White house plan


Obamacare is a Budgetary Disaster

Congressman Paul Ryan’s systematic dismantling of the argument that Obamacare would cut the budget deficit, delivered at the Blair House “summit” meeting, has gotten a lot of attention in recent days, and deservedly so. The Wall Street Journal ran the full text of his presentation on its opinion page yesterday and amplified his arguments in an editorial of its own. At Blair House, neither the president nor any other Democrat present offered a direct rebuttal to Ryan’s critique. The president chose to change the subject instead.

This week, however, top administration officials have come forward with a belated defense — of sorts.

First, OMB Director Peter Orszag penned a blog post taking issue with one of Ryan’s points, namely that the plan relies on ten years of offsets to pay for only six years of spending. And today, Orszag and White House Health Reform Czar Nancy-Ann DeParle have an op-ed in the Washington Post that expands upon Orszag’s post.

Orszag and DeParle start by agreeing with Ryan that delaying the start date of an entitlement expansion is a tried-and-true budget gimmick, designed to push the full cost of the additional spending outside of the “budget window” covered by a cost estimate.

But, not to worry, they say. In this instance, it’s not a gimmick because the deficit reduction from their plan just keeps growing over time. They claim the president’s health plan would produce deficit reduction of $100 billion over ten years and $1 trillion in the second decade.

Of course, there’s another reason besides balancing revenue and spending to push the start of an entitlement back, and that’s to make the ten-year cost look much smaller than it really is. Recall that the president promised in his address to Congress last September to deliver a bill that costs only “$900 billion” over a decade. The new entitlements the Democrats want to create would cost much, much more than $90 billion per year. In fact, the Congressional Budget Office (CBO) says they will cost about $200 billion per year by 2019. And so, to get the media to now say his plan costs only “$1 trillion” (what’s $100 billion among friends!), the administration delays the coverage expansion provisions until 2014. Never mind that the president also says the uninsured can’t wait a day longer for the legislation. Once enacted, he would make them wait — for four years.

As Ryan noted, however, once the program did get up and running, costs would soar. The Senate Budget Committee Republican staff estimates the Senate bill’s cost at $2.3 trillion over ten years when fully implemented.

In their Post op-ed, Orszag and DeParle do not even attempt to address the many other points Ryan made which expose the dubious assumptions and sleight of hand behind their deficit-cutting claims.

For instance, the health reform bill is filled to the brim with Medicare changes, but the one Medicare provision the president and the Democrats want to pass separately from the health bill is the so-called “doc fix,” which would repeal a cut in Medicare physician fees at a cost of $371 billion over ten years. Of course, splitting their agenda into two or three bills doesn’t change the total cost. When the “doc fix” is properly included in a tally of what the president is pushing, all of the supposed deficit reduction vanishes.

Then there’s the double-counting that Ryan exposed. The president’s plan starts up yet another entitlement program, providing long-term care insurance. Enrollees have to pay premiums for a number of years before they qualify for any benefits. Consequently, at startup, there’s a surplus of premium collections — $73 billion over ten years, according to CBO — because no one qualifies for the benefits yet. The president and his team count these savings against the cost of health reform — even though the money will be needed later to pay out long-term care insurance claims. When this gimmick is taken out of the accounting, the president’s health proposal goes even deeper into the red.

Over the long-run, the administration’s claim of large-scale deficit reduction hinges on the dubious assumption that future elected officials will demonstrate more political courage than those in office today.

For most of last year, the president said that he would “bend the cost-curve” in large part by imposing a new tax on “high-cost” insurance plans. The tax would hit more and more middle class beneficiaries each year because the threshold for determining what constitutes a “high cost” plan would grow much more slowly than medical costs. In fact, after a number of years, virtually all Americans would be in plans at or above the “high-cost” threshold.

