Tag Archives: Senate Finance Committee

Will the “Byrd Bath” Turn Into a Tax Credit Bloodbath?

While most of official Washington waits for word—expected early this week—from the Congressional Budget Office (CBO) about the fiscal effects of House Republicans’ “repeal-and-replace” legislation, another, equally critical debate is taking place within the corridors of the Capitol. Arcane arguments behind closed doors about the nuances of parliamentary procedure will do much to determine the bill’s fate in the Senate—and could lead to a final product vastly altered compared to its current form.

In recent days, House leaders have made numerous comments highlighting the procedural limitations of the budget reconciliation process in the Senate. However, those statements do not necessarily mean that the legislation released last week comports with all of those Senate strictures. Indeed, my conversations with more than half a dozen current and former senior Senate staff, all of whom have long expertise in the minutiae of Senate rules and procedure, have revealed at least four significant procedural issues—one regarding abortion, two regarding immigration, and one regarding a structural “firewall”—surrounding the bill’s tax credit regime.

Those and other procedural questions explain why, according to my sources, Senate staff will spend the coming week determining whether they will need to write an entirely new bill to substitute for the House’s proposed language. The stakes involved are high: Guidance from the parliamentarian suggesting that the House bill contains fatal procedural flaws, meaning it does not qualify as a reconciliation bill, could force the House to repeat the process, starting again with a new, “clean” reconciliation measure.

It is far too premature to claim that any of these potential flaws will necessarily be fatal. The Senate parliamentarian’s guidance to senators depends on textual analysis—of the bill’s specific wording, the underlying statutes to which it refers, and the CBO scores (not yet available)—and arguments about precedent made by both parties. Senate staff could re-draft portions of the House bill to make it pass procedural muster, or make arguments to preserve the existing language that the parliamentarian accepts as consistent with Senate precedents. Nevertheless, if the parliamentarian validates even one of the four potential procedural problems, Republicans could end up with a tax credit regime that is politically unsustainable, or whose costs escalate appreciably.

In 2009, Democratic Senator Kent Conrad famously opined that passing health care legislation through budget reconciliation would make the bill look like “Swiss cheese.” (While Democrats did not pass Obamacare through reconciliation, they did use the reconciliation process to “fix” the bill that cleared the Senate on Christmas Eve 2009.) In reality, it’s much easier to repeal provisions of a budgetary nature—like Obamacare’s taxes, entitlements, and even its major regulations—through reconciliation than to create a new replacement regime. The coming week may provide firsthand proof of Conrad’s 2009 axiom.

“Byrd Rule” and Abortion

The Senate’s so-called “Byrd rule” governing debate on budget reconciliation rules—named after former Senate Majority Leader and procedural guru Robert Byrd (D-WV)— in fact consists of not one rule, but six. The six points of order (codified here) seek to keep extraneous material out of the expedited reconciliation process, preserving the Senate tradition of unlimited debate, subject to the usual 60-vote margin to break a filibuster.

The Byrd rule’s most famous test states that “a provision shall be considered extraneous if it produces changes in outlays or revenues which are merely incidental to the non-budgetary components of the legislation.” If the section in question primarily makes a policy change, and has a minimal budgetary impact, it remains in the bill only if 60 senators (the usual margin necessary to break a filibuster) agree to waive the Byrd point of order.

One example of this test may apply to the House bill’s tax credits: “Hyde amendment” language preventing the credits from funding plans that cover abortion. Such language protecting taxpayer funding of abortion coverage occurs several places throughout the bill, including at the top of page 25 of the Ways and Means title.

Over multiple decades, and numerous parliamentarians, Republican efforts to enact Hyde amendment protections through budget reconciliation have all failed. It is possible that Republicans could in the next few weeks find new arguments that allow these critical protections to remain in the House bill—but that scenario cannot be viewed as likely.

The question will then occur as to what becomes of both the credit and the Hyde protections. Some within the Administration have argued that the Department of Health and Human Services (HHS) can institute pro-life protections through regulations—but Administration insiders doubt HHS’ authority to do so. Moreover, most pro-life groups publicly denounced President Obama’s March 2010 executive order—which he claimed would prevent taxpayer funding of abortion coverage in Obamacare—as 1) insufficient and 2) subject to change under a future Administration. How would those pro-life groups view a regulatory change by the current Administration any differently?


A similarly controversial issue—immigration—brings an even larger set of procedural challenges. Apart from the separate question of whether the current verification provisions in the House bill are sufficiently robust, ANY eligibility verification regime for tax credits faces not one, but two major procedural obstacles in the Senate.

Of the six tests under the Byrd rule, some are more fatal than others. For instance, if the Hyde amendment restrictions outlined above are ruled incidental in nature, then those provisions merely get stricken from the bill unless 60 Senators vote to retain them—a highly improbable scenario in this case.

