Thursday, February 2, 2012

Two (Relatively) Recent Public Events 

On December 16, 2011, I participated in a public forum at the Brookings Institution entitled “Controlling Medicare Costs: Is Premium Support the Answer?” The event was kicked off by a presentation from former New Mexico Senator Pete Domenici (my old boss from the years I spent on the staff of the Senate Budget Committee) and former Clinton administration Budget Director Alice Rivlin, on the specific premium support plan they have proposed as part of the deficit reduction initiative of the Bipartisan Policy Center. I participated in a panel discussion that followed their presentation, which featured the views of both opponents and proponents of premium support in the Medicare context. My remarks were based in large part on the views I expressed in a companion paper, also commissioned by Brookings (available here). A full description of the event, and a full video recording of it are available here.

And this week, I had the pleasure of moderating a public forum, sponsored by e21, on Capitol Hill featuring introductory remarks from Wyoming Senator John Barrasso and a presentation from University of Minnesota Law Professor Daniel Schwarcz on why employers are likely to dump their unhealthy workers into the Patient Protection and Affordable Care Act’s state exchanges. Professor Schwarcz’s presentation drew on his findings from a law journal article he recently co-authored (available here). The full details regarding the event, as well as a full video recording of it, are available here.

posted by James C. Capretta | 11:48 am
Tags: premium support
File As: Health Care

Monday, January 30, 2012

A Clash of Conscience 

I have a new column up at National Review Online on the Obama administration’s recent refusal to grant a religious exemption for institutions that wish not to be required to pay for contraception and abortifacients:

The central purpose of Obamacare — and the reason it was and is so strenuously opposed by so many Americans — is to transfer all of the critical decisions about how American health care operates to the federal government. Despite what the president contends, it is a federal takeover. The federal bureaucracy is now in the driver’s seat.

And, with the federal government now calling all of the shots, it is a foregone conclusion that a decidedly secularist and utilitarian point of view will be pervasive in everything that is done. It is simply beyond the capacity of the modern federal government to even consider arguments questioning the wisdom of governmental policies promoting free and abundant contraception. Indeed, it is an article of faith in the modern bureaucratic context that pushing such “prevention” measures onto the American public is one more step on the long march to a more just and humane society.

This is the environment in which we live. The hard truth is that the federal government cannot be trusted today with these kinds of decisions, and there’s no prospect of that changing anytime soon. That’s a big reason why Obamacare should never have been allowed to pass in the first place. Just the sight of Catholic leaders’ being forced to go begging before federal officials ought to be enough to convince most Americans that handing over so much power over such sensitive matters to the federal government was a terrible, terrible mistake.

Read more here.

posted by James C. Capretta | 11:24 am
Tags: religious exemption, Obamacare
File As: Health Care

Wednesday, January 25, 2012

On the State of the Union Speech 

Over at National Review Online, I have a brief take on last night’s State of the Union speech. And at economics21, a lengthier response:

It was no real surprise that during last night’s state of the union address the president hit on the same populist themes he has been pounding since Labor Day, which essentially come down to this: the nation’s economic troubles — anemic job growth today, massive federal borrowing and debt accumulation, and stagnant wage growth for the middle class — can all be traced to public policies which deliver excessive economic gains to the rich at the expense of everyone else. In other words, if only the Republicans were willing to tax the rich, all would be well....

But what President Obama didn’t explain last evening — indeed, has never really explained — is how a tax hike on higher income households will help the struggling middle class. Because it’s not at all obvious it would.

You can read the whole column here.

posted by James C. Capretta | 2:19 pm
Tags: State of the Union
File As: Health Care

Monday, January 23, 2012

Inside the Obamacare Spin Zone 

Over at National Review Online, I have a new column up looking inside the Obama administration’s claims about progress at the state level implementing the “health exchanges” meant to form much of the new health care system:

According to the administration’s spin, some 28 states are “on their way” toward establishing the exchanges, so everything is apparently well under control. In other words, nothing to worry about here. Full speed ahead! 

