Freedom Line Blog

Senator Max Baucus caught some of Joe Biden’s foot-in-mouth disease today when he admitted the Senate health care bill would cost $2.5 trillion, far more than what CBO estimated and propoents of the legislation have been touting.  Taxpayers should be thankful for Baucus’ loose lips.

The CBO cost estimate priced the Senate legislation at $848 billion, but that figure does not represent the full cost of the mandates on individuals and employers.  In addition, the bill masks the true cost of the legislation because it doesn’t begin to subsidize health care until 2014.

As Senator Baucus reveals, the true cost of the legislation over a 10-year period is much higher.

Just for a second … health care reform, whether you use a ten-year number or when you start in 2010 or start in 2014, whenever you start at, so it is still either $1 trillion or it’s $2.5 trillion, depending on where you start…

Taxes, higher premiums and rationing.  That’s what consumers will face if the Senate’s version of health care reform becomes law.

According to a new report released by the Congressional Budget Office (CBO), some self-insured individuals could see a jump in premiums if the Senate bill becomes law.   In some instances, the hike in premiums could be upwards of 13%.  As CBO Director Doug Elmendorf wrote on his blog yesterday, “The average, unsubsidized premium per person covered (including dependents) for new nongroup policies would be about 10 percent to 13 percent higher in 2016 than the average premium for nongroup coverage in that same year under current law.”

And for those of you who have employer-based “platinum” health insurance?  Expect new taxes on you and your employer.  The CBO projects that 1 in 5 people with employer-based coverage will be subject to the new 40% excise tax on health insurance.

With projected costs of the Senate bill reaching $6 trillion over ten years, it’s no wonder that 53% of the nation opposes this sordid version of “reform.”

Much has been made about the proposed federal mandate that all individuals purchase health insurance.  Some have called this mandate unconstitutional since the only constitutional justification could be the interstate commerce clause in Article I.

Since standing around and not purchasing health care is hardly an act of interstate commerce, critics make a good point.  The Congressional Budget Office (CBO) went one step further in its criticism of the mandate in 1994 when it noted that the individual mandate was “an unprecedented form of federal action.  The government has never required people to buy any good or service as a condition of lawful residence in the United States.”

This year, Greg Dattilo and Dave Racer conducted a study of state and federal mandates.  The results aren’t too surprising when you consider that most government action fails to achieve the desired result, or leads to unintended consequences that harm other sectors of the economy.

For example, auto insurance is mandatory in 47 states but the uninsured rate has held steady at 14.6 percent.  In addition, the federal income tax is of course mandatory, but the non-compliance rate is still 14.7 percent.  These individuals are all law breakers, to be sure, but mandating something doesn’t make it so.

I would propose a government mandate on happiness, prosperity and full employment.  That could solve a lot of problems.  Perhaps a government mandate on earning at least $30,000 a year?  The way the FED is printing money, that should be no problem.  Maybe a government mandate for universal chocolate chip cookie access and subsequent ban on diabetes?

Racer and Dattilo conclude:

If the goals of health reform are to reduce the uninsured rate, increase access to health care, and improve quality, forcing more people to sign up for health plans is not the answer.  The CBO makes it very clear; people who are forced to own health insurance will, as a result, use more health services.  That will increase overall health spending, put stress on the supply of health care services (reducing access) and not make a dent in quality.

HT: reason.tv

Unfortunately for taxpayers, patients and health care professionals, the Senate successfully invoked cloture on its health care plan last Saturday.  With only 60 votes needed to proceed to consideration of the bill, Harry Reid got his 60 votes.

Since few Senators likely read the entire 2,074-page piece of legislation, here’s a quick breakdown, courtesy of Senator Coburn, of what was in the bill.

• 8 – new taxes created in the bill.

• 70 – government programs created in the bill.

• 3,607 – uses of the word “shall.”

• 24 million – patients left without health care.

• $494 billion – in new tax hikes.

• $2.5 trillion – total cost of the legislation.

Today’s Wall Street Journal profiles Dr. Devi Shetty, an Indian heart surgeon finding a way to deliver quality health care at lower prices.

Dr. Shetty, who entered the limelight in the early 1990s as Mother Teresa’s cardiac surgeon, offers cutting-edge medical care in India at a fraction of what it costs elsewhere in the world. His flagship heart hospital charges $2,000, on average, for open-heart surgery, compared with hospitals in the U.S. that are paid between $20,000 and $100,000, depending on the complexity of the surgery.

The approach has transformed health care in India through a simple premise that works in other industries: economies of scale. By driving huge volumes, even of procedures as sophisticated, delicate and dangerous as heart surgery, Dr. Shetty has managed to drive down the cost of health care in his nation of one billion.

