The Four Most Dangerous Words in Washington

More than three decades ago, Ronald Reagan rightly characterized the nine most terrifying words in the English language: “I’m from the government, and I’m here to help.” In Washington, a quartet of four words rank close behind Reagan’s nine in their ability to terrify: What are you for?

Countless people in official Washington, from leadership staff to reporters to liberals to lobbyists, use these four words, or some variation thereof, to try to get conservatives to endorse bad policy. Their words carry with them an implicit argument: You have to be for something, rather than just opposing bad policy.

Reagan would find that reasoning nonsensical. Why do you have to be for something when all the available options undermine conservative principles—because you’re from the government and you’re here to help? It’s a lazy straw-man argument, which might explain why so many people in Washington use it, but it’s a premise that conservatives should reject.

Example 1: Drug Price Legislation

On Monday, House Republican leaders released their alternative to House Speaker Nancy Pelosi’s prescription drug legislation. Their very first bullet in the summary of the legislation said that the bill includes “350 pages” of provisions. (Technically, the bill has 352 pages of content, while by contrast, the Rules Committee print of Democrats’ prescription drug legislation weighs in at 275 pages.)

Republicans quite rightly criticized Pelosi almost a decade ago for the awful process she used to enact Obamacare. Remember the speaker’s infamous quote about the legislation in March 2010, which House Republicans still have on their YouTube page:

Yet including the bill’s size as the first bullet point in their summary suggests Republican leadership considers it a feature, not a bug: “Look at how substantive we are—our bill is 350 pages long!” Granted, the House Republican package consists of a grab-bag of provisions related to drug pricing, most of which existed well before this week. Some of them doubtless contain good ideas, and ideas I have previously endorsed.

But think about what went into creating this “new,” 350-page bill. A bunch of leadership staffers sat around a big desk in the Capitol, decided what bills and provisions to include in the package—and, by extension, which bills to exclude from it. I know, because I’ve sat in those types of meetings. They released the legislation on Monday, and Congress likely will vote on it late Wednesday night (early Thursday at the latest).

Republican Members of Congress won’t have time to read all 352 pages of the House Republican bill. Some of them may not have time to read even the four-page summary of the bill. And their staff, who are currently overwhelmed by the litany of issues on Congress’ December agenda, from impeachment to a massive defense policy bill to another massive spending bill to the prescription drug debate, have neither the time nor the bandwidth to provide thoughtful advice and counsel.

But most if not all Republican members of Congress will vote for this drug price alternative they have not read and many do not fully understand. Why? Because most think they need to “be for something.” Because they believe that (false) premise, they will have effectively handed their voting card to unelected leadership staffers—who may or may not actually know what they are doing—to define what Republicans are “for.” It’s no way to run a railroad, let alone the country.

Example 2: Entitlements

My article last week about Democratic presidential candidate Pete Buttigieg’s proposed long-term care entitlement prompted an e-mail from a colleague. The e-mail asked a polite variation of the question noted above: If you don’t like Buttigieg’s approach to long-term care, what would you do instead?

My response in a nutshell: Nope. As I pointed out in the original post, our country faces $23 trillion—that’s $23,000,000,000,000—in debt—and rising. We can’t afford the entitlements and government programs we have now. To even talk about creating new programs (which would face their own solvency and sustainability concerns) only gives lawmakers and the American public a permission structure to avoid the hard decisions Congress should have made years ago to right-size our entitlements.

Example 3: ‘Surprise Billing’ Legislation

On Sunday, several members of key committees announced an agreement in principle on federal legislation regarding “surprise billing,” which arises when physicians and medical providers seek to recover charges when patients obtain care out-of-network during emergencies, or when patients inadvertently see an out-of-network physician (e.g., an anesthesiologist) at an in-network hospital.

(Disclosure: I have consulted with various firms about the potential outcomes and implications of this legislation. However, these firms have not asked me for my personal policy positions on the legislation, nor have they asked me to advocate for a position on it—as my positions, as always, are mine alone.)

I wrote back in July that this issue largely represented a solution in search of a problem, for multiple reasons. First, a relatively small number of hospitals and providers impose most of the “surprise” bills. Second, states have the power to fix this issue on their own by regulating providers, even if federal law makes it difficult for states to regulate all the insurers in their state.

So why do Republicans feel the need to sign off on federal legislation addressing a problem that states can decide to fix (or not to fix) themselves? Again, because lawmakers feel the need to “be for something.” That again brings to mind Reagan’s axiom about the nine most terrifying words, and the proposition that “I’m from the government and I’m here to help” often leads to unintended consequences.

