The Better Solution for Our Health Insurance System: A Plan You Can Actually Keep

Sometimes, liberals and conservatives agree on a policy problem, but disagree strongly on the best solutions to that problem. Our health insurance system presents one case of such a disconnect between problems and solutions.

In the last Democratic presidential debate, hosted by CNN in March, Vermont Sen. Bernie Sanders said that the coronavirus pandemic made the “dysfunctionality of the current health care system … obviously apparent.” He elaborated in an April op-ed in Politico, in which he noted that “already, an estimated 9.2 million workers have lost their employer-sponsored insurance, and as many as 35 million people might lose coverage by the end of the crisis.”

Sanders makes a valid point: The pandemic does illustrate the shortcomings of our system of health coverage. But his single-payer health care plan — or even Joe Biden’s proposal for a (purportedly) voluntary government-run “option” in which individuals could enroll — would take the system in the exact opposite direction.

The dysfunctionality of the system exists largely because employers control most Americans’ health insurance. Most conservatives would therefore support letting individuals control their health coverage, rather than liberals’ plan to replace employer control with government control. Thankfully, the Trump administration has moved health policy in that exact direction, laying the groundwork for a movement toward more personalized insurance options.

The Problem: Employer-Provided Health Insurance

Sanders cited a study from Health Management Associates stating that as many as 35 million individuals could lose access to employer-sponsored insurance due to coronavirus-related layoffs. A revised paper, released in late May, did not specifically update estimates for the number of people losing employer insurance, but still showed significant coverage losses. Other estimates have indicated similarly large numbers of Americans losing their employer coverage.

The sudden job losses sparked by coronavirus lockdowns have illustrated one of the three major problems with employer-provided health insurance. Individually and collectively, these flaws have represented a problem hidden in plain sight for decades.

Lack of choice: The largest survey of employer-provided health insurance found that in 2019, exactly three-quarters of firms (75%) offered only one type of health insurance plan. In general, large firms offer more choices than small businesses, but even among the largest firms — those with more than 5,000 workers.

Because the employer and not the employee owns the insurance policy, workers often end up stuck with whatever plan their employer chooses. An individual who doesn’t want to enroll in an HMO, or whose doctors lie outside his or her employer’s provider network, might have few choices but to switch jobs or accept a plan that does not meet his or her needs.

In its first season, the U.S. version of “The Office” satirized this dynamic, when resident megalomaniac Dwight Schrute got charged with picking the office health plan — and let the power go to his head. While Americans don’t have to worry about contracting “Count Choculitis,” one of the fictitious diseases Schrute’s co-workers invented to needle him in the episode, they do face the very real worry that their employer’s choices and wishes regarding health care might not align with their own.

Flawed incentives: A conversation with one of my friends several years ago illustrated this problem. My friend said he loved the insurance plan his employer provided: “I can go to the doctor and it only costs me a $5 co-pay.”

I posed a thought experiment: What if your health insurance suddenly became taxable, and you had to pay $1,500 or so in taxes on that coverage? (At the time, a top-of-the-line plan cost about $6,000 for an individual, and I assumed a 25% state and local tax rate.) He responded immediately: “I wouldn’t want the plan — I would tell them to raise my co-pays and deductibles.”

That response illustrates the policy problem of employer-sponsored insurance: Everyone thinks they’re spending everyone else’s money. Employees don’t pay taxes on employer coverage; an IRS ruling during World War II, later codified by Congress, exempts employer-provided benefits from both income and payroll taxes.

All the incentives regarding employer-provided health care point in the wrong direction. Exempting employer coverage from taxation encourages individuals to take more compensation in untaxed health insurance benefits rather than taxable wages. Many employees don’t even realize that the employer’s share of the contribution for their coverage — which averaged nearly $15,000 for a family policy in 2019 — comes out of their own wallets in the form of lost wages.

All the flawed and misaligned incentives mean that the co-pay of “only” $5 my friend talked about years ago costs far more than that — to workers, employers and the economy as a whole. It’s one major reason why our health care system represents such a large, and rising, share of our economy.

Lack of portability: This issue arises because employers and not individuals own their health plans. As a result, when individuals lose their jobs, they also lose their health coverage. That dynamic results in the double whammy Americans have experienced during the pandemic, when workers lose their coverage at the same time they have unexpectedly lost their job — compounding families’ financial distress.

Lack of portability also exacerbates the problem of pre-existing conditions. Upon entering the workforce in their teens or 20s, most individuals have yet to develop a pre-existing condition like cancer or diabetes. But every time individuals switch jobs, they lose their employer-provided health coverage — making them vulnerable if they have developed a condition in the intervening time.

