About the Author

James C. Capretta

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@aei.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)

 

 More on James C. Capretta

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

Friday, July 30, 2010

What Desperate Democrats Do 

It’s been a bad stretch for the Democratic majority in Congress.

Their polling numbers have been going from bad to worse. The White House press secretary has openly speculated that House Democrats could lose their majority in November. Nasty disputes between Democratic congressional leaders and the White House staff have broken out in the press. One of the most senior House Democrats is now under an ethics-investigation cloud. And, worst of all, the public now sees the Obama agenda clearly and recognizes that it is far too liberal, government-heavy, and anti-business to be compatible with a vibrant American economy. That spells near-certain doom for many House and Senate Democrats seeking reelection and who are viewed by their constituents as accomplices in the administration’s pursuit of massive new spending, onerous taxation, and clumsy regulation.

All is apparently not lost, however — or so the optimists among them now surmise. Yes, these are desperate times; then what’s needed are desperate measures! What do Democrats do when they are cornered and desperate? Why, attack Republicans on Social Security, of course!

Never mind that Democrats have now controlled Congress for nearly four years and have controlled both the White House and Congress for half of that time. They don’t want to talk about their record, probably wisely. Their signature initiative — a massively expensive government takeover of American health care — remains highly unpopular, so much so that most Democratic candidates are now tiptoeing around the subject and almost never bringing it up themselves. Their so-called “stimulus” plan has done little to nothing to generate job growth, even as unemployment has hovered around 10 percent for months on end. And the Obama budget would run up $10 trillion in deficits through 2020 at a time when the American public has come to realize that excessive government spending and debt pose very real threats to their long-term economic security.

No, in the heavy campaign season between now and November 2, congressional Democrats don’t want to talk about what they have done with the voters’ trust since 2006. They want to shift the focus off of themselves by resorting to a tried-and-true scare tactic. If they can’t get voters to affirmatively support them for office, perhaps they can still get their votes by scaring the heck out of them about what the other guys might do.

Specifically, top Democrats, from House Speaker Nancy Pelosi on down, have apparently decided that their ace in the hole is a concerted attack on Rep. Paul Ryan’s plan to save the country from economic collapse. We are told that House Democrats plan to hold a hearing on the Social Security component of the Ryan blueprint sometime this fall, and the expectation is that Democrats will also make it the focus of a coordinated campaign ad attack as the election approaches.

Though not surprising, the shameless irresponsibility of these planned attacks is still something to behold. Rome burns, and those who are the notional stewards of the nation’s finances continue to play the same political games they have always played – indeed, the very games that have brought us to the precipice in the first place.

Every credible economist views runaway federal entitlement spending as the most serious threat to the nation’s long-term prosperity. The Congressional Budget Office (CBO) recently reported that spending on Social Security, Medicare, Medicaid, and Obamacare’s new entitlement commitments will rise from 10.3 percent of GDP in 2010 to 15.9 percent in 2035, a jump of 5.6 percent of GDP — and that assumes that the unrealistic Medicare cuts in Obamacare continue in perpetuity. A more realistic projection shows spending on these programs rising to 17.1 percent of GDP in 25 years. Beyond 2035, the situation will only get worse.

For the record, the Ryan Roadmap is a comprehensive plan to actually fix the problem — permanently. It would rework the federal government’s main retirement and health programs and tax laws to ensure spending commitments can actually be met now and in the future without pushing tax rates or debt to catastrophic levels. Moreover, the reforms reward work, promote economic growth, and empower consumers and markets. Among its many provisions, in the Social Security section, the Ryan plan would very gradually phase in voluntary personal accounts for workers under the age of 55. No one currently in the program or about to retire would have their benefits changed based on the introduction of the accounts, which in any event would be very small for the foreseeable future. Once instituted, the personal accounts would be entirely voluntary. Enrollees would still get a defined benefit from Social Security, but they would also get an annuity from an investment that they own and that is no longer subject to the unpredictable whims of political control. The balances in the accounts would grow at least at the rate of inflation. Workers would be offered more control over their own money, making it easier to also implement the modifications needed to keep program spending in line with revenue.

