Observations for 21 Mar 10
In this podcast, Bruce, Michael and Dale discuss the health care reform vote. The direct link to the podcast can be heard at BlogTalkRadio.
The intro and outro music is Vena Cava by 50 Foot Wave, and is available for free download here.
As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here. For podcasts from 2005 to 2009, they can be accessed through the RSS Archive Feed.
On the verge
What we’re on the verge of, at the moment, isn’t yet clear, but after today, this health care reform bill will either be law or be dead.
Unfortunately my sneaking suspicion is it will be law and we’ll all be the less free because of that. The rumor of a Stupak deal (via Executive Order no less – can’t wait to hear how that will actually work) has me to the point of figuring the deal is done.
Debate is now underway on the floor – not that it is really debate (it is more like an announcement of positions) nor will it change any minds.
There have been a number of pronouncements made concerning this bill. One of my favorites is “it will fundamentally change the relationship between the people and the government”.
No it won’t. There’s nothing fundamental about the change this bill will bring. It simply expands on the fundamental change that was introduced in the progressive era, was further expanded under the New Deal and has yet to be successfully rolled back.
Given the nonsense about helping reduce the deficit when it is clear that it will add to it dramatically, the one thing it may do is hasten the demise of the welfare state that’s been cobbled together here, but even that’s still a way off.
What it is doing and has done is awaken at least a portion of the population to what has been happening much more slowly and incrementally over the past decades. And because of what is being taken over, something which is a very personal and important part of people’s lives, it will most likely keep the attention of a good portion of them. That’s especially true as the law of unintended consequences begin to take hold and those doctors people like aren’t available anymore (or retire) and that plan they love isn’t available because their employer cut back to avoid the tax or dumped them into another health care plan altogether.
I keep seeing the claim that Democrats are looking at the long game on this one and are willing to sacrifice short term to bring the largest entitlement in most of our lifetimes to fruition. I don’t believe that for a second. There’s a much easier and majority preserving way of passing health care reform. So you have to believe that this isn’t all about health care or reform. The bill in front of Congress is a pretty radical bill which is not at all liked by many of the rank and file Democrats. No, this is a process and a bill being driven by the Democratic leadership – a leadership as radical and as leftist as any we’ve had in 80 years. This is phase III of an agenda begun in the progressive Wilson administration, expanded in the Roosevelt and Johnson eras and now again gaining legs, even limited ones, in the Obama administration.
Incremental collectivism designed to concentrate more and more power in central government.
The change isn’t fundamental at all, but the effect is cumulative and the only question is whether or not we’ll reach the stage where it collapses under its own weight before they successfully take over everything.
~McQ
Democrats drop “deem and pass” – amendment package may be key vote
The Democrats have decided not to use the “Slaughter solution” also known as “deem and pass” during tomorrow’s vote on health care reform. Apparently there will be an up or down vote on the two bills, i.e. the Senate version of HCR and to pass a package of amendments to the law.
Problem – or not – does it matter what sequence they’re done in?
The Republicans are claiming you can’t amend a law that isn’t a law yet. In other words, they’re claiming that unless the Senate HCR bill is signed into law, it can’t be amended. And Democratic House members just don’t trust the Senate enough to pass that first. Thus the proposed “deem and pass” attempt.
However, per Byron York, sequencing really isn’t as big a problem as you may think it should be (i.e. if you’re a logical person who thinks the GOP argument makes logical sense, you’re obviously not used to living the the same world as Congress):
I just talked with a Republican rules expert, and it appears that there is nothing in the rules of the House that will prevent Democrats from scheduling the vote for the amendments package before the vote on the Senate bill itself — that is, voting to amend the law before it becomes law.
“As a technical matter of the rules of the House, you can pass individual bills in any order you want,” says the expert. The expert said Republican Rep. Joe Barton, who argued that the House could not amend the Senate bill before it became law, was making an “integrity-based” argument based on what should be done. “But as a strict construction matter of the House rules, there’s no bar” to doing what the Democrats intend to do, the expert said.
