The Wall Street Journal reports that the Obama Administration is readying a back-up plan in case their latest proposal goes down in flames:
His leading alternate approach would provide health insurance to perhaps 15 million Americans, about half what the comprehensive bill would cover, according to two people familiar with the planning.
It would do that by requiring insurance companies to allow people up to 26 years old to stay on their parents' health plans, and by modestly expanding two federal-state health programs, Medicaid and the Children's Health Insurance Program, one person said. The cost to the federal government would be about one-fourth the price tag for the broader effort, which the White House has said would cost about $950 billion over 10 years.
Officials cautioned that no final decisions had been made but said the smaller plan's outlines are in place in case the larger plan fails.
Just out of curiosity, what on earth would these measures do to reduce health care costs in this country? How is the expansion of Medicaid -- which is being cut by many states facing fiscal pressures -- and CHIP, along with more mandates for private insurance (which will surely drive up costs) going to bend the health care cost curve?
CHIP, by the way, is an interesting case. Passed in 1997, the program had 1 million children enrolled by April 1999. During the 2006 fiscal year that number was up to 6.6 million children and 670,000 adults who were covered at some point. Early last year the program was expanded once again to cover an additional 4 million children. Now it seems that a further expansion is in the cards should ObamaCare be defeated.
And that is how government-run health care, should it ever occur, will come to this country. Not through a massive initiative like ObamaCare or HillaryCare, but the relentless expansion of existing programs. Indeed, sometime next year the government will start to account for a majority of health care dollars spent. While advocates of limited government may win the battle against ObamaCare, the statists are currently poised to win the war.
CHIP, by the way, is an interesting case. Passed in 1997, the program had 1 million children enrolled by April 1999. During the 2006 fiscal year that number was up to 6.6 million children and 670,000 adults who were covered at some point. Early last year the program was expanded once again to cover an additional 4 million children. Now it seems that a further expansion is in the cards should ObamaCare be defeated.
And that is how government-run health care, should it ever occur, will come to this country. Not through a massive initiative like ObamaCare or HillaryCare, but the relentless expansion of existing programs. Indeed, sometime next year the government will start to account for a majority of health care dollars spent. While advocates of limited government may win the battle against ObamaCare, the statists are currently poised to win the war.
13 comments:
Colin, can I ask what's wrong with children being provided health insurance other then the program is state administered? Don't you think, as the fierce believer in markets that you are, that health insurance companies would provide that coverage at a similar cost or a higher quality of care if they were able? Wouldn't they want that increase share of the market?
Here's what's wrong:
* It's unconstitutional. I know many people hate that argument, but it's true. I've checked the enumerated powers and providing health insurance is nowhere to be found.
* Actually, there is substantial reason to think that private insurance companies would provide such health insurance. Economists Jonathan Gruber of MIT and Kosali Simon of Cornell University found that when government expands eligibility for SCHIP and Medicaid, six out of every 10 people added to the rolls already have private coverage. Only four in 10 were previously uninsured. Furthermore, more than half of children eligible for SCHIP already have private insurance. I have little doubt that at least some elected to substitute SCHIP in place of private insurance (SCHIP could well cost less given that government programs don't have to turn a profit or even balance their books). Let's also remember that SCHIP was funded by an increase in the cigarette tax, which hits the poor disproportionately hard, so you can't even use the Robin Hood argument here.
* Lastly I would say that extending insurance to children and calling it a day is really just papering over the problem. The real goal should be both a reduction in health care and insurance costs as well as enhanced health care outcomes. How is this accomplished? More choice and competition. It works every time. This is the reason your food is so cheap, personal technology is constantly improving and air travel is cheaper than ever.
So really, the question becomes how to expand choice and competition. One way is the sale of of health insurance across state lines, which I believe the CBO calculated could reduce premiums by 15%. Mysteriously, this is not even being considered by Democrats (unless they take place through govt-run interstate "compacts" as part of ObamaCare).
Another step to improving health care would be the elimination of "Certificate of need" (CON) laws, a ridiculous initiative implemented by the Nixon administration which actually sought to reduce the supply of hospitals. Of course, reduced supply means less competition and thus higher prices and worse quality.
Many other regulations drive up costs. Many states mandate that even routine procedures have to be performed by doctors instead of nurses. Some prohibit the use of midwives, which is a great boon to nurses but comes at a cost to everyone else. My girlfriend, who works as a physical therapist, would have to take 6 months off from work to study in order to become re-licensed if she were to move to CA and try to work there. This, despite already having worked in two states. It's a ridiculous barrier to supply and competition which again drives up costs.
