Kerry's Health Care Populism -- How Deep?

It's a simple, but extremely important question: How do we evaluate Senator Kerry on health care policy? Centrist or populist?

Senator Kerry has proposed a robust national effort to expand health coverage. His proposal also contains some good ideas to improve health care quality. It even mentions malpractice reform, which is a bold (though soft) slap at the heavily Democratic trial lawyer lobby.

Health coverage is a key national priority. People are having enough trouble adjusting to the ultra-high productivity economy -- with jobs both scarce and impermanent -- without having to worry about being forced into a different health plan, or losing health coverage altogether.

For centrists, the good news is that Kerry's health plan has a large, market oriented component. By using the federal employees' program as a model, his proposal would give many people more choices of private health coverage. His plan would use socially provided "reinsurance" funds to help make the private insurance market work better.

The bad news is that Kerry's health proposals are expensive, and include a large expansion of government-run insurance programs for the near-poor and lower middle class. He has denounced HMOs and drug producers. He advocates importation of drugs from Canada, which is the same as importing that country's price controls.

Health care populism is very tempting on the campaign trail. Who isn't for lower drug prices or insurance premiums? Populism on health care creates great applause lines, as long as no one asks "Would a government-run system be better?"

Meanwhile, market-friendly health policies are tough to explain in simple sound bites. People do value choices, and some have heard that the federal employees' program is pretty good. But explaining the value of competition or the merits of new insurance pools would put audiences to sleep.

The question is: How deep is Kerry's populism?

As President, would he disparage the private health system? Would he encourage its replacement by government?

Or is his populist rhetoric just a campaign-induced veneer on an otherwise centrist, market-based health policy?

In an interview published by Businessweek yesterday, Senator Kerry frames his populism and anti-corporate statements as using government to prevent undue concentrations of power, not as a substitute for market forces and competition.

Q: "You frequently assail corporate bigness -- Big Oil, big insurers, big HMOs, and big drug companies. Are you surprised that some CEOs get nervous?"

A: "What I'm talking about is fairness. What the drug companies did in the [Medicare prescription] drug bill was unfair..."

Q: "Once you were described as a neoliberal, then a New Democrat. Now the Bush campaign calls you a Ted Kennedy-style retro-liberal. Which is it, Senator?"

A: "I don't think it helps to be ideological or doctrinaire. The principles that guide me are these: One, you want to maximize competition, you want to maximize freedom of entrepreneurial ability and create jobs and wealth. But you also need to regulate at an appropriate level so you're not concentrating too much power."

If that explanation holds up, it's not so bad. Letting markets work without allowing big companies to over-concentrate their market or political power is fine.

Moreover, some expansions in public insurance programs like Medicaid or SCHIP (a more flexible version of Medicaid for near-poor children) may be needed. Some truly poor people continue to fall through the various cracks in eligibility.

But centrists are rightfully suspicious of attempts to expand public health programs too far into the middle class. The mostly private-sector federal employees' model is a better choice for people who aren't poor.

It's tempting to believe that Senator Kerry's proposals to expand government-run health insurance were just early primary positioning, and that a Kerry Administration would not push for implementation on anything approaching the scale he has suggested. (Republicans in Congress would block that anyway, presuming they hold their majorities in the House and Senate this November.)

In a sense, proposing big expansions of Medicaid or SCHIP may have been mostly a partisan rite of passage for all the Democratic candidates, and can be safely forgotten now.

On the other hand, lots of centrists believed that President Bush's campaign proposal for vast tax cuts was just posturing for his conservative base, and that he would switch to more modest, evenly distributed tax cuts once in office.

That hunch proved to be wrong. If anything, the dividend and capital gains tax cuts of 2003 were more regressive than Bush's original proposals, and the cost of all the Administration's tax cuts now far exceeds candidate Bush's original plan.