House Democrats and their union allies despise this tax. Last week, the president caved in to their pressure and pushed the start date of the tax back to 2018, well past the point when he will have left office. Even so, Orszag and DeParle still claim credit for the massive revenue hike that would occur in a second decade of implementation. They want us to believe we can finance a permanent, expensive, and rapidly growing new entitlement program with a tax the president himself was never willing to collect.

In Medicare, Orszag and DeParle like to highlight so-called “delivery system reforms” the administration has touted. In the main, these are extremely small-scale initiatives and pilot programs. CBO says they will amount to virtually no savings. The big Medicare cuts in the president’s plan come from across-the-board payment-rate reductions. In particular, the president wants to cut the inflation update for hospitals, nursing homes, and others by half a percentage point every year, in perpetuity. On paper, this change produces huge long-run savings. But it does nothing to control the underlying cost of treating patients. It just pays everyone less, without regard to patient need or quality of care. The chief actuary of the program has said repeatedly that these cuts are completely unrealistic for these very reasons. If implemented, he expects they would drive one in five facilities into serious financial distress. And yet Orszag and DeParle want us to believe these savings can be counted to finance the president’s massive entitlement promises.

And massive they are. CBO says the coverage expansion provisions in the Senate-passed bill would cost about $200 billion by 2019, and that cost would rise 8 percent every year thereafter.

But even these estimates understate the true cost of Obamacare. The president’s plan, like the House and Senate bills, would extend generous new insurance subsidies to low- and moderate-wage workers getting insurance through the new “exchanges.” Workers in job-based plans would get no additional help. That means two workers with identical incomes would be treated very differently. Gene Steuerle of the Urban Institute has estimated that, in 2016, a worker with job-based coverage and a $60,000 income would get $4,500 less than someone with the same income but health insurance through the exchange. This kind of inequitable treatment would never last: one way or another, the entitlement would get extended to everyone in the targeted income range, sending the overall costs of the program soaring.

The president started off last year by saying he wanted to “bend the cost-curve” even as he broadened coverage. But after a year of partisan political and legislative maneuvering, all that’s left is a massive entitlement expansion. The new costs would get piled on top of the unreformed and unaffordable entitlements already on the books. It’s a budgetary disaster in the making.

posted by James C. Capretta | 4:03 pm
Tags: Peter Orszag, Nancy-Ann Deparle, CBO, OMB, Obamacare, White House plan, White House summit, budget, chief actuary
File As: Health Care

The President’s Health Plan Won’t Cut the Budget Deficit

Here’s the conclusion of my latest column for Kaiser Health News:

The federal government is piling up new debt at rates not seen since World War II. As Warren Buffett said recently, what the country desperately needs is a serious plan to slow the pace of rising health care costs.

What the president’s plan would deliver, however, is dead-certain entitlement spending, financed with speculative revenue and spending cuts that almost certainly will not work as advertised. The president says Congress should pass his plan to improve the budget outlook. In fact, Congress should reject it to protect the budget from more unfunded entitlement obligations.

The whole column, which explains the ways that the White House has been understating the cost of its proposed health care plan, can be found here.

posted by James C. Capretta | 8:27 am
Tags: White House plan, Warren Buffett
File As: Health Care

The Democrats’ Contorted and Implausible End-Game

Over the past year, many commentators have noted that the Democratic party has invested so much in the health-care effort that Team Obama would do just about anything to get a bill to the president’s desk. We are now witnessing the depths to which the administration is willing to sink to do just that.

What would appear to be the final episode in this long-running saga apparently commences tomorrow. We are told that the president will unveil yet another health-care plan while delivering yet another health-care speech in Washington. This latest presidential offering is being advertised by House Speaker Nancy Pelosi as “much smaller” than the bill the House approved last November.

But how will it be “smaller”?

Here, it is crucial to understand the process Democrats have now apparently settled on for the end-game.

