Bernie Sanders’ Single Payer Bill Provides Benefits for Billionaires

On Wednesday, socialist Sen. Bernie Sanders plans to introduce the latest version of his single-payer health-care program. If past practice holds, Sanders will call his plan “Medicare for All.” But if he wants to follow Medicare as his model, then the Sanders plan could easily earn another moniker: Benefits for Billionaires.

An analysis released by the Congressional Budget Office (CBO) in August demonstrates how Medicare currently provides significant financial benefits to seniors at all income levels, including the wealthy. Specifically, the CBO paper analyzed lifetime Medicare taxes paid, and lifetime benefits received, by individuals born in the 1950s who live to age 65.

The CBO analysis confirms prior work by the Urban Institute—no right-wing think tank—that Medicare pays out more in benefits than it receives in taxes at virtually all income levels. For instance, according to Urban’s most recent study, a high-earning male turning 65 in 2020 will pay in an average of $123,000 in Medicare taxes, but receive an average of $222,000 in benefits.

Melinda Gates Doesn’t Need Government Health Care

Some may quibble with the work by CBO and Urban Institute for containing an important oversight. In analyzing only Medicare benefits and Medicare taxes paid, the two papers omit the portion of Medicare’s financing that comes from general revenues—including the income taxes paid primarily by the wealthy. While it’s difficult to draw a precise link between Medicare’s general revenue funding and any one person’s income tax payments, it’s possible that—particularly for one-percenters—income taxes paid will offset the net cost of their Medicare benefits.

But regardless of those important details, the larger point still holds. Even if her taxes do outweigh the Medicare benefits received, why does Melinda Gates need the estimated $300,000 in health care benefits paid to the average high-income woman born in the 1950s? Does that government spending serve a useful purpose?

We Don’t Have Money to Subsidize the Rich

Yes, Medicare currently does include some means testing for wealthy beneficiaries, in both the Part B (physician) and Part D (prescription drug) portions of the program. But common sense should dictate first that wealthy individuals not only should be able to opt-out of Medicare if they so choose—because, strange as it sounds, the federal government currently forbids individuals from renouncing their Medicare benefits—wealthy seniors should not receive a taxpayer subsidy at all. Whether in Medicare or Sanders’ socialist utopia, the idea that Warren Buffett or Bill Gates warrant taxpayer subsidies defies credulity.

Despite this common-sense logic, liberals continue to support providing taxpayer-funded benefits for billionaires. In 2011, then-Rep. Henry Waxman (D-CA) said “if [then-Speaker John] Boehner wants to have the wealthy contribute more to deficit reduction, he should look to the tax code.” Perhaps Waxman views keeping wealthy seniors in Medicare as a form of punishment for the rich. After all, nearly nine in ten seniors have some form of supplemental insurance, and a form of “insurance” one must insure against may not be considered an unalloyed pleasure.

Regardless, Medicare faces its own financial reckoning, and sooner rather than later. In 2009—the last trustees’ report before Obamacare introduced fiscal gimmicks and double-counting into Medicare—the program’s actuaries concluded Medicare’s Hospital Insurance Trust Fund would become functionally insolvent this year. Given that bleak outlook, neither Medicare nor the American people can afford Sanders’ ill-conceived scheme to provide taxpayer-funded health benefits to wealthy 1-percenters.

This post was originally published at The Federalist.

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.

Weekly Newsletter: February 23, 2009

Orszag, Liberal Groups Support Health Care Rationing

Today President Obama will host a “fiscal responsibility summit” at the White House, followed later this week by a submission to Congress of his outline for the federal budget in Fiscal Year 2010 and beyond.  Press reports indicate that health issues will predominate both events, as entitlement spending in Medicare and Medicaid will serve as a focus of the fiscal summit, and health initiatives will be given a prominent place in the President’s budget proposals.

However, some Members may take a skeptical view of comments by Office of Management and Budget Director Peter Orszag and others that health care can be reformed—and the entitlement crisis resolved—primarily through government rationing of health care goods and services.  While head of the Congressional Budget Office, Orszag prepared a report on comparative effectiveness research that advocated rationing’s beneficial effects—while alluding to its potential downsides for patients.  The December 2007 report asserted that such research “could …yield lower health care spending without having adverse effects on health.”  However, the report also admits that “patients who might benefit from more-expensive treatments might be made worse off” as a result of changes in reimbursement patterns.