So we'll wait and see. Senator Kerry -- presuming he becomes the nominee -- will have time to clarify his rhetoric and proposals as he gears up for a one-on-one campaign with President Bush.

As that happens, we'll evaluate his health care plan in much greater detail, and compare it on the "centrist-meter" with President Bush's conservative health agenda.

Links:
Senator Kerry's health proposal (announced May 16, 2003)

Businessweek Online John Kerry's To Do List (February 26, 2004)

Centrists.Org Issue Summary Health Costs, Competition and Chronic Care (Prescription Drug Prices and Importation)

Senate Finance Committee Priorities for 2004

This year's Finance Committee priorities -- at least as outlined in yesterday's letter to the Senate Budget Committee -- are not very inspiring or innovative.

There are no major initiatives, although the Committee at least implicitly requests $50 to $71 billion for health coverage. The letter mentions making tax cuts permanent, although it doesn't say how to "pay for" the trillions of dollars in lost revenue.

Congress is still in shell-shock on the budget. Legislators are trapped between the Bush-Rove economic plan, which implies that deficits don't matter, and the worries of Federal Reserve Board Chairman Alan "Omygoodnessdidhereallysaythat" Greenspan, who argued on Wednesday that the deficit situation is sufficiently grave that reductions in Medicare and Social Security benefits are needed.

Links:
Grassley-Baucus letter to the Senate Budget Committee (February 25, 2004)

Testimony of Fed Chairman Alan Greenspan before the House Budget Committee (February 25, 2004)

What Is a Fiscal Conservative Anyway?

Last week, the Washington Post described the anti-tax Club for Growth as supporting "fiscally conservative Republican candidates."

Huh? The Club for Growth and other organizations like it, such as Americans for Tax Reform (ATR), can be described in many ways, but "fiscally conservative" is not one of them.

Last year, at an event sponsored by the Mercatus Center, Club for Growth chief Stephen Moore argued for higher deficits via additional tax cuts, because "the housing market could decline" and the economy might need an additional boost.

That’s a liberal Keynesian argument, not that of a fiscal conservative.

This year, ATR head Grover Norquist argued that deficits don’t matter. Spending is important, and taxes are important, he said at a forum sponsored by the New America Foundation, but the difference between them -- the deficit -- is meaningless.

Hmmm. That doesn’t sound very "fiscally conservative." Real fiscal conservatives are supposed to support balanced budgets, not deep deficits.

Where were these fiscal conservatives when Congress and the White House enacted a bloated (and at least partially unworkable) prescription drug benefit last year? Or the lavish farm bill the year before? The appropriations bills larded with pork-barrel "earmarked" spending? Or all the tax cuts that have turned large surpluses into deep deficits?

If they protested, they didn’t make much noise.

How can the Post call Republican political operatives who push big tax cuts but fail to fight for spending cuts "fiscal conservatives?"

To be fair, some real fiscal conservatives have started speaking out. The Heritage Foundation and Cato Institute have been beating the drum for lower spending in recent months. To its credit, Heritage went berserk over the cost and wrong-headed structure of the drug benefit. (To their shared discredit, both institutes favor additional tax cuts, despite the fact that revenues are at their lowest level since the 1950s.)

The better label for the Club for Growth is "anti-tax." "Powerful" or "influential" would also be accurate, as would "radical" and "extremist."

What about "anti-government?" Is that also a fair description?

We used to think anti-tax activists were motivated by a desire to "starve the government." Their advocacy for tax cuts was also a means to an anti-government end.

However, the most virulent anti-tax activists have been complicit in the rapid growth of federal spending over the last couple years (most of it -- think agriculture, pork-barrel appropriations and drugs -- for crass political purposes). The Club for Growth certainly talks a good game on spending cuts. Unfortunately, it hasn't used any of its clout to achieve many. It seems the "anti-government" label isn’t really accurate.

Anti- "good" government perhaps. Certainly not "fiscally conservative."

