Senate To Scale Back Health Plan
After the price tag for the Senate’s version of health care reform came back from the CBO at $1.6 trillion ($600 billion more than predicted), and amid growing signs that the public is increasingly concerned about the Obama administration’s lack of spending discipline, the Senate now appears to be drawing back for another go:
Senator Charles E. Grassley of Iowa, the top Republican on the Senate Finance Committee, said on Sunday that the panel would consider revisiting its version of health-care legislation to gain more support.
An overhaul of the nation’s health-care system was part of President Obama’s campaign pledge to expand coverage to those who do not have health insurance while lowering costs in general. But an initial price tag for the Senate Finance Committee’s proposal came to $1.6 trillion, according to the Congressional Budget Office. That figure caused enough consternation that the chairman, Senator Max Baucus of Montana, postponed a drafting session that was to have begun this week.
“So we’re in the position of dialing down some of our expectations to get the costs down so that it’s affordable,” Mr. Grassley said on CNN’s “State of the Union,” “and most importantly, so that it’s paid for because we can’t go to the point where we are now of not paying for something when we have trillions of dollars of debt.”
The Finance Committee’s plan is expected to attract more bipartisan support than legislation being written by the Senate Health, Education, Labor and Pensions Committee, chaired by Christopher J. Dodd of Connecticut. The proposal by Mr. Dodd’s committee was estimated to cost $1 trillion over 10 years but would only increase the number of insured Americans by 16 million.
Senator Lindsey Graham, a Republican of South Carolina who appeared on ABC’s “This Week,” said estimates on overhauling health care were “a death blow to a government-run health plan.”
Dianne Feinstein of California joined Republicans in voicing reservations. Ms. Feinstein, who appeared on “State of the Union,” said that controlling the cost of a new health-care system “is a very major and difficult subject.”
Ms. Feinstein also said that Mr. Obama might not have the votes in the Senate to pass his legislation. “I think there’s a lot of concern in the Democratic caucus,” she said.
Senator Richard Lugar, Republican of Indiana, appearing with Ms. Feinstein, said that overhauling the health care system should be done slowly and not this year, as Mr. Obama has insisted. “I think it should be incremental steps,” Mr. Lugar said. Mr. Lugar also suggested a period of study to find and consider alternatives.
Meanwhile, George Will is applying Occam’s Razor:
To dissect today’s health care debate, the crux of which concerns a “public option,” use the mind’s equivalent of a surgeon’s scalpel, Occam’s razor, a principle of intellectual parsimony: In solving a puzzle, start with the simplest explanatory theory.
The puzzle is: Why does the president, who says that were America “starting from scratch” he would favor a “single-payer” — government-run — system, insist that health care reform include a government insurance plan that competes with private insurers? The simplest answer is that such a plan will lead to a single-payer system.
Conservatives say that a government program will have the intended consequence of crowding private insurers out of the market, encouraging employers to stop providing coverage and luring employees from private insurance to the cheaper government option.
…The president characteristically denies that he is doing what he is doing — putting the nation on a path to an outcome he considers desirable — just as he denies any intention of running General Motors. Nevertheless, the unifying constant of his domestic policies — their connecting thread — is that they advance the Democrats’ dependency agenda. The party of government aims to make Americans more equal by making them equally dependent on government for more and more things.
Arguments for the public option are too feeble to seem ingenuous. The president says competition from a government plan is necessary to keep private insurers “honest.” Presumably, being “honest” means not colluding to set prices, and evidently he thinks that, absent competition from government, there will not be a competitive market for insurance. This ignores two facts:
There are 1,300 competing providers of health insurance. And Roll Call’s Morton Kondracke notes that the 2003 Medicare prescription drug entitlement, relying on competition among private insurers, enjoys 87 percent approval partly because competition has made premiums less expensive than had been projected. The program’s estimated cost from 2007 to 2016 has been reduced 43 percent.
