Monthly Archives: May 2011

Democrats’ Hypocrisy on Spending Restraint and Entitlement Reform

The Hill reports that outside advocacy groups (i.e., lobbyists) have been invited to a meeting this afternoon regarding proposed changes to the Medicaid program.  Topics for discussion include “threatened changes to the Medicaid program, including global spending caps, a block grant, the loss of the maintenance of effort requirement (the Medicaid MOE), and other cuts to the Medicaid program that may be contemplated during budget negotiations.”

The article from The Hill notes that “the invitation…criticizes global spending caps” and “offers the strongest evidence yet that Democrats intend to fight” Medicaid reforms.  But there’s only one problem with the message: Democrats who claim to oppose “global spending caps” in Medicaid voted for global caps in Medicare as part of Obamacare.  Specifically, Section 3403 of the law enacts a global budget for Medicare, and empowers a new board of 15 unelected, unaccountable bureaucrats to enforce these spending restraints.

So it’s worth asking:  Why are global spending caps acceptable for Medicare but not Medicaid?  If Democrats oppose “global spending caps” so much because they impede access, why did they vote to impose them as part of Obamacare?  Or do Democrats support global spending caps when they’re used to finance new entitlements, but NOT when they’re used to reduce the deficit?

Another Obamacare Supporter Asks for Obamacare Waiver

In case you hadn’t seen it, Kaiser Health News earlier this week included an interview with former Democrat Governor Mark Parkinson, the head of the American Health Care Association, which represents nursing homes.  In that interview, Parkinson said “we supported [Obamacare] and we continue to do so….there are no regrets.”  He went on however to say that “a minority of our members – those nursing homes that tend to…have a disproportionate share of Medicaid residents (which frankly they lose a lot of money on) – those are the members that find it challenging to provide health insurance” that would meet Obamacare’s standards, “so we are working with the Administration to figure out if there is some accommodation that can be made for these very high-Medicaid-population facilities so that they can be also [sic] in compliance with the law.”

These seemingly contradictory statements raise obvious questions:

  • If the law is so positive, why is the same association that endorsed it seeking a waiver from it?
  • Is it only nursing homes that should be granted “some accommodation” from the law’s onerous mandates?  What about other job creators struggling to cope with the cost of government mandates at a time of continued sluggish economic growth?
  • Will the Administration look more favorably on this request for a waiver because the trade association endorsed Obamacare and still claims to support it?
  • If the nursing home industry is being so squeezed by low Medicaid reimbursements that it can’t afford to offer health insurance, then why on earth did Democrats think it was a good idea to expand the program further to as many as 25 million individuals, placing at least $118 billion in new mandates on states that can’t afford the programs they have now?

More Liberal Hypocrisy on Entitlement Reform

Speaking to Politico’s Pulse blog, Families USA’s Ron Pollack talked about the impact of the House Republican budget and Medicare:

“So much of the attack on the ACA really focused on the $500 billion…Republicans kept on hammering on this, I think very effectively. Unlike the Affordable Care Act, which plowed [the $500 billion] into improvements in the health care system, the House budget is taking that money [out].”

Remember that Obamacare engaged in double-counting; as the Medicare actuary has previously noted, Medicare spending reductions in the law “cannot be simultaneously used to finance other federal outlays and to extend the [Medicare] trust fund, despite the appearance of this result from the respective accounting conventions.”  So what Ron Pollack is really saying is that diverting more than $500 billion from seniors’ Medicare to create a new and unsustainable entitlement constitutes “improvements in the health care system,” while ensuring that Medicare savings are actually used to improve Medicare’s solvency – which the House-passed budget does – is “taking that money [out].”

This kind of logic raises two questions:  Whom does the left think that Medicare funds should protect:  Are those savings funds that should keep promises to seniors, or a “slush fund” for liberal groups to use to finance whatever new unsustainable entitlements they care to propose?  And why should seniors believe the arguments of an organization which apparently believes that keeping Medicare funds for Medicare beneficiaries represents bad policy?

On Medicare, The Left Hand Doesn’t Know What the Far Left Hand Is Doing

Just one day after Bill Clinton publicly argued that Democrats need to propose reforms to Medicare, the New York Times published an editorial agreeing with the former President:

“Democrats cannot expect to build their entire 2012 campaign around attacking the Ryan plan….Sooner or later, Democrats will have to admit that Medicare cannot keep running as it is – its medical costs are running out of control, and a recent report showed its trust fund running out of money in 2024, five years earlier than expected.  Bill Clinton was right on Wednesday to warn his party that it must bring down those costs if it is to have any credibility on the deficit and the economy….At some point in the next year, Democrats will have to do better than [attacking Republicans]….It might require, as Mr. Clinton put it, giving up some short-term political gain, but voters might also appreciate a dose of honesty and realism in their political diet.”