No, Don’t Just ‘Do Something’

Perhaps by this point, some observers might have come up with an obvious question: How can you win elections if you don’t try to “do something?” The question has two simple answers.

First, citizens quite obviously do not vote solely based on a candidate’s ability to “do something,” such as expand the regulatory state, the welfare state, and government in general. If conservatives want to run campaigns based on giving voters “free stuff,” but just slightly less “free stuff” than Democrats, guess how many elections the conservative would win?

Second, as noted above, the “What are you for?” question has an obvious four-word response: “We can’t afford it.” That retort sadly has the feature of truth about it, as our country cannot sustain its current levels of government spending.

Any responsible parent knows that, no matter how often his child asks, letting that child eat ice cream three times a day does not represent good parenting. Congress long since should have imposed some of that sense of discipline on itself, and the American people.

Given our current fiscal situation, many policy proposals, no matter how popular, are not fiscally sustainable. The “What are you for?” question cleverly tries to elide that debate, in ways that will only undermine conservative principles, and our country’s solvency.

I’ll end by noting my strong support for the First Amendment: “Congress shall make no law.” (What, you thought it contains some other words too?) If Congress spent the majority of its time stopping bad laws and policies—particularly policies considered only slightly less bad than the original proposals—maybe our country wouldn’t face the prospect of paying off a growing mountain of debt.

This post was originally published at The Federalist.

Warren’s Prescription the Wrong One

In an October analysis the Urban Institute concluded that a single-payer plan, similar to Sen. Warren’s, which eliminates virtually all patient cost-sharing, would raise national health spending by more than 20%, or $719.7 billion a year. In the researchers’ view, the additional demand stimulated by making health care “free” to consumers would overwhelm any potential savings from paying doctors and hospitals government-dictated rates. This higher demand would also raise the cost of single-payer well beyond Sen. Warren’s estimates, meaning middle-class families would face massive tax increases to pay for this spending.

That Prof. Johnson would cite the Urban Institute to argue that Sen. Warren’s plan would lower health-care costs, while ignoring the fact that the institute itself reached the opposite conclusion, speaks to the cherry-picked nature of the proposal, which has drawn derision from liberals and conservatives alike.

This post was originally published at the Wall Street Journal.

“Ponzi Pete” Buttigieg Proposes More Unsustainable Entitlements

On the campaign trail for the Democratic presidential nomination, South Bend Mayor Pete Buttigieg tries to portray himself as a moderate politician. By running ads against implementing a single-payer health system, Buttigieg would have voters believe he rejects the radical leftism of socialist Sen. Bernie Sanders.

Don’t you believe it. Buttigieg recently released an aging and retirement plan that proposed massive amounts of new entitlement spending, with very little in the way of specifics to pay for all his ideas. It’s but the latest example of Democrats’ government giveaway train run amok.

CLASS Act ‘Ponzi Scheme’

The first part of Buttigieg’s paper talks about an “historic” new program, Long-Term Care America. The mayor claims this plan would provide aid to seniors “who require assistance with two or more activities of daily living….Benefits would be worth $90 per day for as long as [seniors] need care, and kick in after an income-related waiting period.”

But Title VIII of Obamacare contained language establishing the Community Living Assistance Services and Supports (CLASS) program. Moderate Democrats attacked the proposal as unsustainable. Prior to Obamacare’s enactment, Sen. Kent Conrad (D-N.D.), then the chairman of the Senate Budget Committee, called CLASS a “Ponzi scheme of the first order, the kind of thing Bernie Madoff would have been proud of.” Those concerns ultimately proved correct, as the Obama administration had to shelve the program as unworkable before it ever collected a dime in premiums.

As a Senate staffer conducting oversight on CLASS, and later as a member of the Commission on Long-Term Care tasked with examining possible replacements, I examined the program’s failure in minute detail. But at bottom, the program suffered from the same problem facing the Obamacare exchanges: Too many sick people signing up for benefits, driving up premiums, and therefore driving away healthy individuals.

Obamacare required individuals to pay into the CLASS program for only five years to qualify for benefits. Actuaries believed that people would sign up, pay a few thousand dollars in premiums over five years, and then collect benefits totaling tens of thousands of dollars or more. Just as Obamacare’s pre-existing condition provisions have priced millions of people out of coverage—because individuals can sign up for “insurance” after they develop a pre-existing condition—so too would CLASS have attracted people already suffering from disabilities, who by definition don’t need insurance so much as they need care.

