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Deficit Hawkery for Thee, But Not for Me

I was amused by this nugget in today's New York Times:

Republicans’ primary objection is the Democrats’ push for a public health insurance plan that would serve as an alternative to private coverage. Republicans say such a plan would cause the private insurance market to unravel.

There is also the potential 10-year price tag of $1 trillion or more for the overhaul, coupled with the prospect of new taxes or fees to offset the cost. And Republicans see elements of the Democratic plans as government intrusion into personal health care decision making.

So Republicans are opposed to the policy, the philosophy behind the policy, the cost and the offsets to the cost. Impressive! But it may be worth reminding people of a bit of history here. In 2003, amid a war in Iraq and a sluggish economy and all the rest, a Republican Congress and a Republican president passed the Medicare Drug Benefit. The Medicare Drug Benefit, according to the most recent estimate I've seen (which is from early 2007), is now expected to cost $964 billion over 10 years. In other words, it'll cost about a trillion over 10 years.

By Ezra Klein  |  June 29, 2009; 3:00 PM ET
Categories:  Health Reform  
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Next: Designing the Health Insurance Exchanges


To be fair, Congress was lied to about the cost of the Medicare Drug Benefit. That said, when combing the cost of this benefit, the misbegotten war in Iraq, agricultural subsidies, and those nonsensical tax cuts, it is clear that Republicans only care about deficits when Dems are in charge.

Posted by: cjo30080 | June 29, 2009 3:14 PM | Report abuse

This post is outdated and under-researched. The current 2007-2016 estimate for Medicare Part D is $520.7 billion. Not only is this far less than any Democratic plan put forward other than Wyden-Bennett, but the relatively low-cost and high user- satisfaction of Medicare Part D is a testament to the private market responding to effective government policy, as opposed to Mr. Klein and President Obama's argument that the market is incompetent by its very nature of putting forth cost-effective, comprehensive, high-quality health offerings.

Posted by: Dellis2 | June 29, 2009 3:20 PM | Report abuse

If you look at the cost of health care in total (i.e., government costs plus private costs, including private insurance costs), the Republicans are implictly arguing that the Public Plan has a good chance of leading to lower total costs as opposed to the total costs that would arise by continuing the current policy. Private insurers will only falter if providing insurance in competition with the Public Paln is unprofitable and that implies lower costs to consumers and the country in total. Since the Public Plan should, in principal, cover just about everyone that is not covered by private insurance, the total cost of health care could be higher with the Public Plan. However, the total cost of health care per citizen should be lower with a Public Plan according to the Republicans. In any event, the Republicans seem to be arguing that efficiency in health care is a bad thing if the government is responsible for causing the efficiency.

Posted by: davidmorgan44 | June 29, 2009 3:31 PM | Report abuse

"Your wrong justifies my wrong." It's the new "Two wrongs don't make a right."

Posted by: whoisjohngaltcom | June 29, 2009 4:08 PM | Report abuse


“Medicare Part D is a testament to the private market”

A study published last fall showed that Part D was paying more than $15 billion a year more for drugs than the same drugs were costing under Part B.

In addition, only about 50% of seniors eligible for Part D have signed up. Evidence suggests that many seniors analyzed the program and chose not to participate because it would not work for them. The satisfied customers are a self-selected group that benefits from the program because their drug costs are either low enough to fall in the region where the program works or high enough so that they benefit despite the famous “donut hole.”

Privatization has made a hash of Part D and Medicare Advantage, demonstrating that private companies cost considerably more for the same results.

To be fair, private companies have done well in a much more limited role, providing processing of claims and payments for Medicare much more cheaply than private insurers, even though in many cases the companies providing the service are parts of the self-same insurers.

Posted by: PatS2 | June 29, 2009 4:10 PM | Report abuse

The current 2007-2016 estimate for Medicare Part D is $520.7 billion.

Comparing ten-year estimates that do include start-up costs to those that don't include start-up costs isn't really apples to apples.

Posted by: Mike_Russo | June 29, 2009 4:57 PM | Report abuse

Dellis2: This post is outdated and under-researched

You're pretty quick on the draw on your judgement on the post, but....

The new estimate you reference (if it is current) doesn't consider that pre-enactment estimates, the actual actuarial costs estimates, and the four-years post enactment estimates are all quite different. It is quite likely that if all seniors could benefit (and participate) and if the the drug purchasers for the government didn't have their hands tied by the GOP not having allowed cost negotiating, and if the estimates included the cost of the subsidy that corporations gain by keeping their existing drug plans for retirees in force were included, the numbers you cite would be well off the map.

Your comment is just another example of what happens when you start by believing to an absolute certainty that the so-called free market combined with GOP lawmaking is the best possible of all outcomes, that it must come to be.

The drug insurance problem is a piece of cake compared to overall health insurance, but the GOP did its best to make sure that drug corporations would dine at the government table with endless helpings of taxpayer money.

Surprise! The drug companies are very well fed (and their executives paid like they work for Goldman Sachs), half the seniors don't participate, and we still don't know the real cost of the entire plan, including the subsidies through the tax code. The current GOP is just a well-oiled cog in a criminal enterprise that sells life and health to the well-protected wealthy and death and illness to those not part of the GOP protection racket.

Posted by: JimPortlandOR | June 29, 2009 4:59 PM | Report abuse

My message to the Obama-haters is that none of you thought that deficit hawkery was worth voting for before, so please get out of the way while we enact some much-needed health care reforms. Later on, if you wish, you can run on a platform of getting rid of them in the name of deficit reduction and see if people vote for you. However, for the past 30 years you've depended on Democrats to put aside their primary policy goals to do the budget-cutting and revenue-raising dirty work for you. Meanwhile, over those same 30 years, you did precious little to close the budget deficit while you were in charge.

My advice? If you think that fiscal responsibility is so important, get elected to do it. Don't try to find religion on the matter only when you're not in charge. I've yet to meet any of these born-again deficit-hawks who voted for Clinton. In fact, they were all deranged Clinton and Gore haters and Bush-worshippers. It makes me think all their concern about deficits isn't particularly honest and that they're just trying to work out their hostility to Democratic policies by looking for excuses they don't really believe in. You all voted for big-spending Bush when you could have supported Gore or Kerry. So you have top shut up now, because your opinions don't have any credibility. Your opinions are pretty much worthless, and I don't think we should really pay attention to the concerns of America's political ignoramuses. Unrepentent Bush supporters need to be dismissed from the conversation, because of their track record of mental failure on these matters. They had the chance to support Clinton and Gore-- fiscal conservatives both-- and they rejected the opportunity, which puts lie their faux-deficit concern now.

Posted by: tyromania | June 29, 2009 5:10 PM | Report abuse

One last thing:

The main reason that Part D is coming in under cost predictions is that enrollment is much lower than predicted.

Posted by: PatS2 | June 29, 2009 7:21 PM | Report abuse

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