Sunday, March 28, 2010

Done Deal

So, the Democrats, after 14 months of contentious internal wrangling, finally managed to pass their mammoth overhaul of the US health care system. Since the Republicans in the prohibitive minority, could never do anything to stop it, the problem always was to convince enough Democrats to vote for this socialist wet dream.

Making laws has often been compared to making sausage… a messy business. But, the ugly process of cramming this unpopular law through congress makes the production of links and patties positively clean and efficient by comparison. 'Sleazy' is a word that comes immediately to mind. 'Arrogant' is another.

To get it through the Senate where Democrats held a veto proof majority before the historic election of Republican Scott Brown to occupy the “Kennedy Seat”, special deals were struck with Senators to secure their votes. Mary Landrieu of LA sold her vote for the $300 million “Louisiana Purchase", and Ben Nelson sold out for the “Cornhusker Kickback” for a similar amount. Much less discussed were: “carve outs” for Mutual of Omaha and other insurers in Nebraska; $100 million for Chris Dodd (a hospital in CT) and Tom Harkin got a hospital in Iowa. Democrats in Florida, North Dakota, Montana, Vermont and Michigan all got exemptions for their states from the substantial cuts to Medicare Advantage, a popular program with seniors.

Perhaps the most predictable of the breaks was that for the UAW. They got an exemption from the new tax on “Cadillac” health insurance plans. And why not? In the 2006 and 2008 election cycles the UAW gave $1.5 billion of their members dues to Democrat candidates. After giving them 50% of GM, the Democrats continue to pay them back.

To force the Senate bill through the House, Nancy Pelosi and the White House had to pull out all the stops. We don’t know all the strong-arm tactics employed to convince wavering Democrats to vote for the Senate bill that many members admitted they hated. Their constituents were telling them in no uncertain terms that a “yes” vote would insure their defeat this fall. Kim Strassel (WSJ, 3/19) wrote about the plight of Jason Altmire of PA. His story may be similar to other reluctant Dems. She likened his situation to a man being forced to walk the plank with his choice being facing the cutlasses of angry pirates behind him or sharks circling below. The sharks, of course, were the voters and the pirates organizations like and SEIU who were already running negative ads against him in his district and promising to sabotage his election campaign in the fall by withholding money and running primary challengers against him. On the other hand, a “yes” vote pretty much assured he’d get his ass handed to him in the fall and have to go find a real job.

Dennis Kucinich (D-OH), a no vote last time, got a nice ride on Air Force One, some face time with Obama, and Denny’s wife got a job working for Michelle. Jim Matheson was convinced to vote yes when his brother suddenly got appointed to a lifetime position as a Federal judge.

Surely the most cynical of the purchased “yeses” were that of Reps. Cardoza and Costa of CA. Their districts have been devastated by the decision to shut off the water to the San Joaquin Valley to protect the two inch Delta Smelt. Environmental groups had sued and a Federal judge decreed that the endangered minnow required shutting off irrigation to 1,000,000 acres of farm land, throwing 40,000 farmers and their workers into bankruptcy or onto the streets. Turning the “bread basket of America” into a dust bowl and ruining the economy of the region was not enough to sway the Obama Administration from their love of the Delta smelt. But, getting two more votes for ObamaCare? Screw the minnow! The water has been turned on.

To get the health care bill passed into law the Democrat controlled House had to pass the Senate version without changes. With any changes it would have to go back to the Senate where the election of Scott Brown had eliminated the veto proof majority. But, many Dem House members hated a number of provisions in the Senate bill, particularly language that provided for public funding of abortions. Bart Stupak (D, MI) led a group of Democrats strongly opposed this provision and threatened to provide enough votes to defeat the bill. After serious arm twisting failed to sway him, President Obama stepped in and offered Bart political cover by promising an Executive Order prohibiting public dollars for abortion. While everyone agreed that it was “not worth the paper it’s printed on”, Stupak and his small group figured it a sufficient fig leaf to vote yes for the bill.

The House decided to use “reconciliation”, a parliamentary gimmick that would require only 51 votes in the Senate, to “fix” the objectionable bits of the original Senate bill.

At the same time the Congressional Budget Office released the analysis of the bill’s impact based on a bogus collection of assumptions, double counting, Medicare cuts and tax increases. The CBO came back with the wildly implausible projection that the deficit would be slightly reduced by the bill. This flimsy piece of political cover, coupled with the Stupak cave produced sufficient Democrats to pass the bill with zero Republican votes.

Done Deal!! Pop the corks on the champagne, let the party begin! Obama gloated and continued his speechifying touting the bill even after he signed it. As the Congress packed their bags and their hangovers to head home and face their constituents, the details of what’s in this 2600 page monster started to get analyzed and its impacts calculated. Dozens of major corporations now estimate that the bill will cost them hundreds of millions of dollars. (AT&T says it will be a cool $1 billion). This is only the beginning of the reality check. Those disparaged prognosticators who pegged the cost of the bill at close to $2.5 trillion will certainly be vindicated. There is no doubt that this take over of the health care system will be a killer of jobs and a massive increase to the deficit at a time when the US economy can afford neither.

As I have said before, this legislation has never been about improving health care or containing costs. On 3/20 the WSJ reprinted a 1996 piece by the late Milton Friedman. In it, the brilliant economist explains that the rapid rise in the cost of medical care has been the result of policies that separate the receiver of care from the entity that pays for it. Most people receive medical insurance from their employer (either management or union) or from Medicare and Medicaid. Since someone else is paying, there is little incentive for the users to concern themselves with cost and that encourages the overuse of services. With users unconcerned about cost, providers face no competitive pressures to reduce them. And, since the employer provided insurance is tax deductible to the company and tax free to the employee, this distortion of the market has grown over the years.

Medical Savings Accounts were created to let market forces do their magic in a small segment of the health care universe. People could set aside some tax-free savings in a HSAs to pay for routine medical expenses and purchase high deductible insurance in case of something really serious. When spending their own money, people become much more judicious. ObamaCare will eliminate this common sense approach using the gentle persuasion of the IRS.

The unchecked predations of the trial lawyers who attack health care providers for crimes real or imagined has also added greatly the rapid inflation in health care costs. This not only drives up costs directly but also results in a tremendous amount of “defensive medicine” where doctors and hospitals add tests and procedures in anticipation of lawsuits.

ObamaCare does nothing to address these factors that increase costs. In fact, it makes them worse. Provisions in the bill actually make it easier for tort lawyers to sue doctors and hospitals. Pushing more people into Medicaid will not reduce costs and it certainly won’t improve quality. Besides, debt heavy states can ill afford to have these costs fobbed off on them.

So it’s a done deal…. Against the wishes of a vast majority of the American public. The new taxes start immediately but the “benefits” won’t show up until 2014. In the meantime, we will get to find out what it really means and hire the 16,000 new IRS agents to track down and jail the scofflaws who refuse to buy health insurance. (String them up!) It is difficult not to believe that the whole purpose here is to drive private insurance and health care delivery out of business. Perhaps the Left believes that health care nirvana arrives when the US has a government run system like Canada or Great Britain. I can assure you after living in Canada for the last 15 years, that Americans are going to hate it.

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