“Cadillac Tax” Repeal “Deal” Is What’s Wrong with Washington

News articles over the weekend reported that Congress later this week may repeal would Obamacare taxes—the “Cadillac tax” on high-cost health plans, and the medical device tax—as part of a larger spending bill. In reality, however, Democrats eventually agreed to repeal not one but two Obamacare industry taxes—the health insurer tax, which costs approximately $150 billion over a decade, along with the medical device tax—in exchange for repeal of the Cadillac tax, which labor unions want because of their cushy health insurance offerings.

According to The Hill:

On a separate front on ObamaCare, the spending deal repeals three major taxes that had helped fund the law’s coverage expansion. The deal will repeal a 40 percent tax on generous “Cadillac” health plans, the 2.3 percent medical device tax and the health insurance tax.

Those are major wins for the health insurance and medical device industries, which had long lobbied to lift those taxes. The Cadillac tax, in addition to providing about $200 billion in funding over 10 years, had been intended to help lower health care spending by incentivizing employers to lower costs to avoid hitting the tax.

On its face, the news sounds like a win for conservatives. Far from it. The way Congress has addressed these issues illustrates all the problems with politics, both procedural and substantive, in the nation’s capital.

Problem 1: Awful Process

Obvious considerations first: Congressional leaders in both parties want to enact the annual spending bills—which run thousands of pages, and spend trillions of dollars—before breaking for the Christmas holidays at week’s end. But congressional leaders only released text of the two bills publicly on Monday night, so there’s no way American citizens, let alone rank-and-file lawmakers, can digest it before Congress decides. As one lawmaker famously said:

The spending bills are 1,773 pages and 540 pages, respectively. (The health care provisions are in the larger of the two bills.) According to the Joint Committee on Taxation, the repeal of the three health care taxes will cost the federal government $387 billion over ten years.

Nearly ten years after a Democratic-controlled Senate passed the massive Obamacare statute on Christmas Eve—laden with pork-barrel provisions like the “Cornhusker Kickback,” the “Louisiana Purchase,” and the “Gator Aid”—a Senate run by Republicans wants to pass a similarly pork-laden spending bill. It brings to mind the old adage attributed to former House Speaker Sam Rayburn: “There is no education in the second kick of a mule.”

President Trump has likewise confronted the problem of Congress passing huge spending bills on short notice before. When presented with a similarly massive—and pork-laden—omnibus bill in March 2018, he famously proclaimed “I will never sign another bill like this again.” Time will tell if he follows through on his promise, but Congress sure isn’t acting like they think he will.

Problem 2: Raising Health Care Costs

The “Cadillac tax” in particular represents one way to address the problem of ever-increasing health costs. Current law allows employers to offer tax-free health benefits to their workers without limit. This dynamic encourages firms to provide overly generous benefits to their employees, leading to the over-consumption of health care.

By encouraging employers and employees to consume health insurance, and thus health care, more wisely, the “Cadillac tax,” despite its flaws, should work to moderate the growth in health care costs. That is, if Congress ever allows it to take effect as scheduled.

As I noted earlier this year, the left has an easy “solution” to the problem of rising health care costs: Regulations and price controls designed to bring down costs through government fiat. These price controls will lead to consequences for our health system, of course—rationing of care most notably—but they do “work,” insofar as they will arbitrarily reduce health spending.

Conservatives who oppose government price controls should embrace solutions like the “Cadillac tax” (or something like it) as one way to slow the growth in health care spending—not least because Democrats enacted the tax as part of Obamacare. Instead, many conservative lawmakers appear poised to endorse its repeal, without an alternative strategy to control health costs instead, because they find it easier to pursue the path of least resistance.

Problem 3: Lack of Discipline

The Congressional Budget Office previously estimated that repealing the “Cadillac tax” would cost the government nearly $200 billion in revenue over a decade, and larger sums in the decades after that. How does Congress propose to replace that revenue? By repealing the medical device and health insurer taxes, of course!

Therein lies the problem in Congress: The current definition of a bipartisan “deal” occurs when both sides get what they want—at the expense of taxpayers, or more specifically future generations. One article notes that “in general medical device tax repeal is more of a priority of Republicans and ‘Cadillac tax’ repeal for Democrats.” That makes this agreement combining repeal of both taxes like an episode of “Oprah’s Favorite Things,” where everyone wins a car.

