Cagle World

There were a lot of ingredients in the 2010 Republican electoral landslide. Perhaps the most significant was that by raiding $787 billion from Medicare to pay for Obamacare, Democrats gave the “Medicare cuts” club they had used to beat Republicans over the head for decades to their opponents, who then hammered away at them.

Remarkably, twelve years later Democrats may – in a last-ditch attempt to salvage something from the wreckage of Build Back Better – repeat the exact same mistake again.

This time the conceit is that they can drain $200 billion or more from Medicare prescription drug spending and somehow sell that to seniors politically by calling it “drug pricing reform” – then use that money to buy political support via more generous Obamacare subsidies.

The Democrats’ plan would impose price controls via a so-called negotiation in which the government would dictate the prices Medicare pays for drugs to manufacturers, who would face a tax of 95 percent of their total sales if they said no. A classic mob-style “offer you can’t refuse.”

Proponents pretend this is a free lunch, that seniors will have access to the same drugs at steeply lower prices. Reality doesn’t work that way.

Imposing price controls to siphon hundreds of billions of dollars out of Medicare prescription drug spending will clearly result in few new cures and treatments available to seniors. An analysis of an earlier version of the Democratic price control plan by University of Chicago researchers found that it would lead to between 167 and 324 fewer drugs being developed over the next two decades, with biopharmaceutical research and development spending reduced by more than a trillion dollars.

Meanwhile, the health insurance industry has been feasting on larger-than-ever Obamacare subsidies that were stuffed into Biden’s $1.9 trillion “COVID relief” bill. The idea of fattening up subsidies when claims were at historic lows as people avoiding seeking health care during the pandemic never made sense, but Biden did it anyway.

Now the big insurance companies are in all-out lobbying blitz to get the expanded subsidies extended, claiming it is the only way to avoid sharp premium increases – even though health system utilization is still below 2019 levels as many people remain hesitant to go back to doctors and hospitals.

As in 2010, the insurance industry is relying on AARP – which makes more than a billion dollars per year in corporate royalties, mostly from UnitedHealth – to carry their public relations and lobbying water. The plan, clearly, is to drain money from Medicare drug spending to funnel it to the insurance companies.

The bet by Democrats would be that lower prices through “negotiation” is an easier to explain message in a campaign context than “price controls cause shortages.” Maybe so. But the Republican message could be much simpler than that. As simple as: “my opponent voted to drain hundreds of billions of dollars out of Medicare to spend on Obamacare.”

We’ve seen that one before. The result? Republican landslide.

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Copyright 2022 Phil Kerpen, distributed by Cagle Cartoons newspaper syndicate.

Phil Kerpen is the president of American Commitment and the author of “Democracy Denied.” Kerpen can be reached at [email protected].

Energy prices are up 32 percent in the past year, causing pain at the pump, paying monthly utility bills, and buying everything that’s grown, shipped, or manufactured. And yet, staring at this painful reality, many of America’s largest corporations are elevating green wokeness over economic and business logic by calling – in the midst of record high energy prices – for new taxes on energy.

The major oil and gas producers themselves have been shopping a “tax our customers, please” slide deck around town in Washington, DC. According to the Wall Street Journal, “The nation’s biggest oil industry trade group has drafted a proposal urging Congress to adopt a carbon tax, which would put a surcharge on gasoline and other fossil fuels to discourage greenhouse-gas emissions. The draft proposal was approved by the American Petroleum Institute’s climate committee last month.”

The assumption here is that becoming tax collectors for Washington politicians will somehow cause them to loosen their regulatory grip. There is a certain perverse logic here, perhaps modeled on the tobacco industry, which secured its long-term future by becoming one of the major revenue sources for state governments. But it unmistakably means higher costs for customers and more economic pain.

It’s not just the oil and gas industry. The Business Roundtable, a group of corporate CEOs from across ever sector of the economy, published a “roadmap for U.S. energy policy,” ostensibly to lower prices. But plank number six of their plan is to “establish a price on carbon,” that is, impose an energy tax on fossil fuels. It is absolutely insane to call for higher taxes on energy in a plan to lower energy prices.

