The Tough Cost-Benefit Choices Facing Policymakers Regarding Coronavirus

Right now, the United States, like most of the rest of the world, faces two critical, yet diametrically opposed, priorities: Stopping a global pandemic without causing a global economic depression.

Balancing these two priorities presents tough choices—all else equal, revitalizing the economy will exacerbate the pandemic, and fighting the pandemic will worsen economic misery. Yet, as they navigate this Scylla and Charybdis, some policymakers have taken positions contrary to their prior instincts.

In his daily press briefing Tuesday, Gov. Andrew Cuomo (D-NY) discussed the false choice between the economy and public health. He made the following assertions:

My mother is not expendable, your mother is not expendable, and our brothers and sisters are not expendable, and we’re not going to accept the premise that human life is disposable, and we’re not going to put a dollar figure on human life. The first order of business is to save lives, period. Whatever it costs….

If you ask the American people to choose between public health and the economy then it’s no contest. No American is going to say accelerate the economy at the cost of human life because no American is going to say how much a life is worth.

On this count, Cuomo is flat wrong. Entities in both the United States and elsewhere—including within his own state government—put a dollar figure on human life on a regular basis.

Rationing on Cost Grounds Already Happens

Consider the below statement describing the National Institute of Health and Care Excellence (NICE), a British institution that determines coverage guidelines for the country’s National Health Service (NHS). NICE uses the quality-adjusted life year (QALY) formula, which puts a value on human life and then judges whether a new treatment exceeds its “worth” to society:

As a treatment approaches a cost of £20,000 [about $24,000 at current exchange rates] per QALY gained over existing best practice, NICE will scrutinize it closely. It will consider how robust the analysis relating to its cost- and clinical-effectiveness is, how innovative the treatment is, and other factors. As the cost rises above £30,000 [about $36,000] per QALY, NICE states that ‘an increasingly stronger case for supporting the technology as an effective use of NHS resources’ is necessary.

Entities in the United States undertake similar research. The Institute for Clinical and Economic Review (ICER) also performs cost-effectiveness research using the QALY metric. The organization’s website notes that “the state of New York has used [ICER] reports as an input into its Medicaid program of negotiating drug prices.” In other words, Cuomo’s own administration places a value on human life when determining what the state’s Medicaid program will and won’t pay for pharmaceuticals.

Cost-Effectiveness Thresholds

Cuomo represents but one example of the contradictions in the current coronavirus debate. Donald Berwick, an official in the Obama administration and recent advisor to the presidential campaign of Sen. Elizabeth Warren (D-MA), infamously discussed the need to “ration with our eyes open” While many liberals like him have traditionally endorsed rationing health care on cost grounds, few seem willing to prioritize economic growth over fighting the pandemic.

Conversely, conservatives often oppose rationing as an example of government harming the most vulnerable by placing an arbitrary value on human life. Nonetheless, the recent voices wanting to prioritize a return to economic activity over fighting the pandemic have come largely from the right.

The calls to reopen the economy came in part from an Imperial College London study examining outcomes from the pandemic. The paper concluded that an unmitigated epidemic (i.e., one where officials made no attempt to stop the virus’ spread) would cost approximately 2.2 million lives in the United States. Mitigation strategies like social distancing would reduce the virus’ impact and save lives, but would prolong the outbreak—and harm the economy—for more than a year.

The paper’s most interesting nugget lies at its end: “Even if all patients were able to be treated”—meaning hospitals would not get overwhelmed with a surge of patients when the pandemic peaks—“we predict there would still be in the order of…1.1-1.2 million [deaths] in the US.” Based on the Imperial College model, shutting down the economy so as not to let the virus run rampant would save approximately 1 million lives compared to the worst-case scenario.

A Cost of $1 Million Per Estimated Life Saved

Some crude economic math suggests the value a pandemic-inspired economic “pause” might place on human life. Based on a U.S. gross domestic product of approximately $21 trillion, a 5 percent reduction in GDP—which seems realistic, or perhaps even conservative, based on current worldwide projections—would erase roughly $1.05 trillion in economic growth. The Imperial College estimate that mitigation and social distancing measures would save roughly 1 million lives would therefore place the value of each life saved at approximately $1 million.

Of course, these calculations depend in large part on inputs and assumptions—how quickly the virus spreads, whether large numbers of Americans have already become infected asymptomatically, whether already infected individuals gain immunity from future infection, how much the slowdown harms economic growth in both the short and long-term, and many, many more. Other assumptions could yield quite different results.

But if these types of calculations, particularly when performed with varying assumptions and inputs, replicate the results of the crude math above, policymakers likely will sit up and take notice. Given that Britain’s National Health Service makes coverage decisions by valuing life as worth tens of thousands of pounds, far less than millions of dollars, it seems contradictory to keep pursuing a pandemic strategy resulting in economic damage many multiples of that amount for every life saved.

Tough Cost-Benefit Analysis

Unfortunately, lawmakers the world over face awful choices, and can merely attempt to select the least-bad option based on the best evidence available to them at the time. Slogans like “Why put your job over your grandmother?” or “If you worry about the virus, just stay home” belie the very real consequences the country could face.

Consider possible scenarios if officials loosen economic restrictions while the pandemic persists. Some individuals with health conditions could face the prospect of returning to work in an environment they find potentially hazardous, or losing their jobs. Individuals who stay home to avoid the virus, yet develop medical conditions unrelated to the virus—a heart attack, for instance—could die due to their inability to access care, as hospitals become swarmed with coronavirus patients. And on and on.

