The Fundamental Dishonesty Behind Kamala Harris’ Health Plan

When analyzing Democrats’ promises on health care ahead of the 2020 presidential campaign, a researcher with the liberal Urban Institute earlier this year proffered some sage advice: “We should always be suspect of any public policy—especially when it comes to something as complicated as health care—when anybody tells us everybody is going to get more and pay less for it. It’s really not possible.”

Someone should have given that advice to Sen. Kamala Harris (D-Calif.). Her health plan, a modified version of Sen. Bernie Sanders’ single-payer health care program that she released on Monday in a Medium post and on her website, pledges that it will lead to the following outcomes:

Every American will be a part of this new Medicare system….Seniors will see stronger Medicare benefits than they have now. We will cover millions more people who don’t have health insurance today. And we will reduce costs, save our country money, and ensure that no American has to sacrifice getting the care they need just because the cost is a barrier.

As with Barack Obama’s salesmanship of Obamacare more than a decade ago, Harris’ health plan relies upon the exact strategy the Urban Institute researchers decried of promising everything to everybody. In her socialist utopia, everyone will have coverage—coverage that provides better benefits than the status quo—even as health costs decline dramatically.

Like Obama’s “like your plan” pledge, which PolitiFact dubbed the “Lie of the Year” for 2013, Harris’ plan rests on optimistic scenarios that have little possibility of coming to fruition. But one false premise underpins the entire plan:

We will set up an expanded Medicare system, with a 10-year phase-in period. During this transition, we will automatically enroll newborns and the uninsured into this new and improved Medicare system, give all doctors time to get into the system, and provide a commonsense path for employers, employees, the underinsured, and others on federally-designated programs, such as Medicaid or the Affordable Care Act exchanges, to transition. This will expand the number of insured Americans and create a new viable public system that guarantees universal coverage at a lower cost. Expanding the transition window will also lower the overall cost of the program. [Emphasis mine.]

As any math major can explain, extending the transition window for a move to a single-payer health-care system will not, as Harris tries to claim, lower the overall cost of the program once the entire program takes effect. But it will significantly lower the cost of the program during the transition.

Extending the single-payer transition period to ten years—which conveniently coincides with the ten-year budget window that the Congressional Budget Office uses to analyze major legislation—will keep most of the program’s costs “off the books” and hidden from the public until after her proposal makes it on to the statute books. It also means that her plan wouldn’t take full effect until well after Harris leaves office, meaning she can blame her successor for any problems that occur during the implementation phase.

This fiscal gimmick—delaying most of the spending associated with single payer to outside the ten-year budget window—allows Harris to draw a contrast with Sanders, in which she claims that many middle-class families would not have to pay a single cent in added taxes for all the “free” health care they would receive under a single-payer system:

One of Senator Sanders’ options is to tax households making above $29,000 an additional 4% income-based premium. I believe this hits the middle class too hard. That’s why I propose that we exempt households making below $100,000 [from new taxes to pay for single payer], along with a higher income threshold for middle-class families living in high-cost areas.

Analysts from across the political spectrum agree that the $30 trillion (or more) in new taxes needed to fund a single-payer health care system cannot come from the wealthy alone. Yet Harris proceeds to make that exact argument—that the middle class can have all the “free” health care they want, with someone else footing the bill.

Apart from the fiscal legerdemain, the proposal contains other controversial provisions. While she now claims she would allow private insurance to continue—a reversal of her earlier comments this past January—Harris’ plan states that these insurers would get “reimbursed less than what the [government-run] Medicare plan will cost to operate.” She may tolerate private insurers for the sake of political expediency, but her bias in favor of the government-run plan demonstrates that they would have little more than a token presence in any system of her design.

This post was originally published at The Federalist.

Three Reasons to Oppose the Swampy Budget Deal

On Monday, congressional leaders and the Trump administration announced agreement on legislation that would set budget and spending parameters for the next two years. The agreement would suspend the debt limit through July 2021, and establish spending levels for lawmakers to enact appropriations measures for the remainder of this Congress.

Conservatives have rightly criticized the agreement as abandoning the principles of smaller government, with a return to the trillion-dollar deficits seen under Barack Obama (and this time under a more robust economy). Among the many reasons to oppose the agreement, three in particular stand out.

