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Michael Barone: The Trouble with Health Care Is Paying for It
The legislative process can also be a learning process, and as Congress considers health-care legislation — the latest act being the Senate Finance Committee’s vote in favor of Chairman Max Baucus’ bill, or “conceptual language” — we have been learning something useful. It’s that legislators would like to provide generous, even gold-plated health-insurance coverage to almost all Americans, but that no one wants to pay for it.
The learning process should have started last February, when Congressional Budget Office Director Douglas Elmendorf indicated that the CBO did not back the Obama administration’s assertion that preventive care would save money. But it still came as a shock when the CBO confirmed its preliminary finding in its June assessments of the cost of Senate Democrats’ bills.
This should have been obvious all along. Early screening can reduce the cost of treating a particular patient. But the costs of early screening add up when you test lots of people who will never need such treatment. So much for “bending the cost curve” down by preventive care.
Then House committees passed a bill financed in part by a “millionaire’s tax.” But freshman Jared Polis of Colorado, an entrepreneur, and 20 other House Democrats came out against that, on the reasonable theory that a tax on high-earners is a job killer in today’s economy. And tax increases on high-earners, thanks to creative accountants, never net as much revenue as static analysts like the CBO predict.
Baucus’ bill would impose $829 billion in added costs, financed by a variety of taxes and spending cuts that are just as dubious. One is a tax on so-called Cadillac health-insurance plans. But unions that have negotiated such plans are opposed, and House Democratic leaders are uninterested. Another is a tax on makers of medical devices that will be paid for by consumers. Critics have pointed out that most of these taxes will fall on people with ordinary incomes, far below the $250,000-plus moguls that President Barack Obama said would bear all of his tax increases.
Another Baucus tax is the penalties that would be paid by those who don’t buy health insurance. But the penalties in his bill are so low that many will choose to pay them and go uninsured, thus foiling the goal of lowering the uninsured percentage. As the insurers’ lobbying group has pointed out, this will increase premium costs for those who are insured — a form of tax on those behaving the way Baucus wants.
Then there are the Medicare cuts that supposedly would finance the Baucus bill. But this Congress can’t bind future Congresses, and Congresses controlled by both parties have regularly canceled projected cuts in reimbursement rates. Democratic leaders have made this easier by exempting such actions from its pay-go rules.
So as Michael Cannon of the Cato Institute points out, “Universal coverage is so expensive that Congress can’t get there without taxing Democrats.” So when those taxes are cut on low- and middle-earners, there’s not enough money to finance the deals the White House has been making with health-care interest groups.
The insurers and medical-device people are squawking now — look for more squawking from pharmaceutical companies, hospitals and physicians’ groups when they get targeted. House Speaker Nancy Pelosi has made it clear that she doesn’t feel bound by deals the White House has made.
The Senate Finance Committee got bipartisan cover from Maine Republican Olympia Snowe, but she says she was just voting to “continue the process” and won’t necessarily vote for the bill Senate leaders will meld from the Finance and Health committee versions.
So the learning process may not be over. We know now that it costs a lot of money to pay for insurance policies with expanded coverage for an expanded number of people, and we know that no one wants to pay the price.
We may be in the process of learning something else, which is that insurance coverage that further insulates patients from costs results in unanticipated increases in health-care spending. Yes, it bends the cost curve, but in the wrong direction. That’s what has happened with the much-praised Massachusetts system.
Democratic leaders may still have the votes to jam something through. In which case it could, as the Atlantic’s Megan McArdle predicts, “spin out of control and eat a gigantic hole in the deficit.” Who’s going to pay for that?
— Michael Barone is a senior writer for U.S. News & World Report and principal coauthor of The Almanac of American Politics. Click here to contact him.
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» on 10.15.09 @ 06:47 AM
In spite of the Republican’s policy of obstruction on behalf of the insurance lobby there will be a robust health care reform bill passed this year. It will not be perfect but will improve access, affordability while putting the insurance companies in their place. The insurance companies will not be able to drop someone for a preexisting condition and have arbitrary lifecaps. The insurance companies will lose their antitrust exemption. The bill will be revenue neutral and millions will have healthcare for the first time. The net result will be a healthier and more competitive workforce and business climate.
