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program, Long-Term Care for America, designed to replace the CLASS Act included in Obamacare, but which Congress repealed prior to its implementation due to solvency concerns.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.

Separating Fact from Fiction on Trump’s Health Care Proclamation for Immigrants

On Friday, President Trump issued a proclamation requiring certain immigrants entering the country either to purchase health insurance, or demonstrate they can pay their medical bills. The order prompted no small amount of hysteria from the left over the weekend.

If you’re puzzled by this development, you might not be the only one. After all, don’t liberals want everyone to have health insurance? They have spent significant time and effort attacking President Trump for a (slight) increase in the number of uninsured people while he’s been president.

What the Proclamation Says

The proclamation itself, which will take effect on November 3 (30 days from Friday), limits “the entry into the United States as immigrants of aliens who will financially burden” the American health care system. It requires aliens applying for immigrant visas to become “covered by approved health insurance…within 30 days” of entry, or “possess…the financial resources to pay for reasonably foreseeable medical costs.”

The proclamation includes numerous different acceptable forms of health insurance: employer plans (including association health plans and COBRA coverage), catastrophic plans, short-term limited duration insurance, coverage through Tricare or Medicare, or visitor health coverage lasting a minimum of 364 days. The list of acceptable forms of insurance does not, however, include subsidized Obamacare exchange plans, or Medicaid coverage for individuals over age 18—likely because these options involve federal taxpayer subsidies.

What the Proclamation Doesn’t Say

It shouldn’t need stating outright, but contrary to claims that the proclamation constitutes a “racist attack on a community who deserves health care,” the order says not a word about a specific race, or national or ethnic group. It also exempts “any alien holding a valid immigrant visa issued before the effective date of this proclamation,” meaning the requirement will apply prospectively and not retrospectively.

Liberal reporters claimed that “the move effectively creates a health insurance mandate for immigrants,” after Republicans eliminated Obamacare’s individual mandate penalty. But this charge too ignores the fact that the proclamation—unlike Obamacare—includes an exception for those who “possess…the financial resources to pay for reasonably foreseeable medical costs.” (The proclamation does not define this term, meaning that the administration will presumably go through a rulemaking process to do so.)

The Real Story

Liberals’ hysteria over the issue demonstrates a massive shift leftward in recent years. Consider that in 1993, Hillary Clinton testified before Congress that she opposed extending benefits to “illegal aliens,” because it would encourage additional migration to the United States:

We do not think the comprehensive health care benefits should be extended to those who are undocumented workers and illegal aliens. We do not want to do anything to encourage more illegal immigration into this country. We know now that too many people come in for medical care, as it is. We certainly don’t want them having the same benefits that American citizens are entitled to have.

Even in 2009, Barack Obama felt the need to claim that his health plan wouldn’t cover those in the country illegally (even if the claim didn’t stand up to scrutiny). The fact that Democrats have now gone far beyond Obama’s position, and have attacked President Trump for ensuring foreign citizens will not burden our health care system—a position liberals claim to support for Americans—speaks to the party’s full-on embrace of both socialism and open borders.

This post was originally published at The Federalist.

Democrats Debate How to Give “Free” Stuff to More People

The first night of this month’s Democratic debates provided rapid-fire exchanges on health care, made more complicated by CNN debate moderators who rarely gave candidates time to explain their positions clearly. But the overall tenor of the debate seemed clear: Promising free stuff to voters.

Health care consumed a fair portion of the debate’s first hour. Following lengthy exchanges in the first segment, another extended discussion on electability in the second segment revolved around health care—specifically the provision in Sen. Bernie Sanders’ single-payer bill that would make private health coverage “unlawful.”

Sanders and his fellow Sen. Elizabeth Warren (D-MA) sparred with other, more moderate candidates—Sen. Amy Klobuchar (D-MN), Rep. Tim Ryan (D-OH), Rep. John Delaney (D-MD), and South Bend Mayor Pete Buttigieg—about the feasibility of banning the private coverage that most Americans currently have, and like. Warren won applause from the audience, and likely from the liberal base, with her (self-)righteous anger at these criticisms, decrying Democrats’ use of “Republican talking points” about “taking away health care,” and attacking Delaney for “talk[ing] about what we really can’t do and shouldn’t fight for.”

But partisan attacks aside, the debates showed more similarities than differences, on two key fronts. First, even candidates like Buttigieg and former congressman Robert Francis O’Rourke (D-TX) said they want to move everyone onto a government-run health plan—they just want to do it in a slower and more subtle fashion than Sanders.