Except for one minor detail: Our country already faces $23 trillion in debt, and trillion-dollar deficits as far as the eye can see. The “deal” on these two taxes alone will increase that debt by another quarter-trillion dollars (give or take). That number doesn’t include the increased spending arising from Congress’ agreement to bust its spending caps, or all the other ancillary provisions (like a bailout for coal miners) hitching a ride on the “Christmas tree” omnibus.

At some point soon, Congress’ lack of discipline—its inability to say no to spending pledges our country cannot afford—will harm our economic growth and fiscal stability. At that point, the American people will realize that, by constantly trying to play Santa Claus, lawmakers have left a multi-trillion-dollar lump of coal to the next generation, in the form of our rapidly skyrocketing debt.

UPDATE: This post was edited after publication to reflect late-breaking developments concerning the omnibus spending bills.

This post was originally published at The Federalist.

The Four Most Dangerous Words in Washington

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

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

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

Example 1: Drug Price Legislation

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

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

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

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

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

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

Example 2: Entitlements

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

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

Example 3: ‘Surprise Billing’ Legislation

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

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

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

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

No, Don’t Just ‘Do Something’

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

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

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

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

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

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

This post was originally published at The Federalist.

Independent Report Shows How Socialism Will Raise Your Taxes

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

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

Everyone’s Taxes Will Go Up—a Lot

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

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

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

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

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

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

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

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

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

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

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

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

Taxing Only the Rich Won’t Pay for Single Payer

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

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

Socialized Medicine Will Permanently Shrink the Economy

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

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

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

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

This post was originally published at The Federalist.

Six Things about Pre-Existing Conditions Republican “Leaders” Still Don’t Get

“If at first you don’t succeed, go ahead and quit.” That might be the takeaway from excerpts of a conference call held earlier this month by House Minority Leader Kevin McCarthy (R-CA), and published in the Washington Post.

McCarthy claimed that Republicans’ “repeal and replace” legislation last Congress “put [the] pre-existing condition campaign against us, and so even people who are [sic] running for the very first time got attacked on that. And that was the defining issue and the most important issue in the [midterm election] race.” He added: “If you’ll notice, we haven’t done anything when it comes to repealing Obamacare this time.”

Problem 1: Pre-Existing Condition Provisions In Context

I first noted this dilemma last summer: Liberals call the pre-existing condition provisions “popular” because their polls only ask about the policy, and not its costs. If you ask Americans whether they would like a “free” car, how many people do you think would turn it down? The same principle applies here.

When polls ask about the trade-offs associated with the pre-existing condition provisions—which a Heritage Foundation study called the largest driver of premium increases under Obamacare—support plummets. Cato surveys in both 2017 and 2018 confirmed this fact. Moreover, a Gallup poll released after the election shows that, by double-digit margins, Americans care more about rising health premiums and costs than about losing coverage due to a pre-existing condition.

The overall polling picture provided an opportunity for Republicans to push back and point out that the pre-existing condition provisions have led to skyrocketing premiums, which priced 2.5 million people out of the insurance marketplace from 2017 to 2018. Instead, most Republicans did nothing.

Problem 2: Republicans’ Awful Legislating

The bills’ flaws came from a failure to understand how Obamacare works. The law’s provisions requiring insurers to offer coverage to everyone (guaranteed issue) and price that coverage the same regardless of health status (community rating) make insurers want to avoid covering sick people. Those two provisions necessitate another two requirements, which force insurers to cover certain conditions (essential health benefits) and a certain percentage of expected health costs (actuarial value).

In general, the House and Senate bills either repealed, or allowed states to waive, the latter two regulations, while keeping the former two in place. If Republicans had repealed all of Obamacare’s insurance regulations, they could have generated sizable premium savings—an important metric, and one they could tout to constituents. Instead, they ended up in a political no man’s land, with people upset about losing their pre-existing condition “protections,” and no large premium reductions to offset that outrage.

Looking at this dynamic objectively, it isn’t surprising that McCarthy and his colleagues ended up with a political loser on their hands. The true surprise is why anyone ever thought the legislative strategy made for good politics—or, for that matter, good (or even coherent) policy.

Problem 3: Pre-Existing Conditions Aren’t Going Away

Within hours after Sen. Thom Tillis (R-NC) introduced a bill last year maintaining Obamacare’s pre-existing condition provisions—the requirement that all insurers offer coverage at the same rates to all individuals, regardless of health status—liberals weighed in to call it insufficient.

As noted above, Obamacare encourages insurers to discriminate against people with pre-existing conditions. Repealing only some of the law’s regulations would exacerbate that dynamic, by giving insurers more tools with which to avoid enrolling sick people. Liberals recognize this fact, and will say as much any time Republicans try to modify any of Obamacare’s major insurance regulations.

