The Romney-Ryan Medicare Plan is Bad for Students and Seniors

Sep 21, 2012Rahul Rekhi

Shifting health care costs onto seniors will break a social compact that all Americans rely on.

Shifting health care costs onto seniors will break a social compact that all Americans rely on.

With Election Day finally in sight, the last few weeks have been brimming with slogans, speeches, and sound bites. But while Republicans and Democrats are working from a similar playbook, there’s a gaping chasm between their competing visions of the social safety net, and the future of Medicare hangs in the balance. In short, the Republicans claim their voucher plan would reduce health care costs, but the truth is that the seniors who depend on Medicare would be forced to pay the price.

The policy clash boils down to a single notion: vouchers. Mitt Romney and Paul Ryan are proposing a voucher-based Medicare system—one in which seniors are given vouchers to trade for insurance plans on a national exchange or market. The value of these vouchers is capped at a specific value, with the aim of curbing rising health care costs. And in fact, it is completely true that the Romney-Ryan voucher system will reduce Medicare costs, as promised. But it will do so by pushing those expenses onto Medicare enrollees, by forcing them to pay more out of pocket to cover their medical expenses as health care costs rise. What the GOP is proposing, in other words, is not exactly cost-cutting, but rather cost-shifting from government to seniors. If the yearly national allowance of vouchers has expired and your heart begins to fail, well, at least take solace in the fact that Mr. Ryan’s plan lowers Medicare costs by 20 percent.

If you’re only looking at the arithmetic, voucherizing Medicare is a clear and easy solution to bending the health care cost curve. Unlike, say, prevention and wellness campaigns, it’s not hard to project the level of cuts such vouchers will allow for. But this policy simplicity and straightforwardness mask an equally straightforward truth. Rather than attempt to extract amorphous, messy savings through biomedical innovation, electronic records, waste reduction, comparative effectiveness research, or incentivizing quality of care—in other words, achieving collective savings through progressive reforms—Romney and Ryan propose to gut Medicare and hand senior citizens the entrails. And this is hardly hyperbole; the nonpartisan CBO itself stated that the plan “could lead to reduced access to health care; diminished quality of care for Medicare beneficiaries…[and] less investment in new, high-cost technologies.”

That’s not to say that changes to the structure of Medicare are not needed, or will not require tradeoffs; they will. Real discussions, for instance, will have to be had over such hot-button topics as end-of-life care, or limits on the use of expensive, clinically unproven medical technologies. Refinements to these policies would bring Medicare into the 21st century, making it more nimble and in tune with technological advancement and social change. But they also preserve its central guarantee: that our nation’s retirees, having put in a lifetime of hard work and civic service, will receive quality, affordable health care to support them through their later years.

Fifty years ago, with the creation of Medicare under LBJ, thousands of soon-to-be enrollees—aunts, uncles, professors, my friends’ parents and my own—grew up trusting in this promise. And though, as a student, it will be nearly half a century before I qualify for the program, I recognize all too well the gravity of the decision we now face. It is one, after all, that will be borne most heavily by my peers, since the costs that are shifted to seniors today will be thrust upon us tomorrow as health care costs continue to rise. And young Americans will feel the consequences of voucherization well before we reach the age of eligibility, for the security that Medicare provides allows us to take risks when we're younger, to try to create the next Facebook or Instagram, rather than play it safe for fear that we'll be left destitute or denied care in our later years. To chip away at the heart and soul of our social safety net is, in a sense, to hinder innovation itself.

Ultimately, the choice we face is simple: to uphold this mandate or reject it fundamentally; to maintain the promise of health care access for our elderly or begin chipping away at the coverage we provide in the name of budget-balancing. This debate is about a decades-old American social compact, and its effects will reverberate, shaping the futures of not only my own generation but also the ones to come. For the health of our citizens and our safety net, there is only one right answer.

Rahul Rekhi is a student at Rice University and the Senior Fellow in Health Care Policy for the Roosevelt Institute | Campus Network.

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What Does Obama Really Stand For: Community or Small Government?

Sep 10, 2012Jeff Madrick

The president's convention speech focused on the power of community, but the details of his future policies remain sketchy at best.

The president’s acceptance speech in Charlotte last week emphasized his new theme of community and "being in this together." For all its mushy sentiment, this is a major victory for those like us at Rediscovering Government who have been talking about the need to revitalize the discourse about government for quite some time.

The president's convention speech focused on the power of community, but the details of his future policies remain sketchy at best.

The president’s acceptance speech in Charlotte last week emphasized his new theme of community and "being in this together." For all its mushy sentiment, this is a major victory for those like us at Rediscovering Government who have been talking about the need to revitalize the discourse about government for quite some time.

Obama hesitated to sound such a theme in the past. He seemed to run from potential charges of class warfare or favoring big government. He failed to boast about his stimulus plan and some of his investment programs. He hardly talked about his health care program. The conversation in America has changed, of course, partly because of the vice presidential nomination of an extremist, Paul Ryan, who wants to cut government spending to 16 percent of GDP. That’s about the 1950s level. 

But Obama has been moving in this direction for quite a while now. He still avoids the word "government," preferring "community." But he also nicely introduced the word "citizenship." Among Ronald Reagan’s most damaging legacies was, I think, that he undermined the meaning of being a citizen in America. To him, we did not belong to a nation. We belonged only to ourselves. It would be nice to bring the concept of citizen back.