The president said on Tuesday he would like to start reopening the economy by Easter, a timeline that seems highly optimistic, at best. If by that time the situation in New York City deteriorates to something resembling Italy’s coronavirus crisis—and well it could—both the president and the American people may take quite a different view towards reopening the economy immediately. (And governors, who have more direct power over their states, could decide to ignore Trump and keep state-based restrictions on economic activity in place regardless of what he says.)

Nonetheless, everyone understands that the economy cannot remain in suspended animation forever. Hopefully, better data, more rapid viral testing, and the emergence of potential treatments will allow the United States and the world to begin re-establishing some sense of normalcy, at the minimum possible cost to both human life and economic growth.

This post was originally published at The Federalist.

Nancy Pelosi’s Obamacare Bailout Also Funds Abortion Coverage

In the words of her former House colleague Rahm Emanuel, Nancy Pelosi never wants to let a crisis go to waste. The House speaker not only wants to use the coronavirus pandemic to entrench Obamacare, she wants to make taxpayers fund abortion in the process.

A recent summary of the legislation Pelosi plans to introduce as an alternative to Senate Republicans’ “stimulus” bill laid out the strategy. House Democrats want to force insurers to reopen enrollment in the Obamacare Exchanges, and cover their losses via a taxpayer-funded bailout.

Leftist Wish List

The available summary of the bill—the summary!—totals 62 pages, and nearly 25,000 words. It contains a veritable menagerie of liberal big-government programs and boondoggles. For instance, it creates a “cash for clunkers” program for the government to buy old airplanes. (I’m not making this up—check out page 53 of the summary.)

Page 13 of the summary also notes that the bill would spend $400,000 so Congress’ Office of the Attending Physician can buy “N95 masks, surgical masks, gloves, swabs, test[s]…and personal protective equipment.” Somehow, the fact that Pelosi ensured Congress appropriated funds to protect itself failed to surprise this jaded observer.

New Open Enrollment Period

Division G of the 1,404-page legislation includes a variety of health-care provisions, only some of which directly relate to the coronavirus pandemic. For instance, Section 70301 (which begins on page 337) would create a “one-time special enrollment period for the [Obamacare Exchanges], allowing Americans who are uninsured to” purchase coverage.

This proposal raises an obvious problem: Moral hazard. If individuals know they can forego coverage during the usual open enrollment period and obtain coverage later, healthy individuals will do just that: only buy insurance when they need it.

Some may argue that those who lose their jobs due to coronavirus—either a temporary furlough, or a permanent layoff, during the resulting downturn—need a way to buy coverage after losing their insurance. But individuals who lose employer coverage already have a way to purchase a new plan: They automatically qualify for a special enrollment period, during which they can replace their former employer plan with exchange coverage.

Bailout Funds

News reports suggest that insurers support reopening the exchanges for a special enrollment period. However, the insurance industry also wants federal dollars to offset their potential losses from such a move.

Insurers obviously did not account for the costs of coronavirus treatments last spring and summer, when they set their 2020 premiums; no one knew of the disease at that point. The unexpected costs associated with treating the disease will likely eat into insurers’ margins for 2020.

But allowing people to buy “insurance” in the middle of a pandemic will raise insurers’ costs even further. Consider that life insurers are already imposing waiting periods for at least some applicants during the pandemic. One actuary believes life insurers will shut down applications entirely, due to the overwhelming risks they face.

By contrast, health carriers will allow anyone to apply for “insurance” during the pandemic, “if the government cover[s] anticipated losses.” Hence Section 70308 of Pelosi’s “stimulus” bill (beginning on page 404) provides for a two-year program of risk corridors.

Pelosi’s bill would recreate an Obamacare program in place from 2014 through 2016 that would have exposed taxpayers to billions of dollars in losses, but for language inserted at the insistence of Republican members of Congress. Just a few months ago, insurers took a case over risk corridors to the Supreme Court, asking for the justices to give them the bailout funds that Congress declined to pay.

Taxpayer Funding of Abortion Coverage

But as I noted nearly three years ago, when Republicans wanted to pass a “stability” bill bailing out Obamacare insurers, providing new federal dollars to insurers by definition represents taxpayer funding of abortion coverage. Only codifying the Hyde amendment’s pro-life protections for the risk corridor program would ensure that the bailout dollars will not flow to plans that cover abortion.

Separate provisions included in Section 104 of Division T of the bill (beginning on page 1089) would also substantially increase the generosity of Obamacare subsidies. The provisions would reduce the percentage of income that individuals would have to pay towards their premiums, with the federal government picking up a greater share of the tab. The same section would also eliminate the current income cap that prevents households with incomes of over 400% of the federal poverty level ($104,800 for a family of four in 2020) from receiving subsidies.

Joe Biden also included these changes to the Obamacare subsidy regime in his own health plan, released last summer, illustrating Pelosi’s attempt to exploit the coronavirus pandemic to enact Democrats’ pre-existing agenda. As with the risk corridors funding, if the legislation does not include strong pro-life protections, it means that billions of federal taxpayer dollars will flow to plans that cover abortion.

Of course, Pelosi did not include these Hyde Amendment protections in the summary of her bill, and likely would not allow a measure containing the protections to come to the House floor. Instead, the legislation represents a giveaway to both health insurers and the abortion industry.

Ironically, Senate Democrats objected to Republicans’ “stimulus” bill because they claimed it included a “slush fund” designed to bail out corporations. Perhaps they should have a conversation with Pelosi, because the Obamacare “slush fund” included in her bill would do the exact same thing.

This post was originally published at The Federalist.

This post was updated subsequent to publication with additional details regarding the introduced bill.