Fiscal conservatives balance budgets. They do not leave mountainous debts to their successors.

Link:
Washington Post Shaping Conservative Agenda: 'Monday Meeting' in New York Draws a Crowd by Ben White (February 12, 2004)

"Stop Us Before We Spend Again?"

To a cynic, it looks like a ploy. After dramatically raising spending and cutting taxes over the last 3 three years, Republicans are now touting fiscal discipline.

Yesterday, the Republican Study Committee (a very conservative group) and the Tuesday Group of moderate House Republicans issued a 12 point proposal to change the budget process, so spending would be easier to control in the future (if Congress musters the will).

It's too early to comment on the proposals themselves. But it's not too soon to speculate on what this statement really represents.

Is it a real change of heart on spending? Or is this just a passing bit of political wind, tough talk that won't be matched by real fiscal discipline when spending and tax cutting opportunities come up later this year?

It's easy to be doubtful about the spending proclivities of Republican moderates. They'd be at risk for whiplash if they patted themselves on the back any harder over last year's bloated Medicare bill. And despite the courageous objections of Senator Voinovich and Rep. Castle and a few other hardy souls, they always seem to end up voting for the big tax cuts anyway.

Conservatives are also partially to blame for our budget woes. They certainly got the tax cuts they wanted. But now, revenues are expected to hit a 50-year low of 15.8 percent of GDP. To be fair, many RSC members opposed the Medicare bill and hold principled positions against the current spending trend.

But many conservatives want to cut only non-security, non-entitlement spending (which makes up less than 20 percent of the budget). We could cut that spending in half and still have an enormous deficit. And those tax cuts really don't pay for themselves, guys. Sorry, but that myth is just, well, a myth.

Today's Republican Party is at a crossroads. The White House and Congressional Republican leaders are trying to hold together a slim partisan majority by

1. Cutting taxes continually (to please the anti-tax crowd), and
2. Doling out pork-barrel spending and raising outlays on other popular programs (so the moderates don't get in trouble back home).

The result is huge deficit, which shows few signs of receding on its own.

But let's be optimistic. There's much to like in today's announcement. At least it shows a new concern for the fiscal situation. Hopefully, it's more than butt-covering -- maybe it signals a new resolve to address our budgetary woes.

We'll probably see more "budget process" proposals in the coming weeks. Not actual tax increases or deep spending cuts, but procedures designed to make such things more likely in the future.

This year, we shouldn't expect more than a freeze in a few programs for poor people, and maybe a slowdown in the rate of increase in other programs. Congress will probably cut a program or two that Democrats like. Maybe the transportation bill will be trimmed, or maybe not.

Congress probably won't be able to pass a budget, and will probably enact a continuing resolution (in lieu of appropriations) to get through the fall elections. There will likely be a midnight vote to raise the debt limit sometime this summer (presumably attached to a "must have" bill of some sort).

Next year, 2005, is when the budget will probably hit the fan.

After the elections, when it becomes clear that proclamations and process changes and small spending cuts aren't going to balance the budget, the discussion will get more serious. Tax increases and substantial spending cuts will be right back on the table.

But heck, proclamations and process discussions are getting 2004 off to a helpful start.

Link:
Repubican Study Committee and Republican Tuesday Group principles for budget process reform.
Centrists.Org Heritage vs. the Center on Budget -- Is Spending Too High, Or Are Revenues Too Low? (February 8, 2004)
Centrists.Org Deep Cuts in Non-Security Spending and Rapid Economic Growth Won't Balance the Budget (February 2, 2002)

Medicare, Tax Cuts, and The Era of BS Budgeting

President Clinton declared the "era of big government" was over. President Bush says that the era of endless tax cuts is upon us.

We know one thing -- we're definitely in an era of BS budgeting.

The latest? Conservatives are outraged, just madder 'n hell about the cost of the Medicare drug benefit. They feel tricked, and rightly so.