Orszag’s view of health reform is shared by the left-leaning Commonwealth Fund, which last week released its own report outlining ways to generate savings within the health sector.  The largest chunk of proposed savings—$634 billion over ten years—would come from comparative effectiveness research and subsequent rationing of care.  The report asserts that “merely making information available” about the relative merits of treatments “is unlikely to produce” outcomes yielding sufficient savings—and therefore recommends that the new comparative effectiveness center help “to create financial incentives for patients and physicians to avoid high-cost treatments.”  The Fund proposes that the comparative effectiveness center—similar to the Council established in economic “stimulus” legislation signed into law last week—“make benefit and pricing recommendations to public insurance plans, including Medicare.”

While supporting the need to slow the growth of health spending, and entitlement spending in particular, some Members may be concerned by the implications of these recommendations, which would place government bureaucrats between doctors and patients, leading to denials of critical care.  Some Members may instead support alternatives that would slow the growth of health care costs through additional competition (both inside and outside Medicare), while preserving and enhancing a culture where patients and doctors—not insurance companies or government bureaucrats—determine the appropriate course of medical care.  Some Members may also support means testing for the Medicare Part D benefit—requiring Warren Buffett and George Soros to pay more for their prescription drugs—as an additional way to bring our entitlement obligations in line with projected future revenues.

The Outlook Ahead

The President’s address to Congress Tuesday night, coupled with his submission of a budget outline on Thursday, will commence a six-week period leading up to Congress’ Easter recess where health issues will remain prominent.  As indicated above, the budget may include additional provisions regarding comparative effectiveness research and rationing of health care, as well as proposed cuts to Medicare Advantage plans that have proved popular with seniors—particularly those with low incomes—in recent years.  At this time it remains unclear whether the President will use the budget submission to fulfill his statutory obligation to present Congress with Medicare funding reform legislation, as required by the “trigger” provisions inserted into the Medicare Modernization Act at the behest of House Republicans.

Hearings and other legislative activity are also likely to continue regarding comprehensive health reform; Sen. Ron Wyden (D-OR) introduced his comprehensive bill on February 5, and Senate Finance Chairman Baucus—who pledged to introduce legislation early in the 111th Congress—may follow suit in short order.  The House may also consider legislation related to food and drug safety, as well as a bill (H.R. 1108 in the 110th Congress) giving the Food and Drug Administration (FDA) the authority to regulate tobacco products, funded by “user fees” on tobacco companies.  Particularly as many Democrats have harshly criticized the FDA for lax enforcement related to food safety matters, some Members may believe now is precisely the wrong time to distract the FDA from its current mission in order to have the agency regulate the tobacco industry—and the wrong time to burden working families with the second tobacco tax increase this year, on the heels of the 62 cent tax increase used to fund the State Children’s Health Insurance Program (SCHIP) expansion.

Weekly Newsletter: November 17, 2008

  • Baucus’ Plan Exposes Democrat Hypocrisy…

    Last Wednesday, Senate Finance Committee Chairman Max Baucus (D-MT) issued a 98-page report outlining his proposals for reforming the health care system. Although his introduction stated that the platform “is not intended to be a legislative proposal,” Baucus did state his hope that the ideas raised would become a starting point for discussions on comprehensive health care reform during the 111th Congress.

    In reviewing the report’s contents, some conservatives may note several glaring contradictions present within its pages:

  • The Baucus plan proposes tens of billions in unfunded mandates on states—requiring Medicaid programs to cover 7.1 million new low-income individuals, and further requiring 33 states to expand their State Children’s Health Insurance Program (SCHIP) eligibility levels—at a time when Baucus and other Congressional Democrats allege that states’ “fiscal crises” require Congress to bail them out of their current obligations.
  • While expressing his support for cutting payments to private Medicare Advantage (MA), Baucus proposes to repeal a planned premium support project within Medicare, because he wants to bring payments to private insurers in line with traditional Medicare costs while opposing a link between Part B premiums and “how much [private] insurers’ costs differ from traditional Medicare.”
  • Senator Baucus, who at a health reform conference in June questioned Congress’ role in overseeing Medicare payments—“How in the world am I supposed to know what the proper reimbursement should be for a particular procedure?”—proposes numerous attempts to tie reimbursement to various actions by physicians (IT adoption, etc.) in the hope that these will achieve purportedly desirable health outcomes.

