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Why Republicans Really Want to Repeal Health Reform

January 6th, 2011 . by economistmom

So, House Republicans have titled H.R. 2, their bill to repeal the health reform law passed last March, “The Repealing the Job-Killing Health Care Law Act.”  Except the health care reform bill wouldn’t likely kill jobs, according to this analysis by the Center on Budget and Policy Priorities.

Meanwhile, CBO has explained that just as they had scored the health reform law as reducing–not increasing–the deficit (which by the way would mean that it would eventually raise national saving, grow the economy, and create jobs), repealing the (nevertheless so-called “job-killing”) health reform law would actually increase the deficit.

So what are the real reasons why Republicans want to repeal health reform?  I have my guesses:

  1. They think most Americans dislike health reform. This is the companion to why policymakers were so quick to extend and deficit-finance the Bush tax cuts–not because there was any evidence that the Bush tax cuts were wonderful for the economy (oh, to the contrary), but because they believed that Americans (or more specifically those Americans who vote) loved the Bush tax cuts for whatever inexplicable reasons.
  2. They don’t want to expand publicly-funded health care. The health care reform act did in fact do more to expand health coverage than to directly reduce the costs of existing programs.  It does mean “bigger government”–or as CBO puts it, expands the “federal budgetary commitment to health care.”  But it did more than pay for that expanded coverage by the spending cuts and tax increases in the same law, which is why CBO scored it as reducing, not increasing, the deficit.  Which leads to…
  3. They didn’t actually want the kind of health reform that would reduce the deficit–not this way at least. As CBO’s latest analysis of this repeal bill explains (emphasis added):

PPACA and the Reconciliation Act also included a number of provisions to reduce federal outlays (primarily for Medicare) and to increase federal revenues (mostly by increasing the Hospital Insurance payroll tax and imposing fees on certain manufacturers and insurers); in March, CBO and JCT estimated that those provisions unrelated to insurance coverage would, on balance, reduce direct spending by about $500 billion and increase revenues by about $410 billion over the2012–2019 period.

What Republicans really oppose about the health reform law is the tax increases that do most of the deficit reduction in the law.  These aren’t just random tax increases, though.  These are the kind of tax increases (or reductions in health insurance tax expenditures) necessary to bring out-of-pocket health costs more in line with true economic costs, to reduce the excess demand for health care that drives up the market price of health care.  It’s not that Republicans oppose the idea of making health care markets more efficient.  It’s probably that they don’t like the idea of any kind of tax increase, and especially not the kind of tax increase that would be paid disproportionately by higher-income households, who they emphasize are the “engine of economic growth” in our economy–you know, the “job creators.”

So that’s how this bill to repeal the health reform law becomes characterized as a way to eliminate a “job-killing” law, and how the proposal is really perfectly consistent with the Republican supply-side ideology that says that tax increases, no matter of what variety, hurt the economy and reduce jobs, and deficits, if they come from tax cuts rather than spending increases, don’t matter.

35 Responses to “Why Republicans Really Want to Repeal Health Reform”

  1. comment number 1 by: SteveinCH

    Perhaps a trip to Republican school would help Diane.

    I think you got the right answer, it just wasn’t the one at the end.

    Try this instead.
    1. Rs don’t want a larger Federal commitment to health care.
    2. They don’t believe the CBO score (and neither do I).

    The CBO score is only valid if you assume that A) Congress will cut Medicare in the future as the bill calls for (how’s that doc fix working out for you?)
    and B) that the future tax increases will go into affect; and C) that the baseline health care coverage (and therefore necessary subsidies) will not become more generous over time.

    Seems some pretty questionable assumptions to get less than $25 billion a year on average.

  2. comment number 2 by: Gipper

    Economistmom,

    Sometimes you need to be a Historymom. Let me help:

    Take a trip back to 1937. Social Security was running a surplus for many years. Starting in 2010 and continuing for the next 70 years, the projection is that the program’s deficit will balloon and swamp whatever surpluses it ever generated. How would the CBO have scored SS in 1937?