But two other tests under the Byrd rule—provisions outside a committee’s jurisdiction, and provisions making changes to Title II of the Social Security Act—are fatal not just to that particular provision, but to the entire bill, potentially forcing the process to begin all over again in the House. The eligibility verification regime touches them both.

Page 37 of the Ways and Means title of the bill requires creation of a verification regime for tax credits similar to that created under Sections 1411 and 1412 of Obamacare. As Joint Committee on Taxation Chief of Staff Tom Barthold testified last week during the Ways and Means Committee markup, verifying citizenship requires use of a database held by the Department of Homeland Security’s Bureau of Citizenship and Immigration Services (CIS).

That admission creates a big problem: The tax credit lies within the jurisdiction of the Senate Finance Committee—but CIS lies within the jurisdiction of the Senate Homeland Security and Governmental Affairs Committee. And because the Finance Committee’s portion of the reconciliation bill can affect only programs within the Finance Committee’s jurisdiction, imposing programmatic requirements on CIS to verify citizenship status could exceed the Finance Committee’s scope—potentially jeopardizing the entire bill.

The verification provisions in Sections 1411 and 1412 of Obamacare also require the use of Social Security numbers—triggering another potentially fatal blow to the entire bill. Senate sources report that, during when drafting the original reconciliation bill repealing Obamacare in the fall of 2015, Republicans attempted to repeal the language in Obamacare (Section 1414(a)(2), to be precise) giving the Secretary of HHS authority to collect and use Social Security numbers to establish eligibility. However, because Section 1414(a)(2) of Obamacare amended Title II of the Social Security Act, Republicans ultimately did not repeal this section of Obamacare in the reconciliation bill—because it could have triggered a point of order fatal to the legislation.

If both the points of order against the verification regime are sustained, Congress will have to re-write the bill to create an eligibility verification system that 1) does not rely on the Department of Homeland Security AND 2) does not use Social Security numbers. Doing so would create both political and policy problems. On the political side, the revised verification regime would exacerbate existing concerns that undocumented immigrants may have access to federal tax credits.

But the policy implications of a weaker verification regime might actually be more profound. Weaker verification would likely result in a higher score from CBO and JCT—budget scorekeepers would assume a higher incidence of fraud, raising the credits’ costs. House leaders might then have to reduce the amount of their tax credit to reflect the higher take-up of the credit by fraudsters taking advantage of lax verification. And any reduction in the credit amounts would bring with it additional political and policy implications, including lower coverage rates.

Firewall Concerns

Finally, the tax credit “firewall”—designed to ensure that only individuals without access to other health insurance options receive federal subsidies—could also present procedural concerns. Specifically, pages 27 and 28 of the bill make ineligible for the credit individuals participating in other forms of health insurance, several of which—Tricare, Veterans Administration coverage, coverage for Peace Corps volunteers, etc.—lie outside the Finance Committee’s jurisdiction.

If the Senate parliamentarian advises for the removal of references to these programs because they lie outside the Finance Committee’s jurisdiction, then participants in those programs will essentially be able to “double-dip”—to receive both the federal tax credit AND maintain their current coverage. As with the immigration provision outlined above, such a scenario could significantly increase the tax credits’ cost—requiring offsetting cuts elsewhere, which would have their own budgetary implications.

Senate sources indicate that this “firewall” concern could prove less problematic than the immigration concern outlined above. While the immigration provision extends new programmatic authority to the Administration to develop a revised eligibility verification system, the “firewall” provisions have the opposite effect—essentially excluding Tricare and other program recipients from the credit. However, if the parliamentarian gives guidance suggesting that some or all of the “firewall” provisions must go, that will have a significant impact on the bill’s fiscal impact.

Broader Implications

Both individually and collectively, these four potential procedural concerns hint at an intellectual inconsistency in the House bill’s approach—one Yuval Levin highlighted in National Review last week. House leaders claim that their bill was drafted to comply with the Senate reconciliation procedures. But the bill itself contains numerous actual or potential violations of those procedures—and amends some of Obamacare’s insurance regulations, rather than repealing them outright—making their argument incoherent.

Particularly when it comes to Obamacare’s costly insurance regulations, there seems little reason not to make the “ol’ college try,” and attempt to repeal the major mandates that have raised premium levels. According to prior CBO scores, other outside estimates, and the Obama Administration’s own estimates when releasing the regulations, the major regulations have significant budgetary effects. Republicans can and should argue to the parliamentarian that the regulations’ repeal would be neither incidental nor extraneous—their repeal would remove the terms and conditions under which Obamacare created its insurance subsidies in the first place, thus meeting the Byrd test. If successful, such efforts would provide relief on the issue Americans care most about: Reducing health costs and staggering premium increases.

