Health Care Reform Bill – It Makes Bernie Madoff Seem Like A Piker


Today the Wall Street Journal asks what many of us have been asking for quite some time — why aren’t the numerous and specific warnings about the real cost and destructiveness of the proposed health care plan being heeded?

Of course the simple answer is those who are determined to take health care under the government’s purview really don’t care — they finally have the opportunity long denied them and they plan on taking advantage of it. So, much like the “science” of man-made global warming, they’ve picked their narrative, settled on it and will not entertain anything which might impede them from attaining their goal — government control of the health care market.

Those who’ve read this blog are very familiar with how Democrats have gamed the system (CBO’s statutory 10 year window) and used cheap accounting tricks (collect taxes immediately, don’t start paying benefits for 5 years — gives the appearance of bending the cost curve down) to make the case that they’re actually spending less on health care over the years and saving us from the bankruptcy they claim the status quo will eventually bring.

Another report, which I mentioned last week, carries a devastating warning about the plan being considered behind closed doors by Congressional Democrats. Yet it has received no major media exposure.

It is the Centers for Medicare and Medicaid Services (CMMS) report. And chief actuary Richard Foster is very candid about the impact of what Congress is planning. Not the smoke and mirror show Congress puts out there, but a peek at the reality of what Congress is proposing:

Richard Foster, the chief actuary for the Centers for Medicare and Medicaid Services, reports that under his analysis national health spending will rise under the bills by $222 billion over the next 10 years. In other words, ObamaCare really does “bend the cost curve”–up.

Even that estimate exists only on paper, as Mr. Foster has the honesty to admit. Because “most of the coverage provisions would be in effect for only six of the 10 years of the budget period, the cost estimates shown in this memorandum do not represent a full 10-year cost for the proposed legislation,” he writes. The report is punctuated by phrases like “unrealistic” and “doubtful,” and Mr. Foster adds that “the scope and magnitude of these changes are such that few precedents exist for use in estimation.”

Let’s stop right here with the obvious point to be made. The $222 billion, as mentioned, is the estimate for the next 10 years. However, as Foster points out, the spending would occur in only 6 of those 10 years. So that spending is offset by 4 years of revenue collection. If we remove that buffer and simply take 6 into 222 and then multiply it by 10, we’re most likely a bit closer to the real spending number than the contrived one – $370 billion, a difference of a mere $148 billion. Or, in reality, the $222 is a number that was tweaked to ensure when it was added to the other numbers the total fell below the threshold of $900 billion — the point at which it was claimed the cost curve would be bent upward. Had Congress found that to get to the number they needed they would have to collect taxes for 10 years and not provide benefits for 8 years, that’s how the bill would have been written.

It was never really about actually bending the cost curve down — it was all about creating the perception that the cost curve was being bent down, nothing more.

And there’s more to understand about that $222 billion number:

That $222 billion is a net figure, even after accounting for the fact that most of the newly insured–18 million people–will be dumped into Medicaid, “where provider payment rates are well below average.” And for the fact that ObamaCare is “paid for” only in the sense that Medicare’s payments to doctors are assumed in the bill to be cut by more than 20% this spring and even deeper after that, which will never happen in practice.

Mr. Foster adds that other planned Medicare cuts would damage doctors and hospitals: “Over time, a sustained reduction in payment updates, based on productivity expectations that are difficult to attain, would cause Medicare payment rates to grow more slowly than, and in a way that was unrelated to, the providers’ costs of furnishing services to beneficiaries.” This is how price controls would work in practice, even as Medicare has hit its spending targets only four times in the last 25 years.

Again, we know that Congress plans a “doc fix” which will amend the law to keep the 20% cut from taking place this year. And there’s nothing, given the history of this program, that argues that 20% cut will ever take place. It is a figure based on an assumption that will most likely never happen. Note well the last sentence — with an addition of 18 million new Medicaid insured, how many times in the next 25 years do you supposed Medicaid will hit its spending targets? You might also want to keep in mind that is mostly a federally mandated program administered by the states who share the cost. What will this addition of 18 million new insured do to state budgets — especially if the assumed cuts in payments are never made?

But let’s say Congress, somewhere along the line, finds the intestinal fortitude to cut those payments to providers as they say they are. What would be the impact?

He says many providers will be forced to stop accepting patients who are insured by the government, as opposed to those who have private coverage “with relatively attractive payment rates.” The resulting two-tier health-care system “should be considered plausible and even probable initially.”

If they cut, those patients they bring on may not be able to find a health care provider, so the patients suffer. If they don’t make the cuts, spending goes through the roof and the taxpayer suffers. It’s a lose/lose. But what should be patently obvious to anyone reading all of this is the $222 billion net spending claim by Congress for this particular part of the health care reform bill is as bogus as their promise of transparency.

Just delving into the particulars of this one portion of the bill should disabuse any objective person of the belief that what is being proposed is going to cost less than what we presently have. It is all a wretchedly wrought political façade designed to gain your support for long enough to pass this monstrosity. And my guess is should it pass, we’ll all be poorer and eventually sicker for its passage.

[Crossposted at QandO]

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