The exchanges have remained somewhat sustainable only because of massive amounts of federal spending on subsidies and bailouts. However, Obamacare forced CLASS to become self-sustaining, without relying on federally subsidized premiums or a bailout. The Obama administration in October 2011 conceded that it could not meet these statutory requirements, and therefore shelved the program. (Congress later repealed CLASS outright in the “fiscal cliff” deal in January 2013.)

Buttigieg’s plan acknowledges none of this history, and makes no mention of solvency or sustainability when talking about his proposed new program. Perhaps limiting it to only those over age 65, and imposing a waiting period for people to receive benefits, as his proposal outlines, will make it more financially sustainable (or less unsustainable). But Buttigieg also proposes a $90 daily benefit, 80 percent richer than the CLASS Act’s $50 per day benefit, exacerbating solvency concerns.

Costly Promises

Buttigieg’s promise of a long-term care benefit says nothing about whether this new federal spending would increase the deficit, your taxes, or both. In that respect, it represents but one of the many costly promises in his retirement plan, including:

  • An end to the two-year waiting period currently required for individuals receiving Social Security disability benefits to qualify for Medicare coverage;
  • An increase in the minimum wage to $15 an hour, and new staffing requirements for nursing homes, all of which will raise costs to the Medicaid program; and
  • An expansion of Social Security benefits—including a new minimum benefit and credit for caregivers—funded entirely by higher taxes on “the rich.”

At present, our federal government faces $23 trillion in debt, and trillion-dollar deficits as far as the eye can see. To put it bluntly, we can’t pay for the government we have now, let alone the new programs Buttigieg and his fellow presidential candidates have proposed.

Buttigieg can try to hide himself in the cloak of the “moderate” mantra all he likes. But his laundry lists of new and unsustainable entitlements represent nothing more than big-government liberalism.

UPDATE: This post was edited after publication, to clarify the nature of Buttigieg’s proposal as compared to Obamacare’s CLASS Act.

This post was originally published at The Federalist.

The Costs of “Free” Health Care

Libertarian columnist P.J. O’Rourke once famously claimed that “If you think health care is expensive now, wait until you see what it costs when it’s free.” A left-of-center think-tank recently confirmed O’Rourke’s assertion. In analyzing several health care proposals, the Urban Institute demonstrated how eliminating patient cost-sharing from a single-payer system would raise total health care spending by nearly $1 trillion per year.

Those estimates have particular resonance given the recent release of a health care “plan” (such as it is) by Sen. Elizabeth Warren (D-Mass.). Warren’s policy proposals contain myriad gimmicks and rosy scenarios, all designed to hide the obvious fact that one cannot impose a $30 trillion-plus program on the federal government without asking middle-class families to paya lot—for its cost.

The Urban Institute estimates show that a single-payer plan maintaining some forms of patient cost-sharing (i.e., deductibles, co-payments, etc.) seems far more feasible—or less unfeasible—than the approach of Warren and Sen. Bernie Sanders (I-VT), who promise unlimited “free” health care for everyone. Mind you, I would still oppose such a plan—for its limits on patient choice, economically damaging tax increases, and likelihood of government rationing—but at least it would have the advantage of being mathematically possible. Not so with Sanders’ and Warren’s current approach.

Option 1: An Obamacare-Like Single-Payer Plan

In the October policy paper, several Urban researchers examined the financial effects of various health coverage proposals, including two hypothetical single-payer systems. The first single-payer system would cover all individuals legally present in the United States. Urban modeled this system to cover all benefits required under Obamacare, and fund 80 percent of Americans’ expected health costs per year, equivalent to a Gold plan on the Obamacare exchanges. Americans would still pay the other 20 percent of health spending out-of-pocket.

This proposed “lite” single-payer system would still require massive tax increases—from $1.4-$1.5 trillion per year. But it would actually reduce total health spending by an estimated $209.5 billion compared to the status quo.

This single-payer system generates calculated savings because Urban assumed the plan would pay doctors current rates under the Medicare program, and pay hospitals 115 percent of current Medicare rates. Because Medicare pays medical providers less than private insurers, moving all patients to these lower rates would reduce doctors’ and hospitals’ pay—which could lead to pay and job cuts for health professionals. But in the Urban researchers’ estimates, it would lower health spending overall.

Option 2: ‘Free’ Health Care Costs a Lot of Money

Compare these outcomes to a proposal closely modeled on the single-payer legislation supported by Sanders and Warren. Unlike the first proposal, this “enhanced” single-payer system would cover “all medically necessary care,” with “no premiums or cost-sharing requirements.” It would also enroll all U.S. residents, including an estimated 10.8 million illegally present foreign citizens.