Where is the Obama-Pelosi plan to head off fiscal disaster? It doesn’t exist, of course. Obamacare did nothing to solve the problem of rising health-entitlement costs. In fact, it made the problem much worse by bringing tens of millions of people into new, open-ended entitlement programs. And there is no plan to keep Social Security solvent, even though the program is already running cash deficits.

The only Democratic “plan” — such as it is — is the appointment by the president of the so-called “debt commission.” But this is a transparent political ploy in its own right. It is aimed first at providing cover for Democrats between now and November. To every question from a reporter on runaway spending and the hemorrhaging of debt that has occurred under President Obama, the Democrats can simply say they are waiting for the commission to make its recommendations — conveniently scheduled by the president for December 1. Moreover, the Democrats are hoping to use the commission to maneuver Republicans into giving them cover for massive tax hikes to temporarily paper over the explosive costs of the Obama welfare state.

Republicans would be fools to go along with this game. Sooner or later, the fight must be joined, and it almost certainly will in 2012, in any event. Voters need to see as clearly as possible the choice that is before them. We can either stay on the road we are on, with crushing taxes and wholesale middle-class dependency on government. Or we can return to a uniquely American formulation, one which protects the vulnerable but also relies on individual responsibility and initiative. Congressman Ryan has done everyone a favor by laying down a blueprint for responsible American self-government that can produce wealth and prosperity in this century just as it did in the last. With the choices clear, Republicans have nothing to fear from this fight.

[Cross-posted at The Corner]

posted by James C. Capretta | 10:38 am
Tags: Paul Ryan, CBO, Congress, federal spending

Thursday, July 29, 2010

Gazing Into CBO's Crystal Ball 

Over at Kaiser Health News, I have a new article looking more broadly at the fiscal sleight of hand that has gone into making the health care law seem far less expensive than it is:

In total, federal spending on the nation’s main retirement and health programs will jump by 5.6 percent of GDP over the next quarter century, and that assumes all of the Medicare cuts enacted in the health law go into effect as written.

But that is almost certain not to happen....

CBO did everyone a favor by producing an alternative baseline forecast which does not assume these Medicare reductions continue cutting deeper into rates after 2020. In 2035, in CBO’s alternative baseline, health entitlement spending including Medicare would reach 10.9 percent of GDP, or a full 1.2 percent of GDP higher than the baseline that assumes the unrealistic Medicare cuts will continue forever....

The primary threat to the nation’s long-term prosperity is runaway federal entitlement spending. Entitlement costs are set to rise so fast and so quickly that the implications for federal deficits and debt are staggering. If allowed to stand, the health law has dramatically reduced the flexibility of the federal government to respond to the coming budget crisis. It locks in massive new spending commitments, and uses every trick in the book to make it look like those commitments have been paid for.

Read the full analysis here.

posted by James C. Capretta | 2:54 pm
Tags: CBO, federal spending, economic forecasts

Thursday, July 29, 2010

The CLASS Act Mistake 

Recently, I co-authored a paper for the Heritage Foundation with Brian Riedl on the Community Living Assistance Service and Supports Act, or CLASS Act. The CLASS Act is a voluntary long-term care insurance program that hitched a ride on Obamacare. Here's an excerpt from our Heritage paper:

...The Obama Administration and Congress chose to attach the CLASS Act to the broader health legislation for one reason only: It made the budget numbers look better on paper.

Budget gimmicks are sometimes relatively benign and inconsequential accounting tricks, but not so in this case. The CLASS Act hitched a ride on the health law to help hide the near-term budgetary costs of a major Medicaid expansion and a new subsidy program for health insurance. But in so doing, Congress created another ticking entitlement time bomb that is certain to explode on future taxpayers if not defused sooner rather than later.

The full paper is available online here, and a pdf version of it is available here.

posted by James C. Capretta | 12:25 pm
Tags: Brian Riedl, CLASS Act

Wednesday, July 28, 2010

Why the Obama Health Plan Is Not Entitlement Reform 

On July 15, the Galen Institute held an event on Capitol Hill at which I had the privilege to discuss a paper I have written on why the Obama health plan is not entitlement reform. The event was moderated by Grace-Marie Turner, the president of the Galen Institute, and opening remarks were graciously provided by House Budget Committee Ranking Member Paul Ryan. Gene Steuerle, of the Urban Institute, and Doug Holtz-Eakin, the former Director of the Congressional Budget Office and now president of the American Action Forum, provided additional comments on the paper as well as other important insights on where we should go from here. The entire event is available for viewing here.

