Health Care Reform: The Best Trillion Dollars You'll Ever Spend!

Peter Suderman | July 7, 2009

That seems to be the pitch now that the Senate's HELP Committee has come out with a revised proposal that theoretically covers most Americans at the low, low price of between $1 and $1.3 trillion. If Congressional Democrats were selling cars instead of health care, I imagine the pitch might go something like this:

"Your old car might get you around, usually, but its creaking engine and lack of features make it fundamentally unreliable. But let me show you my new model. It comes loaded with nifty features, and it'll be far more reliable in the long run. And it only costs, let's see here... $50,000. What? That's too much? Well, let me go ask my manager if we can do anything about that. [Disappears. Returns a few minutes later.] Good news! He said I could give it to you for just $32,000. It's a great deal! At that price, how could you pass it up?"

Here's the problem: Regardless of whether or not it's a great deal, you just don't have $32,000 to spare, and you're not sure what, if anything, you could cut out of your budget in order to free up the money.

Right now, Democrats have broadly agreed on most of the major elements of a health-care bill, and they seem to think that, at somewhere just north of a trillion dollars, it's a steal. But as The Hill's Jeffrey Young points out, they haven't even begun to figure out how they're going to pay for it:

What none of those bills have spelled out is how Democrats will meet their commitment to fully paying for covering millions of uninsured people and achieving the broad goal of reforming the entire healthcare system.

The matters of who will get taxed more and how much more they would have to pay remain undetermined, or at least unrevealed, with the August recess just five weeks away. Democrats in both the House and Senate are aiming to pass their respective healthcare bills before adjourning in August.

...The grim political reality facing Democrats in Congress and the White House is that some Americans, somewhere, somehow are going to have to pay higher taxes if their healthcare bill is going to become a reality.

And if any of those people make less than $250,000 a year, Obama could be forced to break a major campaign promise.

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Xeones|7.7.09 @ 3:47PM|#

Obama could be forced to break a major campaign promise.

What, again?!?

Jordan|7.7.09 @ 3:51PM|#

They estimate a trillion bucks? So the real cost will probably be north of 30 trillion or so.

Rich|7.7.09 @ 3:51PM|#

Xeones, you beat me to it! So, modified:

"And if any of those people make less than $250,000 a year, Obama could be forced to break a major campaign promise."

*You* call it "major".

|7.7.09 @ 3:52PM|#

they haven't even begun to figure out how they're going to pay for it

That's because they WON'T BE THE ONES PAYING FOR IT! GAH!

Sorry about that. It's hard to stay calm sometimes.

|7.7.09 @ 3:55PM|#

How can these people still think Obama is not just another corrupt politician? He's breaking campaign promises left and right and setting himself up to break even more. And it's not just ones that he had no or little control over. What about the 5-day public debate period before signing a bill? That's been broken.

Can the president get the voting masses to believe that Bush got us so deep in the shitter that, unfortunately, taxes on the middle class will have to be raised temporarily for the overall health and greater good of our society. It's all in the sales pitch folks.

Jordan|7.7.09 @ 3:56PM|#

Seriously, does anyone, even the most doe-eyed ignorant left-winger really believe these idiots when they say something will only cost X? I'm honestly curious if there's anyone that credulous.

X|7.7.09 @ 3:57PM|#

Folks, in anticipation of the tremendous lubeless fiscal rogering that is no doubt on the horizon, i am making some cuts of my own. I am hereby decreasing operating costs for the duration by dropping the "eones" from my name. Most of you goobers call me "X" anyway, so interruptions in service should be minimal.

|7.7.09 @ 3:59PM|#

brotherben,

Well yes, I agree. He may be able to get away with this, just like abusive husbands, used car salesmen, and other assorted con artists do.

|7.7.09 @ 4:02PM|#

X[eones], I don't think you've considered the carbon footprint implications of increasing the amount of whitespace on everyone's screen. I'm trying to compensate, but I urge you to reconsider.

|7.7.09 @ 4:03PM|#

I'm not paying for the rust-proofing.