“To quote Mr. Hastings,” he concluded, “they can make it up as they go along.”
And they are. Given this I expect the first vote to be on the package of amendments tomorrow. If that doesn’t make it (and it may not – stay with me here), the next vote on the HCR bill will be moot. If it makes it, then I would expect the HCR bill to make it although it will probably be very close.
Why do I think the package of amendments might not make it? Well if they vote that down, then they don’t have to be on record with the HCR vote – they (Democrats) can vote “no” on HCR in good conscience. Excuse? Without the package of amendments it was unacceptable.
That’s if it goes in the sequence I think it might tomorrow.
~McQ
More analysis of the HCR bills and CBO numbers
Megan McArdle takes a first look at the bill and CBO numbers and gives her preliminary assessment. I want to specifically discuss a few of them:
1) Thanks to reconciliation instructions, they needed to improve the budget impact by at least $1 billion in the sidecar. They improved it by exactly $1 billion. Which goes back to what I’ve now said several times: the CBO process has now been so thoroughly gamed that it’s useless.
That’s the point I’ve been attempting to make for some time – CBO is limited to a 10 year window when it “scores” a bill. When you look at the graph below, you see the literal gaming that has taken place to get the numbers needed to make this seem palatable.
That brings us to a second point raised by McArdle:
2) The proposed changes increase spending dramatically, most heavily concentrated in the out-years. The gross cost of the bill has risen from $875 billion to $940 billion over ten years–but almost $40 billion of that comes in 2019. The net cost has increased even more dramatically, from $624 billion to $794 billion. That’s because the excise tax has been so badly weakened. This is of dual concern: it’s a financing risk, but it also means that the one provision which had a genuine shot at “bending the cost curve” in the broader health care market has at this point, basically been gutted. Moreover, it’s hard not to believe that the reason it has been moved to 2018 is that no one really thinks it’s ever going to take effect. It’s one thing to have a period of adjustment. But a tax that takes effect in eight years is a tax so unpopular that it has little realistic chance of being allowed to stand.
This proposal with the reconciliation package actually costs more than the previous version. And, she’s dead on right about the tax provision which will most likely never be enforced. That, of course, would add 32 billion to the net cost of the bill pushing it to over 826 billion. That’s not all:
3) As I expected, the size of the magic asterisk–the modern equivalent of David Stockman’s infamous “savings to be named later” in the Reagan budgets–has had to be beefed up to offset the new spending.
Go back and look at the chart here. She’s talking about the last line, “Other Effects on Tax Revenues and Outlays”. No specifics. Assumed savings of 44 billion to help arrive at the net 794 billion. Will there be any savings? Who knows, but given government’s history in that regard – the “magic asterisk” whose saveing never seem to actually materialize – probably not. So when you add that to the tax that’s never taxed, your net is now $860 billion over 10 years.
Add the 200 to 250 billion “doc fix” not in the bill and where are we “net”? Over a trillion dollars hidden in a gamed 10 year period.
She concludes:
I think this is a fiscal disaster waiting to happen. But no one on the other side cares, so I’m not sure how much point there is in saying that any more.
I think she’s right, but it is well worth recording the sentiment though. This has devolved into an exercise in power, politics, party and the presidency. It has little if anything to do with what’s best for the other “p” – the people.
~McQ
Your morning Health Care Reform update
Well the dice are cast and the only thing we’re waiting for is to see if Democrats come up with their point or crap out. Right now, I’d have to say it’s inching toward making their point – but I’m not sure they’re going to end up considering that to be a good thing in the near future. What’s caused me to reconsider my thinking about whether or not this will pass is yesterday’s vote on the Slaughter rule or “deem and pass”. In a straight party-line vote, 222 Democrats (6 more than they need to pass HCR) said yes to “deem and pass”. That says that the bulk want this monstrosity to pass and are looking for the appropriate cover to make it happen. So all whip counts aside, there are enough votes to make it happen, they just don’t want to be on record saying so – thus yesterday’s vote.
