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.

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.

The Other Epidemic Plaguing Washington: Bailouts and Moral Hazard

While lawmakers face tough decisions about the economic impact of coronavirus, they should keep in mind that they face battles on two fronts. They want to promote a healthy economy (or as close to one as is feasible) during the coronavirus downturn, but they also don’t want to exacerbate moral hazard.

Moral hazard reared its ugly head during the 2008-09 recession, particularly in the form of the infamous (and unpopular) TARP program. The concept holds that policy actions supporting people who engaged in “bad” behavior—for instance, bailing out the Wall Street firms that caused the financial crisis—will only encourage such behavior in the future. Multiple examples in recent days, featuring both corporations and individuals, suggest the concept remains alive and well in Washington.

Corporations and Buybacks

On the corporate side, individuals as varied as Rep. Alexandria Ocasio-Cortez (D-NY) and billionaire investor Mark Cuban have highlighted prior actions by airlines, who now seek a government bailout totaling $50 billion. Both noted that the airline industry as a whole spent 96 percent of its free cash flow over the past decade buying back shares—an act that might juice company stock prices, while leaving little cash on hand should a major calamity like a pandemic emerge.

Some have argued that because the Internal Revenue Code currently taxes corporations’ accumulated earnings, airlines have a strong disincentive to build up larger “rainy day funds,” notwithstanding the historically volatile nature of their industry. But the optics of this potential bailout reek of moral hazard, by privatizing gains (i.e., stock buybacks) and socializing losses.

Student Debt

The issue of moral hazard has not remained confined only to corporations. For instance, Sen. Elizabeth Warren (D-Mass.) has demanded that Congress include “broad student loan forgiveness,” along the lines of her presidential campaign proposal, as part of any “stimulus” legislation.

That student loan bailout proposal, originally released in May 2019, “cancels $50,000 in student loan debt for every person with household income under $100,000,” and “provides substantial debt cancellation for every person with household income between $100,000 and $250,000.”

That type of proposal has all sorts of flaws to it. Most notably, by rewarding individuals who picked costlier, private institutions (e.g., Harvard University), it punishes those who chose a less expensive school (e.g., a public institution or community college) to save money. It likewise punishes those who chose their degree based upon earning potential (e.g., an MBA) compared to those who decided to study what they love, even if it would not help their future earning prospects (e.g., art history).

Of course, such a massive (and expensive) bailout would have little to do with the immediate task at hand, in the form of the virus’ economic impacts. A household with income last year of $80,000, but where the income-earners telework, would receive far more debt forgiveness than the owner of a restaurant who earned far more last year but whose small business now lies in ruin because of the virus.

One can cite the present circumstances to make a case for some student loan assistance. Forbearance, a waiver of interest, and suspension of collections—all make sense, particularly for families suffering financial turmoil. But outright loan forgiveness? That would only exacerbate the rising cost of college education, as future students would spend away, thinking Washington will erase their debts in a similar fashion.

Don’t Pick Winners and Losers

Various publications have noted that the “stimulus” activity represents a bonanza for K Street. Lobbyists continue to make their pitch for bailing out various industries, and using coronavirus as a justification to enact agenda items that existed well before the epidemic.

But Congress should avoid the temptation to enact bailouts targeted at particular industries. Such activity only picks winners and losers, further entrenching Washington in the nation’s economy. Moreover, some of the industries seeking assistance have a less-than-critical role in the nation’s economy.

Cruise lines—most of whom base their ships in other countries anyway—how do they represent a vital national interest? Casinos—does anyone really think Americans won’t want to gamble again once the coronavirus restrictions get lifted?

Lawmakers always feel the need to “do something,” seemingly irrespective of what that “something” is. The current pandemic only exacerbates that dilemma. But Congress should proceed very cautiously, because the “cure” for the coronavirus economy could in the long run end up worse than the disease.

This post was originally published at The Federalist.