Recall that last December, President Obama defended the tax relief compromise on the grounds that he couldn’t just appeal to the liberal base: “The New York Times editorial page does not permeate across all of America.”  Apparently however, the New York Times editorial page has not yet permeated in Washington when it comes to Medicare, as the desire for “short-term political gain” has resulted in the lack of a plan from Democrats in Congress.

President Obama has released a “plan” – or at least a version of one in press release form – that centers around giving even greater power to a board of unelected bureaucrats.  But even here, blogger Ezra Klein asks why the President “doesn’t empower the board to experiment with…any form of cost sharing.”  Here again, a liberal has questioned whether and why Democrats – in this case, the White House – are being so timid, failing even to contemplate the thought of an increase in Medicare co-payments, quite possibly for the same political reasons the New York Times outlined.

Meanwhile, Moveon.org is calling to “take Medicare cuts off the table,” and the Progressive Change Campaign Committee believes “these popular programs should be taken firmly off the table” – positions that would lead to Medicare becoming insolvent in as little as nine years.

To sum up:  Even liberal opinion leaders like the New York Times and the Washington Post have criticized Democrats for “leading from behind” when it comes to Medicare reform – failing to put forward bold and specific ideas.  Will they finally come forward and propose constructive solutions to America’s entitlement crisis, or indulge their desire for “short-term political gain” by appealing to their far-left activist base?

Obamacare’s Taxing Problem: What Happens When the Tap Runs Dry?

The Heritage Foundation recently released an interesting analysis of the impact of the health care law’s refundable insurance subsidies on income taxes, which noted that the subsidies could reduce income tax liabilities to zero for many more Americans.  These effects would be particularly acute for older individuals and families with children, who under the law will receive higher subsidies to reflect their higher insurance premiums.  For instance, a 50-year old married couple with two dependent children will not face federal income tax liability until earning nearly $95,000.  For a 60-year old couple, those thresholds are even higher, thanks to the larger insurance subsidies.  Moreover, as the Congressional Budget Office has previously noted, “the phaseout of the subsidies as income rises will effectively increase marginal tax rates, which will also discourage work;” CBO’s best estimates are that 800,000 fewer jobs will exist.  In other words, under the health care law’s perverse incentives, individuals will have a strong incentive not to work and instead to live off of federal largesse.

The potential for individuals to abuse the system by obtaining federal subsidies was most recently illustrated in a Treasury Inspector General report, discussed at this week’s Ways and Means Committee hearing on tax oversight.  The report found serious flaws in the administration of the refundable homebuyer tax credit created in the “stimulus” program:

  • Over $7 million was paid to 1,084 prisoners who purchased homes while incarcerated;
  • Taxpayers under age 18 claimed homebuyer credits (even though they cannot legally sign home contracts);
  • Almost $100 million was paid to 13,448 taxpayers who claimed the credit even though they admitted they hadn’t bought a home yet, and instead listed a future purchase date on their tax form; and
  • 41 IRS employees made questionable claims for the homebuyer credit after a previous Inspector General report identified 87 IRS employees engaging in questionable conduct regarding the credit.

The problems above raise clear concerns about the IRS’ ability to implement the health insurance subsidies included in Obamacare.  But there is an important – and troubling – broader point here as well:  If half of all Americans already don’t pay income taxes and can instead obtain “free” subsidies and refundable tax credits from the government, what incentive do individuals have NOT to claim benefits that they may or may not need or deserve?  And what happens when the federal government, by so vastly expanding the welfare state under Obamacare, runs out of individuals who are willing to pay taxes so someone else can obtain “free,” and possibly fraudulent, taxpayer-funded benefits?

Do Liberals Want to Make Spending Your Own Health Care Dollars Illegal?

In conjunction with the Peterson Foundation’s Fiscal Summit today, various think tanks have released their deficit reduction proposals.  The Center for American Progress plan includes an interesting sentence buried within it:

“Our plan also includes a failsafe mechanism that would ensure significant savings throughout the system.  Our failsafe would be triggered if, starting in 2020, total health care expenditures—not just those in the public sector—grow at a rate faster than that of the economy itself.  Should that happen, we would empower the Independent Payment Advisory Board—subject to the same congressional review process as exists currently in the health care law—to extend successful reforms in the public sector to all insurance plans offered in the health care exchanges, and then potentially to all health care plans, such that the target is met.”

