Michael Bloomberg: Against Obamacare Before He Was For It

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

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

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

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

Obamacare a ‘Disgrace’

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

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

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

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

Changing His Tune

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

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

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

This post was originally published at The Federalist.

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

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

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

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

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

Cost Explosion

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

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

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

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

Waiting Lists

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

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

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

Choice

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

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

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

Oliver acknowledged the likelihood of waiting lists under a single-payer system, as have other supporters. For instance, the head of the People’s Policy Project has argued that costs won’t rise under single payer because “there is still a hard limit to just how much health care can be performed because there are only so many doctors and only so many facilities.” In other words, people will seek care, but not be able to obtain it.

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

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

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

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

This post was originally published at The Federalist.

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.

Warren’s Prescription the Wrong One

In an October analysis the Urban Institute concluded that a single-payer plan, similar to Sen. Warren’s, which eliminates virtually all patient cost-sharing, would raise national health spending by more than 20%, or $719.7 billion a year. In the researchers’ view, the additional demand stimulated by making health care “free” to consumers would overwhelm any potential savings from paying doctors and hospitals government-dictated rates. This higher demand would also raise the cost of single-payer well beyond Sen. Warren’s estimates, meaning middle-class families would face massive tax increases to pay for this spending.

That Prof. Johnson would cite the Urban Institute to argue that Sen. Warren’s plan would lower health-care costs, while ignoring the fact that the institute itself reached the opposite conclusion, speaks to the cherry-picked nature of the proposal, which has drawn derision from liberals and conservatives alike.

This post was originally published at the Wall Street Journal.

Why Republicans Should Preserve Obamacare’s Cadillac Tax

Those seeking to understand why the United States faces out-of-control health-care costs need look no further than this week’s congressional agenda. On Wednesday, the House of Representatives will likely vote on legislation to repeal Obamacare’s “Cadillac tax” on high-cost health plans, a provision Congress has already delayed repeatedly.

Most economists agree that reforming the tax treatment of health insurance represents one key way to slow the growth of health-care costs. Yet neither party wants to take the courageous decisions required to do just that — even when, in this case, the “action” involved merely requires allowing a legislative provision already enacted to take effect.

The Conservative Approach to Controlling Costs

But from a conservative perspective, controlling health care costs in a broader sense involves getting incentives right. Reforming incentives can involve injecting more competition into the health care system — for instance, by improving generic drugs faster to help bring down prices. But it also requires reforms that encourage people to serve as smarter consumers of health care.

Health costs continue to skyrocket, in large part because individuals love to spend other people’s money. Few people can afford to pay for all their health care, such as major surgeries, out-of-pocket. Funding more care through third-party payments — a majority of Americans consume most of their health care through an insurer, and many insurers are chosen by an employer — increases spending.

The tax code exacerbates the third-party payment problem by allowing employers to provide health insurance to their workers on a tax-free basis. Economists agree that this tax preference encourages people to use more expensive health insurance than they need, and thus more health care than they need.

Why Do Conservatives Oppose a Conservative Reform?

However, the law used a clumsy approach to imposing this tax, on two levels. First, it applied the same 40 percent rate to all employer-provided policies, regardless of whether the particular affected workers came from a high-tax bracket, such as corporate CEOs, or a low-tax bracket, such as office janitors. Second, it imposed the tax as part of an overall package of revenue increases used to fund Obamacare.

Nonetheless, the “Cadillac tax” represents an important measure to control health care costs. Because Congress included this provision as part of Obamacare, Republicans could easily allow the measure to take effect while disclaiming responsibility for having enacted it. After all, everyone knows Obamacare passed with only Democratic votes.

Yet Republicans have spent the better part of the past decade trying to repeal this measure, without enacting a similar or better replacement that could control health care costs. Moreover, the House will apparently vote on the repeal this week without a full Congressional Budget Office score showing the sizable fiscal impact of that action.

Liberals’ Approach To Controlling Health Costs

Conservatives might not think a battle over the “Cadillac tax” is worth fighting. President Barack Obama’s attack ads from 2008 showed that “taxing health benefits” can prove incredibly politically powerful. (All the more ironic since the Obama White House insisted on including the “Cadillac tax” as part of Obamacare.)

