Free Markets, Free People

Government

The Shape Of Things To Come

A short little blurb in the WSJ:

The medical costs of treating obesity-related diseases may have soared as high as $147 billion in 2008, the Centers for Disease Control and Prevention said Monday, as its new director set a fresh tone in favor of more aggressively attacking obesity.

Fresh my rear end. The only thing “fresh” about it is another bureaucrat discovering a “fresh” new area in which to intrude.  A little reading between the lines is required.

Note the name of the agency. Is it a stretch, given what we’ve seen lately, to imagine this agency recommending that obesity be classified as a “disease”?

Why else would the director of the CDC even address the issue?

Of course once it has been declared a disease, all sorts of “prevention” can be legislated – for your own good, of course. And to “cut medical costs”.

The cost of treating obesity doubled over a decade, signaling the rising prevalence of excess weight and the toll it is taking on the health-care system. The medical costs of obesity were estimated to be $74 billion in 1998, according to a study by federal government researchers and RTI International, a nonprofit research institute in Research Triangle Park, N.C.

Hmmm can taxes on food – sugary drinks, high calorie foods, etc – be far behind? Right now that may be a little more difficult and problematic because the government doesn’t have control of health care in this country. But, with that in the offiing, I think the new director of the CDC is just anticipating this “fresh” direction once said legislation is expelled from the bowels of Congress.

Just keeping you up to date.

~McQ

Health Care Reform – Peeling The Onion

There are a number of things going on in the health care reform debate that are the reason Democrats are at odds with each other. One, obviously is cost. What should be apparent, even to rocket scientists like Nancy Pelosi, is that the American people are not buying into the premise that “government can expand coverage, improve care and do it for less”. It’s not happening.

And, of course, those on the blue side that are leading the “no way, no how” charge are the so called Blue Dogs. Bolstering the Blue Dog position is the CBO, or Congressional Budget Office – a non-partisan organization which “scores” proposed bills for cost and savings. In the last few weeks it has consistently found Democratic Congressional legislative proposals wanting – pointing out none delivered the promised savings over the long haul.

Predictably, the CBO has come under fire from the left, and yesterday the White House joined the fray. Peter Orszag, the White House budget director, Peter Orszag said – carefully – that the CBO’s recent analysis might be feeding a perception that its tendency is toward “exaggerating costs and underestimating savings.”

Given how the costs of most government programs skyrocket after implementation, I’m having difficulty buying into this supposed perception. And it may say more about Orszag, former CBO director, than it does about the CBO now.

However, what Orszag is talking about specifically is a proposal that is another part of the infighting going on among Democrats.

“The point of the proposal … was never to generate savings over the next decade,” Orszag said in a letter posted on Saturday.

“Instead the goal is to provide a mechanism for improving quality of care for beneficiaries and reducing costs over the long term.”

In fact, the proposal is about shifting power from Congress to the Executive Branch:

The new council, if approved, would replace the current Medicare Payment Advisory Commission, which is made up of doctors and health care experts. Once a year, it gives recommendations about coverage and reimbursement rates for Medicare but has no authority to enforce its ideas. Its report in March recommended that payments for primary care physicians be increased and home health services rates be decreased.

The proposed council would be comprised of doctors and health care experts making their recommendations based on extensive data and analysis of best health care practices, according to administration officials.

It would be an independent executive branch agency — which would give its recommendations more weight. The president would have to approve or disapprove the its recommendations as a package. If it is approved, the package would be enacted if Congress did not vote against it within 30 days.

This isn’t necessarily about “best health care practices” – this is about centralizing the decision making and making it harder and harder for Congress as a whole and individual Congressmen specifically, from excepting their district or certain constituent health care providers from some of the provisions. The White House wants to take that little perk away from them. And that’s another one of many stuggles going on within this fight to pass something.