It Shouldn’t Take a Pandemic to Deregulate American Health Care

Over the past several weeks, the media has spent a great deal of time focusing on delays in rolling out and scaling up coronavirus testing across the country. But the understandable frustration over testing delays should not discount the other changes occurring within the federal government to help the virus response.

On Tuesday, the federal Centers for Medicare and Medicaid Services announced its approval of two waivers related to the Wuhan virus outbreak. One allowed Medicare providers to treat more conditions via telehealth, so more seniors can avoid exposure to the virus by having medical exams at home rather than traveling to a doctor’s office. The other gave Florida’s Medicaid program additional flexibility — such as the ability to reimburse claims made by doctors who participate in other state Medicaid or Medicare programs, even if they have not gone through the process of enrolling in Florida’s Medicaid program.

These changes represent real progress against the virus. But they also raise the broader question of why it required an imminent threat to public health to effect common-sense regulatory changes — and why some of these changes may last only for the duration of the Wuhan coronavirus outbreak.

The Emergency Declaration Includes

The regulatory flexibility announced on Tuesday came mere days after President Trump signed a proclamation authorizing the changes. In his remarks in the Rose Garden Friday, the president indicated what kind of changes the declaration would give to the Centers for Medicare and Medicaid Services and its parent agency, the Department of Health and Human Services (HHS):

  • “The ability to waive laws to enable telehealth,” which “gives remote doctors’ visits and hospital check-ins;”
  • “The power to waive certain federal license requirements so that doctors from other states can provide services [in] states with the greatest need;”
  • “The ability to waive requirements that critical-access hospitals limit the number of beds to 25 and the length of stay to 96 hours;”
  • “The ability to waive the requirements of a three-day hospital stay prior to admission to a nursing home;”
  • “The authority to waive rules that hinder hospitals’ ability to bring additional physicians on board or obtain needed office space;” and
  • “The authority to waive rules that severely restrict where hospitals can care for patients within the hospital itself, ensuring that the emergency capacity can be quickly established.”

The emergency authorities given to HHS under Section 1135 of the Social Security Act include all these flexibilities and several others — for instance, the power to waive conditions of participation and certification requirements for providers, modify statutory deadlines and timetables, waive out-of-network requirements for Medicare Advantage plans, and waive penalties for certain comparatively minor HIPAA violations, such as not distributing privacy notices.

In his remarks Friday, Trump summarized the effect of these changes: Hospitals and medical providers “can do what they have to do” to treat virus patients. “They know what they have to do. Now they won’t have any problem getting it done.”

Reform Onerous Regulatory Burdens For Good

These changes, while both necessary and welcome, fail to answer the broader question of why some of these regulations existed in the first place. For instance, why does a doctor who lives just north of the Florida-Georgia line have to go through one set of bureaucratic hoops to treat his Georgia Medicaid patients and another set of hoops to treat Medicaid patients who happen to live a few miles south in Florida?

In addition to federal laws and regulations that bog down the practice of medicine, states’ varying and often conflicting requirements create a patchwork of regulations that makes life miserable for doctors, and can prohibit them from practicing in multiple states. Worse yet, scope-of-practice laws often prevent people like nurse practitioners and nurse anesthetists from using their full complement of skills because physician groups seeking to maintain their monopoly status lobby state legislatures to enact harmful regulatory burdens.

The Mercatus Center has conducted volumes of research showing that these types of state-imposed laws — whether measures limiting the scope of practice or requiring a certificate of need from a government board before hospitals can construct new facilities — do not improve quality of care, and often harm it. In sum, these laws work less to protect patients than they do to protect incumbent doctors and hospitals looking to eliminate potential competitors.

Lawmakers at both the state and federal levels should examine these unnecessary regulatory burdens with an intent toward rolling them back permanently. The hospital industry has already asked for at least $1 billion as part of the next “stimulus” bill. At minimum, Congress should insist on regulatory reform in exchange for any additional federal dollars. Regulatory reform would both improve the system for patients and ensure Congress gets the most bang for its proverbial buck when providing taxpayer funds to the health-care sector.

This post was originally published at The Federalist.

No, Bernie Sanders, Single Payer Wouldn’t Eliminate the Coronavirus Outbreak

On Monday evening, Fox News hosted a town hall with Vermont Sen. Bernie Sanders in Dearborn, Michigan, ahead of that state’s Democratic presidential primary on Tuesday. The program began with a question about the ongoing coronavirus situation, and how Sanders would respond to the outbreak.

Sanders criticized President Trump’s handling of the outbreak, specifically the contradictions between some of his public statements and those of government scientists. Sanders then pivoted to suggest that a single payer health care system with “free” care would ameliorate Americans’ concerns:

We will talk I am sure about [single payer]. But when I talk about health care being a human right, and all people having health care, the coronavirus crisis makes that abundantly clear as to why it should be. You’ve got millions of people in this country today who may feel that they have a symptom. But you know what? They cannot afford to go to a doctor.

Sanders believes a single payer system that eliminates patient cost-sharing, like Britain’s National Health Service (NHS), would improve access to care. But consider some recent comments made by British Labour Party Leader Jeremy Corbyn. At Prime Minister’s Questions last Wednesday, Corbyn raised the same issue Sanders did—patients in his country unable to access care:

Yesterday, our part-time prime minister finally published the steps that his government will take to tackle the outbreak of the disease. The strategy broadly has our support, but a decade of Tory austerity means that our national health service is already struggling to cope. Bed-occupancy levels are at 94% and hundreds of our most vulnerable people are being treated on trolleys in corridors. What additional funding will our overstretched and underfunded NHS be given to deal with this crisis?

