Sunday, December 20, 2009

Obamacare, creating a nation of Californias

It appears as though Obamacare is going to pass the Senate, thanks to senator Ben Nelson.

The deal was sealed Friday night at about 10:30 with a handshake between Sens. Nelson and Reid, ending 13 hours of negotiations. Mr. Reid later called President Barack Obama, who was flying back from the global climate summit in Copenhagen on Air Force One, to inform him the stalemate was resolved.

"Inaction is not an option," Mr. Reid said Saturday.

Speaking at the White House, Mr. Obama hailed what he called a "major step forward for the American people."
This is a horrible bill and Ben Nelson has been allowed to make a horrible, short-sited deal to accomplish it. Nebraska will never have to pay their share of increased Medicaid costs associated with the new bill.  And neither will several other Democratically controlled states:

Nelson’s might be the most blatant – a deal carved out for a single state, a permanent exemption from the state share of Medicaid expansion for Nebraska, meaning federal taxpayers have to kick in an additional $45 million in the first decade.

But another Democratic holdout, Sen. Bernie Sanders (I-Vt.), took credit for $10 billion in new funding for community health centers, while denying it was a “sweetheart deal.” He was clearly more enthusiastic about a bill he said he couldn’t support just three days ago.

Nelson and Sen. Carl Levin (D-Mich.) carved out an exemption for non-profit insurers in their states from a hefty excise tax. Similar insurers in the other 48 states will pay the tax.

Vermont and Massachusetts were given additional Medicaid funding, another plus for
Sanders and Sen. Patrick Leahy (D-Vt.) Three states – Pennsylvania, New York and Florida – all won protections for their Medicare Advantage beneficiaries at a time when the program is facing cuts nationwide.

All of this came on top of a $300 million increase for Medicaid in Louisiana, designed to win the vote of Democratic Sen. Mary Landrieu.
This bill will create a nation of Californias, meaning it will create a situation where many other states are forced to follow California's lead into virtual bankruptcy. This is because many of the currently uninsured will be pushed onto the roles of Medicaid, which is paid for largely by state governments. So even if Obama claims that he has kept his campaign promise not to raise taxes on anyone who makes less than $250,000 per year, this bill will force states to spend more money on the formerly uninsured which will force the states to cut services or raise fees and taxes in other areas to make up the difference.

From Obama's perspective, this is a bill is ok because the tax increases will have to come long after he has run for reelection and because the tax increases will be at the state, rather than the Federal, level so must people will blame their governors and state legislators.

But from the perspective of the American people, this is horrible bill. It is ultimately a wholesale effort to buy political points in the near term by leveraging future earnings. The cheaper health care gets, the more people will consume. And bringing 30 million uninsured onto the insurance roles will just cause those people to consume more healthcare, thus raising the cost, and it will also create a permanent bi-partisan constituency that will reliably support increasing the amount of money spent on public healthcare at every opportunity. 

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