal, the promised cuts to pay for ObamaCare will not happen: “Senate Democrats chose to ignore this reality and rely on the promise of a cut to make their bill add up. Taking note of this fact . . . destroys any pretense of budget balance.”)

Backers of ObamaCare have refused to cut medical costs through malpractice reform, with Senate Majority Leader Harry Reid saying that such reforms would save “only” $54 billion.  The Pacific Research Institute estimates that just one type of cost that could be reduced through malpractice-lawsuit reform — defensive medicine — costs around $200 billion annually (which is almost as much as France spends annually on health care for all of its citizens; like most countries, France has no punitive damages, and fewer lawsuits against doctors).

One reform opposed by the Democrats — setting up specialized health tribunals to hear malpractice cases — would be particularly helpful. Replacing uninformed juries with specialized health courts would provide more consistent rulings from case to case, eliminate meritless cases, reduce defensive medicine, and more speedily compensate injured people who truly are victimized by doctors’ carelessness. Such tribunals already exist in countries like “Sweden, Denmark, Finland, Iceland and New Zealand.”

Martin Feldstein, one of Obama’s own advisors, has said that Obama’s health-care plan would explode the federal budget deficit and lead to “crippling deficits,” as well as “higher taxes, debt payments, and interest rates” that would cut America’s standard of living. Feldstein also noted that Obama’s health-care plan would harm people with insurance, and predicted that it would lead to massive tax increases. Other analysts have predicted that it will drive up medical costs and inflation.

Obama has relied on $2 trillion in imaginary savings to pay for healthcare “reform.”

What Would Rudy Say?

by Jonathan Moore on November 23, 2009

in Healthcare

A college professor once described what he called the “Rudy’s Test” to his class.  The Rudy’s test involves going into Rudy’s (a bar) sitting down next to any guy at the bar, and asking them their opinion about a proposed policy.  Typically, the professor said, the Rudy’s Test would reveal what the policy would really do.  Many times, the average man’s common sense view of government will provide a simple, clear insight into public policy.

One current statement that fails the Rudy’s Test is that health care reform is going to save us money.  As Saturday Night Live satirically noted, “How exactly is extending health care coverage to 30 million people going to save you money?”

The savings in the health care bills are predicted over the course of the next 10 years.  These predictions are derived by comparing the projected savings with the projected costs of health care reform.  This approach is flawed on both sides.  Government routinely fails to predict how much an entitlement will cost, and also fails in predicting exactly how much a new tax can gather in terms of revenue.

A recent Washington Times story shows fairly conclusively that government economists and bureaucrats do not possess the gift of prophecy.  In 1965, Medicare’s hospital insurance program was estimated at 9 billion dollars.  The actual cost of the program was 67 billion dollars.  In 1987, Medicaid’s projected cost was less than 1 billion dollars.  The actual cost of the program was 17 billion dollars.  In 1993 the cost of Medicare’s home care benefit program was projected to be 4 billion dollars.  The actual cost of the program was 10 billion dollars.  These are only a few examples of how estimated and actual costs are rarely consistent.  There are many reasons for this, as Michael Cannon points out in his article on Medicare Part D cost overruns, including the facts that politicians intentionally conceal costs (accurate in this case because the “doc fix” of Medicare reimbursements, which will cost an estimated 250 billion dollars, has been moved into another bill), that people alter their behavior to maximize the benefits of an entitlement, and that Congress often later expands programs.  I would add a fourth item to this list; that politicians and economists simply do not have the detailed knowledge of every human being in America to be able to predict the future.  In a complex economy filled with rational actors, no economic projection can ever truly capture the future.  There are simply too many parts moving independently of each other to boil down the human behavior of 300 million people into an accurate mathematical formula.  Cost estimates simply cannot be accurately predicted with any regularity.

Further, income estimates are impossible to predict.  Take, for instance, the cosmetic surgery tax included in the Senate’s health care reform proposal.  A similar tax has been instituted in New Jersey, and has been such a failure at bringing in the amount of revenue expected that the assemblyman who first introduced the tax in 2004 introduced a measure to repeal it in 2006.  At the time of it was enacted, the tax was estimated to generate 24 million dollars.  It actually generated 6.8 million dollars.  We have tried this kind of tax before, and it simply doesn’t work the way it is expected.  No doubt the amount of revenues expected by the Obama administration from a host of new taxes will be lower than expected.

