The deed is done. Obama’s version of healthcare reform is law and the details continue to trickle out. My favorite so far is that consumers will be fined $695 to not get insurance — the IRS will keep tabs, but the IRS hasn’t been given any money to enforce the bill (estimated at >$10b annually) — and the IRS has been given no enforcement ability. People who don’t get insurance will be billed $695, but if they don’t pay, then the IRS can’t take the offender to court, doesn’t charge interest or penalties — in essence, the IRS has no power to collect. While stupidity like this kept the cost of the bill down for the CBO, ultimately money will need to be added and the deficit will grow larger. With the deficit in mind, last week’s US government bond offering went poorly and interest rates ticked up 10-20 basis points. Increases in interest rates has begun and the market, not the Fed, will push rates higher and ultimately the Fed will be pulled along. If someone needs to pay $150/month for insurance, it seems to me that paying $695 in a fine (assuming the fine actually needs to be …
A Major Week in the History of the U.S.
This coming week may be a major milestone in the history of the United States. The Administration will pull out ALL stops and will do ANYTHING to get their version of the healthcare bill passed. First let’s review the procedures for passage. A couple of months ago the House and Senate passed different versions of the reform bill. Given that the Senate could not pass (by 60 votes) the same bill today, the House needs to pick up the Senate bill and pass it without amendments. The House does not have the votes to pass the original Senate bill, unless they cut a side deal with the Senate. With a side deal in place, the House intends to get the votes to pass the original Senate bill and that will be signed by the President. The deal with the House is that the Senate will introduce another bill to make some budget changes to the original bill, and will move to pass this new bill with the 50 vote reconciliation process of the Senate. The purpose of this new bill is to adjust the final version of the original act, which is necessary to get the House votes necessary for …
Back to Budget Reconcilation
The bi-partisan healthcare summit was a bust. Surprise, surprise, surprise. After all — the point of the summit wasn’t to exchange ideas, or to craft a real bill. The point was another photo op that got healthcare back on the front page — precisely whatthe President wants. In case you missed it, Senator Frist had a great op-ed piece in the Wall Street Journal this morning talking about the implications of using budget reconcilation in the Senate to pass this bill. Worth reading. I again urge Republicans to split insurance reform from so called healthcare reform. Insurance reform is a slam dunk. American’s want insurance reform. The Republicans have a great opportunity to fill the leadership gap and to produce a bill that the Dems will be hard pressed not to support. The Dems will argue that it doesn’t go far enough and therefore they can’t support the bill, yet with a proper public relations campaign the American public will quickly see that the provisions that the public wants are now being endorsed by the Republicans and blocked by the Democrats. The bottom line problem with the summit is that the Dems want social reform. The Reps want healthcare reform. …
We Are So Screwed
I saw an article the other day with this headline: We Are So Screwed. When I saw the national health expenditure numbers which were released this morning by CMS, I remembered the headline. There are a lot of numbers in the release, so to simply the message, I’ve created this table which I think shows the problem far better than words. Rate of Annual Growth Notes 2008 2009 2010E 2009-2019 National Health Expenditures 4.4% 5.7% 3.9% 6.1% +4.7% with doc pay fix GDP -1.1% 4.0% 4.4% Unrealistically high — 4.4% next 10 years?? Healthcare Spending as % of GDP 16.2% 17.3% 19.3% 1.1% change in 2009 is largest in history Medicaid spending 4.7% 9.9% 7.5% Recession caused uptick in 2009 Medicare spending 8.6% 8.1% 1.5% 6.9% 2010 assumes physicians get 21.3% pay cut If docs pay frozen, NHE rises 4.7%; Medicare 5.1% Private health insurance 3.1% 3.3% 2.8% Out of pocket expenses 2.8% 2.1% 4.8% Hospital spending 4.5% 5.9% 6.1% Physician & clinical spending 5.0% 6.3% 5.9% Prescription drug 3.2% 5.2% 6.3% Source: CMS & Villwock Advisory Services LLC In 2009, Medicaid spending grew by nearly 10% and Medicare over 8%. In 2009, healthcare spending as a percent of GDP …
What’s Next??
Life is interesting. Who would have guessed that Massachusetts would have a Rep Senator? To replace one of the nation’s most liberal Senators? The Senator who drove healthcare reform? How did the Republican win? By trashing healthcare reform — Kennedy’s healthcare reform. Priceless. Pelosi said today that she doesn’t have the votes to pass the Senate version of the bill. That leaves two possibilities if it is to get passed. #1 – The House & Senate could decide on a slimmer bill using the Senate’s budget reconciliation procedures to pass the bill with 51 votes. or #2 – The Dems and the Reps could get together and negotiate a slimmed down version of the bill that could garner Rep votes in the House & Senate. Given the anamosity in Washington and the arrogance displayed by the Administration and Dems in Congress, I think a snowball in Haiti has more of a chance. If that’s right, then it is budget reconciliation for the Senate — the “nuclear” option. After losing the Mass. vote I’ve got to think that the Dems will be hard pressed to take such a political risk. But then, who expected a Rep to win in Mass??