On Friday, some observers were predicting the plan was near death:
President Obama’s campaign for health care reform by this fall, once considered highly likely to succeed, suddenly appears in real jeopardy.
Top White House advisers, especially chief of staff Rahm Emanuel, are still privately predicting massive changes to the health care system in 2009. But for the first time, Democrats on Capitol Hill and in the administration are expressing frank worries about stronger-than-expected opposition from moderate Democrats and worse-than-expected estimates for how much the plan could cost.
Business groups, which had embraced the idea of reform and have been meeting quietly with Democrats for months in an effort to shape the legislation, now talk of spending millions of dollars to oppose the latest proposals out of Capitol Hill. And Democrats themselves are not united, with leading party figures making contradictory declarations about how far they should go to overhaul the system when deficits are soaring and prospects for an economic recovery remain cloudy.
And top Democratic officials tell POLITICO they are increasingly pessimistic about getting any more Republican votes than they did on the stimulus package, with some aides referring to the idea of a bipartisan bill as “fool’s gold” — an unattainable waste of time.
The health plan got a boost, however, when drug companies agreed to $80 billion in price cuts:
Giving a boost to health legislation after a bruising week, the pharmaceutical industry struck a deal Saturday with Senate Finance Chairman Max Baucus (D-Mont.) and the White House to commit $80 billion over 10 years to help pay for comprehensive reform.
The promised savings from the industry will be written into the reform bill, making them binding.
…”You’ve got your first passengers on the train and now you can start moving forward down the track,” said an industry source close to the negotiations.
Not all the savings go towards the health reform bill’s bottom line because it will be split between seniors and the government. While no breakdown is available yet, “parts of the $80 billion we haven’t announced yet save the government real money,” said a source close to the negotiations. “The total deal includes savings for the government and the health system as a whole.”
So, let’s see $1.6 trillion over ten years minus some undetermined part of $80 billion leaves $1.52 trillion + still to go! Yep, we’re almost there…yeesh!…
[...] Original post: Informed Speculation » Senate To Scale Back Health Plan [...]
I’ve said it before, and I’ll say it again.
We spend 6-7% of GDP more on healthcare than any other developed country. By any objective measure, our healthcare outcomes are no better (and, by some measures, they are worse).
6-7% of GDP translates into $10 trillion over the 10 year period you’re talking about. That is (objectively) the amount of money we are wasting on an inefficient and dysfunctional healthcare system.
If we could recapture a fraction of that wasted $10 trillion, healthcare reform would more than pay for itself.
And, by the way, I enjoy the irony of your quoting George Will’s praise of the Medicare Prescription Drug Benefit (which, I thought, even you agreed was a notorious boondoggle).
Sorry, Jacques, your figures don’t add up.
It’s only the amount of money we are wasting, if you somehow believe it could actually be done on 0% GDP. The amount of money that we are wasting is surely significantly less, isn’t it?
Well, as I already have shown, we’re not wasting $10 T, but something significantly smaller than that. As for the other point, I’ve seen no indication that the President’s plan or the Senate plan would save a single dime.
I’ve said it before, and I’ll say it again.
Nothing our government touches has ever gotten either better or less expensive. Yet, somehow we’re supposed to believe that this time it’ll work. What’s the definition of insanity? Doing the same thing over and over and expecting different results.
As has been brought up many other places, why not fix Medicare and Medicaid first? If those are trial runs for government run/assisted healtchare, the results are not encouraging to say the least.
Jacques isn’t saying that health care could be free. He’s saying that the 6-7% of GDP is what we spend on health care above and beyond what the next highest spending developed nation spends on health care.
Where can I get the data showing how this (evolving) plan will get me better care for less money?
We spend 15.3% of GDP on healthcare. The rest of the industrialized world spends roughly half that. By any objective measure, their healthcare outcomes are as good as (by some measures, better than) ours.
So, sorry Chris, we are wasting $1 trillion/year on our inefficient and dysfunctional healthcare system.
