Will Disclosing Prescription Drug Prices in TV Ads Make Any Difference?

Why did the Trump administration last Monday propose requiring pharmaceutical companies to disclose their prices in television advertisements? A cynic might believe the rule comes at least in part because the drug industry opposes it.

Now, I carry no water for Big Pharma. For instance, I opposed their effort earlier this year to repeal an important restraint on Medicare spending. But this particular element of the administration’s drug pricing plan appears to work in a similar manner as some of the president’s tweets—to dominate headlines through rhetoric, rather than through substantive policy changes.

Applies Only to Television

The rule “seek[s] comment as to whether we should apply this regulation to other media formats,” but admits that the administration initially “concluded that the purpose of this regulation is best served by limiting the requirements” to television. However, five companies alone accounted for more than half of all drug advertisements in the past year. Among those five companies, the advertisements promoted 19 pharmaceuticals—meaning that new disclosure regime would apply to very few drugs.

If the “purpose of this regulation” is to affect pharmaceutical pricing, then confining disclosures only to television advertisements would by definition have a limited impact. If, however, the “purpose of this regulation” is primarily political—to force drug companies into a prolonged and public legal fight on First Amendment grounds, or to allow the administration to point to disclosures in the most prominent form of media to say, “We’re doing something on drug costs!”—then the rule will accomplish its purpose.

Rule Lacks Data to Support Its Theory

On three separate occasions, in the rule’s Regulatory Impact Analysis—the portion of the rule intended to demonstrate that the regulation’s benefits outweigh its costs—the administration admits it has very few hard facts: “We lack data to quantify these effects, and seek public comment on these impacts.”

It could encourage people to consume more expensive medicines (particularly if their insurance pays for it), because individuals may think costlier drugs are “better.” Or it could discourage companies from advertising on television at all, which could reduce drug consumption and affect people’s health (or reduce health spending while having no effect on individuals’ health).

Conservative think-tanks skewered several Obamacare rules released in 2010 for the poor quality and unreasonable assumptions in their Regulatory Impact Analyses. Although released by a different administration of a different party, this proposed regulation looks little different.

Contradictions on Forced Speech?

Finally, the rule refers on several occasions to the Supreme Court’s ruling earlier this year in a case involving California crisis pregnancy centers. That case, National Institute of Family and Life Advocates v. Becerra, overturned a California state law requiring reproductive health clinics, including pro-life crisis pregnancy centers, to provide information on abortion to patients.

The need for that distinction arises because the pharmaceutical industry will likely challenge the rule on First Amendment grounds as an infringement on their free speech rights. However, a pro-life administration attempting to force drug companies to disclose pricing information, while protecting crisis pregnancy centers from other forced disclosures, presents some interesting political optics.

A Political ‘Shiny Object’

Ironically enough, most of the administration’s actions regarding its prescription drug pricing platform have proven effective. Food and Drug Administration Commissioner Scott Gottlieb has helped speed the approval of generic drugs to market, particularly in cases where no other competitors exist, to help stabilize the marketplace.

Other proposals to change incentives within Medicare and Medicaid also could bring down prices. These proposals won’t have an immediate effect—as would Democratic blunt-force proposals to expand price controls—but collectively, they will have an impact over time.

This administration can do better than that. Indeed, they already have. They should leave the political stunts to the president’s Twitter account, and get back to work on more important, and more substantive, proposals.

This post was originally published at The Federalist.

What Mitch McConnell and Congressional Democrats Get Wrong about Entitlements

Sometimes, as parents often remind children in their youth, two wrongs don’t make a right. This held true on Tuesday, when Democrats erupted over comments by Senate Majority Leader Mitch McConnell (R-KY) on entitlement reform.

In returning to “Mediscare” tactics, Democrats made several false claims about entitlements. But so did McConnell, who blithely omitted what a Republican majority did earlier this year to worsen the country’s entitlement shortfall.