Always think about the Rudy’s Test when considering a new policy.  If it sounds too good to be true, it probably is.

Healthcare Bill Advances in Senate, Despite Receiving Failing Grade from Health Experts; Democrats Block Filibuster in Party-Line Vote

by Hans Bader on November 21, 2009

in Bailout Watch, Economy, Health and Illness, Healthcare, Insurance, International, Labor, Legal, Nanny State, Personal Liberty, Politics as Usual, Precaution & Risk, Regulation, Sanctimony

The healthcare bill is on the verge of passing the Senate, despite the fact that it has received a failing grade from healthcare experts like the Dean of Harvard Medical School, and the fact that it will increase taxes, deficits, and medical costs, while reducing lifesaving medical innovations.

In a 60-to-39 vote, Senators voted to quash a Republican filibuster, moving it closer to a final vote where it will need the votes of only 51 of the Senate’s 60 Democrats to pass it (60 votes are needed to stop a filibuster). The vote was along strict party lines: all 60 Democrats voted to advance the bill.

Senate Majority Leader Harry Reid (D-Nev.) lined up the 60 votes through payoffs to wavering Senators and left-wing unions (some mismanaged unions will receive a taxpayer bailout of their health plans, to the tune of up to $10 billion).

The Dean of Harvard Medical School recently gave Obama’s healthcare plan a “failing grade,” saying it will harm America’s health and finances, and hamper medical innovations needed to save patients’ lives.  Dean Jeffrey S. Flier wrote in the Wall Street Journal that along “with dozens of health-care leaders and economists,” he had concluded that the bill “will markedly accelerate national health-care spending,” would harm care “by overregulating the health-care system in the service of special interests such as insurance companies,” and would reduce “our capacity to innovate and develop new therapies” that save lives.

Other experts agree.  The health-care “reform” bill backed by President Obama “would reduce senior care,” increase “medical costs,”  and “could jeopardize access to care for millions,” report health care experts at the federal Centers for Medicare and Medicaid Services.   It is one of the most expensive bills of all time.  The House recently passed a similar bill by the razor-thin margin of 220 to 215.

The bill will raise taxes on the middle class.  It will increase taxes on individuals, employers, and hospitals, impose new taxes on medical devices and cosmetic surgery, and levy a 40% tax on health-care plans above $8,500.  It will increase the deficit, and cost taxpayers at least twice as much as predicted.

It contains special-interest pork, such as payoffs for trial lawyers, and racial preferences that drew criticism from the U.S. Commission on Civil Rights. The bill restricts national competition in health insurance, which is permitted in countries with cheaper health care.

ObamaCare spends money on frills like “cultural competency,” while cutting spending on crucial things like anesthesia.

“ObamaCare is all about rationing,” and tax increases, says one of Obama’s own economic advisers, Martin Feldstein.

Fact-checkers say Obama is lying about health care. Obama often contradicts himself. In the very same speech, Obama claimed that Medicare is “unsustainable” and “running out of money,” then contradicted himself by claiming that “Medicare is a government program that works really well,” making it a model for national health care.

CNN noted that Obama’s plan would take away “5 freedoms,” contradicting Obama’s claim that the bill will leave you free to choose your doctor and keep your healthcare plan without government interference.

The bill does nothing to curb massive waste and fraud in existing government healthcare systems like Medicare and Medicaid, even though it proposes to make massive cuts in Medicare (cuts so painful that most of them will never happen: year after year, Congress waives “the annual cut in fees paid by Medicare to physicians” mandated by an earlier law.  The cuts were added to the bill only to reduce its apparent cost.  As economist and former Congressional Budget Office director Douglas Holtz-Eakin notes in the Wall Street Journal, the promised cuts to pay for ObamaCare will not happen: “Senate Democrats chose to ignore this reality and rely on the promise of a cut to make their bill add up. Taking note of this fact . . . destroys any pretense of budget balance.”)

Backers of ObamaCare have refused to cut medical costs through malpractice reform, with Senate Majority Leader Harry Reid saying that such reforms would save “only” $54 billion.  The Pacific Research Institute estimates that just one type of cost that could be reduced through malpractice-lawsuit reform — defensive medicine — costs around $200 billion annually (which is almost as much as France spends annually on healthcare for all of its citizens; like most countries, France has no punitive damages, and fewer lawsuits against doctors).