If they don’t use the rule, I think the bill may fail. If they do, the state of Virginia is lined up to take the Congress to court with a Constitutional challenge. Although the court has been loath to rule about Congressional procedures for the most part, this particular rule flies directly in the face of a Constitutionally mandated duty to record the “Yeas and Nays” in “the journal”. That says to most who read it that votes must be recorded by name.
That aside, the numbers from the CBO are being widely panned as misleading. Those aren’t the CBO’s numbers – they simply deal with what they’re given – they’re the numbers from the pending bill and reconciliation package. The Weekly Standard gives them some pretty good context that all can understand:
[It] is like the introductory price quoted by a cell phone provider. It’s the price before you pay for minutes, fees, and overcharges — and before the price balloons after the introductory offer expires.
If you need a more graphic representation, this will do:
Of course, if you take the decade of 2014 to 2024 into account, the “introductory” offer doesn’t at all look so rosy or good.
Maggie’s Farm has a great round up (and is where I found the graphic). Good quotes from some of the analysis being done on both tdhe numbers and the bill.
Keith Hennessey adds some analysis here.
The Heritage Foundation also looks at the bill and taxes involved. Here are three effects they find within the bill and reconciliation package:
New Middle-Class Taxes: Throughout his campaign, President Barack Obama promised he would not raise taxes on American households making less than $250,000. The Senate bill shatters that promise. For starters, just look at the reason Trumka went to the White House yesterday: the excise tax on high-cost health insurance plans. This tax would overwhelmingly hit middle-class taxpayers. Taxes on prescription drugs, wheel chairs and other medical devices would also be passed on to all consumers, hitting the lower- and middle- classes the hardest.
Increased Health Care Costs: The Senate bill manifestly does nothing to bend the health care cost curve downward. According to the latest CBO report, the Senate bill would actually increase health care spending by $210 billion over the next 10 years. This follows a previous report from the President’s own Center for Medicare and Medicaid Services (CMS) showing the Senate bill would result in $234 billion in additional health care spending over 10 years.
Increased Health Insurance Premiums: The President initially promised that Americans would see a $2,500 annual reduction in their family health care costs. But under the Senate bill, premiums would go up for millions of Americans. In fact, according to the CBO, estimated premiums in the individual market would be 10–13 percent higher by 2016 than they would be under current law.
In fact, further commenting on the last paragraph, in a letter to Sen. Olympia Snowe, the CBO has said those premium increases would be significant. Identifying the most basic level of health care coverage as “Bronze level”, the CBO’s Douglas Elmendorf said:
“Overall, CBO estimates that premiums for Bronze plans purchased individually in 2016 would probably average between $4,500 and $5,000 for single policies and between $12,000 and $12,500 for family policies,” he wrote.
If you can divide by 12, that’s not in anyway cheaper than health care is now. And that’s for the bare minimum which covers an estimated 60% of cost.
Cost containment? Lower premiums? Cheaper health care costs?
Let’s review the promise one more time: The Democrats promise more people on the insurance roles, no cap on payouts, sicker people on the insurance roles and it’s all going to cost less.
I don’t know where you’ve been all your life, but I’ve existed in the real world where experience tells me that such promises are indicative of scam of the worst kind. Nigerian emailers score on the same sort of scam daily. It’s a crying shame when it is your government that is involved in the scam. But, given Medicare, Medicaid and Social Security, it’s not unexpected.
~McQ
Health care reform: Apparently the CBO isn’t cooperating
If Democrats want to have a vote on the bill this week, after a promised 72 hours availability on-line before the final vote, they have until tomorrow afternoon if they plan on voting Saturday. But Congressional Quarterly is reporting:
House Democratic leaders are still struggling to produce a final health care overhaul bill at an acceptable official cost estimate, but Majority Leader Steny H. Hoyer said Tuesday they continue to plan a final vote this week. House leaders were to huddle late Tuesday afternoon, following a noon session of the full Democratic Caucus. There were reports they are having trouble drafting a bill that meets their budgetary targets….
