Tuesday, February 23, 2010

DemCare Peripherals

We've already covered the basics of the DemCare battle, and more will be coming soon, especially on the so-called bipartisan summit dog-and-pony-show. But, here is some exploration of a couple of the more crucial aspects of what the Dems are trying to do.

Price controls never work

For many, price controls may seem like a tempting solution to holding down health care costs. However, past attempts at price controls teach us a very different lesson—this is one government policy guaranteed to do more harm than good. In fact, throughout history, price controls have been a notorious flop, bringing on economic stagnation and decline, rationing, hoarding, black marketing and organized crime, assaults on civil liberties, and even inflation, not to mention untold waste, graft, and human suffering.

In fact, from Babylon’s King Hammurabi to presidents Richard Nixon and Jimmy Carter, the thirty-eight-century history of price controls is a recurring economics lesson for any modern Luddite seeking a quick fix to health care costs. For instance, after he and previous emperors had debased the currency, creating rampant inflation, the Roman emperor Diocletian set maximum prices on more than one thousand products and services. Goods disappeared in legal markets, and reluctantly consumers and producers turned toward black markets despite a penalty of death for participating in these markets. After much suffering and bloodletting of the unfortunate caught violating the law, the law was revoked and Diocletian abdicated.

Hot Air helps explain:

The Obama Administration’s proposal leads to rationing of health insurance ... It creates a shortage, as any effective price control does. To provide the health insurance to others you will have government subsidies paid for by additional taxes. The growth-damaging effects of those additional taxes will not be recognized.

And as prices are reduced and people continue to be promised health care at near-zero marginal cost, insurance companies will slowly suffocate. Who will save us?

If you are old enough to remember (or have read about) the gas shortages of the late 1970s, you'll recall that was the result of the Carter administration's attempts to control the price of oil. The suggestions of Obama being merely the second Carter administration, well, there's a reason for that.

Reconciliation for DemCare is not possible

For a couple of reasons, according to Micheal E. Hammond, former General Counsel of the U.S. Senate Steering Committee, and one of the preeminent experts on U.S. Senate procedure:
First, you cannot get the bill through the House without “fixing” abortion, and you cannot do abortion on reconciliation in the Senate.

Cao will not be the deciding vote. This means that, if absolutely nothing has changed, the current House vote count on the House bill is 217-216. But things have changed:

-Public support for ObamaCare has continued to sink through the floor.

-Between 10 and 12 “yes” votes would vote against the Senate bill based on its abortion language.

-Many House Democrats are still uncomfortable about the “Cadillac tax.”

But, under the Byrd Rule (which prohibits reconciliation language with budgetary implications which are only ancillary to the policy ramifications), you can’t fix abortion on reconciliation. We have asked Senate parliamentarian Alan Frumin concerning our ability to offer abortion amendments to reconciliation, and he has adamantly stood by the position that this is not allowed. And, to get around the Byrd Rule, the Senate requires 60 votes. Without an abortion “fix,” this bill cannot pass the House.

Furthermore, the new provision to allow the government to set insurance rates is also a violation of the Byrd Rule.

Also, the $60 billion union “fix” requires a $62 billion offset. And the additional substantial costs of Obama’s proposal would also have to be offset. Assuming they take the entire $2.5 trillion package and pass the whole thing through reconciliation, they can pay for some of these costs with the phony $124 billion budget “surplus” contained in the Senate-passed bill. The downside of this is that the insurance “reforms” (preexisting conditions, limits on copayments, etc.) which form the core of the bill will be thrown out under the Byrd Rule.

But, assuming they are using reconciliation for nothing more than a “fix,” they have to come up with a new set of offsets. The offsets on the Senate bill are unavailable to them. And it’s not like it has been easy to come up with the offsets they have.

In order to comply with the 1974 Act, these offsets would have to make the reconciliation bill compliant with the reconciliation instructions during the first five-year window and revenue-neutral in every year thereafter. Thus far, NO VERSION OF THE LEGISLATION HAS BEEN ABLE TO COMPLY WITH THIS REQUIREMENT, EVEN USING THE PHONY ACCOUNTING GIMMICKS.


What bothered the American people, as much as anything, was the perception that the Senate’s ObamaCare bill was produced by fraud, secrecy, corruption, bribery, and extortion. Rather than improve the process, the White House has actually made it more corrupt by –-

-threatening to fraudulently take a process restricted SOLELY to deficit reduction and using it to pass the biggest deficit engine in human history; and

-refusing to release legislative language, in the hope that controversies can be kept secret.

Hammond goes on to outline that tax increases, mandates, and government expansions set out in the Obama version of DemCare, and it's worth checking out for that information, too.

The bottom line, I think, is that there are clear precedents and serious legal issues to forcing DemCare into law this way. But, as we've seen so often over the past year, the Constitution and the law don't really seem to matter to the Obama administration. It'll be very interesting to see how Robert Byrd -- for whom the rule is named and who still serves in the Senate -- reacts to using reconciliation for DemCare.

More details to come.

There's my two cents.

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