Ramesh Ponnuru and Yuval Levin respond to their critics:
The first thing to note is that none of our critics actually defend Obamacare, and therefore none dispute the argument of the piece. Their dispute is entirely with what we propose instead — which our piece of course lays out only briefly and broadly, since we assumed that the argument that replacement is still the right way to think about things first had to be made. Their lack of interest in defending the law is interesting. Do they agree with us that Obamacare cannot work as enacted? Do they agree that piecemeal reforms will not work and Obamacare must be replaced? If they do, do they imagine that the party that forced this unpopular law down the country’s throat will be trusted to fix or replace it once it fails?
If they don’t agree that Obamacare is untenable (as we assume at least some of them don’t), how would they defend it? Do they not think it is headed for an insurance death spiral? Do they not think the financial incentives it sets up will result in far higher federal spending and far fewer insured Americans than its advocates promised? Do they think it will lower premium costs? Is it sustainable over time? Have you seen much of a substantive answer from the left to these commonly voiced concerns?
The critics of our piece offer no such answers, and actually suggest that we’re wasting our time repeating the obvious case against Obamacare. Several of them want to get right to a debate about what should replace it. That’s great. Not all of them, though, want to discuss the solution we pointed to. Kevin Drum acknowledges (twice) that he didn’t actually read our piece; he just read Yglesias and Klein (who just summarized Yglesias) and “sighed.” We know the feeling.
Don’t we all?
Waiting for Baghdad Jim to show up with the party line.
All he’s done is quote the CBO.
Sorry, that was meant to be a reply to Bilwick.
All he’s done is quote the CBO.
On the question of the budget impact of Obamacare, I’ve quoted the Congressional Budget Office. If you want to know who won the Michigan-Syracuse game, I’ll quote the box score. Funny how that works.
CBO consistently underestimates spending deficits and the cost of programs. And it has an conflict of interest which explains why it does so.
We already know that employers and states are looking to hand off health care costs to individuals and the federal government though things such as widespread part time employment (to get the employer under 50 full time employees) and refusing to participate in the health care exchanges.
Recently, the Society of Actuaries calculated that the cost of claims would jump by 32% by about 2017. That allegedly included “mitigation strategies” for 2014 and 2015 (I wonder who could have an interest in hiding the pain till after 2016?).
Thus, we already know some low lying fruit to reducing health care costs and the coming burden on the federal government. Repeal Obamacare.
CBO consistently underestimates spending deficits
Not true. For instance, it overestimated the cost of Medicare Part D.
The point isn’t that the CBO is perfect, just that it’s the best we have.
Recently, the Society of Actuaries calculated that the cost of claims would jump by 32% by about 2017.
Yes, because a lot of people are going to be getting more comprehensive coverage — of course claims will go up. The CBO modeled this in their forecasts.
Repeal Obamacare.
If you repeal Obamacare entirely, you repeal the parts that more than pay for it, resulting in a bigger deficit.
If you repeal Obamacare entirely, you repeal the parts that more than pay for it, resulting in a bigger deficit.
Again, CBO is just a mouthpiece for Congress. It doesn’t do genuine analyses. When those are done by actual independent parties, we see the huge flaws such as increased health care cost growth and bizarre disincentives for businesses and medical providers.
Let’s go over some basics. First, there’s only so many parties that can pay for health care. They are the patient, the health care provider, the insurer, the employer, the state, and the federal government. Of these a couple can’t do more than limited contributions. The insurer while they have something of a margin, they operate on volume. Obamacare has been good to them in that it has greatly increased both the demand for health care and gives an incentive for self-insured to go to health insurance. But the margins of the business aren’t that good. IF they have to start paying more than they get in premiums, they’ll go bankrupt fast.
Similar issues exist for health care providers. Sure, they might want to provide health care at below cost, but they can’t do that for long before they go bankrupt as well. Then we get to patients. The whole rationale for the Obamacare shell game is that too many patients can’t afford health care. So dumping these increased costs on them would be counterproductive. Of the three remaining parties, employers will dump their liabilities as fast as they can. We already see this in progress. States are moving to reduce health care expenditures as well. That leaves the federal government as the funding source of last resort.