Rank-and-file Democrats did not talk about the details, but said that the CBO scores had come up short. “They were less than expected” in terms of deficit reduction, said Rep. Gene Green, D-Texas, who plans to vote for the bill.
In reality it isn’t the Congressional Budget Office that is coming up short, but the cost of the bill they’re proposing as a fix. As the American Spectator reports:
There are several things that Democrats are up against when it comes to the CBO score. The most important is that, based on reconciliation instructions, the “fix” bill must be shown to reduce the deficit by at least $1 billion. The challenge is, that’s after assuming that the Senate bill is law. In other words, the reconciliation bill can’t claim any of the deficit reduction from the Senate bill, but rather it must reduce the deficit relative to the Senate bill. Yet the changes that are being talked about will cost a lot of money. This includes eliminating the “Cornhusker kickback” and offering enhanced Medicaid subsidies to all states, increasing subsidies for the purchase of insurance, eliminating the so-called “donut hole” on Medicare prescription drug benefits, and whatever else they put in the bill. At the same time, delaying until 2018 the enactment of the “Cadillac tax” would be scored as a reduction in revenue, and thus add further to the deficit. They’d have to make up the gap through tax increases as well as try to siphon “savings” away from the student loan bill.
Yes, the rumors about the inclusion of a full takeover of the student loan program by government appear to be true and it has been included in health care reform. Look, if they’re going to trash the Constitution and the legislative process this badly, they may as well go all-in. Their problem is going all-in has apparently cost them much more than they thought it would and thus they still don’t have an acceptable bill.
Most likely they’re going to tinker with this until they get what they want in a score. Again keep in mind that this is reform which collects taxes for 10 years but only spends for 6 (benefits in full don’t kick in until 2014) thereby giving the appearance of bending the cost curve down within the 10 year window the CBO is statutorily limited to look at (and shooting the cost curve up after that). I have every confidence that House Democrats can come up with the same sorts of accounting tricks and nonsense that are in the original bill to get the score they want from CBO. But can they do it this week?
Everyday this is delayed means House Democrats are one day closer to the mid-terms and more and more Democrats are saying “no” to the original bill.
~McQ
Obama’s market defying “magic” health care reform proposal
The media has essentially played up the attempt at bipartisanship and the call for immediate action from President Obama’s health care reform proposal yesterday given with the usual background of lab coated “doctors”.
The two things stressed by the media are nothing new. In fact, nothing in the proposal is nothing particularly new. But it does provide, in a distilled example, why it is so much blarney. But you have to get to the proposals themselves to understand that. So:
Essentially, my proposal would change three things about the current health care system:
First, it would end the worst practices of insurance companies. No longer would they be able to deny your coverage because of a pre-existing condition. No longer would they be able to drop your coverage because you got sick. No longer would they be able to force you to pay unlimited amounts of money out of your own pocket. No longer would they be able to arbitrarily and massively raise premiums like Anthem Blue Cross recently tried to do in California. Those practices would end.
So, first no pre-existing conditions, no ability to drop or deny coverage and unlimited payouts. But no ability to raise premiums (obviously without the fed’s say so) to account for the increased cost. A sure fire formula for financial health. Bring the sickest or those with the most chronic diseases on board, give them unlimited payouts and have no mechanism for recovering the cost they bring through premium increases.
Of course he’d have you believe this will work just fine in any government run system as well (the secret there is to cut payments to medical care providers). This part of the proposal should be known as the “big lie” because just like the spending rate of the US government at this point, it is an “unsustainable” program that will see private insurance go out of business within a decade or so.