For a time, House Democrats, including the Speaker, were arguing that the House could hold off approving the Senate-passed bill until after both chambers approved a series of “fixes” using the budget-reconciliation process. Once the reconciliation bill was cleared by Congress, the House would then approve the Senate-passed health-care bill, and both bills would then go together to the president for his signature. The final plan would then be a combination of the Senate-passed version of health-care reform as amended by the reconciliation bill, with both becoming law at the same time (the Senate’s health-care bill would presumably get signed first).

But this scheme was always built on the flawed assumption that the reconciliation process could carry a bill through to passage that is essentially a series of amendments to something that is not yet in law — namely the Senate-passed health-care bill, now being held in the House. The problems such contortions would raise are so numerous that it was always implausible Congress would head down this path.

For starters, the Congressional Budget Office (CBO) assesses the budgetary impact of bills by comparing them to current law. To buy off House liberals, the president’s proposal from last week called for upping the premium subsidies provided in the Senate bill. It might be possible to draft a sensible rewrite of the Senate bill’s subsidy sections and put it into a separate piece of legislation. If such a provision were in fact signed by the president after he signed the Senate health-care bill, then it would take precedence and override what’s in the Senate bill. But how in the world could CBO score such a provision for purposes of consideration in Congress? Current law has none of the Obamacare architecture that would make the subsidy program operational. Most especially, there’s no government-run insurance exchanges to even administer the subsidies. Nor is there a government-determined benefit package to set the boundaries for calculating the value of the premium assistance. In such a context, it would be all but impossible for CBO to produce a sensible cost estimate.

Senate Budget Committee Chairman Kent Conrad apparently saw the unholy mess that would unfold if this gambit were actually tried and decided to head it off at the pass. Last week he announced, rather definitively, that for the whole reconciliation-to-fix-the-Senate-bill scheme to work, the House would first have to approve the Senate bill and send it to the president for his signature. In other words, the Senate’s health-care plan must become law before any next steps are taken.

And that puts us back to where we were when Scott Brown stunned the political world with his election victory on January 19. If the Democrats are determined to press ahead with a government-takeover of American health care in spite of widespread public opposition, then House Democrats will have no choice but to approve the Senate-passed bill before doing anything else. Period.

Then, and only then, could the House and Senate take up a reconciliation bill to amend it. Democrats are apparently looking at a timeline that would have the House pass the Senate bill by mid-March, followed by two weeks of pushing a reconciliation bill through both chambers.

Is this scenario at all plausible?

Start with the prospects of House passage of the Senate health-care bill. The Speaker’s description of what the president will propose tomorrow as being “smaller” than what Congress has been considering to date is all spin aimed at generating some renewed interest among those moderates and conservatives in her caucus who voted no the first time around. She almost certainly needs several of them to switch their votes if she is to have any hope of passing something, and they have all expressed the desire to proceed with a “smaller” measure.

But what she will be asking them to approve is anything but small. As everyone who watched the Blair House meeting now knows, the Senate-passed bill is very lengthy, clocking in at 2,400 pages. That’s because it reflects the liberal ambition to rewrite American health care from top to bottom. It stands up another runaway entitlement program, which CBO says will reach $200 billion by 2019 and grow 8 percent every year thereafter. It would impose massive tax increases and job-killing mandates on employers. It would apply arbitrary, across-the-board cuts in Medicare’s provider-payment rates that the chief actuary of the program says will push many institutions into financial distress. It would, for the first time, ask federal taxpayers to pay for elective abortions, including through Community Health Centers.

And to top it off, the bill the House would have to approve first would still include all of the egregious deals struck with individual Senators to buy their votes for passage in December. The special Medicaid arrangement for Nebraska. The exemption of Florida seniors from the Medicare Advantage cuts. The $300 million for Louisiana. Those, and many others, are all in the Senate-passed bill that Speaker Pelosi will be trying to sell in coming days.

Of course, the Speaker will tell these members, don’t worry, the reconciliation bill will fix all these problems. But will it?