Using economies of scale also allows doctors working at Shetty’s hospital to specialize in specific types of heart ailments by conducting the procedure hundreds, if not thousands, of times. This kind of repetition reduces the risk of something going wrong during surgery, thus leading to better patient outcomes.

When discussing how to reduce costs while maintaining quality, Shetty offers an insight that stands in stark contrast to the “comprehensive” reform of health care currently being pursued by the Democratic Party in America. “What health care needs is process innovation, not product innovation.” Perhaps the best line in the whole article is Shetty’s observation about implementing real, lasting changes that will bend the health care cost curve down. “In health care you can’t do one big thing and reduce the price. We have to do 1,000 small things.” That’s the view helping thousands of poor farmers and their children get better heart health at prices they can afford.

You can read the entire article here.

New Orleans Times-Picayune:  “With help from [Senate Majority Leader] Reid, the health care bill provides Louisiana with between $100 million and $300 million in Medicaid financing for fiscal 2011.”

Must have been one of those rounding errors that caused the rest of the mainstream media to report only the lower number.

Harry Reid will get a little back, for himself, not taxpayers, when Landrieu and James Carville host a New Orleans fundraiser for him on December 12 at $4800 a pop.

h/t:  Martin Kady II, politico.com

Senator Ben Nelson, a key conservative Democrat, has announced that he will vote “yea” on the motion to proceed tomorrow.

Part of his statement:

This weekend, I will vote for the motion to proceed to bring that debate onto the Senate floor. The Senate should start trying to fix a health care system that costs too much and delivers too little for Nebraskans.

Throughout my Senate career I have consistently rejected efforts to obstruct. That’s what the vote on the motion to proceed is all about.

According to Politico, this means that the health care bill will likely make it through its first procedural hurdle.  Senator Nelson cited the ability to amend the bill as a reason for his “yea” vote tomorrow, but unless he removes the tax increases, the mandates, the government-run public option, and the thousands of new federal regulations, then any attempt to “amend” the bill will be pointless.

Given his public statement, it’s unlikely that Senator Nelson’s position will change in the next 24 hours, but if you live in Nebraska you can still give him a call and urge him to oppose the Senate’s health care bill.

D.C. Office: 202-224-6551
Kearney Office: 308-293-5918
Lincoln Office: 402-441-4600
Omaha Office: 402-391-3411

You can also call Congress at 202-224-3121 and tell them to vote “No” on tomorrow night’s cloture motion.

It’s a well known fact that Majority Leader Harry Reid is scrambling to find the 60 votes necessary to move his government-run health care bill to the Senate floor.  Indeed, Reid is doing everything in his power to “encourage” the three or four Democrats supposedly on the fence to vote “yea” tomorrow night on the motion to proceed on the legislation.

And when we say everything, we mean E-V-E-R-Y-T-H-I-N-G.

ABC News’ Jonathan Karl reports:

On page 432 of the Reid bill, there is a section increasing federal Medicaid subsidies for “certain states recovering from a major disaster.” 

The section spends two pages defining which “states” would qualify, saying, among other things, that it would be states that “during the preceding 7 fiscal years” have been declared a “major disaster area.” 

I am told the section applies to exactly one state:  Louisiana, the home of moderate Democrat Mary Landrieu, who has been playing hard to get on the health care bill.

In other words, the bill spends two pages describing [what] could be written with a single world:  Louisiana.

The price tag for this provision?  Karl writes, “According to the Congressional Budget Office: $100 million.”

Read the full story, complete with the actual bill language, here.

This time, the Senate has scheduled a midnight vote on health care, when the nation will once again be engaging in less destructive activities, like watching college football.

According to Senate sources, the actual vote on cloture will take place around 8:00 this Saturday night.  If the cloture motion garners 60 votes, then it will only take 51 Senators to pass the final version, and all indications are that Democrats have at least 55 votes to pass the health care bill.

The Senate will actually begin its Saturday session in the morning, so citizens have all day to lobby against the largest government takeover of health care in history.

You can call Congress at 202-224-3121 and tell them to vote “No” on the Senate’s health care bill.  Don’t let moderates off of the hook.   A vote for cloture is a vote for final passage of the bill.

Indications are that at least two Democrats are hesitant to support the legislation but it is up to taxpayers across the country to keep the pressure on moderate Senators.

The recently passed House health care bill contains a plethora of tax hikes that would make any nanny-state liberal smile with appreciation.

Perhaps the biggest tax hike, in terms of revenue generation, is the new surtax on “high-income” earners.  However, even most Democrats realize that any new tax on income (amounts over $500,000 and $1 million) must be indexed for inflation to avoid hitting middle-class taxpayers.

