|America's independent, non-partisan advocate for overburdened taxpayers.||Home | Donate | RSS | Log in|
CLASS - The Inevitable Fall of Health Care Reform's Chief Budget Gimmick
The CLASS Act, a long-term care entitlement tucked deep in Democrats’ health care reform bill, has officially been scratched. From the get go, it was clear that the program was little more than the political equivalent of a deus ex machina – a contrived plot device that abruptly solves what otherwise would be an impossible situation.
It’s generally the sign of a bad writer. In this case it was the sign of a bad bill.
The Democrats’ proposed health care reform bill was a budget buster. At a time when government deficits and the national debt were becoming major concerns to the American electorate, this wasn’t going to help its’ chances for passage.
It appeared Democrats’ had written themselves into a corner. The stimulus bill had done little to justify its exorbitant cost, discretionary spending was soaring, and government-run health care programs were hemorrhaging money. The Patient Protection and Affordable Care Act, despite its name, would not have made a tidy ending to that story. The political narrative was quickly going off the rails. Rather than do some significant editing to the plot, Democrats decided to introduce a deus ex machina.
Namely, they started stuffing the health care bill with all sorts of unrelated or tangentially related things in an attempt to improve its bottom line. While student loan reform was probably the most egregious example, the CLASS Act, was perhaps the most dishonest.
CLASS was doomed to fail. The way it was structured made an “insurance death spiral” inevitable – high premiums and a short vesting period would discourage all but the sickest Americans from signing up, this would drive premiums even higher, further discouraging the young, healthy people needed to keep costs manageable.
It’s not as if nobody foresaw these problems.
“This program is intended to be “actuarially sound,” but at first glance this goal may be impossible,” wrote Center for Medicaid and Medicare Services’ chief actuary in May 2009 “Seems like a recipe for disaster to me,” William Marton, a senior Obama policy official, wrote in October 2009.
The list goes on, but suffice it to say that CLASS’ problems weren’t unexpected.
The troubling part is that Democrats’ threw it in the bill anyway because it provided them an opportunity to game the Congressional Budget Office’s (CBO) scoring rules and make the health care reform package appear more budget friendly than it was. The way CLASS was written it included a five year vesting period, a time in which the government would be collecting premiums, but would be paying out no benefits. Given that the CBO uses a 10-year budget window to calculate deficit projections, the whole thing came up smelling like roses.
This plot artifice served its purpose admirably. The seemingly inextricable problem had been solved. In large part due to budgetary gimmicks like the inclusion of CLASS, the Democrats’ health reform bill received a favorable CBO score, providing an important talking point to use against those concerned about the deficit.
Now, after the final chapter has already been written, the Obama Administration is dismantling his deus ex machina. “Despite our best analytical efforts, I do not see a viable path forward for CLASS implementation at this time,” wrote Health and Human Services Secretary Kathleen Sebelius in an email to Congress.
Which leaves us with a very bad ending, to an already ugly story.
0 Comments | Post a Comment | Sign up for NTU Action Alerts
Congress's Motto-Fix It in Post
If that isn't already Congress's motto, it should be. An AP story out today reports that due to a little-known provision in the health care bill that a "married couple could have an annual income of about $64,000 and still get Medicaid." An additional 3 million people could qualify for Medicare in 2014, and that worries Medicare's chief actuary. Others don't seem quiet so worried. According to the story:
A spokeswoman for the Senate Finance Committee, which wrote much of the health care law, said if the situation does become a problem there's plenty of time to fix it later.
"These changes don't take effect until 2014, so we have time to review all possible cases to ensure Medicaid meets its mission of serving only the neediest Americans," said Erin Shields.
It's one thing to digitally edit out a movie gaffe or rerecord a bit on inaudible dialogue, but wouldn't it make sense to know what the legislation that you're passing does before you pass it? It sounds a bit naive I know, but isn't that better than having to keep correcting the goofs in post?
HT: Demian Brady
0 Comments | Post a Comment | Sign up for NTU Action Alerts
Ryan's Adult Conversation a Sharp Contrast to Dem's Mediscare Tactics
Recently, former President Bill Clinton warned Democrats that they were “going to have to be willing to give up, maybe, some short-term political gain by whipping up fears” about Medicare.
“Whipping up fears” is the nice way to say it. Given that Democrats recently came out with a political ad depicting a Paul Ryan-esque figure literally throwing an elderly woman off of a cliff, scaring the ever-living-bejesus is probably a more apt way to describe it.
Such partisan demagoguery makes a mockery of the very real problem we face. It’s based on a calculation that emphasizes the short-term political success of their party over the long term financial well being of our program.
Fortunately, Republicans are taking a different tack. In a new video: Saving Medicare: Visualized, Ryan ignores the impulse to treat voters as children, opting instead to have an adult conversation about the unsustainable trajectory of Medicare spending and its impact on our debt. Unlike the cheap gimmick of throwing grannie off a cliff, Ryan’s video evokes fear based in reality – that without reform Medicare will bankrupt our country.