A Democratic president trying to take power away from a Democratic congress is probably not the best way to try to pass something that the President can call “health care reform”. That’s not to say I support this council in either form – its more to point out how clumsily this administration is proceeding in all of this. If you want legislation passed so your signature issue doesn’t fail, it may be best not to try to take power away from a friendly Congress and take it yourself. Executive power grabs don’t just happen in the national security area as the Democrats constantly criticized Bush for attempting. They can occur in many other areas. We’ll see if the Dems will be as critical of this power grab as they were of the ones alleged of the previous administration.

~McQ

The Transparent Administration – Part II

I noted the other day that the Obama administration was hiding its revised budget numbers from the public until August. Obviously, in light of the push to pass health care legislation, they don’t want anymore bad news out there than the CBO has already delivered. And, of course, there’s no doubt that had the news been good, they’d have fallen all over themselves to publish it.

That brings us to our “transparency” moment today. This will probably ring a familiar bell:

Obama administration officials have rejected a watchdog group’s request for a list of healthcare industry executives who’ve been meeting secretly in the White House with Obama staffers to discuss healthcare changes being drafted there and in Congress.

According to the Citizens for Responsibility and Ethics in Washington, which is suspicious of the influence of health industry lobbyists and company officers, it received a letter from the Secret Service citing an Obama Justice Department directive and denying access to visitor logs under the “presidential communications privilege.”

Sound familiar?

Of course it does. But since Darth Cheney and the evil oil executives weren’t involved, my guess is it will hardly make a ripple among lefty critics of the Bush administration.

Promises, promises, this guy was all about promises, remember?

The Problem

Lobbyists Write National Policies: For example, Vice President Dick Cheney’s Energy Task Force of oil and gas lobbyists met secretly to develop national energy policy.

Secrecy Dominates Government Actions: The Bush administration has ignored public disclosure rules and has invoked a legal tool known as the “state secrets” privilege more than any other previous administration to get cases thrown out of civil court.

But you know, the new guy would never do that. He promised!

And you remember the criticism from Democrats and the left about Bush and his signing statements?  Well, guess what?

Congressional Democrats warned President Barack Obama on Tuesday that he sounded too much like George W. Bush when he declared this summer that the White House can ignore legislation he thinks oversteps the Constitution.

In a letter to the president, four senior House members said they were “surprised” and “chagrined” by Obama’s statement in June accompanying a war spending bill that he would ignore restrictions placed on aid provided to the World Bank and International Monetary Fund.

The rebuff was reminiscent of Bush, who issued a record number of “signing statements” while in office. The statements put Congress on notice that the administration didn’t feel compelled to comply with provisions of legislation that it felt challenged the president’s authority as commander in chief.

Democrats, including Obama, sharply criticized Bush for his reliance on the statements. Obama said he would use them sparingly and only if authorized by the attorney general.

Hope and change.

~McQ

Obama: Selling a Pig in a Poke

Does it bother you that a president who is out pushing like hell to pass a bill that will fundamentally change the way we receive health care, and apparently most now believe that change will be negative, apparently isn’t familiar with what he’s pushing?

With the public’s trust in his handling of health care tanking (50%-44% of Americans disapprove), the White House has launched a new phase of its strategy designed to pass Obamacare: all Obama, all the time. As part of that effort, Obama hosted a conference call with leftist bloggers urging them to pressure Congress to pass his health plan as soon as possible.

During the call, a blogger from Maine said he kept running into an Investors Business Daily article that claimed Section 102 of the House health legislation would outlaw private insurance. He asked: “Is this true? Will people be able to keep their insurance and will insurers be able to write new policies even though H.R. 3200 is passed?” President Obama replied: “You know, I have to say that I am not familiar with the provision you are talking about.”

It’s only a question that’s been in the news for a week after it was raised in an Investors Business Daily editorial. That’s the entire reason the blogger brought it up. Salesmanship 101 – know your product. He’s been so busy flapping his jaws about how we have to pass this now that he hasn’t even taken the time to understand what “this” is.

IBD said the provision would, in effect, outlaw private insurance.