But is that really what’s going on here?

Because, even if one were to accept the White House’s accounting (which one shouldn’t), that would mean that 22 states — roughly 40 percent of the country — are not “on their way” toward erecting the Obamacare exchanges. Isn’t that a problem? Further, upon closer inspection, it’s clear that many of the 28 states that are supposedly “on their way” really aren’t “on their way.”

You can read the full column here.

posted by James C. Capretta | 6:43 pm
Tags: Obamacare, health exchanges
File As: Health Care

Tuesday, January 17, 2012

Yes, NPR, Repealing Obamacare is Possible 

NPR this morning ran a segment on the supposed difficulties that might be involved in repealing Obamacare. Folks who are interested in this question might want to check out a piece I wrote for NRO back in October 2011 laying out the steps involved in using a reconciliation bill in 2013 to repeal Obamacare (assuming Republicans keep control of the House, pick up a majority in the Senate, and take the White House). As the NPR reporter noted, some parts of Obamacare have already gone into effect, and repealers would have to decide which of those to keep intact. But the most significant and expensive components of the legislation certainly could and should be repealed in 2013.

posted by James C. Capretta | 5:53 pm
Tags: repeal, replace, reconciliation
File As: Health Care

Thursday, January 5, 2012

More on Premium Support 

I have a new column up at National Review Online on premium support and controlling health care costs:

There are many reasons to be grateful for the introduction of the Medicare “premium support” plan by Democratic senator Ron Wyden and Republican House Budget Committee chairman Paul Ryan.

In some respects, it represents an improvement over the design of previous versions of premium support. Whereas the original Ryan plan offered seniors a subsidy based on a predetermined formula, the Wyden-Ryan plan relies on competitive bidding for setting the government’s contribution rate. Competitive bidding has the potential to cut costs even more than a predetermined index, because an index tends to lock in today’s wasteful spending. Of course, Wyden-Ryan also very usefully shook up the political debate over premium support, making it much more difficult for Democrats to demonize the concept.

But perhaps the most useful byproduct of the Wyden-Ryan plan has been the clarifying effect it has had on the debate over how to slow the rise of health-care costs.

The full article is available here.

posted by James C. Capretta | 12:45 pm
Tags: Medicare reform, premium support
File As: Health Care

Thursday, December 22, 2011

A Look Back at 2011: Congress and White House Edition 

I have a new column up at e21, looking back at the major policy struggles of the last year:

2011 began with great uncertainty and anticipation. How would the new House majority, propelled into office with the energy from the emergent Tea Party movement, share power with a Democratic White House and Senate? And what would it all mean for economic and fiscal policy?

Now that 2011 is nearing an end, it’s safe to say that this particular political marriage — arranged to some extent by the voters who pulled the lever both for Barack Obama in 2008 and then for conservative Republican congressional candidates in 2010 — has been a rocky one, to put it mildly. Over the course of the past year, the news has been dominated by a series of high-level budget negotiations that were initiated by both sides with great fanfare and much hope for historic and game-changing breakthroughs, and that ended instead as spectacular, headline-grabbing failures....

You can read the whole column here.

posted by James C. Capretta | 1:11 pm
File As: Health Care

Friday, December 16, 2011

Premium Support in the new Medicare proposal 

I have an article up at National Review Online on the new Medicare proposal:

The release of the Medicare-reform proposal cosponsored by Democratic senator Ron Wyden and GOP House Budget Committee Chairman Paul Ryan is a milestone event in the long-running struggle for sensible entitlement reform....

The Wyden-Ryan proposal has ... brought to the surface an important issue of how “premium support” is designed. The version that Ryan released in April 2011, and which passed the House as part of the GOP’s budget plan, would have given seniors a subsidy each year based on a predetermined government formula. The new version would instead set the government contribution based on bids from the competing plans, including the “public option” of traditional “fee for service” Medicare. Setting aside the public option for a moment, moving toward competitive bidding is actually an improvement over the previous version. Most analysts agree that the potential for cost-cutting in Medicare is immense. With a government-set formula for payments, there is a danger that excessive costs get locked into the payment stream. With competitive bidding, there is much greater potential for deep cost-cutting, as plans that find new ways to deliver more for less can attract enrollment with low premiums.