What McConnell Got Wrong

McConnell spoke accurately when he said in an interview that Medicare, Social Security, and Medicaid serve as the primary drivers of our long-term debt. He stood on less firm ground when he told Bloomberg that “the single biggest disappointment of my time in Congress has been our failure to address the entitlement issue.” Contra McConnell’s claim, Congress—a Republican Congress—actually did address the entitlement issue this year: they made the problem worse.

This Republican Congress repealed a cap on Medicare spending—the first such cap in that program’s history. It did so as part of a budget-busting fiscal agreement that increased the debt by hundreds of billions of dollars. It did so even though Republicans could have retained the cap on Medicare spending while repealing the unelected, unaccountable board that Democrats included in Obamacare to enforce that spending cap.

By and large, both parties have tried for years to avoid taking on entitlement reform. But Democrats included an actual cap on Medicare spending as part of Obamacare, and Republicans turned around and repealed it at their first possible opportunity. That makes entitlements not just a bipartisan problem—it makes them a Republican problem too.

What Democrats Got Wrong

But McConnell’s comments suggested just the opposite. He noted that, while entitlements serve as the prime driver of the nation’s long-term debt, any changes to those programs “may well be difficult if not impossible to achieve when you have unified government.” McConnell said the same thing in a separate interview with Reuters on Wednesday: “We all know that there will be no solution to that, short of some kind of bipartisan grand bargain that makes the very, very popular entitlement programs in a position to be sustained. That hasn’t happened since the ’80s.”

Even though Congress needs to start reforming entitlements sooner rather than later—even if that means one political party must take the lead—McConnell indicated he would do nothing of the sort. In fact, his comments implied that Congress would not do so unless and until Democrats agreed to entitlement reform, giving the party an effective veto over any changes. Yet Democrats, who never fail to demagogue an issue, attacked him for those comments anyway.

Actually, they haven’t “earned” those benefits. Seniors may have “paid into” the system during their working lives, but the average senior citizen receives far more in benefits than he or she paid in taxes, and the gap continues to grow.

Making a Tough Job Worse

In this case, two wrongs not only did not make a right, they made our country worse off. Like outgoing Speaker of the House Paul Ryan (R-WI), McConnell wishes to absolve himself of blame for the entitlement crisis, when he made the situation worse.

On the other side, Pelosi and her fellow Democrats continue the partisan demagoguery, perpetuating the myth that seniors have “earned” their benefits because they see political advantage in defending nearly infinite amounts of government subsidies to nearly infinite numbers of people. For all their love of attacking “science deniers,” much of the left’s politics requires denying math—that unsustainable trends can continue in perpetuity.

At some point, this absurd game will have to end. When it finally does, our country might not have any money left.

This post was originally published at The Federalist.

Mixed Messages on Paul Ryan’s Entitlement Record

Upon news of House Speaker Paul Ryan’s retirement Wednesday, liberals knew to attack him, but didn’t know exactly why. Liberal Politico columnist Michael Grunwald skewered Ryan’s hypocrisy on fiscal discipline:

Ryan’s support for higher spending has not been limited to defense and homeland security. He supported Bush’s expansion of prescription drug benefits, as well as the auto bailout and Wall Street bailout during the financial crisis…Ryan does talk a lot about reining in Medicaid, Medicare, and Social Security, for which he’s routinely praised as a courageous truth-teller. But he’s never actually made entitlement reform happen. Congress did pass one law during his tenure that reduced Medicare spending by more than $700 billion, but that law was Obamacare, and Ryan bitterly opposed it.

For the record, Ryan opposed Obamacare because, as he repeatedly noted during the 2012 campaign, the law “raided” Medicare to pay for Obamacare. (Kathleen Sebelius, a member of President Obama’s cabinet, admitted the law used Medicare spending reductions to both “save Medicare” and “fund health care reform.”)