As I see it, with medical costs increasing and Medicare spending dropping, Medicare patients will soon be in a poor service environment since no one is paying enough for their health care compared to the inflationary environment. That means they’ll receive service roughly on par with people who don’t have any at all, the so-called “uninsured”.
So what’s going to happen when you still have tens of millions of uninsured and a large portion of the Medicare population is also effectively equivalent to uninsured?
There’s only two parties who can’t dodge these problems or just quit outright, the patients and the federal government. The former because it’s their health care problems and their insurance payments. And the federal government, because it created Obamacare. These are the two groups that will shoulder the costs. And we’ve already established that the patients can only pay so much.
Thus, I don’t see any cost savings from Obamacare no matter what fantasies are spun by the CBO.
A simple alternative would be to drop Obamacare, keep the Medicare cost reduction, drop the tax credit for employer health care benefits, and reduce the minimum required health insurance coverage to catastrophic coverage only (or even, have no minimum at all!).
I think that would be much more effective than Obamacare. First, it’d reduce demand for health care and lower overall costs for everyone. Second, it’d make health insurance more affordable and reduce the number of unemployed. Third, it’d be constitutional. And fourth, it’d end all the other garbage that came along for the ride with Obamacare.
As an aside, I also see in the comments the same complaints about the Republicans not helping to fix the flaws of Obamacare. But the Republicans have proposed a complete repeal of Obamacare a number of times. What else can they do to fix Obamacare?
It was passed on a party-line vote, why should republicans “help fix” a failure that they opposed in the first place?
A complete repeal would take insurance coverage away from tens of millions of Americans. That isn’t a “fix”.
If the GOP had a proposal to cover those people, they could write a bill and bring it up for a vote. But they don’t, so they can’t and won’t.
Obamacare is forcing tens of millions out of their current health care plans. Some wont have any coverage and every single person in the country will have more expensive coverage.
forcing tens of millions out of their current health care plans
Only if you consider forcing them to switch from Plan A to Plan A+ (Plan A plus free preventative care, no lifetime limits, etc.) to be forcing them out of their current plans.
Obamacare repeal would take tens of millions from comprehensive coverage to no coverage at all.
every single person in the country will have more expensive coverage
Untrue.
No. Forcing as in “We’ve stopped providing coverage, go get Plan A– from the government instead.”
every single person in the country will have more expensive coverage
And that is exactly true.
Adding extra middlemen is very rarely useful. Adding extra middlemen while forcing actual providers into larger monopolies is moronic. As usual.
Forcing as in “We’ve stopped providing coverage, go get Plan A– from the government instead.”
The government doesn’t offer plans, other than expanded Medicaid (in states that accept Obamacare Medicaid funds).
And that is exactly true.
It isn’t true of me, or lots of people currently buying coverage on the individual market.
Adding extra middlemen
What middlemen?
That’s what insurance is.
Middlemen who absorb a sliver of the risk for a surcharge over-and-above their overhead.
Yet the “insurance for everything” route means (a) they absorb the entire risk for ‘everything’, (b) they add the entire overhead of administering ‘everything’, (c) they add the overhead of policing the policy, and they add (d) 10% or so profit.
Single payer ends up axing (d) by making (b) and (c) “non-profit” and essentially eliminate the concept of frugality in internal hiring while deciding clearly the place to make cuts is (a).
You’re guaranteeing that the service costs more. And “Oh, but the -states- have to pay that, so no budget impact!” is a pretty typical analysis.
“free preventative care”
Jim,
Assume I know nothing about the economics of constructing, outfitting, staffing, maintaining, and paying utility bills for consumer health care facilities, and providing health care services to consumers in said facilities. Can you please explain to me, in economic terms, not medical terms, what “free (fill in the blank) care” means?
BlueMoon
. Can you please explain to me, in economic terms, not medical terms, what “free (fill in the blank) care” means?
If Jim doesn’t have to pay for it, it’s free.
The other thing I find dubious about “free preventative care” is the “preventative” part. My experience with medicine has been that once you start looking for problems, you’ll find expensive problems. Will those problems matter before you die? Well, that depends in large part on whether your doctor is looking to generate business or not.
