United Liberty

Editor’s Note: This piece originally appeared at The Ancient & Noble Order of the Gormogons.

Dr. Nick Riviera is better qualified to opine on economics than any of these clowns. If the quality of thought in these letters is any indication, Dr. Nick Riviera’s also a more competent physician.

Doctors are the worst.*

‘Puter concluded doctors can suck his big, fat prickly pear after reading the New York Times letters to the editor yesterday.

About eleventy gajillion** doctors wrote in to comment on the New York Times’ article “Medicare and Medicaid at 50.” We are treated to brilliant commentary, insightful analysis, and thoughtful prescriptions*** for America’s healthcare system from the medical profession’s best and brightest.

Dr. Marcia Angell, a “senior lecturer in social medicine at Harvard Medical School and a former editor in chief of The New England Journal of Medicine” from notoriously Right-leaning Cambridge, Massachusetts writes:

The New Republic is only repeating what several Democrats, including Senate Majority Leader Harry Reid (D-NV), have said: Obamacare is a step in the direction of a single-payer healthcare system.

The lede in the piece is that Michael Moore got it right when he describe Obamacare as “awful” because it “preserved the health insurance industry preserved the health insurance industry rather than replacing it with a Medicare-for-all style single-payer system.” Like Moore, The New Republic, a far-leftist publication, posits that Medicaid expansion through Obamacare is the key to luring Americans into socialized medicine.

“[O]ne day soon, especially if Medicaid becomes more generous, the working-class person who makes 175% of the poverty level will look at his working-class neighbor making 130% of the poverty level and think, wow, his health insurance seems a lot better than my private Obamacare plan,” wrote Noam Scheiber recently at The New Republic. “How long can it be before most people earning 175% or 200% of the poverty level are allowed to buy in, too?”

Scheiber believes that the same thing could happen with Medicare, the government-run health insurance program for the elderly, surmising that “progressives are likely to get their beloved public option one way or another” in the near future.

On March 23, 2010, Barack Obama signed into law his signature legislative achievement, the Patient Protection and Affordable Care Act, dubbed by friend and foe alike as “ObamaCare.” In doing so, Obama accomplished what socialist liberals before him, from Hillary Clinton to the Communist Party of America, had been unable to do…enact government-controlled, nationalized health care. It was a glorious moment for the government-is-god crowd, as they had finally attained the means to show the rest of us ignorant hoi polloi just how wonderful health care would be when run by a small, elite group of enlightened bureaucrats and bean-counters.

After waging a fierce battle in the courts, the Supreme Court eventually upheld the law, and specifically the legality of the “individual mandate” (which the Obama administration had alternately argued was a tax, and NOT a tax), with Chief Justice John Roberts discovering his inner emanations and penumbras in deciding that the individual mandate was indeed a tax, and therefore justified under Congress’s Article I taxing power.

Liberal Democrats had their victory, and ObamaCare would go forward as planned, and despite the fact that the law had never enjoyed majority approval by the American people, and despite the fact that it was passed without a single Republican vote (the only major legislation ever to be enacted without bipartisan support), Democrats would now be able to show the American people just how wonderful socialist, nationalized health care could be.

Except something unexpected (for them) and unfortunate (for us all) happened on the way to the victory parade…

TL;DR version: This is a pretty long post dealing with a subject that generally fascinates only those interested in fiscal policy. The short of what you need to know is that the CBO expects the economy to perform better in the short-term, with higher revenues and lower budget deficits. But the rising costs of entitlements and the cost of servicing the national debt will drive up spending substantially over the long-term with the public’s share of the national debt becoming equal to the size of the economy (or GDP). As if the baseline scenario isn’t concerning enough, the alternative fiscal scenario is even more of a disaster. All charts below come directly from the CBO’s report.

Forget Syria or the still ongoing war on terrorism. The real security threat is the national debt. That’s what Admiral Mike Mullen warned in 2010. Those words still ring true today, especially after reading the latest long-term budget projections released yesterday by the Congressional Budget Office (CBO).

