Unanswered Questions on Single Payer

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

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

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

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

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

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

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

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

This post was originally published at USA Today.

How a Massive Medicare Regulation Illustrates the Problems of Single Payer

What do provisions in a federal regulation, released on a sleepy Friday in August, have to do with the raging debate regarding single-payer health care? As it turns out, plenty.

By definition, single-payer health care assumes that one payer will finance all the care provided by the nation’s doctors, hospitals, and other medical providers. But this premise comes with an important corollary: Funding all medical providers’ care through a single source means that source—the federal government—must pay those providers the right amount. Paying providers too much wastes taxpayer resources; paying them too little could cause them to close.

The Rural Wage Index and MRI Counting

Consider, for instance, the regulation governing Medicare inpatient hospital payments for 2020, which the Centers for Medicare and Medicaid Services (CMS) released on Friday, August 2. That 2,273-page regulation—no, that’s not a typo—included major changes to Medicare payment policies.

Most notably, the final rule changed the Medicare hospital wage index. For years, hospitals in rural areas have complained that the current wage index exacerbates wage disparities, under-paying hospitals in low-wage and rural areas, while over-paying hospitals elsewhere. According to CMS, the final rule increased the wage index for many rural hospitals, while slightly reducing payment rates to other hospitals, because CMS must implement the change in a budget-neutral manner.

Consider also a comment made several years ago by Donald Berwick, former CMS administrator and a strong advocate of single-payer health care. In a 1993 interview, Berwick said that “I want to see that in the city of San Diego or Seattle there are exactly as many MRI units as needed when operating at full capacity. Not less and not more.”

‘Little Intellectual Elite’

I don’t know whether the wage index change represents a more accurate way of calculating hospital payments, although I suspect it will make some hospitals’ payments more accurate, and some less accurate. But I don’t presume to know the financial situations of each of the United States’ thousands of hospitals, let alone believe I can calculate the change’s effects for each of them.

Conversely, liberals have the arrogance, even hubris, to believe that a massive—not to mention costly—federal bureaucracy can track and micro-manage the health care system to near-perfection. Remember, this is the same federal government that but a few years ago couldn’t build a website for Obamacare. As Ronald Reagan famously said in his “A Time for Choosing” speech 45 years ago:

This is the issue of this election: Whether we believe in our capacity for self-government or whether we abandon the American Revolution and confess that a little intellectual elite in a far-distant capital can plan our lives for us better than we can govern ourselves.

Berwick, and his fellow single-payer supporters want to place our health care system in the care of that intellectual elite—although, given the size of our health care system, the bureaucracy needed to control it may prove far from “little.” (But hey, they’re from the government and they’re here to help.)

Invitation to Corruption

Four years ago, federal prosecutors obtained an indictment of Sen. Robert Menendez (D-NJ) on bribery charges, for accepting campaign contributions and other gifts from Miami physician Salomon Melgen. Among other things, Menendez repeatedly contacted Medicare officials and asked them to stop seeking $9 million in repayments from Melgen, who was eventually convicted on 67 counts of Medicare fraud.

A U.S. senator receiving nearly $1 million in gifts from a Medicare fraudster seems shocking enough. But increasing the federal government’s influence over health policy will make scenarios like this even more likely—and will make things like hospitals’ yearslong lobbying over the wage index seem like small potatoes.

In “Federalist 51,” James Madison famously wrote that “In framing a government which is to be administered by men over men, the great difficulty lies in this: You must first enable the government to control the governed; and in the next place oblige it to control itself.” Single-payer supporters’ obsession over the former, to the exclusion of the latter, bodes ill for any supposed “efficiency gains” resulting from single payer—to say nothing of the integrity of our government.

This post was originally published at The Federalist.

Single-Payer Will Increase Fraud and Corruption

It seems fitting that the Democratic National Committee chose Miami to host the first debates of the 2020 presidential campaign. Given that many of the candidates appearing on stage have endorsed a single-payer health care plan, the debates’ location epitomizes how government-run care will lead to a massive increase in fraud and corruption.

In South Florida, defrauding government health care programs doesn’t just qualify as a cottage industry — it’s big business. In 2009, “60 Minutes” noted that Medicare fraud “has pushed aside cocaine as the major criminal enterprise.” One former fraudster admitted that likely thousands of businesses in the Miami area alone were defrauding Medicare. Eric Holder, then the attorney general, explained why: Medicare fraud is easier — and carries smaller penalties — than dealing drugs.