The biggest factor, of course, in health care costs is the overuse of insurance which insulates patients from costs and drives up prices. This again is a product of government policy and the tax code. Get rid of this and make health insurance real insurance -- that is to say, something to be used in case of catastrophic and emergency situations.
If we want to get serious about childrens' health, free the market. It will reduce costs and improve quality. To the extent the very poorest among us need help they should be assisted either by charitable organizations or government programs run on the state level.
To your points:
1) We allow our society to live in a state of arrest if we block inconceivable reform on the basis that they weren't enumerated in 1787.
2) Private insurance is allowed to compete, but people elect to enroll in SCHIP. Clearly the private insurers aren't providing a service at a price that entices customers to retain their services. That's not a market failure.
3) It is a limited solution, but I would rather ensure more people have regular access to coverage (before the ER) then to do nothing. Unfortunately Republican members in Congress have made it clear that nothing is preferable.
4) Interstate competition will lead to a race to the bottom, so yes, premiums would go down, but so would standards of care and insurer accountability. This soon on the tails of the latest recession, you believe that is a good thing?
5) You decry the regulations that require a doctor to preform certain procedures, which leads to a question. Who should set standards of care? It would seem obvious that insurance companies would have a vested interest in lowering standards of care since that would lower costs. Who then sets standards of care with a mind of providing the best services?
We allow our society to live in a state of arrest if we block inconceivable reform on the basis that they weren't enumerated in 1787.
A state of arrest if we don't follow the constitution? How do you figure? And we don't follow the constitution, what's the point of having one?
Private insurance is allowed to compete, but people elect to enroll in SCHIP. Clearly the private insurers aren't providing a service at a price that entices customers to retain their services. That's not a market failure.
Well, again, given that government doesn't have to make SCHIP economically viable that's not a surprise. It's also one reason of many we have a massive deficit. Government is great at creating programs, less so at balancing their books. But as I mentioned, there are many ways to make private insurance more affordable, most of which consist of getting government out of the way.
Interstate competition will lead to a race to the bottom, so yes, premiums would go down, but so would standards of care and insurer accountability. This soon on the tails of the latest recession, you believe that is a good thing?
Race to the bottom? How do you figure? Is the airline industry a race to the bottom? Consumer electronics? Basically anything governed by market forces? Of course not. Interstate competition allows me to obtain the services I want at the price I want.
There is no free lunch. State mandates of what insurance must include drive prices ever higher. This is why NJ for example has some of the highest health insurance prices in the world (where insurance even covers acupuncture by law). Every new regulation makes the costs go up and up.
5) You decry the regulations that require a doctor to preform certain procedures, which leads to a question. Who should set standards of care? It would seem obvious that insurance companies would have a vested interest in lowering standards of care since that would lower costs. Who then sets standards of care with a mind of providing the best services?
You're right, left to their own devices insurance companies would probably love to increase my premiums as much as possible while rendering as few services as possible at the lowest quality profitable. So would every other company in every other industry. How do we prevent this? Competition.
Consumers tend to dislike poor quality and high prices. The market acts a superb check against this, much more so than regulation.
Profits are an incentive and reward for those who provided desired services and products. Those who provide sub-par offerings go out of business. In a truly free market those health care providers with the best services will rise to the top while others will fail.
Again, I would strongly encourage you, if you have not already done so, to check out these posts about what free market health care in India has accomplished:
http://togetrichisglorious.blogspot.com/2009/09/india-model.html
http://togetrichisglorious.blogspot.com/2009/11/henry-ford-of-heart-surgery.html
Colin,
I'd be interested to see your reasoning that it's unconstitutional. I think there's a solid argument to be made that the combination of the General Welfare clause and the Necessary & Proper clause provide textual anchoring for a National Healthcare system. If you're merely talking about regulating Health Insurance, well there's the Interstate Commerce Clause--not for nothing, but Congress has already regulated this market by exempting it from anti-trust regulation.
1) The Constitution is not code of law, as I was reminded by a law school friend of mine.
2) Technically the government does have to make programs like SCHIP economically viable. You cite the deficit, which reinforces my argument. The government might have more tools in the toolbox, but they will need to balance their books.
As for the remainder of your points, I think you disregard the exceptional-ism of health insurance and the impact of market forces on that industry.
True, in consumer electronics or in flights consumers can select the cheapest option, and so it might be with health insurance. Maybe people buy the Dynex brand LCD versus the Sony, or economy class instead of first class. But when applied to health insurance and levels of coverage this would lead to a despicable class-based designation of resources.
