Why Republicans Get No Points for Opposing Democrats’ $3 Trillion Coronavirus Bill

On May 15, Speaker Nancy Pelosi (D-Calif.) will bring to the floor of the House a sprawling, 1,815-page bill. Released mere days ago, the bill would spend roughly $3 trillion—down from the $4 trillion or more that lawmakers on her socialist left wanted to allocate to the next “stimulus” package.

Most House Republicans will oppose this bill, which contains a massive bailout for states and numerous other provisions on every leftist wish list for years. But should anyone give them credit for opposing the legislation? In a word, no.

Conservatives shouldn’t give Republican lawmakers any credit for opposing bills that have no chance of passage to begin with—bills they never should vote for anyway. I didn’t go out and rob a bank yesterday. Should I get a medal for that? Of course not. You don’t get credit for doing the things you’re supposed to do.

Conservatives should demand more than the soft bigotry of low expectations that Republican lawmakers’ miserable track record on spending has led them to expect. For starters, instead of “just” voting no on the Pelosi bill’s additional $3 trillion in spending, why not come up with a plan to pay for the $3 trillion Congress has already spent in the past several months?

Yes, government needs to spend money responding to coronavirus, not least because government shut down large swathes of the economy as a public health measure. But that doesn’t mean Congress can or should avoid paying down this debt—not to mention our unsustainable entitlements—starting soon.

Decades of ‘Conservative’ Grifters

Two examples show how far Republican lawmakers stray from their rhetoric. In July 2017, former House Majority Leader Eric Cantor (R-Va.) said of his prior rhetoric regarding Obamacare, from defunding the law to “repeal-and-replace”: “I never believed it.” Of course, he waited to make this admission until he had left office and taken a lucrative job at an investment bank.

Cantor’s comments confirmed conservatives’ justifiable fears: That Republican lawmakers constantly play them for a bunch of suckers, making promises they don’t believe to win power, so they can leverage that power to cash in for themselves.

Perhaps the classic example of the “all hat and no cattle” mentality comes via former House Speaker Paul Ryan (R-Wis.). Notwithstanding Ryan’s reputation as a supposed fiscal hawk, consider his actions while in House leadership:

  • Instead of reforming entitlements, Ryan led the charge to repeal the first-ever cap on entitlement spending. He could have nixed Obamacare’s Independent Payment Advisory Board, a group of unelected officials charged with slowing the growth of Medicare spending, while keeping the spending cap. Instead, he got Congress to repeal the board and the spending cap that went with it—worsening our entitlement shortfalls.
  • For years, Ryan proposed various reforms to the tax treatment of health insurance, because economists on both the left and the right agree it encourages the growth of health-care costs. But as speaker, Ryan supported delays of a policy included in Obamacare that, while imperfect, at least moved in the right direction towards lowering health care costs. The delays allowed Congress to repeal the policy outright late last year, in a massive spending bill that shifted both spending and health-care costs the wrong way.
  • As chairman of the House Ways and Means Committee, Ryan gave then-House Speaker John Boehner (R-Ohio) the political cover he needed to pass a Medicare physician payment bill that increased the deficit and Medicare premiums for seniors. The legislation did include some entitlement reforms, but at a high cost—and didn’t even permanently solve the physician payment problem.

Ryan’s “accomplishments” on spending as a member of leadership echo his prior votes as a backbench member of Congress. Ryan voted for the No Child Left Behind Act; for the Medicare Modernization Act, which created a new, unpaid entitlement costing $7.8 trillion over the long term; and for the infamous Troubled Asset Relief Program Wall Street bailout.

Over his 20-year history in Congress, I can’t think of a single instance where Ryan took a “tough vote” in which he defied the majority of his party. Instead, he always supported Republicans’ big-spending agenda. In that sense, tagging Ryan as a RINO—a Republican in Name Only—lacks accuracy, because it implies that most Republican lawmakers have a sense of fiscal discipline that only Ryan lacks.

It doesn’t take a rocket scientist to draw the line from Ryan’s brand of “leadership” to Donald Trump. The latter spent most of his 2016 campaign illustrating how Republican elected officials failed to deliver on any of their promises, despite talking up their plans for years.

