October 8-10, 2009
Oct 08 03:03 Would Medicaid Expansion Hurt Minnesota's Economy? Oct 08 03:35 Gov. Pawlenty Speaks Out Oct 08 16:12 Hiding the Costs Oct 08 18:30 This Isn't a Minnesota Priority Oct 09 01:02 CATO On Baucuscare Oct 09 08:37 This Makes Perfect Sense Oct 09 23:14 The DNC, the Taliban & the Politics of Appeasement Oct 10 00:29 Rep. Shadegg, Blame the Democrats, Not CBO
Prior Months: Jan Feb Mar Apr May Jun Jul Aug Sep
Would Medicaid Expansion Hurt Minnesota's Economy?
As I read through the CBO's summary of the Senate Finance Committee's legislation, something jumped off the page at me, namely that the Baucus bill would cause a "substantial expansion of Medicaid."
The Medicaid expansion would be initially be paid for by the federal government but just for the first five years. After that, it's the states' responsibilities. I noted in this post the reaction of some Democratic governors to the Finance Committee bill's Medicaid provisions. Here's a brief reminder of what some prominent Democratic governors said about the Finance Committee's bills:
GOV. ED RENDELL (D-PA): "I Don't Think It's An Accounting Trick, I Think It's An Unfunded Mandate, We Just Don't Have The Wherewithal To Absorb That Without Some New Revenue Source..."I don't often agree with Gov. Rendell but I think he's spot on with his analysis. If the Medicaid expansion is simply the biggest federal unfunded mandate in recent history, I don't see how this wouldn't add a huge financial burden to states, Minnesota included.
GOV. PHIL BREDESEN (D-TN): "In his letter to Sen. Bob Corker (R-Tenn.), Bredesen also urged the senator and his fellow lawmakers to temper down their proposed changes to the low-income healthcare entitlement, an expansion Corker later described as an 'unfunded mandate' that could overburden states at a time when many are struggling to manage the recession. ' My guess is that most other states would face a similarly painful situation if these costs are passed down ,' Corker explained in his own statement on Tuesday."
Here's something worth considering about insurance policies bought through the yet-to-be-built exchanges:
An amendment adopted by the committee would require that, beginning in 2012, the Director of the Office of Management and Budget (OMB) certify annually whether or not the provisions of the legislation are projected to increase the budget deficit in the coming year. If the Director determined that they were projected to increase the deficit , he or she would be required to notify the Congress, and exchange subsidies would be automatically adjusted to avoid the estimated increase in the deficit for that year .In other words, if policies bought through an exchange created a deficit, the Director of OMB is given the authority to unilaterally reduce subsidies on those policies, leading to higher insurance premiums for people who bought premiums through the federal government.
In my estimation, that provision, at minimum, might lead to alot of volatility in a person's insurance premiums. Volatility with one's insurance premiums is the last thing people would want. (Let's remember that this is just one of the hidden 'jewels' sprinkled into the bill.)
Then there's this tasty tidbit of information from the report:
The estimates presented in this preliminary analysis do not incorporate the potential effects of using this proposed failsafe mechanism, although CBO and JCT estimate that the amended mark would increase the deficit in fiscal years 2015 through 2018.If I'm reading this right, the CBO is telling legislators that the deficits in 2015-2018 will trigger a reduction in insurance premium subsidies, the very volatility we just talked about.
Under CBO and JCT's estimates of the deficit impact for the proposal, the failsafe provisions would require a reduction in exchange subsidies averaging about 15 percent during the years 2015 through 2018.That's Washington's way of saying that people buying insurance through the exchanges would see an unexpected 15 percent increase per year in their insurance premiums.
There is nothing in this legislation that I find appealing or helpful to Minnesotans. That's why I think Minnesotans will reject this bill the minute they hear the details of this legislation.
Posted Thursday, October 8, 2009 3:03 AM
No comments.
Gov. Pawlenty Speaks Out
Gov. Tim Pawlenty spoke out on FBN yesterday. Here's the video of his appearance there:
Gov. Pawlenty is exactly right in saying that Republicans can still make a good argument against the Baucus legislation even though the CBO report would seem to give Democrats a fig leaf of political cover. Gov. Pawlenty said that Republicans can still point to the extraordinary amount of new taxes in the legislation.