I can’t overemphasize how useful it was for Obama to lay out this old but now new vision. Bill Clinton, who had proudly proclaimed the end of big government in 1996, also said similar things. There is now a distinct us versus them as the election season begins. “Us” is those who want to work together. "Them” is those who treat community as a drug we'll become dependent on. It is probably no accident that the Republican ticket is composed of men descended from rich parents. Lots of rich kids become effective leaders, but many don’t understand how tough it can be to have no one to lean on, to borrow from (as Mitt now famously suggested), or even to be taught by.

But having listened closely to the Obama speech, I am still hungry for more candor. Even a few days later, I have no idea what Obama plans to do over the next four years. We know he will care, and we know he will not take a pound of flesh from the poor or strivers to the middle class if he can help it, but what do we know about his future programs?

He was about as careful as Romney and Ryan were in Tampa to avoid any specifics. Will he propose a new stimulus if the economy teeters, or will he remain dedicated to a narrow deficit-cutting plan even during a weak economy? Does he think there is anything truly commendable about the Simpson-Bowles deficit-cutting plan he had sponsored (if then mostly ignored)? The plan disastrously aims to limit federal spending to 21 percent of GDP, its 40 year- average, even as the population ages, health costs rise, and we know pre-K education is urgently needed. It would cut Social Security sharply. But Obama mentioned it in his speech, and it has become the widely cited “bipartisan” model for fiscal responsibility. The public relations program in its favor is a stunner. It is not really bipartisan at all, of course. Both the Democrat Bowles and the Republican Simpson are devoted and extreme deficit hawks.

What line will Obama hold on Social Security? Will he significantly upgrade his proposals to invest in infrastructure? How about a higher minimum wage? Better labor laws? Is there a potential jobs program in the works? Serious education reform? Will he encourage a lower dollar to help manufacturing and propose ways to create a more level playing field in global trade? Will he propose a serious tax increase to pay for needed public investment and buttress entitlements programs once the economy is righted?

I can’t say it’s bad politics to ignore the details for now. The best case for Obama is that as his health reform law helps more people, he will build American confidence in government. Mitt Romney has already conceded as much, saying he will retain some of Obamacare. With some proof that governmnet helps under his belt, perhaps Obama can move forward. He can add to his health care program with a true public option and perhaps expansion of Medicaid reimbursements to providers, which are too low. He can also adopt more rigid cost controls, drug negotiating procedures, and firmer preventive medicine incentives. A more positive attitude toward government might awaken fresh ideas about educational reform. Perhaps we can put art and music programs back into schools and tackle universal access to the web. Maybe we can even build a universal pre-K system that is cheap and good, one of our most important needs.

I know Romney has only one major idea in his head: tax cuts. If at first they don’t succeed, try again. But of course, tax cuts did succeed for the wealthy, just not for the “community” of America.

What’s really in Obama’s head? Is he a limited government man at bottom, just another Third Way New Democrat? Or is he really a community government man? I don’t know, and that bugs me. Moreover, I am not sure we will find out before Election Day.

Roosevelt Institute Senior Fellow Jeff Madrick is the Director of the Roosevelt Institute’s Rediscovering Government initiative and author of Age of Greed.

 

Barack Obama image via Shutterstock.com.

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Memo to RNC Delegates: You Didn't Build It, But Feel Free to Pay Up

Aug 28, 2012Jordan FraadeSarah Pfeifer VandekerckhoveJeff Madrick

“We built this” is the phrase ringing throughout the (largely publicly funded) Tampa Bay Times Forum this week at the Republican National Convention. Though it is meant as a rebuttal to President Obama’s remarks earlier this summer emphasizing that government is the dynamic foundation and support system upon which all Americans rely, its use as a theme of the RNC is actually a critical illustration of the president’s point.

“We built this” is the phrase ringing throughout the (largely publicly funded) Tampa Bay Times Forum this week at the Republican National Convention. Though it is meant as a rebuttal to President Obama’s remarks earlier this summer emphasizing that government is the dynamic foundation and support system upon which all Americans rely, its use as a theme of the RNC is actually a critical illustration of the president’s point. To be clear, Obama was saying that “there are some things (like fighting fires or building infrastructure) that we (the government and its people) do better together,” such as constructing a multi-million dollar professional sports facility in downtown Tampa or, say, rebuilding the infrastructure and restoring public services to an entire city in the wake of a (relatively small) hurricane to the tune of millions of dollars. But if the 50,000-plus people visiting Tampa for the RNC this week really want to take credit for these enormous feats of collectively funded and supported work, we have helped them figure out just how big a check they’ll need to write.

As Media Matters pointed out last week, the Tampa Bay Times Forum was built in 1996 by the Tampa Bay Sports Authority, a public entity. Of the $139 million construction cost, 62 percent, or $84 million, was paid with public money – bonds backed by the City of Tampa and Hillsborough County, paid back through sales taxes, tourist development taxes, and ticket surcharges. More recently,  the Republican National Committee, which received over $18 million from the federally supported Presidential Election Campaign Fund, shared costs of over $500,000 with the Tampa Bay Lightning just to upgrade the arena’s sound system.

