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The Democrats are way ahead of Bernanke -- but does he know it?

Ben Bernanke's speech to Congress yesterday was more of a lecture: "Economic conditions provide little scope for reducing deficits significantly further over the next year or two; indeed, premature fiscal tightening could put the recovery at risk," he said. But he went on to warn Congress of the dangers posed by future deficits, and argue for the adoption of "legislative agreements intended to promote fiscal responsibility by constraining decisions about spending and taxes," perhaps by reducing congressional authority "on key budget aggregates, such as total government expenditures, deficits, or debt."

They've not gotten much credit for it, but Democrats have already passed one of these rules with the Independent Payment Advisory Board, which is charged with getting Medicare's spending under control and is protected from the filibusters and congressional inertia that have helped our cost problem grow so quickly.

You'd think people who worry about the market's confidence in our ability to control spending would be shouting about this from the rooftops. The IPAB is the single most significant cost control we've ever imposed on the single most fiscally dangerous program in our budget. But Republicans are specifically targeting it for repeal, even as they praise Bernanke's remarks. Meanwhile, I wonder whether Bernanke even knows IPAB is in there.

We have a system where it seems like it would be in everyone's interest to praise and support this reform, but instead, it's mainly been attacked, dismissed or ignored. Republicans would prefer to win the next election than increase the market's confidence in our ability to balance our books. Frankly, if I were the market, this would make me worry.

By Ezra Klein  | October 6, 2010; 10:59 AM ET
 
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With health care costs, it seems like a question of where to place the primary burden of cost control. Dems want to place the burden on providers and insurance companies by working on the supply side (IPAB, exchanges, payment reform). Repubs want to place the primary burden on the consumer by working on the demand side (deregulation, voucherization). Both sides want to get to the same place: a more efficient delivery system.

Posted by: jduptonma | October 6, 2010 11:30 AM | Report abuse

Isn't "reducing congressional authority" the sole purview of the people, through the Constitution? It is for this reason that the IPAB is so strongly challenged in federal Courts. Congress can't simply cede its legislative authority to a King, a Czar, a board, or whatever: periodic appeals to the people -- the routine ability of voters to dismiss those who make bad or unwelcome decisions -- is a cornerstone of governance.

For example, Coons v. Geithener (http://www.goldwaterinstitute.org/file/4929/download/4931) avers that "97. The Act thus burdens and/or purports to deny members of Congress, including Plaintiffs Representatives Flake, Franks and Shadegg of their legislative power and right to consider, review, debate and vote on the legislative proposals of IPAB like any other legislative proposal and to repeal IPAB like any other administrative agency that is legislatively established."

Further, according to (Democratic Party Member) economist and former U.S. Department of Labor Secretary Robert Reich, it is reasonable to expect that health reforms such as those entrusted to IPAB's regulatory authority: a) °means you, particularly you young people, particularly you young healthy people, you're going to have to pay more" b) °if you're very old, we're not going to give you all that technology and all those drugs for the last couple of years of your life to keep you maybe going for another couple of months. It's too expensive. So we're going to let you die"; and c) °drug companies and insurance companies and medical suppliers [will be forced] to reduce their costs . . . [which] means less innovation and that means less new products and less new drugs on the market which means you are probably not going to live that much longer than your parents." Audio recording: Robert Reich's lecture to Professor Alan Ross' political science class at the University of California, Berkeley (September 9, 2007), http://webcast.berkeley.edu/stream.php?type=download&webcastid=20057 (last visited August 2, 2010).

Posted by: rmgregory | October 6, 2010 11:33 AM | Report abuse

"We have a system where it seems like it would be in everyone's interest to praise and support this reform, but instead, it's mainly been attacked, dismissed or ignored"


That would be because the visible results haven't actually worked.

Which is, of course, why you have companies hiking premiums today due to the law.

And, of course, why Mafia boss Kathleen Sebelius is threatening them.

Only the ideologues have blind faith in Obama's IPAB.

