Requiem For A Health Care Reform Dream

By  | 

Last August, Justin and I cooperated in crafting a joint post in Quixotic support of S 391 -the “Wyden-Bennett” Healthy Americans Act. That bill has long since died, and never really saw the light of day. The final nail was pounded in the coffin this week when on Sunday, over bipartisan opposition, the Democrats in the House of Representatives passed HR 3962 – the Affordable Health Care for America Act, and it was signed into law by the President on Tuesday. Democratic Senator Ron Wyden voted for that bill. Republican Senator Bob Bennett voted against it. Justin supported it. I did not.

Once the Senate passed the bill on Christmas Eve, its ultimate passage should have surprised no one. There are 257 Democrats in the House of Representatives. With Nancy Pelosi cracking the whip, and President Obama taking representatives for joy rides in Air Force One, it was inevitable that 216 Democrats would eventually be found to vote for it. Now, whether it should have passed is another matter. I can think of at least one trillion reasons why this bill should never have become law. So let me start with an easier task – specifically what does not bother me about the passage of this bill – the parliamentary procedures and rules used by Democrats to pass it.

I am not particularly bothered about the reconciliation process being used to bypass filibuster challenges and pass the bill modifications with a simple majority in the Senate. Nor am I surprised by the heavy handed parliamentary moves used by the Democratic majority leadership to limit Republican participation. Although it was ultimately not used, I would not have even been overly exercised if “deemed as passed” was used to pass the bill, although I think it would have been a damaging political mistake for the Democratic majority.

Don’t get me wrong, I consider these parliamentary machinations to range from unseemly to downright sleazy, but they are not outside of the normal partisan legislative process. A casual review of the process by which the Republican leadership rammed through the Prescription Drug Benefit in 2003 undermines their credibility when expressing shock and dismay at the Democratic leadership making similar moves now. The only thing comparable to Republican hypocrisy on this issue, is the Democratic hypocrisy using and defending the same techniques they were vociferously decrying when in the minority.

The people who have a legitimate complaint, are those voters who supported Obama and the Democrats based on the promise of bringing change, transparency, bipartisanship, and the end of special interest / corporate lobbyist influence to Washington D.C. While there was a difference in the “talk” coming from candidate Obama, there is no discernable difference in the “walk” comparing President Obama and One Party Rule Democrats vs. President Bush and One Party Rule Republicans.

While Wyden-Bennett is dead and buried, it never had a proper funeral. In memory of that last best chance for a bi-partisan health-care reform bill that, unlike the bill that passed, actually reformed the health-care system, I though we should take one last look back. This was the rationale in our joint post supporting Wyden-Bennett last summer:

“If we were starting with a blank slate, we would support vastly different and incompatible health care systems. But we are not starting there. We have different objections to the existing system, but agree that the current system is in need of reform. We also agree that the reform most Americans want includes three critical criteria:
  1. Universal coverage for all Americans
  2. Insurance against financial ruin if struck with an illness.
  3. The reform program be fiscally responsible, manageable and have understandable costs.”

In particular, it is instructive to look at the criteria by which we judged Wyden-Bennett, and apply that identical criteria to Obama’s Health Care Reform also known as The BFD (OHCR-BFD).

This was my criteria for supporting Wyden-Bennett:

“Wyden-Bennett has my support because it meets the critical criteria for reform, does it without increasing the deficit or requiring net new taxes. Wyden-Bennett has my support because it directly and honestly attacks the central problem of employer based health care insurance as the primary delivery vehicle for non-public health care in America. Wyden-Bennett has my support because it is not (yet) saddled with questionable deals for big pharma, big insurance, and payoffs for big union contributors… The trade-off for this mandated coverage is that we get a fiscally sound health care system that covers everyone, that puts no one at risk of financial ruin from getting sick, and does it without raising the deficit or requiring net new taxes. I am willing to take that trade-off. This is why I describe myself as libertarian-leaning as opposed to libertarian or Libertarian. Once in a while, I feel compelled to lean another way.”

To compare and contrast our quixotic quest for real reform with Wyden-Bennett against the act that is now the law of the land, we’ll grade OHCR-BFD on a pass/fail basis against that same criteria:

On our first critical reform criteria – “universal coverage for all Americans” the new law falls short. Wyden-Bennett would have covered 99% of Americans upon implementation. In our joint post we found HR 3200 to be inferior, as it only covered 97% of Americans, and not until 2019. OHCR-BFD is significantly worse, as it is not projected to cover more than 93% – 95% of Americans, and not until 2018. This law is worse than either Wyden-Bennett or the original House bill (HR 3200). So for the first critical criteria of real reform, OHCR-BFD fails.

This criteria distills into essentially three elements 1) Guaranteed insurance availability for people with pre-existing conditions, 2) Protection against losing insurance because of illness or arbitrary Insurance Company revocation or rescission and 3) Mandated coverage. When implementation of these benefits begin in 2014, this law fully addresses all of these elements. The “Individual Mandate” question is a factor in both coverage and managing costs, and merits additional discussion.