Additional preparation for the RNC cost the City of Tampa upwards of $2.7 million in beautification projects and infrastructure upgrades, like improving highways, redesigning signage, planting palm trees, and bringing a locally loved fountain back into use. Commuting from up to 90 miles away, RNC delegates will surely find these upgrades to be pleasant as they are introduced to the hallowed Tampa tradition of long, grinding commutes. Some delegates may even be transported around by a fleet of 400 city-chartered buses. Those same delegates who, like Florida Governor Rick Scott, are adamant about blocking any further government expenditures on mass transit are more than welcome to walk to the Forum (although a 2007 survey of cities found that Tampa has no walkable destinations, and 50 percent of the urban core is set aside for parking).

Downtown Tampa offers delegates benefits that come as a result of public investment in the city’s urban core (unless, of course, they choose to avert their eyes out of principled opposition to wasteful government spending on things like public art and higher education). The Riverwalk, a two-mile green space along the Hillsborough River, has already enticed the Tampa Museum of Art to relocate and freed up space for public events. The city received $11 million from the Obama administration to put the finishing touches on the project, and is spending $3 million to turn downtown’s Zack Street into a pedestrian thoroughfare with benches, landscaping, and street art. Finally, along the downtown riverfront, the University of South Florida’s new Center for Advanced Medical Learning and Simulation is the world’s largest medical facility that allows medical students to practice surgery without a patient. The center was built at a cost of $38 million and was partially paid for by Build America Bonds, an Obama administration program that provides capital for infrastructure projects and issued over $100 billion in bonds in its first year of operation. More wasteful government spending!

Of course, no event in Florida in August would be possible without hurricane season preparation. In anticipation of Tropical Storm Isaac’s imminent development into a hurricane, the RNC cancelled Monday’s convention activities. Though it’s not clear yet what cleanup the storm will require, similar strength storms generally cost FEMA millions in statewide recovery. When Tropical Storm Debby hit Florida earlier this summer, FEMA spent over $15 million on individual assistance.

For the 2,286 RNC delegates eager to claim they “built this” – whether it’s the Tampa Bay area infrastructure or social services, Tropical Storm recovery included, provided by the host town – we’ve done some math to help them determine just how much money they would have to personally shell out to validate such a claim. Diffusing a $15 million cleanup cost among 2,286 delegates would lead to a total of about $6,562 per delegate—a small price to pay to make sure the party can actually nominate a candidate for president. If we ask everyone visiting Tampa for the convention to pitch in—roughly 50,000 people, according to the RNC website (and yes, 15,000 members of the press, that includes you too)—each person would pay $300 to help clean up. Natural disasters aren’t cheap. Without coordinated government efforts to manage and clean them up, they would be even less so. To cover the roughly $100 million in Tampa Bay area beautification and service and infrastructure improvements, including the construction and upgrades of the Tampa Bay Times Forum, each delegate would need to pitch in an extra $43,745, or an extra $2,000 per visitor, and that doesn’t include myriad other costs going into this week’s events, including the nearly $50 million federal grant covering RNC security.

With this $15 million tucked away and set aside for hurricane cleanup and over $100 million secured for RNC-related infrastructure and beautification, Tampa and Florida taxpayers could go back to taking care of day-to-day expenses, like improving Medicare coverage in a city and state where the need for it is acute. Florida’s health care costs are well above the national average—it ranks 18th in per-capita health spending overall—but the state rockets to second place nationwide in Medicare spending with $11,893 spent per enrollee. The state also ranks second behind California in gross Medicare spending, with just over $39 million spent on the program. And while the Tampa and St. Petersburg hospital referral regions do not contain Florida’s highest per-enrollee Medicare expenditures, nor are the cities among Florida’s most elderly, the city’s age 50-64 population grew by 40 percent between 2000 and 2010. A city whose largest-growing age group is on the cusp of Medicare eligibility is hosting the convention of a party that has dedicated itself to ending the program as we know it.

There’s a larger-than-usual chance that your average Republican delegate will be a Medicare recipient, too. While the convention does not officially release information on the age of its delegates, several states do. North Carolina, Texas, and Connecticut, for example, are all sending delegations whose median age is 57 or 58. Any delegates who require medical care during the convention, hurricane or no, will have the option of visiting Tampa General Hospital, a downtown hospital affiliated with the public University of South Florida—but not, alas, with the for-profit hospital chain managed by Florida Governor Rick Scott in the 1990s and later found guilty of Medicare fraud. Tampa General is the city’s largest hospital, with an operating revenue of $1.1 billion in fiscal year 2011—a year before it was voted the best hospital in Florida by U.S. News and World Report. No doubt at least one Republican delegate, for some reason or another, will find a reason to visit the hospital and help contribute to this nonprofit, government-funded success story.

As for the delegates who stay healthy, we hope you’ll enjoy your stay and that your cheers of “we built this!” are worth the $50,307 you’ll have to refund the government for all the work it did to prepare the city on your behalf. And remember to set a little extra aside for tourist activities!

Jordan Fraade is a former member of the Roosevelt Institute | Campus Network.

Sarah Pfeifer is Manager of Programs for the Roosevelt Institute.

Roosevelt Institute Senior Fellow Jeff Madrick is the Director of the Roosevelt Institute’s Rediscovering Government initiative and author of Age of Greed.

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Ignore the Deficit Hawks. Social Security is Easy to Fix.

Aug 14, 2012Jeff Madrick

On the 77th anniversary of Social Security, we're celebrating what has made the program so important and why it remains vital today. Jeff Madrick explains why Social Security's so-called fiscal crisis has been overblown and looks at the many simple solutions on the table. Read the rest of our coverage here.