But after watching the Democratic debates last month, conservatives should know that liberals have an “easy solution” to controlling health care costs: price controls, greater regulations, and more government control. After all, Sen. Bernie Sanders’ single-payer legislation exists in no small part to extend Medicare’s price controls over health care goods and services to all Americans, rather than just seniors.

If conservatives cannot support and implement changes that reform the incentives in the health care system, including reasonable limits on the tax treatment of employer-provided health coverage, they may end up bringing about the liberal alternative. And sooner than they think.

This post was originally published at The Federalist.

Poll: People Care MORE About Rising Costs Than Pre-Existing Conditions

Now they tell us! A Gallup poll, conducted last month to coincide with the midterm elections and released on Tuesday, demonstrated what I had posited for much of the summer: Individuals care more about rising health insurance premiums than coverage of pre-existing condition protections.

Of course, liberal think tanks and the media had no interest in promoting this narrative, posing misleading and one-sided polling questions to conclude that individuals liked Obamacare’s pre-existing condition “protections,” without simultaneously asking whether people liked the cost of those provisions.

Overwhelming Concern about Premiums

Ironically, a majority of 57 percent said the denial of coverage for pre-existing conditions did not constitute a major concern for them, with only 42 percent agreeing with the statement. Lest one believe that the relative insouciance over pre-existing conditions came because Democrats won a majority in the House, therefore “protecting” Obamacare, Gallup conducted the survey from November 1–11, meaning more than half the survey period came before the American people knew the election outcome.

By comparison, more than three-fifths (61 percent) of respondents viewed rising premiums as a major concern, with only 37 percent not viewing it as such. Not only did premiums register as a bigger concern by 19 percentage points overall, it registered as a larger concern in each and every demographic group Gallup surveyed:

Income under $30,000: +15 percent (70 percent said premiums were a major concern, 55 percent said pre-existing condition coverage was a major concern)

Income between $30,000-$75,000: +19 percent (63 percent premiums, 44 percent pre-ex)

Income above $75,000: +24 percent (57 percent premiums, 33 percent pre-ex)

On Medicare/Medicaid: +16 percent (60 percent premiums, 44 percent pre-ex)

On private insurance: +24 percent (60 percent premiums, 36 percent pre-ex)

Republicans: +25 percent (52 percent premiums, 27 percent pre-ex)

Independents: +19 percent (64 percent premiums, 45 percent pre-ex)

Democrats: +16 percent (68 percent premiums, 52 percent pre-ex)

Aged 18-29: +16 percent (54 percent premiums, 38 percent pre-ex)

Aged 30-49: +23 percent (65 percent premiums, 42 percent pre-ex)

Aged 50-64: +21 percent (67 percent premiums, 46 percent pre-ex)

Aged over 65: +13 percent (57 percent premiums, 44 percent pre-ex)

Men: +18 percent (56 percent premiums, 38 percent pre-ex)

Women: +20 percent (67 percent premiums, 47 percent pre-ex)

With those double-digit margins (i.e., outside the poll’s margin of error) in every demographic group—including among groups more likely concerned about pre-existing conditions, for reasons either practical (i.e., older Americans) or ideological (i.e., Democrats)—Gallup has overwhelming evidence to support its claim that “concerns are greatest about the possibility of having to pay higher premiums.”

Premiums more than doubled from 2013 to 2017, as the law’s major provisions, including the pre-existing condition requirements, took effect. They again rose sharply in 2018, causing approximately 2.5 million individuals to drop their Obamacare-compliant coverage completely.

Not a Surprise Outcome

The Gallup results confirm prior surveys from the Cato Institute, which also demonstrate that support for Obamacare’s pre-existing condition provisions drops dramatically once people recognize the trade-offs—namely, higher premiums and a “race to the bottom” among insurers, reducing access to specialist providers and lowering the quality of care:

But the polling suggests that Democrats have no such mandate, and that they should think again in their approach. Rather than making an already bad situation worse, and potentially raising premiums yet again, they should examine alternatives that can solve the pre-existing condition problem (and yes, it is a problem) by making it easier for people to buy coverage before they develop a pre-existing condition in the first place.