One reform opposed by the Democrats — setting up specialized health tribunals to hear malpractice cases — would be particularly helpful. Replacing uninformed juries with specialized health courts would provide more consistent rulings from case to case, eliminate meritless cases, reduce defensive medicine, and more speedily compensate injured people who truly are victimized by doctors’ carelessness. Such tribunals already exist in countries like “Sweden, Denmark, Finland, Iceland and New Zealand.”

Martin Feldstein, one of Obama’s own advisors, has said that Obama’s health-care plan would explode the federal budget deficit and lead to “crippling deficits,” as well as “higher taxes, debt payments, and interest rates” that would cut America’s standard of living. Feldstein also noted that Obama’s health-care plan would harm people with insurance, and predicted that it would lead to massive tax increases. Other analysts have predicted that it will drive up medical costs and inflation.

Obama is relying on $2 trillion in imaginary savings to pay for his health care plan. He is also relying on tax increases, which breaks Obama’s campaign promise not to raise taxes on the middle class.  Obama’s support for the bill, which will massively increase the deficit in the future, also breaks his promise not to sign a healthcare bill that adds even “one dime” to the deficit, now or in the future.

Reid Health Care Bill Adds New Tax Increases, Costs Twice As Much As Promised

by Hans Bader on November 19, 2009 · 3 comments

in Health and Illness, Healthcare, Insurance, Legal, Personal Liberty, Politics as Usual, Precaution & Risk, Regulation, Sanctimony

The health care “reform” bill drafted by Senate Majority Leader Harry Reid adds new tax increases, and costs twice as much as its promised $849 billion price tag.

The tax increases (in billions) include:

1. 40% excise tax on health coverage in excess of $8,500 (individuals) / $23,000 (families). . .
2. Additional 0.5% Medicare (Hospital Insurance) tax on wages in excess of $200,000 ($250,000 for joint filers) – begins in 2013 – $54 B tax increase
3. Impose annual fee on manufacturers and importers of branded drugs – begins in 2010 – $22 B tax increase
4. Impose annual fee on manufacturers and importers of certain medical devices – begins in 2010 – $19 B tax increase
5. Impose annual fee on manufacturers and importers of certain medical devices – begins in 2010 – $60 B tax increase
6. Cut in half (to $500K) the amount of an executive’s compensation that a health plan can deduct from its corporate income taxes – begins in 2013 . . .
7. Impose 5% excise tax on cosmetic surgery and similar procedures – begins for surgery in 2010 – $6 B tax increase!

The bill will cost far more than projected. The bill uses “accounting tricks” to keep the short-term costs down, by temporarily raising taxes before spending explodes. But in every year thereafter, it will increase the deficit, notes an analysis from the Congressional Budget Office. “In its true first decade (2014 to 2023), CBO projects the bill’s costs to be $1.8 trillion — double the price Reid is advertising.”

The Dean of Harvard Medical School, Jeffrey S. Flier, gave the health care bill a “failing grade” in an analysis published yesterday in The Wall Street Journal, saying that it would drive up costs and stifle medical innovation.

The health care “reform” bills “would reduce senior care,” increase “medical costs,”  and “jeopardize access to care for millions,” reported experts at the federal Centers for Medicare and Medicaid Services.    They will explode state and federal deficits, and contain payoffs for trial lawyers and racial preferences.

ObamaCare spends money on frills like “cultural competency,” while cutting spending on crucial things like anesthesia.

Fact-checkers say Obama is lying about health care.  In a speech, Obama claimed that Medicare is “unsustainable” and “running out of money,” then contradicted himself by claiming that “Medicare is a government program that works really well,” making it a model for national health care.

A CNN commentary noted that Obama’s plan would take away “5 freedoms,” such as the freedom to choose your doctors, keep your existing plan if you like it, and choose what’s in your plan.

ObamaCare Blueprint Called ‘The Worst Bill Ever’: It Drives Up Taxes, Insurance Premiums, State and Federal Deficits, and Legal Bills

by Hans Bader on November 3, 2009 · 2 comments

in Healthcare, Insurance, Politics as Usual, Regulation, Sanctimony

The Wall Street Journal calls the House version of President Obama’s health care plan “the worst bill ever,” noting that it will lead to “epic new spending and taxes, pricier insurance, rationed care, dishonest accounting,” and other problems.

At the Atlantic, Megan McArdle, who voted for Obama, explains how ObamaCare will cost much more than promised — at least $150 billion more.  That’s true even if promised cuts to Medicare included in ObamaCare actually take place — but as McArdle notes, even the head of the Congressional Budget Office “does not think the cuts will take place” (which didn’t stop him from pretending those cuts would occur in giving ObamaCare its original $900 billion price tag).

