The Congressional health care debate reaches its climacteric week, and The Washington Post op-ed page offers two good columns on the topic.

Robert Samuelson, “Obama’s illusions of cost-control“:

Though it seems compelling, covering the uninsured is not the health-care system’s major problem. The big problem is uncontrolled spending, which prices people out of the market and burdens government budgets. Obama claims his proposal checks spending. Just the opposite. When people get insurance, they use more health services. Spending rises. By the government’s latest forecast, health spending goes from 17 percent of the economy in 2009 to 19 percent in 2019. Health “reform” would probably increase that.

Unless we change the fee-for-service system, costs will remain hard to control because providers are paid more for doing more. Obama might have attempted that by proposing health-care vouchers (limited amounts to be spent on insurance), which would force a restructuring of delivery systems to compete on quality and cost. Doctors, hospitals and drug companies would have to reorganize care. Obama refrained from that fight and instead cast insurance companies as the villains.

Rep. Paul Ryan (R-WI), “Rep. Paul Ryan on what real health reform should look like“:

Through any analytical lens, the legislation will not address the central problem of skyrocketing health-care costs. The Congressional Budget Office estimates that families’ premiums could rise 10 to 13 percent; private-sector actuarial estimates top these already high numbers. The higher costs are driven by federalizing the regulation of insurance, narrowing consumers’ options and reducing competition among providers. The health-care market would be dominated by government programs and the largest insurance companies, operating as de facto government utilities.

Rather than tackle the drivers of health inflation, the legislation chases the ever-increasing premiums with huge new subsidies. Already, Washington has no idea how to pay for the unfunded promises in Medicare, Medicaid and Social Security — and creating this new entitlement would accelerate our path to fiscal ruin.

The National Association of Manufacturers is a member of the Start Over! business coalition, which outlined its principles and priorities for health care reform in a Feb. 22 letter to President Obama. Cost control and global competitiveness figured prominently:

Central to the discussion among summit attendees must be how reform ideas affect the ability of
our nation’s economy to recover and businesses to create jobs. Even in ideal economic times
imposing costly regulations and taxes on business is a bad idea. A competitive global
environment and an already burdensome tax and regulatory structure offer enough challenges for
businesses of all sizes to invest and create jobs. We should be looking for ways to streamline
and modernize these structures, rather than layering additional costs on job creators. Moreover,
the dismal state of our nation’s fiscal house requires that proposals be weighed against the threat
that large-scale spending poses to long-term economic stability and competitiveness.

In a letter to Senator Orrin Hatch (R-UT), the Congressional Budget Office reports that tort reform could save about $11 billion in national health care costs in 2009, or about 0.5 percent of national health care spending.

This letter responds to your request for an updated analysis of the effects of proposals to limit costs related to medical malpractice (“tort reform”). Tort reform could affect costs for health care both directly and indirectly: directly, by lowering premiums for medical liability insurance; and indirectly, by reducing the use of diagnostic tests and other health care services when providers recommend those services principally to reduce their potential exposure to lawsuits. Because of mixed evidence about whether tort reform affects the utilization of health care services, past analyses by the Congressional Budget Office (CBO) have focused on the impact of tort reform on premiums for malpractice insurance. However, more recent research has provided additional evidence to suggest that lowering the cost of medical malpractice tends to reduce the use of health care services. CBO has updated its estimate of the budgetary effects of proposals for tort reform to reflect that new information.

Sen. Hatch issued a statement, “Tort Reform Key to Affordable Healthcare“: ““I think this response from the CBO confirms that there is a growing problem regarding the costs of health care lawsuits. In years past, the CBO mainly focused on the cost doctors’ malpractice insurance premiums and did not adequately address the tendency of doctors to use ‘defensive medicine,’ which does little to promote patient health and serves only to help doctors avoid being sued.”

• Deseret News, “CBO says Hatch is right, tort reform could save $11 billion“
• Washington Post, “CBO: Medical Malpractice Reforms Could Save Up to $54 Billion“
• American Association of Neurological Surgeons and Congress of Neurological Surgeons, “Congressional Budget Office Confirms Medical Liability Reform Will Save Billions“
• Fox News, “Tort Reform Reduces Federal Deficit, Congressional Analysts Say“

White House advisor David Axelrod and Sen. Charles Grassley (R-IA) appeared on ABC’s This Week this morning to discuss health care and the carbon cap-control-command-and-trade legislation.  Sen. Grassley, ranking Republican on the Senate Finance Committee, was very good on the Waxman-Markey bill. Host George Stephanopolous cited a CBO analysis and supporters’ talking point to argue that the bill did not represent that big of an economic hit. Grassley:

I’ll tell you, earlier this year, we had economists telling us that when you filter all of these increases in energy through every step of the economy, manufacturing a product or whatever services might come, we have come out with about $3,000 for a family of four.

Now I won’t argue $175 versus $3,000 because that’s not the most important issue. You’ve got to look at what is happening to our economy if we put this very strong tax on energy. The people that have been complaining for 10 years about the outsourcing of manufacturing jobs to China are the very same ones pushing cap and trade.

And you’re going to find signs on manufacturing doors, if this bill passes, that says moved — gone to China. So what we have to do is make sure China, the number one emitter of CO2, not the United States, China is. And India right along with them.

We’ve got to have an international agreement so that we have a level playing field for American manufacturing so we don’t outsource any more jobs. This should be done in a way that affects China the same way it affects the United States.

Because if the United States moves ahead by itself, we’re not only going to lose those jobs, but the point is, after 30 or 40 years, we’re going to reduce CO2 by less than 1 percent.

Speaking of the CBO, its economic projects stop at 2020, just as the tougher anti-energy provisions really kick in. Seems like an inadequate effort.

Heritage  had other analyses challenging the CBO’s study:

24 June 2009
CBO Grossly Underestimates Cost of Cap and Trade
By David Kreutzer, Ph.D., Karen Campbell, Ph.D., and Nicolas D. Loris
WebMemo #2503
The CBO analysis of Waxman-Markey fails to take into account all the adverse effects that will ripple through the U.S. economy if cap and trade becomes law.

24 June 2009
The High Cost of Cap and Trade: Why the EPA and CBO Are Wrong

From the Congressional Budget Office’s new report, “The Budget and Economic Outlook: Fiscal Years 2009 to 2019“:

Under an assumption that current laws and policies regarding federal spending and taxation remain the same, CBO forecasts the following:

• A marked contraction in the U.S. economy in calendar year 2009, with real (inflation-adjusted) gross
  domestic product (GDP) falling by 2.2 percent.
• A slow recovery in 2010, with real GDP growing by only 1.5 percent.
• An unemployment rate that will exceed 9 percent early in 2010.

And the eye-popping news, which takes the wind out of the stimulus sails:

CBO projects that the deficit this year will total $1.2 trillion, or 8.3 percent of GDP. Enactment of an economic stimulus package would add to that deficit.

In CBO’s baseline, the deficit for 2010 falls to 4.9 percent of GDP, still high by historical standards. 

More …

• USA Today, “Budget Deficit to Reach $1.2 Trillion“
• Bloomberg, “CBO Said to Project Deficit This Year Will Exceed $1 Trillion“
• Washington Post, “Obama: Trillion-Dollar Deficits ‘for Years to Come’“