The Right Prescription

Ruination From Obama-Baucus

How the Obama/Baucus health care takeover will ruin America's health care.

By 10.14.09

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"This bill is paid for," Senator Max Baucus grinned upon receiving the CBO report scoring his government health care takeover bill as slightly reducing rather than increasing the deficit. But Baucus does not tell you who is paying for it.

CBO scores the Baucus bill as increasing federal spending by close to $1 trillion. That is entirely paid for by Medicare cuts and tax increases, including tax increases on the middle class which Obama pledged over and over would never happen, "in any form," if he was elected. The New York Times and the Democrats are now trying to tell us that this means the bill and its government handouts are free.

Or, as other silly people have said, "the bill pays for itself." No it doesn't. You pay for it through Medicare cuts and tax increases.

Here is another deficit neutral proposal. The government takes 100% of everybody's income and spends it on welfare for the government's political supporters. Such a bill would also "pay for itself." Don't be surprised if this is Senator Jay Rockefeller's next amendment.

Government Health Care Rationing

The Baucus bill includes specific, overt, government health care rationing, which the Obama Administration has already begun to implement under existing legal authority. Baucus's bill provides that the top 10% of doctors who spend the most in Medicare funds on their patients will automatically be penalized with reduced compensation for the services they provide to seniors under Medicare.

This will create, as intended, a new competition among doctors to see who can provide the least to their patients under Medicare, to avoid the personal penalty to their own compensation. Just think how doctors will react in this brave, new world to patients with serious health problems like heart disease, cancer, diabetes, and obesity, requiring substantial Medicare resources to treat. The minute one walks in the door, there goes this year's vacation, college for the doctor's daughter, that second hand car promised to the teenage son.

Doctors will just retreat from providing care for serious illnesses. They will "specialize" in low resource care for the more healthy. And the truly sick will discover that finding a doctor for necessary health care will become quite difficult, if they can find one at all. President Obama has said if you like your doctor you can keep him. But the question is, under the incentives of the Obama health plan, will your doctor keep you.

Meanwhile, the Obama Administration is already using its existing regulatory authority under Medicare to get the rationing started. As the Wall Street Journal reported on October 6, "Democrats are systematically attacking specific medical fields like cardiology and oncology[cancer treatment]." The just adopted Medicare payment rules for next year impose "an 11% overall cut on cardiology and 19% on radiation oncology." The Journal continues:

The basic tools of heart specialists -- echocardiograms (stress tests) and catherizations -- are slashed by 42% and 24% respectively. Jack Lewin, who heads the American College of Cardiologists, said in an interview that the crackdown will cause "a horrible disruption" that will force many community and independent practices to close their doors, lay off staff, or make senior patients wait days or weeks for tests and services.

Payments for diagnostic imaging services like MRIs and CT scans that help identify cancer early would also be cut by 24%. Payments for antitumor radiation therapy will be cut by 44%. The American Society for Radiation Oncology says in the Journal that these cuts "will have a devastating effect on cancer patients' access to care."

It is sickening that this is already happening in America, as the government attacks the current, high quality, middle class health care provided to the sickest and most vulnerable. When the doctor comes to tell you or a loved one that you are going to die from heart disease or cancer, he is only going to say that nothing more can be done for you. He is not going to explain that this is so because of the health care payment system adopted by Obama and Baucus. This is the socialist change that Obama is bringing us in his effort to cut America down to size similar to other, poorer countries around the world.

Medicare Cuts

But this is only the beginning of the rationing involved in Obama/Baucuscare. The bill would cut Medicare by $400 billion to start, including $133 billion for the private Medicare Advantage plans that 10 million seniors have chosen because those plans provide them a better deal than standard Medicare. While Obama has repeatedly promised everyone that if you like your health plan you can keep it, this would not apply to seniors on Medicare Advantage if the more than $100 billion in cuts for those plans forces them out of business. In any event, seniors on Medicare Advantage would lose benefits under these plans as a result of these cuts.