ObamaCare is based on deceptive accounting that makes Enron look good.  As The Wall Street Journal notes:

“The House disguises hundreds of billions of dollars in additional costs with budget gimmicks. It ‘pays for’ about six years of program with a decade of revenue, with the heaviest costs concentrated in the second five years. The House also pretends Medicare payments to doctors will be cut by 21.5% next year and deeper after that, ‘saving’ about $250 billion. ObamaCare will be lucky to cost under $2 trillion over 10 years; it will grow more after that…

“All this is particularly reckless given the unfunded liabilities of Medicare—now north of $37 trillion over 75 years. Mrs. Pelosi wants to steal $426 billion from future Medicare spending to ‘pay for’ universal coverage. While Medicare’s price controls on doctors and hospitals are certain to be tightened, the only cut that is a sure thing in practice is gutting Medicare Advantage to the tune of $170 billion. Democrats loathe this program because it gives one of out five seniors private insurance options.

“As for Medicaid, the House will expand eligibility to everyone below 150% of the poverty level . . . at a cost of $425 billion [to state and federal governments at a time when] when budgets from Albany to Sacramento are in fiscal collapse.  . .

“All told, the House favors $572 billion in new taxes, mostly by imposing a 5.4-percentage-point ‘surcharge’ on joint filers earning over $1 million, $500,000 for singles. This tax will raise the top marginal rate to 45% in 2011 from 39.6% when the Bush tax cuts expire—not counting state income taxes and the phase-out of certain deductions and exemptions. . . .Meanwhile, a tax equal to 2.5% of adjusted gross income will also be imposed on some 18 million people who CBO expects still won’t buy insurance in 2019.”

A study by PriceWaterhouseCoopers found that the provisions in the Senate version of ObamaCare would add $1,700 a year to the cost of family coverage in 2013 and $600 for a single person. By 2019, family premiums could be $4,000 higher and individual premiums could be $1,500 higher.

Greg Conko calls the bill “worse than the disease.”  In a recently-released paper, “A Cure Worse than the Disease: Obama Care Won’t Cut Costs, But May Cut Quality,” Conko notes that most of the alleged cost-cutting measures in the Baucus bill merely shift costs from the federal government onto the states or private payers, without reducing long-term health care inflation.  The only measures that could conceivably reduce the annual rate of growth in health care costs would erect government barriers between patients and their doctors, while jeopardizing long-term medical innovation.

Another new study found that provisions contained in the health care reform bills, like guaranteed issue and community rating mandates, would drive up premiums by 50 percent for individual policies and 19 percent for small group plans.

A study from the Independence Institute says that ObamaCare would drive up inflation and medical care costs, while shrinking the economy.

As Conko notes, many states have highly concentrated markets.  In Hawaii, Rhode Island, and Alaska, for example, 95 percent or more of the health insurance market is served by just two insurers.  But Obama and congressional Democrats oppose letting insurers compete across state lines, blocking competition that could make health insurance cheaper.  Other countries with cheaper health insurance permit insurers to compete nationally.

ObamaCare would raise taxes.  It would also explode state and federal budget deficits, and would actually cost $2 trillion — far more than its promised $800 billion price tag.  It contains special-interest pork, like racial preferences.

It contains provisions sought by trial lawyers that will increase medical costs.  Doctors afraid of being wrongly sued for malpractice despite providing good quality care order unnecessary tests (or defensive medicine), which wastes $200 billion annually.

In his health care speech, Obama falsely promised tort-reform pilot projects, as a token gesture to doctors.   But the health care bill he backs does just the opposite, requiring states to repeal existing reforms to their medical malpractice laws if they want federal funds.  For example, they lose money if they do anything to “limit attorneys fees.”

The health care bills backed by Obama and congressional leaders ignore reforms that would help doctors and patients alike, like setting up specialized health courts to rule on malpractice claims instead of having them ruled on by juries that have little understanding of medicine or technology.