On the 77th anniversary of Social Security, we're celebrating what has made the program so important and why it remains vital today. Jeff Madrick explains why Social Security's so-called fiscal crisis has been overblown and looks at the many simple solutions on the table. Read the rest of our coverage here.

Little is as distressing in the public discourse as the linking of the financial problems of Social Security and Medicare. It is a favorite ploy of the deficit hawks to claim we must reform our entitlement programs without distinguishing between the two. I am at a loss to explain this. It is clearly ideological -- small government no matter who gets hurt. But Social Security payouts will rise from roughly 5 percent of GDP to 6 percent at worst down the road, while Medicare will rise by much more.

Nevertheless, poorly educated pundits, willing to believe the self-proclaimed centrist view that we cannot tax our way to solvency, demand Social Security reforms from selfish baby boomers. Monique Morrisey of the Economic Policy Institute does good work on this. Moreover, there is even a detailed Senate report on the issues that requires only a little updating. Maybe journalists should read it before they write about the subject. Its title is rather self-explanatory: “Social Security Modernization: Options to Address Social Security Solvency and Benefit Adequacy from the Senate.” 

First, remember that Social Security provides nearly 60 percent of the elderly more than half of their income. Seventeen percent receive all their income from Social Security, mostly households headed by elderly women. Most remarkably, and it would be nice for young people to register this, the poverty rate measured by the federal government for the elderly was 35 percent in 1959. As Social Security became more generous, it was reduced to 10 percent, about where it stands today. This is one of the great social achievements of our time.

Now for that future financing gap. It's true that payroll taxes won’t cover all the benefits to be paid in 25 years or so, as the ratio of the elderly to workers rises and life expectancy grows. But a more important and lesser known cause of this future gap is inequality of income. Tax revenues are reduced because incomes have stagnated for so many. Due to an earnings cap above which taxes are not collected, now about $110,000 a year, combined with the rapid rise of incomes for high-end earners, some 17 percent of aggregate earnings are not covered by the payroll tax. In 1980, only 10 percent were not covered.

But the solvency gap, as we might call it, is not very large, amounting to only 2.67 percent of GDP. How can that be closed? Pretty darned easily. For example, the cap can be eliminated. This would close almost the entire gap if high-end earners do not receive higher benefits. It will still close four-fifths of the gap if they do.

Another way to close the gap would be to raise payroll taxes by 1.1 percentage points, from 6.3 percent to 7.6 percent. This would entirely close the solvency gap. Or the tax could be raised by a little more than 1 percentage point in 2020 and another percentage point in 2052, also eliminating the solvency gap.

A combination would also work. If the cap were raised to cover 90 percent of all workers, for example, it would close about 25 percent of the gap. Thus, a tax increase to close the rest would be smaller. Alternatively, the payroll cap on employees could be limited to 90 percent and eliminated altogether for employers. This would just about eliminate the gap.

There are many other options and permutations, but any claim that a pragmatic increase in taxes cannot close the gap is utterly wrong. 

Let’s also keep in mind that Social Security solvency is based on a 75-year forecast. Any increase in the rate of growth over what is expected will reduce the gap significantly. Now to really be pie in the sky, there is also the possibility of investing in the economy to enable it to grow faster—investing in infrastructure, education, and so on. More equality of income would also reduce the solvency gap. For those eager for major benefit cuts because we can’t be sure about growth, well, they can be quite modest if coupled with tax increases. But they are not necessary now!

Medicare is a different issue. In sum, the nation pays about twice as much for what it gets from health care than it should compared to other countries. This is the domestic problem of our time. I think Obamacare may start us down the road to control these costs, especially if we ultimately add a public option at something like Medicare rates. That’s where pundits and deficit hawks should focus their attention. Instead, they like picking on Social Security, our single greatest achievement. Why?

Roosevelt Institute Senior Fellow Jeff Madrick is the Director of the Roosevelt Institute’s Rediscovering Government initiative and author of Age of Greed.

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The Aurora Victims (and the Rest of Us) Deserve a Health Care Safety Net

Jul 31, 2012Tim Price

The Aurora shooting has sparked debates over gun control, but health care reform is just as important for the uninsured victims.

The Aurora shooting has sparked debates over gun control, but health care reform is just as important for the uninsured victims.

Just 11 days ago, a shooter opened fire in a movie theater in Aurora, Colorado, killing 12 and injuring 58 others who had gathered for the midnight premiere of The Dark Knight Rises. In the wake of these tragic events, a debate has erupted over gun control. (This happens every now and then when we’re reminded that the authors of the Second Amendment might not have meant for someone to be able to buy 6,000 bullets online with no questions asked.) But as we mourn those who were lost and extend our sympathies to their grieving families, we shouldn’t forget that the suffering continues for many who survived the shooting. As Dashiell Bennett of The Atlantic Wire notes, “Most of the wounded are expected to have medical costs in the hundreds of thousands, if not millions, of dollars and many appear to have inadequate or non-existent coverage.” This burden could add more tragedy to the lives of those who have already experienced too much. But while we may wonder if more sensible gun laws or better mental health care could have prevented the shooter’s rampage, we know for sure that a stronger social safety net could have prevented the financial catastrophe that has followed in its wake.