You can read the whole piece here.

posted by James C. Capretta | 4:26 pm
Tags: Medicare reform, premium support
File As: Health Care

Tuesday, December 13, 2011

Out and About 

Last month, I had the opportunity to speak at several meetings on the subject of the relationship of health care to the nation’s medium and long-term fiscal challenge. Two of those sessions were video recorded and are available for viewing on the Internet for those who might be interested.

The first of the recorded sessions, at the Paul Merage School of Business at the University of California at Irvine on November 4, can be viewed here. The slides I used for my presentation are available here.

The second recorded session, at a meeting of the Association of Washington Business (the Chamber of Commerce for Washington State), in Seattle on November 15, can be viewed here. The slides I used for this session in Seattle (very similar to the ones used at UCI) are available here.

posted by James C. Capretta | 1:27 pm
File As: Health Care

Thursday, December 8, 2011

The Case for Reforming Medicare with Premium Support 

Over at economics21, I have a new paper on how Medicare can be reformed with a concept known as “premium support”:

To see the value of premium support as a reform concept, it is necessary to understand how Medicare works today, and especially the role that Medicare plays in today’s inefficient arrangements for delivering health care services.... The primary problem is that health care in this country is highly fragmented and uncoordinated. In the main, physicians, hospitals, clinics, labs, and pharmacies are autonomous, financially independent units. They bill separately for the services they render to patients, with very little need to coordinate with anyone else in the system. The result is an incredible level of duplication and waste, overemphasis on procedure-based medicine, as well as burdensome paperwork, excessive bureaucracy, and a lack of accountability for the all-too-frequent cases of low quality care....

Premium support provides a ... vision for how to bring about “delivery system reform.” Instead of relying on the government’s capacity to re-engineer how doctors and hospitals are organized and provide care, premium support relies on a decentralized process of consumer choice and vigorous price and quality competition among the plans providing coverage as well as among those providing services directly to patients. The idea is to give the program’s participants strong financial incentives to gravitate toward arrangements that can deliver high quality care at the lowest possible premium.

You can read the full paper here.

posted by James C. Capretta | 11:11 am
Tags: Medicare, premium support
File As: Health Care

Monday, November 21, 2011

Super Committee, Super Confusion 

The "super committee" looks poised for failure — which is a much better outcome than some of the deals that were being floated in the last few weeks. As I wrote on NRO last week:

Recent news stories have suggested that the GOP members have offered to raise taxes by $300 billion over the coming decade as part of a deal that would also include some reductions in entitlement spending. But once again, the entitlement changes will do nothing to change the basic, cost-inflating structures of Medicare, Medicaid, or Obamacare. Indeed, if the GOP were to strike such a deal, it would make it that much harder to do what really needs to be done, which is to replace the entire health-entitlement status quo with reformed programs that rely on cost-conscious consumers in a functioning marketplace.

Moreover, the deal that is apparently under consideration would also rely on Senate Finance Committee chairman Max Baucus to write the actual tax and entitlement legislation, along with his GOP counterpart in the House, Dave Camp. This is hardly a process that builds confidence, as Baucus was a primary architect of the massive government overreach that is Obamacare. Indeed, if the supercommittee’s contribution to deficit cutting is to cede power back to the regular committee process, one has to wonder, what was the point of having the committee at all?

posted by James C. Capretta | 11:14 am
Tags: super committee, taxation, entitlement reform

Wednesday, November 2, 2011

Letting the Super Committee Fail? 

I have a new columm up at e21 on the prospects for success of the Joint Select Committee on Deficit Reduction:

The problem is not that the two sides can’t put on the table broad budget parameters that look good on paper (although Republicans will never agree to the kind of tax hike the Democrats are now calling for). The problem is that everything breaks down when the negotiations go from broad and general to the specific....