When it comes to the tax credit itself, Republicans may face some difficult choices. Abortion and immigration present thorny—and controversial—issues, either one of which could sink the legislation. When it comes to the bill’s tax credits, the “Byrd bath,” in which the parliamentarian gives guidance on what provisions can remain in the reconciliation bill, could become a bloodbath. If pro-life protections and eligibility verification come out of the bill, a difficult choice for conservatives on whether or not to support tax credits will become that much harder.

This post was published at The Federalist.

Fact Checking Politico’s Hit Piece on Tom Price

Earlier this evening, Politico released an “article” discussing “Tom Price’s Radically Conservative Vision for American Health Care.” The piece’s first sentence claimed that “gutting Obamacare might be the least controversial part of Tom Price’s health care agenda”—a loaded introduction if ever there were one. The article goes on to quote seven separate liberal analysts—including the President of Planned Parenthood—while not including a single substantive Republican quote until the very last paragraph of a 27-paragraph piece.

Given this opinion piece masquerading as “journalism,” it’s worth pointing out several important facts, falsehoods, and omissions in the Politico story:

CLAIM:           Republicans “may look beyond repealing and replacing Obamacare to try to scale back Medicare and Medicaid, popular entitlements that cover roughly 130 million people, many of whom are sick, poor, and vulnerable.”

FACT:                         It’s ironic that the Politico reporters suddenly care about the “sick, poor, and vulnerable.” I’ve been writing about how Obamacare encourages discrimination against the vulnerable literally for years—including a few short weeks ago. If any Politico reporters have written on how Obamacare encourages states to expand Medicaid to able-bodied adults rather than to cover individuals with disabilities, I have yet to read those articles.

This week came a report that no fewer than 752 individuals with disabilities have died—yes, died—while on waiting lists to receive Medicaid services since that state expanded coverage under Obamacare to able-bodied adults. If the Politico reporters—much less the liberal advocates the reporters interviewed for the article—care so much about the “sick, poor, and vulnerable,” when will they cover this Obamacare-induced tragedy?

CLAIM:           “Price…has proposed policies that are more conservative than those of many House Republican colleagues.”

FACT:                         Dr. Price’s Fiscal Year 2016 budget—which included provisions related to Obamacare repeal, premium support for Medicare, and block grants for Medicaid—passed the House with 228 votes. How can Politico claim that Dr. Price’s policies “are more conservative than those of many House Republican colleagues,” when over 93% of them publicly endorsed his vision?

CLAIM:           “The vast majority of the 20 million people now covered under Obamacare would have far less robust coverage—if they got anything at all.”

FACT:                         This claim presupposes 1) that all individuals covered under Obamacare want to buy health coverage, and 2) that they want to buy the type of health coverage Obamacare forces them to purchase. It ignores the fact that premiums increased by thousands of dollars in 2014 because individuals were forced to buy richer coverage.

It also ignores the fact that nearly 8 million individuals have paid the tax penalty associated with not buying Obamacare-compliant health coverage—because they cannot afford it, do not want it, or both—and another 12.4 million have requested exemptions from the Obamacare mandate. Depending on the degree of overlap between individuals who paid the mandate tax penalty and individuals who claimed exemptions, the number of Obamacare refuseniks could actually exceed the number of individuals newly covered under the law.

Instead, this claim comes at the question of insurance coverage from President Obama’s liberal, paternalistic perspective. When millions of people started receiving Obamacare-related cancellation notices in the mail, the President gave a speech stating how all those plans were “substandard:” “A lot of people thought they were buying coverage, and it turned out not to be so good.” In other words, “If you liked your plan, you’re an idiot.”

CLAIM:           “Price also supports privatizing Medicare…”

FACT:                         The premium support plan included in the House Republican budget includes 1) a federal contribution that increases every year to fund 2) a federally-regulated plan with 3) federally-mandated benefits and 4) the option to continue in government-run Medicare if beneficiaries so choose. Which of these four points would the Politico reporters deem “privatizing?”

CLAIM:           “…an approach that Democrats lambaste as a voucher system…”

FACT:                         That claim is both ironic and hypocritical coming from Democrats, as a version of premium support endorsed by House Speaker Ryan and Senate Finance Committee Ranking Member Ron Wyden in 2011 would have utilized the exact same bidding mechanism as Obamacare itself. Do Democrats “lambaste” Obamacare’s Exchanges as a “voucher system?” Interestingly enough, the Politico reporters neither note this irony, nor apparently bothered to ask the question.

CLAIM:           “…that would gut a 50-year-old social contract and shift a growing share of health care costs onto seniors.”

