CBO: Health care reform to increase federal cost

Report threatens Obama overhaul plan

Congress' budget watchdog warned Thursday that Democrats' health care bills would not lower skyrocketing costs and would drive up government spending, undermining one of President Obama's chief arguments for the overhaul.

Congressional Budget Office (CBO) Director Douglas Elmendorf said the plans already released by the House and Senate would keep costs rising at an unsustainable pace, fueling criticism from Republicans and some conservative Democrats that the overhaul will bankrupt the country.

"Today's CBO testimony should be a wake-up call," said Senate Minority Leader Mitch McConnell, Kentucky Republican. "Instead of rushing through one expensive proposal after another, we should take the time we need to get things right - especially at a time when hundreds of thousands of Americans are losing jobs every month."

Meanwhile, a bipartisan group of senators on the Finance Committee ended negotiations for the week without a piece of legislation, putting the aggressive timetable sought by Mr. Obama and Senate leaders in doubt.

House Speaker Nancy Pelosi, California Democrat, criticized the CBO analysis for not calculating the savings from prevention and wellness measures in the bill that proponents say would promote a healthier population.

Still, she said, Congress will look for more ways to keep down costs, which White House officials predicted will alleviate the budget director's assessment.

"I think we can bend the curve more. I think that we definitely can," she said. "And that is what I think we should try to do."

The verdict from CBO, Congress' nonpartisan accountant, also underscored objections from the House's conservative Blue Dog Democrats, whose break with Democratic leaders last week over the high cost of the plan stalled attempts to quickly advance the bill.

Democratic leaders are struggling to placate the faction, which has enough members on the Energy and Commerce Committee to kill the measure.

The Blue Dogs, a group of more than 50, issued a joint statement Thursday pledging its commitment to health care reform but putting Democratic leaders on notice that it is watching every penny.

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Public wealth won’t cure public health

The statist establishment would love a single-payer health-care system like Canada's if it were politically achievable. Barack Obama said that if we were starting from scratch, single payer is what he'd back. But, thankfully, Americans are still libertarian enough to cringe at turning the medical system entirely over to government.

So with single payer out of reach, the fans of government control have grabbed for second best: the "public option." This would be government-run health insurance that would "compete" with private insurance. (It wouldn't compete fairly because it could do something no private firm can do: milk the captive taxpayers.) But the public option is proving hard to get. Even some Democrats are nervous about it.

What's a statist to do? Leading Democrats in the Senate say the answer might be nonprofit health cooperatives. Sen. Charles Schumer wants some method "to keep the companies honest," and if the "public competitor" can "do those things in a co-op form, I think we're open to it."

One sign that this may be the way things are heading is that the New York Times, the mouthpiece of the statist establishment, ran a front-page article last week that begins with glowing praise for a co-op where doctors have lots of time to spend with patients because of its "collaborative model of primary care." Among the media it's an article of faith that the "collaborative model" is more consumer friendly than a profit-seeking business.

The Times connects the dots in case anyone missed the point. "On Capitol Hill, those innovations have made Group Health a prototype for a political compromise that could unclog health care negotiations in the Senate and lead to a bipartisan deal. ... [T]he Senate Finance Committee seems poised to propose private-sector insurance cooperatives ... as its primary mechanism for stoking competition and slowing the growth of medical costs."

Give me a break. Since when is government needed to stoke competition? Competition is what happens when government lets people alone. I defy anyone to give me an example of lack of competition that doesn't have its roots in government intervention.

Since co-ops are nonprofit organizations owned by their members, the Times' story subtly implies that the profit motive is responsible for the absence of competition and higher medical costs. But that's ridiculous. In a free market without government barriers to entry, it's the quest for profit that produces competition and lower costs.

If health cooperatives were really more efficient and innovative, wouldn't they be copied all over the country? That's how the market works. When someone comes up with an innovative way of doing business, it is quickly imitated and improved on. But buried late in the Times story is the revealing fact that the co-op is "a rare survivor among the hundreds of rural health insurance cooperatives."

Hello? Don't the Times editors see the disconnect? If co-ops worked well, today there would be thousands of them. Why should taxpayers fund a method of delivering health care whose success is "rare"?

The newspaper story made another point that is a favorite of the policy elite: Preventive care will save tons of money. If that's true, there is nothing (but government) to keep people from implementing that principle. But is it true?

This seems to be one of those things we know that isn't so. I take Lipitor. The drug may extend my life. But this doesn't lower my health-care costs. Years of pill-taking increases costs. If the pill works, I may live long enough to get an even more expensive disease. And maybe I, like millions of others, take Lipitor unnecessarily because we would never have had heart attacks. We then spend more, not less, on health care.

Health-care expert John Goodman of the National Center for Policy Analysis says there are "literally hundreds of studies from over the past 40 years that show preventive medical services usually increase medical spending ... Contrary to popular belief, checkups for children and adults do not save the health care system money."

If the policy elite really wanted cost-cutting competition, they would deregulate medicine. No one has ever found a better way to stimulate competition than freedom.

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The truth about health care reform

Hidden within the language of the House Democrats’ Health Care Bill is a provision that would effectively destroy the market for private health insurance:

It didn’t take long to run into an “uh-oh” moment when reading the House’s “health care for all Americans” bill. Right there on Page 16 is a provision making individual private medical insurance illegal.

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.