House Republican energy leaders Steve Scalise of Louisiana, Jeff Duncan of South Carolina, and Markwayne Mullin of Oklahaoma fired back:

“At a time when skyrocketing inflation is hammering American families, it is shocking and tone-deaf that The Business Roundtable’s latest energy policy proposal calls for a new energy tax that would increase energy costs… We strongly oppose the BRT’s proposed energy tax that will hit lower-income families, small businesses, and those on fixed incomes the hardest while doing nothing to confront China, the world’s largest emitter of carbon… Advocating for an energy tax while soliciting massive government handouts for special interests is destructive, ineffective, and unaffordable.”

That is a near-unanimous sentiment among House Republicans, but unfortunately Senate Republicans may be more susceptible to industry-lobbying for higher energy taxes. Several are in a bipartisan working group that appears to coalescing around on a plan to impose carbon taxes only on imports, seizing on the Trump-era GOP’s friendliness toward tariffs.

Bloomberg reported the plan “would place tariffs on fossil fuels and products such as cement and steel to prod countries that are moving too slowly to cut their greenhouse gas emissions.”

Such a tax would directly raise costs for Americans on top of the budget-busting prices they are already experiencing – and it would likely spur other countries to retaliate, eventually leading to global carbon taxation. It should be a nonstarter.

Voters should demand candidates for office this year take crystal clear positions on new energy taxes, rejecting them in favor of real solutions. America needs a Congress that will scuttle the Biden administration’s anti-energy regulatory agenda, find a way to reverse the de facto Wall Street ban on investing in new fossil fuel production, and greenlight stalled pipeline projects all over the country.

It is ridiculous that this needs to be said, but this is no time to impose higher energy taxes.

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Copyright 2022 Phil Kerpen, distributed by Cagle Cartoons newspaper syndicate.

Phil Kerpen is the president of American Commitment and the author of “Democracy Denied.” Kerpen can be reached at [email protected].

The latest iteration of Build Back Better – the president’s multi-trillion-dollar tax-and-spending binge that has been stalled in Congress all year – purports to reduce the cost of prescription drugs via negotiation.

Medicare prescription drug plans already negotiate prices aggressively. As Obama’s CBO director Doug Elmendorf explained back in 2009: “additional authority to negotiate for lower drug prices would have little, if any, effect on prices for the same reason that my predecessors have explained, which is that private drug plans are already negotiating drug prices.”

So how can Democrats extract the $250 billion they are counting on draining from Medicare drug spending to fund the creation of new, unrelated welfare programs in Build Back Better? They don’t negotiate – they impose price controls.

Starting with 10 drugs but sure to expand over time from there, the secretary of HHS would “negotiate” by setting the “maximum fair price” – and if the manufacturer disagrees, they are subject to a tax on total sales of that product that starts at 65 percent, then jumps to 75 percent after 90 days, 85 percent after 180 days, and finally a shockingly confiscatory 95% after 270 days.

A price set by government under that threat is a price control, not a negotiation.

Price controls always lead to shortages, and draining $250 billion from Medicare – sure to rise as the price control scheme expands – will mean shortages of life-saving medicines for seniors. An analysis of an earlier version of the Democratic price control plan by University of Chicago researchers found that it would lead to between 167 and 324 fewer new drugs being developed over the next two decades, with R&D spending plunging about $1 to $2 trillion.

There is no free lunch. If politicians slam the breaks on Medicare prescription drug spending, seniors will inevitably have less access to innovative drugs.

We might expect major U.S. corporations to understand the basic reality that markets allocate resources better than politicians, and that price controls do more harm than good. Unfortunately, when it comes to health care policy, the HR department seems to call the advocacy shots even when the C suite would know better.

When the latest Democratic draft was announced, Bloomberg ran an article with the surprising headline “Drug Price Deal Hailed by Employers as Key Step to Slash Costs.”

The American Benefits Council, which represents hundreds of large employers, said they were “very supportive of the provisions.”

“The negotiations provision will be a foot in the door,” the article quoted the ERISA Industry Committee saying favorably, that would lead to the extension of drug price controls to private plans outside of Medicare.