Presumably (if we ignored or removed the existing oligopolistic nature of the health insurance industry, which you have favored in the past) an individual with higher income could devote more of that income to health insurance and he or she would have a very good health plan.
What about the individual who sits at or below the poverty line? What kind of coverage could they buy? The Scott paper towel version of coverage? Should that person have greater exposure to risk because they are poor? Is the fact that they are poor entirely their fault?
The fundamental point I think we disagree on is that everyone deserves a modest level of coverage and the the government is the only entity, through regulation, that could set such a standard that industry would be compelled to respect. If every individual were "free" to buy their own coverage we would, at the lower income brackets of our society, institutionalize second-class healthcare. It smacks of separate, but equal.
1. I view the Constitution as a contract between citizens and their government. It's very specific about the powers granted to the federal government. Health insurance isn't there.
2. I don't know how the deficit reinforces your argument. Since WWII, which also roughly corresponds with the rise of the welfare state, the federal government has run deficits for far more years than a balance or surplus. Fiscal responsibility is certainly not a high priority.
3. With regard to the general thrust of your response, you're essentially making a moral argument that it is abhorrent if some people receive a higher level of health care than others.
Let's keep in mind, however, that a "class-based designation of resources" is pretty much an apt description of how things already work, even with regard to essentials such as food and shelter. Some of us eat mac and cheese while others dine at fine restaurant establishments. Some people lived in crowded apartments while others install rooms designated only for home theater.
While one can be upset with such disparities, I would argue that it's a good thing government has not attempted to equalize outcomes there. Indeed, just look at what a disaster its interventions in these sectors (agriculture subsidies, public housing) have been. However, while disparities exist, over time the absolute standard of the poorest has steadily risen, thanks to market forces (compare this to, say, East Germany, where bananas were a luxury).
In India disparities also exist as to the level of health care dispensed -- and it's a good thing too. While everyone at the heart surgery facility I cited in one of my blog posts receives high-quality surgery, different levels of service are provided. The poorest have to stay in crowded rooms which lack privacy and where food isn't included (relatives bring it to the hospital). More wealthy patients get screens. Wealthier still get rooms to themselves and hospital-provided food. By doing this, it serves as an effective subsidy from the wealthy to the poor. If all patients were to be treated equally, prices would have to rise at the bottom and decline from the top.
This is, incidentally, the same economic model we find in the airline industry, where passengers in first class are effectively subsidizing their fellow travelers in coach (which is why you should shake each of their hands rather than resent them).
Public policy models based on a particular sense of fairness and social justice rarely outperform those based on hard-headed economics. Class envy is rarely a good starting point for such discussions.
Regulation does not help the poor. If you set a minimum level of coverage it means that prices must rise to cover the costs of that mandated coverage. Premiums are not a mathematical abstraction, they represent a real claim on resources, which regulation increases.
If you really want to help the poor, you should seek to create a system which exerts a relentless downward pressure on prices, namely through competition. Competition also promotes innovation, which can help develop new life-saving and life-enhancing products and services.
If we decide that the poor deserve a minimum level of care it seems the best way to achieve that, beyond the free market and private charity, is a voucher system or public funds deposited into health savings accounts -- a bit like food stamps.
Lastly, under any system imaginable not everyone is going to get all the care they want when they want it. It doesn't happen under a free market system and it doesn't happen under a government-run single payer system either. All face trade-offs. We can only hope to make health care as cheap as possible with as many choices as possible. The best way to realize this is through the market place, not more regulation.
Ben,
I don't believe that either the General Welfare clause or interstate commerce justify government-provided health insurance. My reading of the GW clause is that it allows the government to raise taxes to accomplish those tasks with which it is charged. The interstate commerce clause, meanwhile, is meant to guard against economic protectionism among the states.
Stepping back from the language of the constitution, to me it simply defies common sense that a group of men who fought a war against what they perceived as a repressive government -- and were very determined to ensure the federal government only enjoyed limited powers and put in place a system of checks and balances to accomplish this -- would then obviate their efforts through such an expansive interpretation of those two clauses. Is simply doesn't add up.
Colin,
The interstate commerce clause empowers Congress to regulate commerce which is interstate. See Gibbons v. Ogden, 22 U.S. 1, and its progeny.
As far as the General Welfare Clause, it has not been taken so narrowly. See Kelo v. City of New London 545 U.S. 469 (contrasting the narrow "Public Use" clause and the broad "General Welfare" clause). The purpose of the General Welfare clause, at least according to settled Con-Law, is to raise funds to be spent on those thing necessary and proper. In McCulloch, Marshall noted that the Constitution is a constitution and not a code of law, not a collection of statutes. He then determined that Congress has the power to establish a national bank though that is not a power enumerated in Art. I, S 8. See McCulloch v. Maryland, 17 U.S. 316.