When Buttigieg argued that a government-run “public option” would get to single payer eventually, he meant that he would sabotage private coverage to force people into the government system over time. After all, Democrats wouldn’t support the creation of such an “option” if they didn’t think it would lead to huge enrollment, which they believe can become a self-fulfilling prophecy through policy bias.

Yet while Sanders sponsored the legislation, he obviously has not read it, calling his proposal “Medicare for All” even though it would explicitly abolish the current Medicare program. Sanders also claimed yet again that his proposal would make health care a human right, even though it would do no such thing. People would have the “right” to have their care paid for if they can find a doctor who will treat them, but they have no explicit “right” to care under his bill.

In a similar manner, Warren refused to admit, despite repeated questioning from the CNN anchors, that taxes on the middle class would go up to pay for everyone’s “free” health care. She pledged that total costs would go down, an implicit acknowledgement of the obvious fact that wealthy individuals alone cannot fund a government-run health system costing trillions of dollars annually. But she, like her California Senate colleague Kamala Harris, somehow wants to keep up the fiction that middle-class families can consume all the health care they want without having to pay for any of it in taxes.

Ultimately, one key winner emerged from the debate: Donald Trump. Moderate candidates who have little shot at winning the nomination took multiple shots at the party’s leftward lurch that the Trump campaign can easily exploit next summer and fall.

The more Democrats keep pushing farther and farther to the left—with the debate on outlawing private health insurance a prime example—the better the president’s chances of winning re-election. Given the tenor of Tuesday’s discussion, the Trump campaign should offer to host, and pay for, another debate for Democratic candidates, as soon as possible.

This post was originally published at The Federalist.

How Joe Biden Deliberately Avoided Paying Obamacare Taxes

In the campaign for the 2020 Democratic presidential nomination, Joe Biden has portrayed himself as Obamacare’s biggest defender. His health care plan, released this month, pledges to “protect the Affordable Care Act” and states that he “opposes every effort to get rid of this historic law.”

However, his campaign rhetoric in support of Obamacare overlooks one key fact: For the past two years, Joe Biden structured his financial dealings specifically to avoid paying a tax that funds “this historic law,” along with the Medicare program.

While the Bidens paid federal income taxes on all their income, they did not have to pay self-employment taxes on these millions of dollars in profits. The Bidens saved as much as $500,000 in self-employment taxes by taking most of their compensation as profits from the corporation, as opposed to salary.

The Journal cited multiple tax experts who called the Bidens’ move “pretty aggressive,” and a “pretty cut and dried” abuse of the system. Given that most of their income came from writing and speaking engagements, one expert called that income “all attributable to [their] efforts” as individuals and thus wage income, rather than a broader effort by any corporation resulting in profits.

Most important to Biden’s political future is what that foregone self-employment tax revenue would have funded. Section 9015 of Obamacare increased the tax’s rate from 2.9 percent to 3.8 percent for all income above $200,000 for an individual, and $250,000 for a family. By taking comparatively small salaries from their S corporations and receiving most of their income as profits from those corporations, the Bidens avoided paying a tax that funds an Obamacare law Joe Biden claims he wants to defend.

Moreover, the other 2.9 percent in self-employment tax helps finance the Medicare program, which faces its own bleak fiscal future. According to the program trustees, the program will become insolvent by 2026, just seven years from now. If people like Joe Biden use tax strategies to avoid paying self-employment taxes, Medicare’s date of insolvency will only accelerate.

During the last presidential election cycle, Sen. Bernie Sanders repeatedly returned to Hillary Clinton’s paid speeches before companies like Goldman Sachs. Both the more than $100 million in income Bill and Hillary Clinton generated from their speeches, and Hillary Clinton’s insouciance at the vast sums she received—“That’s what they offered,” she said of the $675,000 sum Goldman Sachs paid her to give three speeches—made her look out-of-touch with the concerns of families struggling to make ends meet.

Likewise, Biden’s 2020 competitors almost certainly will use the questions about his taxes to undermine his image as “Middle Class Joe.” Few middle-class families will make in a lifetime the $15.6 million in income that the Bidens received in but two years. Moreover, how can Joe Biden claim to defend Obamacare—let alone Medicare—when he created a tax strategy specifically to avoid paying taxes that fund those two programs?