Far from acting as the panacea Sanders claimed in his remarks Monday evening, Corbyn believes the NHS will also leave some coronavirus patients untreated.

As this space has previously noted, British patients pay quite a lot for health care—they just pay for it by waiting, as opposed to out-of-pocket costs. A report released last fall concluded that waiting lists in the NHS have risen by 40 percent in the past five years, and now approaches 4.6 million Britons, or nearly 7 percent of the country’s entire population.

As Corbyn noted in his remarks last Wednesday, funding shortfalls mean that British hospitals already face overcrowding pressures under normal circumstances. Two years ago, an outbreak of the flu caused the postponement of nearly 55,000 operations. Emergency room physicians apologized for “Third World conditions of the department due to overcrowding.” Lack of inpatient beds meant ER patients spent hours on gurneys in hallways waiting to get admitted to the hospital, and ambulances spent hours circling hospitals, waiting to drop off their patients.

The NHS’ “winter crisis” occurs regularly when flu cases spike in Britain. And coronavirus—more virulent than the flu, and with no treatments available at present—represents a potential threat orders of magnitude greater than the NHS’s usual capacity problems.

Britain provides health care to its residents with few out-of-pocket charges. But the nearly 4.6 million Britons on waiting lists have no ability to compel the government to treat them promptly. In other words, Sanders’s claims to the contrary, Britain does not make health care “a human right.” Nor would his own bill make health care a legally enforceable right in the United States.

Both American and British patients end up paying for their care—the former more explicitly, and the latter more implicitly. But the potential queues that will likely materialize at NHS hospitals should the coronavirus spread demonstrate that a single-payer system will not provide a cure-all for American health care.

This post was originally published at The Federalist.

Hospitals Seek to Defend Their Questionable Accounting Scams

With the federal government more than $23 trillion in debt, why should taxpayers continue to fund states’ accounting scams designed to bilk Washington out of additional Medicaid matching funds? It’s a good question, but one hospital lobbyists don’t want you to ask.

Late last year, the Trump administration released a proposed regulation designed to bring more transparency and accountability into the Medicaid program. The hospital sector in particular has begun an all-out blitz to try and overturn the rulemaking process. The need for the regulations demonstrates the problems with the current American health-care system, and how hospitals stand as one of the biggest obstacles to reform.

How the ‘Scam’ Works

The proposed regulations call for more transparency about supplemental payments within the Medicaid program. These payments, which take a variety of different forms, are considered supplemental in nature because they are not directly connected to the treatment of any one particular patient.

Many of these supplemental payments represent a way for states—and hospitals—to obtain a greater share of Medicaid matching dollars from the federal government. Hospitals, local governments, or other entities “contribute” funds to the state for the express purpose of obtaining additional Medicaid funds from Washington. Those matching funds then get funneled right back to many of the same entities that “contributed” the funds in the first place. As the old saying goes, it’s nice work if you can get it.

Over the years, even liberal groups have expressed concern about these shady funding mechanisms. In 2011, then-Vice President Joe Biden reportedly called provider taxes—in which hospitals and nursing homes pay an assessment, which gets laundered through state coffers to receive—a “scam.” Think about it: How often do you ask to pay higher taxes? Hospitals and nursing homes often propose new or higher provider taxes because they believe they will get their money back, and then some, via greater Medicaid payments.

Likewise, in 2000 the liberal Center on Budget and Policy Priorities decried the use of “Rube Goldberg-like accounting arrangements” that “use complex accounting gimmicks to secure additional federal funds for states without actual state matching contributions.” Yet two decades later, the scams continue to proliferate, because, as a 2005 government audit noted, most states have hired contingency-fee consultants for the sole purpose of bilking additional Medicaid matching funds from the federal government.

Hospitals’ Scare Tactics Rationalize Theft

The Trump administration’s proposal would make these accounting arrangements more transparent, with the goal of phasing out several of the most egregious arrangements altogether. This has prompted hospital executives to consider the proposed rule something just short of Armageddon.

During a 2008 debate on a similar set of Medicaid regulations put forward by the Bush administration, very few members of Congress even debated the regulations, as opposed to their effects on hospitals. Likewise, most hospital lobbyists and executives don’t try to defend the merits of these accounting scams. Instead, they just focus on the effects, with the typical “parade of horribles” examples: “If you end these payments, Tiny Tim will die.”

Hospitals’ reluctance to defend these opaque funding arrangements on their merits represents an implicit admission: They never should have received this money in the first place. Translation: “We stole that money fair and square—and you better let us keep stealing that money, or else” the hospital will close, people will lose their jobs, etc.

Hospitals’ Disingenuous Tactics

Some lobbyists on Capitol Hill claim they “only” want to delay the regulations, to allow for additional feedback and give hospitals time to adjust. It’s a ridiculous argument on multiple levels. First, as the policy paper from 2000 reveals, hospitals have engaged in these types of tactics for more than two decades, and they continue to grow and proliferate. The idea that hospitals need additional time to adjust to a problem they created seems laughable on its face.

Consider also what happened in 2008, when the Bush administration proposed a similar set of regulations designed to crack down on Medicaid financing abuses. Democrats passed a one-year moratorium preventing the administration from finalizing the rules, blocking them from taking effect.

Why only a one-year delay and not an outright ban? At the time, staff for the House Energy and Commerce Committee publicly stated that the moratorium “intended to delay the implementation of the Medicaid rules just long enough so that a future Administration can withdraw them.”