As background, the health care law created the Independent Payment Advisory Board (IPAB) – an unelected, unaccountable board of 15 appointed bureaucrats – to make binding rulings on Medicare policy.  But the IPAB was created to enforce a hard cap on total Medicare expenditures.  While the CAP paper (by accident or design) doesn’t include details on this proposed failsafe, extending IPAB “targets” to the private sector sounds strikingly similar to a global cap on total health care spending – which could mean that individuals would be PROHIBITED from using THEIR OWN MONEY to purchase health care.  This issue of global caps was one of the downfalls of the Clinton health care plan – yet CAP apparently wants to revive this mechanism to “reform” health care.

Many people would find this type of proposal – extending unelected bureaucrats’ reach well into the private sector – strikingly radical.  But one person who doesn’t is CMS Administrator Donald Berwick.  He’s written frequently – and admiringly – about imposing global caps on health care spending, which again could well prohibit individuals from spending their own money on health care:

“If I could wave a wand…Health care can and should find a route to both higher quality and lower cost—‘The budget is now capped.’” [i]

“We must have absolute caps on healthcare expenditures at some level in this country.  So long as we continue to believe that the survival of our organizations depends on finding additional revenues, we will not reorient ourselves to the internal restructuring that is so crucial.”[ii]

“The third principle is that we need to control costs and the way to do that is probably not through price controls at the level of individual deeds or actions or resources, but rather thinking about population-based payment, the idea of controlling costs per capita, for a population.  It’s sort of the same idea as establishing a budget for the population that can then be rationally spent, optimizing the use of resources.  That will require an integrator, somebody that can be [a] steward of a population-based budget.”[iii]

“The integrator would be responsible for deploying resources to the population, or for specifying to others how resources should be deployed.  Segmentation of the population, perhaps according to health status, level of support from family or others, and socioeconomic status, will facilitate efficient and equitable resource allocation.”[iv]

“If we could ever find the political nerve, we strongly suspect that financing and competitive dynamics such as the following, purveyed by governments and payers, would accelerate interest in the Triple Aim and progress toward it: global budget caps on health care spending for designated populations”[v]

In recent months, liberals have dismissed arguments about the IPAB rationing care; Paul Krugman argued last month that “we’re not talking about limits on what health care you’re allowed to buy with your own (or your insurance company’s) money.  We’re talking only about what will be paid for with taxpayers’ money.”  Some may find it bad enough that under Obamacare, a board of appointed officials will be charged with making arbitrary determinations about what types of care seniors will be able to obtain.  But the unfortunate problem for Dr. Krugman – and for Democrats – is that they’re NOT just talking about what will be paid for with taxpayers’ money – now that CAP has proposed giving unaccountable bureaucrats free rein over ALL of the health care sector.




[i] “Take Two Policies and Call Me in the Morning” by Donald Berwick, presentation slides from speech to Healthcare Management Association and Massachusetts Hospital Association, October 22, 2008

[ii] “Seeking Systemness” by Donald Berwick, Healthcare Forum Journal March/April 1992, p. 28

[iii] “Health Policy and Quality Principles,” Health Care Reinvented: Discussions with Don Berwick, Institute for Healthcare Improvement, June 2008, http://www.ihi.org/ihi/files/Promotions/ProfilesInImprovement/Berwick/Health_Policy_and_Quality_Principles.wma

[iv] “The Triple Aim: Care, Health, and Cost” by Donald Berwick, Thomas Nolan, and John Whittington, Health Affairs May/June 2008, p. 764

[v] “The Triple Aim: Care, Health, and Cost” by Donald Berwick, Thomas Nolan, and John Whittington, Health Affairs May/June 2008, pp. 767-78

Bill Clinton Says Democrats Need a Medicare Plan — So Where Is It…?

Speaking this morning at the Peterson Foundation’s Fiscal Summit, Bill Clinton argued that Democrats need to propose reforms to Medicare. He said that yesterday’s special election results in New York made him “afraid that the Democrats will draw the conclusion…that we shouldn’t do anything [on Medicare reform]. I completely disagree with that….The Democrats may have to give up some short-term political gain by whipping up fear, if it’s a reasonable Social Security proposal, if it’s a reasonable Medicare proposal. You cannot have health care devour the economy.”

Even as President Clinton expressed his strong disapproval of the Medicare proposals in the House-passed budget, he made equally clear that Democrats need to produce an alternative to it. When will Democrats finally reverse their position that passing a budget is “foolish,” and instead make constructive solutions to solve America’s imminent entitlement crisis?

Fast Facts: Five Days, Five Obamacare Failures

Over the past week, multiple reports have showed how Obamacare has not lived up to its promises, delivering higher premiums, more spending, and new mandates on job creators:

May 13—More Waivers Granted:  “As of the end of April 2011, a total of 1,372 one-year waivers have been granted.” – Centers for Medicare and Medicaid Services

  • Over three million people are in plans receiving waivers, more than half of them in union plans—raising questions about why many traditional Democrat allies have received exemptions.

