As the President and the Congress head to a showdown over SCHIP, it might be useful to see how, over the 2000-2005 period, the Federal government’s fiscal exposure evolved.
I rely upon a chart from the most recent version of David Walker’s Fiscal Wake-up tour.
In particular, observe the entry marked “Medicare Part D”, which was a zero entry in 2000. So when the Administration decries the $5 billion per year increase embedded in the legislation, compare it to the $8.7 trillion fiscal exposure that the Congress passed and the President signed. (For more on the sordid story of information-suppression in the run-up to passage, see here.)
And before somebody cites the Administration’s $250 billion expansion figure, take a closer look at CBO’s estimates here, as well as CBPP’s notes here.
Technorati Tags: SCHIP,
Medicare Part D,
fiscal exposure.
Let’s hope that Hillary cleans this up, Professer.
Nixon, who nailed Alger Hiss, was credible when he extended a hand to China; no one thought him soft on communism.
Maybe Hillary will wake up and take on entitlement spending in her first term; no one will think her soft on socialism.
Fat chance, though, given where she is going already with nationalized healthcare.
Bush is bad. Hillary will be worse.
September 26, 2007
Manor & Mendelson, co-founders of Portus Alternative Asset Management Inc., are being charged:
with 12 counts of fraud, money laundering, and possession of property obtained by crime on Wednesday, the result of a lengthy international investigatio…
Typo on ‘Professor.’ I’ve self-administered a wrist-slap.
You’re not going to get any arguments from my side of the blogosphere. The spending side is shameful.
But if you’re arguing that SCHIP is okay becuase it is “only” $5B, that I can’t agree with. Families making $80k should not have their children’s healthcare come from the government.
$80k is solidly in the middle class, and we don’t need any more middle class entitlements.
jg,
When considering Hillary cleaning up health care you must consider the motivation of those who promote nationalized health care. It is not to provide better health care. There is massive data to prove that nationalized health care reduces care generally.
The motivation for nationalized health care is equality. That is a stronger motivation for some than better health care. It is okay for the poor to receive worse health care as long as there health care is equal to the rich, as long as everybody gets the same poor care – oh, except for the politicians; their plan will be different.
Keep obfuscating the issue, Republican dittoheads – your inability to respond to the single topic reflects solely on you. Don’t worry – some people who read this blog retain the ability to think clearly, and look past your random comments.
This issue should pass in spite of the veto.
Unless, of course, Republicans hate children.
Unless, of course, Republicans hate children.
Yeah, that’s the answer.
So it’s only OK to throw out randomly aggressive commentary if you’re against SCHIP?
Shocking!
If you can’t stand the heat, stay out of the kitchen. Either we’re debating the issue or we’re throwing around invective. The choice is yours.
Either we’re debating the issue or we’re throwing around invective. The choice is yours.
Um, your the one who responded to the following with… what exactly?
$80k is solidly in the middle class, and we don’t need any more middle class entitlements.
Poor people have Medicaid. Why exactly do we need a “children’s health program”?
This one is shaping up nicely! But what will bloggers of the left and right do if Hillary is elected and proves to be a female Millard Fillmore?
After all Hil has never done anything or run anything. Her admin experience is zero. Hillarycare bombed. Why take chances?
And then there is the great Democratic Congress. Congresman Dingell is 97. Conyers is 101. But Sen. Kennedy is a sprightly 79. Maybe they will light her fire?
I agree and understand, DF. Great points, BC and ct.
Ha, ha, U-, that Republicans hate children. We have more of them, per capita, than you Dems; remember, alot of us are Bible-beaters, the ‘be fruitful and multiply’ types.
I think it’s time to go feed your cat, U-.
Yep, the folks who gave us great inner city housing, fine inner city public education, and can’t keep illegals from entering our country at will; I’m SURE that they’ll do a bang up job at universal healthcare.
Statistically speaking, we all demand better and better quality healthcare, we want to get near the best care available, we feel bad if our neighbors die because of not getting the best care, and we don’t like the price of care and insurance for future care to increase a lot faster inflation. So whatever happens, most of us will be unhappy about it.
My cost estimate, based on simplistic assumptions: $439b, give or take and ignoring revenue offsets.
Remember, the SCHIP expansion represents a yearly cost increase of roughly $7b. Walker measures the fiscal exposure in terms of the 75-year present value of the net deficit positions for each program. Therefore, if you don’t follow similar procedures, you’ll be comparing shriveled apples ($5b cost for SCHIP) to humongous oranges ($8.7t cost for Part D).
Josh, despite spending the most per capita, US healthcare ranks near the bottom of the industrialized nations, both in performance and in satisfaction.
despite spending the most per capita, US healthcare ranks near the bottom of the industrialized nations, both in performance and in satisfaction.