    …While Proposing More New Spending, Little Cost Control

    Many conservatives may also be concerned by the substance of the Baucus plan’s broader proposals. Similar in many respects to the less-detailed plan offered by President-elect Obama, the platform would expand the role of government in health care in significant, and historic, ways:

  • Expansion of Medicaid and SCHIP to millions of new individuals, as referenced above;
  • Health insurance subsidies for a family of four making $85,000 per year;
  • Repeal of the current five-year waiting period for legal aliens to become eligible for government benefits, increasing government spending on non-citizens;
  • Two new “temporary” entitlement programs, including a buy-in to the Medicare program for those aged 55-64, that many conservatives may be concerned will be anything but “temporary;”
  • A new publicly-run insurance option available to all citizens, whose low reimbursement rates would likely encourage providers to raise rates for private insurers, potentially leading to a “death spiral” of privately-provided coverage options;
  • A health insurance exchange representing another layer of regulation on the health insurance industry;
  • An individual mandate to purchase insurance, requiring the government to pass judgment on the adequacy of individuals’ coverage; and
  • Tax increases on businesses through a “pay-or-play” mandate that could in future years become an easy way for the government to pass off the cost of rising health care on the private sector.

    Just as worrisome to many conservatives are the lack of true cost-containment measures present in the Baucus proposal. Two of the plan’s prime savings targets—an expansion of the Medicaid drug rebate and one-sided cuts to Medicare Advantage plans—constitute little more than government-imposed price controls, which some conservatives may believe both ineffective and detrimental to new innovation.

    Some conservatives may believe that the true answer to reforming health care and slowing the growth of costs lies in harnessing innovation and competition. Implementing, rather than repealing, the Medicare premium support program would allow insurers to compete directly with Medicare to treat seniors in the most cost-effective manner. Additional means-testing for current entitlements would ensure that scarce government resources will go to those most in need of assistance—meaning that Warren Buffett and George Soros should not pay the same prescription drug premium as a senior making $20,000 per year. These efforts, coupled with initiatives to streamline costly state benefit mandates and other regulations, would expand coverage by slowing the growth of health costs, helping to ensure the future viability of our current entitlement programs.

Weekly Newsletter: September 22, 2008

  • Specialty Hospital Ban a Special-Interest Boondoggle Reports circulated late last week that restrictions on physician-owned specialty hospitals may be included in mental health parity legislation that could come to the House floor this week. While later press reports indicated that the specialty hospital provisions would be excluded from the mental health parity bill, legislative activity cannot be ruled out.

    Advocates of a specialty hospital ban state that restricting physician ownership will slow the growth of health care costs and improve the solvency of the Medicare program. However, a look at the record of the Democrat-controlled 110th Congress shows little attempt to control the growth of health spending or solve Medicare’s long-term funding shortfalls:

  • Democrats rejected an attempt to make wealthy seniors pay $2 per day more for prescription drug coverage—which would save Medicare $12.1 billion over ten years;
  • Democrats rejected reasonable reforms to the current medical liability reform system that would eliminate the need for defensive medicine practices that raise health care costs—saving the federal government more than $6 billion over ten years;
  • Democrats could not pass structural reforms to the current system of Medicare physician payments—choosing instead to pass a budgetary gimmick that will give physicians a 21% reimbursement cut in January 2010.Given these actions—and an impending floor vote on a bill (HR 758) that will likely increase health care costs by billions of dollars—conservatives may question why Democrats have passed up attempts to save Medicare more than $12 billion by charging billionaires like Warren Buffett more for their prescription drugs and instead remain fixated on saving one-tenth that amount by eradicating a free market for physician-owned facilities.