FACT:                         The form of premium support endorsed by Rep. Price in this year’s House Republican budget would, according to a September 2013 analysis from the Congressional Budget Office (CBO), save both the federal government and seniors money. And don’t take my word for it—here’s a quote from the CBO paper:

CBO’s analysis implies that beneficiaries’ total payments would be about 6 percent lower, on average, under the average-bid option than under current law. That reduction results from the combination of the lower average premiums paid above and a reduction in average out-of-pocket costs, which would result primarily from higher enrollment in lower-bidding private plans.

Where exactly among the highlighted phrases did the Politico reporters get the idea that premium support will “shift a growing share of health care costs onto seniors?”

CLAIM:           “Price also wants to limit federal Medicaid spending to give states a lump sum, or block grant, and more control over how they could use it—a dream of conservative Republicans for years, and a nightmare for advocates for the poor who fear that many would lose coverage.”

FACT:                         A block grant would increase federal spending on Medicaid annually—just by slightly less than prior estimates. Only in Washington could granting a program a three percent increase rather than a five percent increase classify as a “cut.”

Having provided actual facts to rebut the piece’s nonsensical claims, I’ll offer some free advice: If the folks on Politico’s payroll want to publish liberal talking points unchallenged, they should quit their jobs, go out on their own, and do what I do for a living. I’m all for a free press, and freedom of speech, but passing opinion—and one-sided opinion at that—as “journalism” does a disservice to the name.

This piece was published at The Federalist.

Past as Prologue? A Review of “The System”

A young president promising hope and change takes over the White House. Immediately embarking upon a major health-care initiative, he becomes trapped amidst warring factions in his party in Congress, bickering interest groups, and an angry public, all laying the groundwork for a resounding electoral defeat.

Barack Obama, circa 2009-10? Most definitely. But the same story also applies to Bill Clinton’s first two years in office, a period marked by a health-care debate in 1993-94 that paved the way for the Republican takeover of both houses of Congress.

In their seminal work “The System,” Haynes Johnson and David Broder recount the events of 1993-94 in detail—explaining not just how the Clinton health initiative failed, but also why. Anyone following the debate on Obamacare repeal should take time over the holidays to read “The System” to better understand what may await Congress and Washington next year. After all, why spend time arguing with your in-laws at the holiday table when you can read about people arguing in Congress two decades ago?

Echoes of History

For those following events of the past few years, the Clinton health debate as profiled in “The System” provides interesting echoes between past and present. Here is Karen Ignani of the AFL-CIO, viewed as a single-payer supporter and complaining that insurance companies could still “game the system” under some proposed reforms. Ironic sentiments indeed, as Ignani went on to chair the health insurance industry’s trade association during the Obamacare debate.

There are references to health care becoming a president’s Waterloo—Johnson and Broder attribute that quote to Grover Norquist, years before Sen. Jim DeMint uttered it in 2009. Max Baucus makes an appearance—he opposed in 1994 the employer mandate he included in Obamacare in 2009—as do raucous rallies in the summer of 1994, presaging the Obamacare town halls 15 years later.

Then there are the bigger lessons and themes that helped define the larger debate:

“Events, Dear Boy, Events:” The axiom attributed to Harold Macmillan about leaders being cast adrift by crises out of their control applied to the Clintons’ health-care debate. Foreign crises in Somalia (see “Black Hawk Down”) and Haiti sapped time on the presidential calendar and press attention, and distracted messaging. During the second half of 2009, Obama spent most of his time and energy focused on health care, leading some to conclude he had turned away from solving the economic crisis.

Old Bulls and Power Centers: “The System “spends much more time profiling the chairs of the respective congressional committees—including Dan Rostenkowski at House Ways and Means, John Dingell at House Energy and Commerce, and Patrick Moynihan at Senate Finance—than would have been warranted in 2009-10. While committee chairs held great power in the early 1990s, 15 years later House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid called most of the legislative shots from their leadership offices.

Whereas the House marked up three very different versions of health-care legislation in 1993-94, all three committees started from the same chairman’s mark in 2009. With Speaker Paul Ryan, like John Boehner before him, running a much more diffuse leadership operation than Pelosi’s tightly controlled ship, it remains to be seen whether congressional leaders can drive consensus on both policy strategy and legislative tactics.

The Filibuster: At the beginning of the legislative debate in 1993, Robert Byrd—a guardian of Senate rules and procedures—pleaded for Democrats not to try and enact their health agenda using budget reconciliation procedures to avoid a filibuster. Democrats (begrudgingly) followed his advice in 1993, only to ignore his pleadings 16 years later, using reconciliation to ram through changes to Obamacare. Likewise, what and how Republicans use reconciliation, and Democrats use the filibuster, on health care will doubtless define next year’s Senate debate.

Many Obama White House operatives such as Rahm Emanuel, having lived through the Clinton debate, followed the exact opposite playbook to pass Obamacare.