How Single Payer Would Make Outbreaks Like Coronavirus Worse

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

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

In an Outbreak, Could You Obtain Care?

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

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

Bureaucrats’ Questionable Spending Priorities

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

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

Socialized Medicine Brought to Its Knees By…the Flu?

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

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

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

This post was originally published at The Federalist.

Is Elizabeth Warren Trying to Use a “Goldilocks” Strategy to Win the Democratic Nomination?

In blessing the presidential candidacy of Sen. Elizabeth Warren (D-MA), former Housing and Urban Development Secretary and recent presidential dropout Julian Castro used an interesting rationale to explain his endorsement: “More than any other candidate in this race…Elizabeth Warren is the candidate who can unite the entire Democratic Party.”

That premise may well explain the strategy behind her campaign, to win the Democratic nomination as the “Goldilocks” candidate—not too hot, and not too cold.

The strategy wouldn’t make Warren a political moderate, by any stretch. No nominee who has endorsed a conversion to a single-payer system of socialized medicine would fall into that category. But making Warren the candidate most acceptable (or least unacceptable) to moderates and leftists alike does mean that, the longer the nomination fight plays out, the stronger her chances might get.

Contested Convention Ahead?

In the past several weeks, multiple stories have analyzed the possibility of a prolonged contest for the Democratic nomination. In the fourth quarter of 2019, four candidates—Vermont Sen. Bernie Sanders, former South Bend Mayor Pete Buttigieg, former Vice President Joe Biden, and Warren—raised more than $20 million, suggesting they will have ample resources to compete in primaries throughout the spring. The nomination fight also features two billionaires who have the ability to self-fund their campaigns, Tom Steyer and former New York City Mayor Mike Bloomberg.

Couple the field of well-financed candidates with the Democratic Party’s proportional allocation method, in which any candidate exceeding 15 percent of the vote in a state receives a share of that state’s delegates, and you have the recipe for a prolonged campaign of attrition. In this year’s “bizarro world” scenario, each of the half dozen candidates has the means to continue competing in primaries, and because many (if not most) will amass delegates along the way, they will have every incentive to do so.

It seems premature to make definitive judgments on the complexion of the campaign weeks before the first ballots get cast. But Democrats may convene in Milwaukee this July without a single candidate controlling the majority of delegates necessary to win the presidential nomination.

Least Common Denominator Candidate

If Democrats do end up with a contested convention, it seems unlikely to result in an outcome in which a previously undeclared candidate emerges from the shadows to win the nomination. Given the acrimony throughout the 2016 campaign, when Sanders’ supporters (rightly) protested at a process rigged against their candidate, the idea that a “white horse” candidate such as Michelle Obama, Oprah Winfrey, or someone similar could win the nomination without having entered a single primary seems far-fetched, not least because of the outrage that would ensue.

So a contested convention would feature the candidates currently declared, and only the candidates currently declared, battling for the nomination. At that point, it likely would become less a contest of persuasion—which candidate can I most enthusiastically support?—than an attempt to cobble together a coalition of delegates that focuses on a different test: Which candidate offends the least?

Of the four candidates leading the polls, Warren appears to win this test, by a fairly wide margin. Consider the negatives against the other candidates:

  • Biden’s age (77) has raised questions throughout the campaign about his physical stamina and mental acuity. Even after he reversed himself (under pressure) on taxpayer funding of abortion, Biden’s history of positions on issues—from his support for the 2005 bankruptcy bill, to his vote for the Iraq War, to his support for the 1994 crime bill, to his treatment of Anita Hill—remain to the right of the party, drawing scorn from leftists as a moderate supported by corporate interests.
  • Like Biden, Sanders’ age (78) remains an issue, particularly given his heart attack in October. While many on the left believe he has strong appeal to working-class voters, particularly in the Rust Belt, who have deserted the party, establishment types worry that a self-proclaimed socialist will prove unelectable in November.
  • Buttigieg has age concerns as well because of his relative youth (he turns 38 this month). He has little political experience outside South Bend, won his last mayoral election with a total of 8,515 votes, and lost his only statewide campaign by a nearly 25-percentage point margin. And his experience working at McKinsey has become fodder for attacks by the far-left, who love to hate the candidate they call “Wall Street Pete.”

