Michael F. Cannon

Congress uses price controls to pay Medicare-participating providers. Those providers invariably complain that Congress sets prices too low, but many are no doubt too high.

Congress chose to pay for ObamaCare's new entitlement spending in part by ratcheting down many of those prices. That suggests supporters either believe that Medicare's controlled prices generally exceed the marginal value of the relevant services, or that those prices will begin to exceed marginal value as providers become more productive (i.e., as they learn to provide those services at a lower cost).

Neither assumption is necessarily wrong. Producers operating under price controls nevertheless have an incentive to improve productivity. When costs fall relative to prices, producers get to keep the difference. Ambulatory surgical centers saw a windfall because Medicare took

John Goodman is correct that ObamaCare's individual mandate -- and Kathleen Sebelius' power to make the mandate more burdensome at whim -- threaten the continued existence of health savings accounts (HSAs). But ObamaCare's price controls are no less a threat.

The new law requires insurers to charge enrollees of the same age the same average premium, regardless of health status. That's a price control, and it will cause premiums for healthy people to rise dramatically and thus lead to massive adverse selection. Healthy people will gravitate to less-comprehensive insurance -- in particular, HSA-compatible high-deductible plans -- where the implicit tax is smaller.

As premiums for comprehensive plans spiral upward (ultimately

Supporters of the new health care law are trying to have it both ways. They claim that the regulations that take place this year will provide valuable benefits. Yet they also claim that those benefits will not have an appreciable effect on health insurance premiums.

Of this we can be certain: insofar as the new law expands coverage for preventive and other services, or extends medical care to children with pre-existing conditions and "children" up to age 25, the law must increase premiums. There ain't no such thing as a free lunch.

Premiums will rise faster under ObamaCare than they would have in its absence. We can argue about the magnitude of those increases. But when supporters claim that these regulations will only cost pennies on the dollar, they should admit that what they're really saying is that these regulations don't do much.

In a letter to congressional leaders, President Obama wrote of his openness to including Republican proposals in his health care legislation.

Dropping a few Republican ideas into a government takeover of health care is like sterilizing the needle before a lethal injection: a nice thought, but the ultimate outcome is the same.

Two of the four Republican ideas – federal grants to states that adopt medical malpractice liability reforms, and ratcheting upward Medicare’s physician-price controls – would increase government spending. The president's health savings accounts (HSAs) proposal would merely loosen the noose around consumer-directed health plans. Undercover investigations in Medicare and Medicaid are likely to be as unsuccessful

Hoping to revive his increasingly unpopular health care overhaul, President Obama announced that a key feature of his "new" reform blueprint will be premium caps, a form of government price control that helped kill the Clinton health plan when even New Democrats rejected it.

The New York Times reports: "The president’s bill would grant the federal health and human services secretary new authority to review, and to block, premium increases by private insurers, potentially superseding state insurance regulators."

It bears repeating what Obama’s top economic advisor Larry Summers thinks about price controls: "Price and exchange controls inevitably create harmful economic distortions. Both the distortions and the economic damage get worse with time."

For example, as I have written

Having fisked Newt Gingrich’s and John Goodman’s “best” health care reform ideas, I probably should do the same for Minnesota Gov. Tim Pawlenty’s similar oped in the Washington Post. Pawlenty makes five recommendations:

“Incentivize patients to be smart consumers.” Setting aside his use of the grating word incentivize (down with suffix creep!), Pawlenty is on the right track. But he’s so vague as to leave (himself?) room for mischief. “Make quality and costs more transparent”? “Incentivize smarter health-care decisions”? A pol could claim to be doing those things while falling far short of what he should be doing: letting Americans — rather than employers o

I much prefer the ideas of Newt Gingrich and John Goodman to those of President Obama. But their recent oped in the Wall Street Journal shows why conservatives and Republicans still have a ways to go if they want to stop getting their clocks cleaned on health care. Here’s a fisk of the objectionable passages:

“The current taxation of health insurance…giv[es] lavish subsidies…” There ain’t no such thing as a “tax subsidy.” Or a “tax expenditure.” If that’s what you call it when a tax break reduces federal revenue, don’t be surprised when politicians try to “reclaim” that “expenditure” (read: increase taxes) and spend it someplace else. “Many health economists conclude that tax relief for health insurance should be a fixed-dollar amount…” Many economists also conclude that Medicare’s administra

It has been 178 days since Democrats introduced the first version of President Obama's health plan, and a growing chorus of voices is demanding that the Congressional Budget Office reveal the full cost of Sen. Harry Reid's health care legislation -- including the cost of the private-sector mandates.