Stand for Principle, or Stand for Nothing

When Republicans enter the House chamber on Friday to cast their votes against Pelosi’s bill, they should take a moment to contemplate her history. In the 2010 elections, Pelosi lost the speakership in no small part because of Obamacare. One scientific study concluded that the Obamacare vote alone cost Democrats 13 seats in the House that year.

Pelosi did not relinquish the speakership gladly; few would ever do that. But she proved willing to lose the speakership to pass the law—and would do so again, if forced to make such a binary choice.

I know not on what policy grounds, if any, Republicans would willingly sacrifice their majorities in the way Pelosi and the Democrats did to pass Obamacare. (Reforming entitlements? Tax cuts? Immigration?) That in and of itself speaks to the Republican Party’s existential questions, and the ineffective nature of the party’s “leadership.”

It also provides all the reason in the world that House Republicans should not trumpet their votes against the Pelosi legislation on Friday.

This post was originally published at The Federalist.

How Government-Run Health Care Worsened the Coronavirus Crisis

Leftist politicians have spent a great amount of time over the past two months attacking President Trump for his handling of the coronavirus crisis. But instead of reflexively criticizing the administration, those liberals might want to examine how the left’s dream of government-run health care has exacerbated the crisis within the United States.

One of the major causes of the dearth of testing over the past several months: Low payments from Medicare, which led to low payment rates from private insurance plans. It may come as a shock to people like Rep. Alexandria Ocasio-Cortez (D-NY), but guess what labs did when low payments meant they suffered a financial loss for every coronavirus patient tested? They performed fewer tests.

Low Reimbursements Equals Fewer Tests

A recent expose in USA Today highlighted how Medicare “lowballed payments” to labs for coronavirus tests, leading those labs to restrict the number of tests they performed. An executive at one lab, Aaron Domenico, told the paper that “I’m an American first, and if I could do it for cost, I’d be happy to do it for the people at cost.” But Medicare initially reimbursed laboratories only $51 for a coronavirus test, much less than Domenico’s costs of $67 per test.

Paying $51 for a diagnostic test sounds like a lot, but Medicare gives laboratories nearly twice that amount, or approximately $96, to test for the flu. And government bureaucrats setting unrealistically low prices meant that private insurers followed Medicare’s lead. Little wonder that the head of the National Independent Laboratory Association said “a number of labs are holding back” on performing additional tests “because they didn’t want to lose money.”

Thankfully, on April 14 Medicare raised its reimbursement for a coronavirus test from $51 to $100. Unsurprisingly, the number of tests performed daily has roughly doubled since that point. Centers for Medicare and Medicaid Services (CMS) Administrator Seema Verma said she “recognized that there may have been some issues with reimbursement” discouraging labs from performing coronavirus tests.

Bureaucrats Can’t Micromanage Health Care

Therein lies one of the major problems with government-run health care: The notion that federal bureaucrats can determine the correct price for every prescription drug, laboratory test, physician service, or hospital procedure across the country. Donald Berwick, a former CMS administrator who helped develop Sen. Elizabeth Warren’s single-payer proposal, once said, “I want to see that in the city of San Diego or Seattle there are exactly as many MRI units as needed when operating at full capacity. Not less and not more.”

Berwick’s comments suggest that the federal government can determine the “right” amount of MRI units in each city, and use policy levers to achieve that “correct” outcome. But the coronavirus testing fiasco demonstrates how federal bureaucrats often do a poor job of trying to micromanage health care from Washington. Paying doctors and laboratories too much will encourage over-consumption of care, while paying too little discourages providers from even offering the service.

Low Payments Lead to Job Losses, Too

The problems with coronavirus testing also preview the left’s efforts to expand government-run health care. For instance, Joe Biden’s campaign platform calls for a government-run health plan that “will reduce costs for patients by negotiating lower prices from hospitals and other health care providers.”

But all these proposals—whether they would abolish private insurance outright, as Warren and Sen. Bernie Sanders support, or offer a government-run “option,” as in Biden’s platform—would have the government “negotiate” prices by forcing doctors, nurses, and hospitals to accept less money. By lowering payment levels, those plans would lead to massive job losses—as many as 1.5 million jobs in hospitals alone under a transition to single-payer, according to one estimate in the prestigious Journal of the American Medical Association.