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» on 10.15.09 @ 07:45 AM
To “Local”
If you truly believe this plan will be revenue neutral, I have some land to sell you!!
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» on 10.15.09 @ 07:53 AM
The government pays for it. Aren’t they the ones that print the money? It doesn’t cost them much to make a $100 bill.
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» on 10.15.09 @ 07:55 AM
OBAMA SAYS SO!
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» on 10.15.09 @ 08:15 AM
We’re going to have to pay for health care one way or another…with higher taxes or insurance company premiums. I vote for higher taxes funding a single payer government run plan so that health care is more equitable between the rich and the poor.
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» on 10.15.09 @ 08:44 AM
And I thought this so called “health care” bill was about saving money not getting even with the insurance companies. The latest incarnation of this monstrosity still leaves 25,000,000 out of 30,000,000 uninsured so in order to insure the remaining 5,000,000 people we are spending $1,660,000 a person over ten years. Only liberals could call this a savings and local can call it robust.
One more thing. This will not make our workforce more competitive and it will be a big negative for the business climate.
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» on 10.15.09 @ 08:46 AM
To “TO”
Yes I believe it will be revenue neutral because that is a requirement in order to pass. What we have now is totally unacceptable and is a giant blood sucking profit center for the insurance companies. We pay for the most expensive form of healthcare for the uninsured at the emergency ward.
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» on 10.15.09 @ 09:23 AM
We are told this monstrosity will be rendered “revenue neutral” primaliy by trimming off waste and fraud from Midicare…yea right!
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» on 10.15.09 @ 01:30 PM
Barone’s rugged self-help bootstrap philosophy reads like it was lifted from some old Charles Dickens novel, about brutal exploitation of the weak, sick, or working poor. In those days, only the rich got (or “deserved”) good health care.
He writes the way Ayn Rand wrote (but NOT the way Ayn Rand actually lived). Sheesh.
Barone, in all his anti-health care reform writings, never actually indicates who pays for his insurance, or whether he has personally ever had to deal with a chronic, or life-threatening health emergency within his own family. Why is that?
The conundrum of health “reform” is NOT “overall cost”. That’s a red herring, since America already spends much, much more on health care than any other advanced, democratic nation on earth.
Right now, most of that money is spent in a health insurance private sector that
distributes coverage, manages costs and inflation, much more poorly than most of
our other European allies, or Canada. Why is that?
Barone seems to fear that the immense profits now flowing to private insurance
combines might some day be used to improve and broaden coverage for everyone.
That really rattles him. Why?
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» on 10.15.09 @ 01:43 PM
Let’s just flub up some numbers and call it “revenue neutral”, because that is the requirement to get it passed. Why not? They flubbed up the content of the bill. Social Security was supposed to be revenue neutral too. I don’t know if you’re young, dumb, naive or ignorant or just fell off the turnip truck local, but you have a lot to learn about history, economics and you need to open your eyes and see where having faith and trust in govt. has gotten us. See where other socialist countries have gotten with nationalized everything. Take Castro, Hugo Chavez, endless other examples where there is no private sector. Innovation and development of technology has frozen. I trust insurance companies more because they have to do certain things to compete and stay in business. The government does not, and they only have to be accountable until the next election. They tend to get a little… shall we say, fat and lazy without the motivation of having to compete and turn a profit to stay alive ? With all of the pressure to get this passed YESTERDAY, you don’t think they are beyond stretching the truth and inventing and manipulating numbers a little to make it appear “revenue neutral”? Where exactly are you located local, because fools and their money are easily parted and I could use some dough.
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» on 10.15.09 @ 01:45 PM
And don’t forget, part of “paying for it” is mandating the uninsured to become insured. In other words, tax the poor. But first , don’t call it a tax, so it can be “revenue nuetral”.