Except of course that we're not talking about temporary tax increases. Unless the health care program is intended to be temporary as well.

The stimulus is one thing; even if you accept it as a good idea, having most of the money spent in 2010 (and late 2010 at that) is dumb. But fine, you can make a decent argument for it based on the recession or whatever.

The idiotically deficits from 2012-2019 are much less defensible, and making them much worse is even less so.

President Obama quite obviously lied his way into office, but don't forget that the American people wanted to be lied to. They wanted to be told that there were no tradeoffs, whether in this or in environmental policy. They really wanted to believe this; polls showed that many more Americans thought that McCain would raise taxes than Obama, because of Obama's pledges he knew he couldn't keep. And that means that, politically, even if Americans should have known that he couldn't possibly keep those pledges, he's still going to pay a political price for breaking them.

If Obama's proposed additional spending passes, it's mathematically impossible to close the 2012-2019 deficits to even GWB's highest levels without raising taxes on people making less than $250,000. It's darn near impossible even without the health care spending.

What about the 5-day public debate period before signing a bill? That's been broken.

Nobody really gives a rat's ass about government transparency or reading the bill or parliamentary procedure or holding a vote open. Or at least, not enough that they'd change their vote on the basis of it, which in political terms means that as an issue it's entirely pointless. People care about the bill that eventually gets passed or not, but not how the sausage was made.

|7.7.09 @ 4:04PM|#

Who cares what it costs? Really. The system we have is outrageously expensive on an individual level anyway. Besides, there's no time like an economic downturn for the government to spend money.

If health legislation actually makes it so that doctors decide treatment rather than insurance guys, and makes it so that everyone has access to care that won't bankrupt them, who gives a crap about a pittance in taxes? We come out better. Why is it so hard to understand that money out of our pockets is equally burdensome whether it's by taxes or some other expense?

Rich|7.7.09 @ 4:05PM|#

> Seriously, does anyone, even the most doe-eyed ignorant left-winger really believe these idiots when they say something will only cost X?

Jordan, I suspect "the most doe-eyed ignorant left-winger" does not pay attention in the manner to which you have become accustomed.

|7.7.09 @ 4:06PM|#

Note that when I say mathematically impossible, I literally mean that you would need an effective federal tax rate of over 100% (not counting state or local taxes) on those making over $250k, with absolutely no lost revenue from Laffer Curve effects or deadweight loss, in order to close the deficit to GWB levels in the 2012-2019 time period.

Paul|7.7.09 @ 4:06PM|#

-eyed ignorant left-winger really believe these idiots when they say something will only cost X?

It's worse than that. Not only do they believe it will only cost 'x', but they believe that this is an "investment" that will save us all money. Because the people who will be in the public plan will be beneficiaries to the chimeric "preventive care" and thus will never get seriously ill or have to visit an emergency room.

This, of course is a complete fallacy, but no matter, there are some savings in there they just know it and if we can just cast aside all of this right-wing opposition, Americans will be well on the road to health and well-being and healthcare will cost less than ever. Because the government introduced some good old fashioned capitalist competition.

Oh, can someone give me an exact date and time when liberals started to believe in competition? I mean, yeah, it's the government who'll be "competing" and we all know how "competitive" this whole thing will be, but conceptually, they got on board at some point and I sure would like to know the date and time.

|7.7.09 @ 4:07PM|#

American consumers have been living way beyond their means for quite some time now. Buying all sorts of goodies they couldn't afford on credit. It's a national mindset IMO. Along comes a man that promises to fix everything wrong in the country for everybody, especially the poor. The average voter/consumer doesn't give a flying fuck about debt load, be it personal or governmental. Add to that a large percentage of those folks hating Bush and blaming all the countries ills on him and those greedy, corporate profits loving republicans. Add to that a bunch of people with no concept of responsibility.

You have the perfect situation for Obama to do whatever he wants without the folks worrying about the future cost.

I am not advocating this. It is just my interpretation of current events.

I don't think they will be able to pull it off (rearrange a whole fucking industry AND get the taxes to pay for it). But this has been the dream of the american left (both DC elites and college freshman version) for 50 years.