The pay cuts and furloughs affecting many front-line health workers—the health-care sector lost 1.4 million jobs during the month of April—provide a preview of the future. Instead of suffering temporary revenue declines due to the coronavirus pandemic, hospitals and medical practices would face permanent reductions in revenue from lower-paying government programs.

Worse yet, care will suffer when people cannot access the care they need at the paltry prices government programs will pay. While the left lays the coronavirus testing flaws at the feet of President Trump, they should look instead at the government-run programs they support as a major source of the problem. Voters being asked to endorse the movement towards socialism in November should take note as well.

This post was originally published at The Federalist.

“Medicare at 60” Shows Democrats’ Lust for Government-Run Health Care

The day after socialist Sen. Bernie Sanders, I-Vt., suspended his campaign for the Democratic presidential nomination, presumptive nominee and former Vice President Joe Biden announced his support for a smaller version of Sanders’ signature single-payer proposal. In a Medium post, Biden said he had “directed [his] team to develop a plan to lower the Medicare eligibility age to 60.”

As with many Democratic plans, the proposal sounds like a moderate option. After all, near-seniors will join Medicare soon enough, so how much harm would this plan cause?

But viewed from another perspective, Biden’s proposal looks like a major step toward Sanders’s goal of a government-run health care system. As a way to reduce the number of uninsured, the idea seems like a solution in search of a problem. But as a method to replace private coverage with government-run health care, the Biden plan could accomplish its goals effectively.

Most Eligible People Already Have Coverage

The consulting firm Avalere Health, founded by a Democrat and with liberal leanings, recently released an analysis indicating nearly 23 million people may qualify for coverage under the Biden proposal. But the firm’s headline cleverly attempted to bury the lede, obscuring the fact that the vast majority of eligible people already have health insurance.

As the below graph shows, Avalere found only 7 percent, or 1.7 million, of the 22.7 million people potentially eligible for the Biden proposal lack coverage. The majority of the 60-64 population (13.4 million, or 59 percent) obtain coverage not from government, but from their current or former employer.

Composition of Individuals Newly Eligible for Medicare Under Biden Proposal, Ages 60–64, 2018

The Avalere analysis more accurately depicts how 16.6 million people (13.4 million with employer coverage and 3.2 million with individual plans) could lose their existing private coverage. It also demonstrates how taxpayers could face major costs — particularly if people with private insurance drop that coverage and join the Biden Medicare plan — to reduce the uninsured population by a comparatively small amount.

Near-Retirees Are Comparatively Wealthy

Biden didn’t say how he would structure his proposal to allow people to buy into Medicare at age 60. But he did imply that enrolled individuals would receive some type of federal subsidy when he stated, “Any new federal cost associated with this option would be financed out of general revenues to protect the Medicare trust fund.”

Here again, many near-retirees, in the peak years of their earning potential, don’t need federal subsidies for health insurance. Various surveys show the median household income of near-retirees ranges between $85,000 and over $90,000.

At that income level, even those people who have to pay their entire insurance premiums — Obamacare Exchange policies can easily exceed $1,000 per month for the 60-64 population — could do so without a subsidy. Indeed, a family of three making $86,880 in 2020 would not qualify for any subsidy under the present regime, although Biden’s original health care plan calls for increasing the richness of the Obamacare subsidies.

‘Medicare at 60’ Is a Slingshot to Single-Payer

If Biden’s “Medicare at 60” proposal wouldn’t significantly reduce the number of uninsured — it wouldn’t — and wouldn’t lower costs for people who can’t afford coverage — the comparatively small number of uninsured among people ages 60-64 demonstrates the fallacy of that proposition — then why did Biden propose it in the first place?

Apart from serving as an obvious political sop to the Sanders crowd, the Biden “Medicare at 60” proposal would function as a major cost-shift. By and large, it wouldn’t help the previously uninsured obtain coverage nearly as much as it would use federal dollars to supplant funds already spent by the private sector (whether individuals or their employers).

By doing so, it would build the culture of dependence that represents the left’s ultimate aim: crowding out private insurance and private spending, and putting more people on the government rolls. That Biden would propose a plan so obviously centered around that objective shows he doesn’t fundamentally disagree with Sanders’s single-payer plan at all. He just doesn’t want to disclose his intentions before bringing socialized medicine to the American health-care system.

