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In a world with a broken Congress ...

Fred Hiatt's column today calls the House's health-care reform bill "a step closer to bankruptcy." But he's not really talking about the House's health-care reform bill, which he admits the Congressional Budget Office has assessed as not only deficit neutral but deficit improving. He's talking about, first, a fix to Medicare reimbursement rates that really isn't part of health-care reform, and, second, the capacity of Congress to make hard decisions about, well, anything. Fair points both, but neither here nor there when it comes to the House legislation.

To take them in order, the $250 billion Medicare payment fix is actually the outgrowth of another bill: The 1997 Balanced Budget Act. That legislation created a payment formula for Medicare that tied the program's payments to the period's extremely low growth in health-care costs. But then cost growth accelerated again, and Republican and Democratic congresses alike began voting to reject the formula's cuts. Bringing the formula back into line with the growth of health-care costs will require a hefty $250 billion. But we'd have to do it whether President Obama pursued health-care reform or not. Just ask President Bush, who had no interest in health-care reform, but saw Congress reject these payment cuts in 2003, 2005, 2006, 2007 and 2008.

Hiatt's more compelling objection is that Congress will continue to duck the hard questions of health-care reform and vote to avoid making the cuts and reforms that are written into the bill. As he says, "history suggests that legislators will not be deaf to the complaints of seniors and those who treat them when it comes time for the ax to fall."

This may be true. The problem, however, is that it obviates any possible solutions. For instance: In the final line of the column, Hiatt proposes that "Obama puts his clout behind the progressive ideals of thrift and cost containment." Elsewhere in the column, Hiatt laments that Congress did not "end the tax break for employer-provided insurance" or "empower an independent commission that could make cost-control decisions" or "rais[e] taxes on anyone who earns less than $250,000 per year." But if Congress will simply thwart any effort at cost containment, what's the point?

Taxes can be rolled back (see the Bush tax cuts) or indefinitely delayed (see the AMT). Commissions can be ignored or overturned. Cost controls can be repealed and weakened. I'm not necessarily arguing that Hiatt's pessimistic conception of Congress is inaccurate, but the appropriate response is either nihilistic or revolutionary. It cannot, however, be to propose different and harder cost controls than the ones Congress itself has passed.

Meanwhile, in a world where Congress cannot make the hard decisions to avert fiscal catastrophe, health-care reform hardly matters. As Uwe Reinhardt has noted, a trillion-dollar health-care bill would be less than 1 percent of the GDP America is expected to produce between 2010 and 2020. In that world, health-care spending, alongside the general growth in the state, will bankrupt the country. If Congress passes this bill and then repeals all of the cost controls and moves the day of reckoning forward by a matter of months, that hardly seems meaningful. And, on the bright side, tens of millions more Americans will have health-care insurance between now and the day when the republic collapses.

By Ezra Klein  |  November 9, 2009; 4:58 PM ET
Categories:  Health Economics  
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Comments

but you accelerate the collapse of the Republic by creating a huge new entitlement! i've never heard a good answer as to why we can't do the cost control now, prove its possible, then in 2013 if the cost savings have been realized, then expand coverage.

Posted by: jfcarro | November 9, 2009 5:16 PM | Report abuse

In other news, Fred Hiatt thinks that foreign wars are paid for with pixie dust. The Village: consistent fiscal scolds on anything that might improve the general welfare.

Posted by: pseudonymousinnc | November 9, 2009 5:39 PM | Report abuse

In a world with a broken Congress, it's pretty annoying that the progressives are the only ones willing to shackle their ambitions to fiscal responsibility. The cost-cutting provisions of this bill almost uniformly make the bill harder on the people it's meant to cover -- and do so without gaining any clear "deficit hawk" cover as a result.

The main focus of this fight should have been over affordable coverage, full stop. If the other side can punt on funding mechanisms for their wars, we sure as hell should be able to do so in order to establish a humane health system. It's particularly galling that we're about to pass a really weak, half-baked reform that will impose potentially crippling new costs on working families just to give the Palin Administration an extra couple billion to throw at Iran or wherever.

Posted by: NS12345 | November 9, 2009 5:46 PM | Report abuse

What entitlement does this add? It expands Medicaid, but otherwise the major addition is an exchange where a bunch of independent plans compete. About the only thing you could call an "entitlement" would be the subsidies, but they're linked to premiums that are likely to be high anyway.

Posted by: NS12345 | November 9, 2009 5:54 PM | Report abuse

how bout we agree to tie war funding AND the doc fix (and all other realted healthcare costs) to CPI and call it a day. Seems like a fair compromise, no?

Posted by: visionbrkr | November 9, 2009 5:56 PM | Report abuse

A very elegant rebuttal. Any chance we could make you the WaPo editorial page editor?

Posted by: wagster | November 9, 2009 6:01 PM | Report abuse

...