I fail to see how socialized medicine would improve either performance or satisfaction, short of implementing serious “managed care”. I seem to remember that not working too well in the 1990s.
And comparing us to other “industrialized nations” is not a good comparison. Name me one other “industrialized nation” that has an underclass the size of the one the US has. Name me one “industrialized nation” that has an immigration rate, legal and illegal, the size of the one that US has.
I’m as worried about the cost and performance of the US healthcare system as the next guy, but I just don’t see how SCHIP, or Medicare Part D, or “Medicare for All”, or Hillarycare does anything to make things better.
Josh, despite spending the most per capita, US healthcare ranks near the bottom of the industrialized nations, both in performance and in satisfaction.
In the U.S. doctors, hospitals, insurers, and the govt. are jointly responsible for setting standards of care, and for measuring the quality of those standards and the performance of the healthcare institutions (usually in terms of expected outcomes for patients with different disease types). According to those ways of measuring, the U.S. healthcare has steadily improved. My point was that given a) over time, those standards and those outcome measures have dramatically improved, and b) the cost per patient has dramatically gone up, that there is a causal connection between a) and b).
It wasn’t my intention to comment on whether the system was optimal (it’s not), whether present costs could be lowered by better public health initiatives (they could be), whether universal health coverage is a good or bad idea (the number of uninsured needs to be reduced one way or another), whether the performance measures themselves are perfect (they are not), or whether a majority of Americans would be happier with another country’s system (I don’t know).
I’m simply pointing to a matrix of desiderata – 1) always rapidly improving standards of care, 2) widespread access to near best care, and 3) overall healthcare costs rising at or less than the rate of inflation – that can’t be satisfied with current technologies. Without major technical breakthroughs in health care efficiency, something in that matrix has to give. It’s not my intention to argue that the recent U.S. tendency to either compromise on 2) or partially hide 3) in future generation liabilities is an optimal approach. Rather, I’d suggest that people/politicians should get more explicit about where they really want to compromise – e.g. “I’m for wider access, slower innovation,and higher present costs” or “I’m for lower present costs and less widespread access” or “I’m for more widespread access financed by extra payroll taxes levered on people whose employers don’t provide health insurance”.
You figure the somewhat unpopular President is exercising a political move to suggest that Dems are just spend-it-alls as a token gesture to the GOPs for the coming election –that youngsters needing this health care is pretty much beside the point?
Where is the media reportage to slap his little backside back by examining his spending record? What number of other bills could he have veto’d to build his case as “fiscally responsible”?
Thanks Menzie
I think people are missing the whole point by focusing on the financial issues. Bush is not vetoing the SCHIP bill for fiscal reasons. He is vetoing the bill for philosophical reasons. Bush said, “I believe this is a step toward federalization of health care.” Bush believes that government help for poor children will weaken their morals and make them more dependent on government welfare — the ones that don’t die will be stronger and more independent. Which is kind of funny coming from a guy whose entire life has been dependent on handouts from his father, bailouts from his family friends and government subsidies to his business ventures.
Further proof that fiscal reasons are not behind Bush’s veto is that fact that the bill would also cut funding for the Medicare Advantage program which provides subsidies to private insurers that compete with government Medicare. The Medicare Advantage program is a failed experiment in privatization of Medicare that costs taxpayers more than government Medicare, yet Bush is vetoing cuts in those subsidies for private insurers. Apparently welfare is good for private insurers but bad for poor children.
Joseph,
I totally agree with your that people are missing the whole point by focusing on the financial issues, but they are also missing the point by focusing on Bush’s past record for spending or vetos. The question should be is can the government increase medical care for children if this is passed. The Democrats will point you to health insurance but will ignore increased quality of care. The Republicans will point you to the federal budget and rising expanses rather but will ignore the fact that government health care starts out more inefficient than market health care the moment a bureaucrat touches a document.
Increaseing SCHIP is a bad idea because it will give children worse care, will waste money through inefficiencies, and should not be the role of the federal government at all because it favors one group over another. This has nothing to do with the total bill or how fiscally irresponsible Bush is.
Hillary is just a fount of wonderful economic ideas:
http://news.yahoo.com/s/ap/20070928/ap_on_el_pr/clinton_baby_bonds_2;_ylt=AkRwqxg6Q_ze0_u7wUTYWToE1vAI
Baby bonds, SCHIP, student loans/grants, Medicare/Social Security; man, it is nice being in the all-providing government womb!
DickF, the empirical facts don’t support your contention that “government health care starts out more inefficient than market health care the moment a bureaucrat touches a document.”