They used the time between 1993 and 2009 to narrow their policy differences as a party. Rather than debating between a single-payer system and managed competition, most of the political wrangling focused on the narrower issue of a government-run “public option.” Rather than writing a massive, 1,300-page bill and dropping it on Capitol Hill’s lap, they deferred to congressional leaders early on. Rather than bashing special interest groups publicly, they cut “rock-solid deals” behind closed doors to win industry support. While their strategy ultimately led to legislative success, the electoral consequences proved eerily similar.

Lack of Institutional Knowledge

The example of Team Obama aside, Washington and Washingtonians sometimes have short memories. Recently a reporter e-mailed asking me if I knew of someone who used to work on health care issues for Vice President-elect Mike Pence. (Um, have you read my bio…?) Likewise, reporters consider “longtime advisers” those who have worked the issue since the last presidential election. While there is no substitute for experience itself, a robust knowledge of history would come in a close second.

Those who underestimate the task facing congressional Republicans would do well to read “The System.” Having read it for the first time the week of President Obama’s 2009 inauguration, I was less surprised by how that year played out on Capitol Hill than I was surprised by the eerie similarities.

George Santayana’s saying that “Those who cannot remember the past are condemned to repeat it” bears more than a grain of truth. History may not repeat itself exactly, but it does run in cycles. Those who read “The System” now will better understand the cycle about to unfold before us in the year ahead.

This post was originally published at The Federalist.

Will the “Doc Fix” Include a Compromise on Children’s Health Insurance?

Democrats on the Senate Finance Committee issued a news release Saturday expressing concern about provisions for children’s health insurance in the Medicare “doc fix” bill taking shape in the House. Media coverage of the children’s health program has largely focused on the length of the extension: Senate Democrats want a four-year extension, while a summary of the House agreement released Friday has a two-year reauthorization. But there are other, fundamental policy disagreements.

The disagreements are rooted in a letter issued by the Centers for Medicare and Medicaid Services (CMS) in August 2007. Congress was due to reauthorize the children’s health insurance program that fall, and the letter applied two principles to state programs: It targeted resources first toward families making less than 200% of the federal poverty level (now $48,500 for a family of four). If states wished to expand children’s health insurance to families with incomes greater than 250% of the federal poverty level, they had to first cover at least 95% of children in the lowest income group. The letter also instructed states to take steps to ensure that children and families were not dropping private, employer-provided coverage to enroll in taxpayer-funded programs.

Democrats reacted to the letter by refusing to vote on President George W. Bush’s nominee for CMS administrator in the Senate. The Democratic-controlled Congress passed legislation expanding children’s health insurance October 2007 and January 2008, but President Bush, viewing the bills as inconsistent with the policy goals his administration had outlined, vetoed the measures. House Republicans sustained his veto on both occasions.

Upon taking office, President Barack Obama ordered his secretary of health and human services, Kathleen Sebelius, to rescind the August 2007 memo. In February 2009 congressional Democrats enacted the children’s health insurance program expansion that had previously eluded them. Many Republicans believe the program should be targeted toward the lowest-income families, as it was initially designed. Draft reauthorization language issued by the House Energy and Commerce Committee last month would focus “funding on low-income families” to “address concerns about crowding out private coverage and subsidizing upper-middle-class families,” according to a summary.

The bipartisan deal to amend Medicare’s “doc fix” includes a two-year reauthorization of the children’s health insurance program, but policy details of that extension haven’t been released. Unless Republicans and Democrats can agree on a compromise—which eluded Congress and the Bush administration in 2007-08—one party may have to renege on policies it has adhered to for years. There are questions about the fiscal sustainability of the “doc fix,” but the philosophical questions may be no less difficult.

This post was originally published at the Wall Street Journal’s Think Tank blog.

Democrats Afraid of Obamacare’s Shadow

Politico reported late last week that Finance Committee Chairman Baucus will not schedule a confirmation hearing for Acting CMS Administrator Marilyn Tavenner.  The article provided some hint as to the reasoning behind the Chairman’s position: “If she [Tavenner] did have a hearing, it would likely be dominated by controversial health reform politics.”  In other words, Chairman Baucus and Democrats are shelving confirmation proceedings for a major Administration post — again — because they don’t want to talk about Obamacare.

As noted above, this isn’t the first time that Democrats have attempted to avoid debating the controversial health care law.  With respect to Tavenner’s predecessor, Donald Berwick, Chairman Baucus could also have called a confirmation hearing any time he liked, but chose not to do so.  Even as liberals alleged that “Republicans refuse[d] to even have [sic] a hearing” about Dr. Berwick, the fact remains that Republicans have no power to block the Senate Finance Committee from moving forward on Berwick’s nomination, Tavenner’s nomination, or any other nomination.

