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Why Didn’t Vulnerable Senate Dems Spike the Football Yesterday?

4:25 PM, Apr 2, 2014 • By JAY COST
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It was interesting to juxtapose yesterday's Obamacare celebration with this story from my local newspaper:

Kathy Slosky of the South Side learned last fall that she would pay $24 more per month for her Medicare Advantage plan beginning Jan. 1, while her monthly Social Security benefit was to increase $20.

What’s $4 less to a retiree living on “a very fixed” income of just over $1,000 a month?

“It’s a half-gallon of milk. It’s a vegetable. It’s a head of cauliflower,” she says, her expression conveying that this was no trivial loss. ...

On April 7, the Centers for Medicare and Medicaid Services, or CMS, will announce the Medicare Advantage rates that it will pay insurers beginning in 2015. Last month, the Obama administration proposed a 1.9 percent cut in those payments as it moves to more closely align them with standard Medicare rates. Medicare Advantage is an alternative to traditional Medicare, the federal health insurance program for those 65 and older.

This is a consequence of the Affordable Care Act, which funds its coverage expansion in part by cuts to Medicare Advantage. So, I doubt that Ms. Slosky was joining in the celebration yesterday. That is because she is a loser in the grand redistributional calculus of Obamacare.

This is a calculus that the president studiously ignored yesterday, in his typical peremptory manner. Sure, there are glitches to be worked out, but we are on the right track. So, shut up, already!

The trick is: the cuts to Medicare Advantage are not bugs. They are features of the system. So are:

-The cuts to Medicare's Hospital Fund

-The redistribution of wealth from the young to the old.

-The redistribution of wealth from rural communities to urban ones.

-The as yet unrealized (thanks to a presidential waiver) premium and deductible increases, as well as a narrowing of health networks, for people in the small group marketplace. These people will not be eligible for subsidies.

-The realized premium and deductible increases, as well as a narrowing of health networks, for people in the individual marketplace who did not get a subsidy (and for many who did as well).

-The impending increases in costs for large businesses and therefore their employees.

This gets to the heart of what is, at its core, the strongest argument against Obamacare. And it is a non-ideological one at that. It goes something like this:

Barack Obama and congressional Democrats wanted to expand health insurance coverage, but political constraints prevented them from creating a straightforward program like Medicare that spreads the burden evenly across society. What they did instead was create a series of implicit taxes upon certain, politically disadvantaged groups of people to pay for the coverage expansion for the politically advantaged groups. These implicit taxes are, in many respects, socially perverse. That is, they burden middle class people whom we as a society usually try not to burden. These people were burdened by Obamacare not because there was no way around it, but because Democrats wanted to grossly understate the true costs of the expansion. In other words, not only are these people losing, they are losing for purely political reasons.

Obama, Democrats in safe congressional districts, liberal opinionmakers, and their friends in the media have studiously avoided acknowledging these burdens. Indeed, Obama's "apology" for lying about keeping your plan if you liked it was the very definition of grudging, and was only forced from him after the lie was plain for all to see.

But vulnerable Senate Democrats, who are compelled to keep an eye on what is happening on the ground in their states, know better. This is why the celebrations from them yesterday ranged from non-existent to muted. They might be breathing a sigh of relief that Obamacare has indeed started delivering benefits to its planned winners, but that does not mitigate the burdens upon the losers.

The irony is that if these Senate Democrats had been aware of the perverse distributional effects of this law in 2009-2010, they would not be in this position. It is increasingly clear that Obamacare is the law of the land because moderate Democrats in the Senate did not do their due diligence until after they voted in favor of it.

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