The Urban researchers found that the single-payer plan with no cost-sharing would raise total health spending by $719.7 billion compared to the status quo. Compared to the “single-payer lite” plan, which provides benefits roughly equivalent to Obamacare, eliminating cost-sharing and covering foreign citizens would raise total health spending by $929.2 billion. Moreover, the plan with no cost-sharing requires a tax increase nearly double that of the “single-payer lite” plan—a whopping $2.7-$2.8 trillion per year.

The Urban Institute estimates confirm that making all health care “free,” as Sanders and Warren propose, would cause an enormous increase in the demand for care. This would overwhelm any potential savings from lower payments to doctors and hospitals, meaning the health sector would face a double-whammy, of getting paid less to do more work. These estimates also could underestimate the growth in health spending, because Urban’s researchers did not assume a rise in medical tourism or immigration when calculating the increase in demand for “free” health care.

Socialists’ ‘Solution’: Hold Costs Down by Rationing

Socialist supporters of Sanders’ plan attacked these estimates, claiming that the Urban Institute failed to consider that a single-payer system would ration access to “free” health care. The People’s Policy Project called Urban’s estimates of increased demand “ridiculous,” in part because “there is still a hard limit to just how much health care can be performed because there are only so many doctors and only so many facilities.”

Its position echoes that of the socialist magazine Jacobin, which in response to a single-payer study by the Mercatus Center last year admitted that “aggregate health service utilization is ultimately dependent on the capacity to provide services, meaning utilization could hit a hard limit.”

An increase in health spending of nearly $1 trillion per year, and increased waiting times and rationed access to care: either or both of those scenarios represent the costs of “free” health care, based on the words of leftists themselves. The prospect of either scenario should make Americans reject this socialist approach.

This post was originally published at The Federalist.

Warren Advisor Admits Her Health Plan Raises Middle Class Taxes

That didn’t last long. Five days after Sen. Elizabeth Warren released a health plan (chock full of gimmicks) that she claimed would not raise taxes on the middle class, one of the authors of that plan contradicted her claims.

In an interview with Axios published on Wednesday, but which took place before the plan’s release, Warren advisor and former Centers for Medicare and Medicaid Services Administrator Donald Berwick said the following:

Q: Many people may not know their employers cover 70% or more of their entire premium — money that otherwise would go to their pay. Is this the main problem when talking about reforms?

DB: The basics are not that complicated. Every single dollar — every nickel spent on health care in this country — is coming from workers. There’s no other source. [Emphasis mine.]

Compare that phraseology to what Joe Biden’s campaign spokesperson said on Friday about Warren’s plan and its effects:

For months, Elizabeth Warren has refused to say if her health care plan would raise taxes on the middle class, and now we know why: Because it does….Senator Warren would place a new tax of nearly $9 trillion that will fall on American workers. [Emphasis mine.]

In response to the Biden campaign’s criticism, Warren said last Friday that her health plan’s projections “were authenticated by President Obama’s head of Medicare”—meaning Berwick. Unfortunately for Warren, Berwick, by virtue of his comments in his interview with Axios, also “authenticated” Biden’s attack that her required employer contribution will hit workers, and thus middle-class families.

Warren also tried to defend her plan on Friday by claiming that “the employer contribution is already part of” Obamacare. Obamacare does include an employer contribution requirement, but that requirement:

  • Is capped at no more than $3,000 per worker, far less than the average employer contribution for workers’ health coverage—$14,561 for family coverage as of 2019— which will form the initial basis of Warren’s required employer contribution;
  • Does not apply to employers at all if the firm offers “affordable” coverage—an option not available under Warren’s plan, which would make private insurance coverage “unlawful;” and
  • Will raise an estimated $74 billion in the coming decade, according to the Congressional Budget Office—less than 1 percent of the $8.8 trillion Warren claims her required employer contribution would raise.

While Obamacare and Warrencare both have employer contributions, the similarities pretty much end there. Calling the two equal would equate a log cabin to Buckingham Palace. Sure, they’re both houses, but differ greatly in size. Warren’s “contribution”—which Berwick, her advisor, admits will fall on middle-class workers—stands orders of magnitude greater than anything in Obamacare.

Public Accountability?

In the same Axios interview, Berwick highlighted what he termed a tradeoff “between public accountability and private accountability.” He continued: “By not having a publicly accountable system, we are paying an enormous price in lack of transparency.”

His comments echo prior justification of his infamous “rationing with our eyes open” quote in a 2009 interview. As he explained to The New York Times as he departed CMS in late 2011, “Someone, like your health insurance company, is going to limit what you can get….The government, unlike many private health insurance plans, is working in the daylight. That’s a strength.”