Posted by: krazen1211 | October 6, 2010 11:41 AM | Report abuse

Democrats are woefully inept at selling themselves. When is the last time you saw a Democrat on TV vigorously touting an accomplishment? You have to tell people what you've done. You can't assume that people will just naturally find out about these things.

Unfortunately, Democrats would rather cower under their blankets and ask the Republicans politely to stop hitting them.

Posted by: TYTNation | October 6, 2010 11:42 AM | Report abuse

leave IPAB alone. Let it have its shot at working and when its woefully inadequate we'll have to go further towards price controls.

Frankly, if I were the market, this would make me worry.


Ezra the problem with that above statement is that the market doesn't solely focus on heatlhcare. It also focuses on things that don't favor democrats vs republicans such as what is considered over-regulation of companies, increasing taxes etc.

Posted by: visionbrkr | October 6, 2010 11:51 AM | Report abuse

@krazen1211:

Can you show me/prove that insurance rates are going up now *because* of HCR? Insurance rates have been going up for many years now, well before HCR. We all know this to be insurance rates is ridiculous. In fact, the more people that are covered (given the fact that it will be required) will most likely result in lower rates in the long term.

Posted by: nickthap | October 6, 2010 1:27 PM | Report abuse

rmgreggory, it is not unconstitutional for Congress to exempt certain decisions from their own normal rules. Remember that it's not as if Congress is saying they're removing these decisions from the Legislative branch, they're saying that rules like the filibuster (which aren't Constitutional powers) do not apply to these decisions. The reason for all the court challanges is because healthcare reform is a political football.

Posted by: MosBen | October 6, 2010 1:38 PM | Report abuse

nickthap,

just like krazen1211 can't say insurance rates are going up SOLELY because of this you also can't say that access to care (PPACA) will result in lower costs. Sure we can GUESS that people having access to prevenative care at no cost will help reduce costs but what of the other cost drivers? So now if we give free colonoscopies at $1000 a pop to everyone in the US does that mean that costs will go down? No, it'll go up. And that assumes that people actually access the care. This is proven out by the fact that millions are eligible for medicaid but never get it because its too cumbersome for them, they're maybe too ashamed to take it or its other reasons for inefficiency.

Posted by: visionbrkr | October 6, 2010 2:11 PM | Report abuse

nickthap,

oh and speak to an actuary about it. Most will say the costs of PPACA range from relatively zero (for those individuals who already have the benefits of those coverages in their plan) to a much larger figure.

The reason that McDonald's isn't able to offer the same plan to its employees is twofold. one, the admin costs to administer to a group of individuals like that is very high (higher than 20% obviously because they need a waiver from HHS) and secondly if the benefits they offered were forced to match up to what PPACA required the price would be unaffordable without the subsidies.

Posted by: visionbrkr | October 6, 2010 2:15 PM | Report abuse

"Can you show me/prove that insurance rates are going up now *because* of HCR? Insurance rates have been going up for many years now, well before HCR. We all know this to be insurance rates is ridiculous. In fact, the more people that are covered (given the fact that it will be required) will most likely result in lower rates in the long term"

There are numerous sources that indicate that we are already facing higher premiums due to HCR.


Here's one of many:

http://thehill.com/blogs/healthwatch/health-reform-implementation/121203-study-health-reform-law-will-hike-premiums-between-1-and-2-percent-

Hewitt Associates, a global consulting firm, said the most immediate reforms under the law — including the new protections known collectively as the Patient's Bill of Rights — will contribute "approximately 1 percent to 2 percent of the 8.8 percent projected increase for 2011."

Here's another:

https://home.businessinsurance.com/clickshare/authenticateUserSubscription.do?CSProduct=bi-reg-metered&CSAuthReq=1:873405148605372:AID|ID:49E24C4CFABC7DB0281538461D7D4E72&AID=20100818/NEWS/100819930&title=Employers%20expect%209%25%20rise%20in%20health%20plan%20costs:%20Survey&ID=&CSTargetURL=http://www.businessinsurance.com/apps/pbcs.dll/login%3FAssignSessionID%3D873405148605372%26AID%3D20100818/NEWS/100819930


The NBGH survey of 72 member employers found that 70% will have to amend their plans to eliminate lifetime limits, 26% will have to remove annual dollar limits and 13% will have to remove pre-existing condition exclusions for children under age 19 to comply with the law.