In 2014, Barack Obama, whose administration proposed ending the loophole the Bidens used to avoid self-employment taxes, attacked corporations for seeking to migrate to lower-tax jurisdictions overseas: “It is true that there are a lot of things that are legal that probably aren’t the right thing to do by the country.” In Joe Biden’s case, his tax behavior probably wasn’t the right thing to help his political future either.

This post was originally published at The Federalist.

Democrats Agree: Free Health Coverage for Undocumented Immigrants

If a picture is worth a thousand words, then three series of pictures, featuring Democrats discussing health benefits for those in this country illegally, speak volumes. First, Hillary Clinton in September 1993:

Finally, Democratic candidates for president last night:

Whereas Indiana Mayor Pete Buttigieg called coverage for illegal immigrants an “insurance program” and “not a hand out,” Clinton said in 1993—well before the most recent waves of migration—that “we do not want to do anything to encourage more illegal immigration into this country. We know now that too many people come in for medical care, as it is. We certainly don’t want them having the same benefits that American citizens are entitled to have.”

Likewise, whereas Joe Biden said “you cannot let people who are sick, no matter where they come from, no matter what their status, go uncovered,” the president whom he worked for promised the American people that “the reforms I’m proposing would not apply to those who are here illegally.” Granted, the promise had a major catch to it—Obamacare verifies citizenship but not identity, allowing people here illegally to obtain benefits using fraudulent documents—but at least he felt the need to make the pledge in the first place. No longer.

Ironically enough, even as all Democrats supported giving coverage to illegally present foreigners, the candidates seemed less united on whether, how, and from whom to take health insurance away from U.S. citizens. Only Sens. Kamala Harris and Bernie Sanders said they supported abolishing private health insurance, as Sanders’ single-payer bill would do (and as Sen. Elizabeth Warren and New York Mayor Bill de Blasio pledged on Wednesday evening). For Harris, it represents a return to her position of January, after fudging the issue in a follow-up interview with CNN last month.

As usual, Sanders made typically hyperbolic—and false—claims about his plan. He said that his bill would make health care a human right, even though it does no such thing. In truth, the legislation guarantees that individuals would have their bills paid for—but only if they can find a doctor or hospital willing to treat them.

While Sanders pledged that under his bill, individuals could go to whatever doctor or hospital they wished, such a promise has two main flaws. First, his bill does not—and arguably, the federal government cannot—force a given doctor to treat a given patient. Second, given the reimbursement reductions likely under single payer, many doctors could decide to leave the profession altogether.

Sanders’ home state provided a reality check during the debate. Candidates critical of single payer noted that Vermont had to abandon its dream of socialized medicine in 2014, when the tax increases needed to fund such a program proved too overwhelming.

Shumlin gave his fellow Democrats a valuable lesson. Based on the radical, and radically unaffordable, proposals discussed in this week’s debates—from single-payer health care, to coverage for undocumented immigrants, to “free” college and student loan forgiveness, and on and on—they seem hellbent on ignoring it.

This post was originally published at The Federalist.

California Is What’s Wrong with Obamacare

In recent days, California lawmakers have finalized their budget. The legislation includes several choices regarding health care and Obamacare, most of them incorrect ones. Doling out more government largesse won’t solve rising health costs, and it will cause more unintended consequences in the process.

Health Coverage for Individuals Unlawfully Present

This move has drawn the most attention, as the budget bill expands Medicaid coverage to illegally present adults aged 19-26. California will pay the full share of this Medicaid spending, as the federal government will not subsidize health coverage for foreign citizens illegally present in the United States.

As to those who disagree with this move, one can study the words of none other than Hillary Clinton. In 1993, she testified before Congress in opposition to giving illegal residents full health benefits, because “illegal aliens” were coming to the United States for health care even then:

We do not think the comprehensive health care benefits should be extended to those who are undocumented workers and illegal aliens. We do not want to do anything to encourage more illegal immigration into this country. We know now that too many people come in for medical care, as it is. We certainly don’t want them having the same benefits that American citizens are entitled to have.

If Clinton’s words don’t sound compelling enough, consider one way that California may finance these new benefits: By reinstating Obamacare’s individual mandate. To put it another way, people who obey the law (i.e., the mandate) will fund free health coverage for people who by definition have broken the law by coming to, or remaining in, the United States unlawfully.