A Cure Worse than the Disease

by Greg Conko on October 22, 2009 · 2 comments

in Culture, Features, Health and Illness, Healthcare, Insurance, Nanny State, Personal Liberty, Regulation, Zeitgeist

With Democratic support coalescing around Sen. Max Baucus’s (D-Mt.) health care reform proposal, passage of a comprehensive overhaul now appears more likely than ever.  Opponents had their summer of protests.  But, Democrats have shown a renewed sense of energy since discrediting Sarah Palin’s “death panels” and Sen. Charles Grassley’s claim that ObamaCare would “pull the plug on grandma.” Still, while those charges may have been a little overwrought, there is plenty to be concerned about with the Democratic health reform effort.

As I explain in a new Competitive Enterprise Institute paper out today, “A Cure Worse than the Disease: Obama Care Won’t Cut Costs, But May Cut Quality,” most of the alleged cost-cutting measures in the Baucus bill merely shift costs from the federal government onto the states or private payers, without affecting long-term health care inflation.  The only measures that could reduce the annual rate of growth in health care costs would erect government barriers between patients and their doctors, while jeopardizing long-term medical innovation.

Skeptics have made hay arguing that the so-called Sustainable Growth Rate can’t be counted on to cut $245-billion in Medicare spending. But Senate Finance Committee negotiators have designed a Medicare Commission—what the White House previously called an Independent Medicare Advisory Commission—to make similar cuts in physician and hospital payment rates in a more opaque way.

In an April New York Times interview, President Obama suggested that such a group, working outside of “normal political channels,” should guide decisions regarding that “huge driver of cost…the chronically ill and those toward the end of their lives.”  That’s not exactly a death panel roving the country to pull the plug on innocent grandmas who’ve survived past their sell-by dates, but the effects could be equally pernicious.

What the Medicare Commission is likely to do is work with the Patient-Centered Outcomes Research Institute also established by the Baucus bill to incorporate comparative clinical effectiveness recommendations into Medicare and Medicaid payment policies.

In theory, there’s nothing wrong with comparative effectiveness research, or what used to be called evidence-based medicine.  Good research comparing the clinical effectiveness, risks, and benefits of two or more medical treatments can help doctors better understand the likely benefits of the treatments they prescribe and improve the quality of care they deliver.  But patients vary substantially in their individual physiology, their response rates to drugs and surgical procedures, and their willingness to tolerate side effects.  Doctors know this, and they realize that one size definitely does not fit all. That’s why, in practice, evidence-based medicine in the U.S. and abroad has produced incrementally useful information, but has failed to systematically change the practice of medicine.

Generally, we should encourage efforts to eliminate waste and reduce the use of ineffective treatments, especially when we’re talking about public programs and taxpayer money.  But the only way these programs would result in significant savings is if legislation or subsequent implementation tries to force the square peg of comparative effectiveness research results into the round hole of clinical practice by requiring physicians to always pick the treatment deemed best for the average patient.

That’s not just bad for patients in the near term, it would also wreak havoc on long term medical innovation.  If every new medicine were required, immediately upon gaining regulatory approval, to be effective and cheap enough to get the support of bureaucratic bean counters, research on the next generation of treatments for cancer, heart disease, and countless other serious conditions would slow to a snail’s pace.

Get used to the innovative medical treatments that we already have today.  If these programs become part of our health care system, we’ll be seeing a lot fewer treatment innovations tomorrow.

New Version of Obama Health-Care Plan Relies on Imaginary Savings, Costs More Than $2 Trillion, and Will Explode Federal and State Budget Deficits

by Hans Bader on October 15, 2009 · 1 comment

in Healthcare, Insurance, International, Politics as Usual, Regulation, Sanctimony

Health-care “reform” always costs more than predicted, as ObamaCare provisions have at the state level.  So the claim that the new, cheaper version of President Obama’s health care plan will cost only $829 billion, while not increasing the deficit, should be taken with a grain of salt.

Senate Majority Leader Harry Reid admitted that the actual cost will be more like $2 trillion, and health-care experts have given it a similar price tag of more than $2 trillion.

The reason for the lower $829 billion price tag was that the bill’s supporters promised to offset its costs by making massive cuts in Medicare that no one actually expects politicians to follow through on, since Medicare cuts infuriate seniors and doctors.

Year after year, Congress waives “the annual cut in fees paid by Medicare to physicians” mandated by an earlier law. Yet, now, backers of ObamaCare claim they will cut Medicare by much more to finance coverage of the uninsured. The most recent version of ObamaCare drafted by Senator Max Baucus of Montana claims it will also make “$240 billion in cuts to hospitals, home care providers, nursing facilities and hospices.” Based on Congress’s past track record, the chance of this happening is zero.

