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James C. Capretta

New Atlantis Contributing Editor James C. Capretta is an expert on health care and entitlement policy, with years of experience in both the executive and legislative branches of government. E-mail: jcapretta@eppc.org.
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James C. Capretta’s Latest New Atlantis Articles

 Health Care with a Conscience” (Fall 2008) 

 Health Care 2008: A Political Primer” (Spring 2008) 

 The Clipboard of the Future” (Winter 2008)

 

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Text Patterns - by Alan JacobsFuturisms - Critiquing the project to reengineer humanity

Monday, June 22, 2009

The Baucus Plan Is Obamacare Too 

It is a foregone conclusion that the bill now getting marked up in the Senate Health, Education, Labor, and Pensions Committee (HELP) is not going anywhere. Even the president and his advisers are distancing themselves from it. It costs a fortune — $1 trillion over ten years, according to a Congressional Budget Office (CBO) estimate of an incomplete draft version of the bill — and still only covers a third of the uninsured. Throwing in Medicaid for everyone below 150 percent of the poverty line — as the authors say they intend to do — would reduce the number of remaining uninsured further but at a whopping expense. When all is said and done, the HELP bill almost certainly costs closer to $2 trillion over ten years than $1 trillion. There is no way the congressional Democrats can assemble, on a largely partisan basis, a package of spending reductions or tax increases of that magnitude that their rank-and-file members will support.

But what about the bill the Senate Finance Committee is trying to put together? There, the committee chairman, Senator Max Baucus from Montana, is desperate to strike a deal with the so-called “coalition of the willing” — four Republicans on the committee who have been willing to talk with Baucus on what might be possible in a bipartisan bill. Senator Baucus apparently realizes that there is significant value in the label “bipartisan compromise.”

Here, it is important to remember that Senator Baucus’s strategic objective is to get a bipartisan bill, yes, but only if Democrats can claim the product provides “universal coverage.” That’s what motivates him in this debate — and most Democrats for that matter.

But he has a cost problem too. CBO informed him that an earlier draft of his plan would increase federal spending by $1.6 trillion over ten years, which apparently sent shock waves through the Democratic ranks this week.

In response, Senator Baucus has pledged to produce a bill that only costs $1 trillion over ten years, even as he remains committed to “universal coverage.”

Senator Baucus’s effort to produce a new, “scaled-back” plan is apparently reflected in options covered in a slide deck used at a recent committee meeting — and obtained and posted by Ezra Klein of the Washington Post.

Based on what’s contained in these slides, it is hard to see how the re-tooled Baucus plan would have appeal to any Republicans.

For starters, it’s still a massive tax-and-spend bill. At a minimum, it’s going to cost $1 trillion over ten years to stand up a new health-care entitlement for tens of millions of households. To pay for it, Senator Baucus wants to impose a hugely unpopular tax on the middle-class and cut Medicare’s payment rates to hospital and other suppliers of medical services. The more the public learns of this plan, the less they will like it.

Then there’s the Democratic push to include a government-run insurance option in the reform plan. Senator Baucus knows this is an issue which could drive Republicans out of the negotiating room. And so he is looking for a way to pass a “government option” without calling it that. Enter Senator Kent Conrad. He has suggested a so-called non-profit insurance “co-op” as a substitute for an overt Medicare-like plan (Keith Hennessey, as usual, is all over it with a dead-on critique here). All that one really needs to know about the Conrad co-op is what’s stated in the Finance Committee’s slides: The “advisory boards” of the co-ops would report to the HHS Secretary, who would make the “final decision about approvals of business plans and distribution of funds.” Enough said.

Finally, there are the onerous mandates. How does Senator Baucus plan to fit a $2 trillion scheme into a $1 trillion sack? Make someone else pay, of course. The Baucus plan would impose costly new mandates on both individuals and employers to purchase insurance. Several options are presented in the slides, but the thrust is clear: Employers will be forced to offer and pay for government-approved insurance or pay a new tax, and individuals would pay a fine too if they failed to enroll in an approved product.

Senator Baucus is starting from the same flawed premise as the president and his Democratic counterparts at the other relevant committees. They are bound and determined to pass “universal coverage” without any coherent plan to slow the pace of rising costs. That’s a recipe for onerous mandates, costly new entitlement spending, high taxes, counter-productive regulation, and ultimately government-imposed cost-controls and rationing. In short, all of the bills, including Senator Baucus’s, plant the seeds for a full government takeover of American health care.

What’s needed is sensible, gradual reforms of today’s tax law and entitlement programs to build a functioning marketplace with cost-conscious consumers and effective government oversight. But Congress won’t be able to consider such an approach unless and until it’s clear to all involved that Obamacare, of whatever variety, cannot pass.

posted by James C. Capretta | 12:34 pm
File As: Health Care