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» on 10.15.09 @ 02:41 PM
Hey realist. Look at the healthcare programs of the top industrialized capitalist countries. What koolaid have you been drinking. They have much lower cost and far better performance. So you trust the insurance companies? I guess there is a sucker in every crowd. And for your information I am a rich and highly education successful businessman. Sorry to disappoint you but you have been listening to too much Fox News. We can build an efficient healthcare system that incorporates the best practices of several other countries. The big problem is people like you that have not got an open mind and maintain the same old obstructionist attitude.You label anything the government touches as socialist and do not even understand what that means. Wake-up before health insurance premiums swallow America whole. You should be embarrassed by your uneducated and highly fictional response to a real issue in which others, not you, are offering solutions. Is your mandatory car insurance a tax? Paying for health insurance is not a tax unless of course you categorize anything you pay for as a tax.
If you cannot offer a positive contribution or solution then please go crawl back into your cave. We are not talking about nationalizing anything. You should actually read what a public option means.
You might also take a look at the earnings reports for Aetna, Cigna and United Healthcare while you are at it to see where our insurance premiums are going.
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» on 10.15.09 @ 04:29 PM
There is nothing wrong with making all taxpayers being charged a health insurance premium on their tax return.
This would satisfy the Republican need to prevent excessive taxes to fund this program and would make it pay for itself, and would satisfy the Democratic need to have a workable health insurance program.
Of course, the problem created by a tax such as this, is that when President Bush was spending our tax dollars on a fruitless war, there was no Republican outcry, but when we spend our money to help our people receive better health care and are asked to pay for it, the free ride is absent, which is contrary to Republican philosophy.
Complaning about our modest tax obligation is an American right, but if you want government to pay for war and police and fire, you should want the government to provide for national health care as well, it is just as important. The insurance industry is not interested in anything except making money, and they certainly are not interested in providing for the general welfare.
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» on 10.16.09 @ 09:12 AM
“Realist”, you’re a robber baron’s dream citizen! You think insurance companies have competition? Then you obviously haven’t been paying attention to _reality_, because right now health insurance companies operate with near monopolies all over America, thanks to government deregulation. The only way they will have to compete is if there is an attractive public option available. Ask local business leaders anywhere how much choice they have for health insurance for their employees. If they’re lucky they may have three or four options, but those are severely restricted by local medical providers. Ask Cottage Hospital or Sansum Clinic about this. It’s Blue Shield or nothin. What competition? What accountability?
Realist, you are the one living in a fox-news, drudged-out fantasy. That hoary old saw you remember from econ 101 about free-market competition being the best of all possible systems does not apply to health care in America as it is right now.
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» on 10.16.09 @ 10:03 AM
“a highly education successful businessman”?
Wow I had no idea. Too bad you missed English class. Maybe I should back off. Nah.
You can’t just take things at face value, you have to take it a step further, and you have to read between the lines. You have to actually think. There is a thing called “deception” that people use when they want to get something done that they know will be unpopular and there will be opposition to. You have to look past what agenda driven people (“progressives?”)are saying to see what they really have in mind.
Since you’re “highly education”, maybe you can think this through. Obviously, nobody is TALKING about nationalizing anything, because they know that would not fly. Offering a public option, however, is a trojan horse, and will have the EFFECT of nationalizing healthcare, because it will put insurance companies out of business. Then the ONLY option will be the public option. It’s only the first step planned by people who are obviously smarter than you, in terms of strategy, and knew that you would suck up what they have to say at face value (like “revenue neutral”).
Here’s why: Why would your employer want to pay for your premium or why would YOU when the public option is “free” (yet paid for by you through taxes). they are already dumping retirement pensions, freezing wages reducing benefits, all they need is another excuse to dump health care plans. All they have to do is unload you on the government plan to save themselves money - while we pay for it in taxes instead.
Umm, let’s see, no I don’t consider mandatory car insurance to be a tax, because it is not paid to the government, it is paid to an insurance company. Doy.
The government forcing people to pay money to the government for the public option, however, IS a tax. What do you call it? A fee? A surcharge? It’s a tax, stupid. The difference is, when you pay money to the insurance company, you know that your money is actually going toward buying insurance. When you pay money to the govt, who the hell knows where it is going? I am quite sure I will never see a dime of that money I have been sending to them all of my life for Social Security.