The Congressional Budget Office (CBO) told them it would cost $395 billion over ten years. But all the time, the White House had estimates of over $500 billion for similar plans.

Now the conservatives know how liberals felt about the tax cuts in 2001 and 2003.

Both times, the cost of the tax cuts was understated. Congressional leaders used two blatant gimmicks to disguise the cost: (1) dubious "sunset" provisions that would supposedly end the tax cuts all of a sudden, and (2) sneaky use of the Alternative Minimum Tax (AMT) to negate the income tax cuts for "scoring" purposes.

But the issue isn't payback. There are two larger questions here, which go beyond tax cuts and Medicare costs:

1. When will the budget committees, the Joint Committee on Taxation, CBO, and the Administration's honest analysts start reasserting themselves, so that all members of Congress can get up-front, full-disclosure answers about the cost of spending and tax proposals?

2. When will the executive branch stop lying about the budget and taxes?

The first question is a tough one. Political leaders want favorable estimates for their proposals. And when favorable numbers can't be had, they want the estimators to keep the bad numbers quiet.

To maintain control of the process, Congressional leaders and White House officials take control of the estimates. Not the numbers themselves, but the timing and method of their distribution. Committees sometimes don't show the estimators the final specifications of a bill until just hours before final votes. Sometimes they discourage any explanation of the results, so that rank and file members don't understand the context.

Even now, on February 8th, the Administration hasn't published its detailed Medicare estimates. CBO put out a perfunctory memo last week, which doesn't explain much.

The official cost and revenue estimators must do better. That may mean publishing estimates and discussions of the workability of proposals regardless of what White House political strategists and Congressional leaders think.

It's a very hard, thankless effort. There can be political consequences for telling the truth. Good people might lose their jobs.

Nevertheless, someone in the Congressional estimating community will have to make some sacrifices, and soon, to prevent an irresponsible Congress and a reckless President from destroying the nation's finances.

The second question should be an easy one. Hasn't President Bush gotten in enough trouble with exaggerations about Iraq's weapons? Why compound the problem by lying about the budget?

OK, "lying" is a terribly strong word -- "a deliberate misstatement with intent to deceive."

On an individual basis, all of the little budgetary gimmicks and tricks and omissions used by the Administration over the last 3 years probably fall short of that definition.

But the list of deceptive or misleading budget practices used by the Bush Administration is long:

1. Deliberately shortening the 10-year budget period to 5 years to hide the future cost of spending proposals and tax cuts.

2. Deliberately using the AMT and "sunset" provisions to understate the cost of tax cuts.

3. Deliberately withholding the Medicare Actuary's estimates of the cost of the Medicare drug benefit.

4. Deliberately ceasing to print discretionary spending details beyond 2005 (so analysts have to use computer files to figure out the President's suggested program cuts).

5. Deliberately leaving military and reconstruction spending for Iraq and Afghanistan out of the budget for 2005.

After a while, you start to wonder if all the particular falsehoods and fudges don't amount to one big lie.

Here is how President Bush's projections of the budget for 2004 stacked up over the years.

President's Budget Projections for 2004 (by date of projection)

(Feb. 28, 2001): $3.4 trillion surplus for all years 2002-2011

(Feb. 4, 2002): Revenues: 18.9% of GDP -- Spending: 19.0% of GDP
(Feb. 3, 2003): Revenues: 17.0% of GDP -- Spending: 19.7% of GDP
(Feb. 2, 2004): Revenues: 15.7% of GDP -- Spending: 20.2% of GDP

Every year the budget picture gets worse.

Granted, the February 2001 projection (before 9/11 and before the extent of the 2001 recession was known) was a complete error.

But since then, we've known about war and corporate scandals and the shaky economic recovery.

After a while, the pattern starts to get obvious. The Administration is using unrealistic or misleading budget projections to push its real legislative agenda: permanent tax cuts, all the time, regardless of the long-run budgetary consequences.