Philadelphia Inquirer columnist Kevin Ferris writes: "Have the CBO score the entire Senate bill -- both on-budget expenses and off. Let senators and taxpayers see the real cost - before a vote is taken. Then decide what the nation can afford." Former New Jersey Governor and EPA administrator Christie Whitman -- who should know a little something about private-sector mandates --

House Democrats introduced the first complete draft of President Obama’s health plan on June 19.

Since then, Congress has spent 158 days considering the Obama health plan without ever laying eyes on a complete cost estimate.

The Senate has called up its version for floor consideration without one. (Shouldn’t these eight Democratic-caucusing senators be upset about that?) And the House even passed its version without one.

(Cross-posted at Cato@Liberty.)

President Barack Obama and his congressional allies want to create yet another government-run health insurance program (call it Fannie Med) to cover yet another segment of the American public (the non-elderly non-poor).

The whole idea that Fannie Med would be an “option” is a ruse.

Like the three “public options” we’ve already got – Medicare, Medicaid, and the State Children’s Health Insurance Program – Fannie Med would drag down the quality of care for publicly and privately insured patients alike. Yet despite offering an inferior product, Fannie Med would still drive private insurers out of business because it would exploit implicit and explicit government subsidies. Pretty soon, Fannie Med will be the only game in town – just ask its architect,

I cannot disagree with Uwe Reinhardt's response to me. But his response bears clarification and emphasis.

Improving "population health" generally means "helping people live longer."

To paraphrase, Uwe then writes:

If helping people live longer were our objective in health reform, we could do better than universal coverage. But health reform is not (solely or primarily) about helping people live longer. It is (also or primarily) about other things, like relieving the anxiety of the uninsured.

I applaud Uwe for acknowledging a reality that most advocates of universal coverage avoid: that universal coverage is not solely or primarily about improving health.

Will Uwe go farther and acknowledge that, since universal coverage is largely about some other X-factor(s), that necessarily means that advocates of universal coverage are willing to let some people die sooner in order to serve that X-factor?

The more important question is: should Congress even try to achieve universal coverage?

If the goal is to improve health, then the answer is clearly no.

Ironically, even though universal coverage is presumably about helping the sick, the Democrats’ pursuit of universal coverage demonstrates not how much, but how little they care about their neighbors’ health.

Economists Helen Levy and David Meltzer explain, in a book published by the Urban Institute, “There is no evidence at this time that money aimed at improving health would be better spent on expanding insurance coverage than on…other possibilities,” such as clinics, hypertension screening, nutrition campaigns, or even education. In the Annual Review of Public Health, they explain further: &ldquo

In his weekly radio address, President Obama says private health insurance companies are “filling the airwaves with deceptive and dishonest ads.”

Gee, I wonder if the insurers will dishonestly deceive even half the number of people that President Obama did during his address to Congress.

(Cross-posted at Cato@Liberty.)

This is hardly the 11th hour. More like the end of the beginning, where the problem that Democrats have faced from Day One is finally coming to a head.

The Left and the health care industry both want universal health insurance coverage. The industry, because universal coverage means massive new government subsidies. The Left, because that’s their religion.

But universal coverage is so expensive that Congress can’t get there without taxing Democrats.

Sen. Jay Rockefeller (D-WV) is the biggest opponent of Sen. Max Baucus’ (D-MT) tax on expensive health plans because that tax would hit West Virginia coal miners. Unions vigorously

Two points:

Baucus 2.0 would cost $2 trillion or more, not $829 billion. Baucus 2.0 would increase the deficit, not reduce it.

1. The actual cost. The $829 figure everyone heralds as the Congressional Budget Office’s preliminary cost estimate ignores another $108 billion in government spending under Baucus 2.0.

The $829 billion figure is actually only the CBO’s estimate of new federal spending on health insurance. Former CBO director Donald Marron finds $75 billion of additional new federal spending. The bill would also impose unfunded mandates on state governments, which the CBO projects would increase state-government spending by $33 billion. Voila: $937 billion of new government spending.

But even that ignores the private-sector mandates.

Baucus 2.0 would require most Americans to purchase health insurance. That mandate would force people t