But there is no reason to think that, once opened, the price control door would be limited to prescription drugs. With burgeoning inflation lifting the costs of everything, it would be easy for politicians basking in their “success” at setting drug prices to move on to broader price-controls in a 1970s redux.

Every company that sees drug price controls as a way to save costs should think long and hard about the implications of allowing government to set prices for their own products and services under the threat of a confiscatory tax.

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Copyright 2021 Phil Kerpen, distributed by Cagle Cartoons newspaper syndicate.

Phil Kerpen is the president of American Commitment and the author of “Democracy Denied.” Kerpen can be reached at [email protected].

Over the past two decades, Congress has repeatedly softened the blow of the federal estate tax by increasing the exemption amount – from $600,000 in 2000 to just under $12 million now.

It still hits the largest, most successful family businesses hard, and most people think taxing death is wrong regardless of the exemption level. Nonetheless, President Trump called the higher exemption “virtual repeal,” because for most Americans the tax is no longer a direct concern.

President Biden has other ideas. At the heart of his budget is a new, second “double” death tax with an effective rate of 43.4% on the appreciated value of assets held by an owner following their death. This new double death tax is in addition to, not instead of, the estate tax. And with only a proposed $1 million exemption, it would hit all income levels as vast numbers of small businesses, family enterprises and farms may be hold assets (land, buildings, machinery, etc.), but are often cash poor or even in debt.

A new study conducted for the Committee to Unleash Prosperity by the economic modeling firm REMI finds the economic consequences of this double death tax would be devastating. The study found – with very conventional assumptions – that the Biden proposal to impose capital gains tax at death and hike the rate to over 40% would destroy well over 900,000 jobs and cost the average household about $10,000 in lost income.

California stands to lose 125,000 jobs, New York 50,000, Pennsylvania 33,000, Georgia 30,000, Colorado 25,000, and Arizona 20,000. Even West Virginia, a small and relatively poor state, would shed 4,000 jobs with the new “double” death tax. Montana, 4,000 jobs. The list goes on.

That’s probably part of why its former longtime Montana Democratic senator and former Senate Finance Committee Chairman Max Baucus recently came out swinging against the tax, writing it “would force family businesses and ranchers to liquidate when an owner dies and to lay off employees while bringing in little revenue for Uncle Sam. Lawmakers should know this is a mistake… Proponents try to temper criticism by suggesting carve-outs, but we’ve learned from experience that they are ineffective.”

Another Democrat, former House Agriculture Chairman Collin Peterson, went even further, calling it “the worst idea that has been proposed in terms of its impact on agriculture in my lifetime.”

Meanwhile, Main Street USA remains utterly confused as to why the Biden Administration and Congress seem so intent on now hammering family businesses, those most challenged as they try and emerge from the COVID-19 lockdowns, with massive, even crippling, new asset transfer taxes. They are also putting the livelihoods of those that work for or do business with family businesses, and their communities, in jeopardy.

Sadly, all this has very little to do with tax policy. It is about finding “pay fors,” or new government revenues, to cover the cost of Biden’s massive new spending programs.

The scorekeepers at the Congress’s Joint Committee on Taxation found that a capital gains tax above 28 percent starts to actually lose the government revenue – in part because confiscatory rates above that level tend to induce people to hold assets until they die. So the Biden budget wizards came up with the “solution” of imposing a capital gains tax at death.

They don’t seem to care that it would crush thousands of family farms and businesses and destroy hundreds of thousands of jobs. They must hope voters aren’t paying attention.

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Copyright 2021 Phil Kerpen, distributed by Cagle Cartoons newspaper syndicate.

Phil Kerpen is the president of American Commitment and the author of “Democracy Denied.” Kerpen can be reached at [email protected].

The same politicians who mostly killed free checking and debit card rewards programs through government price controls are setting their sights on credit cards – and that means miles, cash back, and other rewards are now in jeopardy.

That’s a potential political earthquake, because a recent study found that 84 percent of all credit cards are rewards cards, and 70 percent of cardholders who make less than $20,000 a year have rewards cards. Many small businesses also rely on rewards cards – especially cash-back cards.

Those individuals and small businesses need to engage quickly to stop efforts underway by Senator Dick Durbin (D-IL) to build support from his colleagues to extend his 2010 price-control and network-routing regulations on debit cards to credit cards.