As economist and former Congressional Budget Office director Douglas Holtz-Eakin notes in the Wall Street Journal, the promised cuts to pay for ObamaCare will not happen: “Congress will not allow doctors to suffer a 24% cut in their Medicare reimbursements. Senate Democrats chose to ignore this reality and rely on the promise of a cut to make their bill add up. Taking note of this fact . . . destroys any pretense of budget balance.”

As Holtz-Eakin notes, some “middle-class families would get hit with a double-digit increase in their marginal tax rate” under this version of ObamaCare.

Moreover, state budget deficits and state taxes will increase under ObamaCare, which outsources costs to the states by requiring states to expand their Medicaid programs for poor people.

Backers of ObamaCare have refused to cut medical costs through tort reform, with Senate Majority Leader Harry Reid saying it will save “only” $54 billion. Yet they justify ObamaCare partly on the alleged need to prevent uninsured people from not paying their medical bills — even though unpaid medical costs are only 2 percent of all medical costs, a small multiple of the amount Reid admits could be saved from tort reform. (Tort reform would cut the wealth of trial lawyers, who are some of the biggest supporters of the Democratic Party.) In reality, tort reform would save far more than $54 billion.

The Pacific Research Institute estimates that just one type of cost that could be reduced through malpractice-lawsuit reform — defensive medicine — costs around $200 billion annually (which is almost as much as France spends annually on health-care for all of its citizens; France has no punitive damages, few lawsuits against doctors, and “loser-pays” rules).

One reform — setting up specialized health tribunals to hear malpractice cases — would be particularly helpful.  Using specialized health courts, rather than continuing to use uninformed juries, would provide more consistent rulings from case to case, eliminate meritless cases, reduce defensive medicine, and more speedily compensate injured people who truly are victimized by doctors’ carelessness. Such tribunals already exist in countries like “Sweden, Denmark, Finland, Iceland and New Zealand.”

Comprehensive tort reform would also reduce lawyers’ wages, resulting in some additional students choosing to go to medical school (where a critical shortage of doctors is projected over the next decade) rather than to law school (there are already too many lawyers, who sometimes can make work for themselves by bringing “creative” lawsuits).  At least two of my law school classmates had already gone to medical school before going to law school (one decided to become a medical malpractice lawyer). At least a dozen that I know of had considered going to medical school instead.  But life is easier as a lawyer, and you don’t get sued as much if you are a lawyer rather than a doctor.   As long as professionals like lawyers get paid a lot, doctors will have to be, too — greater “wage inequality” in the U.S. means that we have to pay doctors more than other countries do to get the same number of people to become doctors.  (The looming shortage of doctors is aggravated by arbitrary restrictions placed on highly-qualified immigrant doctors, who have to repeat their residencies all over again  in the U.S. even if they manage to immigrate to the U.S.)

Another reform opposed by Obama that would make health insurance cheaper would be to let people buy cheaper insurance across state lines, which an antiquated federal law now prevents.  Countries with cheaper health insurance permit national competition among insurers.

Martin Feldstein, one of Obama’s own advisors, has said that Obama’s health-care plan would explode the federal budget deficit and lead to “crippling deficits,” as well as “higher taxes, debt payments, and interest rates” that would cut America’s standard of living.  Feldstein also noted that Obama’s health-care plan would harm people with insurance, and predicted that it would lead to massive tax increases.  Other analysts have predicted that it will drive up medical costs and inflation.

Obama is relying on $2 trillion in imaginary savings to pay for his health care plan.   He is also relying on tax increases, which breaks Obama’s campaign promise not to raise taxes on the middle class.

Fact-checkers say Obama is lying about health-care.  CNN Money says ObamaCare would take away 5 freedoms.

New ObamaCare Version Claims Not to Increase Federal Deficit, But It Explodes State Deficits, and Relies on Mythical Savings and Unlikely Medicare Cuts

by Hans Bader on October 8, 2009 · 1 comment

in Healthcare, Nanny State, Personal Liberty, Politics as Usual

Democrats are cheering a Congressional Budget Office decision to “score” the Senate Finance Committee’s version of ObamaCare as not increasing the federal budget deficit. But it pays for some of ObamaCare’s massive cost by expanding state Medicaid programs, shifting its cost to the states. That will radically increase state budget deficits. Moreover, this version of ObamaCare, while cheaper than the four other versions, still relies on mythical cost savings and massive cuts to Medicare that are likely to be canceled after ObamaCare is enacted, to avoid enraging seniors and doctors. Rather than keeping costs down, ObamaCare outsources them to state governments and people with insurance.