Gov. Pawlenty gave a great answer on the issue of Medicare cuts, noting that Democrats have tried painting Republicans as the party that wants to eliminate Medicare or at least dramatically cut it. Gov. Pawlenty is right in pointing out that Republicans will now have irrefutable proof that it's Democrats cutting Medicare to the tune of $404,000,000,000 over the next decade.
Democrats should be extremely worried about that as a campaign weapon of the Republicans, especially in states like Texas, North Carolina, Florida and Arizona. Steep Medicare cuts aren't likely to be well received in those states.
Posted Thursday, October 8, 2009 3:35 AM
Comment 1 by eric z. at 09-Oct-09 07:30 AM
Yawn.
Hiding the Costs
Ten days ago, I wrote that Sen. Baucus was trying to hide the true costs of his legislation . It's reassuring to read that Keith Hennessey is making the same points from a different perspective. In my post, I cited this commentary/analysis from the WSJ:
About 59 million people are on Medicaid today, which means that a decade from now about a quarter of the total population would be on a program originally sold as help for low-income women, children and the disabled. State budgets would explode , by $37 billion, according to the Congressional Budget Office, because they would no longer be allowed to set eligibility in line with their own decisions about taxes and spending. This is the mother, and father and crazy uncle-of unfunded mandates.Here's what Mr. Hennessey asks in his post:
Congress needs to ask CBO, "Would these bills result in an increase or decrease in total health spending, and in total health insurance spending, relative to current law?" CBO analyses have so far looked only at subcomponents of the population. Policymakers need the answer for the country as a whole. They also need to understand the effects on public and private health spending combined, and on public and private health insurance spending combined. Don't just focus on government spending. That's too narrow.In addition to the previously mentioned post, I also highlight the legislation's hidden costs this way:
That paragraph briefly touches on expanding Medicaid without talking about the impact that will have on states' budgets. Simply put, that provision will explode state budgets and trigger massive tax increases nationwide. Those massive tax increases will kill entrepreneurial activity and job growth.Keeping the legislation deficit neutral from a federal standpoint is worthless if the report doesn't speak to the huge burden that will be put on the states through the biggest unfunded mandate in history. I'll bet that people won't care whether the taxes that will get raised will happen as a result of their state raising taxes to pay for the "substantial expansion" of Medicaid or if the tax increases come from the federal government. I'll bet that they'll only care that they're getting hit with more taxes that they can't afford.
I wrote last night that the CBO report gave Democrats a brief headline victory that would quickly turn into a net negative within a week. I believe that because they'll take major political hits when people read that the deficit neutrality isn't possible without $404,000,000,000 in Medicare cuts, without the federal government dumping the biggest underfunded mandate in history into the states' laps and when they learn that there are a multitude of tax increases in this bill.
It's also worth highlighting that, after all that spending and after all those costly provisions, the bill doesn't significantly reduce the number of uninsured. That means that there's precious little appeal to the bill.
I'd further suggest that deficit neutrality isn't a high priority if major tax increases are needed to close that deficit. I'd further posit that this bill's appeal will drop the minute people hear that there's even a tax increase on the manufacture of medical devices. I'll bet that people whose lives have been saved by a Medtronics product won't think highly of that tax increase.
In fact, I won't just bet on that, I'll bet the proverbial ranch that the people whose lives were saved by a Medtronics product will oppose that tax increase provision.
UPDATE: King asks a number of great questions in this post .
Posted Thursday, October 8, 2009 4:30 PM
No comments.
This Isn't a Minnesota Priority
At least on a conceptual level, it's never been a Minnesota priority to stifle innovation. (That's what happens too often as a result of proposing tax increases but that's another matter for another day.) One provision in Baucuscare is a major tax increase on medical device manufacturers :
Experts have long wondered how President Obama's drive for reform in health care would affect medical device makers. Congress is considering wholesale changes to the nation's health care system that hospitals fear would reduce Medicare payments. A bill before the Senate Finance Committee also includes a $4 billion annual tax on medical technology companies, which the industry is lobbying to avoid.Let's remember that the health care reform bills raise taxes and cut Medicare spending immediately but that the expansion of Medicaid and the creation of co-ops doesn't happen until 2013. The Baucuscare provision will have a chilling effect on companies like Medtronic and Boston Scientific because they know that they'll get taxed extra for creating lifesaving devices.