By contrast, Warren has comparatively few obvious drawbacks. While a septuagenarian, her age (70) makes her several years younger than Biden and Sanders, and younger than President Trump. She has endorsed a host of far-left policies, but insists she remains a capitalist to her bones. And in a field that has shrunk to become dominated by white men, a Warren nomination would provide Democrats an identity politics card.

For all these reasons, Warren remains the top second choice of voters in most polls, even as her standing as voters’ first choice has shrunk. It makes her well-placed to serve as the compromise candidate should Democrats face a contested convention, which by definition would involve at least some delegates choosing their second-favorite candidate as the nominee.

The two biggest strikes against her appear largely self-inflicted: The controversy over her ancestry (exacerbated by her DNA test), and her evasions on health care. While Trump would bring the latter up often—indeed, has already done so—it seems unlikely any opponent would make it an issue during a fight for the Democratic nomination. (At least he or she would not do so publicly.)

As for health care, she evaded questions about how to pay for single payer for months, and finally released a funding plan in early November, only to say two weeks later she wouldn’t push for single payer until the third year of her term. This bobbing and weaving coincided with a pullback in her polling numbers. But to take the longer view, it syncs up well with a larger “Goldilocks” political strategy.

Her eventual position, in which she pledged to enact a robust “public option” immediately, followed by a push for single payer later, drew little love from either moderates (who don’t like talk of single payer at all) or leftists (who want to enact single payer immediately, as Sanders has promised). But it represents the kind of clunky political compromise could easily envision a party’s platform committee drafting. That makes it entirely consistent with an attempt to position Warren in ways that offend the fewest number of Democrats—a helpful strategy in the event of a contested convention.

Obama Wild Card?

One other figure could loom large over a prolonged nomination fight: Barack Obama. Two reports in recent weeks suggest first that Obama doubts Biden’s connection with voters, and second that Obama has talked up Warren’s candidacy behind closed doors. While one must caveat the articles with two of the biggest weasel words in politics—“If accurate”—these reports suggest that, should the nomination fight become prolonged, the last Democratic president may weigh in on behalf of the Massachusetts senator. While such a development might not decide the nomination, it could go a long way in doing so.

After Warren’s fumbling on health care this fall, some had begun to write off her candidacy. Indeed, this author said she had “Swift-boated” herself, by turning her supposed strength as a policy wonk into her biggest weakness. Paradoxically, however, while Warren’s machinations cost her in the polls over the short term (and would harm her in a general election campaign), they could help her to win the Democratic nomination.

This post was originally published in The Federalist.

Three Ways Pete Buttigieg Is No Moderate

In recent weeks, former South Bend Mayor Pete Buttigieg has enjoyed a boomlet in polls for the Democratic presidential nomination, helped in no small part by fawning press coverage. Politico and others have examined the candidate and his supposedly “moderate” message.

Rhetoric aside, however, the substance of Buttigieg’s policy plans seem anything but moderate. On multiple issues, Pete has embraced positions far to the left of anything Hillary Clinton dared endorse in her campaign four years ago, and which seem “moderate” only in comparison to the socialist delusions of candidates like Sen. Bernie Sanders (I-Vt.).

1. Big Tax Increases on the Middle Class

As I first noted last month, Buttigieg has supported at least one, and quite possibly several, tax increases on the middle class. His retirement security plan included one explicit tax increase on working families, endorsing legislation that would raise payroll taxes as part of a new regime of paid family leave.

