Healthcare - The Myth of Neutrality

Now that the Healthcare bill has become law, we are finally getting some of the transparency we had hoped for during the debates. Unfortunately, this transparency came too late to be of any use during the legislative process and the news is devastating. Despite the promises of budget neutrality made by the President and the Congressional Democrats, this neutrality is turning out to be a shameless and cruel hoax. While the President points to the Congressional Budget Office (CBO) report that claims the bill will provide deficit reduction of just over $100 billion dollars in the first ten years and $1.2 trillion dollars in the second ten years, those numbers were intentionally manipulated by the Democratic leadership.

The CBO can only score what it is before them. It can not extrapolate based on intent and it cannot adjust even when it knows key provisions have been left out of the materials they have been given. The $500 billion that this bill cuts from Medicare was factored in as a savings measure to provide solvency for Medicare through 2019. One would think that if it were a savings measure, that the money would remain in Medicare to restore balance to the program considering the projected rate of expansion. No; instead that $500 billion was also scored as part of the funding for a new entitlement program in the healthcare bill to provide subsidies for the purchase of healthcare insurance for low income families. Counting the same money twice in a business plan or as a proposal to investors would be a crime unless that plan or proposal is being submitted by Congress to the CBO for analysis.

The CBO must also score the bill based upon the language contained in the bill and must assume the cuts proposed in the bill will be law and will take place. Historically, the Congress has already passed cuts to Medicare in many previous years and to date, none of those cuts have ever been enacted. The CBO would love to say “Are you kidding? You guys have never made Medicare cuts before so why should we believe you will now?” The sad truth is they are prohibited from adding anything to their analysis that isn’t part of the actual language before them; including the intent and historical spinelessness of Congress.

Since the $278 billion dollar “doctor fix” was also removed from the legislation and will be considered as part of a spending package separate and apart from the Healthcare Bill, the CBO was prohibited from considering the budget implications from that as well. So far, a cursory look at the fiscal manipulation Democrats used to conceal the true cost of this bill adds up to three-quarters of a trillion dollars and that is just the beginning. It doesn’t sound like that $100 billion dollar savings in the first year is all it’s cracked up to be. As far as the $1.2 trillion dollar savings the CBO estimated for the second ten years is concerned, that is equally as fictional. What the President left out in his speech to the nation was the side note the CBO gave him on their estimates for year eleven through twenty of the program. The CBO made sure they cautioned that the estimates they provided are unreliable beyond ten years and that the projected savings can only be realized if the assumptions made by Congress in the legislation remain valid.

This is only the tip of the iceberg. Large portions of the uninsured are going to be driven into the expanded Medicaid program; a program that bears little consequence for the Federal government but can spell disaster for the individual States. It is very easy for Congressional Democrats to claim budget neutrality when they can shift 70% of this new burden onto the States and let them worry about how to deal with it. Many of these States are already struggling with budget problems of their own because of the recession and loss of tax revenue. In short, while Congressional Democrats try to sell the illusion of budget neutrality and the benefits of the healthcare bill before the November election, the States are going to have to raise your taxes, cut your services or both just to avoid bankruptcy because of the new unfunded mandates in the bill.

Many of the States realize they are already at the tax saturation point and will find it exceedingly difficult to raise taxes to offset the increased Medicaid liability without driving their real tax payers out. States like New York, New Jersey and California have already seen an exodus of the highest earners in recent years and when the affluent in these areas have finally had enough, they aren’t moving to neighboring States for a measly one or two percent decrease in taxes; they are moving to one of the seven US States that have no personal income tax which should be a lesson for us all. As world markets decline, investors are going to look for the safest place to put their money and many would prefer the security and stability of the United States. Unfortunately, the wild spending and outrageous taxes have taken us out of the running and nervous investors would rather take a chance on China’s experiment with limited Capitalism than America’s incredibly stupid experiment with Socialism.

