I have a new piece online from the April Commentary, which argues that contrary to the conventional wisdom, health care has been a poor political issue for the Democrats, and that a measured approach has tended to work better. Given this two-decade history, Democrats should be very wary of the politics of voting yes on their trillion-dollar overhaul.
In addition to the historical politics of the issue, the short-term politics are problematic for the Democrats as well. Today’s CBO score should not be very reassuring to the Democrats on a number of fronts:
1. More Costs — CBO states that we should expect as much as $70 billion in additional discretionary costs that they did not score. This includes $5 to $10 billion for the IRS, “at least” an additional $5 to $10 billion for HHS, and “at least $50 billion in specified and estimated authorizations of future discretionary spending for a number of grant programs and other provisions of the legislation.” That $5 to $10 billion to the IRS, in particular, should worry lawmakers and citizens alike.
2. Continued Access Problems — At great cost, the bill will cover 31 million people by 2019, but that will still leave 24 million people uncovered. In addition, over half — 16 million — of the newly covered people will be covered through Medicaid, and not through private coverage. This is both a fiscal challenge, as Medicaid’s long-term finances are extremely shaky, but also a political challenge, as many doctors refuse to take Medicaid patients. Putting more people on Medicaid will not solve the access problem if doctors refuse to see them.
3. Unlikely Cuts — The bill assumes that Congress will cut doctor payments via the sustainable growth rate, and CBO expresses some understandably healthy skepticism that those cuts will actually take place. As CBO put it, “the sustainable growth rate (SGR) mechanism governing Medicare’s payments to physicians has frequently been modified (either through legislation or administrative action) to avoid reductions in those payments, and legislation to do so again is currently under consideration in the Congress.” Basically, Congress calls for but does not let those cuts go through, and it would be foolish to assume that this kabuki dance of fake cuts built into the baseline budget will change in the future.
4. Higher Premiums — Perhaps most importantly, CBO continues to assume that insurance premiums will increase as a result of the bill, noting that “although CBO and JCT have not updated their estimates of the likely impact of the legislation on health-insurance premiums, that impact would probably be quite similar to the one estimated for an earlier version of the legislation.” It’s interesting to note that CBO does not repeat the findings of that earlier estimate, which found a likely pre-subsidy rate increase of 10–13 percent in the non-group market.
Whether looking at it from a short-term or a long-term perspective, this bill is a bad political deal for the Democrats.