This post was originally published at The Federalist.

We Should Move Away from Employer-Based Insurance, But NOT Towards Single Payer

The left continues to seek ways to politically capitalize on the coronavirus crisis. Multiple proposals in the past several weeks would replace a potential decline in employer-provided health insurance with government-run care.

One analysis released earlier this month found the coronavirus pandemic could cause anywhere from 12 to 35 million Americans to lose their employer-provided coverage, as individuals lose jobs due to virus-related shutdowns. Of course, these coverage losses could remain temporary in some cases, as firms reopen and rehire furloughed workers.

But these lefties do have a point: The United States should move away from employer-provided health coverage. It just shouldn’t rely upon a government-run model to do so.

Biden: Let’s Expand an Insolvent Program

Days after his last remaining rival, Vermont Sen. Bernie Sanders, dropped out of the race for the Democratic presidential nomination, former vice president and presumptive nominee Joe Biden endorsed a plan to expand Medicare. Biden’s statement didn’t include details. Instead, he “directed [his] team to come up with a plan to lower the Medicare eligibility age to 60.”

One big problem with Biden’s proposed expansion: Medicare already faces an insolvency date of 2026, a date the current economic turmoil will almost certainly accelerate. He claimed that “any new federal cost associated with this option would be financed out of general revenues to protect the Medicare trust fund.” But Biden didn’t explain why he would choose to expand a program rapidly approaching insolvency as it is.

Another problem for Biden seems more political. As this space has previously noted, in 2017 and 2018, the former vice president and his wife received more than $13 million in book and speech revenue as profits from a corporation rather than wage income. By doing so, they avoided paying nearly $400,000 in payroll taxes that fund—you guessed it!—Medicare.

It doesn’t take a rocket scientist to ask the obvious question: If Biden loves Medicare so much that he wants to expand it, why didn’t he pay his Medicare taxes?

Medicare Extra

Other liberals have proposals that would expand the government’s role in health care still further. Examining the impact of coronavirus on coverage, and analyzing a movement away from employer-provided care, Ezra Klein endorsed the Medicare Extra plan as superior to Biden’s original health-care proposal for a so-called “public option.” Towards the end of his analysis, Klein makes crystal clear why he supports this approach:

[Medicare Extra] creates a system that, while not single-payer, is far more integrated than anything we have now: A public system with private options, rather than a private system with fractured public options.

Medicare Extra, originally developed by the Center for American Progress and introduced in legislative form as the Medicare for America Act by Rep. Rosa DeLauro (D-Conn.), goes beyond the Biden plan. Both would likely lead to a single-payer system, but Medicare Extra would do so much more quickly.

Biden’s original health care plan would create a government-run “option,” similar to Medicare, into which anyone could enroll. Individuals could use Obamacare subsidies (which Biden’s proposal would increase) to enroll in the government-run plan.

Notably, Biden’s proposal eliminates Obamacare’s subsidy “firewall,” in which anyone with an offer of “affordable” employer coverage does not qualify for subsidized exchange coverage. Removing this “firewall” will encourage a migration towards the exchanges, and the government-run plan.

By contrast, Medicare Extra would go three steps further in consolidating government-run care. First, it would combine existing government programs like Medicare and Medicaid into the new “Medicare Extra” rubric. Second, the legislation would automatically enroll people into Medicare Extra at birth, giving the government-run program an in-built bias, and a clear path towards building a coverage monopoly.

Third, Medicare Extra would not just allow individuals with an offer of employer-sponsored coverage to enroll in the Medicare Extra program, it would require the employer to “cash out” the dollar value of his contribution, and give those funds to the employee to fund that worker’s Medicare Extra plan.

The combination of this “cash out” requirement (not included in Biden’s proposal) and the other regulations on employer coverage included in Medicare Extra would result in a totally government-run system within a few short years. After all, if businesses have to pay the same amount to fund their employees’ coverage whether they maintain an employer plan or not, what incentive do they have to stay in the health insurance game?