A Questionable Individual Mandate

This issue faces multiple questions on both process and substance. First, the budget bill includes about $8 million for the state’s Franchise Tax Board to implement an individual mandate, but doesn’t actually contain language imposing the mandate. The bill that would reimpose the mandate, using definitions originally included in the federal law, passed the Assembly late last month, but faces opposition in the Senate.

Third, implementing the mandate imposes legal and logistical challenges. I argued in the Wall Street Journal last fall that states cannot require employers who self-fund health coverage to report their employees’ insurance coverage to state authorities. The mandate bill the Assembly passed does not include such a requirement.

Without a reporting requirement on employers, a mandate could become toothless, because the state would have difficulty verifying coverage to ensure compliance—people could lie on their tax forms and likely would not get caught. However, imposing a reporting regime, either through the mandate bill or regulations, would invite an employer to claim that federal labor law (namely, the Employee Retirement Income Security Act) prohibits such a state-based requirement.

More Spending on Subsidies

While the budget bill does not include an explicit insurance mandate, it does include more than $295 million to “provide advanceable premium assistance subsidies during the 2020 coverage year to individuals with projected and actual household incomes at or below 600 percent of the federal poverty level.”

Obamacare epitomized the problems that policy-makers face in subsidizing health insurance. The federal law includes a subsidy “cliff” at 400 percent of the poverty level. Households making just under that threshold can receive federal subsidies that could total as much as $5,000-$10,000 for a family, but if their income rises even one dollar above that “cliff,” they lose all eligibility for those subsidies.

By penalizing individuals whose incomes rise even marginally, the subsidy “cliff” discourages work. That’s one of the main reasons the Congressional Budget Office said Obamacare would reduce the labor supply by the equivalent of 2.5 million full-time jobs.

California decided to replace these work disincentives with yet more spending on subsidies. This year, the federal poverty level stands at $25,750 for a family of four—which makes 600 percent of poverty equal to $154,500. In other words, a family making more than $150,000 will now classify as “low-income” for purposes of the new subsidy regime.

Hypocrisy by Officials

The individual mandate bill gives a significant amount of authority for its implementation to Covered California, the state’s insurance exchange. The bill says the exchange will determine the amount of the mandate penalty, and determine who receives exemptions from the mandate.

Who runs California’s exchange? None other than Peter Lee, the man I previously profiled as someone who earns $436,800 per year, yet refuses to buy the exchange coverage he sells. Or, to put it another way, if the mandate passes, Lee will be standing in judgment of individuals who refuse to do what he will not—buy an Obamacare plan.

If you think that seems a bit rich, you would be correct. But it epitomizes the poor policy choices and hypocritical actions taken by officials to prop up Obamacare in California.

This post was originally published at The Federalist.

Kamala Harris vs. Hillary Clinton on Benefits to Immigrants

Back in January, jaws dropped when presidential candidate Sen. Kamala Harris (D-CA) admitted at a CNN town hall that she wanted to take away the existing health arrangements of hundreds of millions of Americans. Now we know one reason why.

In another interview with CNN that aired Sunday, Harris admitted that she wants to provide taxpayer-funded health care, along with education and other benefits, to individuals unlawfully present in this country. But as even Hillary Clinton recognized, doing so wouldn’t just cost precious taxpayer dollars. It will also encourage individuals to migrate to the United States for “free” health care.

In the interview, CNN’s Jake Tapper asked Harris about language in Section 102(a) of the House and Senate single-payer bills, which would make health coverage available to all individuals present in the United States, regardless of their legal status. When questioned whether she supported granting benefits “to people who are in this country illegally,” Harris responded unequivocally that she does: “Let me just be very clear about this. I am opposed to any policy that would deny in our country any human being from access to public safety, public education or public health, period.”

Compare Harris’ response to the words of none other than Hillary Clinton. When testifying before Congress about her health-care task force’s plan in September 1993, Clinton said she opposed extending benefits to “illegal aliens,” because it would encourage additional migration to the United States:

We do not think the comprehensive health care benefits should be extended to those who are undocumented workers and illegal aliens. We do not want to do anything to encourage more illegal immigration into this country. We know now that too many people come in for medical care, as it is. We certainly don’t want them having the same benefits that American citizens are entitled to have.

Clinton may not want illegally present foreign citizens having the same benefits that American citizens would be entitled to under single payer, but Harris does.