As hospital bills pile up, uninsured and under-insured survivors of the shooting are being forced to rely on the kindness of strangers. The Associated Press reports that three of the five hospitals treating the Aurora victims are capping their fees or offering them free care. But that still leaves many to bear a heavy financial burden, including Caleb Medley, an uninsured man who was shot in the eye and placed in a medically induced coma. His family is raising private donations to cover what already amounts to over $2 million in medical bills.

The charity of those who have donated is certainly commendable, but while we wish Medley and his family all the best, we have to ask ourselves whether this is any way to run a country. If there’s a crime spree, we don’t pass the hat around to hire a private security firm to defend us. We have the police for that. If our homes catch on fire, we don’t just cross our fingers and hope one of neighbors will be nice enough to lend us their garden hose. We know firefighters will be there to help. So when it comes to medical emergencies, including random events like this one and also the kind that all of us will face at some point in our lives, why should the 50 million uninsured Americans be reduced to begging for help? If the Affordable Care Act is allowed to fully take effect, providing guaranteed coverage, expanded Medicaid coverage, and insurance subsidies for those who need them, that may no longer be the case. But that’s a big “if.”

There’s a story conservatives like to tell about our health care system, and as with so many of their stories, it involves their peculiar definition of personal responsibility. The story goes that if you’re a responsible person, as physically and mentally healthy as you are morally upright, you can obtain health insurance by working hard so that you can either be covered by your employer’s plan or purchase an individual plan. If you don’t have insurance, there are two likely explanations. The first is that you’re an irresponsible bum who wants everyone else to pick up the tab for your medical care. The other is that you’re a Galtian Übermensch who has planned ahead and saved up for your own private medical staff and organ-cloning lab in case of emergency. If you can’t obtain insurance because you’ve been denied due to a preexisting condition or because your employer doesn’t offer it and doesn’t pay you enough to buy it yourself, you don’t fit into this narrative, so please politely excuse yourself and go complain about it in a quiet room.

I last wrote about this argument and the problems with it when I discussed my own brush with death. That experience didn’t just deepen my appreciation for health insurance and my belief that everyone should be guaranteed coverage. It also made me aware of just how flimsy the GOP’s argument is. If I hadn’t had health insurance at the time of my accident, would I have been “responsible” for a driver blowing a red light and running me over as I was crossing the street? Should the firefighters and paramedics who saved me have instead patted me on the (broken) shoulder and said “Good luck with all that”? Are the uninsured victims of the Aurora shooting at fault because they didn’t set aside some rainy day money on the off-chance that a psychopath in SWAT gear would try to murder them while they were enjoying a night out at the movies?

Claims like these clash with common sense and basic human empathy, which is why they’re rarely made explicit. But it may take events like the Aurora shooting to highlight the extent to which they undergird the Republican approach to health care. To be fair, many conservatives would argue that they agree with the principle that everyone should have access to affordable health care but believe the best way to accomplish that is through the free market rather than government mandates. And many on the left would rightly point out that the Affordable Care Act is only a half-measure, a compromise with private insurers that won’t truly guarantee equal access to health care for all. But none of those criticisms are reflected in the policy agenda of the Republican Party, which has now repealed the Affordable Care Act 33 times and offered an alternative proposal zero times. Senate Minority Leader Mitch McConnell has explicitly said that covering the uninsured is “not the issue,” while Senator Orrin Hatch admits that the number of uninsured is disgraceful but maintains that “we cannot succumb to the pressure to argue on the left’s terms.” Indeed, why should the debate about health insurance focus on people who need health insurance? We should talk about something more fun, like our favorite vacation destinations or Mitt Romney’s dancing horse.

The Aurora victims may have been gathered to watch a movie about a benevolent billionaire who dedicates his life and fortune to righting society’s wrongs, but there’s a reason such stories are best left to fiction, and it’s not just that Warren Buffett wouldn’t look good in a bat costume. In the real world, we understand that there are vast and complex problems that we can’t solve through private charity alone, and for those problems we require strong public institutions and a reliable social safety net. People shouldn’t have to fear that they’ll be shot dead when they walk into a movie theater, but neither should they have to fear that they won’t be able to afford the cost of survival.

Tim Price is Deputy Editor of Next New Deal. Follow him on Twitter at @txprice.

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Mark Schmitt: GOP Has "Less Than No Reason" to Repeal the Individual Mandate

Jul 10, 2012

In the latest episode of the Roosevelt Institute's weekly Bloggingheads series, "Fireside Chats," Senior Fellow Mark Schmitt talks to Scott Lemieux of Lawyers, Guns, and Money and The American Prospect about th

In the latest episode of the Roosevelt Institute's weekly Bloggingheads series, "Fireside Chats," Senior Fellow Mark Schmitt talks to Scott Lemieux of Lawyers, Guns, and Money and The American Prospect about the machinations behind the Supreme Court's recent health care ruling and what challenges lie ahead for the Affordable Care Act. Mark notes that while Republicans have tried to spin the ruling by claiming that they can use reconciliation to repeal the individual mandate if it's a tax, the truth is that they always could have but never will. Echoing his recent post on this subject, he maintains that they have "less than no reason" to repeal the individual mandate as long as insurance companies are lining their pockets.