By all accounts, the super committee has made no progress in conquering these large obstacles to a “grand bargain” on the budget.

That being the case, some in Congress are pushing for a smaller, more incremental deal from the committee, to demonstrate to the markets and the ratings agencies that the American political system isn’t entirely broken. Fine, if it can be done. But under no circumstances should a deal which merely tinkers around the edges and does not fundamentally reform the tax code and entitlement programs be billed as anything but a temporary Band-Aid.

In truth, what is really holding back the super committee is that it does not have a mandate from voters to do what needs to be done. That’s going to take another election, in 2012.... 

You can read the full column here.

posted by James C. Capretta | 3:20 pm
Tags: super committee, budget
File As: Health Care

Monday, October 24, 2011

The End of CLASS 

I have a new article in The Weely Standard on the recently canned part of Obamacare called CLASS:

CLASS (for Community Living Assistance Services and Supports) is a voluntary long-term care insurance program that hitched a ride on Obamacare. The program was set up to charge participants premiums for at least five years before they became eligible for benefits​—​meaning that, as the program commenced, there would be several years of premium collection before any meaningful expenditure.

This turned out to be awfully convenient timing for the White House, as it created the perception of a $70 billion, 10-year CLASS surplus that was used to make Obama-care’s overall books look better.

Counting CLASS in the Obamacare totals was an abuse for two reasons. First, as Ryan pointed out, the same dollar can’t be spent twice. But that’s exactly what the White House wanted to do. They said CLASS’s $70 billion surplus could be used both to pay for Obamacare and to liquidate CLASS Act obligations after ten years.

That was bad enough. But the problem was even worse because CLASS itself was a ticking budgetary time bomb, and the administration knew it.

You can read the whole article here.

posted by James C. Capretta | 11:28 am
Tags: CLASS
File As: Health Care

Thursday, October 20, 2011

World CLASS Contortions 

And so the CLASS Act whitewash begins.

Ever since the Obama administration announced last Friday — in the late afternoon — that it was “suspending” implementation of the CLASS (Community Living Services and Supports) Act, Obamacare’s apologists have been twisting themselves into knots to explain away this embarrassing episode as no big deal.

Leading the way has been Washington Post blogger Ezra Klein. In his account of CLASS’s demise, Klein suggests that the voluntary long-term-care-insurance program ended up in Obamacare pretty much by happenstance, and certainly through no fault of any living Democrat (he points the finger mainly at the late Sen. Ted Kennedy). Klein says the Obama White House was actually publicly cool to the program — and privately hostile. Indeed, according to Klein, the most important reason the program stayed in the final bill was Republican senator Judd Gregg’s amendment, offered in committee, which required the Secretary of HHS to certify that the program could be financed on a self-sustaining basis from participant premiums before it could be launched. Once that amendment was adopted, the budgetary arguments that had been raised against CLASS had been addressed, and then inertia and an unwillingness to undo Senator Kennedy’s final legislative initiative led to its eventual enactment.

Klein also suggests that last week’s White House decision to suspend CLASS implementation is not evidence of failure. Rather, it’s a sign of fiscal sobriety and an unyielding commitment to implementing only what works, and not what doesn’t.

Finally, with regard to the Congressional Budget Office, which estimated in March 2010 that CLASS would produce a $70 billion surplus over the first ten years of Obamacare, Klein again sees no reason for finding fault. Yes, CBO said there would be a short-term surplus from CLASS, but they said all along that there would be long-term deficits from the program too, which the administration has now confirmed. Therefore, Klein concludes, CBO was essentially right about CLASS all along, and the rest of its Obamacare estimate can be trusted to be accurate as well.

Based on Klein’s account of what transpired, one might be tempted to hold up the whole CLASS episode not as a failure, but as a perfect example of good liberal governance. Certainly the New York Times sees it that way. This week, the editors praised the administration for its “wise” but difficult decision to kill the program.

And yet, it’s hard to shake that nagging feeling that Klein and the New York Times haven’t quite gotten this story right. And why is that?