Sen. Baucus must be asked why he's levying an extra tax on something this important to improving people's health. Shouldn't the top priority of health care be to keep people as healthy as possible? Shouldn't people ask why Sen. Baucus has put a bounty on innovative companies with this tax? After all, there's proof that, if you want leses of something, taxing it or regulating it more will reduce that activity.
By coupling this 'tax on innovation' with Sen. Baucus's unfunded Medicaid mandates and a picture starts emerging. That picture is one of legislation that undermines our highest health care priorities.
At a time when we should put a priority on innovation that improves people's health, Sen. Baucus's bill undermines that. At a time when we shouldn't do anything to destabilize states' economies, Sen. Baucus's bill would drop the biggest unfunded mandate on states in American history.
Minnesotans of all political stripes should reject Sen. Baucus's bill because its priorities are that misplaced. Any legislation that doesn't lower costs while increasing Minnesota's health is legislation that runs contrary to the principles that've made our state one of the healthiest states in the Union.
Posted Thursday, October 8, 2009 6:30 PM
No comments.
CATO On Baucuscare
The Cato Institute's Michael Tanner and Michael Cannon have written scathing reviews of Sen. Baucus's legislation. Here's what Mr. Tanner said about Baucuscare:
The CBO scoring makes it clear that the Baucus bill's reduction in future budget deficits comes not from controlling government spending or reducing health care costs, but because of a rapid escalation in tax revenues. The bill imposes a 40 percent excise tax on health-insurance plans that offer benefits in excess of $8,000 for an individual plan and $21,000 for a family plan. Insurers would almost certainly pass this tax on to consumers via higher premiums. As inflation pushes insurance premiums higher in coming years, more and more middle-class families would find themselves caught up in the tax.When I wrote about the Democrats' Cap and Trade legislation, I frequently referred to it as "a tax increase masquerading as" (a) environmental policy or (b) energy policy. Tanner's description of Sen. Baucus's bill has that same tone to it. At minimum, what he's saying is that Sen. Baucus's bill is almost as much about increasing taxes as it is about setting health insurance policy.
In fact, overall, the tax increases in the bill are more than double the amount of deficit reduction. This isn't a health care efficiency bill or a cost containment bill. It is a tax and spend bill, pure and simple.
I think it's particularly instructive when Mr. Tanner says that this legislation isn't about greater efficiency or containing costs. I'm thinking that it's more about hiding the legislation's true expense with tax increases. I'd suggest that people won't tolerate additional tax burdens during this economic downturn. They're likely already jumpy about the possibilty of losing the job they currently have.
Let's understand, too, that the money that isn't being spent isn't because they've made the health care system more efficient. They've just cut the Medicare budget by $404,000,000,000 over the next decade. That's just a little less than the annual Medicare budget, meaning that the Baucus bill is a cut of 10 percent at a time when it's estimated that Medicare enrollment is expected to increase by 30 percent.
I'd love hearing Sen. Baucus explain how you can cut Medicare spending by that much while Medicare enrollment is rapidly expanding without cutting benefits or rationing care.
Here's what Michael Cannon said about the Baucus bill:
The CBO score of the Baucus bill is like a mystery novel with the last 50 pages missing. It fails to reveal both the full cost of the bill and the budget gimmicks that Mr. Baucus uses to hide that cost.In other words, this 'straightforward' bill isn't so straightforward. This isn't a criticism of the CBO. Their job, if I understand it correctly, is to simply attach a price tag on legislation based on how much the legislation will cost the federal government.
The Baucus bill will not reduce the deficit, and it would ultimately cost taxpayers more than $2 trillion, just like every other bill Congress has produced so far.
The biggest gimmick employed by the bill is that its individual mandate pushes more than half of the legislation's cost off-budget and onto businesses and individuals who will have to shoulder that burden. A real-world parallel already exists in the Massachusetts health care plan, where private-sector mandates account for 60 percent of the cost . In 1994, CBO counted those mandated private payments in the federal budget, and it helped kill the Clinton health plan. This time around, Democrats were very careful to craft their mandates so that they just barely avoided having the CBO include those payments in the federal budget. But the CBO's decision does not change the fact that those private-sector mandates are part of the cost of this bill.