This might just be the hill they want to die on.

|7.7.09 @ 4:08PM|#

If health legislation actually makes it so that doctors decide treatment rather than insurance guys, and makes it so that everyone has access to care that won't bankrupt them, who gives a crap about a pittance in taxes?

Tony, Tony, Tony. Interesting hypothetical, but it has nothing to do with what President Obama and Peter Orszag are proposing. They're saying that doctors call for too much treatment, that they call for the hip replacement when you'd be better off sucking it up with a painkiller. Orszag says that the problem with the insurance guys is that they aren't denying enough treatments, so it costs too much.

Maybe he's right, maybe he's wrong, but the Obama proposal for health care savings has absolutely nothing to do with your claims.

Old Cajun Bob|7.7.09 @ 4:08PM|#

"And that means that, politically, even if Americans should have known that he couldn't possibly keep those pledges, he's still going to pay a political price for breaking them."

His lates approval rating in Ohio fell to 49%.

Seriously, does anyone, even the most doe-eyed ignorant left-winger really believe these idiots when they say something will only cost X? I'm honestly curious if there's anyone that credulous.

Jordan, meet Tony. Yes, he's just a spoof, but he's an accurate spoof.

I've seen some Obama-lovers starting to lose their shine on Obama, but they are relatively intelligent and fair people, and even they haven't turned on him yet.

Old Cajun Bob|7.7.09 @ 4:09PM|#

Shut the fuck up, Tony!

|7.7.09 @ 4:13PM|#

They're saying that doctors call for too much treatment, that they call for the hip replacement when you'd be better off sucking it up ~~with a painkiller.~~

Fixed that for you.

Old Cajun Bob|7.7.09 @ 4:13PM|#

"American consumers have been living way beyond their means for quite some time now. Buying all sorts of goodies they couldn't afford on credit. It's a national mindset IMO. Along comes a man that promises to fix everything wrong in the country for everybody, especially the poor. The average voter/consumer doesn't give a flying fuck about debt load, be it personal or governmental. Add to that a large percentage of those folks hating Bush and blaming all the countries ills on him and those greedy, corporate profits loving republicans. Add to that a bunch of people with no concept of responsibility.

You have the perfect situation for HUGO CHAVEZ to do whatever he wants without the folks worrying about the future cost.

I am not advocating this. It is just my interpretation of current events."

FTFY

Old Cajun Bob|7.7.09 @ 4:16PM|#

Anyone got a link to a page that shows how to post in italics and bold and whatnot? Thanks!

Your Dysfunctional Family Rest|7.7.09 @ 4:21PM|#

"Who cares what it costs?"

Behold the Liberal montra.

|7.7.09 @ 4:23PM|#

Worrying about debt in near-depression is a recipe for many years of pain. GOPers and others going off the rails about the deficit are not only hypocritical given their fiscal record, they are setting this country up for a lost decade in order to score political points against Democrats (the deficit is an obvious target, and one of the few they can latch onto).

If you want the deficit to go down, then think of ways to make the economy grow. Like, say, saving Americans money on healthcare, which as of now represents an outsize economic burden.

I don't know if passable legislation will actually accomplish this, but the logic is sound. I somehow doubt more effective legislation with a larger public role would make you guys any happier.

Peter Suderman|7.7.09 @ 4:24PM|#

Jordan asks:

"Seriously, does anyone, even the most doe-eyed ignorant left-winger really believe these idiots when they say something will only cost X? I'm honestly curious if there's anyone that credulous."

A lot of these cost figures come from the CBO, which is mostly independent from Congress. I think a healthy skepticism about the CBO is necessary, and I know some analysts don't always like their number. But a lot of the smart libertarian policy types I talk to tell me that the office is relatively honest and reliable. I'm actually working on a longer project right now based around the question of whether or not we can trust the agency's scores.

|7.7.09 @ 4:28PM|#

I have to give Tony's sockpuppeteer credit. He/she is very patient, and really adds that "I'm a delusional but seemingly rational person" vibe to Tony.

|7.7.09 @ 4:31PM|#

Peter Suderman,

I don't think it's about doubting the CBO; it's rather about the observed behavior of government programs over the long term. They are expansive by nature. And the reformers insistence that just this one time things will be completely different is recognized as a curious mixture of self-delusion and outright lies.

|7.7.09 @ 4:33PM|#

Who provided the cost estimates for Medicare Part D prior to enactment?