Update: NRO has also published a short op-ed that I wrote summarizing the main points of the paper. It is available here.

posted by James C. Capretta | 1:48 pm
Tags: Grace-Marie Turner, entitlement reform, Urban Institute, Paul Ryan

Monday, July 26, 2010

A Mid-Year Update on the President’s Plan to Spend, and Then Tax, in Epic Proportions 

Peter Orszag, the president’s outgoing Director of the Office of Management and Budget, released the annual mid-year update to the administration’s budget projections at 3 p.m. last Friday afternoon in a conference call with reporters. That was a dead giveaway that the administration was hoping not to make much news with its latest budget projections, or at least not make news in a way that anyone would notice.

They weren’t entirely successful in burying the report, but it’s understandable why they tried. The numbers are eye-popping. The budget deficit in 2010 is expected to set a record at $1.471 trillion — or 10% of GDP. In 2011, the administration projects the deficit will again top $1.4 trillion. From 2010 to 2020, the Obama budget plan would run up a cumulative deficit of nearly $10 trillion, and the nation’s debt would reach $18.5 trillion in 2020, up from $5.8 trillion at the end of 2008.

Even more ominous for the president is the economic forecast. It shows unemployment remaining at over 8% through the 2012 presidential re-election campaign, despite the assumption that relatively normal economic growth would have been underway for more than two years by then.

The primary problem is quite plainly out of control federal spending. In 2008, total federal outlays were about $2.9 trillion. President Obama wants to add $1 trillion to that total in 2011, or about a 33% expansion of governmental activity in just three years. And that’s just the beginning of it. By the end of the decade, federal outlays would reach $5.6 trillion, nearly double what they were a little more than a decade earlier, and that’s assuming a massive and speculative peace dividend after 2011 and cuts in domestic discretionary programs that the president has yet to identify. Of course, the baby boomers are also now entering their retirement years, and will begin flooding into the Social Security and Medicare program in the next few years, pushing spending on those programs up even more rapidly than they have grown in the past. By 2030, there will be 71 million Americans age 65 and older, up from 41 million this year.

All of this building budgetary pressure is now a clear drag on growth and a hindrance to hiring. Firms are worried that the “solution” politicians will ultimately pursue to close the widening gap between federal revenues and spending is more debilitating tax increases. The latest long-run budget forecast from the Congressional Budget Office won’t allay those fears.

In that report, CBO found that a massive tax hike is already in the offing. Historically, federal taxes have hovered at around 18 to 19% of GDP. CBO expects that number to rise to 23% of GDP by 2035, even if nothing is done to change current law. Income taxes will begin to rise automatically next year if Congress lets tax rates revert to their pre-Bush levels. In addition, the cuts to rates on dividends and other investment earnings from 2003 — cuts that were which instrumental to igniting growth during the post-9/11 slump — would also vanish.

President Obama has already pushed through Congress one of the largest tax increases on record as part of his health care plan. The Medicare payroll tax is set to rise by 0.9% of payroll for individuals with incomes above $200,000 per year and couples with incomes exceeding $250,000. In addition, these same households will now pay an additional 3.8% tax on “unearned” income, such as dividends, rent, and other investment income. The income thresholds for assessing these taxes are not indexed at all. Further, the new 40% excise tax on the premiums of so-called “high cost” insurance plans kicks in 2018, and then begins to hit more and more people as the threshold for determining what constitutes a “high cost” plan grows with general consumer inflation and not health costs. Carter-era bracket creep has now been restored in a big way in the age of Obama.

All told, CBO expects these and other tax hikes in the health bill to raise ever-increasing amounts of revenue, reaching 0.5% of GDP in 2020 and 1.2% in 2035.

The president’s governing and budget strategy should now be evident to one and all. He has spent his first two years in office working to secure expansions in the scope and power of the federal government. Working with very sizeable Democratic majorities in both the House and the Senate, he passed an $800 billion-plus “stimulus” program, a massive health care entitlement covering tens of millions of new beneficiaries, a full federal takeover of the student loan industry, and sweeping new regulations for the financial sector. All of these initiatives have increased federal power and spending and have been financed with new tax and regulatory burdens on the private sector of the American economy. And all were passed entirely on partisan lines, or with just token Republican support.