The debit card experience should be seen as a cautionary tale.

Rushed to the Senate floor with no committee consideration as part of the Dodd-Frank Act, the Durbin Amendment placed price caps and network routing mandates on debit card transactions, benefiting the biggest retailers but disrupting the business models of banks, credit unions, and stores selling smaller-ticket items. When banks and credit unions were squeezed, they had to cut expenses, and that meant cutting free-checking accounts to customers with lower balances and ending nearly all debit rewards programs.

To garner the support of a handful of Republicans in 2010, Senator Durbin pitched his regulations as a boon to both retailers and to consumers. This is what actually happened:

• 77 percent of retailers kept prices the same and 21 percent actually increased prices because of the Durbin regulations, per the Richmond Federal Reserve.
• Free checking dropped from 60 percent of all accounts to only 20 percent, according to a University of Pennsylvania study.
• The Durbin Amendment cost the average low-income American about $160 per year, per a Boston University study.
• The number of unbanked Americans increased by about a million, according to the same study.

Durbin considers this a success – because his only real purpose was to push down transaction costs for the biggest retailers. And just as debit regulations hurt consumers, imposing Durbin-style price and routing controls on credit cards will result in rewards programs disappearing – particularly for lower income customers who are less valuable to banks.

Is that worth it to relieve influential big box retailers of what they claim are excessive transaction fees? If the costs are really so high, why have “cash only” stores almost completely disappeared?

Electronic payment costs vary, but average around 2 percent. But the average cost of cash across all retail sectors is 9 percent in a recent study. Grocery stores are on the low end of cash costs at 5 percent, while bars and restaurants are on the high end of cash costs at 15 percent. The study defined the cost of cash as managing cash drawers, interacting with their banks with deposits, reconciling cash flows, and “shrinkage” from cash that goes missing from loss, theft, and fraud.

Aside from their transaction-cost savings from using cards, retail merchants know that most of their customers prefer using cards and spend more per transaction when they use cards than when they use cash.

Of course retailers want to cut their costs, and they already drive hard bargains with payment networks. Having government step in with price controls and routing rules, however, would enrich them by disrupting a well-functioning market and harming consumers.

Before signing on to Durbin’s latest bad idea, senators should ask themselves how they will defend their vote to constituents who as a result stop earning miles, cash back, and other rewards with every purchase.

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Copyright 2021 Phil Kerpen, distributed by Cagle Cartoons newspaper syndicate.

Phil Kerpen is the president of American Commitment and the author of “Democracy Denied.” Kerpen can be reached at [email protected].

Broadband has been America’s greatest infrastructure success story – modern, reliable, and passed the stress-test of soaring demand from COVID lockdown with flying colors.

It’s success stands in stark contrast to government-run infrastructure – water, sewer, transportation – which in many places is in a state of disrepair. It also stands in contrast to broadband in Europe, where regulators opted for government-managed pseudo-competition, as networks struggled and strained and had to be throttled when demand surged.

As the University of Pennsylvania’s Christopher Yoo reported: “Between 2010 and 2016, American providers invested on average annually 2.35 times as much per household as their European counterparts. This allowed the average U.S. household to consume more than three times as much data as the average European household in 2017, according to Cisco. This is a significant jump over the 44% difference between U.S. and Europe that existed a decade ago.”

Even Obama’s FCC chief Tom Wheeler admitted at the height of lockdown: “Credit is due to the nation’s broadband providers. The fact we can work from home is the result of hundreds of billions of investment dollars and construction and operational skill.”

A sensible infrastructure policy would look to broadband as a model to bring more private management and investment into other types of infrastructure. The Biden administration is doing precisely the opposite – massively funding a government takeover of broadband.

The justification for government-run broadband keeps changing. As recently as 2010, Obama National Economic Council member Susan Crawford warned “consumers will have just one provider to choose from: their local cable monopoly.” Wireless couldn’t compete. Telco Internet – with the exception of Version FIOS – didn’t count as broadband. “This is the central crisis of our communications era,” she wrote.