The proof is in the Medicare Advantage program. This program was set up by privatization advocates to try to prove your point and was a failure. Medicare Advantage is run by private insurers and turns out to be more expensive than government run Medicare and requires large government subsidies in order to compete. Private insurers simply are unable to compete with the efficiency of a government program. This is not too surprising since they are both providing the same services but the private program has lots of highly paid executives, sales commissions and investors demanding profits.
“Medicare Advantage is run by private insurers and turns out to be more expensive than government run Medicare and requires large government subsidies in order to compete.”
This is a curious statement. Medicare Advantage PFFS is indeed more expensive than Medicare, primarily because it provides more benefits than Medicare and in a more attractive benefits package. Remember that Medicare’s benefit design was so unappealing that an entire “Med Supp” industry developed, and most large insurers — like GM — are forced by the competitive labor market to augment traditional Medicare benefits for their retirees. And they do this at great expense.
It is true that “profit” is not charged by Medicare. Profit is the requisite return to capital and represents an efficient risk premium. Just because risk is not officially priced by the government does not mean that the risk charge does not exist. Rather, it is hidden in the potential for Medicare to unexpectedly demand the issuance of government bonds and/or in the crowding out that it may require of other programs (like SCHIP).
Lastly, private industry, for better or worse, facilitates care management, physician profiling, electronic record keeping, electronic member access to claims, disease management, claims audits and recisions, among many other functions. Medicare doesn’t offer many of these services. They are notable for facilitating claim fraud. Spending money on claims for services not performed or covered may lower admin, but that’s a particularly peculiar argument for Medicare’s supremacy.
Victor, maybe that kind of “risk premium” bamboozlement will work on freerepublic.com, but people here are smarter. The fact is that Medicare Advantage costs 12% more per client for the same care than traditional Medicare — almost $1000 per year for each person. And then you shamelessly suggest that traditional Medicare is responsible for crowding out SCHIP. I guess that this is the kind of stuff you would expect from a apologist working for the heath insurance industry. And then you have the gall to bring up Medicare fraud.
Seven of the largest health insurers offering private fee-for-service Medicare Advantage plans in June entered into a voluntary agreement to suspend marketing of the plans amid allegations of illegal and aggressive sales practices, as reported by the WSJ.
Practices have included the enrollment of dead or mentally incompetent Medicare beneficiaries, the impersonation of Medicare representatives and the use of personal information stolen from federal records, according to a Senate investigation released prior to a committee hearing in May examining marketing abuses.
Senate investigators released to Congress interviews and documents that indicate sales agents in at least 39 states have used unethical or illegal practices. These include falsely telling seniors that they can go to any provider, cross-selling in which they first discuss Medicare Part D and then attempt to pressure them into Medicare Advantage programs, and selling plans inappropriate for the client.
The Medicare Advantage program is just a method to allow private insurers to pillage the treasury, just like the egregious Medicare Part D program.
Victor: The difference between SCHIP and Medicare is that Medicare Parts B and D are in place by virtue of legislation that sets them as entitlements to be funded out of general revenue. SCHIP, as we can see from the ongoing debate, needs to be renewed at multi-year intervals. Hence, there is a real difference in magnitudes — I would say the appropriate comparison is the PDV of SCHIP over the 5 year program renewal period versus the PDV of the other programs like Medicare Part D. In this context, I think the basic point of my post stands.
Menzie — A 5-year cost comparison would be reasonable. My only point was that, to be meaningful, the basis of comparison needs to be consistent across sources. I was not arguing against your main point of profligacy.
You can perform a reasonable estimate for ya 5-year comparison by pulling Part D cost esimates from Table III.C19 from the 2007 Trustee Report.
I get a PDV of $0.355t for the 5-year projected cost of Part D, compared to the sum of $.025t for SCHIP (I was using strictly the cost outlay increases from the CBO estimates, as outlined in my previous post & blog). That’s a ratio of 14:1, not too far distant from my 75-year estimate, which is closer to 20:1.
Joseph “And then you shamelessly suggest that traditional Medicare is responsible for crowding out SCHIP” … I would argue that in general, increases in entitlement programs have begun to strangle our domestic spending. And in specific, programs like SCHIP are, for better or worse, currently under veto threat because of expansions to entitlements … like Part D. It has exacerbated our financial imbalances.
As we march into the future, domestic spending will likely continue to fall as a fraction of federal spending. If Medicare spending, for example, rises faster than projected, this squeeze will likely get tighter, faster.
I’m not sure what is terribly controversial in these statements.
Victor, you buried your argument in a bunch of gobbledegook about the superiority of private insurance programs, the necessity for profits and hidden risk premiums in traditional Medicare being the cause for crowding out, which is plain nonsense.