What is wrong with Aetna, Cigna and United Healthcare making money? Isn’t that why they are in business? Are they supposed to do it for free just as a service? They make money because they offer something people want. You don’t have to buy their product if you don’t want them to make money - that is your choice and freedom. You want their premiums to come down? Let them compete across state lines. Simple answer. If you read these blogs, you will find a multitude of alternative positive contributions that narrow minded people like you consistently ignore in lieu of “whatever our trustworthy fearless leader thinks is best for us without us having to think” - so what the heck are you talking about?
Let me help you with your grammar, “highly education successful businessman”:
“people like you that have not got an open mind”
how about “people like you who are not open minded”
“They have much lower cost”
how about “their costs are much lower”
By the way, I don’t have cable and I never watch TV, therefore it is difficult to watch FOX news, but you can be a bigot and assume that if you wish simply because I don’t agree with you. I also am from Texas, carry a shotgun in my pickup truck, have a 9th grade education I’m dumb as a doorknob and love to go huntin’. Does that fit your stereotype of people who don’t agree with you?
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» on 10.16.09 @ 10:12 AM
Allan, “making all taxpayers being charged a health insurance premium on their tax return” prevents excessive taxes?? Oh I see, it’s not a “tax” because it is called a “premium”.
You need help with your grammar also I see. How about: “making all taxpayers pay a health insurance premium on their tax return” or “charging all taxpayers a mandatory health insurance premium on their tax return”.
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» on 10.16.09 @ 10:14 AM
noleta -
How is it “government deregulation” when the government will not allow competition across state lines? Still sounds a little ummm.. regulated.
Get me out of here, I’m losing brain cells.
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» on 10.16.09 @ 10:25 AM
And local - tell the government to stop “touching things” and I won’t call it socialism, I will call it liberty and freedom. Because I do know what socialism means, apparently you don’t. It is “a system of social organization that advocates the vesting of the ownership and control of the means of production and distribution, of capital, land, etc.[healthcare], in the community as a whole.”
Tell them to stick to their minimal role of public safety and infrastructure and I won’t call it socialism. Regulation must be used when public safety is at stake, I agree, but complete control is the objective here, the means is by taking advantage of the economic downturn, and it’s amazing how you don’t see it coming. You will only believe it when it is right in front of your eyes, which will be too late.
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» on 10.16.09 @ 11:12 AM
Just one more little thing, local. People of your ilk were quick to accuse Bush of lying to get us into the Iraq war. In other words, he lied to push a war on us that he knew would be unpopular, right? But Obama would never ever ever lie to push nationalized healthcare on us that he knows would be unpopular. Right? Jeez.
Let’s see lies lies, excuse me - deceptions deceptions deceptions:
Revenue neutral, by using imagined savings of taking the waste out of Medicare (good luck).
If you like your current coverage you can keep it. (until your insurance company goes belly up that is).
If you like your doctor you can keep him. (until there are not enough doctors to go around and no more entering the career because there is no longer a monetary incentive).
Illegal immigrants will not be covered. (but it will be illegal to be checking for ID, and they will be passing amnesty next)
So local, get real.
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» on 12.09.09 @ 11:14 AM
Realist. You have these “progressives” on the ropes. They would do so much better if they would just think for themselves, rather than spout the talking point de jure. Enjoyable. Daniel Petry
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» on 07.20.10 @ 04:12 PM
Duh. Every other nation in the world except for those most like our theocracy (Muslim countries) already have this figured out. Yet we’re too corrupted by big business and hoodwinked by the fascist operatives that hold our news media and government hostage to see the plain simplicity of the solution to “America’s health care crisis”. Watch this film and then you’ll realize how badly you’ve been lied to: http://www.pbs.org/wgbh/pages/frontline/sickaroundtheworld/
Tell your relatives, friends and neighbors to see it too and by watching their reaction you’ll gain an interesting insight into the true IQ level of those closest to you.
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