1. More Spending Now

When the Budget Control Act, which established the existing spending caps, passed in the summer of 2011, Sen. Mitch McConnell (R-KY)—then the minority leader, now the majority leader—famously said it would slow down the “big government freight train.”

But in the time since that bill’s enactment, McConnell and his colleagues in Congress have repeatedly increased the Budget Control Act’s spending caps, speeding up the big government freight train over and over again.

2. More Spending Later

On one level, the agreement at least wins points for honesty, by abandoning the pretense that Congress has any interest in controlling spending. However, future generations will wish that Congress had substituted some actual fiscal discipline for profligacy.

3. No Policy Improvements

To assuage the conservative concerns about the package’s spending binge, Republican leaders have pointed to other language in the agreement. Specifically, the text states that Republican leaders and the White House would have a veto on any appropriations riders passed by the Democratic House that would seek to (for instance) defund regulatory actions by the current administration:

Congressional leaders and the Administration agree that, relative to the [Fiscal Year] 2019 regular appropriations acts, there will be no poison pills, additional new riders…other changes in policy or conventions…or any non-appropriations measures unless agreed to on a bipartisan basis by the four leaders with the approval of the President.

In theory, this language blocks Democrats from eliminating restrictions on taxpayer funding of abortion, among other liberal priorities.

If Democrats could block Republicans from enacting appropriations policy riders over the past two years, despite serving in the minority, could Republicans have blocked Democrats from enacting their own policy riders with continued control of the Senate and White House? That question should answer itself—provided Republicans had any spine (admittedly an uncertain prospect).

Instead, Republicans agreed to hundreds of billions of dollars in additional spending to “win” something they already had—an understanding that neither side would enact appropriations policy riders. Taken from the most cynical perspective, the agreement uses the pro-life community’s worries about Democratic riders—riders which both the White House and Republican Senate already had the means to stop—to rationalize congressional Republicans’ continued spending binge.

Trump came into office pledging to “drain the swamp.” But the new government spending contemplated by this agreement wouldn’t drain the swamp so much as grow it. Conservatives, and the American people as a whole, deserve better.

This post was originally published at The Federalist.

Ocasio-Cortez Wants Congress to Stop Pretending to Pay for Its Spending

Get used to reading more storylines like this over the next two years: The left hand doesn’t know what the far-left hand is doing.

On Wednesday, incoming House Speaker Nancy Pelosi (D-CA) faced a potential revolt from within her own party. Rep.-elect Alexandria Ocasio-Cortez (D-NY) and several progressive allies threatened to vote against the rules package governing congressional procedures on the first day of the new Congress Thursday, because of proposed changes they believe would threaten their ability to pass single-payer health care.

What’s Going On?

Ocasio-Cortez and her allies object to Pelosi’s attempt to reinstate Pay-as-You-Go (PAYGO) rules for the new 116th Congress. Put simply, those rules would require that any legislation the House considers not increase the deficit over five- and ten-year periods. In short, this policy would mean that any bill proposing new mandatory spending or revenue reductions must pay for those changes via offsetting tax increases and/or spending cuts—hence the name.

Under Republican control, the House had a policy requiring spending increases—but not tax cuts—to be paid for. Pelosi would overturn that policy and apply PAYGO to both the spending and the revenue side of the ledger.

Progressives object to Pelosi’s attempt to constrain government spending, whether in the form of additional fiscal “stimulus” or a single-payer health system.

However, Pelosi’s spokesman countered with a statement indicating that the progressives’ move “is a vote to let Mick Mulvaney make across-the-board cuts.” Mulvaney heads the Office of Management and Budget, which would implement any sequester under statutory PAYGO.

Regardless of what the new House decides regarding its own procedures for considering bills, Pay-as-You-Go remains on the federal statute books. Democrats re-enacted it in 2010, just prior to Obamacare’s passage. If legislation Congress passed  violates those statutory PAYGO requirements (as opposed to any internal House rules), it will trigger mandatory spending reductions via the sequester—the “across-the-board cuts” to which Pelosi’s spokesman referred.

To Pay for Spending—Or Not?

