‘Con­cep­tual lan­guage’ hides health care’s costs

The Washington Times Weekly - - Commentary -

Some of the head­lines in re­cent days are not wor­thy of be­lief. No, I’m not re­fer­ring to the head­lines that Barack Obama won the No­bel Peace Prize, how­ever odd that many seem to many (in­clud­ing, it seems, Mr. Obama him­self). I’m re­fer­ring to the head­lines ear­lier in the week to the ef­fect that the health care bill spon­sored by Se­nate Fi­nance Com­mit­tee Chair­man Max Bau­cus will cut the fed­eral deficit by $81 bil­lion over the next 10 years.

Yes, that is what the Con­gres­sional Bud­get Of­fice es­ti­mated. But, as the CBO noted, there’s no ac­tual Bau­cus bill, just some “con­cep­tual lan­guage.” Ac­tual lan­guage, CBO noted, might re­sult in “sig­nif­i­cant changes” in its es­ti­mates. No won­der Demo­cratic con­gres­sional leaders killed re­quire­ments that the ac­tual lan­guage be posted on the In­ter­net for 72 hours be­fore Congress votes.

More sig­nif­i­cant is the num­ber most pub­li­ca­tions did not put in their head­lines and lead para- graphs: CBO’s es­ti­mate that the Bau­cus “con­cep­tual lan­guage” would in­crease fed­eral spending by $829 bil­lion over 10 years. So how do you in­crease fed­eral spending and cut the deficit at the same time?

One way is taxes. The Bau­cus con­cep­tual lan­guage in­cludes a tax on high-cost in­sur­ance plans ($210 bil­lion), penal­ties for not hav­ing in­sur­ance ($27 bil­lion) and “in­di­rect off­sets” (what­ever they are — $83 bil­lion).

In ad­di­tion, costs are fobbed off on state gov­ern­ments in the form of more Med­i­caid spending, and sav­ings are pro­jected from fu­ture re­duc­tions in Medi­care that will surely turn out to be imag­i­nary (Con­gresses of both par­ties have acted to pre­vent such re­duc­tions ev­ery year since 2003).

We know from past ex­pe­ri­ence that cost es­ti­mates of all gov­ern­ment health care pro­grams (ex­cept the 2003 Medi­care Part D pre­scrip­tion drug ben­e­fit, which has pri­vate mar­ket com­pe­ti­tion) tend to un­der­state ac­tual costs. So the Bau­cus bill — er, con­cep- tual lan­guage — if en­acted is likely to ex­pand gov­ern­ment spending by more than the es­ti­mated $829 bil­lion.

And per­haps quite a bit more. The Bau­cus mea­sure en­ables fam­i­lies without em­ployer-pro­vided in­sur­ance to ob­tain it at ex­changes with sub­si­dies that make it cost less than what those with em­ployer-pro­vided in­sur­ance pay. The lat­ter are a ma­jor­ity of vot­ers — how long are their elected rep­re­sen­ta­tives go­ing to let this dis­ad­van­tage stand?

The Bau­cus mea­sure sub­si­dizes low-in­come fam­i­lies. Say you make $48,000 a year and get a $900 sub­sidy. As your in­come rises, this sub­sidy would be phased out, rais­ing your ef­fec­tive mar­ginal tax rate to as much as 70 per­cent. How long will Congress let this stand?

And per­haps even more. The Wall Street Jour­nal’s Kim­ber­ley Strassel points out that wellplaced se­na­tors are get­ting spe­cial fa­vors in the bill. Ma­jor­ity Leader Harry Reid gets the feds to pick up Ne­vada’s ex­tra Med­i­caid spending. Charles Schumer gets many high-cost in­sur­ance plans in New York ex­empted from tax. How long be­fore other mem­bers seek sim­i­lar breaks for their states?

The Bau­cus bill at­tempts to force more Amer­i­cans to buy health in­sur­ance poli­cies de­signed ac­cord­ing to gov­ern­ment spec­i­fi­ca­tions, which means they will be very ex­pen­sive and con­sumers will be shielded from costs. But that’s likely to pro­duce an in­creased de­mand for health care pro­ce­dures and bend the cost curve not down­ward but up­ward.

Mar­ket in­cen­tives like those in Part D that might shift it down­ward are pretty much ab­sent from the Bau­cus bill. All this will still, ac­cord­ing to CBO, leave 25 mil­lion Amer­i­cans without health in­sur­ance.

CBO es­ti­maters are con­strained by bud­get rules from guessti­mat­ing how costs will sky­rocket be­cause of po­lit­i­cal pres­sures. The rest of us are not. We can re­gard CBO’s es­ti­mate of $829 bil­lion in ad­di­tional spending not as a ceil­ing but as a floor.

We can rea­son­ably con­clude that the Bau­cus bill — or what­ever sim­i­lar mea­sure Messrs. Reid and Schumer con­coct — would vastly and per­ma­nently in­crease pub­lic sec­tor spending and im­pose a crush­ing bur­den on the pri­vate sec­tor in a weak econ­omy. That bur­den would be par­tic­u­larly heavy on low earn­ers forced to buy ex­pen­sive poli­cies or else pay stiff fines, with money they would oth­er­wise re­ceive as wages or salaries.

There are no good pub­lic pol­icy rea­sons to pass such a bill hur­riedly and be­fore it can be fully an­a­lyzed and de­bated. Only po­lit­i­cal rea­sons: line up enough Demo­cratic mem­bers be­fore they can process the pub­lic opin­ion polls that show most vot­ers hos­tile to such mea­sures and be­fore they are faced with prob­a­ble though not cer­tain Demo­cratic de­feats in Vir­ginia and New Jer­sey in Novem­ber.

Too bad the No­bel com­mit­tee doesn’t have a vote.

Michael Barone is a na­tion­ally syndicated colum­nist.

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