That’s exactly what ended up happening: The Obama administration withdrew the regulations upon taking office in 2009, so Congress didn’t have to pay for the cost associated with blocking them permanently. Hospital lobbyists asking for a delay of the regulations are hoping a Democrat wins the White House this fall, and can withdraw the regulations next year. They just won’t tell Republican staffers that their strategy is premised upon President Trump losing his re-election bid.

Let the Regulations Proceed, And Let States Decide

If the regulations went into effect today, they wouldn’t automatically lead to any hospitals closing down, or even hospitals losing any money. The Centers for Medicare and Medicaid Services (CMS) said it would work with states to transition away from the offending transactions over time.

That said, some governors oppose the regulations for the same reason hospitals do: It would force state governors and lawmakers to make difficult choices. If the loopholes that allow states to bilk more funds out of Washington end, then states would have to pony up “real” money from their coffers to maintain payments to providers, rather than funds obtained via accounting gimmicks. Hospitals would have to compete with other important state priorities—transportation, education, corrections, etc.—to maintain their existing payments.

But as the old saying goes, to govern is to choose. Better for a state to raise taxes—and be up-front and honest about doing so—to fund its Medicaid program than for that same state to use opaque gimmicks to squeeze out more federal dollars. The latter situation amounts to a (deferred) tax increase anyway, by adding more dollars to Washington’s ever-growing debt.

After decades of delays, and with our country’s debt growing ever-larger by the day, Medicaid deserves the fiscal integrity these new regulations would bring. They should go into full effect, and sooner rather than later.

This post was originally published at The Federalist.

Michael Bloomberg: Against Obamacare Before He Was For It

Last week, old footage emerged of former New York City mayor, and current Democratic presidential candidate, Michael Bloomberg talking about health care rationing. In his comments from 2011, he advocated denying costly care to older patients:

If you’re bleeding, they’ll stop the bleeding—if you need an X-ray, you’re going to have to wait. That’s just…All of these costs keep going up, nobody wants to pay any more money, and at the rate we’re going, health care is going to bankrupt us….You know, if you show up with prostate cancer, you’re 95 years old, we should say, ‘Go and enjoy. Have a nice life. Live a long life. There’s no cure, and we can’t do anything.’ If you’re a young person, we should do something about it.

Perhaps more important is why Bloomberg made those particular comments. At the time, in February 2011, he was paying condolences to a Jewish family that had lost a loved one. One of the deceased man’s family noted that the man “was in the emergency room for 73 hours before he died and…that overcrowding in emergency rooms in New York had become out of control.”

This entire episode undermines the message of Bloomberg’s current ad blitz claiming that as mayor, he expanded access to health care in New York City. Plus, what did the mayor say about ER overcrowding back in 2011? “It’s going to get worse with the health care bill [i.e., Obamacare].” He also predicted that hospitals would close as a result.

Obamacare a ‘Disgrace’

During last week’s Democrat primary debate in Las Vegas, former Vice President Joe Biden brought up some of Bloomberg’s other comments about Obamacare. Biden correctly noted that Bloomberg had called Obamacare a “disgrace.” In a June 2010 speech at Dartmouth University just after the law’s enactment, Bloomberg said “We passed a health care bill that does absolutely nothing to fix the big health care problems in this country. It is just a disgrace.”

Reporters in the past several days have highlighted some of Bloomberg’s prior comments about the law:

  • In his Dartmouth speech, Bloomberg also pointed out that Democrats “say they’ve insured or provided coverage for another 45 million people…except there’s no more doctors for 45 million people.”
  • In a 2011 radio appearance, Bloomberg said that Obamacare “did not solve the basic problems, two basic problems with health care, which…got lost in all of the negotiations as every special interest in Congress got a piece or lost a piece or negotiated about a piece.”
  • In a December 2009 appearance on “Meet the Press,” Bloomberg criticized Democrats for not reading or understanding the legislation: “I have asked congressperson after congressperson, not one can explain to me what’s in the bill, even in the House version, certainly not in the other version. And so for them to vote on a bill that they don’t understand whatsoever, really, you’ve got to question the kind of government we have.”

It’s notable that Biden didn’t mention Bloomberg’s last quote—about members of Congress not reading or understanding the legislation—in Wednesday’s debate. Of course, that might have something to do with Biden’s own recent admission that “no one did understand Obamacare”—presumably including himself, at the time the vice president of the United States.

Changing His Tune

Now that Bloomberg is running for the Democratic nomination, he’s come around to supporting Obamacare. When asked about his prior comments, a Bloomberg campaign spokesman told CNN Obamacare’s only flaw lay in the fact that it didn’t go far enough. As a result, Bloomberg’s health plan proposes more government spending, funded by higher taxes, and—in a first—price controls on the entire health-care sector, including what you can and cannot pay your doctors.

On the merits of his policy platform, I’ll give the last word to Bloomberg himself, in his June 2010 speech at Dartmouth University. While Bloomberg said President Obama started out with good intentions, he said Congress “didn’t pay attention to any of those big problems and just created another program that’s going to cost a lot of money.”

It’s an apt description of Bloomberg’s own health care plan—to say nothing of his competitors for the Democratic presidential nomination.

This post was originally published at The Federalist.

Why Pete Buttigieg’s Health Plan Might Be More Radical than Bernie Sanders’

During the most recent Democratic primary debate in New Hampshire, former South Bend Mayor Pete Buttigieg claimed that his health-care plan, unlike the single-payer proposal advocated by Vermont Sen. Bernie Sanders, would “not polarize the American people.” But contra the candidate’s claims, Buttigieg’s health plan advocates a policy—government price controls on the entire health-care sector—even more far-reaching than Sanders’s socialist approach.