The worst kinds of situations occur when individuals must leave their jobs because they have become too sick to work. These patients face not one but two potential sources of financial ruin: They have lost their source of income, and face the prospect of astronomical medical bills without a means to fund them.

Cure the Disease, Not the Symptoms

In the past several years, Democrats have spent lots of time talking about the need to protect individuals with pre-existing conditions. But in focusing on pre-existing conditions, the left focuses on the symptom, rather than the underlying problem.

Remember: When Obamacare went into effect in January 2014, at least 4.7 million individuals received cancellation notices, according to The Associated Press. These individuals had plans that they liked, and wanted to keep — but the Obama administration wouldn’t let them. Politifact called the promise that Americans could keep their plan the 2013 “Lie of the Year,” and that lie affected many individuals who had developed, or feared that they would develop, a pre-existing condition. Let’s spare the notion that Democrats want to “protect” people with pre-existing conditions, when they “protected” millions of people right out of their coverage.

Liberals don’t talk about the underlying policy issue that creates the pre-existing condition problem — that people don’t own their own health coverage — because they don’t want people to own their own insurance. They want Washington to control health care decisions, not individual patients. It’s the classic example of former President Ronald Reagan’s nine most terrifying words in the English language: “I’m from the government and I’m here to help.”

But if individuals could buy an insurance policy upon joining the workforce — one that they owned, not their employer — and retain that policy from job to job for decades, most individuals could buy coverage well before they develop a pre-existing condition, and keep that coverage after they do so, the pre-existing condition problem would rapidly diminish. (Yes, a small percentage of Americans, most notably those born with congenital illnesses, develop pre-existing conditions very early in life, but other policy solutions can address this population.)

Trump Administration’s Solution

You wouldn’t know it, given all the carping and hostility from the left, but the Trump administration has put forward a very positive solution that answers the policy problems associated with employer-provided health coverage. It should increase portability in ways that help solve the pre-existing condition problem, while also providing additional choice and competition.

The administration’s policy, implemented through regulations finalized in 2019, allows employers to contribute funds to workers on a pre-tax basis through Health Reimbursement Arrangements. These HRAs allow individuals to purchase coverage that they own, not their employers — making the coverage portable from job to job.

The HRA concept provides wins for employers, employees and the economy as a whole:

• Employers get predictability when it comes to their health insurance offerings. By providing employees a fixed sum (say, $300 or $500 a month) into the HRA, they will not have to worry about changing plans from year to year, a sudden spike in costs because of a sick employee, or many of the other paperwork hassles associated with offering coverage.
• Employees get both choice and portability. They can select the insurance plan that best meets their needs — the doctors, deductibles and plan features that they want. Not only can they keep the plan when they switch jobs, the fact that they and not their employer chose the coverage in the first place will make them more likely to do so.
• The economy will benefit from individuals selecting the plans they want, rather than the plans employers select for them. Insurers will have to provide better, more customized plans that fit individuals’ needs, and employees will have incentives to make better choices to stretch the HRA dollars their employers provide them.

Ideally, Congress would amend the law regarding Health Savings Accounts, to allow individuals to use HSA dollars to fund health insurance premiums. Because HSA funds cannot pay insurance premiums in most cases under current law, the Trump administration had to use Health Reimbursement Arrangements (which are owned by employers) rather than Health Savings Accounts (which are always owned by individuals) to fund individual coverage.

Providing contributions via an HSA, as opposed to an HRA, would allow employees to control any unused employer contributions upon leaving a job. That way, individuals would not only have a source of coverage in the event of a layoff, they could develop a source of savings to pay for that coverage while unemployed. But until Congress acts, the Trump administration’s Health Reimbursement Arrangement regulations represent a tremendous step forward toward a more logical, patient-centered insurance system.

Empower Patients, Not Government

Coronavirus has made the problems with government control of health care apparent. As Joe Biden (of all people) noted in the March CNN debate, Italy has a single-payer system — and that nation had to ration access to ventilators, whereas the United States did not.

The pandemic has exposed the flaws in our health insurance system. But it comes just as the Trump administration has shown a better path forward. By empowering patients rather than government bureaucrats, Health Reimbursement Arrangements can help transform the coverage system into something that lowers costs and provides the care American patients prefer.

This post was originally published at the Daily Caller’s American Renewal blog.

How Government-Run Health Care Worsened the Coronavirus Crisis

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

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

Low Reimbursements Equals Fewer Tests

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

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

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

Bureaucrats Can’t Micromanage Health Care

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

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

Low Payments Lead to Job Losses, Too

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

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

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

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

This post was originally published at The Federalist.