On to number two:
Second, my proposal would give uninsured individuals and small business owners the same kind of choice of private health insurance that Members of Congress get for themselves. Because if it’s good enough for Members of Congress, it’s good enough for the people who pay their salaries. The reason federal employees get a good deal on health insurance is that we all participate in an insurance marketplace where insurance companies give better rates and coverage because we give them more customers. This is an idea that many Republicans have embraced in the past. And my proposal says that if you still can’t afford the insurance in this new marketplace, we will offer you tax credits to do so – tax credits that add up to the largest middle class tax cut for health care in history. After all, the wealthiest among us can already buy the best insurance there is, and the least well-off are able to get coverage through Medicaid. But it’s the middle-class that gets squeezed, and that’s who we have to help.
The reason federal employees get a good rate is they number over a million and can do what the rest of us can’t – buy their insurance from whomever they wish. However, individuals only buy 6% of health insurance and small businesses don’t bring those sorts of numbers to a pool. Essentially Members of Congress exploit the buying power of the high number of federal employees and with a few twists of their own, get insurance not available to the general public because of laws they’ve written. Unless there is the ability to sell insurance across state lines where insurance companies actually compete for business, that’s not going to happen with his proposal. And, by the way, there’s nothing in the Senate bill which includes the mechanism for these “exchanges”, and it is that bill he’s calling for to be passed. So this claim is all smoke and mirrors.
Notice too he plans on pushing a good number of people onto Medicaid – a government system funded and run by the states. As we all know, financially, the states are in excellent shape and this burden won’t have any effect on their future financial stability, will it?
Obama goes on:
Now, it’s true that all of this will cost money – about $100 billion per year. But most of this comes from the nearly $2 trillion a year that America already spends on health care. It’s just that right now, a lot of that money is being wasted or spent badly. With this plan, we’re going to make sure the dollars we spend go toward making insurance more affordable and more secure. We’re also going to eliminate wasteful taxpayer subsidies that currently go to insurance and pharmaceutical companies, set a new fee on insurance companies that stand to gain as millions of Americans are able to buy insurance, and make sure the wealthiest Americans pay their fair share of Medicare.
This is flat out disingenuous. A) no refusal, no payment caps, no premium increases, B) shoving people into Medicaid (thus it goes on state budgets) C) government subsidies. All for $100 billion a year? It will cost that much a year just to set up the bureaucracy.
And the benefits you get from this brilliance?
The bottom line is, our proposal is paid for. And all new money generated in this plan would go back to small businesses and middle-class families who can’t afford health insurance. It would lower prescription drug prices for seniors. And it would help train new doctors and nurses to provide care for American families.
You have to love the line, “all the new money generated in this plan”. It is the ultimate “something for nothing” scam. All these new benefits with no cost. In fact, as we eliminate pre-existing conditions, control what insurance companies can charge and require they pay unlimited payouts, we can expand Medicaid, lower prescription drug prices and train new doctors and nurses – and it’s all paid for.
Finally, my proposal would bring down the cost of health care for millions – families, businesses, and the federal government. We have now incorporated most of the serious ideas from across the political spectrum about how to contain the rising cost of health care – ideas that go after the waste and abuse in our system, especially in programs like Medicare. But we do this while protecting Medicare benefits, and extending the financial stability of the program by nearly a decade.
The eternal promise of every shady politician – “not to worry, we’ll just go after the 30% waste, fraud and abuse in the system we presently run to pay for all of this. We promise.” They never have and they never will. They don’t know how and if they do, they haven’t the capability to eliminate it or, apparently, make a significant dent in it. The problem has persisted at that level since the program’s inception. So have the promises. In the meantime they’ll do everything in their power to cripple the private insurance industry and eventually run them out of business.
And if there is a “biggest lie” in what he said yesterday, it is this:
Our cost-cutting measures mirror most of the proposals in the current Senate bill, which reduces most people’s premiums and brings down our deficit by up to $1 trillion over the next two decades. And those aren’t my numbers – they are the savings determined by the CBO, which is the Washington acronym for the nonpartisan, independent referee of Congress.