If anything, what the president is now pushing, and will presumably push again tomorrow, would make the Senate bill even more expensive, by upping the premium subsidies, closing the Medicare “donut hole,” and giving all states the same deal as Nebraska. These added costs would be paid for with an entirely new Medicare payroll tax, applied to investment earnings. In other words, just days after voting for a highly controversial, trillion-dollar health-care bill, House Democrats would be asked to vote for a reconciliation bill that taxes and spends even more. And then that measure would go to the Senate, where there are never any guarantees that something will emerge unscathed.

It’s hard to see how any of this would be reassuring to House Democratic moderates or conservatives. If they switch their votes to “yes,” they will rightly be seen by voters as putting a risky government takeover of American health care over the top. Plain and simple.

And there are alternatives. President Obama himself has drafted a scaled-back “Plan B.” If sensible House Democrats stand their ground and refuse to go along with the contorted and implausible partisan scheming of their leaders, it will lead to a much better outcome for the country.

posted by James C. Capretta | 5:05 pm
Tags: reconciliation, White House plan
File As: Health Care

The Myth of “All or Nothing”

At last week’s Blair House meeting, several Democrats, including Senator Chris Dodd and House Speaker Nancy Pelosi, repeated the standard talking point used by those pushing for passage of a big health-care bill, which is that it is simply not possible to write a sensible plan that isn’t also “comprehensive.”

Unfortunately for those pushing this line at the “summit,” the Wall Street Journal reported the very same day that the White House has already drafted a decidedly non-comprehensive “Plan B.” After Scott Brown’s stunning election to the Senate in January, it apparently dawned on the president that his grand health-care ambitions might actually be going up in smoke. If that dreaded eventuality did indeed come to pass, the president wanted — not unreasonably — to be ready with a “fallback” plan, one that would cost much less than the bills the House and Senate passed in 2009 but that would still do something positive from his perspective. As reported by the Journal, the president’s staff dutifully complied and put together a package of public insurance expansions and other changes that would cost roughly one-fourth of the “big bill” while still covering some 15 million more people with health insurance.

Of course, just because a plan is incremental does not mean it would entice bipartisan support. This particular version of an incremental plan probably wouldn’t get much Republican interest, given the heavy emphasis on expanding public insurance. It’s an incremental package, yes, but in a decidedly Democratic direction. Other versions with a nod to private insurance almost certainly would attract some Republican votes.

Still, the very existence of the Obama team’s fallback plan should embolden those Democrats who are now resisting their leadership’s pressure to take up the full Obamacare package in coming weeks and pass it. There are plenty of alternatives to passing a massive and risky rewrite of American health care. It’s not “all or nothing,” and never has been. If Obamacare were to be set aside at last — to the great relief of voters everywhere — the president and Congress would still have plenty of time in coming weeks to take up and pass a less ambitious but still significant measure.

The problem for Democrats is that they always dream of putting in place the next New Deal or Great Society. At his State of the Union address in January 1994, President Clinton famously brandished a pen at the Democratic Congress and threatened to veto any health-care bill that didn’t “guarantee every American” health insurance. He never had to deliver on that threat because no bill was ever sent to his desk.

Now, President Obama and his congressional allies have fallen into the same trap. Witness all the comparisons in recent days to the enactment of Social Security and Medicare. That’s the Democrats’ ideal. Their goal is “universal coverage,” but what that really means is another sweeping entitlement that permanently changes the relationship of the middle class to the federal government.

Late last week, the White House announced additional appointments to the “fiscal commission” created by the president, which is supposed to make recommendations on long-term entitlement reform. Most Democrats seem not to have noticed the irony of rushing to lock in another massive entitlement even as they admit they have no earthly idea how to pay for the ones already on the books. But it would seem the American people have, by and large, noticed. Which is why they are in no mood for a “historic” signing ceremony which would only make matters worse.

posted by James C. Capretta | 8:27 pm
Tags: White House plan, Obamacare, Bill Clinton
File As: Health Care

White House “Summit”: Medicare Advantage Confusion

The president is trying to make it seem like the only cuts in the Medicare program he is advocating are for Medicare Advantage (MA) plans. That’s demonstrably not true. The chief actuary has raised concerns about the payment-rate reductions that the Democrats are pushing for hospitals in the traditional program. He believes those cuts will harm access to care. That’s one of the points Congressman Paul Ryan made earlier.