Compare that with a Vox article, titled “Paul Ryan’s Most Important Legacy is Trump’s War on Medicaid”: “[Paul] Ryan’s dreams are alive and well. Through work requirements and other restrictions, President Donald Trump could eventually oversee the most significant rollback of Medicaid benefits in the program’s 50-year history.” It goes on to talk about how the administration “is carrying on Ryan’s Medicaid-gutting agenda.”

Which is it? On fiscal discipline, is Ryan an incompetent hypocrite, or a slash-and-burn maniac throwing poor people out on the streets? As in most cases, reality contains nuance. Several caveats are in order.

First, Ryan’s budgets always contained “magic asterisks.” As the Los Angeles Times noted in 2012, “the budget resolutions he wrote would have left that Medicare ‘raid’ in place”—because Republicans could only achieve the political goal of a balanced budget within ten years by retaining Obamacare’s tax increases and Medicare reductions.” The budgets generally repealed the Obamacare entitlements, thus allowing the Medicare reductions to bolster that program rather than financing Obamacare. The budgets served as messaging documents, but generally lacked many of the critical details to transform them from visions into actual policy.

Second, to the best of my recollections, Ryan never took on the leadership of his party on a major policy issue. Former GOP House Speaker John Boehner famously never requested an earmark during a quarter-century in Congress. Sen. John McCain’s “Maverick” image came from his fight against fellow Republicans on campaign finance reform.

But whether as a backbencher or a committee chair, Ryan rarely bucked the party line. That meant voting for the Bush administration’s big-spending bills like the Medicare Modernization Act and TARP—both of which the current vice president, Mike Pence, voted against while a backbench member of Congress.

Third, particularly under this president, Republicans do not want to reform entitlements. As I noted during the 2016 election, neither presidential candidate made an issue of entitlement reform, or Medicare’s impending insolvency. In fact, both went out of their way to avoid the issue. Any House speaker would have difficulty convincing this president to embrace substantive entitlement reforms.

In general, one can argue that, contrary to his image as a leader on fiscal issues, Ryan too readily followed. Other Republicans would support his austere budgets, which never had the force of law, but he would support their big-spending bills, many of which made it to the statute books.

On one issue, however, Ryan did lead—and in the worst possible way. As I wrote last fall, Ryan brought to the House floor legislation repealing Obamacare’s cap on Medicare spending. This past February, that repeal became law.

Ryan could have sought to retain that cap while discarding the unelected, unaccountable board Obamacare created to enforce it. As a result, Ryan’s “legacy” on entitlement reform will consist of his role as the first speaker to repeal a cap on entitlement spending.

Primum non nocere—first, do no harm. Ryan may not have had the power to compel Republicans to reform entitlements, but he did have the power—if he had had the courage—to prevent his own party from making the problem any worse. He did not.

This post was originally published at The Federalist.

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

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

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

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

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

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

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

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

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

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

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

This post was originally published at The Federalist.

Lowlights of Senate “Budget” Deal

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

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

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

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

Lowlights of the Health Legislation

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

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

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

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

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

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

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

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

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

But Wait—There’s More!

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

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

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

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

Most Expensive Parade Ever?

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

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

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

This post was originally published at The Federalist.

Republicans’ Plan to Raise Health Care Costs

Who would purposefully design a legislative strategy whereby whoever wins actually loses? Congressional Republicans, that’s who.

On Tuesday evening, Republican leaders in the House introduced another continuing resolution to fund the federal government for four more weeks (through February 16). In an attempt to win Democratic votes, the bill includes a six-year extension of the State Children’s Health Insurance Program, without any of the conservative reforms congressional leaders said they would fight for back in 2015.

Inane Tax Treatment of Health Insurance

Since an Internal Revenue Service ruling (later codified) during World War II, the federal government has excluded health insurance and other fringe employment benefits from both payroll and income taxes. Economists on all sides of the political spectrum agree that this exclusion encourages workers to over-consume health insurance, and thus health care.