Except that Berwick, as CMS administrator, went to absurd lengths to hide from public scrutiny after his series of remarks. He would gladly meet with health-care lobbyists behind closed doors, but refused to answer questions from reporters, going so far as to duck behind curtains and request security escorts to avoid doing so.

Warren apparently has taken a lesson in opacity from Berwick’s time as CMS administrator. At first, she avoided releasing a specific health care proposal at all, only to follow up by issuing a “plan” containing so many absurd assumptions as to render it irrelevant as a serious blueprint for legislating.

Unfortunately for her, however, Berwick committed the unforgivable sin of speaking an inconvenient truth about the effects of her proposal. Eight years after leaving office as CMS administrator, Berwick, however belated and however unwittingly, delivered some much-needed public accountability for Warren’s health plan.

This post was originally published at The Federalist.

Analyzing the Gimmicks in Warren’s Health Care Plan

Six weeks ago, this publication published “Elizabeth Warren Has a Plan…For Avoiding Your Health Care Questions.” That plan came to fruition last Friday, when Warren released a paper (and two accompanying analyses) claiming that she can fund her single-payer health care program without raising taxes on the middle class.

Both her opponents in the Democratic presidential primary and conservative commentators immediately criticized Warren’s plan for the gimmicks and assumptions used to arrive at her estimate. Her paper claims she can reduce the 10-year cost of single payer—the amount of new federal revenues needed to fund the program, over and above the dollars already spent on health care (e.g., existing federal spending on Medicare, Medicaid, etc.)—from $34 trillion in an October Urban Institute estimate to only $20.5 trillion. On top of this 40 percent reduction in the cost of single payer, Warren claims she can raise the $20.5 trillion without a middle-class tax increase.

Warren Asks What the Country Can Do for You

Elizabeth Warren’s release Friday of a more specific health-care platform only raised more questions about Medicare for All and its effects on the middle class. Conservatives as well as Ms. Warren’s Democratic opponents questioned the assumptions behind her claim that she can enact a single-payer plan without raising taxes on the middle class. Yet the harshest critic may be Ms. Warren herself. “Ask not what your country can do for you—ask what you can do for your country,” John F. Kennedy, who once held Ms. Warren’s Senate seat, urged. She refuses to ask the middle class to pay a dime for her costly proposal.

Take Ms. Warren’s assumptions at face value, even if doing so requires a knowing suspension of disbelief. Assume she can reduce the 10-year cost of a single-payer system from the $34 trillion in new federal spending estimated by the liberal Urban Institute to a mere $20.5 trillion. Assume her program would reduce administrative costs without encouraging fraud. Assume also that her proposed wealth tax won’t generate massive tax evasion—she claims a Warren administration would generate $2.3 trillion in new revenue by cracking down on tax avoidance—and that not a penny of her $9 trillion in assessments on employers will end up being paid by workers.

Ms. Warren envisions a $20 trillion expansion of government—the largest in American history—paid for by a fraction of the population. She foresees unlimited “free” health care for millions of families, without so much as a $100 copayment, premium, assessment, tax or other fee.

Sure, the earned entitlement always had an element of fiction. Social Security and Medicare pay benefits based on current cash flows, with their respective trust funds containing little more than promises to pay future benefits. Urban Institute estimates show that even wealthy seniors will receive more in Social Security and Medicare benefits than they paid in taxes. But Ms. Warren’s plan would dispense with the pretense of social insurance, instead creating a crass form of political plunder that uses federal largess to buy votes.

In turning government programs into a version of “Oprah’s Favorite Things”—everyone gets a free car, paid for by somebody else—Ms. Warren follows the example of President Obama. He talked of social solidarity, saying “we’re all in this together,” but shied away from asking anyone other than “the rich” to pay for his new government programs. In 2008 candidate Obama made a “firm pledge” not to raise taxes on families making less than $250,000 a year, “not your income tax, not your payroll tax, not your capital-gains taxes, not any of your taxes.”

The “firm pledge” lasted two weeks. In February 2009 Mr. Obama raised tobacco taxes to fund an expansion of children’s health insurance. Then, after ObamaCare took effect in 2013, the law led at least 4.7 million Americans to receive insurance-cancellation notices. In the years since, the health-insurance market has shrunk by four million people, because those who don’t qualify for subsidies can’t afford coverage—what Bill Clinton called “the craziest thing in the world.” Working families ended up bearing the burden of Mr. Obama’s new programs.