Problem 4: Better Policies Exist

According to the Post, McCarthy said he wants to recruit candidates who would “find a solution at the end of the day.” A good thing that, because better solutions for the problems of pre-existing conditions do exist (I’ve written about several) if McCarthy had ever bothered to look for them.

Their political attacks demonstrate that liberals focus on supporting “insurance” for people once they develop a pre-existing condition. (Those individuals’ coverage by definition really isn’t “insurance.”) By contrast, conservatives should support making coverage more affordable, such that people can buy it before they develop a pre-existing condition—and keep it once they’re diagnosed with one.

Regulations proposed by the Trump administration late last year could help immensely on this front, by allowing employers to subsidize insurance that individuals hold and keep—that is, coverage that remains portable from job to job. Similar solutions, like health status insurance, would also encourage portability of insurance throughout one’s lifetime. Other options, such as direct primary care and high-risk pools, could provide care for people who have already developed pre-existing conditions.

Using a series of targeted alternatives to reduce and then to solve the pre-existing condition problem would prove far preferable than the blunt alternative of one-size-fits-all government regulations that have made coverage unaffordable for millions. However, such a solution would require political will from Republicans—which to date they have unequivocally lacked.

Problem 5: Republicans’ Alternative Is Socialized Medicine

Instead of promoting those better policies, House Republican leaders would like to cave in the most efficient manner possible. During the first day of Congress, they offered a procedural motion that, had it been adopted, would have instructed the relevant committees of jurisdiction to report legislation that:

(1) Guarantees no American citizen can be denied health insurance coverage as the result of a previous illness or health status; and (2) Guarantees no American citizen can be charged higher premiums or cost sharing as the result of a previous illness or health status, thus ensuring affordable health coverage for those with pre-existing conditions.

Guaranteeing that everyone gets charged the same price for health care? I believe that’s called socialism—and socialized medicine.

Their position makes it very ironic that the same Republican committee leaders are pushing for hearings on Democrats’ single-payer legislation. It’s a bit rich to endorse one form of socialism, only to denounce another form as something that will destroy the country. (Of course, Republican leaders will only take that position unless and until a single-payer bill passes, at which point they will likely try to embrace it themselves.)

Problem 6: Health Care Isn’t Going Away As An Issue

The federal debt this month passed $22 trillion, and continues to rise. Most of our long-term government deficits arise from health care—the ongoing retirement of the baby boomers, and our corresponding obligations to Medicare, Medicaid, and now Obamacare.

Any Republican who cares about a strong national defense, or keeping tax rates low—concerns most Republicans embrace—should care about, and take an active interest in, health care and health policy. Given his comments about not repealing, or even talking about, Obamacare, McCarthy apparently does not.

But unsustainable trends are, in the long run, unsustainable. At some point in the not-too-distant future, skyrocketing spending on health care will mean that McCarthy will have to care—as will President Trump, and the Democrats who have gone out of their way to avoid talking about Medicare’s sizable financial woes. Here’s hoping that by that point, McCarthy and Republican leaders will have a more coherent—and conservative—policy than total surrender to the left.

This post was originally published at The Federalist.

Ocasio-Cortez Wants Congress to Stop Pretending to Pay for Its Spending

Get used to reading more storylines like this over the next two years: The left hand doesn’t know what the far-left hand is doing.

On Wednesday, incoming House Speaker Nancy Pelosi (D-CA) faced a potential revolt from within her own party. Rep.-elect Alexandria Ocasio-Cortez (D-NY) and several progressive allies threatened to vote against the rules package governing congressional procedures on the first day of the new Congress Thursday, because of proposed changes they believe would threaten their ability to pass single-payer health care.

What’s Going On?

Ocasio-Cortez and her allies object to Pelosi’s attempt to reinstate Pay-as-You-Go (PAYGO) rules for the new 116th Congress. Put simply, those rules would require that any legislation the House considers not increase the deficit over five- and ten-year periods. In short, this policy would mean that any bill proposing new mandatory spending or revenue reductions must pay for those changes via offsetting tax increases and/or spending cuts—hence the name.

Under Republican control, the House had a policy requiring spending increases—but not tax cuts—to be paid for. Pelosi would overturn that policy and apply PAYGO to both the spending and the revenue side of the ledger.

Progressives object to Pelosi’s attempt to constrain government spending, whether in the form of additional fiscal “stimulus” or a single-payer health system.