I bet the doctors who have figured out how to profit from Medicare probably know how to game “preventative care” so that they can find and eventually bill for all sorts of interesting problems. And of course, the federal government’s idea of fraud prevention is to make sure someone signs the checks.
” every single person in the country will have more expensive coverage
Untrue.”
BS Jim and you know it.
“Only if you consider forcing them to switch from Plan A to Plan A+”
How are all the extra services going to be provided without charging people more money?
I don’t like the government coming in between me and my doctor which is exactly what Obamacare does. Democrats need to gtfo out my doctor’s office.
Can you please explain to me, in economic terms, not medical terms, what “free (fill in the blank) care” means?
It’s like the napkins at McDonalds: you aren’t charged for them. They still cost something, but the cost is built into the cost of your meal/insurance premium.
Free preventative care means that people don’t have a financial incentive to skip recommended preventative care.
They still cost something, but the cost is built into the cost of your meal/insurance premium.
So the “Free” part is a lie and deliberately misleading. Cost have gone up, which you earlier said was untrue.
“It’s like the napkins at McDonalds: you aren’t charged for them. They still cost something, but the cost is built into the cost of your meal/insurance premium.
Free preventative care means that people don’t have a financial incentive to skip recommended preventative care.”
Jim,
Thank you for the answer. I admit I know very little about economics, but if the cost of a health care service a person receives is built into his/her health care insurance premium, how can that service be considered “free” for that person?
BlueMoon
PS: If “recommended preventative care” is wrapped into the cost of a person’s health care insurance premium, can you please explain how that is accomplished for differing segments of the population under the PPACA and associated regulations? For example, routine cancer screening colonoscopies are not currently recommended for persons under the age of 50, I believe. Would a 30-year-old person have the cost of a “free”, once-every-five-years, screening colonoscopy built into his/her health care insurance premium?
Would a 30-year-old person have the cost of a “free”, once-every-five-years, screening colonoscopy built into his/her health care insurance premium?
My understanding is the colonoscopy is covered. However, if they find a polyp, the removal and subsequent lab work to determine if it is cancerous leaves the realm of preventative care and enters diagnostic care. I suppose one could ask there doctor prior to sedation just to take pictures, but this kind of misses how easy it is to do the biopsy during the colonoscopy. Then again, universal federal laws usually do tend to miss these finer points of how things work. This is why we end up with thousand page laws that get even larger when “fixed”. More here.
Leland wrote:
“So the “Free” part is a lie and deliberately misleading. Cost have gone up, which you earlier said was untrue.”
Yup. “Free” preventative care, “free” mammograms, “free” whatever, are just big, fat, bald-faced lies by Secretary Sebelius, Rep. Pelosi, and all the PPACA advocacy flacks. I believe a truthful description would be “no co-pay” preventative care, “no co-pay” mammograms, etc. But I’ll bet the term “free” tested much, much better than “no co-pay” when the Administration did surveys and polls seeking the best ways to sell the PPACA mess to low-info voters and the media.
Sure it is.
It’s just not a fix you like. Remember that “tens of millions” of people voluntarily decided not to buy insurance before they were forced to.
And I’m not saying “durrrrr those poor people just “chose” not to buy insurance” – I mean people who actually had money they could have bought it with.
Turns out a rational person can decide that they’d rather not buy a comprehensive health coverage plan (not “insurance”, because health plans in the US are not actually insurance).
(I’ve heard it claimed that Obamacare’s passage made it impossible to sell a catastrophic coverage plan – what actually is “insurance”. If this is true, that’s something easily “fixed” by repealing it.
End the coercion.)
Turns out a rational person can decide that they’d rather not buy a comprehensive health coverage plan (not “insurance”, because health plans in the US are not actually insurance).
Just thought it deserved repeating.
Turns out a rational person can decide that they’d rather not buy a comprehensive health coverage plan
There are tens of millions who want coverage, and either can’t afford it, or can’t get it outright. Obamacare tries to address that problem, the GOP won’t.