Let Individuals Maintain Their Own Coverage

Both Biden’s proposals and Medicare Extra would consolidate additional power and authority within the government system—liberals’ ultimate objective. By contrast, the Trump administration has worked to give Americans access to options other than employer-provided insurance that individuals control, not the government.

Regulations finalized by the administration last year could in time revolutionize health insurance coverage. The rules allow for employers to provide tax-free contributions to employees through Health Reimbursement Arrangements, which workers can use to buy the health insurance plans they prefer. Best of all, employees will own these health plans, not the business, so they can take their coverage with them when they change jobs or retire.

It will of course take time for this transition to take root, as businesses learn more about Health Reimbursement Arrangements and workers obtain private insurance plans that they can buy, hold, and keep. But if allowed to flourish, this reform could remove Americans’ reliance on employers to provide health coverage, while preventing a further expansion of government meddling in our health-care system—both worthy objectives indeed.

This post was originally published at The Federalist.

Hospitals’ Corona Cash Crunch Shows Problems of Government-Run Care

The coronavirus pandemic has inflicted such vast damage on the American economy that one damaged sector has gone relatively unnoticed. Despite incurring a massive influx of new patients, the hospital industry faces what one executive called a “seismic financial shock” from the virus.

The types of shocks hospitals currently face also illustrate the problems inherent in Democrats’ proposed expansions of government-run health care. Likewise, the pay and benefit cuts and furloughs that some hospitals have enacted in response to these financial shocks provide a potential preview of Democrats’ next government takeover of health care.

Massive Disruptions

The health-care sector faces two unique, virus-related problems. The lockdowns in many states have forced physician offices to close, or scale back services to emergencies only. The cancellation of routine procedures (e.g., dental cleanings, check-ups, etc.) has caused physician income to plummet, just like restaurants and other shuttered businesses.

While many physician practices have seen a dramatic drop-off in patients, hospitals face an influx of cases—but the wrong kind of cases. According data from the Health Care Cost Institute, in 2018 a hospital surgical stay generated an average $43,810 in revenue, while the average non-surgical stay generated only $19,672.

The pandemic has raised hospitals’ costs, as they work to increase bed capacity and obtain additional personal protective equipment for their employees. But as one Dallas-based hospital system noted, coronavirus’ true “seismic financial shock” has come from the cancellations of elective surgeries that “are the cornerstone of our hospital system’s operating model.”

This rapid change in hospitals’ case mix—the type of patient facilities treat—has inflicted great damage. Replacing millions of higher-paying patients with lower-paying ones will rapidly unbalance a hospital’s books. Changing patient demographics, in the form of additional uninsured patients and patients from lower-paying government programs, only compounds hospitals’ financial difficulties.

A Preview of Democrats’ Health Care Future

The shock hospitals face from the rapid change in their case mix previews an expansion of government-run health care. The Medicare Payment Advisory Commission noted in a report released last month that in 2018, hospitals incurred a 9.3 percent loss on their Medicare inpatient admissions. To attempt to offset these losses as hospitals treat coronavirus patients, Section 3710 of the $2 trillion stimulus bill increased Medicare payments for COVID-related treatment by 20 percent.

With respect to the single-payer bill promoted by Sen. Bernie Sanders (I-VT), neither the conservative Mercatus Center nor the liberal Urban Institute assumed the higher reimbursement rates included in the stimulus bill. Mercatus’ $32.6 trillion cost estimate assumed no increase in current Medicare hospital or physician payments, while Urban’s $32 trillion cost estimate assumed a 15 percent increase in hospital payments and no increase in physician payments. Raising Medicare reimbursements to match the 20 percent increase included in the stimulus bill would substantially hike the cost of Sanders’ plan.

Conversely, presumptive Democratic nominee Joe Biden believes his “public option” proposal, by making enrollment in a government plan voluntary, represents much less radical change. But his plan increases the generosity of Obamacare subsidies and repeals current restrictions prohibiting workers with an offer of employer coverage from receiving those subsidies—both of which would siphon patients toward the government plan.

In 2009, the Lewin Group concluded that a government plan open to all workers would result in 119 million Americans dropping their private coverage. Such a massive influx of patients into a lower-paying government system would destabilize hospitals’ finances much the same way as coronavirus.