May 15—Penalties on Job Creators“For a midsize nursing home, that penalty [under Obamacare’s employer mandate] could easily exceed $200,000 a year.”New York Times

  • These penalties are on top of payment reductions that the Medicare actuary stated could cause as many as 40 percent of medical providers to become unprofitable in the long term.

May 18—Nearly Half of Employers Could Drop Coverage“84% of companies indicated they would make other changes to their plans [e.g., raising premiums and co-payments] to offset costs associated with [Obamacare].”Price Waterhouse Coopers employer survey

  • According to the survey, nearly half of employers “indicated they were likely to change subsidies for employee medical coverage”—“dumping” their employees on to government-run exchanges and causing the cost of taxpayer-funded insurance subsidies to skyrocket.

May 19—Skyrocketing Premiums“Employers can expect to see an acceleration in health care cost increases in 2012, with expenses rising 8.5 percent next year.”Marketwatch

  • This rising rate of health spending stands in sharp contrast to candidate Obama’s repeated promises that he would lower premiums by $2,500 for the average family during his first term.

May 20—Medicare Actuary Exposes Obamacare’s Unrealistic Assumptions“The current law Medicare expenditure projections are based on payment updates that have a strong likelihood of not being feasible.”Medicare Office of the Actuary

  • In releasing its illustrative alternative scenario for Medicare’s fiscal future, the actuary noted that Obamacare’s payment reductions could cause up to 40 percent of providers to become unprofitable, and are likely to be overridden because not doing so would “jeopardize Medicare beneficiaries’ access to mainstream medical care.”

How Can You Implement a Law if You Can’t Deliver a Letter?

The Daily Caller reports today on a letter sent by HELP Committee Ranking Member Enzi to Vice President Biden, noting that the Vice President’s office has thus far failed to provide official transmittal of the Administration’s Medical Loss Ratio regulation to the Senate.  HHS has confirmed it sent the rule to the Vice President’s office, but the Vice President never delivered the rule to the Senate Parliamentarian.  And because the Vice President’s office has not done so, the Senate cannot debate or vote on legislation seeking to modify this new Obamacare mandate.

As a reminder, candidate Obama repeatedly pledged to televise all health care negotiations on C-SPAN – yet the Administration cannot deliver a letter to the Senate allowing an open debate on one of Obamacare’s regulations to occur.  More broadly, it’s worth asking:  How can this Administration implement a 2700 page law if it can’t deliver a simple letter…?

Will Obama Learn from Cameron on Health Care?

The President arrived in London last night, on the longest leg of his trip to Europe.  His British visit will continue tomorrow with a speech to both Houses of Parliament in Westminster Hall. (No word yet on whether the President will take questions from MPs.)

It is unclear whether health care will be on the agenda for the Anglo-American summit – but perhaps it should be.  As we’ve previously reported, the British Government is attempting a “radical reorganization” intended to promote efficiency by eliminating bureaucracy – bureaucracies that are often used to deny care to patients.  As the New York Times noted: “Currently, how and where patients are treated, and by whom, is largely determined by decisions made by 150 entities known as primary care trusts — all of which would be abolished under the plan, with some of those choices going to patients.”  In other words, the Cameron government is attempting to put patients and doctors, not bureaucrats, at the center of the health care conversation.

Compare that to the Obama Administration, which signed a law creating 159 new boards, bureaucracies, and programs to “improve” health care.  Its approach to accountable care organizations (ACOs) has turned into an historic flop, with multiple letters coming from the provider community about the mass of regulations and mandates placed on ACOs in the Administration proposal.  In fact, several Republican senators wrote to the Administration today asking for a U-turn on ACOs and a withdrawal of the proposed rule.

And yet the Administration not only wants to continue with its top-down, government-centric approach to health care, it wants to increase government control over health care.  The only Democrat idea to “reform” Medicare is the President’s proposal to give even more power to an unelected board of 15 bureaucrats to make rulings on how Medicare should operate.  Such a board could come to resemble Britain’s National Institute for Health and Clinical Excellence (NICE) – and while CMS Administrator Berwick has expressed his strong support for NICE’s policy of “ration[ing] with our eyes open,” British patients have been far from keen about NICE’s arbitrary rationing.

So, whilst the President is in London this week, he would do well to talk with Prime Minister Cameron about true health care reform – and for that matter, visit with some British patients who have had life-saving treatments denied to them by government bureaucrats.  America’s health care system could be the better for it.