Mark thinks the recent revelation of Aetna's $7 million donation to conservative groups is significant given that "overall the health insurance industry basically has staked out with the Republican Party," but insurers were forced to work with Democrats during the health care reform negotiations to get a seat at the table. He explains that the conflict for insurers has always been that "they would love to have as many customers as possible, so if you create a mandate, that's a great thing for them," but it also means that they'll have to put up with more regulation as part of an overall reform package. "If it was all regulation, no mandate, they wouldn't want it; if it was all mandate, no regulation, they'd love it; and then there's two acceptable positions. One is the status quo... pre-2010, and then ACA they were basically fine with."

Now that the Supreme Court has upheld the law, Mark notes that the worst outcome for insurers would be that "only the mandate gets struck," since they would get all of the new regulations and none of the new customers. He says that "now that these companies are fully back at the table with Republicans, the Republicans simply are not going to just repeal the mandate. It's just not an option they have with their cash constituents." As for repealing the entire law, he notes that there is plenty of internal division among Republicans about preserving the more popular provisions, like guaranteed issue and the ability for young adults to stay on their parents' insurance plan until age 26. "I think they're really stuck, and I think we should really just draw the line and say, 'Here it is, we have the Affordable Care Act. It's not going anywhere, nobody's repealing it, now it's time to make it work.'"

For much more, including Mark and Scott's take on how the Supreme Court reached its surprising verdict and why it's been leaking like a sieve ever since, watch the full video below:

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Mark Schmitt: GOP Has "Less Than No Reason" to Repeal the Individual Mandate

Jul 10, 2012

In the latest episode of the Roosevelt Institute's weekly Bloggingheads series, "Fireside Chats," Senior Fellow Mark Schmitt talks to Scott Lemieux of Lawyers, Guns, and Money and The American Prospect about the machinations behind the Supreme Court's recent health care ruling and what challenges lie ahead for the Affordable Care Act.

In the latest episode of the Roosevelt Institute's weekly Bloggingheads series, "Fireside Chats," Senior Fellow Mark Schmitt talks to Scott Lemieux of Lawyers, Guns, and Money and The American Prospect about the machinations behind the Supreme Court's recent health care ruling and what challenges lie ahead for the Affordable Care Act. Mark notes that while Republicans have tried to spin the ruling by claiming that they can use reconciliation to repeal the individual mandate if it's a tax, the truth is that they always could have but never will. Echoing his recent post on this subject, he maintains that they have "less than no reason" to repeal the individual mandate as long as insurance companies are lining their pockets.

Mark thinks the recent revelation of Aetna's $7 million donation to conservative groups is significant given that "overall the health insurance industry basically has staked out with the Republican Party," but insurers were forced to work with Democrats during the health care reform negotiations to get a seat at the table. He explains that the conflict for insurers has always been that "they would love to have as many customers as possible, so if you create a mandate, that's a great thing for them," but it also means that they'll have to put up with more regulation as part of an overall reform package. "If it was all regulation, no mandate, they wouldn't want it; if it was all mandate, no regulation, they'd love it; and then there's two acceptable positions. One is the status quo... pre-2010, and then ACA they were basically fine with."

Now that the Supreme Court has upheld the law, Mark notes that the worst outcome for insurers would be that "only the mandate gets struck," since they would get all of the new regulations and none of the new customers. He says that "now that these companies are fully back at the table with Republicans, the Republicans simply are not going to just repeal the mandate. It's just not an option they have with their cash constituents." As for repealing the entire law, he notes that there is plenty of internal division among Republicans about preserving the more popular provisions, like guaranteed issue and the ability for young adults to stay on their parents' insurance plan until age 26. "I think they're really stuck, and I think we should really just draw the line and say, 'Here it is, we have the Affordable Care Act. It's not going anywhere, nobody's repealing it, now it's time to make it work.'"

For much more, including Mark and Scott's take on how the Supreme Court reached its surprising verdict and why it's been leaking like a sieve ever since, watch the full video below:

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Why Republicans Won't Repeal the Affordable Care Act (Hint: It's About Money in Politics)

Jul 3, 2012Mark Schmitt

Republicans are likely to leave the Affordable Care Act in place, but only because their backers in the insurance industry fear the alternative.

“If I’m the leader of the majority next year, I commit to the American people that the repeal of Obamacare will be job one.”

– Senate Republican leader Mitch McConnell, on Fox News Sunday

"If you thought it was a good idea for the federal government to go in this direction, I'd say the odds are still on your side. Because it's a lot harder to undo something than it is to stop it in the first place."

Republicans are likely to leave the Affordable Care Act in place, but only because their backers in the insurance industry fear the alternative.

“If I’m the leader of the majority next year, I commit to the American people that the repeal of Obamacare will be job one.”

– Senate Republican leader Mitch McConnell, on Fox News Sunday

"If you thought it was a good idea for the federal government to go in this direction, I'd say the odds are still on your side. Because it's a lot harder to undo something than it is to stop it in the first place."

– Mitch McConnell, in Elizabethtown, KY, on Monday

With the Supreme Court ruling upholding the core of the Affordable Care Act, Republicans at every level have renewed their promise to repeal it. It is Mitt Romney's “Day One” task. Because Chief Justice John Roberts upheld the individual mandate under the taxing power in the Constitution, conservatives such as economist Keith Hennessy and Virginia Attorney General Ken Cucinelli argue, the penalties for non-compliance are now a “tax,” and the mandate can be repealed under the federal budget reconciliation process, which can't be filibustered in the Senate. That is, just 50 senators, along with a Republican vice president to break the tie, can repeal the mandate.