Regarding Medicare Advantage, there were several assertions made by the president that also are not true. First, MA enrollees tend to have lower income than the average Medicare beneficiary. Second, the cuts will come right out of benefits. That’s why seniors sign up with the MA plans — to get better benefits that the president would take away.

Here’s what Republicans should say: The president says he want to save money in Medicare Advantage with competitive bidding. But he would leave the traditional program out of the bidding. That’s a one-sided proposal. If he wants competitive bidding, Republicans should say, “Fine.” But it has to include the entire program. And then watch how fast the Democrats run away from the idea.

posted by James C. Capretta | 3:39 pm
Tags: Medicare Advantage, chief actuary, Medicare, White House plan
File As: Health Care

White House “Summit”: The Premium Dust-Up

At the White House meeting going on right now, a recurring subject of debate has been this question: Will health-insurance premiums increase from the Senate bill?

As usual, the president is playing fast and loose with the facts.

The Congressional Budget Office (CBO) says that premiums would go down in the individual market from the Senate bill for the kinds of insurance offered today. The problem is that people couldn’t get that kind of insurance anymore. They would be forced into more expensive plans, with higher premiums. And so, overall, premiums in the individual market would go up, not down.

Moreover, there are several studies showing why CBO is wrong about premiums declining for current policies.

Here’s one. Oliver Wyman Inc., a respected actuarial firm, did a careful study for the Blue Cross–Blue Shield Association. They found that premiums in the individual market would be 54 percent higher in five years’ time if the Senate bill were enacted, and 20 percent higher for those insured through small businesses.

Why the difference with CBO? The reason is that CBO thinks the individual mandate will be effective in bringing people into the market. That is not at all the view of many, many experts who understand the insurance business. Almost uniformly, they say the mandate in the Senate bill is too weak and won’t work. Consequently, the risk pool will become much less healthy over time, thus driving up premiums.

So, no, Senator Alexander should not at all concede the point. He’s right. If the Obama plan were enacted, premiums in the individual market would go up, a lot.

posted by James C. Capretta | 12:06 pm
Tags: Lamar Alexander, White House summit, White House plan, CBO
File As: Health Care

It’s Not a $950 Billion Plan

The Obama administration has gone to great lengths to convince the press that the plan the president released on Monday would cost “only” $950 billion over ten years. At the moment, there’s no Congressional Budget Office (CBO) cost estimate to contradict the White House’s claim. Nor did the administration provide any cost estimate from its own HHS actuaries, even though the actuaries — not the White House press office — are responsible for developing official health-care spending estimates for the administration. An independent estimate from those who do this for a living showing the plan’s cost at $950 billion would have been very convincing.

But that presumes the actuaries would agree with the White House assessment, which they almost certainly don’t. Their cost estimates over the past six months have consistently shown the health-care bills developed by Congress would cost much more than advertised, and well over $1 trillion over a decade. Worse from the Obama team’s perspective, the top HHS actuary has used every opportunity handed to him to say unpleasant things about the Democratic reform plans. Like, there’s no “bending of the cost-curve” going on in any them. And national health spending would go up, not down. And the deep and arbitrary Medicare payment-rate reductions that the Democrats are pushing would lead thousands of institutions into financial distress, thus jeopardizing access to care for many seniors. The last thing the Obama White House wants to do right now is hand the actuary a microphone.

For its part, CBO’s assessment of the president’s latest plan is likely to look similar to the cost estimate the agency produced for the Senate-passed bill. After all, the White House’s latest proposal is explicitly built on the Senate bill’s framework.