The exact opposite happened. Competition kept increasing—every year, more Americans have more options for Internet access. Today, it’s not just cable and telecommunication companies competing, it’s 5G providers, fixed wireless providers, and low-Earth orbit satellite companies all vying for broadband dollars.

So now, just one Democratic administration later, the primary justification for government-run networks is that private networks are great at downloading, but don’t upload fast enough. Really?

The U.S. Treasury is proposing a redefinition of broadband to symmetrical 100 megabit upload and download speeds that would instantly make 58 percent of all households unserved — surprise, even your gigabit cable Internet isn’t broadband anymore!

The idea is absurd on the merits. Broadband consumers in 2019 used 14 times more downstream than upstream. Asymmetrical networks were deployed not just for technical reasons, but to serve actual usage patterns. Zoom’s posted technical requirements only call for 0.6 to 3.8 Mbps of upstream capacity. While video conferencing increased due to COVID, this asymmetrical usage barely budged.

Meanwhile, we have more evidence than ever that government-owned networks are boondoggles. A recent report from Citizens Against Government Waste found:

“From Bristol, Virginia to Provo, Utah, GON projects have proven to be costly, unsustainable, and anti-competitive, while they divert taxpayer resources from higher priorities and fail to solve connectivity issues… Proposals by members of Congress and the Biden administration to preclude private sector participation in up to $100 billion in broadband funding will stifle innovation and cripple investment in new technology.”

The Obama stimulus spent $7.2 billion on broadband – and almost all of it ended up going to well-populated areas (more votes there) that were already served. Even with the advantage of free tax dollars, these systems were, the report found, “ineffective or failed, loans became delinquent, and borrowers defaulted. The NTIA project completion rate was abysmal.”

Now states are sitting on $350 billion of so-called COVID relief funding. They will be tempted to again spend it in on government-owned networks in vote-rich areas rather than reaching sparsely populated areas without broadband, or figuring out why some low-income consumers don’t subscribe to even cut-rate or free Internet plans. And Congress looks poised to add yet another pot of broadband money in the pending infrastructure bill.

All of this gets infrastructure exactly backwards. Congress should repeal the restrictions on the $350 billion they have already sent states that ban it from being used for roads and bridges, and target broadband spending narrowly to the few remaining truly unserved.

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Copyright 2021 Phil Kerpen, distributed by Cagle Cartoons newspaper syndicate.

Phil Kerpen is the president of American Commitment and the author of “Democracy Denied.” Kerpen can be reached at [email protected].

After an early bureaucratic disaster – the feds banned private sector tests and failed to deliver a test that worked – the U.S. has ramped up testing to astronomical levels, dwarfing the rest of the world and any historical comparison.

We now average about 1.5 million tests per flu season, and we’ve now run over 57 million tests for COVID-19. But have all those tests delivered what proponents of mass testing promised? Have they contained the spread and restored public confidence that infectious people are at home, not out and about?

Absolutely not. In fact, by the time most test results are available, the people who were positive are no longer infectious. The tests serve no actual infection control purpose. And the tests that actually would make all the difference are still banned by the FDA.

The CDC reports that most infected people are no longer infectious six to ten days after symptom onset. People with very severe disease can be infectious longer – up to 20 days – but people with severe disease aren’t waiting for a test result to find out if they are sick and self-isolate. The CDC also reports, however, that even though they have never found live, infectious virus three weeks after symptom onset, the so-called gold standard PCR tests we have been using can show positive based on non-infectious viral debris for up to 12 weeks.

So the mass, industrial-scale testing we’re doing – with several days turnaround time – isn’t letting infectious people know they are positive quickly enough to alter their behavior. And many of the positives are likely meaningless artifacts of months-old infections. It feeds a mass public panic but accomplishes little else.

The tests that we actually need are instant tests that people could take themselves and get results in the morning, confidently going about their daily activities knowing they are not infectious. These tests, paper antigen tests, have been developed by a team at MIT that applied for FDA approval back in March. There are several companies ready to mass produce them with FDA approval, and unlike the PCR tests that cost around $100 per test, the paper antigen tests could cost as little as $2, making daily self-testing cost effective for most Americans.