This is true – though the Court's decision has nothing to do with it. Anything that has a significant impact on federal revenues or spending, such as fees, interest on student loans, or mining licenses, can be changed using the budget reconcilation process. The mandate, and some other provisions of the Affordable Care Act, can certainly be stripped out by a Republican majority. Other provisions that don't affect the budget, such as some of the requirements placed on insurance companies to cover preexisting conditions and keep young adults on their parents' plans, probably can't be, because their effect on federal finances is minimal.

So if Romney wins the presidency and Republicans capture the Senate (as seems likely, if Romney wins), at the very least, we can expect them to repeal the individual mandate, right? It's the least popular element of the law, and not too difficult to sever from the rest. As Paul Starr of Princeton and The American Prospect has argued for years, a mandate with minimal enforcement mechanisms might be worse than no mandate at all.

Whether they do that or not will be an interesting case study in the role of money in politics. Health insurance companies and HMOs, after all, are mainstays of the Republican money machine. Aetna, the health insurer that spends the most on lobbying, recently bolstered its Republican bona fides by being the first public corporation to disclose recent contributions to Republican dark-money committees, the American Action Network and the U.S. Chamber of Commerce's political arm. Aetna's former CEO, Ronald Williams, even went so far as to renounce the company's long-standing support for the mandate, predicting it would fall at the Supreme Court.

But for health insurers like Aetna, stripping out the mandate alone would be the worst possible outcome. It would mean that they would still have to take all applicants, and couldn't reject or charge more to people with preexisting conditions. And they wouldn't have the profits from younger, healthier customers. Ideally, companies like Aetna would like to have the mandate without any of the other reforms, but that's a political non-starter, since individuals would be mandated to buy something that the insurers would refuse to sell them. Failing that, the insurers could live with the Affordable Care Act, or the pre-ACA status quo. But what they can't live with is the insurance reforms alone, without a mandate. (As a spokesperson for America's Health Insurance Plans told Reuters, “There has always been broad agreement that the insurance market reforms... cannot work without universal coverage.”)

And you can be pretty sure that they won't have to. By deepening their alliance with the Republican Party, Aetna and other insurers have made sure they would be at the table, whether the Court overturned the mandate (in which case the insurers' goal would be to undo the rest of the law) or upheld it.

Some Republicans, including Romney, promise to repeal the whole law and “replace” it with something better, often suggesting that the replacement would include the popular provisions on preexisting conditions. That, too, is a non-starter with the party's cash constituents. And other Republican proposals, such as to allow insurance companies to sell across state lines – that is, evade state regulations – aren't ready for prime time. Republicans never offered an alternative during the health care debate and they don't have one now.

Thus you have McConnell's careful lowering of expectations on Monday: “It's a lot harder to undo something than it is to stop it.” The Republicans will talk about repealing “Obamacare” for as long as it succeeds in firing up their base. But it's all cheap talk; they won't do a thing.

And so, the Affordable Care Act is secure. Unfortunately, that has less to do with public opinion or the Constitution than the simple power of money in politics.

Mark Schmitt is a Senior Fellow at the Roosevelt Institute.

 

Image via Shutterstock.com.

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O Christmas Tree: Why Scalia's Dissent is More Activist Than the Roberts Decision

Jul 3, 2012Mike Konczal

Roberts's decision to uphold the individual mandate as a tax was based on solid and established legal arguments, but the dissent's justification for throwing the whole law out was pure radicalism.

CHIEF JUSTICE ROBERTS: You're telling me they thought of it as a tax, they defended it on the tax power. Why didn't they say it was a tax?

Roberts's decision to uphold the individual mandate as a tax was based on solid and established legal arguments, but the dissent's justification for throwing the whole law out was pure radicalism.

CHIEF JUSTICE ROBERTS: You're telling me they thought of it as a tax, they defended it on the tax power. Why didn't they say it was a tax?

GENERAL VERRILLI: They might have thought, Your Honor, that calling it a penalty as they did would make it more effective in accomplishing its objective. But it is — in the Internal Revenue Code it is collected by the IRS on April 15th. I don't think this is a situation in which you can say -
 
CHIEF JUSTICE ROBERTS: Well, that's the reason. They thought it might be more effective if they called it a penalty.
 
-Supreme Court arguments, March 27th, 2012 (transcript)

Last week, the Supreme Court found in a 5-4 vote that the individual mandate survives under the taxing power instead of the Commerce Clause. Here is the decision, authored by Chief Justice Roberts. I've noticed two responses from conservatives:

The first is that Roberts, by looking to the taxing power in the Constitution, found something liberals had never argued. Related is the argument that liberals took the constitutionality of the mandate for granted and never built out the framework necessary to argue for it, especially in the form of a tax.

I haven't followed health care closely, but I do try to keep up with Jack Balkin's work, and he's been on the taxing power since forever ago. Here's two amicus briefs (h/t Incidental Economist for the actual brief links, who also gives them "most influential" status) that come from the team of Jack Balkin at Yale Law School and Gillian Metzger and Trevor Morrison at Columbia Law School. Their Fourth Circuit brief covers this (Argument 1: "The minimum coverage free provision is a permissible exercise of Congress's taxing power"), as does the Supreme Court brief (Argument 1: "The minimum coverage provision falls within Congress's expansive tax power and is not an impermissible direct tax").

