Pelosi Needs Catastrophe to Get Health-Care Fix: Caroline Baum
Commentary by Caroline Baum
March 18 (Bloomberg) -- What happens if the Democrats fail to twist enough arms and cajole enough members of the House of Representatives to vote “yes” on the Senate health-care bill?
They can always pass it without a vote, using an arcane rule that would allow the House to approve a package of fixes and amendments in lieu of the health-care bill itself.
House Speaker Nancy Pelosi likes the tactic “because people don’t have to vote on the Senate bill,” she told the Washington Post in a statement sure to haunt her for the rest of her legislative career.
What about the insistence by President Barack Obama that the American people deserve an up or down vote on health care? Pelosi’s plan obviates the need from such democratic niceties.
And if the tactic flops and the bill is defeated?
“If this goes down, neither the Democrats nor the Republicans will make a serious effort in the next two years,” says Andy Laperriere, a managing director at the ISI Group in Washington.
Obama will have squandered his political capital on a dead- end effort. The Democrats will go into hiding because -- take your pick -- they a) failed to deliver the goods, or b) voted for something their constituents hate. The Republicans aren’t about to take the initiative on health care, the sequel.
Can-Kicking Exercise
The U.S. can’t kick the can down the road forever. Health care is consuming an ever-larger share of the economy: a record 17.3 percent in 2009, up a record 1.1 percentage points from the previous year, some of which can be attributed to the recession. As a share of gross domestic product, health care spending is projected to rise to almost 20 percent in the next decade.
The Democrats’ model of a successful government health-care program, Medicare, is going broke. Medicare’s Hospital Insurance Trust Fund is already insolvent on a cash-flow basis and will be exhausted within the next eight years, according to the Social Security and Medicare Boards of Trustees’ 2009 Annual Report.
And that’s before the baby boomers start to retire.
If ObamaCare passes, the outlook isn’t that much different. While the Senate bill has some good features, including the creation of health insurance exchanges where individuals and small businesses can buy coverage, it fails to tackle the basic problem: the lack of incentives. Consumers are divorced from the cost of care. Is there anything else we buy -- from big-ticket items like cars and appliances to necessities like food and clothing to discretionary items like sports tickets and air fares -- where we don’t comparison price shop or weigh our infinite wants against our more limited resources?
Separate, Unequal
The Senate bill does nothing to equalize the tax treatment of health-care benefits, which favors employer-provided care over individually purchased plans. It does away with “the hottest selling product,” which is a high-deductible plan linked to a health savings account, says Paul Feldstein, professor of health-care management at the Paul Merage School of Business, University of California, Irvine. Such plans allow individuals to opt for less comprehensive coverage in exchange for lower premiums.
The U.S. is on an unsustainable path, with entitlement spending growing faster than the economy. While neither party supports the status quo, few lawmakers are willing to face up to the limited, unpalatable options: higher taxes, reduced benefits, increased borrowing. And the government is determined to add a new health-care entitlement and absorb student loans into its already vast portfolio.
So what will it take to make Congress sit up, take notice and do something meaningful before the nation is staring into an abyss? Probably a catastrophe, according to experts I talked to.
Catastrophic Insurance
“From a fiscal perspective, there is not much going on that’s favorable and a lot that’s unfavorable,” says Joseph Antos, a health-policy scholar at Washington’s American Enterprise Institute, a conservative think tank.
Within the next 10 years, half of the baby boomers will be on Medicare, which translates into “a lot more people drawing benefits and a huge hit to tax revenues,” he says. “We have created promises we can’t fulfill.”
U.S. living standards will fall as more resources are directed toward keeping granny alive than investing in ways that increase the economy’s potential. None of this is good. Yet there’s no real appetite for fixing it now.
It was only three years ago that a nascent bipartisan effort at health-care reform emerged in the form of the Wyden- Bennett bill, or the Healthy Americans Act. That Oregon Democratic Senator Ron Wyden and Utah Republican Senator Robert Bennett came up with something superior to anything that’s been offered in the past year’s “reform” efforts suggests the two parties can reach across the aisle and find common cause.
As a starting point, the bill would have mandated universal coverage, introduced real competition among insurers and eliminated the tax exemption for employer-provided insurance.
It went nowhere, introduced as it was at the end of George W. Bush’s presidency in 2007. Pretty soon, a new administration got caught up in that “hopey changey stuff,” to borrow a phrase from Sarah Palin.
Hope won’t change things. Only a catastrophe will.
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