In an op-ed in today’s Wall Street Journal, Thomas Saving and John Goodman, a former Medicare trustee and the President of the National Center for Policy Analysis respectively, unveil just how unsustainable the Democrats’ vision for Medicare is. Recently, House Minority Leader Nancy Pelosi said Democrats have already “[given] the blueprint for how we strengthen Medicare in the Affordable Care Act.” But Saving and Goodman argue that any “strengthening” was nothing more than a parlor trick.
“In terms of the sheer dollars involved,” they argue, “the law’s reduction in future Medicare payments is the equivalent of raising the eligibility age for Medicare to age 68 for today's 65-year-olds, to age 71 for 55-year-olds and to age 74 for 45-year-olds. But rather than keep the system as is and raise the age of eligibility, the reform law instead tries to achieve equivalent savings by paying less to the providers of care.”
Once you leave the fantasyland of the written page, paying less to providers will have enormous real world consequences. Reduced payment rates will reduce the amount of doctors who will accept Medicare patients, making it harder for seniors to find a doctor. Once admitted, they will likely face reduced amenities, a lower level of care, and reduced treatment options.
The fact is, there is just no getting around the absolute need to reform Medicare. Democrats can continue to ignore the problem and choose to maximize their political gain by preying on the fears of older voters. But with America teetering on the edge of financial ruin, how much longer can they afford to play these games? After all, what good is winning an election, if you have to force the nation into default to do it?0 Comments | Post a Comment | Sign up for NTU Action Alerts
Despite Clinton's Warnings, Democrats Demagogue Medicare Reform
Many Democrats are wrongfully hailing the New York special election as a critical victory over Rep. Paul Ryan’s Medicare reform plan. They’re beginning to see how Medicare demagoguery and scare tactics could be a potent recipe for winning big in the 2012 elections. But at what cost?
That’s the question that former President and respected thinker Bill Clinton has apparently been asking himself. Speaking yesterday at a fiscal summit hosted by the Peter Peterson Foundation, Clinton said, “I think the Democrats are going to have to be willing to give up, maybe, some short-term political gain by whipping up fears on some of these things – if it’s a reasonable Social Security proposal, a reasonable Medicare proposal. We’ve got to deal with these things. You cannot have health care devour our economy.”
Sadly, thus far Democrats have appeared either unwilling or unable to look past the 2012 elections, regardless of the disastrous long-term consequences that might entail. Take Senate Majority Leader Harry Reid who used his time on the Senate floor to say, “The Republican plan to kill Medicare is a plan to make the rich richer and the sick sicker.”
Quotes like that seem to confirm President Clinton’s fears about his party’s misreading the New York tea leaves. In a candid conversation caught by ABC News, Clinton was overheard telling Ryan “I’m glad we won this race in New York, [but] I hope Democrats don’t use this as an excuse to do nothing.”
Nothing appears to be exactly what Democrats plan to do. When asked what her plan was for Medicare, House Minority Leader Nancy Pelosi responded, “It is a flag we’ve planted that we will protect and defend. We have a plan. It’s called Medicare.” In other words, their plan to reform Medicare, is, well, to leave it alone.
Although that may be good politics in the short-term, it would represent a financial disaster in the long-term, threatening the existence, much less the benefit levels, of the Medicare program liberals are claiming to be such stalwart advocates of. According to the 2011 Medicare Trustees’ report, the Hospital Insurance trust fund will run out in 2024, five years earlier than last projected. In addition the report argues that the Democrats’ Patient Protection and Affordable Care Act has done little to improve Medicare’s actuarial future. The report states,
“By the end of thelong-range projection period, Medicare prices . . . would be less than half of their level under the prior law. Medicare prices would be considerably below the current relative level of Medicaid prices, which have already led to access problems for Medicaid enrollees. . . Well beforethat point, Congress would have to intervene to prevent the withdrawal of providers from the Medicare market and the severe problems with beneficiary access to care that would result.”
Is that really the future that Democrats want to fight for tooth and nail?
After Rep. Ryan expressed how disheartened he was that the New York race would likely lead to paralysis for his plan, President Clinton said that Ryan should “give me a call.” I don’t think it’s Ryan who needs the talking to. Unfortunately, it’s the Democrats who need a talkin-to.1 Comments | Post a Comment | Sign up for NTU Action Alerts
Comments on Alice Rivlin’s Entitlement Reform Testimony
The Brookings Institution’s Senior Fellow Alice Rivlin prepared testimony for the House Committee on the Budget -- one of the centers for entitlement reform and debate. She presented ways to reform Social Security, Medicare, and Medicaid while reducing the federal deficit. The views and options she expressed were the recommendations of the Bipartisan Policy Center’s Task Force on Debt Reduction (Domenici-Rivlin). Below, I highlight a few points that particularly struck me.