As the polling indicates, the American people—to say nothing of the 2.5 million priced out of the marketplace in the past 12 months—will thank them for doing so.

This post was originally published at The Federalist.

Three Elements of a Conservative Health Care Vision

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

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

Portable Insurance

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

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

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

A Sustainable Safety Net

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

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

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

Appropriately Aligned Incentives

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

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

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

This post was originally published at The Federalist.

Hospital Monopolies Are What’s Wrong with American Health Care

Call it a sign of the times. If Rich Uncle Pennybags (a.k.a. “Mr. Monopoly”) appeared today, he would have little interest in holding properties like the Short Line Railroad. In the 21st century, acquiring railroads, or even utilities, is so Baltic Avenue. The real money—and the real monopolies—lie in health care, specifically in hospitals.

Despite the constant focus on prescription drug prices, pharmaceuticals represent a comparatively small slice of the American health care pie. In 2016, national spending on prescription drugs totaled $328.6 billion. That’s a large sum on its own, but only 9.8 percent of total health care spending. By contrast, spending on hospital care totaled nearly $1.1 trillion, or more than three times spending on prescriptions.

Hospitals’ Monopolistic Tactics

The Journal profiled several under-the-radar tactics that some large hospitals use to deter competition and pad their bottom lines. For instance, some contracts “prevent patients from seeing a hospital’s prices by allowing a hospital operator to block the information from online shopping tools that insurers offer.”

Hospitals use these tactics to oppose transparency, because they fear, correctly, that if patients know what they will pay for a service before they receive it, they may take their business elsewhere. It’s an arrogant and high-handed attitude straight out of Marxism.

Also in hospitals’ toolkits: So-called “must-carry” clauses, which require insurers to keep their hospitals in-network, regardless of the high prices they charge, or poor quality outcomes they achieve. The Journal reported that one of the nation’s largest retailers wanted to kick out the lowest-quality providers, but had no ability to do so.

Officials at Walmart a few years ago asked the insurers that administered its coverage…if the nation’s largest private employer could remove from its health-care networks the 5% of providers with the worst quality performance. The insurers told the giant retailer their contracts with certain health-care providers didn’t allow them to filter out specific doctors or hospitals, even based solely on quality measures.

Surprise! Obamacare Made It Worse

Many of these trends preceded President Obama’s health care law, of course. But it doesn’t take a PhD in mathematics to see how hospital mergers accelerated after 2010, the year of Obamacare’s passage:

Hospitals responded to the law by buying up other hospitals, increasing market share in an attempt to gain more negotiating “clout” against health insurers. That leverage allows them to demand clauses such as those preventing price transparency, or preventing insurers from developing smaller networks that only include efficient or better-quality providers.

Here again, industry consolidation begets higher prices. In many cases, hospitals can charge more for services provided by an “outpatient facility” as opposed to one provided by a “doctor’s office.” In some circumstances, the patient will receive the same service, provided by the same doctor, in the same office, but will end up getting charged a higher price—merely because, by buying the physician practice, the hospital can reclassify the office and procedure as taking place in an “outpatient facility.”

Remember: Hospitals Endorsed Obamacare

In 2010, the American Hospital Association, along with other hospital associations, endorsed Obamacare. At the time the hospital lobbies claimed that the measure would increase the number of Americans with health insurance coverage. For some reason, they neglected to mention how the law would also encourage the consolidation that presents ever-upward pressure on insurance premiums.

But remember too that Obama repeatedly promised his health-care law would lower premiums by $2,500 for the average family. Unfortunately for Americans, however, Obamacare’s crony capitalism—allowing hospitals to grow their operations, and thus their bottom line, in exchange for political endorsements—continues to contribute to higher premiums, putting Obama’s promise further and further away from reality.

This post was originally published at The Federalist.