There are tens of millions who don’t want coverage, and neither want government enforced coverage nor private coverage. Obamacare forces them to participate in trade when they otherwise would not, the GOP fix is to repeal it.
So the GOP message is: we don’t care about people who can’t get coverage they want and need, we’re just concerned that people not have to buy any more coverage than they want. The Democrats see the problem as not enough coverage, the Republicans see the problem as too much coverage. It’s a stark divide.
In a free country, everyone pays cash for medical services at time of provision. This keeps medical services cheap and providers small and numerous.
In a free country, the ill who cannot afford medical care services obtain them free of charge from Catholic and other religious hospitals. Abortion and contraception are not on the menu.
This used to be a free society. Now the government has, for some strange reason, decided that it is vital to force everyone to participate in a Byzantine scheme of publicly-subsidized “care” provided by a clique of politically-connected, theoretically private “insurance” companies.
And every provider must offer baby-killing services as part of their “care”.
I fail to see how this improves anything for anyone except a) the clique of politically-connected, theoretically private “insurance” companies and b) the government.
It certainly doesn’t help the poor– or the babies that get killed.
The solution: full, free Medicare for all U.S. citizens under age 18. No abortion or contraception on the public dime. No government funding whatsoever for anyone else.
What B Lewis wrote; plus medical care is provided by people not governments. Obamacare has done nothing to provide medical services. It has simply increased demand on an already stressed supply with the caveat that it will “cut costs”, thus removing incentive for the supply to grow.
Obamacare will still leave something like 10 million without any coverage. This means that the government take over of the health industry will only be “helping” a small percentage of the population. For everyone who already has insurance, nearly all of the employed population, costs will go up.
There are many ways to help poor people get health coverage without the government take over of an entire industry but Obamacare was never about making healthcare affordable, it is about control and crony capitalism.
“A complete repeal would take insurance coverage away from tens of millions of Americans. That isn’t a “fix”. ”
Yes and many of them *should* be removed. Like, for example, the fully capable adults up to age 26 still mooching off their parent’s insurance.
Obviously other kids who are seriously disabled (e.g. Downs) are a different story.
Jim if you are paying attention you will see that millions of people are already losing their health insurance under the abomination of Obamacare.
And that’s just the start.
the party that forced this unpopular law down the country’s throat
A modest proposal: let’s describe every law passed by a majority of the Senate and House, and signed into law by the president, as having been “forced down the country’s throat”. The fact that Republicans don’t like Obamacare doesn’t make it any less legitimate than other duly passed laws.
Have you seen much of a substantive answer from the left to these commonly voiced concerns?
I have — there’s been active discussion of all these issues in the health policy community for the last five years. Ponnuru and Levin apparently haven’t looked, and think their own lack of curiosity somehow means there’s nothing to see.
“The fact that Republicans don’t like Obamacare doesn’t make it any less legitimate than other duly passed laws.”
You cant possibly support the way the bill was passed.
You cant possibly support the way the bill was passed
It was passed following the Constitution and the rules of the House and Senate. What’s not to support?
What was the origin of the Obamacare bill? The bill that passed the house and was later rewritten by the Senate, was not Obamacare.
Why are Democrats so upset about corruption right up until their own party engages in corruption at the highest levels in order to take over one of the largest industries and insert government between doctors and patients?
…except the “straight party line vote”, the “against the country’s will”, and the “dirty tricks during reconciliation” parts, that is.
Oh yeah- almost forgot the “astorturfed support” and the “direct lies form the President, the Speaker, and the PPT of the Senate about content and financing” parts.
In short, a microcosm of what makes Democrats… Democrats.
straight party line vote
So? The Clinton 1993 budget, which helped give us a balanced budget, was also passed on a party line vote. There’s nothing illegitimate about party line votes.
against the country’s will
Really, you want polling to determine the legitimacy of a law? Right now 90+% of the public supports universal background checks — do you think that makes the GOP opposition to checks illegitimate? The polling on Obamacare was never close to being that one-sided.
dirty tricks during reconciliation
Again, you can’t be serious. Reconciliation is a totally routine procedure. If its use makes Obamacare illegitimate, it makes a lot of other things illegitimate as well.
direct lies form the President, the Speaker, and the PPT of the Senate about content and financing
You make similar political charges against the people responsible for every controversial bill passed in the history of the republic. Which is why we have a Constitution and rules and courts; they, not political rhetoric, decide which laws are legitimate. Obamacare is as legitimate as any of them.