Now that a vastly expanded federal enterprise has been “locked in,” or so the Democrats now hope, the president and his team are looking to “pivot” and spend the coming period in the run-up to 2012 as would-be defenders of the U.S. treasury. The president is now pledging to attack runaway budget deficits starting with consideration of the recommendations of a presidentially-appointed debt commission, set to report — conveniently — just after the mid-term election. And he wants Republicans on the commission and in Congress to give him cover for the tax increases he is sure to seek to pay for the bloated government he has erected.

Republicans would be fools to go along with this game plan. If the president wants bipartisan cooperation in governing, then that cooperation should extend to the scope and expanse of the federal government, not just how to pay for it. That means health care policy, and financial services, and student loans, and everything else in between. But that’s not what the president has in mind. He has spent his first two years in office building a government of the Democrats’ dreams. He and his fellow Democrats in Congress should now explain how they plan to pay for it.

[Cross-posted at e21 here]

posted by James C. Capretta | 3:04 pm
Tags: Peter Orszag, CBO, federal spending, economic forecasts, deficit commission
File As: Health Care

Thursday, July 8, 2010

The Cowardice of His Convictions 

The reason the health-care debate has been so polarizing is that there is a deep and fundamental divide over what should be done to fix the problems in American health care, especially with regard to rapidly rising costs.

On one side of the debate are those who advocate a decentralized, market-based reform program. Congressman Paul Ryan is among the leaders pushing for such a consumer-driven solution.

On the other side are what you might call the “governmentalists.” The governmentalists believe the way to “bend the cost-curve” is with a centralized, government-led effort to micromanage the entire $2.6 trillion health sector from Washington, D.C.

President Obama, his top aides, and his allies in Congress are all quite clearly health-care governmentalists. The evidence for this is on full display in the bill they jammed through the legislative process. It is filled to the brim with provisions that shift power and authority away from states, individuals, employers, and the private sector to the federal government.

The federal government is now the nationwide regulator of all private health insurance. Federal bureaucrats can pick and choose which insurers are allowed to sell to customers in government-managed “markets.” The federal government will determine what health benefits every citizen and legal resident must secure to avoid paying a punitive tax. The federal government will also decide the appropriate level of cost-sharing for government-certified insurance products.

The new law is also filled with provisions which the sponsors contend will slow cost growth with “delivery-system reform.” The federal government has been put in the driver’s seat of a sprawling effort to force doctors and hospitals to quite literally change how they care for patients and conform to the federal government’s view of what constitutes cost-effective medical practice. Medicare’s administrators will be using new authority to reward those who toe the government’s line and hit budget targets, and punish those who don’t. Government reimbursement will be used to prevent the introduction of medical technologies considered excessively costly.

Although President Obama is quite clearly a committed and enthusiastic health-care governmentalist, he has never admitted as much in public, nor is he ever likely to. He avoids engaging in direct debate over the merits of his position with the market-based reformers. Instead, he argues, as he did at the so-called “bipartisan summit” back in February, that there is no great disagreement over substance; it’s just that those dastardly Republicans are against progress on his watch.

In a way, it’s hard to blame him for ducking the fight. The entire governmentalist reform program is based on the assumption that the federal government has the capacity to nimbly manage the health sector and to cut out unnecessary spending without harming the quality of care. Let’s just say that’s a hard sell with most of the public. The federal government has been running public-insurance programs for almost half a century. The only way it has ever cut costs is with arbitrary, across-the-board price setting. These price controls cut reimbursement rates for all providers of services, without regard to what it will mean for patient care. That’s the norm in government-run systems around the world as well. And the end result is not more efficient health care. Artificial, government-set cost limits simply drive out willing suppliers of services, and eventually lead to access problems, queues, and government-driven rationing of care.

Truth be told, this is a debate President Obama has always known he couldn’t win, and so he never wanted to engage in it.

Which brings us to the administration’s recess appointment of Dr. Donald Berwick as administrator of the Centers for Medicare and Medicaid Services (CMS).

Unlike the president, Dr. Berwick hasn’t hid his worldview.