Much as the White House may want to blame Republican obstruction for the delays in confirming a CMS Administrator, the Administration should take a closer look in the mirror at its own party’s actions.  While the White House alleged that Dr. Berwick’s nomination was blocked because senators “put political interests above the best interests of the American people,” it was Democrats who did not want to call a hearing, and were afraid to discuss either Berwick or Obamacare at any point during the second half of 2010, their huge Senate majorities notwithstanding.  Moreover, according to key Democrat staffers, the Administration wanted to appoint a CMS Administrator in 2009, but decided not to, perhaps because it did not want to tell the American people who would actually implement Obamacare prior to its enactment.

Some may find the irony that even as the Administration attempts to sell the unpopular law to the American people, Democrats in Congress appear to have settled on a “Don’t Mention the War” strategy towards the 2700-page legislative behemoth.  Regardless, the net effect will be that unconfirmed bureaucrats have been given control over every American’s health insurance, and a budget larger than the Pentagon’s, for four years without so much as a cursory hearing.

Correcting the Record on the Berwick Nomination

The end of Donald Berwick’s tenure as Centers for Medicare and Medicaid Services Administrator last week has resulted in several news stories, as well as points that need rebutting:

  • First, it is NOT correct to state that “Republicans refuse[d] to even have [sic] a hearing” on Berwick’s confirmation – for Republicans have no power to block the Senate Finance Committee from moving forward on Berwick’s nomination (or any other nomination).  Chairman Baucus could have called a confirmation hearing any time he liked, but chose not to do so.
  • Second, if the White House wants to claim that Berwick’s nomination was blocked because senators “put political interests above the best interests of the American people,” their criticisms should be focused on Democrats who did not want to call a hearing, and were afraid to discuss either Berwick or Obamacare at any point during the second half of 2010, their huge Senate majorities notwithstanding.  The White House should also look in the mirror – because according to key Democrat staffers, the Administration wanted to appoint Berwick in 2009, but decided not to, perhaps because it learned of his controversial views and did not want them publicized in the run-up to Obamacare’s passage.  Berwick had previously committed to delivering a public “point-by-point rebuttal” to his critics, but the New York Times noted this weekend that “for political reasons, the Administration did not want him [Berwick] to defend past statements” regarding rationing and British socialized medicine.  In other words, the White House censored Berwick, thereby playing politics with his nomination.
  • Third, the idea that Republican criticisms of Berwick were based on a “caricature” significantly understates the breadth and scope of Berwick’s comments regarding controversial issues.  In an interview with MSNBC’s Chris Hayes over the weekend, Hayes alleged that opposition to Berwick were based on one article about rationing and one speech about the NHS.  Berwick himself claimed his critics had “a lack of authenticity in inquiry.”  But in reality, the more one inquires into Berwick’s history, the more one finds controversial statements focused on a health system driven by government bureaucracy and centralized planning.  One publicly available document shows not just one article or one speech, but 158 separate quotes over 22 pages, and dozens of articles, highlighting Berwick’s troubling views – none of which have been publicly refuted.  Dr. Berwick wrote articles with such titles as “Cost-Effectiveness Analysis in Pediatric Practice,” which makes one wonder:  If these cost-effectiveness analyses were NOT designed with rationing health care in mind, then what exactly was the point of conducting the analysis in the first place?
  • Fourth, the notion that Republican concerns about Berwick were based upon gamesmanship, and that his nomination was merely “derailed by politics” understates the problematic nature of his nomination.  Berwick himself said this weekend that “I did not even know if I was fit for” the CMS post.  This concern about his managerial skills was shared by others in the health policy sphere, who “voiced concerns that Berwick lacked the administrative background for the position.”  Berwick in a 2006 interview admitted: “Inattention to detail is my biggest defect….I can create a mess.”  Couple his lack of managerial expertise with his controversial – and oft-repeated – views, and there were many substantive reasons, both practical and philosophical, for Republicans to question his nomination, not just a desire to score points.

Finally, it’s worth pointing out that in his New York Times interview, Berwick conceded the health care law remains unpopular: “It’s a complex, complicated law.  To explain it takes a while.  To understand it takes an investment that I’m not sure the man or woman in the street wants to make or ought to make….Somehow we have not put together that story in a way that’s compelling.”  That one of Obamacare’s key implementers, and biggest supporters, acknowledges the public continues to reject the law speaks volumes about the 2700-page measure.