The second-biggest gimmick is assuming that Congress will let the "Sustainable Growth Rate" cuts in Medicare physician payments to occur. Starting in 2003, Congress has repeatedly blocked those cuts, and there is no reason to think that Congress will behave any differently in the future. So yes, provided that the sun rises in the West, the Baucus bill would reduce the federal deficit .
Again, if I understand it correctly, the CBO's job isn't to attach a cost to how much the legislation will cost states or individuals. Diana Furchtgott-Roth's article does a nice job with that part of the hidden equation:
What CBO doesn't tell Americans is that their health insurance premiums would increase substantially in the decades ahead . The level of health insurance premiums does not have to be incorporated in CBO estimates, because it is not a tax and it is not paid by the federal government. In 2019, in addition to $46 billion in excise taxes, Americans would be paying over $100 billion in higher premiums.Those are real costs to real families. It isn't important whether we should call something a fee, a tax or an expense to families. Thursday night, I asked a friend of mine's daughter if she cared if the taxes taken from her paycheck were all federal taxes, all state taxes or a combination of both. She confirmed that she didn't care in terms of budgeting, that it's all money missing from her account.
Since CBO forecasts increases in excise tax revenues of 10% to 15% annually after 2019, health insurance premiums must also rise by the same percent annually . This government mandate will amount to a steady drain on Americans' pocketbooks, a tax under another name.
I suspect that people will be upset with any of the Democrats' bills, whether it's the Baucus bill, the HELP bill, one of the bills from the House of Representatives or if it's an amalgamation of the various bills. All are loaded with major tax increases, all will result in rationing and all will cost people more money than they're spending now on health care.
Until something changes dramatically, I'll continue believing that these bills are heading for a crash landing on rocky ground.
Posted Friday, October 9, 2009 1:08 AM
Comment 1 by eric z. at 09-Oct-09 07:28 AM
I doubt the Baucus bill will be what's passed.
Nobody but Baucus and a few Blue Dogs would want it.
The GOP committee negotiators don't like it. Sen. Rockefeller does not.
You don't.
I don't.
How about this Gary, let's see if any of your readers posts a comment saying he/she likes it, and why.
Any bets about takers of the Baucus Bill Challenge?
Comment 2 by Gary Gross at 09-Oct-09 08:11 AM
Eric, We're in agreement with this one. I can't imagine any of my daily readers clamoring for passage of Baucuscare.
For crying out loud, TPaw, AKlo & Franken agree on this one. What are the chances of that happening again???
Comment 3 by eric z. at 09-Oct-09 08:41 PM
One vote, Olympia Snowe.
This Makes Perfect Sense
This morning in Norway, the Nobel committee awarded President Obama the Nobel Peace Prize for "giving the world hope for a better future and striving for nuclear disarmament":
The Norwegian Nobel Committee praised Obama for "his extraordinary efforts to strengthen international diplomacy and cooperation between peoples." But critics, especially in parts of the Arab and Muslim world, called its decision premature.Though this isn't the biggest embarrassment for the committee, it certainly says that a formerly prestigious award is now a laughingstock in serious people's eyes.
I can't say this is the biggest embarrassment in Nobel history because giving the award to Mickhail Gorbachev while he was slaughtering dissidents within his own country was worse. Giving the award to Arafat while he lobbed missiles into Israel was a bigger embarrassment, too.
The AP's Jennifer Loven, someone I've never agreed with prior to this morning, states the case against President Obama perfectly :
The prize seems to be more for Obama's promise than for his performance . Work on the president's ambitious agenda, both at home and abroad, is barely underway, much less finished. He has no standout moment of victory that would seem to warrant a verdict as sweeping as that issued by the Nobel committee.I couldn't say it better. This isn't about something that President Obama has done. It's about him winning another award for something he said, rather than on actually accomplishing something. More than anything else, this says that the committee shouldn't be taken seriously. Talking about a nuclear-free world and about nuclear nonproliferation was all it took to influence this gaggle of idiots.
He has said that battling climate change is a priority. But the U.S. seems likely to head into crucial international negotiations set for Copenhagen in December with legislation still stalled in Congress.Not only doesn't he have a list of accomplishments, he's got a modest-sized list of significant setbacks.