But CBO never said the Senate bill would cost “only” $871 billion over ten years. That’s Democratic spin. CBO said the cost of the so-called “coverage provisions” would cost $871 billion over a decade. But there’s plenty of other spending in the bill that is not directly related to coverage expansion. That spending totaled another $90 billion over a decade.

Moreover, the president has taken the Senate bill’s expansive entitlement promises and made them even more expensive. He would increase the new insurance subsidies, make the Senator Nelson-giveaway for Nebraska available to all states, and close the “donut hole” in the Medicare drug benefit. The White House says the new subsidy structure would add $75 billion to the overall price tag. The Medicaid expansion and the new drug spending would certainly add tens of billions more. If they cost just another $50 billion, that would put the total cost of the White House plan at about $1.2 trillion through 2019.

But 2019 is no longer the appropriate stopping point for budgetary assessment. CBO updates their baseline projections every January, and they extend them by one more year each time they do. So, right now, CBO has current-law projections going out to 2020, and the cost estimates they produce for other tax and entitlement legislation considered by Congress this year will go out to 2020 as well. When CBO finally does assess the latest Obama plan, it will have to look at the plan through 2020, not 2019. Adding one more year to the health-care cost estimate will increase the ten-year price tag by another $220 billion.

And there’s more. The administration wants to provide a permanent fix for the broken Medicare physician-fee schedule, but it doesn’t want to include that fix in the cost of the health-care plan. Never mind that the health-care proposal includes scores and scores of Medicare provisions, touching on just about every aspect of the program. The one provision the White House doesn’t want included just happens to cost $210 billion or more over ten years. It doesn’t matter to taxpayers to whether the Democratic health-care program is passed in one bill, or two, or even three. The total cost will be the same. If the “doc fix” is included in a cost tally of the Obama health plan, as it should be, it adds another $200 billion to the price tag.

So, no, it’s not a $950 billion plan. Not even close. All in all, it’s at least $1.5 trillion through 2020, and probably closer to $1.6 trillion.

But even that’s not the full story. To keep costs “down,” the White House plan starts tax increases and Medicare cuts right away, while the new spending is mostly delayed until 2014. A fair look at the plan’s ten-year costs would include ten years’ worth of spending. The Senate Budget Committee Republican staff expects the Senate-passed bill’s true ten-year cost is $2.3 trillion. The Obama add-ons almost certainly would push that up to $2.5 trillion, and maybe even as much as $3 trillion.

And it would not end there either. If enacted, the Obama health plan would lead to even more entitlement spending down the road. The Democrats want to extend a new health-care entitlement to low- and moderate-wage workers — but only some low- and moderate-wage workers. Not all of them. In particular, the Democrats would provide generous new insurance subsidies to those who get their insurance through the so-called “exchanges.” Lower- and middle-class families who continue to have job-based plans would get no additional help even as the government imposed new mandates and burdens on them. But providing federal support to some but not all workers in defined income categories is a completely unsustainable political proposition. One way or another, the entire middle class will end up becoming eligible for the new entitlement, pushing the costs of the Obama plan well above anything that has been discussed to date.

The Obama team that says all of the lavish new promises it is extending can be paid for with new taxes and Medicare cuts. But that’s already been shown to be a very dubious assumption. Under pressure from his union patrons, the president pushed the starting date for the so-called “Cadillac tax” to 2018 — well past the time when he will have left office. This was supposed to be his signature “bend-the-curve” reform. If he can’t impose this tax, why should we expect later administrations will? And there’s no way Congress will withstand the pressure that will come when some facilities head toward insolvency with inadequate Medicare payments.

At the beginning of 2009, the president told the country we needed to reform health care in large part for fiscal reasons. The federal budget cannot sustain the rapidly rising costs of the health programs already on the books. But at each stage of this year-long odyssey, the bills being pushed by Democrats have become increasingly on heavy entitlement promises and light on anything resembling true reform. The president’s latest proposal continues the trend. After a year of giveaways, this is not a reform effort at all. It’s nothing more than another massive entitlement expansion, and one the country most surely cannot afford.

posted by James C. Capretta | 8:50 pm
Tags: budget, White House plan, Senate bill, actuaries, CBO
File As: Health Care

Obama and the Democrats vs. the Voters

The Obama White House and Congressional Democrats are trying to treat the Massachusetts Senate election the same way they treated last summer’s town hall meetings — by ignoring it.