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

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

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

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

Most Eligible People Already Have Coverage

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

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

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

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

Near-Retirees Are Comparatively Wealthy

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

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

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

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

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

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

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

This post was originally published at The Federalist.

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

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

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

Massive Disruptions

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

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

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

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

A Preview of Democrats’ Health Care Future

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

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

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

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

Economic Cutbacks and Job Losses

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

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

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

This post was originally published at The Federalist.

Colorado Plan Shows the Coercion Behind the Public “Option”

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

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

Big Government Forces Hospitals’ Participation

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

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

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

Insurers Required to Participate, Too

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

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

Worse Than Berniecare?

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

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

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

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

This post was originally published at The Federalist.

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.

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.

November Debate Outs Democrats’ Health Care Double Speak

Ten Democratic candidates took the stage in Atlanta for the latest presidential debate on Wednesday evening, and as with the past several debates, health care played an important role. The attack lines echoed debates past: Progressives like Sens. Elizabeth Warren (D-Mass.) and Bernie Sanders (I-Vt.) pledged support for full-fledged socialized medicine, while so-called “moderates” like former Vice President Joe Biden expressed opposition to taking away Americans’ existing health plans, and raising taxes by tens of trillions of dollars to do so.

Several contradictions emerged. First, as in debates past, the controversy seemed focused more on tactics than on strategyhow quickly to take away Americans’ health insurance, rather than whether the United States should ultimately end up with a system of socialized medicine.

Warren’s Unrealistic Promises

Early in the debate, Warren tried to square the circle into which she has put herself, by first releasing a plan for full-on single payer, and then releasing a second “transition” plan last Friday. In the latter plan, Warren pledged she would pass not one but two separate major pieces of health care legislation through Congress—the first within her 100 days, the second within three years.

Warren claimed that she would provide access to “free” health care for 135 million Americans within her first 100 days in office. That number comes from the populations that she pledged in last week’s plan would have immediate access to a Medicare-type single-payer system without premiums or cost sharing: Those with incomes under 200 percent of the federal poverty level (currently $51,500 for a family of four), and all children under age 18.

The idea that Warren can introduce, let alone pass, such massive legislation within 100 days—by April 30, 2021—seems unrealistic at best. By way of comparison, the Senate Health, Education, Labor, and Pensions Committee—the first committee to mark up the legislation that became Obamacare—did not even introduce its version of the bill until June 9, 2009, well after Barack Obama’s first 100 days in office. Barack Obama did not sign Obamacare into law until March 23, 2010, 427 days after his inauguration.

Drafting and passing a bill providing “free” health care to only 135 million people (as opposed to more than 300 million in full-on single payer) would in and of itself represent one of the largest and costliest pieces of legislation—if not the largest and costliest piece of legislation—ever considered by Congress. It would also require massive tax increases, which given the gimmicks in Warren’s plan would likely fall on the middle class.

The idea that Congress could pass such large legislation in only 100 days seems unrealistic at best, and an affront to democracy at worst. Underpinning this timetable lies the idea that “we have to pass the bill so that you can find out what’s in it,” because Democrats fear the ramifications of allowing the American people to understand the effects of their agenda before enacting it. In reality, however, trying to pass legislation that fast would quickly become a legislative morass for Warren, much like the political morass (of her own making) that she currently faces on health care.

Does Biden Believe in Choice?

Biden also spoke out of both sides of his mouth on health care. He claimed that 160 million Americans with employer-sponsored coverage like their current insurance, and that he trusts the American people to decide whether or not to join a government-run plan.

However, Biden also claimed that his plan would bring down costs and premiums for the American people. Those reductions can only materialize if people end up enrolling in the government-run health plan, because it would use raw government power to pay doctors and hospitals less.

On the one hand, Biden claims he believes in choice. But on the other hand, his rhetoric belies his desire for a given outcome, one in which people “choose” the government-run plan. As with Pete Buttigieg’s claim that a government-run plan would provide a “glide path” to single payer, both Biden’s rhetoric and the details of his plan show that he wants to sabotage private insurance to drive people into the government-run plan.

Forcing everyone into socialized medicine, and dissembling to voters while doing so: That’s the agenda the American people saw on display in Atlanta Wednesday evening.

This post was originally published at The Federalist.

Pete Buttigieg’s Health Care Sabotage Strategy

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

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

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

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

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

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

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

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

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

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

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

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

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

Opportunistic Flip-Flops

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

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

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

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

This post was originally published at The Federalist.