If not, taxpayers could experience “bracket creep” similar to the Alternative Minimum Tax (AMT), the inception of which was meant to target literally a few dozen millionaires, but could soon affect over 30 million taxpayers.  If income thresholds don’t change, in the year 2060 a $500,000 annual income won’t be rich but taxpayers will still have to pay both the AMT and the health care surtax.

For example, without changes, the CBO now estimates that “three-quarters of households would pay the AMT.”  The math for the potential surtax is just as frightening.

BlackBook Legal’s Sam Greenberg does the math on the new health care surtax and it’s not pretty.  Eventually, the 5.4% surtax could end up hitting millions of households.  Even if wages grow at the same rate as inflation (unlikely unless the economy continues to stagnate), the surtax will end up hitting at least 5 times as many households as was intended by House leaders.  Greenberg concludes, “A non-inflation linked tax is a convenient way to pass future tax hikes without any legislative action.”

This is just another unintended consequence of federal tax policy.  For those who remain confident that the surtax will eventually be indexed to avoid middle-class taxpayers, just look at the AMT.  Of course, when tax time arrives, you won’t have to look for it; the AMT will find you.

Late last night, Senate Majority Leader Harry Reid released the newest iteration of health care “reform.”  Seeking to outdo Speaker Pelosi’s 1,990 page bill, Reid’s version measures in at 2,074 pages, longer than War and Peace.  You can read and search through the full version here.

The Congressional Budget Office and the Joint Committee on Taxation have released cost estimates of the bill.  Don’t let Senate Democrats fool you, however.  The actual cost of the bill is not $849 billion, mainly because federal subsidies don’t even kick in until 2014.

When fully implemented, the actual cost of Harry Reid’s bill is over $2.5 trillion, from 2014 to 2023.

If you like tax increases, you’ll love the new bill.  It contains over $500 billion in new taxes.  The bill taxes health insurance, Botox, Health Savings Accounts, drug devices, and some employers and employees.  No one escapes Uncle Sam’s scalpel in Harry Reid’s version of “reform.”  Click here for a full list of tax hikes.

More analysis later.

Now they’ve finally blown it.  After getting away, so far, with screwing over just about everyone in the country, with hardly a peep, the Senate version of “healthcare reform” has now inappropriately groped a constituency that no sane male-dominated body dare touch:  real housewives of America.

That’s right, ladies.  Politico.com reports, before you’ve even had your coffee this morning, that the botox tax is back.  Five percent on all elective cosmetics surgery.  It is needed “to make the numbers work,” a Democratic Senate aide told Politico.

All we can do is warn Senators of the following:  Ladies who attend those Tea Parties that scare you so badly wear sensible shoes.  Real housewives wear four-inch stilettos, and they ain’t just for pretty.

With the Congressional Budget Office set to release its cost estimate of the Senate’s version of health care “reform” sometime this week, taxpayers continue to speculate over the whip count and the prospects for ObamaCare.

Congress.org has set up a virtual prediction market for the health care bill in the Senate.  Click here to make your predictions of ObamaCare’s future.  (Sorry, you can’t make any money off of your predictions.)

Let’s all hope that President Obama and leaders in Congress have a sudden change of heart and decide that more massive government won’t bring down health costs or reduce the federal deficit.

My prediction was 55-45 for final passage, but that doesn’t mean the bill will survive a filibuster attempt.

HT: Political Wire

The chorus of opposition to ObamaCare is growing louder among the ranks of medical academe.  Dr. Jeffrey Flier, dean of Harvard Medical School, says ObamaCare would receive a “failing grade” at Harvard.

He wrote:

Our health-care system suffers from problems of cost, access and quality, and needs major reform. Tax policy drives employment-based insurance; this begets overinsurance and drives costs upward while creating inequities for the unemployed and self-employed. A regulatory morass limits innovation. And deep flaws in Medicare and Medicaid drive spending without optimizing care.

His conclusion:

In discussions with dozens of health-care leaders and economists, I find near unanimity of opinion that, whatever its shape, the final legislation that will emerge from Congress will markedly accelerate national health-care spending rather than restrain it. Likewise, nearly all agree that the legislation would do little or nothing to improve quality or change health-care’s dysfunctional delivery system.

The government can’t manage to control the laws of economics like it used to.

No surprise here, but according to a new study released by the non-partisan Center for Medicare and Medicaid Studies, the House health care bill will increase health care costs by $289 billion in the next ten years.

As much as the White House talked about “bending the health care cost curve” downward, the House health care bill, H.R.3962, does the exact opposite.

For some reason the Administration can’t understand that more government spending on health care without commensurate gains in supply leads to health care inflation, driving up costs for all consumers.