As Federal policy drives the States closer to the brink of disaster, many are beginning to fight back. Several have passed legislation negating the individual mandate that would force citizens to purchase healthcare insurance under the new Healthcare bill and more than twenty more have identical legislation pending. Of course that legislation does not exempt the citizens and businesses in those States from the new tax liabilities so it in fact, allows people the privilege of paying more for absolutely nothing in return.

Congressional Democrats are already kicking back stating that the Supremacy Clause in the Constitution invalidates those measures reminding those States that Federal law supersedes State law. Of course the Supremacy Clause only applies to Federal law that is actually constitutional and that is where several States are applying their attention. Within minutes of the signing of the Healthcare Bill into law, a number of States filed suits challenging the constitutionality of the mandates that force individuals to purchase healthcare insurance and the unfunded mandates the States will face as the number of people enrolled in Medicaid climbs as a result of the bill.

Tomorrow, we will discuss the constitutional questions surrounding the Healthcare Bill and why Congress and the President are secretly concerned about those challenges.

Paul

What is actually in the Healthcare Bill?

During the healthcare summit there was a charged moment where President Obama accused Republican Senator Lamar Alexander of misrepresenting how the cost of private healthcare insurance premiums would change if the current Senate bill were adopted. The President chided Senator Alexander, speaking down to him as you would an unruly child, “This is one of those times when it is important to get the facts straight” insisting that premiums for private healthcare insurance would go down under his plan.

As it turns out, the President’s figures are, as usual, a product of careful crafted semantics. According to the CBO analysis, the cost for private healthcare insurance will rise between ten and thirteen percent but the president doesn’t want to discuss that. What he referred to are plans that will be constructed with the new mandates for increased coverage; plans that the insurers will have to provide if they wish to sell their insurance as one of the “approved” plans through the proposed exchange. If private insurance currently offered plans that cover pre-existing conditions and if they offered plans that provided portability and only if these plans were available to anyone regardless of which state they live in; these expanded plans offered through the government exchange would be lower in cost than you could have purchased them without the exchange.

Well, that assessment may be theoretically correct but it’s hardly honest. Those plans do not exist because the mandates that will force insurers to provide the key components have not been passed into law, at least not yet. Senator Alexander was absolutely correct in stating that the plan that you have now will see a price increase of ten to thirteen percent as a direct result of the passage of this bill. How the President claims that premium costs for a plan that doesn’t exist yet will drop is nothing more than D.C. trickery and can only be achieved if you are willing to imagine what those plans would have cost if they did exist in the absence of a national exchange, premium caps and government subsidies.

If just the first five minutes of the summit exposed such a blatant lie, then what else is there? Let’s start with their favorite phrase…budget neutral. The President said he would not sign a bill that added one dime to the deficit. Really? This week, everyone is aware of Senator Bunning’s resistance to the passage of a bill that will provide an emergency extension of unemployment benefits and will extend Medicare payments that were facing an automatic 21% cut. The emergency bill has a price tag of ten billion dollars and Bunning wants to know how it is being paid for before he votes for it. The Senate just passed “Pay-go”, a Senate law that requires them to offset new spending with either tax increases or corresponding cuts in other areas of the budget. It is Bunning’s opinion that if the can’t find ten billion for this, then what is the possibility that they will obey the Pay-go mandate on larger bills that require even harder choices; like healthcare.

As it turns out, the Healthcare bill would have added to the deficit even with the planned $500 billion in Medicare cuts and $500 billion in new taxes so they resorted to nothing less than voodoo economics to show the neutrality the President said he would require. The taxes and spending cuts begin in year one while the expenditures are pushed off until 2014. The CBO analysis shows ten years worth of income but only six years of expenses but since Congress didn’t request an analysis of the ten years from 2014 to 2024, the report doesn’t show the real deficits in the legislation. The 2014-2024 analysis was performed through a series of independent audits and estimates the real deficit to be anywhere from $2.7 trillion dollars to a whopping $5 trillion dollars. Why don’t I believe the CBO? Well, they can only score what is given to them and this bill was written by the masters of deception to intentionally take advantage of the scoring system. Congress used the same tactics to pass Johnson’s “Great Society” and the result was the CBO said Medicare and Medicaid would only cost $9 billion dollars a year by now and it is currently a mind numbing $408 billion dollars or 13.34% of the Federal budget. With all this in mind, do you trust the CBO?