In an astonishing display of government stupidity, the FDA’s objection to the paper antigen tests is based on precisely the characteristic that makes them vastly superior to the PCR tests – they are far less sensitive. FDA has used the extreme sensitivity of the PCR tests as a benchmark and refused to issue emergency use authorizations for less sensitive tests. But a test that is so sensitive that it picks up viral debris for months is not a useful tool to prevent infection.

A less sensitive test that is calibrated to show positive when a person is actually infectious is far more useful. That makes the paper antigen tests not only cheaper and faster but better than the 57 million PCR tests that have become a national obsession.

From the beginning the FDA has made a total mess of testing. Last week they finally introduced a new application for at-home testing. They should approve applications from credible paper antigen test manufacturers as soon as possible – they really should have done it months ago.

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Copyright 2020 Phil Kerpen, distributed by Cagle Cartoons newspaper syndicate.

Phil Kerpen is the president of American Commitment and the Committee to Unleash Prosperity. Kerpen can be reached at [email protected].

I recently testified before the House Select Coronavirus Subcommittee on the meltdown in nursing homes, which excluding New York (which deliberately underreports) now account for over 55 percent of deaths with COVID.  The House Democrats’ goal was to blame these high death rates on President Trump – but the blame should belong squarely to the handful of governors who presided over these disasters.

More than 60 percent of both nursing home deaths and total COVID-19 deaths occurred in just seven blue states with about 20 percent of the U.S. population: New York, New Jersey, Connecticut, Pennsylvania, Massachusetts, Illinois, and Michigan.  The governors in each of these states ignored federal guidelines and pursued some version of the policy of admitting infectious patients to nursing homes as soon as they were clinically stable.

Nationally about 2 percent of the long-term care population has died with COVID-19 – but over 12 percent in Connecticut, 10 percent in New Jersey, 9 percent in Massachusetts, and about 4 percent in Illinois. Even New York’s dishonest underreported number is 4.4 percent of the state’s long-term care population.

Carnegie Mellon and University of Pittsburgh mathematicians showed back in March that efforts to shelter everyone would lead to a far higher death total than efforts focused on the elderly, but the liberal governors chose to ignore that reality – even as we’ve seen over 80 percent of COVID deaths among seniors.

New York’s policy was implemented via a March 25 advisory that said: “No resident shall be denied re-admission or admission to the [nursing home] solely based on a confirmed or suspected diagnosis of COVID-19. [Nursing homes] are prohibited from requiring a hospitalized resident who is determined medically stable to be tested for COVID-19 prior to admission or readmission.”

The Society for Post-Acute and Long-Term Care Medicine warned in response:  “Unsafe transfers will increase the risk of transmission in post-acute and long-term care facilities which will ultimately only serve to increase the return flow back to hospitals, overwhelming capacity, endangering more healthcare personnel, and escalating the death rate.”

This caution was ignored and the policy stayed in effect until May 10.  New York presently reports 6,413 deaths physically in long-term care facilities. Adding hospital deaths, which the state refuses to report, would likely double or triple that number.

Similar policies in New Jersey, Massachusetts, Connecticut, Illinois, Michigan, and Pennsylvania – where the state health secretary moved his own mother out of a nursing home while sending infectious patients in – produced similar outcomes.

As Dr. Anish Koka described it: “Two weeks into the lockdown, Philadelphia hospitals had been emptied waiting for a New York-style surge that never came… But nursing home patients were treated like patients from the community who were too well to be admitted to the hospital – they were sent home.  The consequences of keeping these patients at the nursing home meant the health system had to eventually deal with the entire nursing home being infected.”

Pennsylvania now reports at least 4,345 long-term care resident deaths; all others are at least 2,054.

It isn’t just state size. California nearly adopted substantially the same policy as the meltdown states, but reversed it just two days later – they didn’t ignore the backlash. With a markedly different policy in place, including sending COVID-negative nursing home residents out of Los Angeles area facilities to the USN Mercy hospital ship to establish COVID-only facilities, the state so far has lost only 1.1 percent of its long-term care population, fewer total deaths in this cohort than little Connecticut.