The problems sparked by single payer would reach far beyond undocumented foreigners living in this country. To wit, both the House and Senate single-payer bills prohibit individuals from traveling “for the sole purpose of obtaining health care” from the new government-run system. But note the specific wording: It only prohibits foreign citizens from traveling for the sole purpose of receiving health care.

This extremely permissive language would give federal officials fits. So long as anyone states some other purpose—visiting the U.S. Capitol, for instance, or seeing a Broadway play—for his or her visit, the language in the bills would make it impossible to deny these foreign citizens health care funded by U.S. taxpayers.

Provisions like these would not just cost American taxpayer dollars, it would also cost the U.S. health-care system. Growth in benefit tourism would greatly increase demand for health care (as would many other provisions in a single-payer system). Because of this greater demand, American citizens would have an increasingly difficult time accessing care. Foreign residents may not like waiting for care either, but individuals from developing countries lacking access to advanced health treatments might find queues for care in this country far preferable to no care at all in their native land.

Don’t Insult Americans’ Intelligence

In the same CNN interview that aired Sunday, Harris also tried, albeit unconvincingly, to “clean up” her January comments about “mov[ing] on” from private insurance. She claimed to Tapper that single-payer legislation would not fully eliminate private insurance. However, host Tapper rightly pointed out that supplemental insurance could only cover the very few services that the government-run plan would not, like cosmetic surgery.

Tapper also asked Harris about the unions that have health plans that they like now, not least because they gave up pay raises in prior years to keep rich health benefits. Harris could only concede that “it’s a legitimate concern which must be addressed.” I’m sure that those individuals facing the loss of their health coverage feel better, because Harris has officially dubbed their concern “legitimate.”

Note to Harris: Legal hair-splitting about whether single payer bars all health insurance, or just virtually all health insurance, and patronizing constituents fearful of losing their coverage, doesn’t seem like the best way to win support for a government takeover of health care. Perhaps next time she gives an interview with Tapper, she will finally have an answer for why she wants to give benefits to individuals unlawfully present, while taking coverage away from nearly 300 million Americans.

This post was originally published at The Federalist.

Democrats’ Single-Payer Health Care Bill Raises Serious Questions

On Tuesday, the House’s Democratic majority will hold its first formal proceedings on single payer legislation. The House Rules Committee hearing will give supporters an opportunity to move past simplistic rhetoric and answer specific questions about H.R. 1384, the House single payer bill, such as:

Section 102(a) makes “every individual who is a resident of the United States” eligible for benefits, regardless of their citizenship status. But in September 1993, Hillary Clinton testified before Congress that she opposed “extend[ing]” benefits to “those who are undocumented workers and illegal aliens,” because “too many people come [to the United States] for medical care as it is.” Do you agree with Secretary Clinton that single payer will encourage “illegal aliens” to immigrate to the United States for “free” health care?

Section 102(b) prevents individuals from traveling to the United States “for the sole purpose of obtaining” benefits. Does this provision mean that foreign nationals can receive taxpayer-funded health care so long as they state at least one other purpose—for instance, visiting a tourist site or two—for their travels?

Section 104(a) prohibits any participating provider from “den[ying] the benefits of the program” to any individual for any of a series of reasons, including “termination of pregnancy.” What if the nation’s more than 600 Catholic hospitals—which collectively treat more than one in seven American patients—refuse to join the government program because this anti-conscience provision forces them to perform abortions and other procedures in violation of their deeply-held religious beliefs? How will the government program make up for this lost capacity in the health care system?

Section 201(a) requires the Secretary of Health and Human Services (HHS) to compile a list of “medically necessary or appropriate” services that the single payer program will cover. Does anything in the bill prohibit the Secretary from including euthanasia—now legal in at least eight states—on that list of covered benefits?

Section 401(b) requires HHS to compile an “adequate national database,” which among other things must include information on employees’ hours, wages, and job titles. Will America’s millions of health care workers appreciate having the federal government track their jobs and income? Why does the bill contain not a word about employees’ privacy in this “adequate national database?”

Section 611 creates a system of global budgets to fund hospitals’ entire operating costs through one quarterly payment. But what if this lump-sum proves insufficient? Will hospitals have to curtail operations at the end of each quarter if they exceed the budget government bureaucrats provide to them?

Section 614(b)(2) prohibits payments to providers from being used for any profit or net revenue, essentially forcing for-profit hospital, nursing home, hospice, and other providers to convert to not-for-profit status. Coming on top of the bill’s virtual abolition of private insurers, how much will this collective destruction of shareholder value hurt average Americans’ 401(k) balances?