Mike M.|7.7.09 @ 4:42PM|#

Meanwhile, in the latest "No shit, Sherlock" moment, an Obama economic advisor just came out and admitted that this year's budget deficit is going to be even bigger than what they had previously estimated, primarily because the economy is still going down the toilet.

|7.7.09 @ 4:44PM|#

It's worse than that. Not only do they believe it will only cost 'x', but they believe that this is an "investment" that will save us all money. Because the people who will be in the public plan will be beneficiaries to the chimeric "preventive care" and thus will never get seriously ill or have to visit an emergency room.

Don't you know? If you give someone something of value for free, they'll use *less* of it.

It's true.

|7.7.09 @ 4:45PM|#

I know why can't I be like those rational libertarians who can't decide whether they hate higher taxes or deficits more. Here let me anticipate the response: but if we lived in libertopia where the government only exists to blow people up and imprison them, it wouldn't be contradictory at all!

|7.7.09 @ 4:49PM|#

The grim political reality facing Democrats in Congress and the White House is that some Americans, somewhere, somehow are going to have to pay higher taxes if their healthcare bill is going to become a reality.

My Google Fu is weak, so can anyone help with this:

I'm looking for data on the percentage of American families at various income levels (over 250K, 200 - 250K, etc.) and the total income taken in by each tranche. I want to be able to figure out how much would be raised by, say, a 10% increase in the marginal rate at various income levels.

I'm trying to back into just what kind of increase in taxes would cover even the admitted costs of this hideous abomination.

Uh, Tony, we hate taxes *and* fiscal irresponsibility equally.

|7.7.09 @ 4:50PM|#

tarran|7.7.09 @ 4:50PM|#

Tony, baby, you want to reduce health care costs?

REDUCE THE GOVERNMENT CREATED SHORTAGES IN MEDICAL CARE.

Seriously, it's that simple.

According to COGME, we had, in the 1990's a glut of physicians. That's right, according to the government there are too many doctors!

The notion that this plan will cover everyone is laughable. The only thing that government has that an HMO lacks is the policeman's gun, and sovereign immunity from prosecution. Good luck getting better treatments out of it than you would with an HMO.

R C Dean, IIRC, that is available at the U.S. Census bureau website. Or at links from there.

|7.7.09 @ 4:51PM|#

Here let me anticipate the response: but if we lived in libertopia where the government only exists to blow people up and imprison them, it wouldn't be contradictory at all!

Whereas, in Tony's sociotopia, government exists to blow people up, imprison them, and rob them.

|7.7.09 @ 4:55PM|#

Tony, I believe that libertarians hate them both with equal disgust.

Just because your 'topia is different from mine or other posters' doesn't make it right.

FYI, whiny assed bitch style snark is my trademark.

Peter|7.7.09 @ 4:58PM|#

Whereas, in Tony's sociotopia, government exists to blow people up, imprison them, and rob them.

No one needs to blow anyone up or imprison them because all the money from the rich is given to the poor and that makes everyone love each other!

|7.7.09 @ 5:09PM|#

And remember, just because you've got CBO analysis, doesn't mean you can't structure your bill to take advantage of it. One popular way is to have your bill only start paying out benefits after five years or so pass, so that the CBO's ten year analysis really only shows about half the long term average cost.

See for example the CBO director talking about the CLASS Act to establish federal long-term care insurance:

CBO estimates that the proposal's net effect on the federal budget would be to reduce the budget deficit by about $58 billion during the 2010-2019 period, including some effects on federal revenues and Medicaid spending. In CBO's analysis, the real (inflation-adjusted) average monthly premium was assumed to be $65, and the real daily benefit was assumed to average about $75. The estimated reduction in the federal budget deficit over the next 10 years is chiefly the result of the five-year vesting requirement; the payout of benefits would not begin until 2016, five years after the initial enrollment in 2011.