Your historical argument, while facially compelling, ignores the period of chaos under the loose Articles of Confederation that prompted the adoption of the Constitution. At any rate, the Long Train of Abuses that prompted the revolution included taxation without representation and the abridging of Colonists' rights, not the provision of national health insurance.
The interstate commerce clause empowers Congress to regulate commerce which is interstate. See Gibbons v. Ogden, 22 U.S. 1, and its progeny.
I have no problem with Gibbons v Ogden. Like I said, the commerce clause was designed to act as a check on protectionism among the states and give final authority to the federal government in such matters. That's what this case did.
As far as the General Welfare Clause, it has not been taken so narrowly. See Kelo v. City of New London 545 U.S. 469 (contrasting the narrow "Public Use" clause and the broad "General Welfare" clause).
That was a horrible decision by the court. An absolute travesty.
I also am not sure how I see the applicability of McCulloch v. Maryland. Creation of national health insurance would be in furtherance of which specific enumerated power?
As for history, I think about it like this: When the republic was first founded the major industry was agriculture, yet no Department of Agriculture was established. New England sailors traded with Europe and the Americas, yet we had no Commerce Department. If the founding fathers had intended an expansive state, don't you think they would have founded one?
I also think there is a HUGE amount of distance between the Articles of Confederation, which didn't even grant the federal government the ability to tax, and the establishment of national health insurance.
And again, what is the point of having specific and enumerated powers if such a broad interpretation of the IC and GW clauses is taken? Given that interstate commerce and general welfare touch all of our lives in at least some fashion, it means we have a federal government with essentially unlimited powers.
Gibbons began interstate commerce decisions but your reading of that sentence notably ignores the nearly 200 years of further development. Interstate commerce has not been limited to protectionism, Colin. If you like, I can hunt down cases for you later but I don't have the time right now. I would recommend you check out Erwin Chemerinsky, Constitutional Law: Principles and Policies.
Whether the Kelo decision was a travesty is beside the point. It is 1. the law; 2. the decision did not turn on whether the General Welfare clause is broad, that was merely an ancillary point. The fact stands that the GW clause is broader than you conceive of it.
The point of McCulloch is that Congress need not have an enumerated power: creating a national bank is not an enumerated power.
And the notion that broad IC and GW clauses render federal government unlimited does not sound in reality. These powers do not allow the federal government to act in the realm reserved to the states. See Medellin v. Texas, e.g.
While interstate commerce has not been limited to protectionism, that is a very significant reason why that clause was included, as during the Articles of Confederation states engaged in protectionist acts against one another.
What we do know is that one can't simply find some tangential way in which an issue impacts interstate commerce and then declare it's a federal responsibility.
As for Kelo, my contention is that it was incorrectly settled. I believe it was wrongly interpreted. Judges and their conclusions are not beyond reproach.
McCulloch allowed the creation of a national bank in order to carry out the federal duties of coining money, as well as tax and spend. Those are all specific and enumerated powers. I don't see how health insurance is applicable.
Lastly, maybe "unlimited" isn't accurate, but plainly a broad reading of those two clauses gives the federal government hugely expansive powers, far beyond what the founding fathers envisioned. Such a broad interpretation also doesn't seem to comport with the 10th amendment. After all, what's the point of saying that any rights not specifically given to the feds are reserved to the states or people? If you take an expansive reading of the GW and IC clauses, it seems that basically any power not given to the states or people are reserved for the federal government.
Little to nothing in the Federal Papers, nor the actions of the founding fathers after the founding of the republic, demonstrate they envisioned anything like the massive federal government we have today. If they were appalled by the British level of interference and taxation, they'd be driven insane by what our own government does today.
Again, whether Kelo was wrongly decided is irrelevant. The point was that in Kelo, the Court nicely distinguished between the Public Use clause (narrow, at issue in the case) and the General Welfare clause (broad, not at issue in the case). Regardless of Kelo's outcome, the General Welfare clause remains broad. This notion finds support throughout Con-Law, including in the writings of Justice Story.
What we do know is that one can't simply find some tangential way in which an issue impacts interstate commerce and then declare it's a federal responsibility.
Actually, the bulk of Interstate Commerce legislation and decisions say the exact opposite. See, e.g., Dupuy v. Dupuy (5th Cir).
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