The same would be true for all other seniors on Medicare. The other almost $300 billion in Medicare cuts would reduce the payments to doctors and hospitals for the medical services they provide to seniors. Of course, this means that doctors and hospitals will cut back on the medical services and care they provide to seniors under Medicare.

Even supposed moderate Democrats are now saying on TV that doctors and hospitals will just make up for these cuts in volume. What exactly does that mean for patients? It means precisely less time, fewer resources, and less care for each patient, and longer delays and waiting time for what they can get.

The Baucus bill further provides for an Independent Medicare Advisory Commission with the power to adopt still more Medicare cuts. These cuts would be adopted by unelected, unaccountable bureaucrats, and Obama and the Democrats will say those cuts had nothing to do with them.

Eventually, these Medicare cuts would be expanded to all doctors and hospitals under Obamacare, resulting in rationing for everyone. Further rationing would be imposed under so-called "comparative effectiveness," where the government, not your doctor, decides what health care works and what doesn't, and under "cost-effectiveness" where the government decides whether your health care is worth the cost. These decisions will be again enforced under the payment system for doctors and hospitals.

Literal clowns like Michael Moore and Wanda Sykes ridicule the notion that any such rationing and death panels are included in Obamacare. Glenn Beck already wrote a book responding to such uneducated foolishness, Arguing with Idiots. The whole Baucus bill is a death panel, as explained above.

Higher Costs

The Baucus bill will cause health insurance premiums to soar, as a new Price Waterhouse study confirmed on Monday. The study shows that an average family health insurance policy costing $12,300 today will explode under the bill to $17,200 by 2013, $21,300 by 2016, and $25,900 by 2019.

This will result in part because the bill forces everyone to purchase a health insurance plan specified by the government, with all the expensive, politically correct benefits like coverage for abortion. The Baucus bill will also add a new tax on health insurance that will be passed along to consumers. The bill further adds costly new regulations on health insurance, such as guaranteed issue, which requires coverage for all new applicants regardless of how sick they already are, and community rating, which requires the same premiums for new applicants regardless of health condition. This regulation is like requiring fire insurance companies to insure new applicants whose houses are already on fire, charging them no more than anyone else. Such regulations cause health insurance premiums to soar even in the context of broader health reform, as we have seen in Massachusetts.

But health insurance premiums will also rise because the Obama/Baucus health overhaul would radically increase incentives to demand more health care, with the government paying for everything or paying for health insurance to pay for everything. At the same time, it would radically reduce the incentives to supply health care by clamping down more and more on payments to doctors, hospitals and other health providers for health care services. Increasing demand while reducing supply will produce skyrocketing health costs, which will further increase health insurance premiums.

AARP's John Rother shamefully attacked the Price Waterhouse study as not worth the paper it is printed on. But he has nothing to base that on. AARP has never responded to the arguments presented above, because it is a liberal/left front group specializing not in representing seniors but in political propaganda promoting socialized medicine, big government, and other left-wing causes. Average citizens wonder what they can do to fight back against President Obama's left-wing tide. One thing you can do is quit any membership you have in AARP, and urge all of your friends, neighbors, and relatives to do the same. Seriously, the decline in AARP membership because of its mindless support for Obama's government health care takeover is being monitored in Washington as a measure of public opinion.

The Price Waterhouse study did not even take into account all of the above factors that would increase health insurance premiums. But we can see the impact that would result in Massachusetts where Obama/Baucus-style reforms have already been adopted. Health insurance premiums for families in Massachusetts are already approaching $20,000 a year, the highest in the country. In Iowa, you can get adequate coverage for less than $2,000 per year. As one commentator has said, we have already conducted an experiment in the states as to what works in health reform, and Obama and the Washington Democrats are choosing to adopt what has failed.

New Entitlement Spending

America already faces a looming entitlement crisis. Costs for Social Security, Medicare, and Medicaid are already projected to explode, causing federal spending as a percentage of GDP to almost double in the next couple of decades as the baby boom retires. We already can't pay for all of the entitlement promises we have made.