By prohibiting readmission without effective infection control and deploying the national guard, adequate testing, and PPE, Florida reported long-term care COVID deaths at 1,664 as of June 21 – a quarter of New Jersey’s, and 1.1 percent of the state’s large long-term care population. Texas has fared even better, with less than half its COVID-19 deaths in long-term care and presently at only 0.6 percent of that population.

Most states are now finally making serious efforts to test their entire long-term care population.  That’s great, but if the CDC does not fix its definition counting any death in the presence of the coronavirus, nursing home residents with mild or asymptomatic infections will still show up in the count when they die of other causes. The median nursing home stay before death is just five months. If this definitional problem isn’t fixed, deceptive counts will add to the problem of misperceived public fear.

We need honest reporting and counting to understand the risk of serious illness or death with COVID, and we need policies targeted to protect the vulnerable – not to scare the public. And the governors who presided over the carnage need to be held to account.

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Copyright 2020 Phil Kerpen, distributed by Cagle Cartoons newspaper syndicate.

Phil Kerpen is the president of American Commitment and the Committee to Unleash Prosperity. Kerpen can be reached at [email protected].

It became a major scandal when Philadelphia-based researcher Rich Weinstein uncovered video of Jonathan Gruber, the architect of Obamacare, saying: “This bill was written in a tortured way to make sure the CBO did not score the mandate as taxes. If CBO scored the mandate as taxes, the bill dies.”

The quote became famous but was widely misunderstood; he was not referring to the penalty versus tax question, on which Chief Justice John Roberts would later uphold the law. The issue was whether the payment for a mandatory government insurance program should be scored as tax revenue – like Social Security or Medicare premiums – or considered private sector payments. This is crucial because a program scored as taxes and spending is transparently a government takeover, with potentially trillions of dollars shifted from the private sector to government.

There’s bad news for Joe Biden’s current plan. As Biden explained: “I’d bring back the individual mandate… and here’s the deal. We’re in a situation where if you provide an option for anybody who in fact wants to buy into Medicare for All, they can buy in.”

It’s hard to see how a mandate paired with a government plan could be scored by CBO as anything but taxes and spending.

The relevant CBO document is a report from May of 2009.

Biden’s Medicare-for-All public option would unambiguously be scored as a government program, even if he tried to dress it up as a nonprofit. But what about the mandatory purchase of putatively private insurance under the Biden scheme? Could tortured language exclude that from the CBO score? Probably not this time.

The central framework of Obamacare, an individual mandate to buy a tightly regulated but notionally private insurance product, was a close call for CBO. Gruber, Pelosi, and Obama got away with it based the expectation that there would be many different companies in the exchanges (which in most of the country has not occurred) and on the lack of a public option.

Once Biden adds his public option, the whole program clearly becomes taxes and spending, exposing the massive expansion in the size of government expressly to the American people:

“In CBO’s view, a requirement that individuals purchase health insurance combined with tight federal constraints on the market for such insurance or a dominant role for a public plan would constitute a fundamentally governmental system, reflecting the exercise of the government’s sovereign power. In those situations, premiums appearing in the budget – for a public plan or for insurance purchased through exchanges or in the private market – should be recorded as federal revenues.”

If CBO sticks to this standard, Biden will lose the principal advantage of the public plan strategy – its ability to camouflage from American voters that it leads directly to forcing everyone into a one-size-fits-all government plan by creating the illusion of allowing a choice of private plans.

The “public option” strategy for ending private insurance is to set it up in a rigged competition with a government-run plan that can absorb losses indefinitely and can use the power of government to dictate below market prices to doctors and hospitals – as Joe Biden dot com puts it: “the Biden public option will reduce costs for patients by negotiating lower prices from hospitals and other health care providers.” Simultaneously, private plans would be subject to regulations by the same government that is competing with them.

Americans would have the illusion of being able to keep their private insurance for a while, but would all eventually end up in the single payer government plan.

Some have said that makes the public option a Trojan Horse for single payer, but Yale professor Jacob Hacker, the inventor of the plan, disputed that characterization to a 2008 audience at the liberal Tides Foundation: “Someone once said to me, ‘Well, this is a Trojan horse for single payer.’ I said, ‘Well, it’s not a Trojan horse, right? It’s just right there! I’m telling you!'”