    Part of the answer may lie in the lobbying activities of entities like the American Hospital Association— which spent nearly $20 million last year alone, and nearly $153 million over the last decade, on federal lobbying activities. Despite the fact that, by one measure, specialty hospitals represent less than 1% of total Medicare hospital spending, traditional hospitals continue their attempts to eradicate this potential source of competition—going so far as to draw a rebuke from Health and Human Services’ Inspector General for “misrepresent[ing]” the IG’s conclusions in a document sent to Congressional staff. Despite— or perhaps because of—these deceptive lobbying practices, some conservatives may support efforts to maintain free markets in health care, and oppose any further efforts by Congressional Democrats to pass a specialty hospital ban.

Medicaid Fraud Will Not Be Addressed by Bailout

Last Tuesday’s New York Times highlighted the case of Staten Island University Hospital, an institution with a history of questionable billing practices—and now one of the largest fraud settlements against a single hospital. This week the hospital agreed to return nearly $90 million to respond to claims of overbilling government programs as a result of two whistle-blower lawsuits and actions by federal prosecutors. The lawsuits and charges alleged among other things that the hospital deliberately inflated bed and patient counts in order to obtain reimbursements from Medicare and Medicaid, and come after the hospital had reached two previous settlements—one in 1999 resulting in $45 million in Medicaid repayments, and another in 2005 resulting in $76.5 returned to Medicaid—with state authorities regarding fraudulent billing activity.

Many conservatives may not be surprised by these repeated instances of fraud and graft within the program, given that a former New York state Medicaid investigator estimated that 40% of all Medicaid payments were fraudulent or questionable in nature. However, this episode may only strengthen conservative concerns that a proposed “temporary” increase in federal Medicaid matching funds (HR 5268) would do nothing to combat this fraud and abuse before spending additional federal dollars. Indeed, given that a single hospital has settled more than $200 million in fraud claims, some conservatives may wonder whether, if the Medicaid program had appropriate anti-fraud efforts in place, an additional $10-15 billion “bailout” for states would even be needed at all.

Read the article here.

Weekly Newsletter: July 28, 2008

Tobacco Bill Coming Soon

This week the House could consider legislation (H.R. 1108) granting the Food and Drug Administration (FDA) the authority to regulate tobacco, possibly under suspension of the rules. The bill would establish a new center within FDA to regulate tobacco products and assess tobacco companies more than $5 billion in “user fees” over the next ten years to pay for this regulation.

Some conservatives may be concerned by the regulatory regime the bill would establish, which would require an agency charged with promoting food and drug safety to regulate a product inherently unsafe and unhealthy. Some conservatives may also object to the multiple layers of regulation the bill would create, by leaving intact the Federal Trade Commission’s ability to regulate tobacco advertising and distribution and providing only limited pre-emption against additional state-based regulations and restrictions. Some conservatives may question whether the highly prescriptive restrictions in the bill— including advertising limitations on the use of color advertising and regulation of the font size of tobacco disclaimer warnings, all of which raise significant constitutional questions about their free-speech implications—constitute good public policy, particularly as the Congressional Budget Office estimates that H.R. 1108 will reduce smoking levels by only 2% over 10 years.

Lastly, some conservatives may object to provisions in the bill that could prompt an international trade dispute. Last week, HHS Secretary Leavitt wrote to Energy and Commerce Committee Ranking Member Barton about H.R. 1108, observing that, because the bill prohibits all tobacco flavorings except menthol, foreign countries which manufacture clove or other flavored cigarettes may take action against the United States for providing unfair and disparate treatment for a particular type of manufactured cigarette. As press reports indicate that H.R. 1108 may be considered under suspension of the rules, some conservatives may be concerned by the lack of procedural opportunities available to address this disparity, such that the United States can live up to its obligations under international free-trade agreements.

A Policy Brief on H.R. 1108 (as reported by the Energy and Commerce Committee) can be found here.