Taxing wages but not health benefits encourages firms to offer more generous benefits—with lower deductibles, co-payments, and so forth—and that lower cost-sharing encourages people to consume extra health care. (“I’m not sure how sick I really am, but because I only have a $10 co-pay, I might as well go to the doctor and find out.”)

Obamacare attempted to change that dynamic through its “Cadillac tax” on “high-cost” employer plans. The tax applied for every dollar of benefits provided over a defined amount, encouraging firms to make their benefits less rich, to avoid exceeding the threshold that would trigger the tax.

As for the Bad Strategy

However, Republicans could easily remedy the “Cadillac tax’s” flaws with another alternative. The alternative could limit the tax preference for employer-provided health insurance—without a punitive 40 percent tax rate, and while not raising any additional revenue over a decade. President George W. Bush proposed this concept more than a decade ago, and the Republican Study Committee and others have since endorsed it.

However, repealing the “Cadillac tax” outright would effectively sabotage any ability to reform or replace it. As with Obamacare’s Independent Payment Advisory Board (IPAB), removing a constraint on health spending now with the intent of replacing it later would almost certainly mean that “later” will never arrive. That of course means Republicans, consistent with their insatiable desire to postpone difficult decisions, want to repeal both the “Cadillac tax” and IPAB without constructing replacements.

Tuesday evening’s spending bill would postpone the “Cadillac tax”—already delayed once, until 2020—for another two years, until 2022. It would likewise suspend Obamacare’s medical device tax for two years, and its health insurer tax for one year. It would also exempt these changes from the Statutory Pay-As-You-Go Act, which requires offsetting spending cuts to fund this tax relief—because heaven forbid Congress be forced to reduce spending.

This post was originally published at The Federalist.

Liberals’ “Alternative Facts” on Capping Entitlement Spending

Here’s a policy riddle for you: When is a spending cap not a spending cap? The answer: When a liberal finds it politically inconvenient.

During the confirmation hearing for Health and Human Services Secretary-designee Alex Azar, a staffer for the liberal Center for Budget and Policy Priorities tweeted that Azar supported capping Medicaid. I noted that meant he supported capping Medicaid spending like the caps Democrats enacted as part of Obamacare—and that’s when the fun began.

Then I pointed out that Section 3403 of Obamacare charges the Independent Payment Advisory Board (IPAB) with enforcing a cap on per-beneficiary spending in Medicare. She responded by saying that IPAB contains restrictions on “rationing health care, raising Medicare’s premiums or cost sharing, cutting benefits, or restricting eligibility.”

That response, while accurate, misses the point. First of all, while the law prohibits Medicare from “rationing” benefits, neither Obamacare nor any other law “defines” rationing. Former Health and Human Services secretary Kathleen Sebelius testified to Congress in 2011 that HHS would need to undertake rulemaking to define “rationing.” However, as I noted this summer, “the Obama Administration never even proposed rules ‘protecting’ Medicare beneficiaries from rationing under the IPAB per capita caps—so how meaningful can those protections actually be?”

Capping Spending Does Indeed Reduce It

Second, a cap on spending, by definition, will reduce spending. The implication that one form of cap on spending in Medicare will have no ramifications whatsoever for beneficiaries, while another form of cap on spending in Medicaid will lead to proverbial death and destruction, strains credulity.

But putting those distinctions aside for a second, I asked whether Obamacare capped Medicare spending. I sent links to the portions of Section 3403 that 1) establish a target growth rate for Medicare and 2) instruct IPAB to develop recommendations to reduce spending to meet that target—the definition of a cap in my book, and probably anyone else’s as well.

I asked a simple yes-no question: While they might be implemented in different ways than the caps in Republicans’ “repeal-and-replace” bills, doesn’t IPAB limit the growth rate of Medicare spending to meet a cap?

Answer came there none.

