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Kaiser Health News

 

The House Bill Could Have Been Avoided

November 08, 2009

By Douglas Holtz-Eakin

I watched Saturday night’s House vote with mesmerized horror. The good news is that it did not degenerate into a re-run of the vote for Medicare Part D — an all-night mixture of retail politics and Mafioso strong-arm tactics. Instead, Speaker Pelosi kept her brass knuckles hidden behind closed doors, the proceedings were dominated only by rhetorical excess, and the proceedings moved forward like clockwork.

Unfortunately, the remainder of the spectacle was a bit hard to digest. The most obvious problem is that this is a bad bill. While one might be tempted to write it off to a triumph of good intentions over good legislation, the House bill has too many transparent flaws to be defensible. Let us review:

(1) It does not bend the cost curve. As noted by the Congressional Budget Office, it does not reduce the pace of health care spending growth. Even worse, Administration actuary Richard Foster concludes that it bends the cost curve the wrong way. In this way, the Pelosi bill betrays the basic promise of health care reform: providing quality care at lower cost. No legislation should pass the Congress that does not meet this test.

(2) It is budgetarily dangerous. The bill sets up a new entitlement spending program that grows at 8 percent annually as far as the eye can see — faster than the economy will grow, faster than tax revenues will grow, and just as fast as the already-broken Medicare and Medicaid programs. It also creates a second new entitlement program — the so-called CLASS Act — that Senate Budget Chairman Kent Conrad correctly identified as a Ponzi scheme.

The United States is already living off the questionable generosity of China and other international lenders. The federal budget is already projected to run enormous deficits for the next decade, tripling the national debt by 2019. The Congress has already displayed no capacity to address Social Security, Medicare and Medicaid. Every member of Congress that supported this bill (as well as the American Medical Association and AARP who sold their integrity for this bill) should be writing a letter of apology to America’s children.

(3) It is budgetarily dishonest. One reason the Democrats were able to sell the bill is that it uses every budget gimmick and trick in the book: leave out inconvenient spending, back-load spending to disguise the true scale (the Senate Budget Committee minority estimates that the first 10 years of full implementation will cost $2.4 trillion — so much for $900 billion or less), front-load taxes, let inflation push up tax revenues, promise spending cuts that will never materialize … the list goes on. The only thing less transparent than the budget treatment was the process of developing the bill.

(4) It is economically dangerous. The bill has been sold as help for the uninsured, and the polling suggests that people are expecting relief in 2010. Instead, the bill will levy taxes and fees that simply cannot improve a precarious economic situation. It will undertake insurance market reforms that will raise the premiums of those that already have insurance, especially small businesses. As noted above, it invites a U.S. debt crisis. And the reality is that it offers no real insurance subsidies or expansions until 2013.

I could go on to dissect additional follies, but the basic point is simple: we need for our elected leaders to do better than this.

The second, and ironic, aspect of the proceedings was that they were probably also dangerous to the political health of Democrats. The bill is structured so that the first several years are nothing but bad news. Higher taxes, higher fees and misguided insurance reforms will not shower good news on America. No real sign of the misguided Medicaid expansions and debt-financed subsidies until 2013. It is a recipe for electoral backlash. As I watched, it kept running through my head: “What are these Democrats thinking? How could they get the pandering so wrong?”

The third and most troubling recurring aspect was the partisanship (although I personally can’t wait for the spectacle of Democrats’ claiming bipartisan support by cornering the single vote of Republican Ahn Cao). Republicans will now be dead-set on doing a u-turn. If so, the U.S. will achieve neither health care reform nor real health insurance reform and will have expended enormous political energy in the process. This is the worst of all outcomes.

It could have been so easily avoided. With the right leadership, a bi-partisan merger of the Republican alternative and the coverage expansions in the bill itself could have been augmented with real delivery system reforms. Alas.

Original Source: http://www.kaiserhealthnews.org/Columns/2009/November/110909DougHE.aspx

 

 
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