The Heritage Foundation did a little digging into this provision to figure out the real impact it will have. Here’s what they have to say:

[T]he House bill does not outright outlaw private individual health insurance, but it does effectively regulate it out of existence. The House bill does allow private insurance to be sold, but only “Exchange-participating health benefits plans.” In order to qualify as an “Exchange-participating health benefits plan,” all health insurance plans must conform to a slew of new regulations, including community rating and guaranteed issue. These will all send the cost of private individual health insurance skyrocketing. Furthermore, all these new regulations would not apply just to individual insurance plans, but to all insurance plans. So the House bill will also drive up the cost of your existing employer coverage as well. Until, of course, it becomes so expensive that your company makes the perfectly economical decision to dump you into the government plan.

President Obama may not care to study how many people will lose their current health insurance if his plan becomes law, but like most Americans, we do. That is why we partnered with the Lewin Group to study how many Americans would be forced into the government “option” under the House health plan. Here is what we found:

* Approximately 103 million people would be covered under the new public plan and, as a consequence, about 83.4 million people would lose their private insurance. This would represent a 48.4 percent reduction in the number of people with private coverage.

* About 88.1 million workers would see their current private, employer-sponsored health plan go away and would be shifted to the public plan.

* Yearly premiums for the typical American with private coverage could go up by as much as $460 per privately-insured person, as a result of increased cost-shifting stemming from a public plan modeled on Medicare.

So it ends up not killing the private insurance business outright with a bullet through the brain, but instead, by slow strangulation. Same effect, but it will just take much longer. Legislate rules and requirements which will up the cost of private insurance to the point that the economic incentive is to dump it in favor of the cheaper public option.

Like your plan? Like your doctor?

Too bad.

But the man who promised you could keep both couldn’t be bothered to become “familiar” with this particular “provision”.

~McQ

State Governors Not Happy With Democratic Health Care Plan

At least not the Medicaid portion. The reason, of course, is states are on the hook to pay about 43% of Medicaid costs. Under the pending legislation, and depending on which plan you look at (House or Senate), Medicaid would expand 11% to 20%.

As you might imagine, that would impose a huge new mandate on the states already struggling with huge budget deficits and revenue shortfalls.

State governors, in Biloxi MS for the National Governors Association meeting, expressed bi-partisan disapproval of the plans.

“I think the governors would all agree that what we don’t want from the federal government is unfunded mandates,” said Gov. Jim Douglas of Vermont, a Republican, the group’s incoming chairman. “We can’t have the Congress impose requirements that we are forced to absorb beyond our capacity to do so.”

The House plan would pay for all of the costs of new enrollments and expand Medicaid the least (11%). The Senate version, however, would expand it the most (up to 20%) and would only pay full costs for 5 years. And the Senate’s answer to the states about how to fund the mandate?

Go into debt, of course:

One of the proposals being considered by the Finance Committee would encourage states to issue bonds to cover the costs of expanding Medicaid. Governors in both parties revolted, trumpeting their opposition in a conference call last week with Senator Max Baucus, the Montana Democrat who leads the committee.

The point is that not all costs are being surfaced when the total cost of this bill at the federal level is all that is cited. The House bill, for instance, would cost an estimated $438 billion over 10 years. I want to emphasize the word “estimated” and remind readers that there has never been an estimated cost I’m aware of that has come in on or under the projection.

Of course the Senate version, with expanded coverage, would cost more and shift the cost to states in 5 years. So you’ll not only be paying for this monstrosity at a federal level, but you can count on being tapped at a state level as well.

~McQ

Quote of the Day

It goes to Steve Chapman in his discussion of the government’s health care reform proposals and what they promise:

But efficiency is to government programs what barbecue sauce is to an ice-cream sundae: not a typical component.

Chapman also discusses the illusion of “competition” the reformers are pushing while outlining what real competition in the insurance field might actually look like (and, unsurprisingly it requires less, not more, government).

Make sure you RTWT.

CBO Says Federal Budget On Unsustainable Path (Is Anyone Surprised?)