Rather, you could make similar political charges against the people responsible for every controversial bill passed in the history of the republic.
To expand on that a bit: take a look at how the 13th Amendment was passed, in history books or Spielberg’s Lincoln. Federal jobs were traded for votes, and Lincoln deliberately mislead some allies on the status of peace talks in order to keep his political coalition together. Should we consider the 13th Amendment to therefore be illegitimate?
Plus (or should I say, “above all”) Jim likes Obamacare because it exapnds the power of the State, and Jim likes that because he likes the use of a powerful State to legally pick peiople’s pockets.
There: I just translated ninety-nine percent of Jim’s hogwash into plain English.
I’m less worried about them picking pockets on healthcare than the rationing (even Paul Krugman admits this) that will come later.
The Clinton 1993 budget
Sure, by spurring the electorate in 1994 to bring in Republican majorities in both branches of Congress. Balancing the budget suddenly became a priority after that point.
The fact that Republicans don’t like Obamacare doesn’t make it any less legitimate than other duly passed laws.
I don’t know, the current AG has decided its within the realm of his authority to determine what laws on the book will or will not be enforced, regardless of them being duly passed into law. How do we know what’s legitimate anymore when the AG can Executively void legal enforcement of laws?
And yes, enforcement is within the power of the Executive Branch, but the AG has gone further in note defending laws to the US Supreme Court nor prosecuting employees held in contempt of Congress. It’s like legitimacy is whatever the Executive claims it is. So that’s really my question, how do we know its legitimate? Would it be legitimate under a different President if they choose not to enforce the fines associated with not getting a health plan?
What law has Holder decided to not enforce, on the grounds that it was passed in an illegitimate fashion?
What’s the value of the qualification?
The topic is Obamacare, and the way it was passed.
Holden has refused to honor FOIA requests in the Fast and Furious scandal. I doubt he’d have similar difficulties enforcing anything related to Obamacare.
The topic is Obamacare, and the way it was passed.
So? Holder doesn’t have to qualify why he decided not to enforce various laws. He justs chooses to do so.
Qualification would provide intent, and he’s smart enough to avoid that legal issue. So he simply says he has the authority because, as Al Gore might say, “there is no controlling legal authority that says that is any violation of any law”. With that form of governance, I ask again, how do we know what is legitimate?
Its not a legitimate law because its a tax on simply existing. For fuck’s sake.
My guess is Jim also simply read the Yglesias ‘piece’.
And Jim wont respond to your comment, because he can’t.
He thinks we only exist because of the state, our lives are in service of the state, and any possessions we may accumulate in life are being lent to us by the state.
I’m convinced those who drafted the law KNEW it wasn’t going to work. That was a feature, not a bug. Because once in place, they knew it would have to be “fixed,” and fixed it will be. Remember the comment about it being a “starter home?” This was just one crafty step towards the Left’s beloved single-payer healthcare system. First, implement the law. Next, drive legitimate healthcare insurance providers out of business, create a crisis, “fix” the crisis, voila.. single-payer government provided healthcare.
All those “millions” that Jim feels so strongly about will finally have the healthcare they are entitled to…screw the rest of you suckers who, by the way, will pay for it.
I know I’m being snookered, but I’ll write it up anyway.
Imagine a bandaid. (Well, think ‘condom’ if you must, because that -is- explicitly on the list.)
$12.21 for 280 at Amazon right now. ($0.044 each)
If bandaids are not covered by insurance, then I’m accepting the risk that I’ll need one and the full price. I -will- need some (the question is how long the box will last). So, first I shop and find a variety of prices from OMG down to ‘bulk packaging’. So it’s costing me $12.
If bandaids are covered by insurance, then I’m not interested in “shopping” at all – I’ll buy the first darn thing I can find that fits because someone else is paying. $37 for 24 ($1.54 ea). Whatever, it came up first..