Beyond the 10-year budget window, the effects of the program could be quite different, and CBO expects that the HHS Secretary would need to reduce benefit payments and increase premiums to maintain the program's solvency.
...
Overall, CBO estimates, if the Secretary did not modify the program to ensure its actuarial soundness, the program would add to future federal budget deficits in a large and growing fashion beginning a few years beyond the 10-year budget window.

Typical, of course. Let's shove more deficit spending on down the road and create another unsustainable program.

Mike M.|7.7.09 @ 5:42PM|#

Reduce the deficit by cutting spending really doesn't seem to me like such a hard concept to be able to grasp.

Can Tony really be this stupid, or is he just being deliberately obtuse?

Elizabeth A. Terrell|7.7.09 @ 7:30PM|#

Reminds me of this excellent video:
http://www.youtube.com/watch?v=Kadjlv-LPbI&feature=player_embedded

|7.7.09 @ 8:02PM|#

I think they know exactly how they're going to pay for it. They'll do so by inflating the money, just like they did to pay for the bailouts. When prices rise, they'll spew vitriol at anyone who tries to cope with their inflation, and probably pass wage and price controls like they did during the Nixon administration.

-jcr

|7.7.09 @ 8:46PM|#

Still waiting for someone to explain exactly what needs reform and exactly how that will happen. Oh, right, no more arguing w/insurance company, we will follow the strictly enforced compact formulary of drugs and the even tighter list of approved therapies, shut up and die.

|7.7.09 @ 9:42PM|#

It's not contradictory to hate both taxes and deficit spending in the abstract. But in a particular circumstance, say the one we currently inhabit, freaking out about the deficit while hanging onto your traditional loathing of more taxes, preferring instead to retreat to a fantasy world in which things are correctly (magically) oriented so that no one needs/wants social security and other government services, is to want to have your cake and eat it too. Not to say it's an adolescent avoidance of making choices in favor of pouting and whining.

Probably not a good idea to raise taxes massively during a recession, but the beneficiaries of the Reagan-to-W gilded age can surely afford it.

And the deficit isn't a non-issue. It's just a question of whether it's more important at this time than the recession, which only compounds deficits the longer it lasts.

johnny john john|7.8.09 @ 5:03AM|#

http://www.politifact.com/truth-o-meter/promises/

* Promise Kept 32
* Compromise 9
* Promise Broken 6
* Stalled 12
* In the Works 67
* No Action 388

Gary|7.8.09 @ 11:15AM|#

Now, from the folks who brought us public housing, it's "the public option." Not only will this bankrupt us all, but it will reduce our health care options to zero. Save up your money for trips to India for necessities such as emergency appendectomies. Oops, that won't work, will it? Okay, how about for removal of a tumor? The waiting list and unavailability of doctors and hospitals under "the public option" will be sure to doom most of us to death while we wait for the Mighty One (and his minions) to say we can now get treatment.

Hal Horvath|7.8.09 @ 6:00PM|#

The reason the *market* isn't working well in health care is very simple: fee-for-service, where most insured people have mostly low-co-pay insurance paid for by employeers, hiding the full costs from easy view.

In fee-for-service, the patient thinks: I paid for it, so I should get all I can. The doctor thinks: I could order some more tests and try a few more things, and earn more on this patient. The insurers think: uh-oh, we need to cancel some more policies and raise premiums and offload more of the costs onto the insured, etc., etc.

Combine that with demographic trends and trends like diabetes, and you have an impossible "market" outcome over time -- health eating more of the discretionary-spending economy over time, and all the trends worsening.

But if fees paid to doctors were like most private contracts: fee for outcomes, results....

that would be a whole different picture.

A market that worked.

http://findingourdream.blogspot.com/2009/06/new-way-to-hold-down-health-care-costs.html

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