However, Pelosi’s spokesman countered with a statement indicating that the progressives’ move “is a vote to let Mick Mulvaney make across-the-board cuts.” Mulvaney heads the Office of Management and Budget, which would implement any sequester under statutory PAYGO.

Regardless of what the new House decides regarding its own procedures for considering bills, Pay-as-You-Go remains on the federal statute books. Democrats re-enacted it in 2010, just prior to Obamacare’s passage. If legislation Congress passed  violates those statutory PAYGO requirements (as opposed to any internal House rules), it will trigger mandatory spending reductions via the sequester—the “across-the-board cuts” to which Pelosi’s spokesman referred.

To Pay for Spending—Or Not?

Progressives think reinstituting PAYGO would impose fiscal constraints hindering their ability to pass massive new spending legislation. However, the reality does not match the rhetoric from Ocasio-Cortez and others. Consider, for instance, just some of the ways a Democratic Congress “paid for” the more than $1.8 trillion in new spending on Obamacare:

  • A CLASS Act that even some Democrats called “a Ponzi scheme of the first order, the kind of thing Bernie Madoff would have been proud of,” and which never went into effect because the Obama administration could not implement it in a fiscally sustainable manner;
  • Double counting the Medicare savings in the legislation as “both” improving the solvency of Medicare and paying for the new spending in Obamacare;
  • Payment reductions that the non-partisan Medicare actuary considers extremely unlikely to be sustainable, and which could cause more than half of hospitals and nursing homes to become unprofitable within a generation;
  • Tax increases that Congress has repeatedly delayed, and which could end up never going into effect.

A Bipartisan Spending Addiction

An external observer weighing the Part D and Obamacare examples would find it difficult to determine the less dishonest approach to fiscal policy. It reinforces that America’s representatives have a bipartisan addiction to more government spending, and a virtually complete unwillingness to make tough choices now, instead bequeathing massive (and growing) amounts of debt to the next generation.

In that sense, Ocasio-Cortez and her fellow progressives should feel right at home in the new Congress. Republicans may criticize her for proposing new spending, but the difference between her and most GOP members represents one of degree rather than of kind. Therein lies the problem: In continuing to spend with reckless abandon, Congress is merely debating how quickly to sink our country’s fiscal ship.

This post was originally published at The Federalist.

Three Elements of a Conservative Health Care Vision

Recently I wrote about how conservatives failed to articulate a coherent vision of health care, specifically issues related to pre-existing conditions, in the runup to the midterm elections. That article prompted a few Capitol Hill colleagues to ask an obvious question: What should a conservative vision for health care look like? It’s one thing to have answers on specific issues (i.e., alternatives to Obamacare’s pre-existing condition regulations), but what defines the vision of where conservatives should look to move the debate?

Henceforth, my attempt to outline that conservative health-care vision on a macro level with three relatively simple principles. Others may express these concepts slightly differently—and I take no particular pride of authorship in the principles as written—but hopefully they will help to advance thinking about where conservative health policy should lead.

Portable Insurance

Conversely, conservatives believe in insurance purchased by individuals—or, as my former boss Jim DeMint likes to describe it, an insurance policy you can buy, hold, and keep. With most Americans still obtaining health coverage from their employers, a move to individually owned coverage would mean individuals themselves would decide what kind of insurance to purchase, rather than a business’s HR executives.

Conservatives should also promote the concept of portable insurance that can move from job to job, and ideally from state to state as well. If individuals can buy an insurance policy while young, and take it with them for decades, then much of the problem of covering individuals with pre-existing conditions will simply disappear—people will have the same insurance before their diagnosis that they had for years beforehand.

I wrote approvingly about the Trump administration’s proposals regarding Health Reimbursement Arrangements precisely because I believe that, if implemented, they will advance both prongs of this principle. Allowing employees to receive an employer contribution for insurance they own will make coverage both individual and portable, in ways that could revolutionize the way Americans buy insurance.

A Sustainable Safety Net

As it is, the Medicare program became functionally insolvent more than a year ago. The year before Obamacare’s passage, the Medicare trustees asserted the program’s hospital insurance trust fund would become insolvent in 2017. Only the double-counting included in Obamacare—whereby the same Medicare savings were used both to “save Medicare” and fund Obamacare—has allowed the program to remain solvent, on paper if not in fact.

Reasonable people may disagree on precisely where and how to draw the line at the sustainability of our entitlements. For instance, I hold grave doubts that able-bodied adults belong on Medicaid, particularly given the way Obamacare’s expansion of Medicaid has encouraged states to discriminate against individuals with disabilities and the most vulnerable.

