Manhattan Institute for Policy Research.
search  
 
Subscribe   Subscribe   MI on Facebook Find us on Twitter Find us on Instagram      
 
 
   
 
     
 

National Review Online

 

Three Strikes against Obamacare

December 08, 2009

By Paul Howard

The public option isn’t the worst thing about the Senate health-care bill.

Joseph Lieberman’s words, “I’m going to be stubborn on this,” must be giving Harry Reid heartburn.

Lieberman may caucus with the Democrats, but he’s more than willing to go his own way — especially when it comes to his staunch opposition to the “public option,” a proposed government-run insurance plan that would compete with private insurers. “Once the government creates an insurance company or plan, the government or the taxpayers are liable for any deficit that government plan runs, really without limit,” Lieberman told the Wall Street Journal.

Other moderate Democrats in the Senate, like Mary Landrieu of Louisiana and Ben Nelson of Nebraska, have made similar criticisms — but none as unequivocally as the junior senator from Connecticut.

So let’s all cheer Senator Lieberman on. There’s a legitimate concern that a public option could eventually use Medicare payment rates to undercut private-insurance premiums, gradually taking over the market. (Democrats insist that the public plan now in play could not work that way — but once it’s in operation, all bets are off. Medicare, after all, was never supposed to set hospital and physician payments — but it didn’t take long before that’s just what it was doing.)

But we should also be wary of a pyrrhic victory. Even if the public option dies, the Senate bill is riddled with fiscal gimmicks and heavy-handed regulations that will increase health-care costs, explode the deficit, and drive up insurance premiums for many people who have private insurance today.

STRIKE ONE
President Obama has promised that he will not sign a health-care bill that would cost more than $900 billion for ten years, and the CBO has scored the Senate bill under that price tag. But according to Jeffrey Anderson, a senior fellow at the Pacific Research Institute, just 1 percent of the ten-year costs of the Senate’s health bill falls in the first four years (2010–2013). Costs escalate rapidly starting in 2014. The minority staff of the Senate Budget Committee estimates the fully implemented cost of the Senate bill for the ten years 2014–2023 at close to $2.5 trillion.

STRIKE TWO
Over the summer, President Obama made a bold promise: “I won’t sign a bill that doesn’t reduce health-care inflation so that families as well as government are saving money.” In that case, the president should tell Harry Reid to head back to the drawing board.

The Congressional Budget Office predicts that, under the Senate bill, coverage costs for individual-insurance subsidies, Medicaid expansion, and tax credits to small businesses will rise at about 8 percent annually. Expansion of eligibility for Medicaid and SCHIP (the State Children's Health Insurance Program) under the Senate bill would thrust 15 million more Americans into a program that already costs over $300 billion annually.

To add insult to injury, the Senate bill would create another entitlement program on top of Medicaid and Medicare: the Community Living Assistance Services and Supports (CLASS) program, which will offer long-term-care insurance.

CLASS is supposed to be supported entirely through premiums, with no federal subsidies. However, the program is apt to attract sicker enrollees, because their premiums would be higher in the private market than premiums for healthy enrollees. But since these sicker enrollees will cost more to care for, there will eventually be intense political pressure for federal subsidies to keep the program going. The structure of the program would also allow Congress to use premium funds in the early years ($72 billion) to offset coverage costs for the uninsured — making the bill seem deficit-neutral.

Senator Nelson has called CLASS “a Ponzi scheme of the first order, the kind of thing that Bernie Madoff would have been proud of.”

STRIKE THREE
The Senate bill contains a version of insurance regulations currently in force in several states called community rating (charging everyone the same rate) and guaranteed issue (mandating that insurers sell to all applicants, regardless of health status). These policies have driven up insurance costs in every state they’ve been tried in, as younger, healthier applicants drop coverage rather than pay higher costs.

In a recent study for the Manhattan Institute on New York’s individual-insurance market, researchers Stephen Parente and Tarren Bragdon estimated that repealing these regulations could lower insurance premiums by 42 percent.

The Senate bill will drive up other insurance costs as well. Almost everyone would be required to buy expensive policies with limits on out-of-pocket spending, no caps on lifetime spending, and mandatory coverage for services that many consumers would not buy on their own, like orthotics. This is a recipe for health-care inflation.

AND YOU’RE OUT . . .
No one should lose sight of the fact that the Democratic leadership in both chambers of Congress is pushing a costly expansion of the welfare state with no real strategy for reining in costs. “The hope that health-care reform would take care of our budget problem has evaporated,” one Brookings expert recently admitted to the Washington Post.

Moderate Democrats like Joe Lieberman, Mary Landrieu, and Ben Nelson have (correctly) argued against the public option, and without their three votes Obamacare may never make it to a Rose Garden signing. But cutting out the ten pages of the Senate bill that would set up a government-run insurance plan won’t do anything to fix the problems in the remaining 2,060 pages.

Original Source: http://article.nationalreview.com/?q=ZmJiOTlhZjIyZjEwZjY1MDc5OWNmMzJiNTEyYzhlY2M=

 

 
PRINTER FRIENDLY
 
LATEST FROM OUR SCHOLARS

5 Reasons Janet Yellen Shouldnt Focus On Income Inequality
Diana Furchtgott-Roth, 10-20-14

Why The Comptroller Race Matters
Nicole Gelinas, 10-20-14

Obama Should Have Picked Ebola Czar With Public-Health Experience
Paul Howard, 10-18-14

Success Of Parent Trigger Is UnclearJust As Foes Want
Ben Boychuk, 10-18-14

On Obamacare's Second Birthday, Whither The HSA?
Paul Howard, 10-16-14

You Can Repeal Obamacare And Keep Kentucky's Insurance Exchange
Avik Roy, 10-15-14

Are Private Exchanges The Future Of Health Insurance?
Yevgeniy Feyman, 10-15-14

This Nobel Prize-Worthy Economist Figured Out How To Destroy Terrorism
Diana Furchtgott-Roth, 10-15-14

 
 
 

The Manhattan Institute, a 501(c)(3), is a think tank whose mission is to develop and disseminate new ideas
that foster greater economic choice and individual responsibility.

Copyright © 2014 Manhattan Institute for Policy Research, Inc. All rights reserved.

52 Vanderbilt Avenue, New York, N.Y. 10017
phone (212) 599-7000 / fax (212) 599-3494