Donald Berwick’s Greatest Hits

Given Medicare Administrator Berwick’s resignation today, it’s worth remembering some of the highlights (or lowlights) of Berwick’s tenure.  Berwick spent most of his time in a virtual bunker since his controversial recess appointment last July – hiding from reporters’ questions, and going to great lengths to do so:

  • “Exited behind a stage” at a July press event on health IT regulations before the media were allowed to ask questions, according to Inside Health Policy;
  • Declined to participate in an August conference call with reporters to discuss a report on Medicare’s solvency;
  • Declined to participate in the release of the annual Medicare trustees report;
  • Declined to respond to interview requests from both the New York Times and Congressional Quarterly;
  • Declined to remain on an August conference call “to take questions from reporters,” according to The Hill;
  • “Left without taking questions from reporters” after delivering a speech to health insurance executives and lobbyists;
  • Declined to answer a series of questions from a reporter about his prior writings on rationing; an Administration official accompanying Dr. Berwick responded solely that “He’s not taking any questions;” and
  • Failed to deliver the “point-by-point rebuttal” to his critics previously promised at his (VERY brief) Finance Committee hearing in November;
  • Required a “security escort” to avoid questions from reporters during an appearance in early December;
  • Held a closed-door meeting with lobbyists and other industry executives.

Recall also that Berwick never responded to substantive document requests related to his nomination either.  Berwick promised Sen. Grassley to release financial statements related to his tenure as the head of the Institute for Healthcare Improvement, only to renege on this promise once he accepted his recess appointment last year.  It remains unclear whether, or what, Berwick was attempting to hide by not disclosing these documents.

Berwick had some “achievements” while at CMS – for instance, a preliminary rule for accountable care organizations so onerous and bureaucratic virtually every health care provider group imaginable promised not to participate.  But it’s worth asking:  If a Medicare Administrator has to go to such seemingly absurd lengths to avoid scrutiny of his own record, did he EVER belong in that role in the first place?  And how does the “most transparent and accountable Administration” justify such conduct?

Berwick’s Tenure Rationed With Our Eyes Open

In a holiday edition of “Take Out the Trash Day,” the Administration announced this afternoon that Medicare Administrator Donald Berwick was resigning effective December 2 (next Friday).  Deputy Administrator Marilyn Tavenner has been nominated to succeed Berwick, whose statements in support of the British single-payer system and “rationing with our eyes open” sparked widespread controversy.

It is of course ironic that given the Administration’s mantra of “We Can’t Wait,” the White House took three years to nominate a Medicare chief who might actually be confirmable.  Recall reports from earlier this year suggesting that even Senate Democrats did not want Berwick’s confirmation to go ahead, as Finance Committee Chairman Baucus refused to schedule a hearing on Berwick’s appointment.

On this day before Thanksgiving, all Americans should give thanks that the Obama Administration finally gave in to political and constitutional realities, and submitted the nomination of a new Medicare Administrator to the Senate.  However, many may still be concerned at the circumstances by which an unconfirmed bureaucrat was given control over every American’s health insurance, and a budget larger than the Pentagon’s, for nearly a year and a half without so much as a cursory confirmation hearing.

Obamacare Consultant Admits: Over $800 Billion “Straight to Insurance Companies”

After House Republicans last week released a report outlining how Obamacare penalizes marriage, liberal professor Jonathan Gruber – a paid Obamacare consultant – responded yesterday in an interview posted on the New Republic’s website.  He’s wrong on several key points*, but right on a very important one:

“Most households will never actually get their hands on the credits, so their existing tax liabilities won’t actually change.  In most cases, credits will go straight to insurance companies, to pay for health benefits.”

Democrats’ claims to the contrary, the law and record are very clear about the fact that this massive new entitlement will go straight into the arms of the insurance industry:

  • Section 1412(c)(2)(A) of the law provides that “The Secretary of the Treasury shall make the advance payment under this section of any premium tax credit allowed under section 36B of the Internal Revenue Code of 1986 to the issuer of a qualified health plan on a monthly basis.”
  • Page 37 of the report on the Finance Committee bill states: “The Committee Bill provides a refundable tax credit for eligible individuals and families who purchase health insurance through the state exchanges.  The premium tax credit, which is refundable and payable in advance directly to the insurer, subsidizes the purchase of certain health insurance plans through the state exchanges.”

The Congressional Budget Office’s most recent estimates regarding Obamacare’s insurance subsidies show that from 2014 through 2021, the federal government will spend a whopping $821.2 billion for subsidies that “will go straight to insurance companies,” according to Gruber’s own admission.

Of course, candidate Obama opposed sending subsidies straight to insurance companies when he ran for President, only to flip-flop on this issue when he signed Obamacare:

  • An Obama campaign ad derided Senator McCain’s proposal to subsidize insurance through tax credits: “That tax credit?  McCain’s own Web site said it goes straight to the insurance companies, not to you, leaving you on your own…”
  • Likewise, in a campaign speech, candidate Obama vilified Senator McCain for this policy: “But the new tax credit [McCain’s] proposing?  That wouldn’t go to you.  It would go directly to your insurance company – not your bank account.”