The retirement white paper, released just before Thanksgiving, implicitly endorsed a second tax increase on the middle class as well. The plan proposed a new entitlement program, Long-Term Care for America, designed to replace the CLASS Act included in Obamacare, but which Congress repealed prior to its implementation due to solvency concerns. Buttigieg’s paper didn’t say how it would pay for the new spending created by the program, but other studies cited by the campaign did: They proposed another increase in the payroll tax, which would also fall on middle-class families.

I wrote about Buttigieg’s tax plans in the Wall Street Journal last month. Yet following that article, no one from the Buttigieg campaign bothered to refute, smack down, or otherwise correct my assertion that their candidate wants to tax middle-class families.

The deafening silence from the Buttigieg campaign regarding my op-ed suggests the candidate does indeed want to raise taxes on the middle class—he just hopes that no one will notice that fact. It seems like an ironic bit of silence, given that Buttigieg attacked Sen. Elizabeth Warren (D-MA) for being “extremely evasive” on the issue of middle-class tax increases last fall.

2. ‘Insurance, Whether You Want It or Not’

Buttigieg likes to advertise his health care plan as “Medicare for All Who Want It,” but as several stories over the holiday revealed, it comes with an intrusive twist. While his plan says that “individuals could opt out of public coverage,” they could do so only “if they choose to enroll in another insurance plan.”

In other words, Buttigieg would compel people to buy insurance—whether they want to or not, enforcing this revived individual mandate through the tax code. On April 15, individuals who didn’t enroll in health insurance the previous year would get a bill for coverage, which could total $5,000 or more, whether they wanted that coverage or not, and whether they knew they had that coverage or not.

It’s far from clear that this new “mandate on steroids” would pass constitutional muster. In 2012, the Supreme Court under Chief Justice Roberts blessed Obamacare’s mandate as a tax in part because “for most Americans the amount due will be far less than the price of insurance…It may often be a reasonable financial decision to make the payment rather than purchase insurance.”

Roberts justified Obamacare’s mandate as a tax because it gave the public a genuine choice: Buy insurance, or pay the IRS a tax. Buttigieg’s plan would give the public a Hobson’s choice: Buy insurance, or have insurance bought for you. It represents a significant increase in federal powers—one courts could (and should) strike down.

3. ‘Glide Path’ to Socialized Medicine

Notwithstanding his use of a strengthened individual mandate, Buttigieg ultimately wants to end up with a single-payer system of socialized medicine. He has made no bones about his objective, claiming that his health-care plan would provide a “glide path” to socialism.

As with most of the 2020 Democratic candidates who haven’t endorsed single payer explicitly, Buttigieg’s plan contains several characteristics designed to promote the growth of government-run health care. For instance, he would automatically enroll millions of individuals into the government-run health plan. (He claims Americans could opt out of the government plan, but if he wants the system to end in single payer, how easy would he make it for them to do so?) And he has proposed capping the amount that both private and public insurers can pay physicians and hospitals for health treatments, another way to funnel Americans into the government-run system.

Buttigieg’s plan would create the architecture to create a government-run system of socialized medicine. He just would build that edifice slightly more slowly than Sanders would. It represents but one of the big-government dreams of a candidate who, despite soothing rhetoric, has little in the way of policies to justify the term “moderate.”

This post was originally published at The Federalist.

Joe Biden’s Obamacare Gaffe Points to a Larger Truth

In Iowa just before the New Year, former Vice President Joe Biden had an interesting response to a voter’s concerns about Obamacare. The voter said his father had lost his coverage when the law’s major provisions took effect in 2014, and the “replacement” plans proved far more expensive. Asked to apologize for what PolitiFact dubbed its “Lie of the Year” for 2013—that “If you like your plan, you can keep it”—Biden demurred by claiming the following:

There’s two ways people know when something is important. One, when it’s so clear when it’s passed that everybody understands it. And no one did understand Obamacare, including the way it was rolled out. And the gentleman’s right—he said you could keep your doctor if you wanted to, and you couldn’t keep your doctor if you wanted to, necessarily. He’s dead right about that.