But few could argue that the current system qualifies as sustainable. Far from it. With Medicare beneficiaries receiving more from the system in benefits than they paid in taxes—and the gap growing every year—policy-makers must make hard choices to right-size our entitlements. And they should do so sooner rather than later.

Appropriately Aligned Incentives

Four decades ago, Margaret Thatcher hinted at the primary problem in health care when she noted that socialists always run out of other people’s money. Because third-party insurers—in most cases selected by HR executives at individuals’ place of business rather than the individuals themselves—pay for a large share of health expenses, most Americans know little about the price of specific health care goods and services (and care even less).

To state the obvious: No, individuals shouldn’t try to find health care “deals” in the ambulance on the way to the hospital. But given that much health care spending occurs not for acute cases (e.g., a heart attack) but for chronic conditions (i.e., diabetes), policymakers do have levers to try to get the incentives moving in the right direction.

Reforming the tax treatment of health insurance—which both encourages individuals to over-consume care and ties most Americans to employer-based insurance—would help align incentives, while also encouraging more portable insurance. Price transparency might help, provided those prices are meaningful (i.e., they relate to what individuals will actually pay out-of-pocket). Giving individuals financial incentives to shop around for procedures like MRIs, or even surgical procedures, also would place downward pressure on prices.

This post was originally published at The Federalist.

Bill Cassidy’s “Monkey Business”

Last we checked in with Louisiana Republican Sen. Bill Cassidy, he was hard at work adding literally dozens of new federal health care requirements to a Republican “repeal-and-replace” bill. This week comes word that Cassidy continues to “monkey around” in health care — this time quite literally.

STAT reports: “Sen. Bill Cassidy is trying to help hundreds of chimpanzees enjoy an easy retirement in his home state of Louisiana. The Republican is pushing for an amendment to a major appropriations bill winding its way through Congress this week that would force the National Institutes of Health to make good on a 2015 promise to move all its chimps out of research facilities.”

Don’t get me wrong: I oppose animal cruelty as much as the next person. If NIH lacks a compelling scientific justification to conduct research on chimpanzees, or any other animal, then it should cease the research and provide alterative accommodations for the creatures affected.

But on at least three levels, Cassidy’s amendment demonstrates exactly what’s wrong with Washington D.C.

Problem 1: Skewed Priorities

The federal debt is at more than $21 trillion and rising — more than double its $10.6 trillion size not ten years ago, on the day Barack Obama took office. American troops remain stationed in Afghanistan, and elsewhere around the world. Russia still looks to undermine American democracy and to meddle in this year’s midterm elections. The situation with North Korea remains tenuous, as the North Koreans continue to develop intercontinental ballistic missile technologies and their nuclear program.

So why is Cassidy trying to consume Senate floor time with a debate and vote on the chimpanzee amendment, after having already sent a letter to NIH on the subject? On a list of America’s top policy issues and concerns, the fate of 272 chimpanzees wouldn’t register in the top 100, or even in the top 1,000. So why should members of Congress (to say nothing of their staffs) spend so much time on such a comparatively inconsequential issue?

Problem 2: Cassidy Doesn’t Want to Repeal Obamacare

Rather than spending time on a chimpanzee amendment, Cassidy — like his Senate Republican colleagues — should focus on keeping the promise they made to their voters for the past four election cycles that they would repeal Obamacare. But unfortunately, many of the people who made that promise never believed it in the first place.

Based on his record, Cassidy stands as one of those individuals opposed to Obamacare repeal. As I noted in June, Cassidy does not want to repeal the federal system of regulations that lies at the heart of the health care law. In fact, a health care plan released earlier this summer seemed designed primarily to give lawmakers like Cassidy political cover not to repeal Obamacare’s most onerous regulations — even though a study by the Heritage Foundation indicates those regulations are the prime driver of premium increases since the law passed.

Problem 3: Cassidy Just Voted to Entrench Obamacare

Earlier this month, I noted some Republicans in the Senate would likely vote to allow the District of Columbia to tax individuals who do not purchase health insurance, after having voted to repeal that mandate in last year’s tax bill. After I wrote that story, Cassidy became one of five Senate Republicans to do just that, by voting to table (or kill) an amendment defunding Washington’s new individual mandate.

Because Cassidy voted to keep the mandate in place in D.C., he voted to allow District authorities to seize and sell individuals’ property if they do not purchase “government-approved” health coverage. Rather than voting to repeal Obamacare, Cassidy and his colleagues voted to entrench Obamacare in the nation’s capital — for which they have sovereign jurisdiction under the Constitution.