Yet, instead of addressing these serious problems, the Baucus bill increases entitlement spending further. It expands Medicaid to cover millions more people, increasing government spending for the states as well in the process. And it provides new federal subsidies for the purchase of health insurance for families earning as much as $88,000 per year! CBO projects these new subsidies will cost close to $500 billion to start. Remember in 1965 the government projected that Medicare would cost $12 billion by 1990. When we actually got to 1990, it cost $110 billion.

How could this be more irresponsible? It is an outright abuse of public office.

Tax Increases on the Middle Class

Besides the Medicare cuts, the rest of the bill is "paid for" by $500 billion in tax increases. These include tax increases on health insurance and on health care services and treatment. They include higher payroll and income taxes on workers and employers.

And the tax increases also include the individual mandate. If you do not purchase the expensive health insurance plan specified by the government, you will be forced to pay a special tax penalty enforced by the IRS of as much as $900 per individual and $1900 per family each year. You can then be subject to an additional penalty of as much as $25,000 per year.

But this is not the whole individual mandate tax. The entire cost of the expensive health insurance plan the government is forcing you to buy should rightly be considered a tax as well. A new study from the Heritage Foundation finds that these health insurance costs would be as high as 16% to 19% of income for families earning over 200% of the poverty line. That is like a whole new payroll tax.

These tax increases would be paid primarily by families earning less than $250,000 a year. Last year while campaigning for our votes, Barack Obama and the Democrats pledged over and over that there would be no tax increase "in any form" for anyone making less than $250,000 a year. Less than a year later they are already brazenly violating that pledge that got them into office.

Breakdown of American Democracy

This emerging health policy atrocity represents a fundamental breakdown of American democracy. The only broadcast news outlet reporting this story is Fox News. All the rest, NBC, MSNBC, CNN, ABC, CBS, NPR, carefully report the Democratic Party line and political propaganda as dutifully as the old Soviet controlled press. On Monday, the White House attacked Fox News as a Republican Party mouthpiece precisely because it is the only broadcast outlet not controlled by Obama and the Democrats. If you watch Fox, you will see it includes more overt Democrat party strategists than any other network.

Even without a public option, and even with no increase in the deficit, the above explains why the Baucus bill is still a health policy atrocity that will ruin America's health care, trashing the best, most advanced, and innovative health care in the world that the American people currently enjoy. Note that the bill provides for a 25% cut in government payments to doctors and hospitals in 2011 to get that supposed deficit neutrality. And an internal Senate Finance Committee analysis reveals the valid expectation that employers will cut back on health benefits to avoid the tax on high cost plans. So much for the claim that if you like your health plan you can keep it. So much for the $200 billion in revenues that tax is supposed to raise to avoid any deficit. The other taxes won't raise the revenue projected either.

Any Republican who votes for this assault on America's standard of living needs to follow Sen. Specter all the way into the Democrat Party. Don't foolishly underestimate the grassroots anger on the right over this.

Finally, consider the spectacle of today's Democrat Party. They will not listen to the people, on this issue, or on global warming, taxes, welfare, economic policy, or seemingly anything else. They already know everything. If you don't agree with them, they respond by calling you an ignorant yahoo, a hooligan, and a Nazi. Watch the smirk on the face of supposedly "moderate" Sen. Bob Casey of Pennsylvania anytime he has to address disagreement from the stupid, unwashed masses. This is reminiscent of Marie Antoinette.

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About the Author
Peter Ferrara is Director of Entitlement and Budget Policy at the Heartland Institute, General Counsel of the American Civil Rights Union, Senior Fellow at the National Center for Policy Analysis, and Senior Policy Advisor on Entitlements and Budget Policy at the National Tax Limitation Foundation. He served in the White House Office of Policy Development under President Reagan, and as Associate Deputy Attorney General of the United States under President George H.W. Bush.