Therein lies the true lesson for the American people. Elizabeth Warren may not ask the middle class to fund Medicare for All—at least not until she’s safely in office—but one can rest assured that, should she succeed in enacting her scheme, all American families will pay.

This post was originally published at The Wall Street Journal.

Independent Report Shows How Socialism Will Raise Your Taxes

Democratic candidates for president continue to evade questions on how they will pay for their massive, $32 trillion single-payer health care scheme. But on Monday, the Committee for a Responsible Federal Budget (CRFB) released a 10-page paper providing a preliminary analysis of possible ways to fund the left’s socialized medicine experiment.

Worth noting about the organization that published this document: It maintains a decidedly centrist platform. While perhaps not liberal in its views, it also does not embrace conservative policies. For instance, its president, Maya MacGuineas, recently wrote a blog post opposing the 2017 Tax Cuts and Jobs Act, stating that the bill’s “shortcomings outweigh the benefits,” because it will increase federal deficits and debt.

Everyone’s Taxes Will Go Up—a Lot

Consider some of the options to pay for single payer CRFB examines, along with how they might affect average families.

A 32 percent payroll tax increase. No, that’s not a typo. Right now, employers and employees pay a combined 15.3 percent payroll tax to fund Social Security and Medicare. (While employers technically pay half of this 15.3 percent, most economists conclude the entire amount ultimately comes out of workers’ paychecks, in the form of lower wages.) This change would more than triple current payroll tax rates.

Real-Life Cost: An individual earning $50,000 in wages would pay $8,000 more per year ($50,000 times 16 percent), and so would that individual’s employer.

Real-Life Cost: An individual with $50,000 in income would pay $9,450 in higher taxes ($50,000 minus $12,200, times 25 percent).

A 42 percent Value Added Tax (VAT). This change would enact on the federal level the type of sales/consumption tax that many European countries use to support their social programs. Some proposals have called for rebates to some or all households, to reflect the fact that sales taxes raise the cost of living, particularly for poorer families. However, using some of the proceeds of the VAT to provide rebates would likely require an even higher tax rate than the 42 percent CRFB estimates in its report.

Real-Life Cost: According to CRFB, “the first-order effect of this VAT would be to increase the prices of most goods and services by 42 percent.”

Mandatory Public Premiums. This proposal would require all Americans to pay a tax in the form of a “premium” to finance single payer. As it stands now, Americans with employer-sponsored insurance pay an average of $6,015 in premiums for family coverage. (Employers pay an additional $14,561 in premium contributions; most economists argue these funds ultimately come from employees, in the form of lower wages—but workers do not explicitly pay these funds out-of-pocket.)

Real-Life Cost: According to CRFB, “premiums would need to average about $7,500 per capita or $20,000 per household” to fund single payer. Exempting individuals currently on federal health programs (e.g., Medicare and Medicaid) would prevent seniors and the poor from getting hit with these costs, but “would increase the premiums [for everyone else] by over 60 percent to more than $12,000 per individual.”

Reduce non-health federal spending by 80 percent. After re-purposing existing federal health spending (e.g., Medicare, Medicaid), paying for single payer would require reducing everything else from the federal budget—defense, transportation, education, and more—by 80 percent.

Real-Life Cost: “An 80 percent cut to Social Security would mean reducing the average new benefit from about $18,000 per year to $3,600 per year.”

The report includes other options, including an increase in federal debt to 205 percent of gross domestic product—nearly double its historic record—and a more-than-doubling of individual and corporate income tax rates. The impact of the last is obvious: Take what you paid to the IRS on April 15, or in your regular paycheck, and double it.

In theory, lawmakers could use a combination of these approaches to fund a single-payer health care system, which might blunt their impact somewhat. But the massive amounts of revenue needed gives one the sense that doing so would amount to little more than rearranging deck chairs on a sinking fiscal ship.

Taxing Only the Rich Won’t Pay for Single Payer

CRFB reinforced their prior work indicating that taxes on “the rich” could at best fund about one-third of the cost of single payer. Their proposals include $2 trillion in revenue from raising tax rates on the affluent, another $2 trillion from phasing out tax incentives for the wealthy, another $2 trillion from doubling corporate income taxes, $3 trillion from wealth taxes, and $1 trillion from taxes on financial transactions and institutions.

Several of the proposals CRFB analyzed would raise tax rates on the wealthiest households above 60 percent. At these rates, economists suggest that individuals would reduce their income and cut back on work, because they do not see the point in generating additional income if government will take 70 (or 80, or 90) cents on every additional dollar earned. While taxing “the rich” might sound publicly appealing, at a certain point it becomes a self-defeating proposition—and several proposals CRFB vetted would meet, or exceed, that point.