Economic Cutbacks and Job Losses

Sadly, the coronavirus pandemic has allowed us to see what a rapid influx of lower-paying patients will do to the hospital sector. A few weeks into the crisis, many systems have already resorted to major cost-cutting measures. Tenet Healthcare, which runs 65 hospitals, has postponed 401(k) matches for employees. In Boston, Beth Israel Deaconess has withheld some of emergency room physicians’ accrued pay, a measure sure to harm morale as first responders face long hours and difficult working conditions.

This economic damage from a rapid change in hospitals’ payer mix echoes a study in the Journal of the American Medical Association last spring. That study concluded that a single-payer health care system paying at Medicare rates would reduce hospital revenues by $151 billion annually, resulting in up to 1.5 million job losses for hospitals alone. Robust enrollment in the government-run health plan Biden supports would have only marginally lower effects.

Hospitals, like the rest of our economy, will in time recover from the financial impacts of the coronavirus pandemic. But they may not bounce back quickly, or at all, from another expansion of government-run health care—a fact that hospital workers facing cutbacks, and patients needing care, should take to heart in November.

This post was originally published at The Federalist.

The Coronavirus and Advance Directives

Sometimes, the right policy can come at the wrong time. Consider an article on how the coronavirus has upended nursing homes, hundreds of which have at least one—and in many cases far more than one—case among residents.

A Politico newsletter discussing the article last Monday included an ominous blurb: “The National Hospice and Palliative Care Association has been pushing Congress to give more support to advance care planning, perhaps in the next stimulus bill.” While the advocates may have the best of intentions, discussing advance care directives in the context of a global pandemic raises serious ethical questions.

Planning for Worst-Case Scenarios

End-of-life care remains a touchy political subject. In 2009, following comments by Gov. Sarah Palin (R-Alaska) about “death panels,” she defended her characterization of Democrats’ health care effort by pointing to a provision in a House draft allowing Medicare to cover end-of-life counseling. While the controversy prompted congressional Democrats to drop the provision from the bill that became Obamacare, the Centers for Medicare and Medicaid Services (CMS) in 2015 approved regulatory changes allowing Medicare to pay physicians for end-of-life consultations with their patients.

In most cases, talking through options and allowing patients to determine their intended course of treatment gives patients a voice in their own care. Advance care planning—whether through a formal directive, or even informal conversations amongst family members—also takes a weighty burden off of loved ones at a time of immense stress and emotional anguish.

My mother has told me throughout my adult life that, in extreme circumstances, she does not want medical personnel using extraordinary means to extend her life. Heart-breaking as it would be for me to relay that decision to her doctors, I could at least know I did not make that decision, but instead merely relayed a wish that my mother has expressed, consistently and repeatedly, over many years.

The Power of Persuasion

Under most circumstances, encouraging individuals to have these types of end-of-life conversations with their family members and physicians represents sound medical practice and wise public policy. But the middle of a global pandemic by definition does not constitute ordinary circumstances.

Here’s one telling example from Britain’s National Health Service. The BBC obtained a document from a regional medical group based in Sussex. The document, which sets out guidance for treating coronavirus patients in nursing homes, prompted one care manager to become “deeply concerned that residents and families are being pushed to sign” do-not-resuscitate forms:

The…guidance even provides a suggested script for GPs [general practitioners] to use in conversations with residents and families, part of which says ‘frail elderly people do not respond to the sort of intensive treatment required for the lung complications of coronavirus and indeed the risk of hospital admission may be to exacerbate pain and suffering.’

It goes on: ‘We may therefore recommend that in the event of coronavirus infection, hospital admission is undesirable.’

One care manager…[said] their GP had even told them ‘none of your residents aged over 75 will be admitted to hospital.’ They said they felt ‘shocked and numb’ to hear that. Another said: ‘We have been told flatly that it would be highly unlikely that they would be accepted into hospital.’

Put aside for a moment the fact that Britain’s system of socialized medicine has prompted at least some physicians to believe they should flatly refuse medical care to senior citizens (even though Health Secretary Matt Hancock denied such a policy exists). That such a system has also pressured family members to sign do-not-resuscitate orders for their loved ones speaks to the potential dangers of combining end-of-life counseling with the pressures faced by health care providers during a pandemic.