    Let’s go back to the 1960’s when Medicare was enacted. It too ran surpluses at first. How would the CBO have scored Medicare in 1968? Now look at the budgetary disaster on our hands. And now the left is saying that we need a Canadian style healthcare system to solve a problem that they created! They say that Conservatives should be thankful that we only got Obamacare without the public option.

    Well Conservatives are sick of the historical amnesia and the lack of accountability from the left. We’re going to do our damndest to stop the train heading toward the Euroweenie land of cradle to grave welfare statism.

    You mischaracterize Supply Side economics very badly. In fact, most serious academic supply-side adherents believe in a weak form of the Ricardian Equivalence theorem that posits that deficit spending has no beneficial stimulative effect on the economy because economic agents make plans to reduce future consumption, anticipating that they will have to eventually pay increased future taxes to retire the newly created debt.

    Ludlow, Norquist, and Moore do not accept Ricardian Equivalence and are not serious academic supply-side economists. As for the Laffer Curve, it’s simply an application of Rolle’s Theorem that you learn in your introductory Calculus course. No great economic insight is needed for that truism.

  3. comment number 3 by: Gipper

    Economistmom,

    A real deficit hawk would have enacted all of the tax increases and Medicare program cuts in the PPACA, but leave out the expenditures. Now that is a defensible position.

    For you to write that repealing PPACA is fiscally irresponsible is ludicrious. What if Republicans repeal PPACA and then cut other programs that exceed the so called “surplus” generated by PPACA? You have to look at the overall budget, not just one program in isolation.

    Do you and Ezra Klein sit around every morning and come up with these talking points or what? What nonsense! But at least the mask of non-partisanship has fallen away. For that I’m thankful.

  4. comment number 4 by: Dugger

    “They think most Americans dislike health reform”

    I haven’t meet someone in person that agrees with health care reform. I don’t want the government to tell me how to use health care. They, republican and democrate, do not have my best interests in mind. They also have not done a very good job handling the monies I already have tendered.

  5. comment number 5 by: Arne

    Gipper,

    Your defensible position is not what House Republicans have proposed.

  6. comment number 6 by: Gipper

    Arne,

    No, that first paragraph was my challenge to Economistmom to illustrate her sins of omission.

    But the Republicans have proposed cutting $100 billion from the budget which roughly equates to the deficit reduction scored by CBO for Obamacare. Therefore, from a global budgetary perspective, they could meet the conditions in my second paragraph.

    They could reduce the deficit and still repeal Obamacare. Do you disagree?

  7. comment number 7 by: Arne

    “A real deficit hawk would have …”

    It is entirely possible to believe that the government should be doing more but should still be doing it within fiscal limits. The need to control the terms of the debate is ine thing that keeps it from being a meaningful debate.

  8. comment number 8 by: Arne

    “They could reduce the deficit and still repeal Obamacare. Do you disagree?”

    Of course they could. They could also reduce the deficit by rasing taxes that have nothing to do with healthcare. Do you disagree?

  9. comment number 9 by: Gipper

    Arne,

    Of course not. If the deficit was all you cared about, then you could reduce taxes and/or cut spending. I’m on record for doing both.

    However, the deceit of Ezra Klein and Economistmom is to make readers believe that deficit reduction has to be judged on the basis of a single program. However, most people judge the fiscal responsibility of someone by their overall budget proposal, not on the basis of individual proposals taken in isolation inside the budget.

    For Economistmom to pretend that repealing Obamacare is evidence of fiscal irresponsibility is very misleading and deceitful because she is someone who definitely knows better than to use a cheap propaganda ruse like that.

    Do you disagree?

  10. comment number 10 by: AMTbuff

    The two problems with HCR were always:

    1. It spent the money from the easiest tax increases, money that was badly needed to close the existing deficit.

    2. It laid the foundation for inexorable increase in government spending on health care, regardless of any rosy initial projections. Both sides know this, and that’s why one side likes it so much and the other side dislikes it so much. Nobody seriously believes that HCR as enacted will bend the cost curve in anything resembling the current political climate.

