Blue Dogs Bark, Don't Bite Socialized ObamaCare

Last week the public learned what Washington insiders have long known: the Blue Dog Democrats don't hunt.

The Blue Dogs are a group of moderate Democrats, many from the South, who make a big show of forcing concessions by liberal colleagues who seek to increase taxes and expand the role of big government. In the end, as happened last week, the Blue Dogs are nothing more than role players in a Kabuki theater that is designed to deceive voters. They don't stop bad legislation, and the concessions they extract are meaningless.

Here's how it works. Democrats propose something radical and unpopular, like President Barack Obama's health-care plan. Then the Blue Dog Democrats traipse onto the public stage claiming to carry the banner of fiscal responsibility and moderation.

The Blue Dogs essentially accomplished nothing substantive.

The show is covered the same way by the media every time. The virtuous, "centrist" Blue Dogs share the concerns of the American people, the story goes, and have enough votes to stop Nancy Pelosi and the fringe from radicalizing American policy. After "tough" negotiating sessions, the Democrats cave in to Blue Dog demands, producing a bill that is moderate and reasonable.

Except that it's all just nonsense, meant to create the illusion that Pelosi isn't dictating the details of Democratic bills in the House. In fact, she is.

Take the health bill. For any moderate and sensible individual, the key problem with Obama's approach is that it calls for a public insurance plan, run by the government, that will compete with private plans.

Single Payer

Make no mistake. If a public plan is enacted, it will move us swiftly toward socialized medicine with a single government payer, an objective Obama has endorsed in the past.

The government insurer can conquer the market quickly for two reasons.

First, the government can coerce large cost concessions from providers, much larger than those negotiated by private firms. In the current system, Medicare pays lower fees for many services than private providers do. If the government insurer pays those same fees, it will have an advantage.

Second, unlike private companies, the government insurer can lose money every year and stay in business. Even the most brilliant entrepreneur will eventually lose to a competitor that can provide potentially unbounded subsidies to its customers.

So the key question is: Will there be a public insurance plan that can undercut private firms? If so, the U.S. as we know it will change.

Smart Bomb

The House bill has always had a public plan. It is a smart bomb designed to destroy our private health-care system. The much-reported compromise with the Blue Dogs did little to change that.

The deal reached by members of the House Energy and Commerce Committee on Wednesday cut about $100 billion from a $1 trillion bill and exempted some smaller firms from the requirement that they provide health insurance.

It also purported to level the playing field by changing the way the public plan will arrive at the prices it pays providers. In the original version of the bill, health-care providers would have to accept payment based on Medicare prices. In the revised version, the public plan would have to negotiate prices with providers.

That might seem like a substantive change. In fact, it is meaningless. It is impossible for a big government entity to negotiate prices with millions of providers. If the current version of the bill were enacted, government bureaucrats would simply adopt a formula to handle reimbursements. Odds are, that formula would be based on Medicare prices--just as the original version of the bill called for.

Smaller Price Tag

Saving $100 billion might seem like a nice thing, too, but the number is a rounding error in the broad scheme of things and likely is irrelevant, given that Senate Democrats were going to demand a smaller price tag anyway.

Thus, the deal has little content, even if it is honored. And that isn't likely. As the Associated Press reported on Friday, "Senior congressional aides cast it as a temporary deal, saying leaders had not committed to support it once the bill advances to the floor of the House in the fall."

The Blue Dogs, then, essentially accomplished nothing substantive. They did serve a useful political role. By appearing to win concessions, they created the impression that the Democrats were being moderate and reasonable when they weren't. That impression may well undercut fears that the Democratic agenda is a radical departure from the status quo. It could give Democrats the cover they need to pass the Obama plan.

If we wake up a few years from now with socialized medicine, we will have the Blue Dogs to thank for it.

Kevin A. Hassett is a senior fellow and the director of economic policy studies at AEI.

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About the Author

 

Kevin A.
Hassett
  • Kevin A. Hassett is the State Farm James Q. Wilson Chair in American Politics and Culture at the American Enterprise Institute (AEI). He is also a resident scholar and AEI's director of economic policy studies.



    Before joining AEI, Hassett was a senior economist at the Board of Governors of the Federal Reserve System and an associate professor of economics and finance at Columbia (University) Business School. He served as a policy consultant to the US Department of the Treasury during the George H. W. Bush and Bill Clinton administrations.

    Hassett has also been an economic adviser to presidential candidates since 2000, when he became the chief economic adviser to Senator John McCain during that year's presidential primaries. He served as an economic adviser to the George W. Bush 2004 presidential campaign, a senior economic adviser to the McCain 2008 presidential campaign, and an economic adviser to the Mitt Romney 2012 presidential campaign.

    Hassett is the author or editor of many books, among them "Rethinking Competitiveness" (2012), "Toward Fundamental Tax Reform" (2005), "Bubbleology: The New Science of Stock Market Winners and Losers" (2002), and "Inequality and Tax Policy" (2001). He is also a columnist for National Review and has written for Bloomberg.

    Hassett frequently appears on Bloomberg radio and TV, CNBC, CNN, Fox News Channel, NPR, and "PBS NewsHour," among others. He is also often quoted by, and his opinion pieces have been published in, the Los Angeles Times, The New York Times, The Wall Street Journal, and The Washington Post.

    Hassett has a Ph.D. in economics from the University of Pennsylvania and a B.A. in economics from Swarthmore College.

  • Phone: 202-862-7157
    Email: khassett@aei.org
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