Progressives think reinstituting PAYGO would impose fiscal constraints hindering their ability to pass massive new spending legislation. However, the reality does not match the rhetoric from Ocasio-Cortez and others. Consider, for instance, just some of the ways a Democratic Congress “paid for” the more than $1.8 trillion in new spending on Obamacare:

  • A CLASS Act that even some Democrats called “a Ponzi scheme of the first order, the kind of thing Bernie Madoff would have been proud of,” and which never went into effect because the Obama administration could not implement it in a fiscally sustainable manner;
  • Double counting the Medicare savings in the legislation as “both” improving the solvency of Medicare and paying for the new spending in Obamacare;
  • Payment reductions that the non-partisan Medicare actuary considers extremely unlikely to be sustainable, and which could cause more than half of hospitals and nursing homes to become unprofitable within a generation;
  • Tax increases that Congress has repeatedly delayed, and which could end up never going into effect.

A Bipartisan Spending Addiction

An external observer weighing the Part D and Obamacare examples would find it difficult to determine the less dishonest approach to fiscal policy. It reinforces that America’s representatives have a bipartisan addiction to more government spending, and a virtually complete unwillingness to make tough choices now, instead bequeathing massive (and growing) amounts of debt to the next generation.

In that sense, Ocasio-Cortez and her fellow progressives should feel right at home in the new Congress. Republicans may criticize her for proposing new spending, but the difference between her and most GOP members represents one of degree rather than of kind. Therein lies the problem: In continuing to spend with reckless abandon, Congress is merely debating how quickly to sink our country’s fiscal ship.

This post was originally published at The Federalist.

Three Elements of a Conservative Health Care Vision

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

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

Portable Insurance

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

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

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

A Sustainable Safety Net

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

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

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

Appropriately Aligned Incentives

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

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

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

This post was originally published at The Federalist.

How Republicans Shot Themselves in the Foot on Pre-Existing Conditions

Republicans who want to blame their election shortcomings on last year’s attempt to “repeal-and-replace” Obamacare will have all the fodder they need from the media. A full two weeks before Election Day, the bedwetters caucus was already out in full force:

House Republicans are increasingly worried that Democrats’ attacks on their votes to repeal and replace Obamacare could cost them the House. While the legislation stalled in the Senate, it’s become a toxic issue on the campaign trail for the House Republicans who backed it.

In reality, however, the seeds of this problem go well beyond this Congress, or even the last election cycle. A health care strategy based on a simple but contradictory slogan created a policy orphan that few Republicans could readily defend.

A Dumb Political Slogan

Around the same time last year, I wrote an article explaining why the “repeal-and-replace” mantra would prove so problematic for the Republican Congress trying to translate the slogan into law. Conservatives seized on the “repeal” element to focus on eradicating the law, and taking steps to help lower health costs.

By contrast, moderates assumed that “replace” meant Republican lawmakers had embraced the mantra of universal health coverage, and would maintain most of the benefits—both the number of Americans with insurance and the regulatory “protections”—of Obamacare itself. Two disparate philosophies linked by a conjunction does not a governing platform make. The past two years proved as much.

A Non-Sensical Bill

In life, one mistake can often lead to another, and so it proved in health care. After having created an internal divide through the “repeal-and-replace” mantra over four election cycles, Republicans had to put policy meat on the details they had papered over for seven years. In so doing, they ended up with a “solution” that appealed to no one.

  1. Removed Obamacare’s requirements for what treatments insurers must cover (e.g., essential health benefits);
  2. Removed Obamacare’s requirements about how much of these treatments insurers must cover (e.g., actuarial value, which measures a percentage of expected health expenses covered by insurance); but
  3. Retained Obamacare’s requirements about whom insurance must cover—the requirement to cover all applicants (guaranteed issue), and the related requirement not to vary premiums based on health status (community rating).

As I first outlined early last year, this regulatory combination resulted in a witch’s brew of bad outcomes on both the policy and political fronts:

  • Because lawmakers retained the requirements for insurers to cover all individuals, regardless of health status, the bills didn’t reduce premiums much. If insurers must charge all individuals the same rates regardless of their health, they will assume that a disproportionately sicker population will sign up. That dynamic meant the bills did little to reverse the more-than-doubling of individual market insurance premiums from 2013-17. What little premium reduction did materialize came largely due to the corporate welfare payments the bills funneled to insurers in the form of a “Stability Fund.”
  • However, because lawmakers removed the requirements about what and how much insurers must cover, liberal groups raised questions about access to care, particularly for sicker populations. This dynamic led to the myriad charges and political attacks about Republicans “gutting” care for people with pre-existing conditions.

