Obama Uses Iffy Math

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http://dailytribune.com/articles/2009/09/10/news/doc4aa91e685e2e9230680802.txt

By CALVIN WOODWARD and ERICA WERNER

Associated Press Writers

WASHINGTON (AP) — President Barack Obama used only-in-Washington accounting Wednesday when he promised to overhaul the nation’s health care system without adding “one dime” to the deficit. By conventional arithmetic, Democratic plans would drive up the deficit by billions of dollars.

The president’s speech to Congress contained a variety of oversimplifications and omissions in laying out what he wants to do about health insurance.

A look at some of Obama’s claims and how they square with the facts or the fuller story:

OBAMA: “I will not sign a plan that adds one dime to our deficits either now or in the future. Period.”

THE FACTS: Though there’s no final plan yet, the White House and congressional Democrats already have shown they’re ready to skirt the no-new-deficits pledge.

House Democrats offered a bill that the Congressional Budget Office said would add $220 billion to the deficit over 10 years. But Democrats and Obama administration officials claimed the bill actually was deficit-neutral. They said they simply didn’t have to count $245 billion of it — the cost of adjusting Medicare reimbursement rates so physicians don’t face big annual pay cuts.

Their reasoning was that they already had decided to exempt this “doc fix” from congressional rules that require new programs to be paid for. In other words, it doesn’t have to be paid for because they decided it doesn’t have to be paid for.

The administration also said that since Obama already had included the doctor payment in his 10-year budget proposal, it didn’t have to be counted again.

That aside, the long-term prognosis for costs of the health care legislation has not been good.

CBO Director Douglas Elmendorf had this to say in July: “We do not see the sort of fundamental changes that would be necessary to reduce the trajectory of federal health spending by a significant amount.”

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OBAMA: “Nothing in this plan will require you or your employer to change the coverage or the doctor you have.”

THE FACTS: That’s correct, as far as it goes. But neither can the plan guarantee that people can keep their current coverage. Employers sponsor coverage for most families, and they’d be free to change their health plans in ways that workers may not like, or drop insurance altogether. The Congressional Budget Office analyzed the health care bill written by House Democrats and said that by 2016 some 3 million people who now have employer-based care would lose it because their employers would decide to stop offering it.

In the past Obama repeatedly said, “If you like your health care plan, you’ll be able to keep your health care plan, period.” Now he’s stopping short of that unconditional guarantee by saying nothing in the plan “requires” any change.

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OBAMA: “The reforms I’m proposing would not apply to those who are here illegally.” One congressman, South Carolina Republican Joe Wilson, shouted “You lie!” from his seat in the House chamber when Obama made this assertion.

THE FACTS: The facts back up Obama. The House version of the health care bill explicitly prohibits spending any federal money to help illegal immigrants get health care coverage. Illegal immigrants could buy private health insurance, as many do now, but wouldn’t get tax subsidies to help them. Still, Republicans say there are not sufficient citizenship verification requirements to ensure illegal immigrants are excluded from benefits they are not due.

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OBAMA: “Don’t pay attention to those scary stories about how your benefits will be cut. ... That will never happen on my watch. I will protect Medicare.”

THE FACTS: Obama and congressional Democrats want to pay for their health care plans in part by reducing Medicare payments to providers by more than $500 billion over 10 years. The cuts would largely hit hospitals and Medicare Advantage, the part of the Medicare program operated through private insurance companies.

Although wasteful spending in Medicare is widely acknowledged, many experts believe some seniors almost certainly would see reduced benefits from the cuts. That’s particularly true for the 25 percent of Medicare users covered through Medicare Advantage.

Supporters contend that providers could absorb the cuts by improving how they operate and wouldn’t have to reduce benefits or pass along costs. But there’s certainly no guarantee they wouldn’t.

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OBAMA: Requiring insurance companies to cover preventive care like mammograms and colonoscopies “makes sense, it saves money, and it saves lives.”

THE FACTS: Studies have shown that much preventive care — particularly tests like the ones Obama mentions — actually costs money instead of saving it. That’s because detecting acute diseases like breast cancer in their early stages involves testing many people who would never end up developing the disease. The costs of a large number of tests, even if they’re relatively cheap, will outweigh the costs of caring for the minority of people who would have ended up getting sick without the testing.

The Congressional Budget Office wrote in August: “The evidence suggests that for most preventive services, expanded utilization leads to higher, not lower, medical spending overall.”

That doesn’t mean preventive care doesn’t make sense or save lives. It just doesn’t save money.

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OBAMA: “If you lose your job or change your job, you will be able to get coverage. If you strike out on your own and start a small business, you will be able to get coverage.”

THE FACTS: It’s not just a matter of being able to get coverage. Most people would have to get coverage under the law, if his plan is adopted.

In his speech, Obama endorsed mandatory coverage for individuals, an approach he did not embrace as a candidate.

He proposed during the campaign — as he does now — that larger businesses be required to offer insurance to workers or else pay into a fund. But he rejected the idea of requiring individuals to obtain insurance. He said people would get insurance without being forced to do so by the law, if coverage were made affordable. And he repeatedly criticized his Democratic primary rival, Hillary Rodham Clinton, for proposing to mandate coverage.