Democrats Ignore Medicare Funding Warning

Last week Democrats responded to the Medicare trustees’ finding that the Medicare program faces significant future funding shortfalls—by resolving to ignore the problem. The resolution concerned a provision inserted into the Medicare Modernization Act at the behest of the RSC, which provided for the President to submit, and Congress to consider under expedited procedures, legislation to remedy Medicare’s funding problems when the program is projected to consume more than 45% of its funding from general revenues (as opposed to the Medicare payroll tax and beneficiary premiums). The Democrat majority’s action turned off this funding “trigger” for the balance of the 110th Congress, preventing those who believe in entitlement reform from taking action to force a House floor vote on Medicare reform legislation.

Many conservatives may be disappointed by the actions of Congressional Democrats, which prevented the President’s reasonable and modest proposals for Medicare reform—means testing that would make wealthier individuals like Warren Buffett and George Soros pay $2 per day more in Part D prescription drug premiums and liability reform to reduce the costs associated with defensive medicine practices— from receiving a vote in Congress. Many conservatives may believe that solving Medicare’s $86 trillion in unfunded obligations—and a Hospital Trust Fund scheduled to be exhausted in little more than a decade—will not be helped by Democrats’ apparent eagerness to ignore the problem. However, when Democrats like Florida’s Alcee Hastings note that “the perceived problem with Medicare funding has already been addressed,” many conservatives may be concerned that this lack of awareness will only hasten the day when Medicare’s funding shortfalls jeopardize the viability of the program—and wonder what policy-makers will tell their senior constituents when it does.

There are RSC Policy Briefs related to the Medicare trigger: Legislative Background; Talking Points on Trigger; Questions for House Democrats; Size of Medicare Program; White House Trigger Bill; Medicare Trustees Report

Article of Note: Fuzzy Math

Last Wednesday the New York Times reported on the many financial discrepancies surrounding the health care plan of Sen. Barack Obama (D-IL). While Sen. Obama has been consistent in saying that his health plan would save every American family $2,500 per year, many observers have come to question the factual basis for a “best guess” assertion by his advisers early last year. Independent estimates, including those by the Congressional Budget Office, have questioned whether the savings from such initiatives as health information technology and chronic care management will materialize, particularly in the four-year timeline Sen. Obama has promised—such that even a statement by Obama’s own advisers backtracked from any assertions that the purported savings would materialize by a date certain.

Many conservatives may be skeptical of Sen. Obama’s claims, particularly as the liberal Commonwealth Fund released a report in December with a menu of options for savings that would by their estimates achieve a total reduction in spending of only 6% in 10 years. Some conservatives may also be concerned that, in an attempt to reduce health care costs—whether by 8%, 6%, or some lesser amount— Sen. Obama would rely first and foremost on imposing price controls on physicians, pharmaceutical manufacturers, and insurance companies, along with rationing care through a government-controlled comparative effectiveness institute. Many conservatives may believe that such bureaucratic restrictions would in the long run prove far more effective at growing the size of government than slowing the growth of health care costs.

Read the article here: New York Times: “Health Plan from Obama Sparks Debate

Weekly Newsletter: July 21, 2008

Resolution Would Block SCHIP Funds from Being Targeted to Poor Children

Last week, a group of Senators introduced a Resolution of Disapproval (S. J. Res. 44) designed to nullify guidance put forward by the Administration regarding state efforts to expand government-funded health insurance coverage to higher-income children. The guidance, issued last August and revised this May, provides a list of steps states must take in order to expand coverage to children in families making over 250% of the federal poverty level (approximately $50,000 for a family of four), and to ensure that states do not encourage families to drop private insurance coverage in order to obtain coverage through a government program.

Many conservatives may be surprised and disappointed by this resolution, which if successful would effectively give states a disincentive to reach out and enroll poorer-income children if children from wealthier families can be more easily found and enrolled in government-funded coverage. Particularly as the Administration has issued clarifying guidance noting that no child need be dropped off the SCHIP rolls while states implement this new policy, some conservatives may question why Democrats would prefer to extend government-funded health insurance to families making $80,000 or more, while neglecting to ensure that poorer children receive first preference for SCHIP enrollment.

An RSC Policy Brief on the Administration’s SCHIP Guidance can be found here.