How Single-Payer Supporters Defy Common Sense

The move to enact single-payer health care in the United States always suffered from major math problems. This week, it revived another: Common sense.

On Monday, the Mercatus Center published an analysis of single-payer legislation like that promoted by socialist Sen. Bernie Sanders (I-VT). While conservatives highlighted the estimated $32.6 trillion price tag for the legislation, liberals rejoiced.

Riiiiiigggggggghhhhhhhhhttttt. As the old saying goes, if something sounds too good to be true, it usually is. Given that even single-payer supporters have now admitted that the plan will lead to rationing of health care, the public shouldn’t just walk away from Sanders’ plan—they should run.

National Versus Federal Health Spending

Sanders’ claim arises because of two different terms the Mercatus paper uses. While Mercatus emphasized the way the bill would increase federal health spending, Sanders chose to focus on the study’s estimates about national health spending.

Although it sounds large in absolute terms, the Mercatus paper assumes only a slight drop for health spending in relative terms. It estimates a total of $2.05 trillion in lower national health expenditures over a decade from single-payer. But national health expenditures would total $59.7 trillion over the same time span—meaning that, if Mercatus’ assumptions prove correct, single-payer would reduce national health expenditures by roughly 3.4 percent.

Four Favorable Assumptions Skew the Results

However, to arrive at their estimate that single-payer would reduce overall health spending, the Mercatus paper relies on four highly favorable assumptions. Removing any one of these assumptions could mean that instead of lowering health care spending, single-payer legislation would instead raise it.

First, Mercatus adjusted projected health spending upward, to reflect that single-payer health care would cover all Americans. Because the Sanders plan would also abolish deductibles and co-payments for most procedures, study author Chuck Blahous added an additional factor reflecting induced demand by the currently insured, because patients will see the doctor more when they face no co-payments for doing so.

Second, the Mercatus study assumes that a single-payer plan can successfully use Medicare reimbursement rates. However, the non-partisan Medicare actuary has concluded that those rates already will cause half of hospitals to have overall negative total facility margins by 2040, jeopardizing access to care for seniors.

Expanding these lower payment rates to all patients would jeopardize even more hospitals’ financial solvency. But paying doctors and hospitals market-level reimbursement rates for patients would raise the cost of a single-payer system by $5.4 trillion over ten years—more than wiping away any supposed “savings” from the bill.

Finally, the Mercatus paper “assumes substantial administrative cost savings,” relying on “an aggressive estimate” that replacing private insurance with one single-payer system will lower health spending. Mercatus made such an assumption even though spending on administrative costs increased by nearly $26 billion, or more than 12.3 percent, in 2014, Obamacare’s first year of full implementation.

Likewise, government programs, unlike private insurance, have less incentive to fight fraud, as only the latter face financial ruin from it. The $60 billion problem of fraud in Medicare provides more than enough reason to doubt much administrative savings from a single-payer system.

Apply the Common Sense Test

But put all the technical arguments aside for a moment. As I noted above, whether a single-payer health-care system will reduce overall health expenses rests on a relatively simple question: Will doctors and hospitals agree to provide more care to more patients for the same amount of money?

Whether single-payer will lead to less paperwork for doctors remains an open question. Given the amount of time people spend filing their taxes every year, I have my doubts that a fully government-run system would generate major improvements.

But regardless of whether providers get any paperwork relief from single-payer, the additional patients will come to their doors seeking care, and existing patients will demand more services once government provides them for “free.” Yet doctors and hospitals won’t get paid any more for providing those additional services. The Mercatus study estimates that spending reductions due to the application of Medicare’s price controls to the entire population will all but wipe out the increase in spending from new patient demand.

If Sanders wants to take a “victory lap” for a study arguing that millions of health care workers will receive the same amount of money for doing more work, I have four words for him: Good luck with that.

Health Care Rationing Ahead

I’ll give the last word to, of all things, a “socialist perspective.” One blog post yesterday actually claimed the Mercatus study underestimated the potential savings under single-payer: “[The study] assumes utilization of health services will increase by 11 percent, but aggregate health service utilization is ultimately dependent on the capacity to provide services, meaning utilization could hit a hard limit below the level [it] projects” (emphasis mine).