Preserve a Culture of Life

A content-neutral conversation among a doctor and a patient about constructing an advance directive, and what instructions to put in that advance directive, is one thing, but pressuring vulnerable patients to sign do-not-resuscitate orders during a global pandemic is quite another. Common sense, confirmed by the example from Britain, suggests that given the current medical crisis, the conversations could easily veer off-track from the former to the latter.

Advance care planning has its place in health care, but now seems an inauspicious time to push for its more widespread adoption. At present, our efforts should focus not just on preserving life, but on preserving a culture of life—and hurried conversations about end-of-life care in the current pandemic could undermine that culture significantly.

This post was originally published at The Federalist.

Colorado Plan Shows the Coercion Behind the Public “Option”

Former Vice President Joe Biden’s political comeback prompted health care stocks to surge last month following the Super Tuesday primaries. The rally, which occurred before the coronavirus pandemic took hold in the United States, stemmed in large part from Wall Street’s belief that Biden represents less of a threat to the sector as a potential president than Vermont Sen. Bernie Sanders’ single-payer health-care system.

But anyone who considers Biden’s alternative to single payer, the so-called “public option,” innocuous should look to Colorado. Lawmakers in the Centennial State recently revealed their version of the concept, and it represents an “option” in name only. Indeed, the state’s plan contemplates a level of coercion that in some respects exceeds that of Sanders’ system of socialized medicine.

Big Government Forces Hospitals’ Participation

For starters, the legislative proposal dictates prices for hospitals, based on a percentage of Medicare rates. As one might expect, the bill’s supporters believe the rates proposed in the legislation represent fair reimbursement levels, while some hospital executives disagree.

But the bill would also take away hospitals’ negotiating leverage, by requiring all Colorado facilities to participate in the new insurance offering. Hospitals refusing to participate would face fines of up to $40,000 per day. And if the prospect of nearly $1.5 million in government-imposed sanctions does not force a recalcitrant facility into submission, the bill also permits Colorado’s insurance commissioner to “suspend, revoke, or impose conditions on the hospital’s license.”

Think about that for a moment: The government forces hospitals to offer patients a service—even if the government’s price for that service could lead them to incur financial losses—and threatens to take away their license to do business if they refuse. That level of heavy-handed government involvement far exceeds the individual mandate in Obamacare.

Insurers Required to Participate, Too

The bill similarly requires all Colorado insurers to offer the new government-dictated “option” in each county in which they offer Obamacare exchange products. In counties where only one insurer currently offers coverage, the bill directs the insurance commissioner to “require carriers to offer the Colorado option in specific counties,” such that at least two carriers offer the plan in every county.

According to one report, the bill’s sponsors called their new offering the “Colorado option” rather than the “public option” because lawmakers did “not want to put the state budget at risk by creating a government-run insurance company.” Instead, lawmakers want to dragoon insurers into assuming that risk, even as the bill prohibits efforts by insurers to absorb potential losses from the “Colorado option” by raising rates elsewhere.

Worse Than Berniecare?

Sanders’ legislation would effectively put private insurers out of business, by making coverage for services covered by the single-payer system “unlawful.” The issue of whether to ban private insurance, and take away individuals’ ability to keep their current coverage, became a defining characteristic of Democrats’ nominating contest.

But the Colorado legislation could put private insurers and hospitals out of business, if they refuse the state’s commands. At least Sanders’ proposal allows hospitals to opt out of the government system if they decide—few would, but they do have that choice.

The Colorado legislation shows how Obamacare set a dangerous precedent, which Democrats want to extend throughout the health-care system. Just as Obamacare forced all Americans to buy a product for the first time ever, now lawmakers want to force hospitals and insurers to treat patients, even at their financial peril. Each could face a Hobson’s choice: Putting themselves out of business by incurring losses on “Colorado option” patients, or taking the “option” to decline to participate, at which point the state will regulate them out of business.

Colorado’s proposal of dubious merit and equally dubious constitutionality demonstrates the way in which even purported moderates like Biden have embraced a health-care agenda defined by ever-increasing levels of government intrusion and coercion. At present, Sanders’ single-payer legislation represents the far end of that continuum, but liberals will use proposals like Colorado’s “public option” to get there.

This post was originally published at The Federalist.

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.

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.

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.