Even apart from Cassidy’s flip-flopping on repeal of Obamacare and its individual mandate, the contrast with the letter to NIH raises its own questions. In that letter, Cassidy emphasized that former research chimpanzees should have “the opportunity to live in mixed-sex groups and … daily access to nesting materials.”

This all sounds well and good, but why does Cassidy seemingly care so much about giving freedom to chimpanzees and so little about giving freedom to District of Columbia residents to buy (or not buy) the health coverage they wish to purchase?

Congress, Stop Monkeying Around

Five years ago, Democratic Rep. Frank Pallone famously called a congressional hearing on the healthcare.gov debacle a “monkey court.” Five years later, the Cassidy amendment on chimpanzee research demonstrates how Congress continues to “monkey around.”

Republicans should stop the primate-related sideshows and focus on things that really matter. Like sticking to the promise they made to voters for eight years to repeal Obamacare.

This post was originally published at The Federalist.

Rescissions Package Shows Washington’s Spending Problem

Talk about swampy: Republicans control the House, the Senate, and the White House, yet even token attempts to reduce spending cannot succeed.

Last week’s failure of a $15 billion package of rescissions (i.e., spending cuts) that the administration had proposed partly reflected the narrow Republican majority in the Senate. With Republicans’ one-vote margin, objections by Sens. Susan Collins (R-ME) and Richard Burr (R-NC) sank the measure in a 48-50 vote.

Health Care: Dems Demagogue, GOP Caves

Nearly half of the proposed savings, approximately $7 billion, in the rescissions package came from the State Children’s Health Insurance Program (SCHIP)—roughly $5.1 billion in unobligated balances, and $1.9 billion in child enrollment contingency funds for the current fiscal year that ends in September.

Liberals claimed the rescissions package would “gut” the contingency fund and “put the health of children at risk.” However, the Congressional Budget Office (CBO) last month noted that, with respect to the $5.1 billion in unobligated SCHIP balances, “authority to distribute the funds to states…expired in 2017.”

CBO also “projected that the rescission from the child enrollment contingency fund would not affect payments to states.” In sum, the budget office concluded that the $7 billion rescission “would not affect…the number of individuals with insurance coverage.”

Had Republicans stuck to their prior principles on SCHIP, much of the rescissions package would have proved unnecessary. Congress never would have authorized the funds in the first place, eliminating the need to rescind that spending. They did not. Collins voted against the package because of the SCHIP funds, while Sen. Lisa Murkowski (R-AK) voted to support it, but very begrudgingly.

Parochial Interests Clip the Other Vote

The other Senate Republican no vote came from Burr, a surprise opponent of the measure. Burr said he opposed the package’s $16 million reduction in funding for the Land and Water Conservation Fund.

Burr’s staff told the Washington Post they had not received assurances that Burr could receive a vote on an amendment striking the land and water reduction from the package, leading the senator to oppose the procedural motion to bring the package to the floor.

On the other hand, killing a $15 billion spending reduction package over literally 0.1 percent of its contents seems more than slightly absurd. With the federal debt at $21 trillion and rising, if Congress will not act on this package—buckets of unspent money lying around at agencies, like spare change under the proverbial couch cushions—when will it discover fiscal discipline?

All Dessert, No Spinach

The defeat of this rescissions package means another may not follow in short order. The administration wanted to propose reductions in spending from March’s omnibus legislation. But appropriators like Senate Majority Leader Mitch McConnell (R-KY) said that one party clawing back money included in a bipartisan budget deal might impede Congress’ ability to pass budget-busting legislation in the future. (Quelle horreur!)

The administration relented in the short-term, hoping to start a virtuous cycle of fiscal responsibility and set spending-reducing precedent they could build upon. Unfortunately, however, the administration failed to recognize the magnitude of this Congress’ bipartisan addiction to federal spending.

Sooner or later, Congress will end up passing spending reductions of a much larger scale than last week’s rescissions package. That they failed to start that task when they had an easy opportunity—the lowest of the low-hanging fruit—will make the spending reductions Congress ultimately enacts that much larger, and more painful.

This post was originally published at The Federalist.

No, Nancy Pelosi, Republicans Aren’t “Cutting” Medicare — But They Should

In a many-layered case of irony, House Minority Leader Nancy Pelosi (D-CA) attacked Republicans on Wednesday for doing something they didn’t do—but she did. In a letter to her Democratic colleagues, Pelosi wrote the tax reform bill “will lead to devastating cuts to Medicare and Medicaid.”