This version of ObamaCare “proposes to spend more than $800 billion in the midst of an explosion of federal spending and debt to create a new entitlement program, the cost of which CBO says will grow at more than 8 percent a year (faster than health care costs grow now), and to raise taxes by almost $200 billion in the midst of a recession. It then proposes to make up the difference by massive cuts in Medicare which, as CBO notes, are unlikely to actually materialize.”

The Congressional Budget Office “scored” the bill as not increasing the deficit, but in doing so, it admitted that the bill does not even exist except as a concept, and that its details have yet to be fleshed out. Senate leaders intend to have the Finance Committee vote on the bill before its text is even available, and to have the Senate vote on the bill with virtually no advance notice, after major changes are made to the broad outline of the bill approved by the Committee (to add a potentially-costly “public option”).

ObamaCare would pay to cover some currently uninsured people by expanding state Medicaid programs.  Tennessee Governor Phil Bredesen (D) is criticizing Obama’s health-care plan as “the mother of all unfunded mandates,” saying it will force states to spend so much that they will have to either massively raise taxes, or run large budget deficits that violate state constitutions.

Some people who currently have employer-provided insurance or individual insurance policies will lose that insurance under ObamaCare.  In states that adopted major provisions of ObamaCare, the number of privately-insured people fell, as the cost of their insurance skyrocketed.   “The Congressional Budget Office analyzed” ObamaCare “and said that by 2016 some 3 million people who now have employer-based care would lose it because their employers would decide to stop offering it.”  Some of these people will wind up on Medicaid, which ObamaCare will expand to cover some people who are not poor enough to be covered now.

While the CBO has scored this version of ObamaCare as not increasing the federal budget deficit (unlike the 4 other versions of ObamaCare pending in Congress, which the CBO admits would explode the deficit), some of Obama’s own advisers are more skeptical.  Earlier, adviser Martin Feldstein said that Obama’s health-care plan would explode the federal budget deficit and lead to “crippling deficits,” as well as “higher taxes, debt payments, and interest rates” that would cut America’s standard of living.  Feldstein also noted that Obama’s health-care plan would harm people with insurance, and predicted that it would lead to massive tax increases.  Other analysts have predicted that it will drive up medical costs and inflation.

Obama is relying on $2 trillion in imaginary savings to pay for his health care plan.   He is also relying on tax increases, which breaks Obama’s campaign promise not to raise taxes on the middle class.

Fact-checkers say Obama is lying about health-care. CNN Money says ObamaCare would take away 5 freedoms.

ObamaCare’s Smoke and Mirrors: Huge Costs Paid for by Imaginary Savings

by Hans Bader on September 21, 2009

in Healthcare, Legal, Politics as Usual, Sanctimony

Obama’s health care plan uses imaginary savings to finance massive new spending. His claim that it will not increase the deficit is based on the notion that he can squeeze $2 trillion in savings out of the current health care system to finance his plan’s huge costs.

Washington Post columnist Charles Krauthammer, who once practiced medicine, points out in his column that these savings aren’t real, and that politicians falsely promise to pay for new programs through imaginary savings all the time:

“Obama said he would largely solve the insoluble cost problem of ObamaCare by eliminating ‘hundreds of billions of dollars in waste and fraud’ from Medicare. . . .That’s just an insult to our intelligence. Waste, fraud and abuse as the all-purpose piggy bank for budget savings has been a joke since Jimmy Carter first used it in 1977. Moreover, if half a trillion is waiting to be squeezed painlessly out of Medicare, why wait for health-care reform? If, as Obama repeatedly insists, Medicare overspending is breaking the budget, why hasn’t he gotten started on the painless billions in ‘waste and fraud’ savings?”

Even staunch Democrats admit the president’s claims are questionable.  Tennessee Governor Phil Bredesen (D) is criticizing Obama’s health care plan as “the mother of all unfunded mandates,” saying it will force states to massively raise taxes or run big deficits. Earlier, one of Obama’s own economic advisers said his health care plan would explode the federal budget deficit and lead to “crippling deficits” and “higher taxes.”

The Associated Press said Obama’s proposals would “would drive up the deficit by billions of dollars.”  The Washington Post, which hasn’t endorsed a Republican for president since 1952, noted that “the expanded coverage would add more than $1 trillion to the deficit.”

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