Others have exposed how Buttigieg’s plan would force people to buy insurance costing thousands of dollars, whether they want it or not. But his proposal for government price controls across a $4 trillion health-care sector represents the most radical idea yet—because, unlike Sanders’s plan, individuals appear to have no way to opt out.

National Price Controls

Buttigieg’s plan, released in September, would “prohibit health care providers from pricing irresponsibly by capping their out-of-network rates at twice what Medicare pays.” (Upon entering the race for the Democratic presidential nomination last November, New York Mayor Michael Bloomberg also adopted this rate-capping provision in his health plan.) Buttigieg admits that, by capping out-of-network rates, his proposal would give insurers leverage to demand lower prices for in-network care, creating a de facto system of national price controls for the entire health-care sector.

Imposing price controls on nearly 20 percent of the American economy, and linking those price controls to Medicare rates, would have substantial distortionary impacts. For starters, Medicare often does not reimburse medical providers at a rate to recover their costs. The Medicare Payment Advisory Commission estimated last March that hospitals would incur a -11 percent margin on their Medicare patients in 2019.

Moreover, because Medicare payment rates reflect the cost of treating the over-65 population—not many Medicare beneficiaries need maternity care, for instance—even supporters of capping rates have questioned the wisdom of linking such caps to Medicare levels.

More broadly, a national system of price controls could create health-care shortages. Facing reductions in pay, doctors could decide to retire early, and aspiring physicians could avoid the profession entirely. With the United States already facing a shortage of up to 121,900 physicians between now and 2032, Buttigieg’s price controls would reduce the physician supply still further.

Pathway to Single Payer—With No Exit

Despite the contrast he attempts to draw with Sanders’s plan, Buttigieg’s price controls would likely lead to a fully government-run system. Buttigieg admits a desire for his plan to provide a “glide path” to single-payer; its price controls provide an easy mechanism for such a transition.

By reducing the payments that private health insurers can offer doctors and hospitals, Buttigieg would slowly sabotage individuals’ existing coverage, throwing all Americans into a government-run health system. Indeed, his price caps provide an easy mechanism to force more and more individuals off their private coverage. While Buttigieg says he wants to cap payments at double Medicare rates, he could lower that cap over time. Of course, capping private health-care reimbursements at less than Medicare rates would all-but-guarantee private health insurance would cease to exist, because few doctors would agree to accept it.

Patients facing long waits for care would have no way to get around queues created by Buttigieg’s socialistic price controls. Sanders’s single-payer legislation allows physicians and patients to contract privately by paying cash for health-care services. But Buttigieg’s plan does not envision a mechanism for Americans to opt out of his price control regime. If Medicare pays $50 for a service, a patient could not pay a physician more than $100 for that service—no matter how experienced or qualified the physician, and no matter how desperate the patient.

The questionable constitutionality of Buttigieg’s plan belies its purportedly moderate nature. On the one hand, he would compel all individuals to pay for health insurance—whether they want it or not, and whether they use it or not. On the other, he would prohibit individuals from engaging in private transactions with their own doctors and hospitals if the amounts of those transactions exceed federally defined limits.

Differences in tone notwithstanding, Sanders and Buttigieg represent two halves of the same general approach to health care, expanding a technocratic leviathan that will attempt to micromanage nearly one-fifth of the economy from Washington. Doctors and patients, take note.

This post was originally published at The Federalist.

What John Oliver Didn’t Mention about Single Payer Health Care

During the first episode of this season of “Last Week Tonight,” HBO host John Oliver used his monologue to make the case for the United States to adopt a single-payer health-care system. While Oliver articulated many of the shortcomings of the current system, much of his arguments in favor of a single-payer system missed the mark.

As Oliver noted in his program, whether to adopt single payer represents a debate between the devil one knows and the devil one doesn’t. Skeptics of single payer have the advantage of inertial bias—that is, people may not want to give up what they currently have.

On the other hand, supporters of single payer can characterize the future however they like—even if it doesn’t always line up with the facts. That dynamic has allowed supporters to frame single-payer health-care as “Medicare for All,” even though the legislation introduced by Sen. Bernie Sanders (I-Vt.) would abolish the current Medicare program.

In his program, Oliver acknowledged some of the trade-offs associated with a move to a government-financed health-care system. But he also minimized others, and failed to explain some of the fundamental flaws in Sanders’ approach.

Cost Explosion

Oliver’s segment attempted to tackle the three primary critiques of a single-payer system: It will cost too much; lead to lines and waiting lists for care; and undermine individual choice. On the cost front, Oliver noted that estimates will vary as to whether the Sanders bill will lead to an increase in overall health-care spending. After admitting that the bill could either reduce health spending or cost “a f-ck of a lot more,” Oliver basically threw up his hands, calling the exact amount of spending under the new system unknowable.

On this front, Oliver didn’t analyze why health costs would likely rise under single payer. He mentioned (correctly) that Sanders’s bill would essentially abolish all premiums, deductibles, and co-payments for health care in the United States, making the new system much more generous than the current Medicare program, and much more generous than single-payer systems in places like Canada and Great Britain.

But Oliver did not mention four critical words that majorly affect costs: “Induced demand for care.” In other words, because Sanders’ legislation would make all health care “free” to patients, they would demand much more of it. According to the Urban Institute, a liberal think-tank, a single-payer system that eliminated cost-sharing would result in nearly $1 trillion more in health spending per year than a single-payer system that retained a system of co-pays and deductibles roughly equivalent to Obamacare’s Gold health insurance plans.