Unfortunately for Biden, if the CBO follows its own guidelines on the issue, no amount of torturing legislative language will get him a score that conceals his intention to have government take control of American health care.

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Copyright 2020 Phil Kerpen, distributed by Cagle Cartoons newspaper syndicate.

Phil Kerpen is the president of American Commitment and the Committee to Unleash Prosperity. Kerpen can be reached at [email protected].

For years the major health care policy debates in Washington and state capitals have been distorted by the fact that one of America’s best known and trusted advocacy organizations, AARP, has functioned largely as a lobbying and PR front for the country’s biggest health insurer, UnitedHealth.

Yet elected officials continue to see and hear their advocacy messages as representing millions of seniors – who are famously reliable voters – with a serious corrosive impact on the ability to advance meaningful free-market health reforms.

Even during this pandemic, with the whole world hoping that the biopharmaceutical industry can discover and deliver breakthrough cures and vaccines at record speed, AARP continues to bang the drum for government price controls. In fact, after the pandemic arrived in America AARP sent a letter advocating for Nancy Pelosi’s draconian price control plan, which would threaten drugmakers with a tax of 95 percent of their gross revenues if they don’t accept government set prices.

When governments set the price of cutting-edge drugs, needed innovations and investments dry up. A new cure now costs an average of $2.6 billion to bring to market. If government policy makes it impossible to recover those costs and earn a return on capital, as Pelosi’s bill would, seniors would suffer from a shortage of new cutting-edge treatments and potential cures for diseases like Alzheimer’s, cancer, diabetes – and of course from any new emerging pandemic, like the one we face now.

Why would a seniors group favor undermining the discovery of new cures seniors need?

A forthcoming report by Juniper Research (commissioned by American Commitment) explains this seeming paradox. Chris Jacobs explains how AARP – which somehow maintains a tax-exempt charitable status – has raked in an astounding $11 billion from its sales and marketing activities over the past decade, with revenues climbing from just under $200 million in 2001 to over $900 million in 2018.

Most of that revenue comes from UnitedHealth, which from 2010 to 2017 sent AARP a staggering $4.2 billion. That includes a record $627 million in 2017 – after which AARP stopped specifically disclosing how much it takes in from UnitedHealth. This is the same UnitedHealth that brought in record profits this quarter that, ironically, has come during a deadly pandemic.

The lion’s share of that windfall is from the sale of Medigap policies, for which AARP collects a nifty 4.95 percent off the top for lending its name and exclusive endorsement. Calling their vig a royalty instead of commission, they claim, sidesteps all of the rules and regulations for brokers and insurance sales. In fact, AARP recently defeated an Ohio lawsuit by arguing, successfully, that their relationship with their members “is not one of ‘trust or confidence'” and that membership “does not ‘transcend an ordinary business’ relationship.”

With all that money flowing, AARP’s policy positions almost always align with UnitedHealth’s business interests. Start with Obamacare. Despite overwhelming 14-to-1 opposition from its members, AARP’s executives supported it – and got rewarded with a very convenient carve out: Medigap policies, the AARP/UnitedHealth cash cow, are still allowed to exclude enrollees with some pre-exiting conditions.

Pelosi’s price controls bill also unambiguously benefits insurers and pharmacy benefit managers (PBMs) like UnitedHealth’s OptumRx subsidiary despite the non-partisan CBO research finding it would stifle the innovate drugs seniors rely one.

As Milton Friedman and other prominent economists have explained: “American consumers would get the short-term windfall of lower prices, but they would end up unnecessarily suffering and living shorter lives because promising new therapies would be delayed or not even developed.”

And last year AARP pushed to block a Trump Administration Medicare reform that would have applied big discounts to seniors’ prescriptions directly at the cash register at their local pharmacies, protecting the discounts that are currently pocketed by PBM middlemen like UnitedHealth.

AARP calls its lobbying outfit “AARP Advocates.” Lawmakers on the receiving end of their messages should ask, “For whom?”

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Copyright 2020 Phil Kerpen, distributed by Cagle Cartoons newspaper syndicate.

Phil Kerpen is the president of American Commitment and the Committee to Unleash Prosperity. Kerpen can be reached at [email protected].