    Repealing HCR solves both these problems. For a deficit hawk, what’s not to like?

  11. comment number 11 by: Gary

    The reason that Republicans do not want any reform to healthcare is that it will limit profits.

    Many financial decisions are based on projected profits. Those decisions will be invalidated by major changes to healthcare, particularly reforms that lower costs.

    Sure, it will bankrupt the country if we do not limit costs, but what does that matter if 2% of the country can profit from it?

  12. comment number 12 by: Charles Roth

    Let’s face it, most Americans find any form of taxation anathema. We are spoiled rotten. We want everything NOW!
    Having lived in England for two years, and in France for 14 years, I paid higher taxes in order to have the same medical coverage as the President of France, and to have the peace of mind that I could walk into any hospital in the country for medical services, without fear of being ushered out the door. Our U.S. Congress has privileged coverage, which we citizens pay for, and which the elitist Republicans lacking an exgratia gene, want to deny us, for the sake of the “upper class” and to preserve the status quo. The Republicans tried to undermine Social Security when Roosevelt introduced it. Europeans have longer life spans and fewer infant deaths. Even the “clochard”, or homeless have the right to medical care in France. I have spoken to many mothers in our country who told me, “if I or my husband could get a job in France, I’d be there in a heartbeat, because I would know that life is so unpredictable, that it would give me and my family peace of mind to know that if an unforeseen medical emergency came up, or that my husband lost his job, at the very least, we would have the protective blanket of universal health care.”,

  13. comment number 13 by: Gipper

    Mr. Roth:

    Our healthcare system has a small impact upon our average life spans. Here’s what are the most important factors:
    1. Sewage and waste treatment systems
    2. Treated water supplies
    3. innoculations against infectious diseases
    4. A healthy diet low in processed food products, saturated fats, alcohol, etc.
    5. A lifestyle through work or planned activities that incorporates physical motion that creates anaerobic and aerobic stress in the body, in contrast to sitting on a sofa watching TV.

    Medical care is a distant 6th place after these other factors that are far more important.

    Regarding infant deaths, if you compared white Americans with Europeans, the infant mortality rate would be lower. The high incidence of drug use, obesity, and other behaviors that are risk factors in infant mortality are more prevalent in the minority communities. That’s hardly a weakness of our healthcare system.

    Europeans are superior with factors 4 and 5 than the US. On average, Americans have higher rates of morbity than Europeans: Heart disease, hypertension, stroke, Type 2 diabetes, osteoporosis, and cancer. That’s one of the big reasons healthcare costs in the US are higher than Europe. The other factor is the insane overuse of insurance companies as an interface between patients and doctors, promoted by our tax code.

    As for the peace of mind you crave, well that is the Achilles Heel of the Euroweenie mindset that many Conservative Americans simply despise about our brethren on the opposite side of the Atlantic and the Democrats here at home . Uncertainty and stress are the soil where superior motivation and achievement grows best. The record of American vs. European innovation over the past century speaks for itself.

  14. comment number 14 by: Arne

    Gipper,

    per your 6:08, yes I disagree.

    The House Republicans have the choice of offering a bill than does more than just repeal ACA. They have the choice of offering a revenue neutral bill or even using “the easiest tax increases” to reduce the deficit. Diane is right to call them out on it.

    Yes, the bill does raise taxes. To increase the services offered by the government without raising taxes would be fiscally irresponsible. To increase the services offered by the government is NOT fiscally irresponsible unless it fails to include a way to pay for it. The recognized arbiter says it does pay for it.

  15. comment number 15 by: SteveinCH

    The recognized arbiter is required to assume that unspecified cuts to Medicare will materialize, that the cost of the subsidies will stay consistent with the bill despite the fact that the minimum threshold has not been set and a whole host of other things that may or, more likely, may not happen.

    As such, the value of the forecast depends on how robust one believes those assumptions to be. Given the history (of Medicare and Medicaid to name 2), it seems reasonable to suspect that costs may be much higher than forecast.