You couldn’t have picked a worse combination for lawmakers to try to defend. The bills as written created a plethora of “losers” and very few clear “winners.” Legislators absorbed most of the political pain regarding pre-existing conditions that they would have received had they repealed those regulations (i.e., guaranteed issue and community rating) outright, but virtually none of the political gain (i.e., lower premiums) from doing so.

Some people—including yours truly—predicted this outcome. Before the House voted on its bill, I noted that this combination would prove untenable from a policy perspective, and politically problematic to boot. Republicans plowed ahead anyway, likely because they saw this option as the only way to breach the policy chasm caused by bad sloganeering, and paid the price.

Lawmaker Ignorance and Apathy

That apathy continued after Obamacare’s enactment. While Suderman articulated an alternative vision to the law, he admitted that “Republicans can’t make the case for that plan because they’ve never figured out what it would look like. The GOP plan is always in development but never ready for final release.”

Emphasizing the “repeal-and-replace” mantra allowed Republicans to avoid face the very real trade-offs that come with making health policy. When a Republican Congress finally had to look those trade-offs in the face, it couldn’t. Many didn’t know what they wanted, or wanted a pain-free solution (“Who knew health care could be so complicated?”). Difficulty regarding trade-offs led to the further difficulty of unifying behind a singular policy.

Can’t Avoid Health Care

Many conservative lawmakers face something that could be described as “health policy PTSD”—they don’t understand it, so they don’t study it; they only define their views by what they oppose (e.g., “Hillarycare” and Obamacare); and when they put out proposals (e.g., premium support for Medicare and “repeal-and-replace” on Obamacare), they get attacked. So they conclude that they should never talk about the issue or put out proposals. Doubtless Tuesday’s election results will confirm that tendency for some.

Rather than using the election results to avoid health care, Republican lawmakers instead should lean in to the issue, to understand it and ascertain what concepts and policies they support. The left knows exactly what it wants from health care: More regulation, more spending, and more government control—leading ultimately to total government control.

Conservatives must act now to articulate an alternative vision, because the 800-pound gorilla of Washington policy will not disappear any time soon.

This post was originally published at The Federalist.

Will the Trump Administration Help Republicans Expand Obamacare?

For all the allegations by the Left about how the Trump administration is “sabotaging” Obamacare, a recent New York Times article revealed nothing of the sort. Instead it indicated how many senior officials within the administration want to entrench Obamacare, helping states to expand the reach of one of its costly entitlements.

Thankfully, a furious internal battle took the idea off the table—for now. But instead of trying to find ways to increase the reach of Obamacare’s Medicaid expansion, which prioritizes able-bodied adults over individuals with disabilities, the Trump administration should instead pursue policies that slow the push towards expansion, by making the tough fiscal choices surrounding expansion plain for states to see.

What ‘Partial Expansion’ Means

Following the court’s decision, the Obama administration determined expansion an “all-or-nothing” proposition. If states wanted to receive the enhanced match rate for the expansion—which started at 100 percent in 2014, and is slowly falling to 90 percent for 2020 and future years—they must expand to all individuals below the 138 percent of poverty threshold.

However, some states wish to expand Medicaid only for adults with incomes below the poverty level. Whereas individuals with incomes above 100 percent of poverty qualify for premium and cost-sharing subsidies for plans on Obamacare’s exchanges, individuals with incomes below the poverty level do not. (In states that have not expanded Medicaid, individuals with incomes below poverty may fall into the so-called “coverage gap,” because they do not have enough income to qualify for subsidized exchange coverage.)

States that wish to cover only individuals with incomes below the poverty line may do so—however, under the Obama administration guidance, those states would receive only their regular federal match rate of between 50 and 74 percent, depending on a state’s income. (Wisconsin chose this option for its Medicaid program.)

How ‘Partial Expansion’ Actually Costs More Money

The Times article says several administration supporters of “partial expansion”—including Health and Human Services (HHS) Secretary Alex Azar, Centers for Medicare and Medicaid Administrator (CMS) Seema Verma, and Domestic Policy Council Director Andrew Bremberg—believe that embracing the change would help to head off full-blown expansion efforts in states like Utah. An internal HHS memo obtained by the Times claims that “HHS believes allowing partial expansion would result in significant savings over the 10-year budget window compared to full Medicaid expansion by all.”