I cannot believe you work with that guy, Ezra.

Posted by: cronksty | November 9, 2009 6:02 PM | Report abuse

Ezra,
You pointed out the errors in one of George Will's columns on global warming. Any chance you can do this again for his recent piece, http://www.washingtonpost.com/wp-dyn/content/article/2009/11/06/AR2009110603075.html?referrer=digg?

Posted by: JW09 | November 9, 2009 6:17 PM | Report abuse

The Pentagon was unable to fight off the Congress' refusal to let it rationalize its base structure until the advent of the Base Closing Commission.

No way to know if something analogous could work for health care, but it's pretty clear that nothing else will.

I'd be less cynical about this round if Dems hadn't explicitly included the savings from abandoning "doc fix" in the bill, while simultaneously pushing it forward in a separate bill. If Congress won't abandon it, so be it, but then it shouldn't count as part of the "no increase in the deficit" verdict from CBO.

Posted by: lfstevens | November 9, 2009 8:01 PM | Report abuse

Please make sure that you say this stuff to his face the next time you run into him in the men's rest room.

Posted by: blah1 | November 9, 2009 8:22 PM | Report abuse

8 years of war in Iraq and Afghanistan is hardly more expensive (if at all) than the House bill as a percentage of GDP. I guess Ezra would say that it is hardly a blip on the budgetary radar, too. Endless wars = reckless spending? hardly. Indeed, the wars do end at some point. Free and highly subsidized health care, however, are sure to become permanent fixtures. Indeed, that is what is contemplated.

Of course, when compared to our budget deficit as a share of GDP (5% when Bush left office), a 1% increase represents a 20% increase in our yearly budget deficits. And dont tell me its paid for with new revenues. those new revenues should be used to draw down the deficit by 20%. Ezra's logic only make sense if you believe there is no connection between the money in our right pocket and the money in your left pocket.

Ezra is essentially rationalizing the last steps toward a cliff, much like Jim Cramer rationalized the last steps toward the exploiding housing and stock bubble. His basic argument is: "thing are fine today, so they must be fine tomorrow". Unfortunately, bebt crisis, whether on the level of the consumer or the sovereign, rarely unfold in a linear way. Rather there is always (for lack of a better word) a "tiping point" where accumulated debt changes behavior among either debtors (homeowners missing mortgage payments) or creditors (think China refusing to buy US debt, or dumping dollar denominated assets) in a way that fundamentally alters the working of the system. Its usually the line that seperates a system that provides benefits (more or less) for the parties involved and a system that decidedly harms. The switch happens fairly quickly, and the line between the two is thin. Anyone who has accumulated so much debt that they are only paying off interest and never paying off principal can attest to that. It would be ironic and tragic if a country in which so many of its citizens have experienced this on a personal level, would allow itself to be steered into the same situation on a national level.

One way to avoid that is to stop cold any further advance of the entitlement culture that pervades our society. And let's be serious: health care is not a right. Thats an absurd formulation if no other reason than it is literally meaningless. There is no free lunch, especially when unemployment is at 10% and we are 15 trillion dollars less rich as nation than we were just 3 years ago. All those idealistic plans that Ezra hatched during college, creative and enlightened ways to spend other people's hard earned money, have suddenly become as far fetched as the house flipping schemes which they relied on for funding.

Posted by: dummypants | November 9, 2009 10:34 PM | Report abuse

Ezra works for the washington post website only, and fred hiatt heads up the editoral page for the washington post itself. big difference.

i dont know this with certainty, but im guessing that ezra klein and fred hiatt dont cross paths a on daily or even a weekly basis. once or twice a month seems more like it to me.

Posted by: dummypants | November 9, 2009 10:41 PM | Report abuse

You are wrong about $250 Billion doc fix. It is Obama who promised in the first place to 'give comprehensive' health care reforms. This means it was required on his part:
- in the first place to include this doc fix cost in the bills or
- way back when the first bill was to be introduced on this topic, he was needed to make it clear that he would not include that cost but count it differently.

For 6 years Bush counted war cost differently and did not include in budgets. Peter Orszag and Obama included those. Then why this omission? Don't you see plain and simple 'politicking' here?

Next, today Congress is pushing this cost out of HCR. How do we know of tomorrow? Why is that each and every cost cutting assumed in the HCR will not be externally again punted? It is necessary for Congress to include this cost if it wanted to present the credibility on cost cutting.

Finally, your argument about 'the appropriate response is either nihilistic or revolutionary'. That is non-sense. Appropriate response to Fred Hiatt is to argue that:
- granting the risk of fiscal madness, explain why you believe America will vote another Obama and another Congress to resolve this issue;
- or accept the short comings and hence oppose the bill.

If it is all about revolution what is the difference between an African nation always under revolts and the Republic of Washington, Jefferson and Lincoln? Didn't FDR solve the near 'insolvency' issue with deft (even though Krugman criticizes, probably rightly, for removing the stimulus early then)?