As I stated in the analysis of Wyden-Bennett, there is no way to rationalize support for an individual mandate from a libertarian perspective. I simply decided that there is indeed a need for health care reform, that Americans want reform that offers universal coverage and financial protection against catastrophic illness, and there was no way to get there from here in a fiscally responsible way without invoking an individual mandate. So I abandoned my libertarian leaning principles on this issue and leaned another way, expressing grudging support for the mandate. Now, whether or not the individual mandate is constitutional is another matter altogether, and will be settled in the courts.

On these particular elements of reform, the OHCR-BFD succeeds more than it fails, once the provisions kick in, if the administration and Democratic leadership even understands what they have crammed through the process. Which – one day after becoming law- it became apparent that they did not.

President Obama has repeatedly made the claim “Starting this year, insurance companies will be banned forever from denying coverage to children with pre-existing conditions.” Yeah… no. That is not in the law. The way the law is written is that children get that protection in 2014, along with everyone else. So “Plan B” from the administration is to say the Department of Health and Human Services is empowered by the law to create that protection with regulations. I don’t know which is worse – the fact that the administration itself does not understand what is written in the bill – or – their representation that wholesale major coverage constraints can be created or destroyed by regulatory fiat from unelected bureaucrats in the Department of Health and Human Services.

An additional post-passage surprise is Senator Ron Wyden’s claim that the states need not sue over the individual mandate, since they can completely opt out of the act altogether. If true, I am not sure that anyone, including the administration, understands the ramifications of that provision.

This criteria had three elements. 1) Reasonable and understandable costs, 2) Tax neutral and 3) Deficit neutral. All three criteria were met by Wyden-Bennett. At best OHCR-BFD meets one of the three (Deficit neutrality) – and then only if you squint and don’t look too closely.

The Congressional Budget Office determined that OHCR-BFD will add about $1 trillion of new spending by the Federal government and will reduce the deficit by $138 billion in the next ten years and by $1.3 trillion dollars in the ten years after that. Taking the CBO analysis at face value would give OHCR-BFD a passing grade with flying colors. The CBO is a non-partisan office and we have frequently cited their analysis on this blog, including their analysis of Wyden-Bennett. As such, it would be disingenuous to not accept their findings on the law as it was communicated by Congress. They are not always right, but they are unbiased, and represent the best estimate we are likely to get within the constraints that they must live under when generating their estimates. And there is the rub.

The CBO is required to generate their estimates based on the law as written, and not make assumptions about likely, but unsubmitted congressional actions. So if Congress is willing to game the CBO by – for example – excluding costs from a bill that will be added later in a separate bill, the results will be wrong. It becomes a variation of the programming phrase “Garbage In Garbage Out”. If Congress feeds a lie into the the CBO process, we get a lie back out. There are multiple lies and deliberate cost obfuscations that are in the law specifically to game the CBO estimate as documented here and here. Consider two of the more egregious whoppers.

  • The first whopper is the “doc fix”. This is an increase in medicare reimbursement rates for doctors that was promised to the AMA in order to secure their support. It was originally in the bill, now it is not, but is likely to be passed by Congress next year. It adds $200 B to the cost and immediately turns the deficit reduction into a deficit increase.
  • The second whopper is the unfunded mandate imposed on the states. It increases the number of people that qualify for Medicaid, but the law does not pay for those additional entitlements, leaving it to the states. Since the the law, as written, does not cover those costs out of federal funds, the CBO analysis does not include them in their deficit calculation. This is one of the catalysts for 14 states (so far) suing to stop the law.

Representative Paul Ryan requested an additional CBO analysis using more realistic assumptions about likely future Congressional actions, and got a very different result. Since we have dueling CBO deficit estimates that will not be resolved until we see how Congress behaves on outstanding issues, I have graded the deficit status of this bill as INCOMPLETE.

On taxes, this law is an unmitigated disaster. New and increased taxes, fees, penalties, and fines are levied across the board. President Obama broke his promise to not raise taxes on the middle class with this law. I won’t belabor this point. It is incontrovertible. You can find a comprehensive list of the new taxes here. The ramifications are already being felt by companies large and small.

Predicting the political and economic consequences of this law is not quite as popular as filling out March Madness brackets, but getting close. Since my bracket is busted, I’ll add one prediction of my own: One consequence of these additional tax burdens on our fragile economy is a continuing high unemployment rate for the foreseeable future (7.5%+ for at least as long as Obama is President and this law – as written – is in effect). We’ll save some political prognostications for a future post.

This is a bad piece of legislation that will have negative consequences for our economy and country and should never have become law. On that one point many liberals, conservatives and libertarians agree. Perhaps President Obama has simply fulfilled the campaign promise of a post-partisan political environment in Washington D.C. Due to his efforts, many Republicans, Democrats, Libertarians, Liberals and Conservatives are now united – in opposition to the BFD that is the Obama Health Care Reform hairball.

Cross-posted from Divided We Stand United We Fall