Along with many liberals, Oliver views eliminating cost-sharing as a feature of Sanders’ single-payer proposal. But at containing the costs of such a system, it represents a major bug—one Oliver never acknowledged.

Waiting Lists

Oliver did concede that waiting lists for care exist in other countries’ single-payer systems. However, he contended that patients wait primarily for non-emergency care, using knee replacements as an example. (Many patients wouldn’t call the concept of waiting nearly 10 months for a knee replacement—the average wait in Canada for an orthopedic procedure—a non-urgent matter.) He also didn’t point out that 4.56 million individuals in Britain—roughly 7 percent of that country’s population—were on waiting lists for care as of last fall, an increase of roughly 40 percent in the past five years.

Oliver’s discussion of waiting lists also missed a critical point: Sanders’s legislation would go further than other countries with single-payer systems, because it would prohibit individuals from purchasing private health insurance. Canadian and British patients who object to government waiting lists can purchase private coverage, and obtain care via that route.

Under Sanders’s proposal, American patients would not have that choice: They could only opt-out of the single payer system by paying for their treatment entirely in cash. Because not even a family making several hundred thousand dollars per year could afford the full costs of a heart transplant or chemotherapy, the vast majority of Americans would have no choice but to wait for care until the government system got around to treating them.

Choice

That brings up Oliver’s discussion of choice, and whether taking choice away matters. He points out—rightly—that many Americans do not have a substantive choice of either insurers or doctors, because their employers control the former, and by definition the latter.

But it doesn’t require the federal government taking over the entire health-care system to solve this problem, and give Americans a true choice among insurance plans and doctors. I have pointed out on many occasions the ways the Trump administration has acted to make coverage more portable, so that individuals, not employers, and not the federal government, choose the coverage options they prefer.

Oliver talks about the choices some patients currently face: whether to seek treatment they cannot pay for, or rationing medicines based on cost grounds. But patients would face similar choices under a government-run system—just for different reasons.

Oliver acknowledged the likelihood of waiting lists under a single-payer system, as have other supporters. For instance, the head of the People’s Policy Project has argued that costs won’t rise under single payer 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.” In other words, people will seek care, but not be able to obtain it.

In such circumstances, people won’t have a “choice” at all. Because they cannot purchase private insurance to cover treatments the government plan does not, they can either wait for care or they can…wait for care. That’s not just not giving patients choices, it’s harming patients by prohibiting them from buying the insurance they want to buy with their own money.

Towards the end of the segment, Oliver revealed his own bias against giving American patients any choices. After a clip of former South Bend Mayor Pete Buttigieg’s claim that “I trust Americans to make that right choice” on health care, Oliver responded to laughs: “Okay, well, hold on there. You trust Americans to make the right choice? You know Americans choose to drink Bud Light, right?”

Even as he tries to rebut conservative claims that single-payer would undermine Americans’ choices, Oliver admits that he doesn’t really want to give Americans a choice at all. He would rather use government to impose his beliefs on others, and force them to comply.

At minimum, Oliver’s program acknowledged the very real trade-offs associated with a single-payer health-care system. But had he explained those trade-offs fully, the American people would understand why single payer would result in adverse consequences to both our health-care system and our economy as a whole.

This post was originally published at The Federalist.

How Single Payer Would Make Outbreaks Like Coronavirus Worse

The past several weeks have seen two trends with important implications for health policy: Vermont Sen. Bernie Sanders’s burst of momentum following strong political showings in both Iowa and New Hampshire has drawn greater attention to his proposal for single-payer health care, as China struggles to control a coronavirus outbreak that first emerged at the end of last year.

The two events are linked by more than just time. The coronavirus outbreak provides a compelling argument against Sanders’s so-called “Medicare for All” program, which would upend the health-care system’s ability to respond to infectious disease outbreaks.

In an Outbreak, Could You Obtain Care?

For starters, supporters of Sanders’s plan have admitted that under single payer, not all patients seeking care will obtain it. In 2018, People’s Policy Project President Matt Bruenig claimed that while demand for care might rise under single payer, “aggregate health service utilization is ultimately dependent on the capacity to provide services, meaning utilization could hit a hard limit.”

By eliminating virtually all patient payments for their own care, single payer would increase demand for care—demand Bruenig concedes the system likely could not meet, even under normal circumstances. Consider that an outbreak centered more than 6,000 miles from the Pacific coast has already led to a run on respiratory face masks in the United States. During a widespread outbreak on our shores, an influx of both sick and worried-but-well patients could swamp hospitals already facing higher demand for “free” care.

Bureaucrats’ Questionable Spending Priorities

While Sanders’s legislation attempts to provide emergency surge capacity for the health-care system, experience suggests federal officials may not spend this money wisely. Section 601 of the House and Senate single-payer bills include provisions for a “reserve fund” designed to “respond to the costs of treating an epidemic, pandemic, natural disaster, or other such health emergency.” However, neither of the bills include a specific amount for that fund, leaving all decisions for the national health care budget in the hands of the Department of Health and Human Services.

And federal officials demonstrated a questionable sense of policy priorities in the years leading up to the 2014 Ebola outbreak. Of the nearly $3 billion from Obamacare’s Prevention and Public Health Fund given to the Centers for Disease Control in the years 2010-2014, only about 6 percent went towards building epidemiology and laboratory capacity. Instead, CDC spent $517.3 million funding grants focused on objectives like “improving neighborhood grocery stores” and “promoting better sidewalks and street lighting.”

Socialized Medicine Brought to Its Knees By…the Flu?