On its face, Biden’s comments initially resemble House Speaker Nancy Pelosi’s “We have to pass the bill so that you can find out what is in it” gaffe. But in reality, they hint at a larger truth: the federal government has gotten so big and sprawling, nobody really understands it.

Pelosi’s ‘Kinsley Gaffe’

Just before Obamacare’s passage in March 2010, Pelosi made comments that conservatives have parodied for most of the ten years since:

Upon closer inspection, though, her comments centered on the political messaging about the law, rather than the underlying policy. She prefaced her infamous quote by noting that “You’ve heard about the controversies within the bill, the process about the bill.”

But in Pelosi’s view, the American people had not heard about the substance of the bill itself: “I don’t know if you have heard that it is legislation for the future.” She went on to talk a bit about preventive care measures contained in Obamacare, which in her view would lower health-care costs. She then gave her infamous quote about passing the bill “so that you can find out what is in it, away from the fog of the controversy.”

Pelosi’s statement still seems extraordinary. She admitted that, even with Barack Obama—who won the presidency in fair measure through his rhetoric—in the White House, more than 250 Democrats in the House, and 60 Democrats in the Senate, Obamacare had proven a political failure. Democrats had lost the messaging battle in 2009 and 2010, and could only hope that enacting the legislation and allowing Americans to see its purported benefits could turn the dynamic around.

But Pelosi’s comments said “we have to pass the bill so that you can find out what is in it”—emphasis on the second person. She still claimed to know the contents of the legislation, contra the recent claims of the vice president at the time.

So Much for ‘Experts’

On one level, Biden’s comments echoed Pelosi’s. He talked about “the way it was rolled out”—a likely reference to the messaging battles of 2009-10, the “debacle” of the exchange launch in late 2013, or a combination of the two.

But unlike Pelosi—who said the public didn’t understand Obamacare—Biden said that “no one did understand Obamacare.” One wonders whether the statement meant to inoculate Obama from accepting blame for his “like your plan” rhetoric, even though Obama himself apologized for misleading the public on the issue in late 2013.

Regardless, Biden’s rhetoric echoes the example of Max Baucus, at the time the chairman of the Senate Finance Committee. Asked shortly after the legislation passed whether he had read Obamacare prior to its enactment, he responded that “I don’t think you want me to waste my time to read every single word of that health care bill,” because “we hire experts” who are the only people who “know what the heck it is:”

Except that four years later, one of those “experts” who worked on Baucus’ staff at the time, Yvette Fontenot, admitted that when drafting Obamacare’s employer mandate, “We didn’t have a very good handle on how difficult operationalizing the provision would be at that time.” So, to borrow Baucus’ own phrase, even one of his self-appointed “experts” didn’t “know what the heck it is” either.

Why Expand a Government You Can’t Even Understand?

Biden’s comments once again reveal that the federal government has become too big and sprawling for anyone to understand. Yet he and his Democratic colleagues continue to push massive, multi-trillion-dollar expansions of government as part of their presidential campaigns. Sen. Elizabeth Warren goes so far as to claim that “experts” can fix just about everything that’s wrong with the world, even though Biden’s admission shows that they need to start by fixing the problems they caused.

As the old saying goes, when you’re in a hole, stop digging. That axiom applies equally to Biden’s propensity to put his foot in his mouth and Democrats’ desire to expand a government they do not understand.

This post was originally published at The Federalist.

Elizabeth Warren’s Health Care “Choice:” Dishonesty

In Thursday night’s Democratic presidential debate, Sen. Elizabeth Warren (D-MA) may debut before a nationwide audience a surprising mantra for someone openly committed to enacting a single-payer system of socialized medicine: Choice.

NBC reports that Warren said on Saturday: “We’re going to push through…full health care coverage at no cost for everyone else who wants it—you can buy it for a modest amount. You don’t have to, but it’s your choice.”