The White House says Republicans were planning to obstruct the nomination. Republicans haven’t obstructed anything. All they did was signal an eagerness to engage in a spirited debate over Dr. Berwick’s vision for health-care cost control. The reason Dr. Berwick’s nomination hasn’t moved forward is because he hasn’t yet submitted responses to relatively routine questions posed by the Senate Finance Committee — questions that would have been asked of any nominee, from either party, given the same set of facts and circumstances.

Some have speculated that the White House chose to make the recess appointment because the answers to some of those questions might cause some problems for the nomination or the administration. Perhaps. But it seems more likely that the primary motivation for the recess appointment was to avoid a clear and transparent fight over the merits of the competing visions of health care reform. Dr. Berwick is an unvarnished governmentalist of the first order. The debate over his nomination would have been the perfect opportunity to present clearly to the public the consequences of handing over so much power in the health sector to the federal government.

The decision to bypass a confirmation fight may have avoided some short-term pain for the administration. But the long-term problem remains. The president jammed his health-care bill through Congress without a full debate and public consent. Voters don’t want the federal government put in charge of cost control, and yet that’s exactly what the new law will do. In time, that fact will become obvious to everyone. At which point, those who sponsored and passed this new reality into law will be held accountable for what they have done.

posted by James C. Capretta | 9:53 am
Tags: Donald Berwick, governmentalism, Centers for Medicare and Medicaid Services, cost control
File As: Health Care

Friday, July 2, 2010

Plugging the Leaks in High-Risk Pools 

(with Tom Miller)

This week, the Obama administration finally launches a poorly designed, hastily constructed, and severely underfunded high-risk pool program across the 50 states. It’s a shallow attempt to appear to be doing “something” soon to help Americans without health insurance due to pre-existing health conditions. But apart from its stumbling start, it’s also the initial poster child for the core flaws of ObamaCare. It misrepresents the real problem, promises more than it can deliver, tries to hide the real costs, and gives sensible reforms a bad name — all because the administration is more committed to its long-term vision of central government control than to actually building a sustainable solution. High-risk pools can address pre-existing conditions without the costs and burdens of the heavy-handed federal regulation of insurance planned for 2014. In short, we can do more by doing less, in a transparent, targeted, and adequately funded manner.

The Patient Protection and Affordable Care Act (PaPACA) enacted into law last March included $5 billion in federal taxpayer funds to finance a new version of state-based high-risk pools (HRPs). This provision was inserted into the broader healthcare legislation late last year to address two political needs. It provided a superficial bow toward bipartisanship (Republican presidential candidate John McCain had proposed a more robust version of HRPs in the 2008 campaign, which was promptly derided by Barack Obama’s supporters). It also would offer modest transitional relief in the form of subsidized insurance to at least some Americans with pre-existing health conditions who find individual market health coverage either unavailable or unaffordable (or both).

ObamaCare advocates hoped that this might distract voters from the unpleasant fact that all but a tiny portion of the new law’s provisions to expand health insurance coverage do not go into effect until 2014, even though the higher private insurance premiums, taxes, and regulatory burdens triggered by the new health law kick in much earlier.

Ironically, the Obama team has both overstated the problem and underfunded the solution. For the past year, ObamaCare advocates have led the public to believe that private insurers regularly scheme to refuse coverage to most people with higher-cost conditions. Last summer, the propaganda arm of the administration’s Department of Health and Human Services (HHS) recycled a dubious Commonwealth Fund survey claiming that 36 percent of all people who tried to buy their own insurance plans (12.6 million non-elderly adults!) were discriminated against because of a pre-existing condition. The real dimensions of the problem of the “medically uninsurable” are a good bit smaller (because most insurers need to sell more, not fewer, policies), but it’s nevertheless serious and costly to solve. Most credible estimates, by the Government Accountability Office, the Congressional Budget Office (CBO), and the Agency for Healthcare Research and Quality, place the figure closer to 2 to 4 million Americans, depending on various definitions and assumptions.

CBO’s assessment is that the new law’s funding for HRPs will only cover, on average, 200,000 enrollees a year — or no more than one in ten of the 2 to 4 million people who are likely in need of assistance. CBO acknowledged that the actual number of people who would be eligible for the program if adequately funded could be much greater — and in the millions — and conceded that if more people were allowed to sign up initially, the available funds will probably be exhausted prior to 2013.