  16. comment number 16 by: AMTbuff

    >To increase the services offered by the government is NOT fiscally irresponsible unless it fails to include a way to pay for it.

    This is incorrect when the long-run fiscal gap is already huge without those additional services. By analogy you don’t go on a cruise when your mortgage payment is late just because your aunt died and left you $5000 of easy money. You apply that money to the current problem rather than adding a new problem.

  17. comment number 17 by: Gipper

    Arne,

    Your epistemic closure is severe. You cannot judge the Republicans’ fiscal responsibility by one bill. You have to judge them by the entire budget proposed. You resist crying uncle, but Economistmom, Ezra Klein, and you are looking very silly in the process of continuing this silly and stupid line of argument.

    Per ATMBuff, a more fiscally responsible course of action would be to repeal Obamacare so that you make it easier to eliminate the deficit. If you add more spending, you make it harder to balance the budget, not easier.

    Fine, raise taxes. But there’s no need to couple a tax increase with a spending increase. You don’t need Obamacare as an excuse for cutting Medicare benefits. All Obamacare does is make it harder for future legislators to reduce the deficit even further because he’s sucked precious tax revenue out of the economy to pay for a new entitlement.

    Just because at the margin, the CBO scores a bill as reducing the deficit doesn’t mean adoption of that bill is the best course of action for reducing the deficit from a global perspective.

    I

  18. comment number 18 by: Gipper

    Arne,

    I realized that words are ineffective. Let’s try an Algebraic proof to demonstrate that repealing Obamacare can reduce the deficit:

    Suppose this represents pre-PPACA budget:

    Federal Revenue = y*GDP
    Federal Spending = x*GDP
    Surplus (Deficit) = (y-x)*GDP

    where 0 < x,y < 1

    Additional revenue raised by Obamacare = y’*GDP
    Additional net spending from Obamacare = x’*GDP

    where 0 < x+x’, y+y’ < 1
    and x < x+x’ and y y

    Post-Obamacare Budget:

    (y + y’)*GDP = Revenue

    (x + x’)*GDP = Spending

    (y’ - x’)*GDP = Deficit reduction

    CBO says that y’ - x’ > 0. Conservatives are saying that the following alternative is superior,
    where x” > y’

    y*GDP - (x - x”)*GDP > (y+y’)*GDP - (x+x’)*GDP

    Marginal improvement in surplus (deficit):

    Conservative (y - x + x”) versus Obama (y+y’-x-x’)

    Eliminate like terms:

    x” > y’-x’

    Conservative deficit is a smaller negative number because

    x” > y’ so the Conservative Surplus (Deficit) dominates the Obama one.

    This alternative is even better for deficit hawks like me:

    (y+y’)*GDP - (x-x”)*GDP

    But I’m not holding my breathe that Republicans would offer something like this.

  19. comment number 19 by: Mark

    “So that’s how this bill to repeal the health reform law becomes characterized as a way to eliminate a “job-killing” law, and how the proposal is really perfectly consistent with the Republican supply-side ideology that says that tax increases, no matter of what variety, hurt the economy and reduce jobs, and deficits, if they come from tax cuts rather than spending increases, don’t matter.”

    EnglishMom would give you a well-deserved scolding for that sentence structure, if she got that far.

  20. comment number 20 by: Vivian Darkbloom

    The entire premise of this article is false—Republicans don’t want to repeal health reform. First, because they know they can’t. Second, because they know that it is unfeasible to merely return to the status quo ante. Repeal of the health reform bill cannot be acheived unless it is coupled with an alternative reform. Republicans got themselves into this mess by promising something they knew they could not and would not deliver. It was done for political expediency and it opened them up to the type of criticism they are facing here. Some of that is justified, especially the criticism that the repeal campaign was pure political rhetoric. Some of it is counter-rhetoric for refusing to acknowledge the original gambit was simply a bluff.