A 2009 Government Accountability Office report also highlighted pervasive fraud within Medicare. For instance, some South Florida home health agencies “have submitted claims for visits that were probably not provided, such as claims for visits that allegedly occurred when hurricanes were in the area.” Auditors also found that fraudsters paid off seniors to cooperate with their scams. Because some “beneficiaries purportedly received more income in illegal [kickbacks] than from their monthly disability checks,” they would not report fraud to government officials.

Lest anyone believe that much has changed in the past decade, the spring of 2019 saw not one but two billion-dollar — that’s billion with a B — fraud rings against Medicare exposed in a single week. On April 7, Philip Esformes, a South Florida businessman, was convicted for bilking Medicare and Medicaid out of $1.3 billion in fraudulent nursing home claims. Two days later, federal authorities charged dozens more individuals in a $1.2 billion Medicare scam regarding neck braces.

If you think that the single-payer bills promoted by Sens. Bernie Sanders, Elizabeth Warren, and others would stop this rampant fraud, think again. Both the House and Senate single-payer bills include not a single new provision designed to stop crooks from defrauding government health programs. The bills would apply some existing anti-fraud provisions to the new government-run health program. However, given the widespread fraud in Medicare and Medicaid, expanding the failed status quo would increase corruption rather than reducing it.

To give some sense of perspective, in the last fiscal year Medicare had a rate of improper payments — payments either made in the wrong amount, or made under fraudulent pretenses — of 8.12%. Medicaid had an even higher improper payment rate of 9.8%. Extrapolating those rates to all health spending nationwide yields estimated improper payments under a single-payer system of between $296.1 billion and $357.3 billion. These sums of potential improper payments under single payer exceed the entire economies of countries like Finland and Denmark.

If lawmakers like Bernie Sanders want to see the ways in which socialized medicine will increase fraud, they don’t have far to look. Sanders’ Senate colleague Robert Menendez received nearly $1 million in gifts and favors from Salomon Melgen, yet another South Florida medical provider convicted of defrauding Medicare. Yet over several years, Menendez repeatedly lobbied Medicare officials on his friend Melgen’s behalf — using his influence as a senator to try to protect Melgen from his crimes.

At next week’s debates, moderators should ask candidates supporting Sanders’ plan whether they condone the actions of their colleague Menendez — and whether they think concentrating all power in a government-run health plan will increase or decrease the incidence of fraud and corruption within our health care system. The American people deserve better than to pay massive tax increases for this $32 trillion scheme, only to see much of that money end up in the hands of criminal fraudsters.

This post was originally published at Real Clear Politics.

Update on 1099 Repeal

As you may have just seen, the Senate set the 1099 repeal legislation (H.R. 4) to the President’s desk for signature, endorsing the measure by a vote of 87-12.  Prior to the vote on passage, the Menendez amendment was rejected on a 41-58 vote.

As you have likely seen, House Budget Committee Chairman Ryan introduced his mark for tomorrow’s budget markup.  Information on that document can be found here.  The Congressional Budget Office has indicated it will be releasing a long-term analysis of the proposal later this afternoon.

And as a final FYI, Senator Thune published an op-ed in Roll Call regarding the CLASS Act today that can be found here.

Menendez Amendment (#284) to H.R. 4 on 1099 Repeal

Senator Menendez has offered an amendment to the 1099 mandate repeal bill (H.R. 4) regarding the impact of the repeal.  A formal score is not available, but JCT has provided background information on the amendment, which is discussed in more detail below.

Summary:  The Menendez amendment requires the Department of Health and Human Services to study whether H.R. 4 “will result in an increase in health insurance premiums within the Exchanges” or “will result in an increase in the number of individuals who do not have health insurance coverage, a disproportionate share of which are employees and owners of small businesses.”  If the Secretary determines such an effect, the increase in subsidy recapture amounts included in the bill will not apply.

Background:  The underlying bill modifies the repayment levels for insurance subsidies provided under PPACA.  Under the health law, new health insurance subsidies are based on an individual’s (or family’s) most recent tax return – so that subsidy levels beginning in January 2014 will be based on reported income for 2012.  However, a family’s circumstances can change significantly during this time lag for a variety of reasons – a change in job, significant raise, divorce, birth, or death, to name just a few.  The “doc fix” enacted in December 2010 (P.L. 111-309) modified these levels to pay for a one-year adjustment to Medicare physician payment rates; H.R. 4 would modify those levels still further.

While some Democrats in the House expressed concern about the higher repayment requirements in H.R. 4, December’s increase in subsidy repayments passed the Senate by voice vote, and passed the House by the overwhelming margin of 409-2, with 243 House Democrats supporting what they have now criticized as a “tax increase.”  Moreover, the provisions of H.R. 4 requiring full subsidy repayment for all individuals and families with incomes above 400% FPL merely echoes a provision in PPACA itself – meaning Democrats would now oppose this provision in the bill after having supported it during the health care debate last year.