In reality, however, “partial expansion” would explode the budget, for at least three reasons. First, it will encourage states that have not embraced expansion to do so, by lowering the fiscal barrier to expansion. While states “only” have to fund up to 10 percent of the costs of Medicaid expansion, they pay not a dime for any individuals enrolled in exchange coverage. By shifting individuals with incomes of between 100-138 percent of poverty from Medicaid to the exchanges, “partial expansion” significantly reduces the population of individuals for whom states would have to share costs. This change could encourage even ruby red states like Texas to consider Medicaid expansion.

Second, for the same reason, such a move will encourage states that have already expanded Medicaid to switch to “partial expansion”—so they can fob some of their state costs onto federal taxpayers. The Times notes that Arkansas and Massachusetts already have such waiver applications pending with CMS. Once the administration approves a single one of these waivers, virtually every state (or at minimum, every red state with a Medicaid expansion) will run to CMS’s doorstep asking for the federal government to take these costs off their hands.

Medicaid expansion has already proved unsustainable, with exploding enrollment and costs. “Partial expansion” would make that fiscal burden even worse, through a triple whammy of more states expanding, existing states offloading costs to the federal government through “partial expansion,” and the conversion of millions of enrollees from less expensive Medicaid coverage to more costly exchange plans.

What Washington Should Do Instead

Rather than embracing the fiscally irresponsible “partial expansion,” the Trump administration and Congress should instead halt another budget gimmick that states have used to fund Medicaid expansion: The provider tax scam. As of last fall, eight states had used this gimmick to fund some or all of the state portion of expansion costs. Other states have taken heed: Virginia used a provider tax to fund its Medicaid expansion earlier this year, and Gov. Paul LePage (R-ME)—who heretofore has steadfastly opposed expansion—recently floated the idea of a provider tax to fund expansion in Maine.

The provider tax functions as a scam by laundering money to generate more federal revenue. Providers—whether hospitals, nursing homes, Medicaid managed-care plans, or others—agree to an “assessment” that goes into the state’s general fund. The state uses those dollars to draw down new Medicaid matching funds from the federal government, which the state promptly sends right back to the providers.

For this reason, politicians of all parties have called on Congress to halt the provider tax gimmick. Even former vice president Joe Biden called provider taxes a “scam,” and pressed for their abolition. The final report of the bipartisan Simpson-Bowles commission called for “restricting and eventually eliminating” the “Medicaid tax gimmick.”

If Republicans in Congress really want to oppose Obamacare—the law they ran on repealing for four straight election cycles—they should start by imposing a moratorium on any new Medicaid provider taxes, whether to fund expansion or anything else. Such a move would force states to consider whether they can afford to fund their share of expansion costs—by diverting dollars from schools or transportation, for instance—rather than using a budget gimmick to avoid those tough choices. It would also save money, by stopping states from bilking the federal government out of billions in extra Medicaid funds through what amounts to a money-laundering scam.

Rhetoric vs. Reality, Take 5,000

But of course, whether Republicans actually want to dismantle Obamacare remains a very open question. Rather than opposing “partial expansion” on fiscal grounds, the Times quotes unnamed elected officials’ response:

Republican governors were generally supportive [of “partial expansion”], but they said the change must not be seen as an expansion of the Affordable Care Act and should not be announced before the midterm elections. Congressional Republican leaders, while supportive of the option, also cautioned against any high-profile public announcement before the midterm elections.

In other words, these officials want to expand and entrench Obamacare, but don’t want to be seen as expanding and entrenching Obamacare. What courage!

Just as with congressional Republicans’ desperate moves to bail out Obamacare’s exchanges earlier this year, the Times article demonstrates how a party that repeatedly ran on repealing Obamacare, once granted with the full levers of power in Washington, instead looks to reinforce it. Small wonder that the unnamed politicians in the Times article worry about conservative voters exacting a justifiable vengeance in November.

This post was originally published at The Federalist.

Dr. Nick Riviera Explains Obamacare

Dr. Nick Riviera From ‘The Simpsons’ Explains Obamacare

He graduated from Hollywood Upstairs Medical College, thinks “choc-o-tastic” qualifies as a food group, and has a strange habit of jumping out of windows when called to the coroner’s office. He’s also an animated character, for what it’s worth. So what does Dr. Nick Riviera, Springfield’s resident quack on “The Simpsons,” have to do with Obamacare?