The annual report presents the federal budget outlook for the next 10 years (2013-2023) as well as provides a look into long-term projections relative to both current law and alternative scenarios, the latter of which most economists believe present a more realistic view of the United States’ fiscal health.

CBO Director Doug Elmendorf told reporters yesterday that the “federal budget is on a course that cannot be sustained indefinitely.”

Senator Rand Paul (R-KY) has a simple idea to fix Medicare, and it involves offering all seniors the best health care system in America while saving taxpayer’s money.

According to Sen. Paul, his Congressional Health Care for Seniors Act would have Members of Congress and seniors sharing the same health plan, which would save $1 trillion over the first 10 years, amounting to a major cut of Medicare’s $43 trillion unfunded liability.

The bill, Sen. Paul says, “fixes the Medicare system, and gives seniors access to the best health care plans enjoyed currently by Members of Congress and does so without breaking the bank.”

Seniors would have access to a marketplace of various insurance plans that cannot deny coverage to anyone for any reason. While the government still pitches in with about three-quarters of the total costs, the open market makes it fairly less complicated for the senior to find a more inexpensive option, since companies will have to compete to meet the needs of growing numbers of customers. The Congressional Health Care for Seniors Act assures that there’s a gradual raise in the Medicare retirement age, which would go from 65 to 70 over a generation, leading to a major cut in overall costs.

Sen. Paul is confident that with his plan, the Medicare system will get the reform needed to become a more sustainable program without having to cut benefits or force a government rationing. Every citizen would be eligible to enjoy the same plan members of Congress enjoy without bankrupting the country since the new plan would be less expensive than the current Medicare system, which is now run by government bureaucrats.

It shouldn’t be a surprise by now: under ObamaCare, health-insurance premiums will increase, companies will struggle to stay afloat and doctors will earn less money.

That’s right, physicians will earn less if anybody wants to see ObamaCare thrive.

Washington is taking a step into ensuring that the rates physicians are collecting while working for hospital-owned clinics are lower than the rates they currently collect. According to Medicare Payment Advisory Commission, the current arrangement that ensures hospitals can bill Medicare at higher rates for services provided by their physicians should be invalidated, given that physicians can offer the same services in different settings. The system that served physicians looking for a way to make up for their declining incomes by establishing long-term contracts with hospitals or hospital-owned clinics could soon collapse. Physicians that once saw an advantage in seeing patients at hospitals in order to counterbalance the high cost of running their own medical practice will no longer see any convenience in maintaining the agreement with hospital-owned clinics.

To offset the expensive mandates, insurance providers must limit what healthcare providers are paid by also controlling what they can and cannot do. While the proposal introduced by the MedPAC is still being considered, it could serve as a strong indicator for future policy making.

While doctors might be losing incentives to work with hospitals when ObamaCare kicks in, employers are already losing incentives to keep employees under full-time contracts.

The Centers for Medicare and Medicaid Services was supposed to, under ObamaCare, reduce payments to insurance companies that offer coverage through Medicare Advantage by 2.3%. Unsurprisingly, they changed their mind. Not only are they not going to reduce payments, they’re going to increase them by 3.3%.

Medicare needs some serious reform. That’s just a fact. If it’s not, it will be bankrupt in just a few years. So why the delay? There are a few reasons. The first is that no politician wants to be labeled as the one that “kills” Medicare. It’s long been the third rail (along with Social Security, of course) of politics – touch it and your career is over. Another reason is lobbyists. According to Philip Klein at the Washington Examiner:

In February, as CMS announced plans to cut payment rates in 2014, it triggered an intense lobbying effort from insurers, who got 160 members of Congress from both parties to send letters asking the administration to back off. The insurance industry’s lobbying group, America’s Health Insurance Plans, celebrated the about face by the administration: “CMS has taken an important step to help stabilize Medicare Advantage at a time when the program is facing significant challenges.”

