Joe Lieberman


The Irony of Mandatory Payments to Profit-Hungry, Private Insurance Companies

Senator Joe Lieberman announced today that he is ready to support “health-care reform” now that both a new, government-run insurance option and the ill-fated Medicare “buy in” idea have been stripped from the legislation.

It’s not really surprising that Senator Reid and the White House, desperate to pass anything called “health care reform,” would succumb to Senator Lieberman’s demands to get his vote.

Still, though long in coming, the jettisoning of all flavors of the so-called “public option” — to appease Senator Lieberman, of all people! — must be an awfully bitter pill for the left to swallow. After all, what is the Reid plan now that those provisions are out? In essence, it’s a requirement that all Americans pay health insurance premiums to secure qualified coverage. And if there is no government-run option, the public will have no choice but to pay their premiums to private insurers. Yes, that’s right. The Democratic party is on the verge of enacting a requirement, enforced with federal tax penalties, which would effectively require hard-working Americans to hand over even more of their wages to profit-hungry, private insurance companies.

Yes, the Reid legislation may still include the half-baked idea to offer national, not-for-profit insurance plans out of the Office of Personnel Management. But no such plans currently exist in the marketplace, and it’s hard to see how they could get up and running and stay viable without crossing into the no-fly zone of a government-run option that would push Senator Lieberman out of the yes column. The not-for-profit concept is therefore either non-viable window dressing to make liberals feel better, or a foot in the door that will draw opposition when its details are revealed.

Of course, even without a new government-run insurance plan, the Reid bill is a policy monstrosity. It’s filled to the brim with mandates, fines, and new federal controls which will erode the quality of American medicine and lead to government-driven rationing of care. It’s a governmental takeover by regulation and bureaucracy, not program enrollment.

Still, it’s easy to see why liberal Democrats are screaming over the Lieberman apostasy. There’s really no industry they despise more than private health insurers. And now they are being told they have no choice but to vote for a bill that would hand over to those greedy insurers a captured marketplace of guaranteed insurance purchasers. Ironic indeed.

posted by James C. Capretta | 3:46 pm
Tags: Joe Lieberman, Harry Reid, mandates, Office of Personnel Management
File As: Health Care

Harry Reid's Ticking Entitlement Time-Bomb

Senate Majority Leader Harry Reid is scrambling today to pick up the pieces from his collapsing “breakthrough deal” between moderates and liberals. It seems the Senate’s top Democrat rushed out with a compromise plan that none of the critical players had actually agreed to support.

At the center of the storm is Connecticut Senator Joe Lieberman, who is an independent but caucuses with his Democratic colleagues. Because of how he was last reelected — in spite of, not thanks to, the national Democratic party — Senator Lieberman owes the Obama administration nothing.

For months, Senator Lieberman has warned his colleagues of the dangers of pursuing an excessively partisan health-care agenda. In August, he told CNN that it would “a real mistake” to jam through an unpopular health bill with no Republican support and passionate public opposition. And he has been sounding the alarm for months that the emerging Democratic plan is too heavy with entitlement expansions at a time when the nation’s finances are already drowning in unaffordable commitments. In an interview in October, he said that Democrats were “trying to do too much” in the health-care bill and were unnecessarily creating additional risks for an already over-burdened federal budget.

But his warnings have fallen on deaf ears. Ever since the August town-hall meetings, the Obama administration and the Democratic leadership in Congress have been rushing full speed ahead to try to pass a highly partisan and bloated bill that they know is strongly opposed by a majority of voters. Their goal is to pass it as fast as possible so that they can lock in a massive entitlement expansion with time to recover politically before the 2010 midterm election.

Senator Lieberman has done the country a great service by, rather mildly, voicing his concern and disagreement with the prevailing Democratic approach. In recent days, he has said that, to get his support, the health-care bill must drop any and all variations of the public option (including the flawed Medicare “buy-in”), as well as the new long-term care entitlement — the so-called CLASS Act — which would almost certainly lead to unfunded obligations down the road. Senate liberals, not wanting to compromise with Lieberman, are howling at the prospect of having their long-cherished goal of “universal coverage” boil down to forcing tens of millions of Americans to pay premiums to profit-greedy, publicly-traded insurance companies.