In other words, if this bill passes, you would be able to keep your current health insurance as Obama promises, but you wouldn’t be able to make any changes to it beyond adding or deleting new dependents, and the insurance company wouldn’t be able to increase premiums for specific risk groups without raising everyone’s premiums by the same amount, and they won’t be able to accept any new customers under the existing plan. Insread, they’d have to offer plans that comply with the rules set forth in the Democrats’ bill.

You can read the language for yourself, just go page 16.

Ed Morrissey is spot-on in describing what the impact of this part of the legislation would be:

[It] will have the effect of forcing millions of people into the public plan whether they want it or not. Even worse, if insurers get barred from attracting new customers — which this clause outlaws — then they will eventually see their rolls drained, thanks to the natural flow of the market as employers drop plans and skip the expense of offering medical insurance. It won’t take long at all for insurers to exit the market and leave the field for just the public plan, which will automatically get the customers of each individual insurer as they close up shop.

Does this bill outlaw private insurance? Literally, no, but in practical terms, it makes it an endangered species and creates an American single-payer system by default.

The good news ? It looks like the Blue Dog Democrats are joining Republican efforts to fight the worst parts of Obamacare:

Centrist Democrats are threatening to oppose their party’s healthcare legislation unless House Speaker Nancy Pelosi (D-Calif.) accepts changes that make the bill more to their liking.

Seven Blue Dogs on the House Energy and Commerce Committee have banded together to draft amendments that they’ll co-sponsor in the committee markup, which starts Thursday. Rep. Mike Ross (D-Ark.), the Blue Dogs’ point man on healthcare, says if those changes aren’t accepted, they’ll vote down the bill.

“We cannot support the current bill,” Ross said. “Last time I checked, it took seven Democrats to stop a bill in Energy and Commerce.” …

Blue Dogs think the bill fails to do enough to reduce healthcare costs, jeopardizes jobs with a fee on employers that don’t provide health insurance, and would base a government-run healthcare plan on a Medicare payment system that already penalizes their rural districts.

Here’s hoping that they can stop this monstrosity because, if it passes, it’s game over.

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A sign of things to come?

Remember when Massachusetts overhauled its health care system? It wasn’t too long ago. Two thousand and six (AD) to be precise. Well, the utopian project is now forcing its passengers to brace for impact as it experiences potentially terminal turbulence due to out of control costs associated with the massive entitlement program.

The Commonwealth’s Medicaid program, called MassHealth, is what America’s government-run health care could look like if the administration gets its wish and the new America’s Affordable Health Choices Act, introduced yesterday by Speaker Pelosi and other top House Democrats, passes Congress.

We’ll know sometime this fall—most likely October if things go according to Mr. Obama’s plans—whether or not the trail of red ink leading out of 1600 Pennsylvania Avenue becomes a fully-paved road. In the meantime there are some staggering vitals you should know about the pending legislation’s microcosm.

The Bay State’s landmark health care bill enactment has caused more headaches than breakthroughs. At the root of the plan are tax hikes, employee and employer mandates, a council that makes decisions on benefits, community rating mechanisms to determine care and a full-fledged Trojan Horse public-option.

The result: MassHealth is adding sharply to the Commonwealth’s budget shortfall. As Alexander Green of the Examiner points out,

“While the commonwealth brags about ‘closing the $5 billion budget gap,’ doing so involved $305 million in Medicaid cuts. Even worse, the vast majority of that money came in federal reimbursements, so the Commonwealth’s net savings are only $119 million, or 39% of the lost benefits.”

And that’s only for starters. Green adds,

“Even less impressive is the fact that $1.657 billion needed to “close the gap” came from the federal government’s American Recovery and Reinvestment Act.”

Now, as reported by the New York Times, Boston Medical Center, a hospital that patients thousands of Massachusetts’ poverty-stricken residents, sued its employer yesterday, charging that

“[i]t’s costly universal health care law is forcing the hospital to cover too much of the expense of caring for the poor.”

But rapidly rising costs have caused centers such as the BMC problems beyond repair. For instance, as the report indicates, the state employer only reimburses BMC 64 cents for every dollar it spends on treating the poor. Although the number of uninsured patients is now down to 10% (levels were at 20% pre-enactment), many more of the hospitals patients are insured through Medicaid or Commonwealth Care, the state-subsidized insurance program for low-income residents. BMC has accumulated a $38 million deficit for the 2009 fiscal year, its first loss in five years. And,

“The suit says the hospital will lose more than $100 million next year because the state has lowered Medicaid reimbursement rates and stopped paying Boston Medical ‘reasonable costs’ for treating other poor patients.”

The report makes no mention of the rationing of care—no doubt precursive to the losses—that has since taken place, but one can grimly imagine. But some, like Elaine Ullian, the hospital’s CEO, still hold out hope.

“We filed this suit more in sorrow than in anger. We believe in health care reform to the bottom of our toes, but it was never, ever supposed to be financed on the backs of the poor, and that’s what has happened in Massachusetts.”

Reading between the lines it is rather clear what Ms. Ullian is trying to say: that the deal was suppose to put the burden on the rich folk. But Ms. Ullian misses the boat completely. Mounting deficits go hand in hand with such a system. One needs to look no further than the whalesharks of the Great Society, Medicare and Medicaid. Thus, it might not be long before the Massachusetts’ experiment crashes.

If so, don’t say we didn’t warn advocates of ObamaCare.

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