And what about Obama's global prestige? It seemed to take a big hit last week when he jetted across the Atlantic to lobby for Chicago to get the 2016 Olympics, and was rejected with a last-place finish.
Perhaps for the Nobel committee, merely altering the tone out of Washington toward the rest of the world is enough. Obama got much attention for his speech from Cairo reaching out a U.S. hand to the world's Muslims. His remarks at the U.N. General Assembly last month set down new markers for the way the U.S. works with the world.NOW IT ALL MAKES SENSE!!! He won the prize for his worldwide apology tour. If you can't win a formerly prestigious international award for badmouthing the greatest liberator of oppressed people in the history of mankind, what good is the international community?
Posted Friday, October 9, 2009 8:41 AM
Comment 1 by Eric Heins at 09-Oct-09 09:14 AM
None of those reasons are even relevant unless the Nobel committee allowed Obama's nomination later than the end of January. That would be breaking their own rules, per
nobelprize.org/nomination/peace/process.html
Comment 2 by Fred at 09-Oct-09 01:42 PM
This has to be a joke right? Someone is pulling my leg. This guy hasn't done anything but triple the national debt, nationalize the auto industry and now is trying to bring health care rationing into being. I am sure someone on the Nobel committee will say "April Fool". Oh, wait, this isn't April 1.
Comment 3 by walter hanson at 09-Oct-09 02:08 PM
why Obama won:
One, Obama is not George Bush. Within the famous 10 day period of his presidency which should've been the only thing that applied he did announce he was closing gitmo (but that might not happen). After the ten day period he did release torture and claim that the United States wouldn't torture and his attorney general made it look like the CIA was going to be prosecuted.
Two, in the eyes of the world where the world is dictating to the united States that is good. Under strong presidents who are more deserving of the prize but didn't get it Regan and Bush 43 they didn't let the world lead them.
Three, Obama believes that global warming is real instead of a hoax. Bush 43 didn't believe that global warming should destroy the US economy. Gore got the same aware for promoting this lie.
Why he won was understandable. The job could be this year since he hadn't offically done anything by the time his nomination and hence what he was suppose to be judge on had rolled around.
Walter Hanson
Minneapolis, MN
Comment 4 by eric z. at 09-Oct-09 08:39 PM
Kissinger, Chile coup master got it, the man who brought the world Pinochet, that bagged its legitimacy from then on.
Go back to Woodrow Wilson - President at the start of the Fed, he got it.
If Ron Paul ends the Fed, what prize does he get?
The DNC, the Taliban & the Politics of Appeasement
In this morning's Politico, Ben Smith quotes liberal uberactivist Brad Woodhouse as criticizing Michael Steele. Not surprisingly, Mr. Woodhouse doesn't have his facts straight, which is what he does for a living at the DNC. Here's the objectionable part of Mr. Woodhouse's quote:
"The Republican Party has thrown in its lot with the terrorists, the Taliban and Hamas this morning, in criticizing the President for receiving the Nobel Peace prize," DNC communications director Brad Woodhouse told POLITICO.Actually, Mr. Woodhouse doesn't have his facts straight. It wasn't Republicans who said that the Taliban could play a significant role in Afghanistan :
Bowing to the reality that the Taliban is too ingrained in Afghanistan's culture to be entirely defeated, the administration is prepared, as it has been for some time, to accept some Taliban role in parts of Afghanistan, the official said. That could mean paving the way for Taliban members willing to renounce violence to participate in a central government, though there has been little receptiveness to this among the Taliban. It might even mean ceding some regions of the country to the Taliban,Mr. Woodhouse has a storied history as a fringe leftist activist , not the least of which was his being the president of fringe leftist group Americans United For Change, aka AUFC. Mr. Woodhouse also was a spokesman for the DSCC. Now he's moved on to being the spokesman for the DNC.
Someone needs to remind Mr. Woodhouse that it's a president from his party that's cozying up with the Taliban. If Mr. Woodhouse has a problem with the Taliban and American politicians, perhaps he should remind President Obama that he shouldn't be going soft on that terrorist organization.
This is what happens when an extremist like Mr. Woodhouse makes over-the-top, derisive statements about his political rivals without considering the unintended consequences of such statements. Then again, thoughtful people wouldn't mistake Mr. Woodhouse with a rocket scientist.
Posted Friday, October 9, 2009 11:21 PM
No comments.