Politically Inconvenient Truths

The political hack—erm, I mean, “analyst”—in question, from the Center for Budget and Policy Priorities, has more than enough health policy experience to recognize a spending cap. According to the center’s website, she served in senior roles in California’s Medicaid program, worked as the primary health staffer for former U.S. senator Al Franken (D-MN), and holds a master’s degree in health policy. She knows better—she just chose not to.

As I have written previously, Democrats don’t want to admit that they imposed per capita spending caps in Medicare as part of Obamacare. They may still fear the political consequences of capping Medicare spending—and more importantly, do not want to give Republicans political “cover” to impose similar caps in Medicaid.

So rather than admit the obvious—yes, Democrats did impose spending caps in Medicare (albeit in a slightly different form than Republicans’ Medicaid proposals last year) as part of Obamacare—this person chose to obfuscate, deflect, deny, and ultimately join Twitter’s version of the Witness Protection Program rather than admit the politically inconvenient truth. And beclowned herself in the process.

After the “repeal-and-replace” process of 2017, I know full well what it means to tell politically inconvenient truths. Going out on a limb to point out flaws in alternatives to Obamacare won me no small amount of flack from others on the Right, and may have cost me business to boot.

But at bottom, I consider myself a conservative health policy analyst, not a Republican one. As such, I feel an obligation to call “balls-and-strikes” based solely on policy, regardless of party. Doing otherwise would harm my reputation and integrity. And in policy circles in this town, one’s good name is the only thing you’ve got.

People can propose “alternative facts” all they like, but not without cost. After our Twitter tete-a-tete, I think less of the analyst in question, and of the Center for Budget and Policy Priorities for employing her. While liberals can talk all they like about a “wonk gap,” or about Republican “science deniers,” they appear to have some in their own midst as well. Just ask liberal health analysts about IPAB’s per capita caps.

This post was originally published at The Federalist.

Contradictory Messages on SCHIP

When the bill reauthorizing the State Children’s Health Insurance Program (SCHIP) comes to the House floor for an expected vote on Friday, it will feature numerous examples of oxymoronic policy messages from the Republican majority. Call them contradictory, call them hypocritical, but regardless, the lack of coherence sends decidedly mixed messages about what exactly Republicans consider good, conservative health policy.

Voting to Reduce Medicare Spending the Day After Voting to Increase It

On Wednesday, the House Rules Committee finally decided the on-again, off-again question of whether to include provisions expanding Medicare means-testing for the affluent in the bill. The rule the committee reported states that, upon the rule’s adoption by the House, the base bill will be replaced by a substitute amendment—as well as a separate amendment adding the means-testing language back into the bill.

Rewarding States that Expanded Medicaid 

Section 305 of the new substitute amendment would postpone by two years reductions in Obamacare’s Disproportionate Share Hospital (DSH) payments—scheduled to total $4.7 billion in both fiscal years 2018 and 2019—for two years, until 2020. Theoretically the bill would “pay for” this additional spending (i.e., cancelling spending reductions now) by increasing the size of DSH reductions in future years. However, given that Congress has already postponed Obamacare’s DSH reductions three times in as many years, some may view the move as a “can-kicking” exercise and fiscal gimmick that lawmakers do not believe will ever take effect.

More to the point: In undoing the DSH reductions, the bill makes absolutely no distinction between states that expanded Medicaid under Obamacare and those that did not. In 2009 and 2010, Democrats thought the DSH payment reductions would partially offset the increased revenues hospitals would generate as a result of gaining more insured patients under Obamacare. But by failing to target the DSH reductions only toward states that have not expanded Medicaid to the able-bodied, the Republican House would effectively allow expansion states to “double-dip,” gaining both additional revenue from the Medicaid expansion and from the postponement (or the eventual cancellation) of the DSH reductions.