Medicare: As a member of the President’s Debt Commission, she worked with Congressman Paul Ryan (WI-1) to produce the Rivlin-Ryan Plan. Touted by panelists at NTUF’s Moving Forward on Entitlements event, Medicare would be remade into a voucher program. After 2020, new enrollees would receive fixed health care-related contributions at a growth rate of GDP plus one percent. Much like Congressman Ryan’s Roadmap, the plan would greatly increase Medicare’s longevity.
“The Affordable Care Act includes important provisions aimed at improving health outcomes and reducing cost growth: authorizing Medicare to contract with accountable care organizations on the basis of shared savings and value-based payments to providers; pilot projects to try out other payment reforms; ... . However, the impact and timing of these efforts is still uncertain.”
The Patient Protection and Affordable Care Act (PPACA), otherwise known as Obamacare, greatly increased the bureaucratic weight on the health care system. To help offset some of the pressure, accountable care organizations -- “a provider organization that takes on responsibility for meeting the health needs of a defined population” a.k.a. HMOs under government control -- are said to save money while increasing health care efficiency. However, this is a very optimistic outlook. To assume a new level of control of care, charged with ensuring quality and lower cost curves, is to institutionalize quality. Ask Medicaid how that turned out.
Pilot programs under PPACA may not have the results many proponents of Obamacare would hope. In improving quality and prices through such programs, many of the factors leading to success are oft times difficult, if not impossible, to replicate in other cities, states, or regions. NCPA’s John Goodman has explored pilot programs and their seemingly random success rates. I am not branding pilot programs as useless but they ought to be used in targeted instances with realistic measures of success. The general provisions used in PPACA open a door for pilot programs to become legacy government efforts, not to improve health care.
I agree with many of the reforms Rivlin proposed for Medicaid. Many of the problems occur because the give and take of “dual eligibilities” -- low-income earners receiving both Medicare and Medicaid -- and the shared financing system between state and federal governments. Many states are given larger shares per capita than others because they have learned to game the system. Rivlin goes on to say, “states could be given more leeway to design their own programs, either through block grants… or through waivers under the existing program.” By cutting out the federal bureaucracy, states would get medical care funds to those who need it more quickly.
Rivlin’s stance on Social Security reform is a mixed bag. She calls for a “change in the calculation of annual cost-of-living adjustments for benefits to more accurately reflect inflation” and to “slightly reduce the growth in benefits… for approximately the top 25 percent of beneficiaries” (otherwise known as means testing). Both measures would bring more accurate cost controls, while maintaining benefits for which the program was originally intended.
However, her last point concerned me the most: “The Task Force plan would cover newly hired state and local government workers under the Social Security system, beginning in 2020, to increase the universality of the program.” Certain government employees can opt out of the system in favor of their own group pension plans, which often are more successful than Social Security. By bringing more people into the system, a short-term cash infusion would result but, if no systemic reform occurs, they would end up in precarious situations similar to current beneficiaries.1 Comments | Post a Comment | Sign up for NTU Action Alerts
Harvard economist Jeff Miron presented his realistic goals for truly fixing what Obamacare has failed to do: reducing health care costs while providing more Americans with quality health insurance. In the video below, presented by the Institute for Humane Studies Learn Liberty initiative, Miron delves into the complex issues facing taxpayers across the country, using commonsense solutions we can all understand.
Throw away the notion that health care is a right: By branding health care as a right, we are led to believe in giving any health care to anyone who wants it without the need to pay for it. Much like our entitlement system today, everyone on the system would demand all they health care they can get because there is no accountability of personal cost. More demand leads to evermore spending and still more taxing of American workers.
Repeal Obamacare: Many of the proposed initial savings of the Patient Protection and Affordable Care Act are largely derived from cuts in current government medical programs, like Medicare. This kind of budget fixing was reported by the Congressional Budget Office as a net decrease in spending outlays but does not take into account the increased demand resulting from the free-ridership in point one (not to mention the decreased tax revenue, as CBO assumes it will increase over time). Miron says it perfectly, “thinking that expanding coverage reduces the deficit is just completely insane.”
Phase out Medicare: As one form of entitlement reform (see NTU Foundation’s panel discussion on fixing Social Security, Medicare, Medicaid, and pensions), people on Medicare don’t have an incentive to be selective with the care they receive because they pay so little for the care. The program creates price and resource distortions in the market, making costs higher for those on regular plans and ratcheting up the mandatory spending of the government. Miron says taking care of the people most in need (people in poverty with no employment and no medical coverage at all) is not out of the question. It is taking care of people who can afford health plans that doesn’t make sense. Getting rid of the Medicare system would help the quality and cost of health care, the tax burden of American taxpayers, and the recovering economy.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Health Care Freedom in Texas
If you live in Texas and you're concerned about ObamaCare (especially its burdensome hidden tax hikes), there is some good news for you to report from the Texas State Legislature.