First things first: A slowdown in a program’s projected growth rate does not constitute a “cut.” That fact applies just as much to Republican spending proposals as Democratic ones. You don’t have to take my word for it: Multiple fact check articles discussing Obamacare’s reductions in Medicare spending pointed out that under Democrats’ law, “Medicare spending will increase each year but at a lower rate.”

Pelosi’s 2011 phraseology hit the nail on the head, because Democrats did “take” money out of Medicare to fund Obamacare’s new entitlements. While on paper the spending reductions extended the life of the Medicare trust fund, the Congressional Budget Office concluded that Obamacare did not “enhance the ability of the government to pay for future Medicare benefits.”

While the Democrat record on Medicare leaves much to be desired, so too does the Republican one. Whereas Democrats reduced Medicare spending, then diverted those savings to fund another new and costly entitlement, Republicans just last month turned around and increased Medicare spending.

In the February budget “deal,” Republicans repealed the Independent Payment Advisory Board (IPAB). While Obamacare created this unelected, unaccountable board of bureaucrats to make binding rulings regarding Medicare, it did so for a worthwhile purpose: To cap Medicare spending. As I noted last fall, Republicans could have kept the caps in place, while repealing the board. They chose not to do so. As a result, the budget “deal” raised entitlement spending rather than lowering it.

As it stands now, the “devastating cuts to Medicare and Medicaid” that Pelosi claimed to warn her colleagues about on Wednesday seem inevitable—not because Republicans will soon pass legislation slowing the growth of entitlements, but instead because they refuse to do so. Because some Republicans remain under the misapprehension that Medicare “is underfunded,” and because liberals love running “Mediscare” campaigns designed to frighten seniors into voting Democratic, Republicans seem poised to do exactly nothing on entitlement reform for the foreseeable future.

At least, until the debt crisis arrives—which it will, and sooner than many think. With the imminent return of trillion-dollar deficits, and the federal government already $21 trillion in debt, China and other nations may not take kindly to the bipartisan profligacy perpetrated by Democrats and Republicans alike.

As I noted two years ago, if not for the double-counting fiscal gimmicks included in Obamacare, the Medicare Hospital Insurance Trust Fund would already have been exhausted, putting the program’s solvency quite literally on borrowed time.

Last month, in typically understated fashion, Pelosi tweeted about how Republicans were “plotting to destroy your Medicare, Medicaid, and Social Security.” That claim implies a level of intent—that Republicans actually have a plan to reform entitlement spending—that quite clearly does not exist.

Instead, Republicans and Democrats will continue to destroy Medicare, Medicaid, and Social Security in the same way they have over the past several decades. Both parties will ignore the problem and do nothing until it’s too late. It’s the most insidious type of “bipartisanship,” but in Washington, also the most common.

This post was originally published at The Federalist.

Lowlights of Senate “Budget” Deal

In the budget agreement announced Wednesday between Republican Sen. Mitch McConnell and Democrat Chuck Schumer, McConnell’s negotiating position can be summed up thusly: “Give us the money we want for defense spending, and you can run the rest of the country.”

The result was a spending bonanza, with giveaways to just about every conceivable lobbying group, trade association, and special interest possible. The unseemly spectacle resembles “Oprah’s Favorite Things:” “You get a car! You get a car! You get a car! EVERYONE GETS A CAR!!!”

Even reporters expressed frank astonishment at the bipartisan profligacy. Axios admitted that “there’s a ton of health care money in the Senate budget deal,” while Kaiser Health News noted that the agreement “appear[s] to include just about every other health priority Democrats have been pushing the past several months.”

Of course, McConnell and Schumer want to ram it through Congress and into law by Thursday evening—because we have to pass the bill to find out what’s in it.

Lowlights of the Health Legislation

Repeal of Medicare Spending Restraints: The bill would repeal Obamacare’s Independent Payment Advisory Board (IPAB), a board of unelected bureaucrats empowered to make rulings on Medicare spending. I noted last year that conservatives could support repealing the power given to unelected bureaucrats while keeping the restraints on Medicare spending—restraints which, once repealed, will be difficult to reinstitute.

Congressional leaders did nothing of the sort. Instead the “deal” would repeal the IPAB without a replacement, raising the deficit by $17.5 billion. Moreover, because seniors pay for a portion of Medicare physician payment spending through their Part B premium, repealing this provision without an offset would raise seniors’ out-of-pocket costs. While a Congressional Budget Office (CBO) score of the bill as a whole was not available as of press time Wednesday evening, this provision, on its own, would raise Medicare premiums by billions of dollars.