Perhaps it’s because there was never any shred of evidence that CLASS could ever be made sustainable. Not before enactment, and not since. Indeed, any fair reading of the analyses that were done on the concept prior to its passage would conclude that CLASS was hopeless. And it wasn’t a close call. The program was so far from being actuarially sound that it could never be fixed without fundamentally changing how it worked. It is simply not possible to pay a pay-as-you-go long-term-care benefit to the disabled unless millions upon millions of healthy Americans are forced to pay premiums somewhere in the range of $100 to $200 monthly — for a benefit none of them really wants. There was no way the Obama administration was ever going to propose this, because to do so would have been political suicide.

And so, instead, it chose to pretend that a solution might be out there, somewhere, despite all evidence to the contrary.

This was rather convenient for the White House because, as it happened, the $70 billion in supposed CLASS Act “surplus” was just what the doctor ordered for making the deceptive argument that Obamacare was good, not bad, for the federal budget. More than half of the deficit reduction claimed for the final bill came from those bogus CLASS savings. That turned out to be key in convincing the final wavering Democrats to vote yes on the legislation.

CLASS’s enactment was no accident of a chaotic and uncontrolled legislative process. It was a deliberate and cynical ploy to put a phony veneer of fiscal restraint on top of a massive tax-and-spend program. The administration and its allies certainly knew all along that a day of reckoning would come. But they didn’t care; they staked so much on the passage of Obamacare that they had a win-at-any-cost mentality. And now that they have admitted that tens of billions of dollars in deficit reduction that they promised will never materialize, they aren’t the least bit apologetic.

What remains most perplexing in this whole episode is why CBO played along with the CLASS charade. They had access to all of the same actuarial data as everyone else. Their own numbers showed the program was unstable beyond ten years. The Gregg amendment gave them the perfect excuse to conclude that CLASS would never be launched because it could never be viable without massive taxpayer subsidies. And yet they kept showing the $70 billion ten-year surplus in their estimate.

Among the many questions about this sorry episode that are worth pursuing, the role of CBO is surely one.

[Cross-posted at National Review Online.]

posted by James C. Capretta | 3:38 pm
Tags: CLASS Act
File As: Health Care

Tuesday, October 18, 2011

The Reconciliation Option 

Over at National Review Online, I have a new column up on a special budgetary procedure known as “reconciliation,” which was mentioned by Mitt Romney and Rick Santorum at last Tuesday’s Republican presidential debate as an option for repealing Obamacare:

If, in the 2012 election, Republicans are able to maintain control of the House, pick up the majority in the Senate (a real possibility) but not a 60-vote supermajority, and win the White House (looking more possible by the day), the GOP would be in position to set in motion a reconciliation bill to repeal and replace Obamacare — and they wouldn’t need any Democratic cooperation to make it happen. The fact that leading Republican presidential candidates have now said that reconciliation is an option is a big deal, as it makes it very clear to all concerned that there is a clear path to victory for Obamacare opponents.

Seeing the threat that the reconciliation option could pose, Obamacare’s apologists have responded by suggesting it would be the height of cynical partisanship for Republicans to undo Obamacare in this fashion, since reconciliation supposedly played only a minor role in the enactment of Obamacare. Obamacare’s defenders also claim that, in any event, the GOP may not be able to pull it off because some aspects of Obamacare are non-budgetary and therefore aren’t eligible for repeal in a reconciliation measure, which is supposed to deal exclusively with budgetary matters. Sen. Kent Conrad, the Democratic chairman of the Senate Budget Committee, took the argument further and said that using reconciliation for repeal would be inappropriate because reconciliation is supposed to be used fordeficit-cutting efforts — and Obamacare’s full repeal would increase the deficit, according to the Congressional Budget Office (CBO).

As usual, there’s a lot of smoke and misdirection in these arguments, and not much clarity....

You can read the whole column here.

posted by James C. Capretta | 1:01 pm
Tags: Obamacare, repeal and replace, reconciliation
File As: Health Care