In the News: Blog

A long-term, bipartisan highway bill, known as the Developing a Reliable and Innovative Vision for the Economy Act (DRIVE), passed the U.S. Senate last week by a vote of 65-34, with Senator Johnson's support. The bill reauthorizes our country’s surface transportation and road safety programs for six years.

Why is the DRIVE Act such a big deal?

This is the longest multi-year highway funding measure to pass the Senate in a decade. Not since 2005 has the Senate been able to agree on a long-term bill. In fact, since 2009, Congress has passed more than 30 patches and shorter-term extensions to keep the funding flowing so that infrastructure projects can continue.

Jun 26 2015

Ron in Dairyland

An inside look at Sen. Johnson's recent adventures in America's dairyland. 

Thank you for wanting to learn more about Senator Johnson’s bill to help America transition past the poorly written and disastrously implemented Affordable Care Act.

Senator Johnson’s proposed Preserving Freedom and Choice in Health Care Act would prevent a crisis in the event the Supreme Court in the King vs. Burwell case reads the Affordable Care Act the way Congress wrote it.

May 23 

Memorial Day Program at Northern Wisconsin Veterans Memorial Cemetery in Spooner
http://dva.state.wi.us/Cem-northern.asp 

May 24 

Memorial Day Program at Southern Wisconsin Veterans Memorial Cemetery in Union Grove
http://dva.state.wi.us/Cem-southern.asp 

May 25 

Service at the Central Wisconsin Veterans Memorial Cemetery in King
http://dva.state.wi.us/PA-MemorialDay.asp#King 

Memorial Day Ceremony at Wood National Cemetery in Milwaukee
http://1.usa.gov/1L7qHZl

 

On tax deadline day, April 15, IRS Commissioner John Koskinen testified before my committee about the IRS’ implementation of Obamacare.

The IRS, probably the most feared civilian agency of the federal government, plays a central role in enforcing Obamacare’s individual mandate and in reconciling its subsidies. So, as chairman of the Homeland Security and Governmental Affairs Committee, I felt Koskinen (right) needed to hear what Americans have experienced.

Remember one year ago, when President Obama was claiming that unless Republicans again renewed the temporary, extra-long unemployment benefits enacted in the depths of the recession, the economy would suffer?

Remember how his advisers claimed that if Congress let unemployment benefits return to normal, 240,000 jobs would be lost, and how a New York Times columnist claimed it was because Republicans liked to “afflict the afflicted”?

Republicans did not heed the president. The unprecedented 99 weeks of extended benefits expired. Unemployment benefits returned to normal.

And last week, President Obama was declaring 2014 “a breakthrough year for America.” Remember that?

A groundbreaking new study explains why it was such a good year, Investors Business Daily reports: It was because Republicans ignored Obama’s advice, as 60% of the jobs gained last year were due to the cutoff of extended unemployment benefits.

I’ve said as much, but now others are saying so, too. IBD writes:

“Economists from the University of Oslo, the Institute for International Economic Studies and the University of Pennsylvania took advantage of the sudden end to this federal benefit across the country to see how it correlated with job growth.

“Their findings, published this week by the highly respected National Bureau of Economic Research, found that because Congress didn't listen to Obama, ‘1.8 million additional jobs were created in 2014 due to the benefit cut.’”

You can read the study itself here. It’s worth doing. Economists Marcus Hagedorn, Iourii Manovskii and Kurt Mitman point out just how well the economy did:

“Average employment growth was about 25% higher in 2014 than in the best of several preceding years. The employment-to-population ratio rose. The unemployment rate declined sharply. In contrast to typical predictions, the labor force participation rate suddenly halted its steady secular decline.”