Other highlights from the report:

By calendar year 2019, the mandates, coupled with the Medicaid expansion, would reduce the number of uninsured from 57 million, as projected under current law, to an estimated 23 million under H.R. 3962.

The estimated effects of H.R. 3962 on overall national health expenditures (NHE) are shown in table 5. In aggregate, we estimate that for calendar years 2010 through 2019 NHE would increase by $289 billion, or 0.8 percent, over the updated baseline projection that was released on June 29, 2009… The NHE share of GDP is projected to be 21.1 percent in 2019, compared to 20.8 percent under current law.

Public spending would increase under H.R. 3962 as a result of the expansion of the Medicaid program and other Medicaid changes, less the net Medicare savings under the bill. Private expenditures would be higher as well…

This one is from James Capretta over at The New Atlantis, a technology and science journal, is a must read.

Capretta highlights why the federal government will never be able to truly “bend the cost curve” on health care.

Here is the link and a few highlights:

Obamacare is predicated on the assumption that the federal government has the knowledge, capacity, and will to drive greater efficiency in American health care. Inadvertently, White House Chief of Staff Rahm Emanuel has become an articulate spokesman for why that assumption is dead wrong.

Emanuel blames the limits of politics. “Let’s be honest,” Emanuel apparently stated in a recent interview. “The goal isn’t to see whether I can pass this through the executive board of the Brookings Institution. I’m passing it through the United State Congress with people who represent constituents.” That’s exactly right of course. But it’s also an indictment of the entire Obamacare enterprise. The health-care bills under consideration would hand over to the federal government nearly all power for organizing American health care. And yet there is not a shred of evidence that Congress or the administration can handle these tasks well.

The only way to slow the pace of rising costs without sacrificing quality is by building a functioning marketplace, with cost-conscious consumers driving the allocation of resources. The government must play an important oversight role in such a marketplace. But if we rely on politicians, or even commissions that answer to them, for cost control, what we will get is lower quality, not more efficiency.

HT: Greg Mankiw

Conservative candidate Doug Hoffman might end up winning the race for the upstate New York House seat that he supposedly lost last week.  Bill Owens, the Democrat, was sworn in last Saturday.

Apparently, Hoffman conceded based on inaccurate reports from his base in Oswego County and early returns.  As it turns out, Owens’ lead is down to 3,026 votes (from over 5,000 on Election Night), with still more than 10,200 absentee ballots at large.  The chances are slim, but if Speaker Pelosi hadn’t planned a health care vote for last Saturday night, this race might still be up in the air.

From the news report:

Now Hoffman, who campaigned against the health care reform bill, is carefully watching as the 23rd District race tightens and he is left to wonder if he conceded too soon.

“I don’t know if we would have conceded on election night,” Rob Ryan, Hoffman’s campaign spokesman, said Wednesday while discussing the latest results of the recanvassing. “I’m someone who doesn’t like to look back. But would we have taken longer to make a decision on election night? Probably, if we knew it was only 3,000 votes making the difference.”

Ryan, while acknowledging that Hoffman’s chances of pulling off a come-from-behind victory are still remote, said the campaign is looking at its legal options.

With pressure coming from the White House and not to be outdone by Speaker Pelosi, Majority Leader Harry Reid indicated earlier today that the Senate could begin debate on his health care “reform” bill as early as next week.  Reid believes a final vote on the legislation could happen by Christmas.

That’s an ambitious schedule considering that Reid’s bill hasn’t even been presented to his Senate colleagues yet, much less to the American people.   The Majority Leader has been waiting for the Congressional Budget Office to finish its cost estimates on various versions of his “reform” proposal prior to deciding what the final product will look like and releasing it for review.

Moreover, Reid has his hands full trying to find the 60 votes necessary to proceed to a vote on health care “reform” in the Senate as liberals and so-called moderates in his caucus are divided on issues such as taxpayer funding for abortion and a government-run “public option.”

UPDATE:

The Hill reports:

Senate Majority Leader Harry Reid (D-Nev.) late Tuesday laid the groundwork for the Senate’s healthcare reform debate to start next Tuesday.

Reid filed a motion to introduce the bill on Monday, Nov. 16. Anticipating a Republican objection, the bill would be pushed onto the Senate calendar.

“A motion to proceed to the bill would be in order the next legislative day,” said Reid spokesman Jim Manley.

The unemployment rate is 10.2%, the House just passed a government-takeover of health care, but at least Wall Street gave us some good news today.

The Dow hit a 52-week high during afternoon trading, reaching 10,186.  However, this is still far behind the Dow’s October 9, 2007 high of 14,164.