Score:  A formal budgetary score is not available.  However, staff from the Joint Committee on Taxation have provided an informal analysis of the Menendez amendment.  JCT concluded that it “do[es] not project an increase in health insurance premiums…as a result of H.R. 4,” meaning the first criteria in the Menendez amendment for nullifying the higher repayment amounts will not be met.  With respect to the second criteria, JCT concluded that “a larger share of small business employees will be affected than of large business employees.”  JCT declined to score the budgetary impact of this provision because of uncertainty about “how the Secretary will interpret the terms ‘disproportionate share’ and ‘small business.’”  However, JCT admitted that, should the Secretary certify that H.R. 4 will have a disproportionate impact on small businesses – as seems likely, given the JCT estimates and the Democrat sponsor of the amendment – the amendment would result in H.R. 4 increasing the deficit by $24.9 billion.

Considerations:

  • Last year, Democrats had an opportunity to vote on an amendment to the reconciliation bill containing very similar language to the Menendez amendment – provisions that would have prevented implementation of the health care law unless the Secretary of Health and Human Services certified the measure would not raise premiums.  Every Senate Democrat now serving voted against this amendment to keep premiums low.
  • Politico has reported that “Senate Dems look to have it both ways on 1099 repeal” by offering the Menendez amendment, noting that the provision “could kill the proposal down the road.”
  • Enacting the Menendez amendment would necessitate that H.R. 4 return to the House, further delaying the repeal of a 1099 mandate scheduled to take effect in January (and which small businesses are already having to prepare for).
  • Enacting the Menendez amendment would give the Administration the discretion to increase the deficit by $24.9 billion, by nullifying the means by which the 1099 repeal is paid for.

Dems “Try to Have It Both Ways” on 1099 Repeal

Politico reported last night that Senate Democrats were looking to “have it both ways” when it comes to repealing the health care law’s 1099 reporting requirements, with “an amendment that could kill the proposal down the road.”  Specifically, Politico reported that Sen. Menendez would offer an amendment “that would require an Obama Administration study to see how the Republicans’ amendment would affect small businesses’ premium increases and access to coverage…if the study finds that the Republican amendment increases costs or reduces access, the Johanns amendment won’t go into effect.”

For the record, the outcome for amendment votes on the small business bill remains unclear. (When final text and/or a schedule is available, we will of course get that information to you ASAP.)  But here are two simple examples of how such an amendment would show Democrats “having it both ways” when it comes to their positions on the health care law:

Democrats Voted AGAINST Keeping Premiums Low Last Year:  In March 2010, Democrats had an opportunity to vote on an amendment to the reconciliation bill containing similar provisions to the Menendez amendment being discussed.  That amendment, offered by Dr. Barrasso, conditioned implementation of the health care law “on the Secretary of Health and Human Services certifying to Congress that the implementation of such Act (and amendments) would not increase premiums more than the premium increases projected prior to the date of enactment of such Act.”  Every Senate Democrat now serving voted against this amendment to keep premiums low last year.  While it’s nice that the majority has finally decided to show concern about premium increases, it’s worth noting that Democrats voted to pass a law that will RAISE individual health premiums by an average of $2,100 per year – a direct violation of President Obama’s repeated statements that his bill would CUT costs by $2500 for the average American family.

Democrats Enacted a “Tax on Success” As Part of Obamacare:  During the House debate on a 1099 repeal measure (H.R. 4) earlier this month, Democrats complained that the repayment obligations in H.R. 4 (also in the pending Johanns amendment) represented a “tax on success” and a “tax trap” because it “would penalize people whose incomes had increased because of a raise, a bonus, or additional hours of work,” as individuals would have to repay insurance subsidies they received.  There’s only one problem with this allegation: It applies to the underlying bill Democrats passed.  As we previously noted, under the Democrat bill, in 2016 a family of four with income of $95,000 would lose nearly $5,000 in health insurance subsidies by receiving an extra $1,000 of income.  In fact, the Congressional Budget Office noted in August last year that Obamacare’s perverse incentives “will effectively increase marginal tax rates, which will also discourage work” – one of the main reasons CBO concluded the law will reduce the labor supply in the American economy by about 800,000 jobs.  While it’s nice that Democrats have finally objected to a “tax on success,” the majority should recognize that the legislation they enacted last year more accurately deserves that title. (Perhaps this is what Speaker Pelosi meant when she famously said we had to pass the bill to find out what’s in it, because Democrat Members of Congress apparently don’t understand the legislation they passed.)