If you think it’s “impossible” to do better, you’ll have to explain why every other industrialized country manages to do the impossible, year-in, year-out.
Steve:
I don’t know whether the (constantly shifting) proposal on the table will bring about the kind of efficiencies that are commonplace elsewhere.
Perhaps (with Mark cheering them on), the Senate will eviscerate the proposal to the point where it does absolutely nothing to bring down costs, and is merely another wasteful boondoggle, like the Medicare Drug Benefit (which George Will now chooses to praise).
Perhaps if the focus were on developing an approach that delivers better care at a lower cost we could arrive at an agreeable bill sooner? I don’t care how much “we” spend, as a percentage of GDP, on healthcare, I want the best care at the lowest possible cost. Give me a proposal that delivers that and I’ll call my Senators immediately. If “we” overspend other countries but get the best care then I’m okay with that too.
Hey, I quote people all the time I don’t necessarily agree with – I was pretty balanced in my selection of quotes. I’ve been neither the biggest critic nor the biggest fan of the Bush prescription drug entitlement, but as a new entitlement, I was inclined to opposition for budgetary reasons.
It is no good saying other countries pay “x% of GDP” for their care, and we somehow must magically conform. Other countries face a different set of challenges than we do.
My opposition to this bill is quite simple and has been consistent from day one. We can’t afford it.
More later from Megan McArdle…
It’s not a matter of “magically conforming” to what other countries spend.
There’s a wide range of what other industrialized countries spend: from 6.4% of GDP in Korea, to 11% of GDP in France. But note that the difference between us and our next-most-expensive competitor (France) is nearly as large (4.3%) as the difference between them and their least-expensive competitor (4.6%).
If we achieved better healthcare outcomes for our extra trillion dollars/year, that would be one thing.
But we don’t.
What unique challenges do we face, that no other industrialized country in the world faces, that cost us an extra $1 trillion/year to meet?
(The obvious answer: a private, for-profit, health insurance industry, is not an allowed response.)
Well, Jacques, my point is merely that each country faces its own set of challenges, its own demographics, etc. One reason the U.S. may pay more for health care than other nations is that we are a land of plenty, and the home of the free (and lazy) and thus quite obese by international standards.
But just because we are industrialized and so are other nations doesn’t mean we’ll have comparable outcomes in spending…few nations spend as much on defense as we do, either, but we have to, for obvious reasons (obvious to me, anyway)…
But I refuse to blame the fact that we have private health insurance for our high costs. That shows a distrust of the market that I do not share. The REGULATION of the market may be flawed, but as you know, I’m a capitalist, and I believe that left to their own devices, markets will reach the right price. It may just be that we expect too much health care as a birthright.
I don’t have the answers. And if we weren’t sitting on over $11 trillion in debt, I would be more open to a bigger government role in ensuring that the uninsured get insured (say that three times fast).
My argument here is not ideological, believe it or not…it’s based on sheer terror of the consequences of taking on more debt at a time like this…
Sorry, Jacque, I misread your post.
I read it as “We spend 6-7%, which is more than…” rather than “We spend 6-7% more than…”. I don’t know how I did that. My apologies.
Still, the new 1.6T USD is on top of that, so this will only increase our expense, not decrease it.
I don’t think it’s impossible to do better. In fact, I can think of several ways to do better. The Shakespearean response would be one way to cut health care costs, by cutting down on malpractice insurance. I’m also unsure on drug patents, but I admit that’s there’s not a clear better solution there. The one thing that Giuliani did during his campaign that I really liked what his health care plan.
What I do think is impossible is that the government can cut healthcare costs. And I don’t feel like I need to explain why in any more detail than I already did. More beauracracy, more inneficiency, less desire for innovation always lead to government options costing more and doing less than private options.
As I said, nothing our government ever touches has gotten better or less expensive. And, if you somehow believe that this time will be different, then I suggest that the burden of proof is upon you, not me.
errr…Jacuqes, not Jacque. I owe another apology.