Socialized Medicine Will Permanently Shrink the Economy

The report notes that “most of the [funding] options we present would shrink the economy compared to the current system.” For instance, CRFB quantifies the impact of funding single payer via a payroll tax increase as “the equivalent of a $3,200 reduction in per-person income and would result in a 6.5 percent reduction in hours worked—a 9 million person reduction in full-time equivalent workers in 2030.”

By contrast, deficit financing a single-payer system would minimize its drag on jobs, but “be far more damaging to the economy.” The increase in federal debt “would shrink the size of the economy by roughly 5 percent in 2030—the equivalent of a $4,500 reduction in per person income—and far more in the following years.”

Moreover, these estimates assume a great amount of interest by foreign buyers in continuing to purchase American debt. If the U.S. Treasury cannot find buyers for its bonds, a potential debt crisis could cause the economic damage from single payer to skyrocket.

To say single payer would cause widespread economic disruption would put it mildly. Hopefully, the CRFB report, and others like it, will inspire the American people to reject the progressive left’s march towards socialism.

This post was originally published at The Federalist.

Pete Buttigieg’s Health Care Sabotage Strategy

After the most recent Democratic presidential debate, when South Bend, Indiana Mayor Pete Buttigieg criticized Massachusetts Sen. Elizabeth Warren for evasiveness on her single-payer health plan, Warren’s staff circulated a Buttigieg tweet from February 2018. The tweet indicates Buttigieg’s support for single-payer 20 months ago, which makes him a hypocrite for criticizing her now, according to the Warren camp.

In response, Buttigieg claimed, “Only in the last few months did it become the case that [single-payer] was defined by politicians to mean ending private insurance, and I’ve never believed that that’s the right pathway.” Apparently, Buttigieg never read Sen. Bernie Sanders’ bill — which Sanders, a Vermont independent, introduced in September 2017 — Section 107(a) of which makes private insurance “unlawful.”

Buttigieg’s evasion follows a consistent pattern among Democrats running for president, a two-step in which candidates try to avoid angering both Americans who want to keep their current coverage and the socialist left, who view single-payer’s enactment as a shibboleth. In January, Sen. Kamala Harris, D-Calif., told the American people, “Let’s move on” from private insurance, but she later put out a health plan that she says retains a role for private coverage. Warren herself said as recently as March that she had embraced approaches other than single-payer to achieving the goal of universal coverage.

More importantly, however, Buttigieg wants to enact single-payer — and has said as much. He just wants to be stealthier than Warren and Sanders in taking away Americans’ private insurance.

‘Glide Path’: An Expressway Toward Government-Run Care

Consider a spokesman’s response to the Warren camp re-upping Buttigieg’s 2018 tweet:

Asked about the tweet, a Buttigieg aide … argued he had not changed his position, saying he supports [single-payer] as an end goal but that he wants to get there on a ‘glide path’ by allowing people to have a choice and opt into the government plan.

Indeed, the health care plan on Buttigieg’s website makes the exact same point: “If private insurers are not able to offer something dramatically better, this [government-run] plan will create a natural glide path to” single-payer.

The details of his health care proposal reveal Buttigieg’s “glide path” as an expressway to government-run care, time and time again favoring the government-run plan over private insurance. Consider the following references to the government-run plan in the health care proposal:

  • “Individuals with lower incomes in states that have refused to expand Medicaid will be automatically enrolled in the [government-run plan].”
  • “Individuals who forgo coverage through their employer because it’s too expensive will be able to enroll in the [government-run plan] and receive access to income-based subsidies that help guarantee affordability.”
  • “Anyone eligible for free coverage in Medicaid or the [government-run plan] will be automatically enrolled.” The plan goes on to admit that “individuals could opt out of public coverage if they choose to enroll in another insurance plan,” but the government-run plan would serve as the default “option.”
  • “Individuals with no coverage will be retroactively enrolled in the [government-run plan].”

By automatically enrolling people in the government-run plan — not private insurance, not the best insurance, not the most affordable insurance, but in the government-run insurance plan — Buttigieg wants to make that “option” the only “choice for Americans.”

In 2009, independent actuaries at the Lewin Group concluded that a government-run plan paying doctors and hospitals at Medicare rates, and open to individuals with employer plans — a policy Buttigieg endorsed in his campaign outline — would siphon 119.1 million Americans away from their private coverage, and onto the government-run plan:

Buttigieg calls his plan “Medicare for All Who Want It.” But given the biases in his plan in favor of government-run coverage, another description sounds more apt: “Medicare: Whether You Want It or Not.”

