In 2009, Democrats chose to proceed with a health-care bill under the regular order – that is, they sought to pass the legislation under normal House and Senate rules. They did not put together a budget reconciliation bill with health care in it, something that could have passed the Senate with a simple majority vote. They conceded that such an approach would likely produce a flawed product, as many non-budgetary provisions in a health-care plan would not survive the reconciliation process. And so they decided to try and pass a bill without resorting to reconciliation, even though they knew they would need sixty votes in the Senate to succeed. It worked. They passed a bill in the House in November, and a somewhat different version in the Senate in December.
Then came Scott Brown. His stunning election to the Senate on January 19 upended the Democrats’ end-game. They were going to work out the differences between the House and Senate-passed bills in January and proceed to pass an agreed-upon version in both chambers as expeditiously as possible. But that plan was contingent on getting sixty votes again in the Senate. With Brown’s election, Senate Republicans increased their numbers from forty to forty-one, thus forcing Democrats to find at least one Republican Senator to support their final bill.
For the past two months, the White House and Democrats in Congress have been weaving ever-more complicated legislative webs all with the express intent of avoiding at all costs any need to negotiate with the now slightly enlarged Senate minority. In effect, what Democratic leaders want to do is – at the very end of the legislative process – switch from regular order to a reconciliation process in order to avoid having to deal seriously with any elected Republicans.
But it’s become increasingly clear that the Democratic scheming and maneuvering necessary to pull off such a high-wire act has created a web of entanglements that could very well doom passage of the entire effort.
In particular, there now appear to be two huge hurdles standing directly in the way of a plan to jam a bill through in the coming days.
First, there is the matter of the liberal abortion provisions in the Senate bill. As the Catholic Bishops conference has noted the Senate-passed bill includes several provisions that would allow taxpayer funding of elective abortions. Consequently, the Bishops opposed passage of that bill when it was considered in the Senate, and now oppose its passage by the House. The problem for House Democrats is that every version of the end-game they are now considering is predicated on having the House take up the Senate bill and pass it unchanged for presidential signature.
That is entirely unacceptable to the Catholic Bishops. They oppose House passage of the Senate’s pro-abortion health bill. Period. And their opposition hasn’t come with procedural loopholes that would let members off the hook if they promised to pass a fix separately. That would be fool’s bargain, and the Bishops know it. So pro-life House Democrats, led by Congressman Bart Stupak, really have no choice here. They can’t support the Senate bill unless they want to be known for supporting the most pro-abortion bill ever considered in Congress. Their only real option is to force House leaders to amend the Senate bill before passing it to include strong restrictions on funding of abortion. Yes, that would mean the bill would have to go back through the Senate again before going to the president, but so be it. That’s not the Bishops’ problem. It would mean the president and the Democrats would have to really negotiate to get some Republican support, which is of course the norm for sweeping and important legislation.
This post originally appeared at National Review Online.
One of the central arguments President Barack Obama has made on behalf of the health care plan he wants Congress to approve in coming weeks is that it would begin to address the problem of rising costs and thus also begin to bring down future federal budget deficits.
But will it?
The president’s plan has not yet been assessed by the Congressional Budget Office. But CBO has provided a cost estimate for the Senate-passed bill, upon which the president’s proposal is built. That estimate shows the Senate bill would reduce the budget deficit by $132 billion through 2019. CBO also says that the Senate bill would likely reduce projected deficits even more during the second decade of implementation.
But, as Republican Rep. Paul Ryan of Wisconsin noted at last week’s Blair House meeting, there are a number of reasons to be skeptical about this claim.
For starters, the Senate bill omits the president’s proposal to permanently restore a 21 percent reduction in Medicare’s fees for physician services, now in effect as of March 1. The administration estimates that overriding this cut will cost $371 billion through 2020. Last summer, the House planned to include a permanent repeal of the cut in its health reform bill. But when the president imposed a 10-year budget of $900 billion on the reform legislation, Democratic leaders decided to pull the physician fee spending out of it and pass it separately.
The health bill includes scores of Medicare provisions, touching on just about every aspect of the program. The only major Medicare provision not in the bill is the costly “doc fix.” And the only reason for the omission is to make the total cost of the health reform bill appear lower. But passing the “doc fix” in a separate bill doesn’t make the cost go away. When the president’s entire health care agenda, including the “doc fix,” is tallied up, there is no deficit reduction over the next 10 years.
Ryan noted in his remarks at Blair House that the Senate bill would start up a new long-term care insurance program for the disabled. Participants would be required to pay in premiums for a number of years before becoming eligible for any benefits. Consequently, in the new program’s early years, there would a surplus, which CBO estimates at $73 billion over 10 years. The president’s claim of deficit reduction depends on double-counting these funds, first as an offset for the larger health care bill and then as a revenue source for long-term care insurance benefits beyond the 10-year window of the CBO estimate.
Over the long run, what matters in terms of the budget in the president’s health plan are the entitlement expansions, the effectiveness of “bending-the-cost-curve” measures, and the tax increases and spending cuts used to pay for broadened insurance coverage.
CBO expects the cost of the new entitlement spending aimed at coverage expansion in the Senate bill – the premium subsidies in the exchanges and the expansion of Medicaid — to reach about $200 billion by 2019 and then grow at a rate of 8 percent every year thereafter. In other words, this new health entitlement spending is expected to escalate just as rapidly as Medicare and Medicaid have in the past. CBO does not expect the “delivery system reforms” in the Senate bill, which are mainly small initiatives and pilot programs, to amount to much of anything in terms of cost control.
So how would the president pay for another expensive and rapidly growing entitlement? First, he would try to slow the rate of growth in the Medicare program, but not with new measures to weed out wasteful spending. His claim of long-term deficit reduction comes mainly from across-the-board payment rate reductions for hospitals, nursing homes and other providers of Medicare services. They would get a lower inflation update every year, in perpetuity. But these kinds of cuts do nothing to improve the efficiency of patient care or reward quality.
The chief actuary of the Medicare program has said repeatedly that these cuts are unrealistic because they would continuously cut reimbursements without touching the actual costs of providing care. He expects many facilities would be driven into serious financial distress. And without these Medicare cuts, the Senate bill is almost certainly a long-term budget buster.
The Senate bill also includes the so-called “Cadillac tax,” a new fee imposed on insurers and employers offering high-cost plans. As passed, this provision would generate substantial revenue in the second decade of implementation because the threshold for what constitutes “high cost” would rise much more slowly than medical inflation. Eventually, virtually the entire country would be in plans deemed “high cost.”
The president is relying heavily on the large, second-decade revenue increase associated with this tax for his claim of long-term deficit reduction. But just last week, under heavy pressure from union leaders, the president proposed to delay the tax from 2014 to 2018, well past the point when he will have left office. It will now raise almost nothing over the next 10 years, but the administration still claims credit for the sizeable revenue that would come in a second decade. That revenue would materialize, however, only if future officeholders were more willing than their counterparts today to impose large new taxes on a broad cross-section of the American middle class.
The federal government is piling up new debt at rates not seen since World War II. As Warren Buffett said recently, what the country desperately needs is a serious plan to slow the pace of rising health care costs.
What the president’s plan would deliver, however, is dead-certain entitlement spending, financed with speculative revenue and spending cuts that almost certainly will not work as advertised. The president says Congress should pass his plan to improve the budget outlook. In fact, Congress should reject it to protect the budget from more unfunded entitlement obligations.
Cross-Posted on Kaiser Health News