As it happens, plenty. Dr. Nick provides a humorous example of what may happen in future years, as cascading reductions in reimbursements due to Obamacare wreak havoc on our health care system—and could make “doctors” like Dr. Nick the only access option for some patients.

Productivity Adjustments Ahead

Most economists consider health care a superior good. That is, as income rises, people want more of it. Moreover, in many cases patients equate price with quality. People generally want the most, and best, health care money can buy, even if the most expensive care does not always equate to the best care. In Springfield, that high-cost care gets provided by giggling physician Dr. Julius Hibbert.

Obamacare included several major changes to reimbursement systems that attempted to change this drive for more, and more expensive, care, but also included arbitrary payment reductions that will lead to abysmally low payment levels. Most notably, the law included so-called “productivity adjustments” to the Medicare formula for hospitals and other providers, reducing the growth of their payments every year.

The CEO of a major hospital trade association admitted back in 2010 that this trade-off—a one-time increase in insured patients for hospitals in exchange for lower payments from Medicare forever—probably didn’t amount to a great deal for his industry in the longer term. Nonpartisan budget experts agree.

The Congressional Budget Office in September 2016 released an analysis showing the Obamacare productivity adjustments could more than double the number of unprofitable hospitals nationwide by 2025. In the longer term, the independent Medicare actuary believes that the productivity adjustments will become unsustainable. As Medicare payment levels keep dropping relative to private insurance, they will make 70 percent of skilled nursing facilities and 80 percent of home health agencies unprofitable, “raising the prospect of access and quality-of-care issues for Medicare beneficiaries.”

Although set by another formula—one created in 2015 rather than in Obamacare itself—Medicare physician payment rates face the same dilemma, as simulations also project payments to decline substantially over time when compared to other forms of coverage.

‘You’ve Tried the Best—Now Try the Rest!’

Into this payment breach steps none other than Dr. Nick Riviera. In season three of “The Simpsons,” the title family had to rely on Dr. Nick to perform open-heart surgery on Homer. Because Homer’s insurance wouldn’t cover the operation, the family turned to Dr. Nick upon seeing his television ad, in which he pledged to undertake any surgery for the ridiculously low price of $129.95. (“Call 1-600-DOCTORB—The B is for bargain!”)

The following scenes show an inept Dr. Nick attempting to learn bypass surgery on the fly. Only a well-timed intervention from smarty-pants daughter Lisa allows Dr. Nick to complete the surgery successfully, resulting in a happy ending for the Simpson clan.

Coming to a Hospital Near You?

Liberals might argue that this episode makes the case for Obamacare, by preventing the kind of care denials that led Homer to Dr. Nick in the first place. But in reality, Obamacare insurance plans currently provide increasingly narrow provider networks that could impede access to care. Moreover, the law’s productivity adjustments, by making hospitals and other providers unprofitable, will increasingly limit access to care for seniors in Medicare over time.

Democrats claim Obamacare made no changes to Medicare, and that reducing reimbursement levels amounts to no more than cutting “waste” out of the system. “Your guaranteed benefits won’t change,” House Minority Leader Nancy Pelosi argues.

That argument only holds merit to the extent that providers will accept lower and lower reimbursement levels in perpetuity. Medicare could lower payments for all surgeries to $129.95, but I doubt anyone other than our good friend Dr. Nick will perform them at that price.

So the next time Democrats try to argue that Obamacare didn’t harm Medicare, or will have a positive effect on our health-care system, think of Dr. Nick. In less time than you expect, his real-life equivalent could be coming to a doctor’s office or hospital near you.

This post was originally published at The Federalist.

What You Need to Know about Today’s Medicare Trustees Report

Insolvency Date:  The insolvency date for the Medicare Hospital Insurance Trust Fund is 2029, one year later than last year’s report. However, remember that, if not for the double-counting in Obamacare (about which see more below), the Trust Fund would ALREADY be insolvent, as in 2009 — the last trustees report prior to Obamacare’s enactment — the trustees projected insolvency for 2017 (i.e., this year).

IPAB NOT Triggered:  Despite prior predictions, this year’s trustees report did NOT trigger a reporting requirement related to the Independent Payment Advisory Board (IPAB). In other words, Medicare spending over the relevant five year period (2015 through 2019) is not projected to exceed the per capita caps established for Medicare in Obamacare itself. Which makes one wonder — if per capita caps for Medicare haven’t yet bit, why are liberals objecting so loudly to per capita caps for Medicaid…?