“To force people to get health insurance, you’ve got to have a very harsh penalty,” he said in a February 2008 debate.

Now, he says, “individuals will be required to carry basic health insurance — just as most states require you to carry auto insurance.”

He proposes a hardship waiver, exempting from the requirement those who cannot afford coverage despite increased federal aid.

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OBAMA: “There are now more than 30 million American citizens who cannot get coverage.”

THE FACTS: Obama time and again has referred to the number of uninsured as 46 million, a figure based on year-old Census data. The new number is based on an analysis by the Kaiser Commission on Medicaid and the Uninsured, which concluded that about two-thirds of Americans without insurance are poor or near poor. “These individuals are less likely to be offered employer-sponsored coverage or to be able to afford to purchase their own coverage,” the report said. By using the new figure, Obama avoids criticism that he is including individuals, particularly healthy young people, who choose not to obtain health insurance.

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Michael Tanner: WrongRX

http://article.nationalreview.com/?q=NThmM2Q4MDZjNjU4NjJkZGIwZmY0MWVlNzNiMzRmZTQ=

Wrong RX

Dr. Obama doesn’t know what he’s talking about.

By Michael Tanner

Barack Obama’s presidential campaign is supposed to represent a new politics that transcends traditional partisanship, open to new ideas from all sides, and leavened with optimism. But if Obama’s new health-care plan is an example of this new politics, give me old fashioned partisan bickering and gridlock anytime.

That plan, unveiled Monday in Des Moines, is a dog’s breakfast of bad ideas from Left, Right, and center, topped with an unhealthy amount of wishful thinking. If enacted it would cost Americans dearly — in higher taxes, lost jobs, reduced freedom of choice, and lower quality health care.

From the Left, along with the usual mishmash of increased subsidies, Obama, has taken the idea of an employer mandate. Obama would establish a “play or pay” system under which employers would be required to provide their workers with health insurance or pay a payroll tax to fund government-provided insurance. There are two big problems with this approach. First, it flies in the face of basic economics. The amount of compensation a worker receives is a function of his productivity, and an employer is indifferent as to whether that compensation is in the form of wages, taxes, health insurance, or other benefits. Such a mandate simply increases the cost of hiring workers without increasing their productivity. Employers will therefore have to find ways to offset the added costs. This they can do by raising prices, lowering wages or reducing future wage increases, reducing other benefits such as pensions, or hiring fewer workers. Almost certainly, employees will be the net losers under such a mandate, with the low-skilled suffering most.

Second, an employer mandate locks us further into an employment-based health insurance system at a time when there is a growing bipartisan consensus that we should be moving in the opposite direction. There is no logical reason for tying health insurance to employment. There are many good reasons for not doing so.

At the same time, he looks right to call for a Massachusetts-style insurance “connector,” an idea being promoted by the Heritage Foundation among others. (Obama calls it “an exchange.”) The exchange would allow workers to purchase individual health insurance with pre-tax dollars, leveling the playing field for individual insurance and giving workers the chance to buy personal and portable insurance — a good idea. The problem is that “exchanges” are also regulatory bodies. Indeed, Obama wants the “exchange” to regulate all sorts of things, including minimum benefit packages, premium caps, limits on copayments and deductibles, and “standards of quality and efficiency.”

Like Hillary Clinton, who announced part of her health-care plan last week, Obama would require insurers to cover everyone regardless of their health status and charge community-rated premiums. One goal of health-care reform should be to encourage people to enter the insurance pool while they are young and healthy. We can do this by making insurance inexpensive for them, and penalizing them if they wait to buy insurance when they are old and sick. Community rating and guaranteed issue does precisely the opposite, raising the cost of insurance for the young and healthy and removing any penalty for waiting. Inevitably, this means more young healthy people will make the rational choice to go without insurance. Hillary Clinton (and former Massachusetts Governor Mitt Romney, for that matter) dealt with this by mandating that everyone buy insurance. Obama seems unaware of the problem he is creating.

Finally, there is the question of how to pay for all this. Obama does not put a price tag on his plan, but there is no doubt it will be expensive. Indeed, it will almost certainly be far more expensive than he assumes, since his ideas for cost savings are mostly figments of his imagination. For example, Obama assumes that allowing the federal government to directly negotiate Medicare drug prices will yield substantial savings. But the Congressional Budget Office has said that private insurance plans have already reduced drug prices about as far as they can go, and unless the government is prepared to severely restrict drug formularies, denying seniors access to some drugs, further savings are unlikely.

And Obama, like everyone else from Newt Gingrich to Hillary Clinton, assumes that there will be enormous savings from having the government design a system for electronic medical records. Electronic medical records would undoubtedly be a good thing and would reduce both costs and medical errors. The private sector is already moving rapidly in that direction. But the federal government has not yet figured out how to get the FBI’s computers to talk to each other. What makes anyone think that a single federally-imposed medical IT system will be more efficient?

So far three Democrats (Obama, Hillary Clinton, and John Edwards) and one Republican, (Mitt Romney) have put forward plans for health-care reform. For supporters of free market health care, it is looking like a very long and disappointing campaign.

—Michael Tanner is the director of Health & Welfare Studies at the Cato Institute, and the author of Leviathan on the Right: How Big Government Conservatism Brought down the Republican Revolution?