But it’s very unlikely to work this time around.

Last August, it was already apparent that Obamacare was in deep trouble with a skeptical public. Strong opposition to a government-heavy reform of American health care was on full display in countless meetings held in every part of the country. And it was also clear that the more Americans learned about what was being planned by the Democrats, the stronger the opposition got.

But last September, the White House chose to ignore the clear message that voters were sending. Instead, the administration decided to move ahead as fast as possible to jam the legislation through Congress before public opposition became overwhelming. To get the bills through the House and Senate, Democratic leaders resorted to unseemly vote-buying that further infuriated the public.

Popular outrage was in full boil by the time Democrats huddled at the White House with their union patrons in early January to carve out a special deal for collectively-bargained health-insurance arrangements. The Democrats had no intention of seeking out any more public input at that point. They were focused on reaching a “historic” signing ceremony.

But the voters found another avenue to voice their strong opposition to what was going on, in the person of Scott Brown, who ran for the Senate on the explicit promise to stop Obamacare in its tracks. His stunning and historic victory finally seemed to break through the fog of Democratic self-delusion. After the Brown win, every sane Democrat in Washington finally woke up to what was happening around the country: It’s not some vague anger at gridlock and inaction that is motivating the electorate. Americans are dead set against the government takeover of health care that the president has been pushing, and politicians who continue to pursue that agenda do so at their extreme peril.

Ever since January 19, the health-care debate has been a state of limbo, waiting for the president to make his next move.

This past weekend, he did. Just like last September, it’s full steam ahead for Obamacare. The president is not going to change anything. The health-care “plan” released by the Obama White House on Monday picks up where the Democrats left off in early January, as if nothing has changed but the month on the calendar.

The latest Obama plan would still pile a massive new health entitlement program on top of the unaffordable ones already on the books. The Congressional Budget Office says the cost of the coverage expansions in the Senate bill (upon which the president’s plan is based) will reach $200 billion annually by 2019 and increase 8 percent every year thereafter. The Obama plan would increase those costs with even more expensive promises. Over the next decade, the plan would cost at least $1.2 trillion. Over a full ten years of implementation, its cost would approach $2.5 trillion.

The president keeps saying Congress needs to pass his plan to “bend the cost-curve,” but there has never been cost-control in any of the plans Congress has been considering. The savings in Medicare come from arbitrary payment reductions that apply without regard to any metrics of quality, and the program’s chief actuary has warned repeatedly that they are unrealistic because of the damage they would cause to access to care. Moreover, the much-touted “Cadillac tax” now won’t apply until 2018 — well after President Obama is out of office — and even then it would be set so high as to be largely meaningless. This is the same tax the president and his people have pointed to all year as evidence of their seriousness on cost-control. The political cowardice is stunning. It’s now clear the Democrats have no intention of ever imposing this tax, but that won’t stop Obama from claiming “deficit reduction” from the revenue assumed from it in the second decade of implementation.

The White House and its allies have apparently made their choice. They are going to try to jam their bill through, despite overwhelming public opposition. This will have the entirely predictable result of triggering a backlash of epic proportions. Voters will be beyond irate at the arrogance of it all. Rank-and-file Democrats will therefore be faced with a stark choice. Follow their leaders off of this political cliff, or listen to their constituents and pursue sensible, bipartisan reforms. The president may have decided to ignore the message of Massachusetts, but, with the Obama magic long gone, many other Democrats almost certainly won’t.

posted by James C. Capretta | 10:45 am
Tags: Congressional Budget Office, White house plan, Scott Brown
File As: Health Care