But now I’m damn sure I’m going to be reimbursed, because that was farking outrageous. Generally it’s either the pharmacist ‘calling it in’ for prescriptions, or me spending 10 minutes with a form. And UPC-codes, photographing receipts, etc. Just like a ‘rebate’ – there’s always the mechanism to track crickets.
Then on ‘the other end’, there’s first someone to make sure the paperwork is correct. “Is this UPC valid for this item? Is this item covered at all? Did he get it from a legitimate pharmacy?” Then there’s the “Death Panel” layer – over the top language, but there is a layer where someone is actually deciding “Wait, he’s bought -how-many- boxes of bandaids? 47 this year?!? Deny it!” And they’re also deciding things like “He bought Bosch-brand, they’re on double-secret probation!” Or perhaps “We don’t buy Canadian medical equipment, they undercut good American jobs!” Whatever.
Regardless, there -are- a couple of layers in there staffed with live people. And they -do- deny crap for the craziest reasons. (The 280-count box of bandages might well be denied just because “You have -one- injury, you need like 3 bandaids max! We are -not- paying for that!”) I have personally had that happen for prescribed ‘saline solution’ where I got a deal on a 1-year supply – and then denied coverage.
So, ten minutes for me, ten minutes each for a couple layers of people and 10% profit. Then take the bill and smoosh it around so it comes out of my paycheck as an unidentifiable blob. That’s $37 + 2x (really, 3x) $3, + $4 = $47.
Without doing anything particularly outrageous. The key step is the first one, where the shopper just doesn’t give a darn about the price. But, fine. Pretend I did and got precisely the same ‘low priced item’ -> $12 + 2×3 + (10%) = $20.
This ignores the “Medical Device Tax”, which is just obviously sand in the gears. And the key effect of single-payer is to eliminate the 10% ‘profit’ motive. While silently completely borking up the rest of the overhead calculation in both intentional obfuscation, turf-building, and the other standard crap that’s been killing off civilizations via excessive bureaucracy since the Chinese somewhere around 3000BC.
—-
How would
a Republicanmy health system work for this?“Here’s the debit card for my health savings account. It’s a small payment, so I only need the 6-digit PIN. $12 from -pre-tax- funds!?! Awesome. That’s like 30% less than $12 from post-tax funds. 30% savings for like no work … oh, other than the shopping.”
Yes, Jim. It will not work for people too stupid to shop. Of course, they should also be able to get themselves declared non compos mentos and make it someone else’s problem anyway.
No point, really, in trying to explain to Jim why Obamacare is so flawed and why it will throw more millions off health insurance than he hoped it would insure in his wildest dreams.
He’s doing the backstroke in a pool full of koolaid – there’s no getting through.
The fact is, Obamacare will fail as all statist, utopian, central-authority, bribe-based, irrational, monstrosities fail. As Obamanomics is failing – it was always destined to fail. The goal of people who believe in liberty is to try and mitigate the pain as much as possible by defeating the idiotic ideas as much as possible. One sad part is that they (O-care and Obamanomics) cause so much horror and pain and misery as they sink.
The saddest part is that statist utopians like Jim will sit there amid the ashes of misery and destruction and…….
…Will. Not. Learn. The. Lesson.
Even now you see that in his writings..the only problem with O-care in his eyes is that it’s not being implemented quite correctly.
Next time we’ll do it better….**
Meaningless facade-based gun control has failed (Columbine) and will fail again if it’s passed. And you can hear the morons now:
This time we’ll do it better….**
They. Will. Not. Learn. The. Lesson.
** The endless lament of the Statists.
“The saddest part is that statist utopians like Jim will sit there amid the ashes of misery and destruction and…….
…Will. Not. Learn. The. Lesson.”
Sad but true. I expect Jim will be doing his “Baghdad Bob” imitation until the reality of the Obama chickens coming home to roost makes the final chapters of ATLAS SHRUGGED look like the Garden of Eden by comparison.
until the reality of the Obama chickens coming home to roost makes the final chapters of ATLAS SHRUGGED look like the Garden of Eden by comparison.