Including a system of global budgets as part of a transition to single payer would leave hospitals with little financial flexibility to cope with a sudden surge of patients. Sanders’s Senate version of single-payer legislation does not include such a payment mechanism, but the House single-payer bill does. Sen. Elizabeth Warren and other liberal think-tanks believe the concept, which provides hospitals lump-sum payments to cover the facilities’ entire operating budget, can help reduce health-care costs.

But in its May 2019 report on single payer, the Congressional Budget Office noted that consistently slow growth of global budget payments in Britain’s National Health Service has “created severe financial strains on the health care system.” And how: Rising hospital bed occupancy rates have created longer wait times in emergency rooms, with patients stuck on gurneys for hours. In one example of its annual “winter crisis,” two years ago the NHS postponed 55,000 surgeries due to capacity constraints, with one ER physician apologizing for “Third World conditions of the department due to overcrowding.”

A British health system barely able to cope with a predictable occurrence like a winter flu outbreak seems guaranteed to crumble in the face of a major pandemic. Voters lured by the siren song of socialism should bear that in mind as they ponder news of the coronavirus and Sanders’ “Medicare for All.”

This post was originally published at The Federalist.

No, $400 in Routine Health Care Costs is Not a Reason to Socialize Medicine

Sometimes, even heated discussions on Twitter can bring both light and heat by illuminating policy discussions. On Wednesday evening, Elizabeth Bruenig wrote a since-deleted tweet, using her transition from a writing position at the Washington Post to one at The New York Times to argue for single-payer health-care system:

Vance made a compelling point on policy, but one that conflated two issues. I wholeheartedly agree with his position on wanting to make coverage portable. But I don’t believe that a movement to de-link health coverage from employment means the government should pay for the health costs of comparatively affluent individuals.

Need for Portability

In her tweet, Bruenig admitted her period of uninsurance came from switching jobs. As a mother of two, including a newborn, Bruenig quite likely—and understandably—arranged some time between her two positions to spend with her young children.

On that front, I agree with both Bruenig and Vance about the good policy reasons to move away from individuals obtaining health coverage from their employers. As I outlined in prior writings, much of the problem of pre-existing conditions comes from our employer-based health insurance system: When you lose your job, you lose your coverage, which causes understandable worry for employees who have pre-existing conditions.

Making health coverage portable would allow individuals to take their insurance from job to job. This change would eliminate the friction people like Bruenig face when they’re between jobs, and greatly reduce (but not eliminate) the problem of pre-existing conditions, because people who develop such conditions during their working careers would own their own coverage, purchased before they became ill. The Trump administration has taken big strides on that front, publishing a regulation that will allow individuals—not their employers—to select and own their own health coverage, while still receiving an employer subsidy to cover some or all of the cost of their premiums.

However, people on the left talk about making health coverage portable not by giving power to individuals but by giving power to government. To borrow a medical metaphor, most liberals and socialists focus on the symptom (pre-existing conditions) rather than the underlying disease (lack of portable insurance). They favor either government regulation regarding pre-existing conditions, which encourages people to wait until they become sick to buy insurance, or in Bruenig’s case, an entirely government-run system.

Affordability for Individuals—And Taxpayers

While I agree with both Bruenig and Vance on the need to improve coverage portability (even if I disagree with the former on the way to go about it), I disagree in this instance about the separate question of who should pay for those costs.

But context matters, and in this case, the context looks quite different. Bruenig’s husband Matt also works; a former attorney for the National Labor Relations Board, he heads the People’s Policy Project, a socialist think-tank. As a result, their family has a second source of income, and another source of employer-based health insurance. (While Bruenig referenced health bills for her children, she didn’t say that her children faced an insurance gap. Given that context, I assume, but do not know for certain, that her husband’s insurance covers her children.)

Consider also the most recent breakdown of IRS tax filing data by income. As of 2017, households with adjusted gross income exceeding $97,870 represented the top quintile (i.e., top 20 percent) of filers, and households with adjusted gross income exceeding $145,135 represented the top 10 percent of filers. Bruenig and her husband almost certainly exceed the threshold to put themselves in the top 20 percent, and quite possibly the top 10 percent as well. Do I believe someone with that kind of income should receive government assistance for health insurance costs? In a word, no.

I haven’t yet completed my tax returns for 2019, but based on my paperwork compiled to date, I expect to declare just over $100,000 in income from my business last year. Of course, because I run my own business, I have to pay my own health insurance premiums. And my age (I’m roughly ten years older than Bruenig) means I pay more in premiums for Obamacare exchange coverage than she would if she bought temporary insurance there—and I do it month after month, not just when I have a gap between jobs.

In short, the Twitter mob calling me an “elite” for my tone and comments about savings ignore the fact that, based upon their station in life, Bruenig and her husband qualify on that front too. Unlike them, however, I don’t believe the federal government has a place subsidizing my insurance costs.

A Question of Priorities

I’ll give the last word to a Democrat: Maryland Rep. Steny Hoyer. As I mentioned in my book, in 2009, Hoyer, then as now the House majority leader, took to the House floor to make this compelling statement about entitlement spending and federal priorities:

At some point in time, my friends, we have to buck up our courage and our judgement and say, if we take care of everybody, we won’t be able to take care of those who need us most. That’s my concern. If we take care of everybody, irrespective of their ability to pay for themselves, the Ross Perots of America, frankly, the Steny Hoyers of America, then we will not be able to take care of those most in need in America. [Emphasis added.]

I agree with both Vance and Bruenig on the need to make health coverage more portable. But on the separate question of who pays, and saving scarce taxpayer resources for those who need them most, I stand with Hoyer.

This post was originally published at The Federalist.