    Having said that, SteveinCH is right. The CBO scoring system is seriously flawed and is subject to the type of gaming he outlines here. And, the Democrats gamed this one to the hilt. Economist Mom should at least admit that. But, both parties game it and it’s the only system we’ve got. If the Concord Coalition and similar groups want to play a credible and constructive role in restoring our government to fiscal sanity, I would suggest they devote some of their considerable talent and resources to making suggestions as to how this scoring system can be made more reliable and credible. Perhaps they could call together a panel consisting in part of a number of former CBO directors to make suggestions as to how gaming the system can be made more difficult.

    Bruce Bartlett has (rightly) pointed out that the Republicans conveniently omitted health care repeal from their proposed House PAYGO rules. There are, however, two points Bartlett conveniently omitted. First, the proposed exemption would apply only until such time as there is a Congressional concurrent budget resolution. If Congress acts responsibly and things happen on schedule, that would mean the exemption would only apply to April 15, 20011. Second, the exemption generally does not apply before April 15, 2011 to any bills the purpose of which would be to reform or amend the health care bill. Those bills would generally need to be deficit neutral under the proposed House PAYGO rules. Realistically, amending the existing legislation or replacing it with alternative reform are the only two possibilities.

    Republicans have a chance to redeem themselves. First, I will be watching carefully to see if they can put aside the rhetoric and eventually introduce legislation that replaces the health care bill with a better reform or introduce amendments to ObamaCare to improve to reduce costs and make it more fiscally sustainable. Second, work on the concurrent budget resolution will be the key test of their credibility and leadership.

    The repeal bill has been labelled by Republicans as a “job killer”. Economist Mom has replied with the following:

    “It’s probably that they don’t like the idea of any kind of tax increase, and especially not the kind of tax increase that would be paid disproportionately by higher-income households, who they emphasize are the “engine of economic growth” in our economy–you know, the “job creators.”’

    The “you know” part struck me as a bit cynical and snarky. I think I saw Economist Mom winking when she wrote that. So, I’d like to end with a challenge to Economist Mom: Who, in your view, are the real job creators in our economy? It sounds as though you might think that is government, but I suspect as a mom, and especially as an economist, you know that’s not true.

  21. comment number 21 by: JP

    I too have lived in France and it is not true that wealthy people seek out the same medical institutions as the poor. Wealthy people are willing to pay for personalized care and they do so in spite of being taxed for a public health system that is so overburdened that few people in the system get the quality of care that we would in America.

    Canada is no better. For a profound look into the Canadian health system I’d suggest watching a film entitled Les Invasions Barbares. http://www.imdb.com/title/tt0338135/. While telling a story of a man’s life and death, it also succeeds in bringing to light the harsh truths of the Canadian medical system including overcrowding, corruption, and a lack of proper care.

    The cost of healthcare in America is a huge problem as is the number of gluttonous people looking for a handout for themselves and their 6 children. Our enormous cost of healthcare in relation to GDP will continue to plunge America into debt until we become healthier people and find other ways to lower healthcare costs.

    Also, the new healthcare law will certainly affect jobs. There are many small businesses who cannot afford to insure their employees and who cannot afford to pay the fines they will incur as a result. When these small businesses begin to fold or cut back on hiring due to insurance costs there will suddenly be many underinsured Americans looking for work.

  22. comment number 22 by: SpendingHawk

    Vivian,

    My guess is that Economistmom’s circle of friends does not consist of many (if any) people who own for-profit businesses that employ more than 10 people. The kind of people who write snarky remarks like that live in the non-profit and government world doing “analysis.” They look at Keynesian models and actually believe that government spending programs create wealth.

    I’ll also venture that her circle of friends doesn’t include many active military personnel outside of the Pentagon bureaucracy. Her comments leave fingerprints that are easy to interpret.

    From a national income accounting perspective, this government spending she is so enamored by is added to GDP. However, from the perspective of long-term capital accumulation and wealth creation, this spending is an anchor. As Adam Smith once said, “there is a lot of ruin in a nation.” Sweden, France, and the UK used to have a very high per capital GDP relative to the US. Now look at them after decades of welfare statism. It catches up in the long-run, beyond the time horizon of CBO modeling.