Worse yet is the $500 billion in Medicare cuts are being counted twice; once to reduce the cost of the Medicare program and then again to expand Medicare coverage to the poor. Well, everyone knows you can’t spend the same dollar twice; everyone that is, except Congress. That logic reminds me of the old cartoons where the character had a string tied to his nickel so he could pluck it back out of the pay phone after making his call. Yeah, it was an old cartoon. The point is that was theft and so is this. In fact, if anyone else tried this budget maneuver, especially public companies, it would be a criminal act but somehow, Congress has exempted itself from any real examination so I guess it’s only a criminal act if someone is watching. That this is the lesson we have learned from the actions of Congress is shameful.

Republicans have been asking for the retirement of a Federal regulation that prohibits health insurers from competing across State lines. The President says this is already in the Senate bill; but is it? What the Republicans are talking about is an actual free market reform where the insurance companies themselves would advertise their product and compete with each other. What the President is talking about is the exchange. The exchange would feature plans from a whole host of providers that meet the government seal of approval. These plans would be available only through the exchange so there would be no competition between plans across State lines unless the Federal government has its fingers in the middle of it. What is the difference? Free competition across State lines doesn’t cost the American taxpayer anything. The exchange is a part of this multi-trillion dollar healthcare bill.

If you have a plan that you like you can keep it also seems to have been subtly changed. If you’ve noticed, they haven’t really been saying that lately and have changed it by saying instead “you can keep your doctor”. Ok, you can keep your doctor as opposed to what? Seeing a plumber or a used car salesman for medical care? They gave up on saying that you can keep a health insurance plan you like because that is simply not true with this legislation. Certain plans that meet government approval will be “grandfathered” in, only to be phased out at a later date. Of course the grandfathering will depend on whether or not those plans will even exist once the mandates for expanded care and pre-existing conditions have been imposed. Those that already meet government approval are the higher priced “Cadillac” plans that will have an additional tax placed on them. When that tax will be imposed depends largely on which plan makes it through the reconciliation process. The President’s alternative delays that tax until 2018 while the Senate bill imposes the tax immediately.

This is just the tip of the iceberg with other, more nefarious, details carefully hidden from view until the controlling board is formed and the mandates start flowing from that body of twenty-six Presidential appointees, shaping the care you will receive. When the President says there are no death panels or rationing in this bill, he is right; to a point. The reason that the opposition cannot find them and the President can stand firm on his claims that they don’t exist is that the bulk of what this “reform” legislation is capable of doing is entirely in the hands of the new bureaucracy it will create. The health benefits board will determine what benefits will be covered and who will receive them. We saw a preview of that when the government panel that advises the nation on healthcare issues released a document downgrading the importance of breast cancer screenings; raising the age when first screenings should take place and limiting them to once every two years instead of the currently recommended annual examination.

Of course, doctors and women’s rights advocates across the county shouted out against this and the government dismissed the outcry, saying it was merely a suggestion but what happens when the government controlled health benefits board begin to make policy that affects medical insurance coverage based on those recommendations? We already have a fiscal crisis looming that will affect every man, woman and child in America as our deficit and debt spiral out of control. If I am right in my assessment and all we will have after ten years of government control of health insurance is government health insurance or “Universal” care, will that care be rationed because of the financial crisis? Of course it will. All you need to do is look at the nations that have already adopted a single payer healthcare system and every one of them has rationed care, waiting lists or both.

Paul