But even if Senate Democrats made some concessions to Lieberman, the Reid version of Obamacare would still be a runaway entitlement expansion and budget buster. That’s because the primary entitlement it promises is a ticking budgetary time-bomb certain to go off in a few years time.

The Reid bill promises households with incomes between 100 and 400 percent of the federal poverty level that the premiums they owe for health insurance will be limited to a fixed percentage of their incomes. In 2016, a family at the poverty line would pay no more than 2.1 percent of its income toward health insurance. The premium cap would increase on a sliding scale until it reaches 10.2 percent for families with incomes between 300 and 400 percent of the poverty line. The Congressional Budget Office (CBO) expects this entitlement, plus the Medicaid expansion and tax credits for small businesses, to cost about $200 billion by 2019, and to grow 8 percent annually every year thereafter.

But even that staggering cost doesn’t reveal the true price tag of the Reid bill because, expansive as the entitlement is, Senate Democrats make most workers ineligible for it. Workers who are offered qualified coverage by their employers, with employee premiums below specified “affordability” thresholds, would have no choice but to take their job-based plan with no subsidization. True, the vast majority of the premiums would be paid by their employers — but, of course, when an employer pays for health insurance, it is really the worker who pays in the form of lower cash wages. That is the consensus of credible economists, including those working at CBO. There is a federal tax preference for employer-paid premiums, but it is worth much less for most low- and moderate-wage workers than the subsidies the Reid bill would hand out in the exchanges.

Let’s imagine what this would mean in practice in the year 2016, by which time (according to CBO estimates) the average cost of family coverage will be $14,100. Consider a hypothetical family of four with an income at 200 percent of the federal poverty line (or about $48,000 for a family of four in 2016). Under the Reid plan, that family would pay 6.5 percent of its household income as a premium, or $3,120. Their employer would pay a fee of $750 to cover some of the cost. The rest of the premium — $10,230 in this example — would get paid by the federal government.

By contrast, a worker with the same total compensation from his employer but with job-based insurance would enjoy a tax advantage of about $4,300 from employer-paid premiums. That's nearly $6,000 less in governmental support than the worker who is eligible for direct subsidization in the exchange.

According to the Census Bureau, in 2008 there were 127 million Americans under the age of 65 living in households with incomes between 100 and 400 percent of the federal poverty line. But CBO assumes that in 2015, only 18 million people would get subsidized premiums in the Reid plan.

But of course it will never work. If enacted, employers would find ways to place more low-wage workers into the exchanges, thus driving up the cost of subsidized insurance. Congress would also respond to political pressure and liberalize the eligibility rules. Like almost every other entitlement ever enacted, this one will grow far beyond current projections.

Truth be told, though, that’s what most Democrats want. They just don’t want to face up to the costs at this time, in this bill. Better to get the entitlement in place first, and then let it grow naturally as entitlements always do.

Senator Lieberman has been pushing his colleagues all year to produce a bipartisan and more measured bill that enjoys broad public support. That’s the only sure way to prevent enactment of a runaway entitlement sold on dubious assumptions and gimmickry. It’s now within Senator Lieberman’s power to bring about a major course correction. For the sake of the country, he shouldn’t hesitate to force his Democratic colleagues to do what they would not do voluntarily.

posted by James C. Capretta | 6:04 pm
Tags: Harry Reid, Joe Lieberman, CLASS Act, Senate bill
File As: Health Care

The Health Care Bill in the Senate

I have a piece over at First Things on the prospects of the health care bill currently under debate in the Senate, from a possible amendment on abortion coverage to potential hold-outs such as Senator Lieberman:

While Senator Reid was able to garner sixty votes to proceed to his bill before Thanksgiving, it is much less clear that he has the votes locked up to pass it. He will need sixty senators at several more steps along the way to provide their assent, and some who voted with him to proceed to the legislation have publicly stated they would not now vote to stop debate unless significant revisions are made to the bill.

You can read the whole thing here.

posted by James C. Capretta | 3:37 pm
Tags: Senate health bill, abortion coverage, Harry Reid, Joe Lieberman
File As: Health Care