A Brief Break from Massive Deficits:  For the first time in nearly a decade, the Medicare Part A Trust Fund did NOT run a deficit. However, the small $5.4 billion surplus did not even begin to overcome the $132.2 billion in deficits run by the Medicare program from 2008 through 2015.

Funding Warning:  For the first time since 2013, the trustees issued a funding warning showing that the Medicare program is taking a disproportionate share of its funding from general revenues, thus crowding out programs like defense and education. If a second warning is issued next year, the President will be required to submit legislation to Congress remedying the problem.

Unrealistic Assumptions:  As it has every year since the passage of Obamacare, the trustees issued an alternative scenario, because “absent an unprecedented change in health care delivery systems,” the payment reductions included in Obamacare mean that “access to, and delivery of, Medicare benefits would deteriorate over time for beneficiaries.”

Double Counting:  The actuary also previously confirmed that the Medicare reductions in Obamacare “cannot be simultaneously used to finance other federal outlays and to extend the [Medicare] trust fund” solvency date – rendering dubious any potential claims that Obamacare will extend Medicare’s solvency.  As Nancy Pelosi previously admitted, Democrats “took a half a trillion dollars out of Medicare in [Obamacare], the health care bill” – and you can’t improve Medicare’s solvency by taking money out of the program.

Democrats’ Hypocrisy on the Trump Budget

As expected, the Left had a harsh reaction to President Trump’s first budget on its release Tuesday. Bernie Sanders called the proposed Medicaid reductions “just cruel,” the head of one liberal think-tank dubbed the budget as a whole “radical,” and on and on.

But if liberals object to these “draconian cuts,” there’s one potential solution: Look in the mirror.

And exactly who might be to blame for creating that toxic environment?

Democrats Are Using The ‘Mediscare’ Playbook

Democrats have spent the past several political cycles running election campaigns straight out of the “Mediscare” playbook. In case anyone has forgotten, political ads have portrayed Republicans as literally throwing granny off a cliff.

This rhetoric about Republican attempts to “privatize” Medicare came despite several inconvenient truths:

  1. The “voucher” system Democrats attack for Medicare is based upon the same bidding system included in Obamacare;
  2. The Congressional Budget Office concluded one version of premium support would, by utilizing the forces of competition, actually save money for both seniors and the federal government; and
  3. Democrats—in Nancy Pelosi’s own words—“took half a trillion dollars out of Medicare” to pay for Obamacare.

Given the constant attacks from Democrats against entitlement reform, however, Donald Trump made the political decision during last year’s campaign to oppose any changes to Medicare or Social Security. He reiterated that decision in this week’s budget, by proposing no direct reductions either to Medicare or the Social Security retirement program. Office of Management and Budget Director Mick Mulvaney said the president told him, “I promised people on the campaign trail I would not touch their retirement and I would not touch Medicare.”

That’s an incorrect and faulty assumption, of course, as both programs rapidly spiral toward insolvency. The Medicare hospital insurance trust fund has incurred a collective $132.2 billion in deficits the past eight years. Only the double-counting created by Obamacare continues to keep the Medicare trust fund afloat. The idea that President Trump should not “touch” seniors’ retirement or health care is based on the fallacious premise that they exist beyond the coming decade; on the present trajectory, they do not, at least not in their current form.

Should Bill Gates Get Taxpayer-Funded Healthcare?

That said, the president’s reticence to “touch” Social Security and Medicare comes no doubt from Democrats’ reluctance to support any reductions in entitlement spending, even to the wealthiest Americans. When Republicans first proposed additional means testing for Medicare back in 2011, then-Rep. Henry Waxman (D-CA) opposed it, saying that “if [then-House Speaker John] Boehner wants to have the wealthy contribute more to deficit reduction, he should look to the tax code.”

In other words, liberals like Henry Waxman, and others like him, wish to defend “benefits for billionaires”—the right of people like Bill Gates and Warren Buffett to receive taxpayer-funded health and retirement benefits. Admittedly, Congress passed some additional entitlement means testing as part of a Medicare bill two years ago. But the notion that taxpayers should spend any taxpayer funds on health or retirement payments to “one-percenters” would likely strike most as absurd—yet that’s exactly what current law does.