Opportunistic Flip-Flops

Buttigieg sees political value in hitting Warren from the right on health care. But recall that Barack Obama did the same thing in the 2008 presidential primaries, decrying Hillary Clinton’s proposal to require all Americans to purchase health coverage:

Obama used those attacks to wrest the nomination from Clinton, and ultimately capture the presidency. Once he did, he flip-flopped on the coverage requirement, embracing the individual mandate he had previously attacked during the election campaign.

Buttigieg wants to force all Americans into government-run care. He has said as much repeatedly. His attacks on Warren represent an attempt to sound moderate and draw necessary political distinctions ahead of the Democratic primaries.

While he may moderate his tone to get elected, don’t think for a second he would moderate his policies or do anything other than sabotage private health coverage once in office. We’ve seen this show before — but whether we will see it again remains in the hands of the American people.

This post was originally published at The Federalist.

The Left’s Health Care Vision a Prescription for Brute Government Force

Even as Democrats inveigh against President Trump for his alleged norm-shattering and contempt for the rule of law, their health care plans show a growing embrace of authoritarianism. For instance, Rep. Adam Schiff (D-CA) recently dubbed the President’s July 25 call with Ukrainian President Volodymyr Zelensky “a classic mafia-like shakedown.” He knows of which he speaks, because the Democratic agenda on health care now includes threats to destroy any entities failing to comply with government-dictated price controls.

The latest evidence comes from Colorado, where several government agencies recently submitted a draft report regarding the creation of a “state option” for health insurance. The plan would not create a state-run health insurer; instead, it would see agencies dragooning private sector firms to comply with government diktats.

The plan would “require insurance carriers that offer plans in a major market,” whether individual, small group, or large group, “to offer the state option as well.” In these state-mandated plans insurers must offer, carriers would have to abide by stricter controls on their administrative costs, in the form of medical loss ratio requirements, than those dictated by Obamacare.

For medical providers, the Colorado plan would use “payment benchmarks” to cap reimbursement amounts for doctors and hospitals. And if hospitals decline to accept these government-imposed price controls, the report ominously says that “the state may implement measures to ensure health systems participate.”

In comments to reporters, Colorado officials made clear their intent to coerce providers into this price-controlled system. Insurance Commissioner Michael Conway admitted that “If our hospital systems don’t participate, this won’t work….We can’t allow that to happen.” The head of Colorado’s Department of Health Care Policy and Financing, Kim Bimestefer, said that “if we feel that the hospitals are not going to participate, we will require their participation.”

State officials did not elaborate on the mechanisms they would use to compel participation in the state option. But they could attempt to require hospitals and insurers to participate in the new plan to maintain their license to operate in Colorado—a likely unconstitutional condition of licensure.

In threatening this level of coercion—agree to price controls, or we’ll shut down your business—Colorado Gov. Jared Polis imitated his fellow Democrat, House Speaker Nancy Pelosi. Pelosi’s proposed drug pricing bill, up for a vote in the House as soon as next month, would impose excise taxes of up to 95 percent of a drug’s sale price if companies refuse to “negotiate” with the federal government.

In its analysis of Pelosi’s legislation, the Congressional Budget Office (CBO) noted that, because drug makers could not deduct the 95 percent excise tax for income tax purposes, “the combination of income taxes and excise taxes on the sales could cause the drug manufacturer to lose money if the drug was sold in the United States.” Perhaps unsurprisingly, CBO concluded that the excise tax would not generate “any significant increase in revenues,” as “manufacturers would either participate in the negotiating process”—because they have no effective alternative—“or pull a particular drug out of the U.S. market entirely.”

CBO also noted, in a classic bit of understatement, that Pelosi’s bill “could result in litigation,” for threatening losses on any company that dares defy the government’s offer of “negotiation.” But the left seems uninterested in abiding by limits on government power—or the consistency of its own arguments. As I noted this spring, other proposed legislation in Congress would abolish the private health care market. Less than one decade after forcing all Americans to buy a product for the first time ever, in the form of Obamacare’s insurance mandate, liberals now want to prohibit all Americans from purchasing care directly from their doctors.

These recent proposals continue a virulent strain of authoritarianism that has permeated progressivism’s entire history. Franklin Roosevelt threatened to invoke emergency powers during his first inaugural address, and Rahm Emanuel infamously said during the Great Recession that “you never want a serious crisis to go to waste.” Make no mistake: The health care system needs patient-centered reform. But the true crisis comes from the progressives who would utilize blunt government force to seize control of one-fifth of the nation’s economy.

This post was originally published at The Daily Wire.