Big Pharma Giveaway: In a further giveaway to the pharmaceutical industry, the bill would close the Medicare Part D prescription drug “donut hole” a year earlier—that is, beginning in 2019 rather than 2020. Having failed to repeal Obamacare, Republicans apparently want to expand this portion of the law, in the hopes of attracting seniors’ votes in November’s mid-term elections.

Extension of an Unreformed SCHIP Program: The bill would extend for another four years the State Children’s Health Insurance Program—a mandatory spending program that Republicans extended for six years just last month. I previously explained in detail that last month’s reauthorization failed to include at least ten different conservative reforms that Republicans previously supported. By extending the program for another four years, the “deal” would prevent conservatives from enacting any reforms for a decade.

Back in 2015, Republican aides pledged that “Republicans would like to reform and improve this program, and the next opportunity will be in two years when we have a new President.” Not only have Republicans done nothing of the sort, the additional extension will prevent this president—and potentially the next one as well—from reforming the program.

Mandatory Funding for Community Health Centers: The bill provides for $7.8 billion in mandatory spending for community health centers over the next two years, once again extending a mandatory program created by Obamacare.

While many conservatives may support funding for community health centers, they may also support funding them through the discretionary appropriations process, rather than by replenishing a pot of mandatory spending created by Obamacare to subvert the normal spending cycle. The normal appropriations process consists of setting priorities among various programs; this special carve-out for community health centers subverts that process.

Mandatory Opioid Funding: The bill also provides $6 billion in mandatory spending over the next two years to address the opioid crisis. As with the community health center funding, some conservatives may support increasing grants related to the opioid crisis—through the normal spending process.

The Schumer-McConnell “deal” would bust through the Budget Control Act spending caps, increasing the amount of funds available for the normal appropriations bills. (Most of this spending increase would not be paid for.) Additional mandatory health care spending on top of the increase in discretionary funding represents a spendthrift Congress attempting to have its cake and eat it too, while sticking future generations with the bill in the form of more debt and deficits.

But Wait—There’s More!

Surprisingly, the bill does not include an Obamacare “stabilization” (i.e., bailout) package. But other reports on Wednesday suggest that will arrive in short order too. One report noted that Democrats want to increase Obamacare premium subsidies. They not only want to restore unconstitutional payments that President Trump cancelled last fall, “but to expand it—and to bolster the separate subsidy that helps people pay their premiums.”

Republican leaders want to pass a massive Obamacare bailout in the next appropriations measure, an omnibus spending bill likely to come to the House and Senate floors before the Easter break. In a sign of Republicans’ desperation to pass a bailout, Wednesday’s report quoted a Democratic aide as saying that corporate welfare to insurers in the form of a reinsurance package “has become so popular among Republicans that Democrats don’t feel like they have to push very hard.”

There are two ways to solve the problem of rising premiums in Obamacare. One way would fix the underlying problems, by repealing regulations that have led to skyrocketing premiums. The other would merely throw money at the problem by giving more corporate welfare to insurers, providing a short-term “fix” at taxpayers’ ultimate cost. Naturally, most Republicans wish to choose the latter course.

Moreover, in bailing out Obamacare, Republicans will be forced to provide additional taxpayer funding of abortion coverage. There is no way—zero—that Democrats will provide any votes for a bill that provides meaningful pro-life protections for the Obamacare exchanges. Republicans’ desperation to bail out Obamacare will compel them to abandon any pretense of pro-life funding as well.

Most Expensive Parade Ever?

Press reports this week highlighted Pentagon plans to, at President Trump’s request, put on a military spectacle in the form of a massive parade. Trump tweeted his support for the Schumer-McConnell deal on Wednesday, calling it “so important for our great Military.”

It’s an ironic statement, on several levels. First, the hundreds of billions in new deficit spending coming from the military buildup included in the agreement would make the parade the most expensive ever, by far. Second, Michael Mullen, the former chairman of the Joint Chiefs of Staff, called our rising debt levels our biggest national security threat, because it makes us dependent on other countries to buy our bonds. Given that statement, one can credibly argue that this deficit-driven spending binge will harm our national security much more than the defense funds will help it.

Time will tell whether or not the legislation passes. But if it does, at some point future generations will look back and wonder why the self-proclaimed “king of debt” imposed a financial burden on them that they will not be able to bear easily—if at all.

This post was originally published at The Federalist.