As the old saying goes, to govern is to choose. If Democrats are so violently opposed to the supposedly “cruel” savings proposals in the president’s budget, then why don’t they put alternative entitlement reforms on the table? From eliminating Medicare and Social Security payments to the highest earners, to a premium support proposal that would save seniors money, there are potential opportunities out there—if liberals can stand to tone down the “Mediscare” demagoguery. It just might yield the reforms that our country needs, to prevent future generations from drowning in a sea of debt.

This post was originally published at The Federalist.

Dear Congress: Take My Obamacare Coverage — Please!

Last week, Vox ran a story featuring individuals covered by Obamacare, who live in fear about what the future holds for them. They included people who opened small businesses because of Obamacare’s coverage portability, and worry that the “career freedom” provided by the law will soon disappear.

Unfortunately, but perhaps unsurprisingly, Vox didn’t ask this small business owner—who also happens to be an Obamacare enrollee—for his opinions on the matter. Like the enrollees in the Vox profile, I’m also incredibly worried about what the future holds, but for a slightly different reason: I’m worried for our nation about what will happen if Obamacare ISN’T repealed.

What Obamacare Hasn’t Done For Me

While in generally decent health, I have some health concerns: mild hypertension (controlled by medications), mild asthma, and allergies that have worsened in the past few years. I’ve gone through two reconstructive surgeries on my ankle, which I’ve chronicled in a prior article. Under “research” previously published by the Obama Administration, my health conditions classify me as one of the 129 million people with a pre-existing condition supposedly benefiting from the law.

Yet while my health hasn’t changed much since Obamacare passed and was implemented, my health insurance policy has already been cancelled once. The replacement I was offered this year included a 20 percent premium increase, and a 25 percent increase in my deductible.

If Obamacare was repealed, or if insurers stopped offering coverage, it would be an inconvenience, no doubt. I don’t know what options would come afterwards. That would depend on actions by Congress, the District of Columbia, and the insurance community. But having already lost my coverage once, and gone through double-digit premium and deductible increases, how much worse can it really get?

Obamacare Will Raise the Deficit

I know what liberals are saying: “But Obamacare will reduce the deficit!” Yes, the Congressional Budget Office did issue a score saying the law will lower the deficit. But consider all the conditions that must be met for Obamacare to lower the deficit. If:

  • Annual Medicare payment reductions that will render more than half of all hospitals unprofitable within the next 10 years keep going into effect; and
  • Provisions that will, beginning in 2019, reduce the annual increase in Exchange insurance subsidies—making coverage that much more unaffordable for families—go into effect; and
  • An unpopular “Cadillac tax” that has already been delayed once—and which the Senate voted to repeal on a bipartisan 90-10 vote in December 2015—actually takes effect in 2020 (which just happens to be an election year); then

The Congressional Budget Office estimates that the law will reduce the deficit by a miniscule amount. But if any of those conditions aren’t met, then the law becomes a budget-buster. And if you think all those conditions will actually come to pass, then I’ve got some land to sell you.

Obamacare’s Unspoken Opportunity Costs

Even if you believe in raising taxes to reduce the deficit, Congress has already done that. Except that money wasn’t used to lower the deficit—it’s been used to pay for Obamacare. Even some liberals accept that you can only tax the rich so much, at which point they will stop working to avoid paying additional income in taxes. Obamacare brought us much closer to that point, without doing anything to put our fiscal house in order.

We Just Can’t Afford Obamacare

Whether they’re liberal websites, Democratic leaders, or Republican politicians attempting to cover as many Americans as Obamacare in their “replacement,” no one dares utter the four words that our country will soon face on any number of fronts: “We can’t afford it.”

But the fact of the matter is, we can’t afford Obamacare. Not with trillions of dollars in debt, 10,000 Baby Boomers retiring every day, and the Medicare trust fund running over $130 billion in deficits the past eight years. Our nation will be hard-pressed to avoid all its existing budgetary and financial commitments, let alone $2 trillion in spending on yet more new entitlements.

So, to paraphrase Henny Youngman, take my health coverage—please. Repeal Obamacare, even if it means I lose my health coverage (again). Focus both on reducing health costs and right-sizing our nation’s massive entitlements.

Failing to do so will ultimately turn all 300-plus million Americans into the “faces of Obamacare”—victims of a debt crisis sparked by politicians and constituents who want more government than the public wants to pay, and our nation can afford.

This post was originally published at The Federalist.