Medicaid Bailout for States Receives Committee Hearing

This week the House Energy and Commerce Committee will hold a Subcommittee hearing on legislation (H.R. 5268) designed to provide a temporary increase in the Medicaid matching rate provided to states. News reports suggest that the Democrat leadership may attempt to attach similar provisions to a second “stimulus” package being considered by the Congressional majority.

Some conservatives may be concerned that this legislation—which was proposed, and rejected, during negotiations over the first “stimulus” bill passed in January—would not provide any “stimulus” at all, instead substituting federal Medicaid spending for state dollars, at a significant cost to the federal budget deficit. Given an Urban Institute study suggesting that lost revenue—and not increases in Medicaid enrollment—generates a measurably larger impact on state budgets during economic downturns, some conservatives may view H.R. 5268 as providing a bailout to states, which did not engage in proper budgetary planning, that will only encourage “moral hazard” among states with flawed revenue projection models.

The legislation being considered also includes provisions designed to disregard “extraordinary pension contributions” for purposes of calculating each state’s Medicaid match rate. Because the Centers for Medicare and Medicaid Services has noted that Michigan—home to full Committee Chairman John Dingell—is the only state that would benefit from such a change, some conservatives may consider this provision an authorizing earmark and object to its inclusion.

An RSC Policy Brief on Medicaid matching formulae can be found here.

Documents of Note: Democrats Defend Entitlement Spending on the Wealthy

Last Wednesday, RSC Chairman Hensarling submitted an op-ed to the Washington Times discussing Medicare legislation recently enacted over the President’s veto. The article noted that the Democrat-constructed bill pits groups of low-income seniors against each other—by adding subsidies for some, while taking away access to Medicare Advantage for millions—all the while doing nothing to make billionaires like Warren Buffett and George Soros pay $2 per day more for prescription drug coverage.

Read the op-ed here.

And as Congress once again may consider SCHIP-related legislation, some conservatives may find the colloquy between Rep. Mike Burgess (R-TX) and House Energy and Commerce Chairman Dingell from last October enlightening. In it, Chairman Dingell admitted that states can choose to disregard tens of thousands of dollars of income from families applying for SCHIP—thus making families with six-figure incomes potentially subject to government-funded health insurance for “poor” children.

Rep. Hensarling Op-Ed: Democrat Medicare Bill Shortchanges Minorities

Over the last several weeks, I have heard from physicians rightly concerned that lawmakers had yet to pass legislation repealing a scheduled 10.6 percent reduction in their Medicare reimbursement rates. No doubt Congress should and will act soon, to preserve seniors’ access to physician care. This is critical for doctors, specifically primary care physicians, whom already face tremendously difficult challenges. But behind the scenes of the physician reimbursement debate lies an interesting paradox in the way Congressional Democrats protect wealthy seniors, while exposing large numbers of low-income beneficiaries whom the legislation purports to protect.

Nestled into the sprawling 278-page bill the House passed with limited debate are provisions that would expand eligibility for subsidy programs that aid low-income beneficiaries with Part B premium payments, deductibles, and co-insurance. Coupled with several proposals designed to increase outreach to low-income populations, the changes would cost hardworking Americans $7 billion over the next ten years.

Of course, budgetary rules require Congressional Democrats to pay for this expansion of the Medicare benefit. By listening to Senator Obama, you might assume that the likeliest culprit would be yet another tax on the wealthy. But that is far from it. The expanded subsidies for low-income individuals – as well as the physician reimbursement provisions and other related Medicare provisions – are paid for by cuts to Medicare Advantage plans that provide coverage to millions of seniors.

The paradox arrives in the discovery that Medicare Advantage plans disproportionately serve low-income and minority populations. Nearly half of all Medicare Advantage beneficiaries had incomes under $20,000; for Hispanic and African-American populations, that number rises to 70 percent. While policy-makers argue about “overpayments” to Medicare Advantage plans, many low-income seniors have come to appreciate – and rely on – the lower costs and increased benefits that these plans have provided. But as a result of the House-passed legislation, over 2 million seniors, including 1.8 million in private fee-for-service plans popular in rural areas with limited physician access, will lose their Medicare Advantage coverage.