To clarify her “you can buy it” comments, Warren’s most recent health care plan said she would immediately make “free” coverage available to anyone making less than two times the federal poverty level ($51,500 for a family of four in 2019), with sliding-scale premiums capped at no more than 5% of income for those making more than 200% of poverty. Her recent speeches have focused on selling this “transition” plan—“free” coverage if you want it, but only if you want it—rather than her earlier single-payer program.

Some conservatives have claimed that Warren’s change in rhetoric marks the “last gasp” for the left’s move towards socialized medicine. Don’t you believe it. Warren hasn’t given up on anything. Nor have Pete Buttigieg and the other candidates who have campaigned against “Medicare for All.” They, and she, have just chosen to become less candid with the American people about how they hope to achieve their ultimate objectives.

Why Warren Pivoted

Two reasons in particular explain why Warren suddenly embraced the mantra of choice. First, most Americans who have health insurance right now like their plan. A Gallup survey found that nearly seven in ten Americans find their health coverage either excellent (27%) or good (42%). In the 18 years since Gallup first started asking this question, the approval number for Americans’ health coverage has never dropped below 63%.

When millions of people received cancellation notices as Obamacare took effect, Barack Obama found out in 2013 how much people like their current coverage. He felt compelled to issue a public apology for his “Lie of the Year,” telling people they could keep their existing plans when many could not. In part due to these events six years ago, the fear of taking people’s coverage away has dominated the health care discussions at this year’s Democratic presidential debates.

By emphasizing choice, Warren seeks to minimize this potential source of controversy for key constituencies. In the Democratic primaries, union households who have negotiated generous health benefits may blanch at losing those benefits; one confronted Sen. Bernie Sanders (I-VT) about the issue in Iowa this past summer.

Then in next year’s general election, educated and affluent voters who have good health coverage will similarly fear a new plan taking that coverage away. As Philip Klein recently noted in the Washington Examiner, proposing the eradication of existing insurance options could well cost Warren in places like the suburbs of Philadelphia, Detroit, and Milwaukee—critically important battleground areas in battleground states.

De-Emphasizing (Middle Class) Tax Increases

Second, Warren’s earlier rhetoric about taking coverage away from all Americans implies another, similarly awkward question: How will you pay for this massive expansion of government? Warren tried to answer this query by releasing a funding proposal in early November, but in truth, it raised more questions than it answered.

To give but one example: Since Warren released her plan, one study found that her proposed wealth tax would raise $1 trillion less in revenue than she claimed. That $1 trillion gap represents money that she would have to get from somewhere else.

Her revenue plan has myriad other gimmicks buried inside (analyzed in detail here). For instance, her estimates didn’t take into account the fact that the tax increases will shrink the economy, and therefore by definition won’t produce all the revenue she claims.

Warren released her revenue plan claiming that she could fund the full cost of her single-payer plan without raising taxes on the middle class. But the more she pushed that plan, the more people would pick apart all the gimmicks—and Warren’s opponents would rightly claim the gap between what she said her plan would raise and what it actually does would end up coming from the middle class. As a result, Warren “chose” to pivot to her “choice” mantra, navigating away from the Scylla and Charybdis of taking away people’s coverage, and raising taxes on the middle class to do so.

Forcing People to ‘Choose’ Socialism

The change in Warren’s tone doesn’t mean she’s changed her ultimate objective, however. Consider her comments at a town hall on Monday: “When tens of millions of people have had a chance to try [the buy-in proposal], I believe, at that point, we’re going to be ready to vote for” single payer (emphasis added).

Like Buttigieg, Warren sees a buy-in program—call it a “government-run plan,” call it a “public option,” call it “Medicare for All Who Want It”—as creating a natural “glide path” to single payer. They remain quite outspoken in their goal: They want to achieve a socialized medicine system. If given the opportunity, they will use policy to accomplish that objective—just slightly more slowly than under an immediate transition to single payer.