Of course, the estimated cost of dealing with this problem is subject to political mood swings. For example, when Senator McCain proposed a somewhat broader high-risk pool program in 2008 and budgeted it at $7 billion to $10 billion a year, then-Georgetown University professor and HRP critic Karen Pollitz guesstimated to the New York Times that “it may cost 7 to 10 billion dollars a week” and criticized state HRPs that “leave the illusion that there’s a safety net without there really being much of one.” By the fall of 2009, an administration-backed HRP proposal pegged at the ultimate $5 billion total was included in a pending Senate health reform bill. Pollitz had revised her estimates, telling the PBS NewsHour that although it probably cannot cover everybody, it’s a good start and can cover “a lot more than you’re covering now.” She was recently appointed director of the office of consumer support at HHS in the Obama administration.

In any case, the actual cost of a more extensive and robust HRP program would depend on where policy makers set such insurance benefits parameters as cost-sharing and supplemental income-based subsidies, as well as the level at which beneficiary premiums are charged. Although the risk characteristics of the population in broader HRPs could be somewhat healthier and less expensive to cover, the average cost of government subsidies (after premiums) in current state HRPs was about $4,341 per enrollee in 2008.

But the ObamaCare/PaPACA version of HRPs is about to operate very differently from those already established in 35 states that are designed to match more limited resources. Under federal rules, the new state pools cannot allow any exclusions or waiting periods for coverage of pre-existing conditions, age-based premium differences must be compressed, enrollees can only be charged standard rates, and cost-sharing is restricted.

Not surprisingly, estimated costs for these more generous and seemingly less restricted health benefits are much higher, and as many as 20 states have balked at participating directly in the new program when it formally commences this week. Many governors and state legislators fear being left holding the bag when federal funds run out ahead of schedule but political expectations of continued coverage remain. They will leave it to Washington to run new HRPs in their states, in some case redundantly parallel to existing state-run ones operating under older rules.

The flawed design of ObamaCare’s shallow and leaky HRPs reflects the overreaching delusion that the HRPs could somehow fast-forward future assumptions of mandated coverage, standardized benefits, and risk-insensitive insurance premiums (envisioned under PaPACA for new health insurance exchanges and eventually the rest of the “private” insurance market) more than three and a half years ahead of schedule. Over-promising the deliverable benefits of HRPs was aimed at briefly allowing the Obama administration to cover itself politically while building its preferred long-term architecture of federal-directed health insurance regulation.

Drafters of the law authorizing the new HRPs tried to leave some budgetary wiggle room, by limiting their enrollment only to those already uninsured for at least six months and authorizing the HHS secretary to close enrollment to comply with funding limitations and make other unspecified “adjustments” as needed to eliminate any annual deficits. Enrollees already “insured” in older versions of state-based HRPs must remain in their higher-priced, less-comprehensive coverage. Other individuals already suffering from high-cost health conditions (but not yet uninsured for a full six months) must simply wait their turn. In other words, the administration would first encourage a new wave of enrollment in HRPs and boost coverage expectations through over-generous promises, but then renege on them when budget funds run short. If private insurers did this, they would be accused of illegal bait-and-switch practices. However, applying the healthcare spending accelerator and brake at the same time, which inevitably leads to violent collisions, looks like it will become standard policy for the Obama administration’s broader vision of healthcare reform.

The lessons to be learned do not include abandoning the concept of HRPs but rather restructuring them more effectively, sustainably, and transparently. Adequately funded HRPs need to be augmented with broader remedies: supplemental income-based subsidies, stronger protection for those maintaining continuous insurance coverage against the risk of new insurance underwriting based on future changes in health status, and more effective incentives and tools for both patients and providers to make higher-value healthcare decisions.

High-risk pools that deliver what they can promise will be more expensive. But compared to the sweeping burdens of ObamaCare, they will cost much less and do less damage to the rest of the private healthcare market that many Americans prefer and from which they still benefit greatly. They can represent the foundation for what it means to “replace,” and not just “repeal,” its flawed prescription for health policy change.