To sum up: Congressional Democrats are cutting benefits for some low-income seniors – in order to extend benefits to other low-income seniors. All the while, proposals to increase Part D premiums for the wealthiest Medicare beneficiaries -think George Soros and Warren Buffett – languish in legislative purgatory.

There is a Machiavellian logic to Democrats’ apparent lack of appetite for Medicare means testing. If wealthier individuals become less dependent on the welfare state for their health benefits in retirement, political support for the popular program may wane. But when President Bush proposed to extend current means-testing of Part B premiums to the prescription drug plan as one way to alleviate Medicare’s funding woes, the New York Times considered this element of the President’s plan a “reasonable” proposal. If President Bush and the editorial board of the New York Times can both see the merits of this concept, there is little reason why Congress, in its infinite wisdom, should not see fit to include it in the Medicare bill.

Instead, the legislative product being considered constitutes, at best, an attempt at behavioral modification – forcing low-income beneficiaries away from plans run by “greedy” insurance companies – and at worst a perverse experiment in social Darwinism, pitting one group of vulnerable seniors against another in a competition for Medicare dollars. All this so Warren Buffett can avoid having his estimated $60 billion fortune decimated by paying an extra $2 per day for prescription drug coverage.

In March, the Medicare trustees issued their annual report, which noted that Medicare faces $86 trillion – yes, trillion – in unfunded obligations. The two best ways to stem this looming tide of debt are increased competition among private Medicare Advantage plans and proposals utilizing means-testing to dedicate scarce health care resources to the seniors who need them most. Yet the House bill undermines the former, while ignoring the latter.

While introducing Medicare legislation very similar to the bill the House passed, Senate Finance Committee Chairman Max Baucus decried efforts to “protect private insurance plans” that would “leave low-income beneficiaries behind,” arguing that his “balanced legislation” will prevent the latter while discouraging the former. I agree with Senator Baucus that his legislation is indeed balanced – it would ensure that a senior with $20,000 in income will continue to pay as much for prescription drugs as Ross Perot (or Senator Baucus himself). But in their ideological quest to undermine private insurance plans, Congressional Democrats are indeed leaving millions of beneficiaries on Medicare Advantage plans, many of them low-income, behind. Speaker Nancy Pelosi and House Democrats – Cutting coverage for beneficiaries while protecting billionaires.

This post was originally published at The Washington Times.

Questions for House Democrats on the Medicare Trigger

  • Ways and Means Health Subcommittee Chairman Pete Stark has publicly stated that “Medicare is not in crisis.” Yet the Medicare program faces unfunded liabilities of $86 trillion—more than 70 times the total anticipated losses from subprime mortgages worldwide.  Why do House Democrats believe that a $1.2 trillion “crisis” requires the creation of massive new government programs to help borrowers, while $86 trillion in debt from an existing government program warrants no action at all?
  • Democrats have complained that the trigger is an “arbitrary” calculation of the health of the Medicare program. Since they find Medicare’s $86 trillion in unfunded obligations an “arbitrary” figure too low to prompt any concern, how high will Medicare’s expected losses have to rise before Democrats will take action?  $100 trillion?  $200 trillion?
  • “Fixing” the Medicare trigger this year requires finding less than $2 billion in savings during Fiscal Year 2013—this for a program projected to grow over the next five years from $454 billion to $636 billion in spending. Do Democrats really believe that nothing can be done to reduce Medicare’s growth in spending from $182 billion to a mere $180 billion over the next five years?
  • At a recent House Appropriations Committee markup, attempts to attach language creating a bipartisan commission to examine entitlement spending and make recommendations to Congress was defeated on a largely party-line vote. Why do most House Democrats oppose even creating a commission to study the nation’s impending fiscal crisis due to unsustainable entitlement spending?
  • Why do House Democrats believe that wealthy seniors—including billionaires like Warren Buffett and George Soros—should not be asked to pay $2 per day more in premiums for their prescription drug coverage to help improve the solvency of the Medicare program?
  • A House Democratic aide recently said that the party’s advice to frustrated families dealing with high gas prices consisted of “Drive small cars and wait for the wind.” What will Democrats tell seniors and those individuals looking to retire when the Medicare Hospital Trust Fund goes broke just over a decade from now?