In other words, spending will fall because so many will demand “free” health care that government will have to ration it. To socialists who yearningly long to exercise such power over their fellow citizens, such rationing sounds like their utopian dream. But therein lies their logic problem, for any American with common sense would disagree.

This post was originally published at The Federalist.

Liberal Think-Tank Admits Obamacare’s Failures

Once again, the movement to expand government-run health care continues apace. No sooner had one think tank published a paper calling for the return of an individual mandate at the federal level than the liberal Commonwealth Fund published a paper, released on Friday, calling for states to impose their own Obamacare-style mandates at the state level.

However, the paper proves most interesting for what it tacitly admits. Over time, Commonwealth believes that more and more people will purchase coverage solely due to a government order—because health costs and premiums will continue to rise. Because Obamacare failed to control health costs, more and more individuals will purchase health coverage only under the threat of government-imposed taxation. That’s Commonwealth’s version of health “reform.”

Late Wednesday evening, the House of Representatives adopted the amendment by a 226-189 vote. Next week, the Senate could take up its version of the District of Columbia appropriations bill. If a similar amendment passes on the Senate floor, then the final version of the appropriations measure likely will contain the defunding language—thus preventing individuals who do not buy “government-approved” health coverage from having their property seized by DC authorities.

Longer-Term Effects of the Mandate

As to the Commonwealth report itself: It concludes that enacting an individual mandate in all 50 states would increase insurance coverage by roughly 3.9 million in 2019. Nearly half of those individuals (1.7 million) would comprise individuals purchasing unsubsidized exchange coverage—the people for whom Bill Clinton said Obamacare was the “craziest thing in the world,” because they don’t receive subsidies (which might explain why they won’t purchase insurance unless the government taxes them for not doing so). Individuals enrolling in Medicaid (600,000), subsidized exchange policies (1.1 million), and employer plans (450,000) comprise the rest of the coverage gains.

Particularly noteworthy however: In 2022—just four years from now—the mandate will lead 7.5 million people to obtain health coverage, or nearly twice the 2019 total. Commonwealth explains the reasoning:

As health care costs get more expensive relative to incomes over time, fewer people tend to purchase insurance and the number of uninsured rises. However, with an individual mandate in place, the effect of health care cost growth is lessened because more people hold on to their insurance to comply with the mandate. As a result, the effect of the individual mandate on reducing the number of people without insurance increases over time in percentage terms.

Wasn’t Obamacare Supposed to Reduce Health Costs?

The obvious question: Why would health care costs continue to “get more expensive relative to income over time”? Wasn’t Obamacare supposed to fix all that?

Recall that during his 2008 campaign, Barack Obama repeatedly promised that his health plan would cut families’ premiums by $2,500 per year. Commonwealth provided some of the intellectual firepower behind the pledge, releasing in 2007 a report that it claimed could save $1.5 trillion in health expenditures over 10 years. Many of that report’s proposals, although not all (limiting Medicare’s coverage of expensive drugs and treatments being an obvious exception), made their way into the measure that became Obamacare.

In 2013, Commonwealth upped the ante, releasing another report whose recommendations promised $2 trillion in lower health spending over a decade. Yet Commonwealth’s report released Friday admits that health costs in 2022 will continue to rise faster than income, resulting in more and more people feeling squeezed to afford coverage. At this rate, Commonwealth should stop putting out reports talking about all the health costs we could save. Our country can’t afford them.

The Left’s Arrogant Conceit

I’ll give the last word to—of all people—Barack Obama. In 2010, he talked about how he didn’t want to “give the keys back” to people who “didn’t know how to drive.” The Commonwealth report makes plain that despite all the intrusions on freedom Obamacare included, it didn’t accomplish its supposed goal of making health care more affordable. (And no, using government to re-distribute money doesn’t qualify as making the underlying cost of care more “affordable.”)

Given that dynamic, who would want to give people like the researchers at Commonwealth even more control over the health care system? The question should answer itself.

This post was originally published at The Federalist.