A throwaway line in a recent Vox article got at this same point. The article focused on open enrollment for exchange plans, and the fact that insurers must limit enrollment to a certain period of time, because Obamacare’s costly pre-existing condition provisions encourage individuals to wait until they become sick to sign up for coverage. The penultimate paragraph included this claim:

Under the various public options that have been proposed, uninsured people would be automatically enrolled in the new optional government plan. One advantage the government has over private insurers is it doesn’t need its books to balance perfectly; adverse selection [a disproportionate number of sick people signing up] isn’t as big a concern. [Emphasis mine.]

The highlighted line demonstrates how liberals would use taxpayer funds for the government-run plan: subsidizing coverage in advance, or bailing out the government plan after the fact if premiums are set too low, or too many sick people enroll, or both. Vox’s line hints at the left’s true goal through a “public option:” To sabotage private plans, and force people into socialized medicine, one person at a time.

Warren’s “choice” mantra sounds innocuous, but its underlying premise—by her own admission—seeks to create a single-payer system, just over a slightly longer period. Conservatives who think her approach represents anything other than a change in tactics should think again. The wolf attacking private insurance hasn’t disappeared so much as put on a disguise of sheep’s clothing.

This post was originally published at The Federalist.

Unanswered Questions on Single Payer

This month’s Democratic presidential debate will likely see a continued focus on the single-payer health care proposal endorsed by Sens. Bernie Sanders of Vermont and Elizabeth Warren of Massachusetts. But for all the general discussion — and pointed controversy — over single payer at prior debates, many unanswered questions remain. The moderators should ask Sanders and Warren about the specific details of their legislation, such as:

►Section 901(A) of the bill states that “no benefits shall be available under Title XVIII of the Social Security Act” — i.e., Medicare. And an analyst with the liberal Urban Institute has said that “you can call (the bill) many things — from ambitious to unrealistic. But please don’t call it Medicare.” Why do you insist on calling your proposal “Medicare for All” when it would bear little resemblance to the Medicare program and, in fact, would abolish it outright?

►You have claimed that single payer will make health care a human right. But the bill itself does not guarantee access to a doctor — it only guarantees that patients will have their care paid for if they can find a doctor or hospital willing to treat them. In fact, in 2005, the Canadian Supreme Court ruled that “access to a waiting list is not access to health care,” because patients in that country’s single-payer system could not access care in a timely fashion. Why are you promising the American people access to care when your bill falls short of that promise?

►The Urban Institute estimated that a similar single-payer plan would raise national health care spending by $719.7 billion a year, because abolishing cost-sharing (e.g., deductibles, copayments, etc.) will increase demand for care. But the People’s Policy Project called Urban’s estimates “ridiculous,” because “there is still a hard limit to just how much health care can be performed because there are only so many doctors.” Which position do you agree with — the Urban Institute’s belief that individuals consuming more “free” health care will cause spending to rise, or the position that spending will not increase because at least some people who demand care will not be able to obtain it?

►Countries like Canada and Great Britain, both of which have single-payer health care systems, permit individuals to purchase private insurance if they wish — and many Canadians and Brits choose to do so. Why would you go beyond Canada, Britain and other countries to make private health insurance “unlawful” — and do you believe taking away individuals’ private insurance can pass constitutional muster with the Supreme Court?

►Four years ago, your Senate colleague Robert Menendez, D-N.J., was indicted for accepting nearly $1 million in gifts and favors from a Florida ophthalmologist. Menendez had tried to help that ophthalmologist — who was eventually convicted on 67 counts of defrauding Medicare — in a billing dispute with federal officials. Given this ethically questionable conduct by one of your own colleagues regarding the Medicare program, why does your legislation include no new provisions fighting fraud or corruption, even as it vastly expands the federal government’s power and scope?