Passing a Not-That-Conservative Bill with Only GOP Votes

As previously noted, the underlying SCHIP reauthorization—separate and distinct from the controversies about how to pay for the spending—deviates from prior legislative proposals designed to return SCHIP towards its original purpose: Covering low-income kids. In addition to the reward for Medicaid expansion states discussed above, the bill:

  • Extends Obamacare’s maintenance of effort requirements, which constrain states’ flexibility in managing their programs, for three years, through 2022;
  • Extends—albeit only for one-year, and at a lower rate as part of a phase-out approach—Obamacare’s enhanced match rate for SCHIP programs;
  • Omits prior language requiring states to focus their programs’ efforts on covering children from low-income households;
  • Omits prior language permitting states to impose waiting periods in SCHIP programs for people who turn down an offer of, or disenroll from, employer-sponsored health coverage, given that studies suggest as many as three in five children enrolled in programs like SCHIP do so after first dropping their prior health coverage (i.e., “crowd-out”).

Even though the bill does not contain any of these conservative proposals, Democrats claim they will not support the legislation, given their objections to the SCHIP “pay-fors.” The Democratic position raises an obvious question: If Republicans will end up passing a SCHIP reauthorization along party lines, why not ensure that the legislation includes solid conservative policies throughout, instead of just conservative offsets? It’s one of several relevant questions given the decidedly mixed messages coming from House Republicans on health care this week.

This post was originally published at The Federalist.

A Conservative’s (Sort of) Defense of IPAB

The House of Representatives will vote Thursday on whether to eliminate Obamacare’s Independent Payment Advisory Board (IPAB). I come not to praise IPAB, but not to bury it, either—at least, not yet.

Yes, Obamacare empowers this federal board to make binding recommendations to Congress about enforcing per capita spending caps within Medicare. Yes, that board undermines congressional sovereignty by empowering unelected bureaucrats, in what its own advocates transparently described as an attempt to minimize democracy. And yes, federal bureaucrats have no business interfering still further with physicians’ practice of medicine. But for multiple reasons, Congress should not repeal IPAB without first enacting a suitable replacement.

We Can’t Afford Medicare As It Is

The Medicare Trust Fund suffered $132.2 billion in deficits during the Great Recession, and faces insolvency in just more than a decade. Medicare needs fundamental reform now, but repealing IPAB without simultaneously enacting other reforms will only encourage partisan attacks when Congress finally must act. Witness the liberal ads throwing granny over a cliff in response to congressional Medicare reform proposals that would save both seniors and taxpayers billions of dollars annually.

Second, repealing IPAB would also undermine the case for reforming Medicaid. Liberals’ hue-and-cry over proposals to reform Medicaid earlier this year demonstrated an opportunistic hypocrisy, as the same groups that attacked Republican efforts to impose per capita caps on Medicaid supported per capita spending caps on Medicare when created by a Democratic president. Conservative support for IPAB repeal would reinforce this ideological incoherence, demonstrating Republicans as favoring per capita caps in Medicaid, but not Medicare, and weakening the case for reforms to either entitlement.

Third, opportunities to control spending do not come often, or easily, which should make conservatives inherently reluctant to repeal any of them. In 1985, Congress enacted the Gramm-Rudman-Hollings Deficit Reduction Act, designed to force lawmakers to live within statutory spending targets. But Congress weakened Gramm-Rudman’s statutory fiscal discipline within five years, and abandoned it altogether by 2002. It took the debt limit fight of 2011 to restore fiscal discipline through the Budget Control Act’s sequestration caps—conservatives’ major policy victory of the Obama era, and one that congressional spendthrifts have consistently worked to undermine since.

It’s Clumsy, But Better than Nothing

As someone who has criticized Obamacare’s overly regulatory structure since its enactment seven years ago, I recognize—and entirely agree with—objections to the way IPAB undermines congressional authority, and intrudes still further into the practice of medicine. But conservatives would do well to avoid conflating IPAB’s highly flawed means with its entirely proper ends.

The board imposes real caps on Medicare spending, however clumsy, and like the budget sequester mechanism represents a genuine, albeit flawed, attempt to reduce federal spending. That’s why the Congressional Budget Office estimates the board’s repeal would increase Medicare spending, and thus the budget deficit, by $17.5 billion over the coming decade and more after that.