In other words, Ayn Rand’s book, Anthem. Which is basically Atlas Shrugged minus a John Galt counter revolution and fast-forwarded a few millennia.
Oh well, …..
so much for the CBO eh?
and so much for the estimates as to how much O-care will cost……
“The state health exchanges that are central to the U.S. Affordable Care Act are costing the federal government more than twice its initial budget to complete.
The Obama administration expects to have spent $4.4 billion in fiscal 2012 and 2013 on grants to states that are building new marketplaces to sell subsidized health insurance, according to budget proposals released today for 2014. A year ago, the administration had anticipated spending about $2 billion.
Including grants the administration expects to make in 2014, costs for the state-run exchanges will reach about $5.7 billion. The budget overrun doesn’t include the extra money needed to set up a “Federally Facilitated Exchange” in 34 states that chose not to cooperate with President Barack Obama’s initiative.
“It’s a lot more complicated than anybody imagined,” Joseph Antos, a health economist at the nonprofit American Enterprise Institute who advises the Congressional Budget Office, said in a telephone interview. “To be fair to CBO, this is one of the many areas where they didn’t know how big the bread box was, much less what was in it.” “
CBO fantasy numbers don’t hold up when exposed to reality? Who knew?
Not the CBO’s fault, of course. They were required to use garbage numbers for input and they got garbage numbers for output. Everyone paying attention knew what was going on.
And here we have a prime example of:
1) Unintended consequences
2) Inability of any governmental agency to think through the ramifications of a massive law
3) And the hubris of governmental officials who think they can avoid the above through their massive intellects:
WASHINGTON (AP) — Retired as a city worker, Sheila Pugach lives in a modest home on a quiet street in Albuquerque, N.M., and drives an 18-year-old Subaru.
Pugach doesn’t see herself as upper-income by any stretch, but President Barack Obama’s budget would raise her Medicare premiums and those of other comfortably retired seniors, adding to a surcharge that already costs some 2 million beneficiaries hundreds of dollars a year each.
More importantly, due to the creeping effects of inflation, 20 million Medicare beneficiaries would end up paying higher “income related” premiums for their outpatient and prescription coverage over time.
Administration officials say Obama’s proposal will help improve the financial stability of Medicare by reducing taxpayer subsidies for retirees who can afford to pay a bigger share of costs.
But the way Pugach sees it, she’s being penalized for prudence, dinged for saving diligently.
It was the government, she says, that pushed her into a higher income bracket where she’d have to pay additional Medicare premiums.
IRS rules require people age 70-and-a-half and older to make regular minimum withdrawals from tax-deferred retirement nest eggs like 401(k)s. That was enough to nudge her over Medicare’s line.
“We were good soldiers when we were young,” said Pugach, who worked as a computer systems analyst. “I was afraid of not having money for retirement and I put in as much as I could. The consequence is now I have to pay about $500 a year more in Medicare premiums.”
Currently only about 1 in 20 Medicare beneficiaries pays the higher income-based premiums, which start at incomes over $85,000 for individuals and $170,000 for couples. As a reference point, the median or midpoint U.S. household income is about $53,000.
Obama’s budget would change Medicare’s upper-income premiums in several ways. First, it would raise the monthly amounts for those currently paying.
If the proposal were already law, Pugach would be paying about $168 a month for outpatient coverage under Medicare’s Part B, instead of $146.90.
Then, the plan would create five new income brackets to squeeze more revenue from the top tiers of retirees.
But its biggest impact would come through inflation.
The administration is proposing to extend a freeze on the income brackets at which seniors are liable for the higher premiums until 1 in 4 retirees has to pay. It wouldn’t be the top 5 percent anymore, but the top 25 percent.
“Over time, the higher premiums will affect people who by today’s standards are considered middle-income,” explained Tricia Neuman, vice president for Medicare policy at the nonpartisan Kaiser Family Foundation. “At some point, it raises questions about whether (Medicare) premiums will continue to be affordable.”
Required withdrawals from retirement accounts would be the trigger for some of these retirees. For others it could be taking a part-time job.