Gruber was attempting to argue that taxpayers’ liability would not change under Obamacare – because the subsidies are paid directly to insurers, individuals who owed the IRS $1,000 would still owe the IRS $1,000 come April 15.  But that misses the point – because someone who sends the IRS a $1,000 tax payment, and then has the IRS subsidize his health insurance to the tune of $5,000, is obviously a net winner when it comes to the Internal Revenue Code.  (Who wouldn’t take that deal?)  The issue is who are the net contributors to the federal budget, and the Joint Committee on Taxation admitted that under Obamacare, another 7-8 million more households will receive more from the federal government in benefits than they pay in taxes.  Which raises the larger question:  What will happen to Obamacare when Democrats run out of other people’s money to spend…?

* Some of the other nonsense claims made by Gruber include:

  • He conflates (unwittingly or not) tax refunds at the end of the year with refundable tax credits as a “semantic choice.”  It’s NOT a semantic argument:  The former are for those who overpaid their taxes during the year; the latter are for those that do not pay income taxes at all.
  • He conflates the subsidies under Obamacare to the “large tax refunds that were put in place by the Bush tax cuts,” as both represent spending, in his view.  Again, this view is incorrect.  According to CBO, $103.2 billion of the $140.1 billion – or nearly 75% – of the federal spending on Exchange subsidies in 2021 will be refundable subsidies to people who do not have income tax liability.  Conversely, according to CBO, less than 10% of the cost of the 2001 tax relief act represented outlay effects – i.e., refundable federal spending on those who do not have income tax liability.  In other words, the vast majority of the Bush tax relief was provided to individuals who paid income taxes – and the vast majority of Obamacare’s subsidies are to people who don’t.  You can argue whether each is good or bad policy, but you can’t argue with those facts.
  • Gruber also claims that “the committee’s analysis conveniently ignores the fact that all but the highest wage earners pay significant payroll taxes in the U.S.”  But Democrats have told Republicans for years that those payroll taxes are used solely to fund Social Security benefits, meaning those workers will get their payroll taxes back in future benefits (and especially in the case of low-income workers, will get their payroll taxes back and then some, due to the way Social Security benefits are calculated).  Or does Gruber now want to admit that the Social Security Trust Fund is effectively meaningless, and that those who pay only payroll taxes are funding general government obligations rather than their own retirement benefits…?

Peter Orszag Admits Obamacare’s Failures, Says Law “Could Become Unsustainable”

Writing in a Foreign Affairs piece published last week, former CBO Director and Obama Administration Office of Management and Budget head Peter Orszag, although generally supportive of the health care law, included some interesting comments about its shortcomings.  Among the more interesting tidbits is this paragraph regarding the ability of the law to control premiums and costs:

“Barack Obama’s presidential campaign had promised massive cost savings from reform, including $2,500 a year per family.  But such savings were never going to be confirmed by the CBO under any scenario.  And since the House bill was relatively weak on cost containment anyway but was the first version to receive a public CBO analysis, the contrast between Obama’s campaign promises and the CBO’s forecast proved something of a shock to the public.  [Emphasis mine.]”

For those of you keeping score at home, the Obama Administration’s progress on achieving its $2,500 promised premium reduction is illustrated graphically below.  Of course, Dr. Orszag would say that the law will lower costs, and therefore premiums, over time.  But why should we believe Orszag when he says premiums might fall in the future, when Orszag himself admits that the President’s promise of lower premiums over his first term was largely a fantasy?

The article also includes other interesting claims about the law’s shortcomings – including the potential for “unsustainable” new spending:

  • “The biggest substantive shortcoming of the legislation involves tort reform” – or specifically the lack of it: “By failing to move forcefully” on tort reform, “the health reform act missed a major opportunity.”
  • While Orszag doubts that employers will drop health coverage en masse, he envisions a scenario whose fiscal effects would be almost as harmful: “they could start dropping high-risk workers by designing health plans that encourage these employees to purchase insurance on the exchanges.  This is a legitimate concern.  If employers altered their plans, this could create a spiral effect, in which those employees buying insurance on the exchanges would be disproportionately high-risk patients, raising premiums and defeating the purpose of risk sharing.  The cost to the federal government of subsidizing coverage in the exchanges, in turn, could become unsustainable.”
  • “The health legislation, if anything, will exacerbate” current consolidation within the hospital industry “by inducing a new round of mergers among clinics, hospitals, and practices.”  Orszag’s article admits the possibility that the programs included in the law could end up quashing rather than enhancing competition – which will only raise cost levels rather than lowering them.

As a reminder, Dr. Orszag will be testifying before the Finance Committee on Thursday morning.  It will be interesting to see how he squares his message of deficit reduction with his observations that Obamacare’s perverse incentives could cause the creation of an unsustainable new entitlement.

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