And if you want to say 'Obama revolution via ballot box' is impaired and only partial; that is fine. As Ted said, 'dream lives on' and we will continue the search of that honest leader who will accept the humility of being fiscally responsible. Obama - looks like his feet are after all made of clay.

And you - unwilling to accept what is obvious here.

Posted by: umesh409 | November 10, 2009 1:22 AM | Report abuse

The 250 billion Medicare reimbursement rate fix will set the basis of any negotiation between doctors and any new government-run health program.
If its costs shouldn't be considered part of health care reform, what does that make the bio-fuel tax credit changes added to the Pelosi bill by Dingell and Van Hollen? How do savings from bio-fuel tax credits get counted in health care reform, but not increasing the very rates a government-run plan would have to pay?

Posted by: cprferry | November 10, 2009 4:50 AM | Report abuse

Congress is not broken. The problem is that the American people's expectations for what should be provided to them by their federal government does not accept limits.

Posted by: lancediverson | November 10, 2009 10:39 AM | Report abuse

Ezra you quoted "a trillion-dollar health-care bill would be less than 1 percent of the GDP America is expected to produce between 2010 and 2020." When have any estimates of a large entitlement program been right or even remotely close? If you believe these figures you believe in unicorns; and quit insulting us with these figures. At its inception in 1965, Medicare cost figures seemed reasonable- too bad the real costs were off by 900%!

Posted by: wizboman | November 10, 2009 11:36 AM | Report abuse

This column is just too glib.

First off, whether the $250B doc fix is part of health care reform or some previous bill is a technicality. It is still spending $250B which we currently don't have. This bill doesn't exist in a vacuum - there are all the other things we are deficit spending on - TARP, various bailouts, stimulus packages, 2 wars, etc...
Whether CBO scores this a deficit neutral is partly irrelevant - most people don't believe it will be.

Second: to the objection that congress will duck hard questions, he states "The problem, however, is that it obviates any possible solutions. " That is precisely why huge, sweeping, hastily crafted legislation, which will have loads of unintended consequences, is a bad idea.

Lastly: he states "And, on the bright side, tens of millions more Americans will have health-care insurance between now and the day when the republic collapses."
Well sure, and jumping out of a 10th story window is quite enjoyable - until you hit the ground.

Posted by: invention13 | November 10, 2009 2:55 PM | Report abuse

WAPO - make the intelligent choice. Replace Hiatt with Klein. Hiatt can always get a job at the NY Post.

Posted by: edfunk1 | November 10, 2009 6:16 PM | Report abuse

Europe is in much better shape than we are. They are blaming the mess on us. CEO pay is about 17 to 1 to average worker's. In the USA robber-baron system it is 256 to 1.

Sweden, the quintessential socialism in Europe, has only 5.4% unemployment. The dollar continue to devalue against European currencies.

Our problem is not socialism. It is fundamentalist capitalism run amuck. Corporate oligarchs run the U.S.A., not the people. Along with the Neocons, they double the debt in the last 9 years, and allowed wall street to become a gambling casino, and they are blaming it on the "socialists."

I only wish Obama was the left wing tyrant that the ignorant redneck and neocon idiots characterize him as being.

He is not. He is more like Bush than one would like to think, unfortunately for this pathetic country.

Posted by: owldog | November 11, 2009 1:41 AM | Report abuse

According to National Catholic Reporter Reinhard Marx, Pope Benedict's successor as Archbishop of Munich, reflected on the 20th anniversary of the Berlin Wall's fall took on neo cons. Marx charged that what he calls 'turbo-capitalism' has led 'to a detoriation in the daily situation of millions of people'.While the Catholic Church supports 'freedom, democracy, and pluralism' that position 'has nothing to do with reducing Christianity to religious ideology propping up the market economy.' However 'on some issues, such as the defense of life and the family, the so-called neo-cons are fully in line with the church.' Archbishop Marx, whom Italian media prematurely describe as cardinal, added 'But I don't understand how one can define oneself 'neo conservative' and put all one's trust in the capitalist model.'
Is it fair to say that profit motive often hides behing denial of social and economic evolution? What motivated the murderous atheist Josef Stalin to ban abortion in the USSR?
Prsumably members of the matrimonial bar observe ABA Model Rule of Professional Conduct 1.5 (d) 1 preventing contingency fees in domestic matters. Even neo-con lawyers abide by a prohibition of 'quota leonis'. That's the term ancient Roman law coined. Pray tell me if any Christian Church defending the integrity of families blessed with children may tolerate that an insurer funds divorce litigation causing more emotional distress than economic benefit for couples who otherwise might part peacefully, if not reconcile?

Posted by: EPaulImhof | November 11, 2009 6:20 AM | Report abuse

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