I‘m not sure how often everyone has to be told, but here’s the warning again, just as Democrats attempt to pile another trillion plus dollars in federal health care spending (and debt). From the CBO Director’s blog:

Under current law, the federal budget is on an unsustainable path, because federal debt will continue to grow much faster than the economy over the long run. Although great uncertainty surrounds long-term fiscal projections, rising costs for health care and the aging of the population will cause federal spending to increase rapidly under any plausible scenario for current law. Unless revenues increase just as rapidly, the rise in spending will produce growing budget deficits. Large budget deficits would reduce national saving, leading to more borrowing from abroad and less domestic investment, which in turn would depress economic growth in the United States. Over time, accumulating debt would cause substantial harm to the economy.

I’m not sure how it can be said any more clearly and more succinctly.

The choices, as laid out in the paragraph above are fairly simple – cut federal spending dramatically or raise taxes (revenues) dramatically to meet the spending or your going to do “substantial harm to the economy”. Of course we also know that raising taxes dramatically would have the same effect. That leaves one option and, as is clear with the health care reform proposals, that’s nowhere near the table, is it?

Yet that’s the formula:

Keeping deficits and debt from reaching these levels would require increasing revenues significantly as a share of GDP, decreasing projected spending sharply, or some combination of the two.

CBO offers the following graph to illustrate the point of letting the status quo remain in place. Note that the second line coming off the actual/projected line – that’s the “extended baseline scenario” where absolutely nothing is changed and the budget, as projected, is executed. Disregard the first line for the moment.

slide2

What is important is to understand this:

The current recession and policy responses have little effect on long-term projections of noninterest spending and revenues. But CBO estimates that in fiscal years 2009 and 2010, the federal government will record its largest budget deficits as a share of GDP since shortly after World War II. As a result of those deficits, federal debt held by the public will soar from 41 percent of GDP at the end of fiscal year 2008 to 60 percent at the end of fiscal year 2010. This higher debt results in permanently higher spending to pay interest on that debt. Federal interest payments already amount to more than 1 percent of GDP; unless current law changes, that share would rise to 2.5 percent by 2020.

Now you’ve heard that, in various forms for years. But what does that mean to you personally – how does one put that in terms that mean anything to a taxpayer?

Well Jim Glass at scrivner.net has done that for us:

The national debt incurs interest that is paid with taxes. The interest rate on US debt is projected be about 6% annually in the long run, according to the Social Security Administration’s actuaries and other such governmental budget projectors. Six percent of one trillion dollars is $60 billion.

There are 80 million payers of income tax in the US. (If that seems low for a population of 300 million remember that 47% of all “tax units”, 70 million potential taxpayers, pay no income tax or receive refundable tax credits from the government.)

Now $60 billion divided by 80 million taxpayers equals $750 per taxpayer — so each trillion dollars of the national debt costs the average taxpayer $750 per year, every year that the debt is carried, forever.

So for every trillion in debt the federal government puts us, we owe $750 per tax payer in interest alone.

Jim extends his example to what the chart above depicts:

As of the end of last year the government’s outstanding explicit and implicit debt was $64 trillion. Add another year’s interest on that, plus this year’s $1.8 trillion deficit, and we will be well over $66 trillion at the end of this year. Which creates an explicit and implict annual interest liability to just carry the debt of more than $49,000 per taxpayer.

Yet we have Joe Biden claiming we have to spend money to avoid bankruptcy – and there are people out there who believe him.  As Jim points out:

As of today most of that is implicit (for unfunded Medicare liabilities, etc.) but every year from now on (as more seniors retire and start collecting Medicare, etc) more of the debt will shift from being implicit to explicit, requiring cash tax collections to pay for it.

And the same entity which has put the country in this shape running a health care system, now wants the rest of it with the stated goal of cutting costs.

If you’re gullible enough, given the facts above, to fall for that, I have to question your critical thinking abilities. In fact, you might want to consider the chart above again and pay attention to the top line coming off the actual/projected line – that’s likely what our debt will look like if you hand over health care to the federal government.

