One of the most striking aspects of the $3.5 trillion budget resolution proposed last week by Senate Democrats is how little it does to improve America’s ailing healthcare system.
The plan funnels massive sums of money into everything from Medicare and Medicaid to Obamacare’s premium tax credits. But it utterly fails to address the deep structural flaws in these programs.
As a result, it amounts to a classic case of throwing good money after bad.
Consider its proposed expansion of Medicaid. Obamacare ordered states to make all residents earning up to 138% of the federal poverty level eligible for the program. The U.S. Supreme Court later made that expansion optional; 12 states have exercised their rights under the high court’s decision.
Democrats see this as a major failing. The Senate proposal seeks to remedy the situation by creating a separate, Medicaid-like program aimed specifically at covering the population the expansion was supposed to cover in these 12 states.
The bill also includes new incentives to encourage them to follow Obamacare’s original directive to expand the program.
The left’s obsession with sweeping yet more people into Medicaid shows a profound disregard for the actual interests of patients.
A landmark study of Oregon’s effort to expand Medicaid pre-Obamacare concluded that the program yielded no improvement in health outcomes for its beneficiaries after two years compared to remaining uninsured.
If Medicaid fails to improve its beneficiaries’ health, then why devote billions more taxpayer dollars to put more people on its rolls?
The budget’s proposed reforms to Medicare, the healthcare entitlement for seniors, also represent a colossal waste of money. Democrats want to expand the program to cover dental, vision, and hearing benefits. They’d also green-light new spending on home- and community-based services for people requiring long-term care.
Such spending commitments would be difficult to justify even if Medicare weren’t dangerously close to insolvency.
But it is.
The program’s Part A hospital insurance trust fund is forecast to run out of cash by 2024, according to a September report from the Congressional Budget Office.
Adding a collection of expensive new benefits to the program will only compound Medicare’s financial challenges.
The Democrats propose to pay for some of these provisions by reducing what the federal government spends on prescription drugs by imposing price controls. Such controls would wreak havoc on one of the most vibrant, innovative markets on the planet — and deprive American patients of access to cutting-edge medicines.
If the government caps prices for high-tech medicines, drug companies will have significantly less incentive to invest billions of dollars developing breakthrough drugs, including vaccines like the ones proving so effective against COVID-19. The result would be a significant slow-down in drug innovation.
Senate Democrats also propose to spend more money on Obamacare by extending the more generous subsidies for exchange coverage that were enacted until December 2022 as part of the American Rescue Plan Act back in March.
Those subsidies cap premiums for Americans making more than 400% of the federal poverty level, or $106,000 for a family of four, at 8.5% of income. Those who make less than 400% of poverty are also eligible for subsidies at higher levels than under Obamacare.
These more generous government subsidies don’t lower the price of exchange plans. They simply pass the cost along to taxpayers.
Exchange plans are too expensive chiefly because of the insurance market regulations established by Obamacare.
They require insurers to sell coverage to anyone who comes calling, regardless of health status or history. They forbid insurers from charging older patients any more than three times what they charge younger ones.
And they order insurers to cover a list of “essential health benefits” regardless of whether the beneficiary wants or needs them.
The combined effect of these reforms has been to make low-cost coverage all but illegal across the United States.
But Democrats would rather send yet more taxpayer money to insurance companies in the form of premium subsidies than roll back these destructive regulations.
America’s healthcare system would benefit from aggressive reforms that improve quality, lower costs, and expand choice.
The Senate Democrats’ proposed budget resolution, which they hope to ram through via reconciliation with no Republican votes, achieves none of these goals — and does so at astonishing cost.
Sally C. Pipes is president, CEO, and the Thomas W. Smith fellow in healthcare policy at the Pacific Research Institute. Her latest book is “False Premise, False Promise: The Disastrous Reality of Medicare for All,” (Encounter 2020). Follow her on Twitter @sallypipes. Read Sally Pipes’ Reports — More Here.