Yeah, if you don’t consider the double counting, removal of the “doc fix” and any number of cheap accounting tricks that ended up putting Enron execs in jail. Paul Ryan took care of that bogus claim during the health care summit – it is worth your while to review his work.
Those are the Obama “proposals”. They essentially mirror the Senate bill which I and many others consider to be an abomination. This was Obama’s 31 or 32nd speech on the subject. Nothing has changed and the lies and distortions remain pretty much the same.
We have to hope that there are enough Democrats in the House that see that bill as something they can’t support. Obviously that’s the case at the moment (or it would have passed by now). Keep the pressure on, because the victory has to be in the House. The reconciliation nonsense is moot if it never leaves the House.
~McQ
Podcast for 24 Jan 10
In this podcast, Bruce, Michael and Dale discuss the special election in Massachussetts, the dangers of hyperinflation, and Haiti. The direct link to the podcast can be found here.
The intro and outro music is Vena Cava by 50 Foot Wave, and is available for free download here.
As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here. For podcasts from 2005 to 2009, they can be accessed through the RSS Archive Feed.
Hail Mary
How scared are Senate Democrats that Martha Coakley will lose the special Senate seat election in Massachussetts tomorrow? This scared.
The White House and Democratic Congressional leaders, scrambling for a backup plan to rescue their health care legislation if Republicans win the special election in Massachusetts on Tuesday, have begun laying the groundwork to ask House Democrats to approve the Senate version of the bill and send it directly to President Obama for his signature.
Well, I’m sure if that’s gonna fly.
When the idea was suggested at a Democratic caucus meeting last week, Mr. [Bart] Stupak [D-MI] said, “It went over like a lead balloon.”
But, that was then. This is now.
Health Care Spending – The Government Is NOT The Answer, It’s The Problem
Morgen Richmond of Big Government points out a story that received very little coverage this week in the media. It had to do with a report released by the Centers for Medicare and Medicaid Services and its findings. Apparently, per CMMS, 2008 health care spending (the latest figures available) “slowed” when compared to 2007. In fact that slowed from 6% growth to 4.4% growth in 2008.
That, one would think, especially as health care reform is the hot topic, is newsworthy. But one has to believe that the reason it wasn’t found newsworthy has to do with the details of the report. The reason is that the details don’t support the premise that our health care spending problems lie in the private sector:
Because in a year where the growth rate in overall healthcare spending dropped by an unprecedented amount, federal spending on Medicare and Medicaid actually increased dramatically from the prior year.
Medicare by 8.6% in 2008 compared to 7.1% in 2007, and Medicaid by 8.4% compared to 6.1% in 2007. And Federal spending on the Children’s Health Insurance Program (SCHIP) increased by an even greater amount (13.4%).
In other words, the reduced growth rate in healthcare spending for 2008 was entirely due to reduced spending in the private sector. Which upon reflection really comes as no surprise since the private sector by its very nature must respond and adapt to market dynamics. As long as it has the flexibility to do so, unimpeded by government regulation.
Exactly.
Look again at those numbers. Think about the reduction in private health care spending necessary to offset those increases in federal health care spending to bring the overall number down to 4.4%. Private care and/or insurance are not the problem and giving more power to government is not the solution to lowering health care costs.
Another report that has been mostly ignored points to factors which will most likely see private sector spending continue to decline over the coming years. It is most likely being ignored because the solutions put forward are primarily market based solutions.
Given these facts, you are left to ponder the following question articulated by Richmond:
So a federal government which has never in history demonstrated one iota of ability to reign in spending can permanently add another 40+ million people to federal entitlement programs [and] [t]his is the silver bullet necessary to reduce costs?
Nope. No bullets at all, silver or otherwise. The government is shooting blanks, and a system that is ranked number 1 out of 191 in the world for “responsiveness to the needs and choices of the individual patient” (uh, isn’t that what good medicine is all about?) is about to be downgraded dramatically based on a collection of myths, half-truths and outright lies.
Comforting, isn’t it?
~McQ