NBGH President Helen Darling estimates that one percentage point of that 8.9% increase projected for 2011 is due to changes required by the law. Cost increases also are being fueled by unabated rate hikes by medical providers, Ms. Darling said.


You can choose to believe the partisans in the white house (who come up with similar numbers), or the businesses paying for this bill.

Posted by: krazen1211 | October 6, 2010 2:30 PM | Report abuse

"Can you show me/prove that insurance rates are going up now *because* of HCR? Insurance rates have been going up for many years now, well before HCR. We all know this to be insurance rates is ridiculous. In fact, the more people that are covered (given the fact that it will be required) will most likely result in lower rates in the long term"

There are numerous sources that indicate that we are already facing higher premiums due to HCR.


Here's one of many:

http://thehill.com/blogs/healthwatch/health-reform-implementation/121203-study-health-reform-law-will-hike-premiums-between-1-and-2-percent-

Hewitt Associates, a global consulting firm, said the most immediate reforms under the law — including the new protections known collectively as the Patient's Bill of Rights — will contribute "approximately 1 percent to 2 percent of the 8.8 percent projected increase for 2011."

Here's another:

https://home.businessinsurance.com/clickshare/authenticateUserSubscription.do?CSProduct=bi-reg-metered&CSAuthReq=1:873405148605372:AID|ID:49E24C4CFABC7DB0281538461D7D4E72&AID=20100818/NEWS/100819930&title=Employers%20expect%209%25%20rise%20in%20health%20plan%20costs:%20Survey&ID=&CSTargetURL=http://www.businessinsurance.com/apps/pbcs.dll/login%3FAssignSessionID%3D873405148605372%26AID%3D20100818/NEWS/100819930


The NBGH survey of 72 member employers found that 70% will have to amend their plans to eliminate lifetime limits, 26% will have to remove annual dollar limits and 13% will have to remove pre-existing condition exclusions for children under age 19 to comply with the law.


NBGH President Helen Darling estimates that one percentage point of that 8.9% increase projected for 2011 is due to changes required by the law. Cost increases also are being fueled by unabated rate hikes by medical providers, Ms. Darling said.


You can choose to believe the partisans in the white house (who come up with similar numbers), or the businesses paying for this bill.

Posted by: krazen1211 | October 6, 2010 2:30 PM | Report abuse

"Can you show me/prove that insurance rates are going up now *because* of HCR?"

Insurance companies are being required to provide new benefits. Those benefits are not free. Therefore, rates are going up.

Sure, I agree HCR isn't the ONLY driver of rate increases, but HCR certainly puts upward pressure on rates.

"In fact, the more people that are covered (given the fact that it will be required) will most likely result in lower rates in the long term."

Do you think we can reduce the costs of going out to eat by requiring all restaurants to use the all-you-can-eat buffet model?

Or that we can reduce the costs of car ownership by mandating maintenance coverage for all auto insurance policies?

If there was any point to this whole enterprise, it is that 30 million more people will have awesome health plans and will be demanding more health services. More demand equals higher prices and quantities, and far higher total costs. This will translate into higher rates.

Posted by: justin84 | October 6, 2010 2:58 PM | Report abuse

krazen:

IPAB is something I was not familiar with, but Klein said it involves Medicare, so I don't see why you could expect it to restrain increases in insurance premiums for the general public that have been triggered by the health care bill of 2009.

That being said, it does seem that even if IPAB is what Klein claims it to be, it is an exception to the general budget-busting proclivity of the Obama administration and the current US Congress. (one of the best examples being, of course, the fact that they didn't even produce a federal budget, realizing the extent to which it would embarrass them with the public.

Posted by: bot_feeder | October 6, 2010 6:16 PM | Report abuse

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