“I think the impressionable libertarian kids are going to save our nation.” — Igor Birman

Late last year, I ran across video of Igor Birman, who immigrated to the United States with his family as the Soviet Union was collapsing, warning against a more centralized government healthcare system. Birman, who now serves as Chief of Staff to Rep. Tom McClintock (R-CA), was explaining that the Soviet system relied on rationing of healthcare, which would be the end result of ObamaCare.

Earlier this week, I had the chance to sit down with Birman to discuss his story, the transformation of the United States into a police state, ObamaCare, the budget, and other destructive economic policies that are being pushed by the White House.

When asked about the recent filibuster in the Senate, Birman applauded Sen. Rand Paul and noted that it was refreshing to hear a politician be so passionate. He also compared the policies implemented as part of the “war on terror”  to life in the Soviet Union, where the government frequently searched homes of ordinary citizens without cause, which he called a “fact of life,” noting that “you just accepted it as much as you did the cold weather and the long lines for the basic staples of food and water.”

Birman experienced this first-hand. “A week before we left for the United States, we went to say goodbye to my uncle in St. Petersburg and when we came back, we found our apartment just absolutely ravaged,” recalled Birman. “The authorities must have been looking for whatever lame excuse they could find to either delay or disrupt our departure.”

There is some more bad news for ObamaCare. According to a recently released report from the Government Accounting Office (GAO), the Patient Protect and Affordable Care Act (PPACA) — President Obama’s signature domestic policy achievement — could cost taxpayers dearly in the long-term if cost-savings measures don’t work as intended.

The report, which was requested by Sen. Jeff Sessions (R-AL), who is the ranking Republican on the Senate Budget Committee, explains that the “effect of PPACA on the long-term fiscal outlook depends largely on whether elements designed to control cost growth are sustained.”

“Overall, there was notable improvement in the longer-term outlook after the enactment of PPACA under our Fall 2010 Baseline Extended simulation, which, consistent with federal law at the time the simulation was run, assumed the full implementation and effectiveness of the costcontainment provisions over the entire 75-year simulation period,” noted the GAO. “In contrast, the long-term outlook in the Fall 2010 Alternative simulation worsened slightly compared to our January 2010 simulation. This is largely due to the fact that cost-containment mechanisms specified in PPACA are assumed to phase out over time while the additional costs associated with expanding federal health care coverage remain.”

The baseline scenario is used by the government budget officials to determine the the cost effects of current law. However, the alternative scenario gauges budget implications based on past behavior of Congress, such as its proclivity for bypassing scheduled Medicare payments to doctors (also known as the “doc fix”).

On March 1st, the so-called sequester which is a series of automatic spending “cuts” that were agreed to in 2011 are supposed to take effect. The “cuts” are supposed to be around $1.2 trillion over 10 years spread equally among defense and non-defense spending. Democrats are complaining how women, children, and old people will be (insert one or more of the following here) starved, made homeless, and/or impoverished by the “cuts” in social welfare programs. Republican defense hawks are claiming that sequester will destroy the US military. Both groups also claim the sequester will put the economy back into recession and/or maybe even a depression. Indeed, both groups say that the sequester should be avoided at all costs and that we should “raise revenues” which is Washington speak for raising taxes to cover the amount that was supposed to be “cut”. However, if we are ever going to get our nation’s fiscal house in order, we have to allow the sequester to take effect.

Why I Hate The Sequester

Although I do believe that the sequester must be allowed to take effect, I don’t like it. For starters, $1.2 trillion in “cuts” (which are not actual budget cuts but instead are merely reductions in the rate of spending growth) is a very small amount when you look at how grave the nation’s financial condition is.

Secondly, the sequester does nothing to address entitlement programs like Social Security and Medicare which are the two long-term drivers of future financial problems.

Third, the Democrats do have a point when they say the cuts fall disproportionately on non-defense spending. The Department of Defense is the largest single item of discretionary spending and all other agencies combined do not equal it. But the DoD is only taking 50% of the cuts.