Most health-care interest groups want an outright IPAB repeal immediately, which is one major reason the House will vote on its repeal this week. But conservatives should not take that bait, and should instead work to replace IPAB with constructive reforms that modernize Medicare and make the program more fiscally sustainable for future generations.

As the old saying goes, “Be careful what you wish for—you just might get it.” Conservatives may not wish to see spending rise on an already unsustainable entitlement. But if they follow the efforts of K Street lobbyists and repeal IPAB without an effective substitute, that’s exactly what they would end up getting.

This post was originally published at The Federalist.

Liberals’ Hypocrisy on Per Capita Caps

It was, to borrow from Arthur Conan Doyle, the dog that didn’t bark. In releasing the annual report on its finances, Medicare’s actuary last month found that the program would not trigger requirements related to the Independent Payment Advisory Board (IPAB) this year—or for several years to come. Although the Senate and House health-care bills avoided altering Medicare, the IPAB development—or non-development, as it were—should inject some important perspective into the legislative debate.

Many liberal critics of the Republican bills have attacked proposals to impose per capita caps on state Medicaid programs, while conveniently forgetting that Obamacare imposed similar spending caps on Medicare. In fact, Section 3403 of the law empowers IPAB—a board of unelected bureaucrats—to make binding recommendations to Congress reducing program spending if Medicare will exceed statutory limits for spending per beneficiary.

We Care More About Politics than Policy

Some Obamacare supporters claim that statutory restrictions on IPAB—in enforcing Medicare spending caps, the board may not change Medicare benefits or “ration health care”—will protect Medicare beneficiaries in a way that the current bills do not protect Medicaid recipients. But IPAB’s supposed “protections” have their own flaws. The statute does not define “rationing,” and then-Secretary of Health and Human Services (HHS) Kathleen Sebelius testified in 2011 that HHS would need to draft regulations to do so. But the Obama administration never even proposed rules “protecting” Medicare beneficiaries from rationing under the IPAB per capita caps—so how meaningful can those protections actually be?

When push comes to shove, few liberals can justify their support for per capita caps on Medicare, but opposition to similar caps in Medicaid. One day on Twitter, I posed a simple question to Topher Spiro, of the Center for American Progress (CAP): If the Republican proposals for per capita caps in Medicaid included the same beneficiary “protections” as IPAB creates for Medicare recipients, would he support them? I never received a substantive answer.

Therein lies the problem: Many critics of the Republican Medicaid proposals seem to prioritize political partisanship over policy consistency. Five years ago, CAP made very clear it supports IPAB’s per capita caps on Medicare spending, denouncing a 2012 legislative effort to repeal the board. But earlier this year, the organization denounced as “devastating” Republican proposals for per capita caps on Medicaid. So why exactly does this purportedly non-partisan organization support per capita caps when a Democratic Congress enacts them, but oppose similar caps proposed by a Republican Congress?

It’s Okay, It’s Just Hypocrisy

Democratic senators appearing with disability advocates at events to denounce spending caps for Medicaid fail to recognize that they voted for similar caps in Medicare, which provides health coverage to 9 million Americans with disabilities. Moreover, despite being in place for several years, the Medicare caps have yet to be breached. So how damaging is a policy that hasn’t affected Medicare beneficiaries in the slightest, and which Democratic lawmakers themselves have voted for?

In his Sherlock Holmes story “Silver Blaze,” Doyle wrote of the guard dog that didn’t bark because it was friendly with an intruder. Likewise, many liberal advocates and Democratic lawmakers are quite friendly with per capita entitlement caps, already having imposed such caps for Medicare. Particularly given the non-factor of such caps in the Medicare program in recent years, they should perhaps “bark” less in opposing similar caps in Medicaid. Both beneficiaries and taxpayers deserve better than opportunistic—and politically inconsistent—scaremongering.

This post was originally published at The Federalist.