[Cross-posted at American.com]

posted by James C. Capretta | 2:31 pm
File As: Health Care

Thursday, June 24, 2010

About Those Presidential Promises... 

From my latest column today in Kaiser Health News:

Over the past three years, President Barack Obama made many promises to the American people about his health care plan. Among other things, he said it would reduce the federal budget deficit in coming years, promote better quality care and improve access to physicians.

But two promises stood out in the sales pitch because they were aimed at assuaging the deepest fears of a broad cross-section of the electorate: those who already have good health insurance today.

First, during the presidential campaign, Obama promised on numerous occasions that families with existing coverage would see their annual premiums fall, on average, by $2,500 per household. Jason Furman, an adviser to candidate Obama and now an economic aide in the White House, even said that the Obama campaign team believed this level of premium savings could be fully achieved, or nearly so, by the end of an Obama first term.

Second, throughout the campaign and many times since taking office, the president has promised to let Americans stay with the health insurance plans they are enrolled in today if they want to. In other words, the changes he favors in health care arrangements would not force anyone out of something they find entirely satisfactory.

The rest of the piece looks at how those two promises have been panning out. Short version: not all that well. Read the whole thing here.

posted by James C. Capretta | 2:24 pm
Tags: broken promises, costs, coverage
File As: Health Care

Thursday, June 24, 2010

How to Cover Pre-existing Conditions 

The new issue of National Affairs, the excellent journal edited by my EPPC colleague Yuval Levin, includes a piece that I wrote with Tom Miller of the American Enterprise Institute. The focus of the piece is the problem of pre-existing conditions:

The health-care legislation enacted this spring followed more than a year of heated, rancorous debate. But rather than subdue the public's passions, the bill's passage has only stoked them. Opposition to the new law remains very high, and Republicans have made clear their intention to push for its repeal if they gain control of Congress and the White House in 2010 and 2012.

For their part, President Obama and other champions of the legislation insist that public attitudes will soon change. More Americans will come to appreciate the law, they argue, once people have a better grasp of its benefits. And foremost among these benefits is the law's prohibition of "pre-existing condition" exclusions in health insurance — which would prevent insurance companies from denying coverage to customers with serious medical problems.

Like most of the health-care bill's major provisions, this ban will not take full effect until 2014. But the mere prospect of finally addressing the "pre-existing condition problem" is held up as an enormous selling point of the law. At long last, the bill's advocates claim, America has a solution to a profound failing of our current system — a solution that will eliminate a source of worry for millions, and that opponents would not dare undo. Indeed, while describing the plight of a young woman in the audience at a rally he attended in April, Obama told the crowd: "If [opponents of the law] want to look at Lauren Gallagher in the eye and tell her they plan to take away her father's ability to get health insurance ... they can run on that platform."

The president's dramatic talents notwithstanding, the choice he presents is a false one. We do not face an either-or showdown between cruelly denying sick people treatment and a massive new federal health-insurance entitlement. The problem of covering Americans with pre-existing conditions is certainly real, but the notion that the only way to solve it is through a massive transformation of America's health-care system — one that will increase costs, raise taxes, displace millions of the happily insured, create a new entitlement, and undermine our private insurance sector — is simply wrong.

The case for repealing the newly enacted law, then, is not that there are no problems to solve in American health care. Rather, it is that there are far better solutions available....

The entire piece can be found here.

posted by James C. Capretta | 10:06 am
Tags: pre-existing conditions
File As: Health Care

Tuesday, June 15, 2010

Should People Be Paid to Stay Healthy? 

The New York Times has a symposium on wellness incentive programs in insurance and health care. I argue that they're worth a try:

In health care, as in so much else in modern life, money matters immensely. It matters for those who provide services to patients, as well as for those who consume them. We would have a better health care system today if public policy harnessed financial incentives in the right way — to produce higher quality care at a lower cost.

Alas, U.S. health care is awash in third-party payment arrangements that fundamentally distort decision-making and drive up costs. Public insurance and heavily tax-subsidized employer-provided coverage pay the bulk of the nation’s health care bills, which means consumers are largely insulated from the financial consequences of their choices, including the health care costs associated with unhealthy behavior.

Read the whole thing here.

posted by James C. Capretta | 10:34 am
Tags: wellness programs, patient incentives
File As: Health Care

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