►You have criticized President Donald Trump for his supposed attempts to “sabotage” the exchanges created under President Barack Obama’s health care law. How, then, would you stop a future Republican president from sabotaging a single-payer system when your legislation would vest more authority in the federal government than President Trump has?

Once Warren and Sanders finish answering these questions, the American people will likely recognize that, the senators’ claims to the contrary notwithstanding, single payer doesn’t represent a good answer for our health care system at all.

This post was originally published at USA Today.

Pete Buttigieg’s Plan to Tax the Middle Class

Democratic presidential candidate Pete Buttigieg claimed last month that “everything that we have proposed has been paid for, and we have proposed no tax increase on the middle class.” The South Bend, Indiana mayor is incorrect on both counts: He hasn’t said how he’d pay for all his proposed spending. He has endorsed one explicit tax increase on the middle class, and his recent retirement plan provides an outline for another. Add it up, and middle-class workers could face a trillion dollars in new taxes.

To support family caregivers, Mr. Buttigieg’s retirement plan restated his prior commitment to enact “an enhanced version of the Family Act,” which would provide 12 weeks of subsidized family leave. The candidate has yet to specify how exactly he would “enhance” the Family Act. But that legislation, introduced by Rep. Rosa DeLauro (D., Conn.) and Sen. Kirsten Gillibrand (D., N.Y.), pays for its new benefit by raising payroll taxes by 0.2% of income.

Mr. Buttigieg’s retirement plan also contains several new spending proposals, including a long-term care entitlement. He says the program would make benefits available to people over 65 and would “kick in after an income-related waiting period.” His plan cites two white papers as examples of “similar programs” proposed by scholars.

Mr. Buttigieg fails to note how both white papers propose to pay for the new benefits. In the first paper, the Long-Term Care Financing Collaborative envisions a program “fully financed by a dedicated revenue source,” including a payroll tax, “an explicit income tax surcharge, or other dedicated tax.”

The second paper, written by researchers affiliated with the Urban Institute, contains several policy details Mr. Buttigieg adopted, including waiting periods for wealthier people to qualify. That paper also proposes a specific funding source: “an additional tax of about 1.0 percent of earned Medicare-covered income.” In other words, an increase in the payroll tax—a tax increase on the middle class.

The Congressional Budget Office estimated last December that a one percentage point increase in the Medicare tax rate would raise $898.3 billion over a decade. If Mr. Buttigieg intends to fund his new long-term care program via the payroll tax, that tax increase, coupled with the 0.2% payroll tax hike in the Family Act he has already endorsed, would bring total payroll-tax increases to more than $1 trillion.

If Mr. Buttigieg doesn’t want to fund his long-term-care entitlement with the payroll-tax increase proposed in a paper his campaign cited, he should explain where that money will come from. His own claims notwithstanding, Mr. Buttigieg’s candidacy has lacked fiscal candor. His campaign told the Indianapolis Star last month that it had proposed $5.7 trillion in spending to that point, but cited a total of only $5.1 trillion in tax increases and savings.

Mr. Buttigieg’s retirement-security plan has since added other spending proposals with no mention of a funding source. There’s his plan to make those receiving Social Security disability benefits immediately eligible for Medicare, which will likely cost more than $100 billion. There’s his new requirement for state Medicaid programs to cover community-based services as a mandatory benefit, along with mandates on nursing homes—including a $15 minimum wage and higher staffing ratios—which will raise Medicaid spending.

Mr. Buttigieg called Elizabeth Warren “extremely evasive” for her answers on single-payer health care, saying, “I think that if you are proud of your plan and it’s the right plan, you should defend it in straightforward terms. And I think it’s puzzling that when everybody knows the answer to that question of whether her plan . . . will raise middle class taxes is ‘Yes.’ Why wouldn’t you just say so, and then explain why you think that’s the better way forward?” He should follow his own advice.

This post was originally published at The Wall Street Journal.