We're all but sure the Bush Administration has finally hit rock bottom on its deficit projections for 2004 -- things almost certainly won't be worse than the President expects this year.

But let's look ahead to 2007.

President's Budget Projections for 2007 (by date of projection)

(Feb. 4, 2002): Revenues: 19.1% of GDP -- Spending: 18.3% of GDP
(Feb. 3, 2003): Revenues: 18.3% of GDP -- Spending: 19.7% of GDP
(Feb. 2, 2004): Revenues: 17.8% of GDP -- Spending: 19.4% of GDP

Anyone want to bet revenues don't magically rise back up to 17.8 percent of GDP by 2007 without some tax increases? Or that spending falls to 19.4 percent without some serious pain?

The Bush Administration didn't invent lying about the budget. (Remember President Clinton's pledge to "Save Social Security First?")

But we're not running surpluses now. We have significant ongoing military requirements overseas. The baby boom generation will begin to retire and expect entitlement benefits in 6 short years.

Isn't it time we declared an end to the era of BS budgeting?

Links:
President's Budget Summary (February 28, 2001)
President's Budget Summary Tables (February 4, 2002)
President's Budget Summary Tables (February 3, 2003)
President's Budget Summary Tables (February 2, 2004)
Centrists.Org Deep Cuts in Non-Security Spending and Rapid Economic Growth Won't Balance the Budget (February 2, 2004)
Centrists.Org Issue Summary: Budget and Tax (Basics)
Centrist Policy Network Medicare and Rx Drug Resource Page (includes links to CBO estimates and tables, Administration leaked estimates, etc.)

A Different Approach to Malpractice Reform

According to press reports, Congressional leaders have given up on sweeping limits to malpractice damage awards this year.

There will be heated rhetoric, to be sure. And the leadership might try to move some smaller "message" bills targeted to just the most sympathetic doctors, like obstetricians and gynecologists.

That is fine, but there may be a more productive approach.

Last year, Senator Michael Enzi introduced a bill (S. 1518) that would encourage comprehensive malpractice reforms and reductions of medical errors.

The idea is for the federal government to provide funds for states wishing to experiment with alternative malpractice compensation systems.

Few people argue that the current system works. Many patients injured by malpractice never sue. Those that do enter the "jackpot justice" lottery. Many receive no compensation -- others receive huge awards. It can take years for lawsuits to result in payments to victims.

On the other hand, health providers are sometimes sued in cases where the patient was not harmed. Sometimes patients sue after disappointments or bad outcomes that were essentially just bad luck -- not malpractice. Often these claims get settled anyway, due to the cost and uncertainty of a trial, especially with the plethora of "hired gun" experts available to litigators willing to twist the facts in front of an impressionable jury.

Worst of all, the current malpractice system does not really reduce medical errors. Instead, it creates incentives for health providers to cover up their mistakes. Unless health providers are encouraged to discuss and learn from their mistakes, patients will suffer from the same errors made over and over again.

The Enzi bill would allow specialized "health courts" and other methods of getting rapid compensation to victims instead the lengthy lawsuit process. Injured patients or their families could still use the lawsuit system if they didn't want to use the expedited procedures.

This bill is a good start, and should be taken seriously by consumer and patient advocates. Malpractice reforms should go beyond just capping damages. Real reform should also seek to improve health care quality and reduce errors.

Links:
Centrist Policy Network Enzi Reliable Medical Justice Act (S. 1518)
Centrists.Org CBO's New Brief on Medical Malpractice Implies that Capping Awards is Not Enough (January 25, 2004)
Congressional Budget Office Limiting Tort Liability for Medical Malpractice Economic and Budget Issue Brief (January 8, 2004)
Troyen A. Brennan and Philip K. Howard Heal the Law, Then Health Care Washington Post (January 25, 2003)
Common Good (Ideas for Legal Reform, including tort reform in Health Care)