  23. comment number 23 by: Vivian Darkbloom

    Yes, but my question was a serious one. I hope Economist Mom will answer in the spirit of civil debate. Who her friends are is no business of mine.

  24. comment number 24 by: AMTbuff

    Ad hominem arguments will not persuade any serious participants here. I’ll listen to solid reasoning from any source, up to and including partisan hacks. Diane is nobody’s hack.

  25. comment number 25 by: danimal

    Doesn’t the CBO number of deficit savings still use the 10 years of tax revenue vs. 7 years of outlays for benefits? As exlained to Obama by Rep Ryan from Wis. in they meeting, that doesn’t make sense, and I recall a Dem Rep. as saying “the cbo says!” If I take 30 yrs of income vs 5 years of mortgage payments I can get a huge manision! Maybe we should all do that.

  26. comment number 26 by: Arne

    “Doesn’t the CBO number of deficit savings still use the 10 years of tax revenue vs. 7 years of outlays for benefits?”

    I suspect this is confusing the fact that the bulk of benefits don’t start until 2014, while some of the revenue changes begin sooner. There is nothing so blatant as you suggest.

  27. comment number 27 by: Vivian Darkbloom

    danimal and Arne,

    The original score on the health bill did use 10 years of tax revenues and 7 years of benefits. Arne, I think you are missing the point here somewhat: the Dems could have started the revenue provisions of the bill to coincide with the kick-in of benefits. They didn’t do that, primarily, I think, to help their CBO score. The new scoring on repeal doesn’t use the same years (time does go by) so you’ve got basically 9 years of benefits and 10 years of revenue, I think. Either way, I don’t think it is a huge deal in the overall scheme of things. On this issue you might take a look at the recent post by Dave Marron on his blog. Also, interesting comments by David Brooks (op ed) and Krugman (blog) in the NYT. The link from Brooks op ed to Gene Steurele of the Urban Institute is well worth following, if you have the time.

    One thing I think has been overlooked by both sides is the projected costs to state governments. Most of this is out of the CBO estimates (except to the limited extent states get assistance for start-up costs, etc from the feds). Most states expect huge costs as a result of expansion of Medicare. Of course, this will force state taxes up and the feds will eventually incur more costs for bailouts, etc. The nature of our federal system and the CBO scoring is such that costs get shunted around (including to the private sector) and never get counted.

  28. comment number 28 by: Vivian Darkbloom

    Make that Don Marron ex Dave Marron. I must have fast forwarded to Brooks.

  29. comment number 29 by: SteveinCH

    Yes, the dirty little secret of the ACA (one of them) is cost shifting to states and the insured.

  30. comment number 30 by: Vivian Darkbloom

    Also, I should have referred to expansion of Medicaid, not Medicare. Need to take my Alzheimer’s med.

  31. comment number 31 by: BillSmith

    Whats with the claims that the bill was going to save $143 billion if it passed but only a few months later it will cost $240 billion to repeal?

  32. comment number 32 by: Vivian Darkbloom

    Bill Smith,

    See Don Marron’s blog for a good brief summary as to why: http://dmarron.com/

  33. comment number 33 by: CLA

    Can the author please itemize the ‘true economic cost’ of health care delivery and also harmless uses of taxation to promote deemed-appropriate behaviors? And, as to the last item, what are appropriate demands for medical services, who decides what they are and does the government pay for all of those now?

  34. comment number 34 by: J0e

    Your own nonpartisan friend David Walker also says those CBO numbers are unrealistic.

  35. comment number 35 by: James D.Taylor

    OK Gang- I thought supply- side theory and trickle down economics went out with the “Laffer Curve”. The only thing trickle down ever produced was piss in my boot which is exactly what proponents of eliminating this long overdue health care bill are doing to anyone (An est.123 million like me-A Type 1 Diabetic for 46 years) who lives with the dreaded “pre-existing condition” tag.
    A medical condition curse on any and all who would seek to overturn this bil on specious grounds!l