Rep. Shadegg, Blame the Democrats, Not CBO
Rep. John Shadegg, (R-AZ), is one of the most reliable fiscal conservatives in DC. That's why it pains me to disagree slightly with his post about the CBO . Here's what he said that I object to:
Could you make your family budget look good in a ten-year analysis if you counted ten years of income but only seven of expenditures? That's what the Congressional Budget Office did in their report on Senator Max Baucus's health care bill.I'd suggest that the CBO did its job. Based on what I've read, the CBO didn't omit these things in their summary report. It's unfair to accuse the CBO of "taking accounting tips from old Enron manuals." Again, it isn't the CBO that's playing games with the numbers.
Their subpar accounting includes revenue from tax increases and cuts to Medicare and Medicare Advantage starting in 2010. However, the bulk of expenditures begin in 2013, when many of the bill's programs go into effect. It sounds like the CBO has started taking accounting tips from old Enron manuals. How can Democrats be taken seriously if they use ten years of revenue to pay for seven years of expenditures?
Rep. Shadegg has a right to be upset, though. It's just that his frustration shoulid be directed at the Senate Finance Committee's Democrats in general and at Sen. Baucus in particular. Sen. Baucus wrote the bill in such a way as to reach this outcome.
Instead of criticizing the CBO, Republicans should be highlighting (a) the massive tax increases included in the bill, (b) the gigantic cuts in Medicare (approximately $404,000,000,000) and (c) the huge tax increase levied against people who aren't covered through their employer and who choose not to buy a government-approved health insurance policy.
Republicans should tell everyone who'll listen that Sen. Baucus wants to increase taxes on the manufacture of medical devices. That's such bad policy that Gov. Pawlenty, Sen. Amy Klobuchar and Sen. Al Franken immediately criticized that provision. The likelihood of that trio of Minnesota politicians agreeing on something again is roughly the same as the odds of winning a powerball jackpot AND getting hit twice with a bolt of lightnig duringa single thunderstorm.
I'd also have Rep. Shadegg look at how the Cato Institute's Michael Cannon criticized Senate Democrats :
The biggest gimmick employed by the bill is that its individual mandate pushes more than half of the legislation's cost off-budget, and onto businesses and individuals who will have to shoulder that burden. A real-world parallel already exists in the Massachusetts health care plan, where private-sector mandates account for 60 percent of the cost.I'd also recommend that Rep. Shadegg, and all Republicans, criticize the Baucus bill for its "substantial expansion of Medicaid", something that I call the biggest unfunded mandate dumped on states in the history of this nation.
I'd also take advantage of the teachable moment given by the Medicaid unfunded mandate to talk about how many taxes get raised when the federal goveernment dumps something into the states' laps through an unfunded mandate, then say the same thing happens on a smaller, though still significant scale, when state government dumps unfunded mandates into cities' laps.
Frankly, the Baucus bill is a great opportunity for conservatives to point out how health insurance, like government, gets expensive because of government's mandates. This is a great opportunity for Conservatives to teach the virtues of limited government by trusting the American people. It's our way of telling people that we aren't opposed to all regulation, just those that well-informed people can figure out on their own.
Posted Saturday, October 10, 2009 12:34 AM
Comment 1 by Margaret at 10-Oct-09 06:49 AM
Agree, but Shadegg might be on to something. I have found it remarkable that the CBO is the arbiter of what sound fiscal policy is and is used repeatedly by the Democrats whenever possible to claim that their policies are fiscally sound. Shadegg is right to insist we need to look at the numbers beyond the claims that are made about them.
We depend on government stats to decide what policy is. If we can't scrutinize them and criticize the conclusions their reports draw, we might as well give up now and hand our future over to bureaucrats.
As for your general point about keeping the focus on the Dems. I don't see why we can't push back on both fronts, the bureaucratic and the legislative.
Comment 2 by Gary Gross at 10-Oct-09 11:05 AM
Margaret, The point I didn't make well enough is that Republicans didn't ask CBO for an analysis of the impact the Medicaid unfunded mandate would have on states, what effect the individual mandates will have & whether the legislation will do anything to slow the inflation rate on health care.
Had the Republicans asked CBO for such a report, then they would've had the ammunition they needed to change the storyline & put the Democrats on the defensive.