Now you state that SCHIP is under veto threat because it will worsen financial imbalances. This might be your belief, but it certainly isn’t George Bush’s belief. He has clearly stated that he “objects on philosophical grounds” saying that expanding the program would enlarge the role of the federal government at the expense of private insurance. His major objection isn’t the cost. His purpose is the destruction of government programs and the protection of private interests. As Paul Krugman has frequently pointed out, Bush’s history of government mismanagement isn’t a failing — it’s a feature. Like FEMA in New Orleans, the failure of government programs is a cynical way of creating contempt for government. Successful government programs create Democrats and that is what Bush fears most.
Successful government programs create Democrats and that is what Bush fears most.
That’s an intersting take on the issue.
Granting you your argument, is he wrong? Is it wrong to fight a program because of raw partisanship?
I mean, you could turn the argument around and say that Democrats only want this program because it gets people hooked on a government program and makes them Democrats.
Isn’t that just “public choice theory” in a nutshell?
I still maintain that a family of 4 making $60k per year should not be getting health “insurance” directly from the government.
Buzzcut, whether Bush is right or wrong I’ll leave up to you to decide. The point I am making is that the fiction that Bush opposes SCHIP for fiscal reasons is ridiculous and contradicted by his own statements. This is a guy who hasn’t vetoed a single pork-laden Republican spending bill in six years.
To some extent I agree with you. Democrats believe that well-run social welfare programs are a good thing and would like to have more of them. The more successful the programs that Democrats favor, the more likely people are to vote for Democrats. On the other hand, many Republicans hate social welfare programs and would like to dismantle the New Deal. If they can’t eliminate the programs outright, they want to cripple them or manage them incompetently so that people will lose confidence in them. Badly run government programs encourage people to vote for Republicans.
Badly run government programs encourage people to vote for Republicans.
It’s an interesting meme, but I think that its largely something Democrats say to make themselves feel better about government progams.
“Yes, FEMA was incompetant, but it was because Bush was running the show. If Clinton were still President, FEMA would have run like clockwork”.
You can believe that if you want to, but “reality based” folks understand that the federal bureacracy is run by career bureacrats that are largely immune to the appointees. And they’re by and large all union members and Democrats to boot.
As for SCHIP, I’ll say it yet one more time: NO ONE living in a houshold with an income of $60k or more should be getting government provided healthcare. You can say that that is a philosophical statement, or fiscal, or whatever. It’s a statement of fact. We don’t need anymore middle class entitlements.
In fact, the first thing that we should do if we’re going to do anything is to make health insurance premiums a taxable benefit. If you want to talk about middle class welfare, you need to talk about how employer provided healthcare pre-tax is nothing more than another middle class entitlement.
Actually, in the reality based world, Clinton got praise from both Democrats and Republicans for his revamping of FEMA in 1993 and transformation into a professionally run, cabinet level organization. Hurricane Floyd in 1999 was the most devastating storms to hit the eastern coast. The emergency response and evacuation were handled in an orderly fashion. It is amusing to read some of the contemporaneous accounts from 1999 and complaints that emergency housing trailers took a whole three weeks to be put in place. It is only after the disastrous response to Katrina that these minor complaints can be put into perspective. Two years after, the Bush administration is still stumbling in its handling with hundreds of emergency trailers still sitting unused on storage lots. Clinton stayed up all night and the next day helping to coordinate officials. Bush said “whatever” and was in bed as usual by 9 PM. The next day Bush went to a campaign event and quite literally strummed a guitar while hundreds of dead bodies floated in New Orleans.
On the whole, with some exceptions, I think that most federal programs do an okay job. Social Security and Medicare are two of the most efficient and popular government programs in America. The post office reliably delivers my mail anywhere in the country in a couple of days for 41 cents and doesn’t charge extra for Saturday delivery. I even like my local department of motor vehicles. They have an online web site that allows me to actually see how many people are in line from my home. I waited for a slack time and took care my license renewal in just 10 minutes from the time I left my door.
I’ve consulted with enough private sector companies to know that they are chock full of incompetent managers, old-boy crony bureaucrats and lifetime slackers, so I’m not surprised to come across a few in government as well. But in most of my encounters with government employees I find them to be very dedicated, hardworking and helpful.
But in most of my encounters with government employees I find them to be very dedicated, hardworking and helpful.
My beef with government employees is with their unions. Government employees should never have been allowed to unionize. They’re undemocratic.
I don’t think the DMV is all that different from, say, the cable company. The big difference is that if the cable company is totally screwing you, you can always cancel your service. Can’t do that with the DMV or the post office.
Regarding Hurricane Floyd, a lot of that FEMA “conpetance” was really state level competance. Florida is not Louisianna. The states are the first line of defense in a natural disaster.