Section 614(c)(4) prohibits hospital providers from using federal operating funds to finance “a capital project funded by charitable donations” without prior approval. Does this restriction—preventing hospitals from opening new wings funded by private dollars—demonstrate how single payer will ration access to care, by limiting the available supply?

Section 614(f) bars HHS from “utiliz[ing] any quality metrics or standards for the purposes of establishing provider payment methodologies.” Does this prohibition on tying any provider payments to quality metrics serve as confirmation of the low-quality care a single payer system will give to patients?

Section 616 states that, if drug and device manufacturers will not agree to an “appropriate” price for their products—as defined by the government, of course—the HHS Secretary will license their patents away to other companies. But the average pharmaceutical costs approximately $2.6 billion to bring to market. How many fewer drugs will come to market in the future due to this arbitrary restriction on innovation?

Section 701(b)(2)(B) sets future years’ appropriations for the program based in part on “other factors determined appropriate by the [HHS] Secretary.” But this month, Nancy Pelosi filed suit against President Trump’s border emergency declaration, after she claimed that the declaration “undermines the separation of powers and Congress’s [sic] power of the purse.” How does allowing an unelected executive branch official to determine trillions of dollars in appropriations uphold Congress’ “power of the purse?”

Section 901(a)(1)(A) states that “no benefits shall be available under Title XVIII of the Social Security Act”—i.e., Medicare—two years after enactment. How does abolishing the current Medicare program square with the bill’s supposed title of “Medicare for All?”

If single payer supporters can answer all these queries at Tuesday’s hearing, many observers will only have one other question: Why anyone thought the legislation a good idea to begin with.

This post was originally published at Fox News.

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.

Health Insurance Bailout Is Subprime Redux

Stop me if you’ve heard this story before: Financial institutions, enabled and empowered by lax regulators, make unwise multi-billion-dollar bets that threaten the well-being of millions of Americans—not to mention federal taxpayers. The subprime mortgage crisis that led to the financial meltdown of 2007-08? Sure. But it also describes insurers’ risky bets on Obamacare in 2017-18.

At issue in the latter: Federal cost-sharing reduction payments, designed to reimburse insurers for providing discounted co-payments, deductibles, and the like for certain low-income households. While the text of Obamacare includes no explicit appropriation for the payments, the Obama administration decided to start providing the payments to insurers anyway when the law’s insurance exchanges opened in 2014.

By summer 2016, anyone could have seen problems on the horizon for insurers: Collyer had declared the cost-sharing payments unconstitutional; a new president would take office in January 2017, and could easily terminate the payments unilaterally, just as Obama started them unilaterally; and neither Hillary Clinton nor Donald Trump made any clear public statements confirming the payments would continue.

Worried about their potential exposure, insurers tried to fix their dilemma, but didn’t. Insurers insisted upon language in their contracts with healthcare.gov, the federally run insurance exchange, stipulating that cost-sharing reductions “will always be available to qualifying enrollees,” and allowing them to drop out of the exchange if those reductions disappeared.

But the legal and constitutional dispute does not apply to payments to enrollees. Insurers are legally bound to provide those reductions regardless. The contract provides no help to insurers on the fundamental question: Whether the federal government will reimburse them for providing individuals the reduced cost-sharing.

Likewise, despite having multiple reasons to do so, state regulators did not appear to question the uncertain status of the cost-sharing payments when approving insurers’ 2017 rates in the fall of 2016. I asked all 50 state insurance commissioners for internal documents analyzing the impact of the May 2016 court ruling declaring the payments unconstitutional on the 2017 plan year. In response, I have yet to receive a single document to indicate that regulators demonstrated concern about the incoming administration cutting off billions of dollars in federal subsidies to insurers.

Having under-reacted surrounding the cost-sharing reductions for much of 2016, insurers and insurance commissioners have spent the past several months over-reacting. Industry lobbyists have swarmed Capitol Hill demanding Congress pass an explicit appropriation for the payments—and more bailout payments besides.

But the hyperventilation regarding the cost-sharing payments sends the wrong message to financial markets: They can ignore significant risks, so long as their competitors do so as well. The “uncertainty” surrounding the payments was knowable, and known, both to insurers who tried to change their contracts with the federal exchange, and to analysts like this one. Yet insurers did not change their behavior to reflect those risks, nor did regulators require them to do so.

This post was originally published at The Federalist.