Tomorrow, Thursday, March 17, at 10:30am local time or upon adjournment of the Texas House of Representatves, the State Sovereignty Committee will be in room E2.010 for a hearing about House Joint Resolution 24, the Health Freedom Act. Sponsored by Rep. Ken Paxton (R-McKinney), this constitutional amendment keeps individuals in control of their own health care instead of allowing the government to make or influence choices for us.
This is an important measure and attending the hearing will be well worth your time. You can show your support by signing a witness affirmation card in favor of the bill at the hearing. Take a few minutes out of your day to stop by the Texas State House to show your support for health care freedom!
NTU Foundation’s weekly newsletter brings you a variety of bills this week with an environmental management plan bill for the Chesapeake Bay region, an act to establish a commission to study the nation’s justice system, a measure to create a domestic supply of medical isotopes, and a proposal to expand anti-hunger activities throughout the United States.
The bill to increase funding for community food initiatives and to expand some of the federal-to-state food stamp reimbursements is this week’s Most Expensive Bill of the Week. At $200 million in new federal spending for each of the next five years, HR 350 would direct tax dollars to nonprofit hunger groups within 20 designated geographic areas. The groups would present their plans and goals to receive operational grants and/or technical assistance grants. @NTUF will keep taxpayers informed about the different aspects of this bill, as well as the other three bills we detailed in Issue 7 of the Tab. Not much of a twitterer? No problem! Subscribing to the Tab is the best way to stay informed about all the exciting research coming out of NTU Foundation.
Newly scored bills highlighted in the latest Taxpayer’s Tab include:
Do you or anyone you know live in Congressmen Jose Serrano (NY-16) or Rob Wittman (VA-1), or Senators Jeff Bingaman (NM), Lisa Murkowski (AK), or Jim Webb’s (VA) states? Each of these legislators were mentioned in this week’s Tab. Check it out and keep a tab on your representatives!0 Comments | Post a Comment | Sign up for NTU Action Alerts
Showdown in Wisconsin
Picture this: protestors storming the capitol. State workers declaring that their pay and benefits are sacrosanct. University students banging drums and wearing red shirts. Schools shut down. Soldiers on standby ready to assume control of vital government services. Am I talking about Paris, France? Or Athens, Greece? Nope, I just described the scene right now in good ole Madison, Wisconsin.
The brouhaha in Wisconsin is in response to Governor Scott Walker’s proposal to end the ability of most government employees to collectively bargain for benefits such as health care and pensions. Although workers could still bargain for wages, increases would be capped at the CPI or another rate through a voter referendum. Walker also wants to require state workers to contribute 5.8% of their salary towards pensions and pay 12.6% of their health insurance premiums. By contrast, private workers contribute 7.5% towards retirement and pay 20% of health insurance premiums, on average.
Walker says he is doing this because he is facing a budget crisis. Wisconsin will run a budget deficit of $137 million this year and a $3.6 billion deficit in the next budget. The governor, a former chief executive of Milwaukee County, estimates that if he does not have the ability to demand more concessions from public sector unions, he will be forced to layoff 5,500 employees or roll back major government programs, like Medicaid.
The public sector unions and their allies have responded strongly in opposition to the proposal. Thousands have turned out to the state capitol, filling the hallways, blocking access to the General Assembly’s chambers, and banging on windows. Public schools in Madison actually closed on Thursday because 40% of the teachers called in “sick.”
But the twists and turns continue. Although the Senate scheduled a vote on the Governor’s proposal for Thursday, the vote did not happen; the entire Democrat caucus was nowhere to be found. Republicans control the General Assembly and reportedly have the votes to pass the Governor’s proposal, but they are one vote short of a quorum to conduct business. With the Democrats gone, there are not enough Senators in the chamber to hold a vote. According to some reports, the caucus decamped to a Best Western hotel in Rockford, Illinois, which is outside the jurisdiction of the Wisconsin State Patrol. More rallies, for and against the governor’s proposal, are planned for the weekend. It’s anyone’s guess as to what happens next.
The unions are targeting this reform because collective bargaining is the source of their power. By reforming collective bargaining, governors and legislators would have a stronger hand in contract negotiations to demand concessions to balance budgets and save taxpayers money. Some argue that reforming collective bargaining and labor laws could be a more realistic alternative to dealing with health care and pension costs than state bankruptcy. The stakes are high for both sides. Whatever happens in Wisconsin over the next several days will have ramifications for the rest of the nation.
This entry also appears at State Budget Solutions.
This entry also appears at State Budget Solutions.
3 Comments | Post a Comment | Sign up for NTU Action Alerts