In "The Lawfulness of Health-Care Reform," Akhil Amar writes that Obamacare "is proper under at least six different theories, each one of which has deep roots in constitutional text and common sense." The very first one? "It is outlandish to think that [Obamacare's] provisions exceed the sweeping power that the Constitution confers upon Congress to 'lay and collect Taxes, Duties, Imposts, and Excises.'" And Andrew Koppelman, in "Bad News for Mail Robbers: The Obvious Constitutionality of Health Care Reform," noted that "Even if you somehow suppose that the health care mandate exceeds the commerce power, it would be valid anyway as an exercise of the power to tax," which is now the law of the land. These thinkers are at the forefront of elite liberal legal scholarship, and they all made this argument. It showed up in the oral arguments as well, with Roberts paying particular attention to it, as Brian Beutler of TPM caught at the time.

The second response conservatives have is that Roberts found something Congress never intended. National Review's editors, immediately after the decision, argued that one "distinguishes, though, between construing a law charitably and rewriting it. The latter is what Chief Justice John Roberts has done." The dissent itself argues that "to say that the Individual Mandate merely imposes a tax is not to interpret the statute but to rewrite it."

But in terms of rewriting a bill and judicial activism, I haven't seem any conservatives deal with the "Christmas Tree" doctrine. Given that the dissenting judges found the mandate and related major parts of the bill unconstitutional, what should they do with the rest of the bill? For instance, what should be done about the student loan reform, a major and obviously constitutional provision that was included with the ACA?

The dissenting judges would overturn it. They'd overturn the entire bill, including the student loan provisions. But why? Here is their logic, from the dissent (my bold):

Such [minor] provisions validate the Senate Majority Leader’s statement, “‘I don’t know if there is a senator that doesn’t have something in this bill that was important to them. . . . [And] if they don’t have something in it important to them, then it doesn’t speak well of them.  That’s what this legislation is all about: It’s the art of compromise.’ ” [Quote from New York Times article.] Often, a minor provision will be the price paid for support of a major provision.  So, if the major provision were unconstitutional, Congress would not have passed the minor one.
 
The Court has not previously had occasion to consider severability in the context of an omnibus enactment like the ACA, which includes not only many provisions that are ancillary to its central provisions but also many that are entirely unrelated—hitched on because it was a quick way to get them passed despite opposition, or because their proponents could exact their enactment as the quid pro quo for their needed support. 
 
When we are confronted with such a so called “Christmas tree,” a law to which many nongermane ornaments have been attached, we think the proper rule must be that when the tree no longer exists the ornaments are superfluous. We have no reliable basis for knowing which pieces of the Act would have passed on their own.

Notice how this dissent comes up with an elaborate theory of how and why Congress passed the pieces of the bill they did, rewriting the history of how and why health care reform passed. With no previous case law, they turn to a quote from a New York Times article, of all things, to determine the constitutionality of things like student loan reform.

And this history strikes me as ideologically predicated on a third-rate "Public Choice" criticism, which is that all the minor provisions were "quid pro quo" bribes needed to secure passage. It reads like when Scalia brought up the Cornhusker Kickback during legal arguments. So it isn't derived from case law, or a theory of the courts or the law, but on an ideological, right-wing vision of how political actors behave.

Which is to say that the dissent took a maximal course of rewriting and assuming not only the intent but the counterfactual of congressional action and the ACA, including what it does, why it does it, and how it came to be, in their Christmas Tree doctrine. This is the very definition of judicial activism.

If Roberts was interested in minimizing his activism and rewriting of congressional action, as well as maintaining a baseline of presuming the legitmacy and constitutionality of congressional action, wouldn't he have gone with the liberals instead of the conservative dissent?

Now that CBS News has revealed that Roberts changed his vote from siding with the conservatives to siding with the liberals, everyone is trying to figure out why. I wonder if it is because the dissenters wouldn't back down from their Christmas Tree doctrine and Roberts called foul on its absurdity.

Mike Konczal is a Fellow at the Roosevelt Institute.

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New Deal Numerology: Broccoli Roberts

Jun 29, 2012Tim Price

This week's numbers: 80; 23%; 67%; 6%; 17 million

80... is an activist number. That’s how many years it’s been since the Supreme Court voted as conservatively as it does now, according to a recent study. But upholding Obamacare makes them liberals if you believe anything invented after electricity is unconstitutional.

This week's numbers: 80; 23%; 67%; 6%; 17 million

80... is an activist number. That’s how many years it’s been since the Supreme Court voted as conservatively as it does now, according to a recent study. But upholding Obamacare makes them liberals if you believe anything invented after electricity is unconstitutional.

23%... is a divided number. That’s how many of the Roberts Court’s rulings have split 5-4. It really helps make your decisions seem unbiased and binding when nearly a quarter of them could be changed by one guy flipping a coin.

67%... is an individualist number. That’s how many Americans support repealing the individual mandate. Large majorities favor the rest of the bill, but Americans are still uncomfortable with mandates despite growing support for gay marriage.

6%... is a mandatory number. That’s how many people will actually be affected by the individual mandate. And if they really don’t want health care, the IRS promises not to send agents to coat their medicine in peanut butter and feed it to them.

17 million... is an expansive number. That’s how many Americans the law’s Medicaid expansion will cover. But yesterday’s ruling makes it easier for Republican governors to reject those funds if they feel politics is literally more important than life itself.

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