It is very close to fish or cut bait time for the people of the US – we have got to realize, very quickly, that in fact,  we are on the verge of bankruptcy and what that buffoon Biden says is just abject, unthinking nonsense.

Either cut government spending – drastically – or go under. Those are your choices.

~McQ

Health Care Warning Bells

Just a few of the gems beginning to come out of the Democratic health care reform proposals.

Keith Hennessey wonders if the Democrats really want to tax the uninsured because as the bill is structured a) not everyone will have insurance and b) not everyone will be able to afford it meaning c) they pay a tax. He gives 2 examples:

* Bob is a single 50-year old non-smoking small business employee who makes $50K per year before taxes and does not have health insurance.
* Bob cannot afford a $1,600 bare bones health insurance policy, much less a $3K — $5K policy.
* Bob would get no subsidies under this bill, and his employer would face no penalty for not providing him with health insurance.
* Bob would end up without health insurance and would have to pay $1,150 more in taxes.

Now, what you can expect is not that Democrats would stick with the provisions of the bill, but instead they’d find some way to fold Bob into the program further raising the cost.

Same with Freddy and Kelsey:

* Freddy and Kelsey are a 40-year old couple with two kids. They own and run a small tourist shop in Orlando, Florida.
* They are the only employees, and earn a combined $90K per year.
* They cannot afford even an inexpensive health insurance plan, and so the House bill would make them pay $2,050 in higher taxes.

So given those figures (and be sure to read the whole post by Hennessey) and the estimate of 8 million falling into this category, obviously the bill will cost more than projected.

Second point.

When we first saw the paragraph Tuesday, just after the 1,018-page document was released, we thought we surely must be misreading it. So we sought help from the House Ways and Means Committee.

It turns out we were right: The provision would indeed outlaw individual private coverage. Under the Orwellian header of “Protecting The Choice To Keep Current Coverage,” the “Limitation On New Enrollment” section of the bill clearly states:

“Except as provided in this paragraph, the individual health insurance issuer offering such coverage does not enroll any individual in such coverage if the first effective date of coverage is on or after the first day” of the year the legislation becomes law.

So we can all keep our coverage, just as promised — with, of course, exceptions: Those who currently have private individual coverage won’t be able to change it. Nor will those who leave a company to work for themselves be free to buy individual plans from private carriers.

While assuring everyone that the same choices we now have would still in the system, this was discovered a mere 16 pages into the 1,000 page monstrosity. I’m sure there are other gems to be had in there as well. But the obvious point here is this puts people who make the choice, for instance, to go into business for themselves, in a situation where they are unable to buy health insurance from a private carrier, whether they want too or not. Of course, that will go a long way toward killing any private market in that niche of the insurance industry. And where will these people eventually end up? On a subsidized public plan, of course.

If that’s not bad enough, there’s the planned expansion of Medicaid. What the federal government plans to do is expand insurance coverage under Medicaid by 11 to 20 million people depending on which percentage above the poverty rate the final bill has. But states pay a large portion of Medicaid expenses. The House version calls on the fed to pick up all the expenses while promising to enact big savings in the program. The Senate version has the fed paying the full freight for 5 years. The latter is more likely to be the version that would pass simply because they can hold the “cost” numbers down a bit by doing so.

But not so in the states where the mandated expansion of Medicaid will end up having to be funded by each state’s taxpayers.

Keep these in mind as you hear cost figures bandied about by the blowhards on the Hill. They give used car salesmen a bad name.

~McQ

$1,000,000,000,000

Have you ever wondered how much a trillion dollars really is?  Have you ever tried to get your head around that number?

Well here’s a handy measure.  If you were in the aircraft carrier buying business you could buy 222 Nimitz class carriers.

nimitz9

Or you could just give every man, woman and child in the US $325.50 each year for 10 years.

Yeah.

It’s one hell of a lot of money.

And if you only think its going to cost a trillion when the government gets into health care, I have a few hundred Nimitz class carriers you might be interested in.

~McQ