The majority of the effect, the economists write, was because Congress cut off the extra-long benefits. Naysayers claimed this would cause discouraged unemployed people to stop looking entirely – to drop out of the labor force. That didn’t happen, the researchers write, because cutting benefits encourages job creation:

“Not only did the unemployed not drop out of the labor force because of losing entitlement to benefits, but instead those previously not participating in the labor market decided to enter the labor force. . . . The increased availability of jobs than draws non-participants into the labor market.”

Others have already been saying this. North Carolina cut back on extended benefits earlier. Liberals implied this was immoral, but it led to more people finding work. Other observers have been noting the helpful effects of the national cut-off already.

None of this is to imply that unemployed people were lazy. I’m not saying that, nor were conservatives. But government programs, even well-intentioned ones, often have unforeseen effects. Incentives matter. That’s a piece of science that the president and his party should start paying attention to.

“It's enough to make you wonder,” IBD writes, “how much more growth we'd enjoy if other parts of Obama's ‘middle class economics’ were jettisoned.”

The faculty of Harvard is in an uproar, the New York Times reports – the changes to employee health coverage that already hit almost everyone else in America have come to the elite university.

“Professors at Harvard have until now generally avoided the higher expenses that other employers have been passing on to employees,” the paper reports. But health care benefit costs are rising quickly, faster than the university’s revenue or the salaries it pays faculty, the Times reports. Some of those soaring costs are driven by Obamacare, according to the paper – “provisions in the health care law that extend coverage for children up to age 26, offer free preventive services like mammograms and colonoscopies and, starting in 2018, add a tax on high-cost insurance, known as the Cadillac tax.”

graph premiums

So the faculty will pay:

“The university is adopting standard features of most employer-sponsored health plans: Employees will now pay deductibles and a share of the costs, known as coinsurance, for hospitalization, surgery and certain advanced diagnostic tests. The plan has an annual deductible of $250 per individual and $750 for a family. For a doctor’s office visit, the charge is $20. For most other services, patients will pay 10 percent of the cost until they reach the out-of-pocket limit of $1,500 for an individual and $4,500 for a family.”

The plan could have saved some money by narrowing the network of providers, the paper reports, but “some of Boston’s best-known, most expensive hospitals are affiliated with Harvard Medical School. To create a network of high-value providers, Harvard would probably need to exclude some of its own teaching hospitals, or discourage their use.”

Even after these changes, the Times reports, Harvard’s plan will cover 91% of the cost of health care for the typical employee – far more generous a benefit than what Americans forced to buy coverage on Obamacare’s government-run “exchanges” will get. Still, professors are outraged. One tells the paper that increased out-of-pocket costs amount to a pay cut. “It’s equivalent to taxing the sick,” says another.

No, actually it’s equivalent to paying a doctor something for services received — because that’s what it is. It’s what most of America does.

That is the most striking part of the article: These people who are surprised and offended at having to pay part of the cost of their health care include those who have prescribed this exact approach, the Times reports:

“For years, Harvard’s experts on health economics and policy have advised presidents and Congress on how to provide health benefits to the nation at a reasonable cost. But those remedies will now be applied to the Harvard faculty, and the professors are in an uproar. . . .

“The university says the increases are in part a result of the Obama administration’s Affordable Care Act, which many Harvard professors championed.”

A fundamental problem with the Orwellian-named “Affordable Care Act” is that it takes away freedom and choice from consumers – forcing millions to drop the health plans they chose, cutting off access to doctors they trusted. This was part of the design of Obamacare. It was prescribed by experts who believed it would benefit “average Americans.” That we-know-best attitude is part of why Obamacare has remained so unpopular, so unaccepted by the American people.

Now the result is hitting the experts themselves. Perhaps this will be the Harvard faculty’s George McGovern moment.

Vermont is a model for America on health care, the Wall Street Journal sensibly pointed out earlier this week. That’s because Vermont is “where the purest progressive version of ObamaCare has imploded.”

Vermont’s Democrat Governor Peter Shumlin (at right) ran for election in 2010 promising a “single-payer” health system – one in which the government paid for all health care by taxing people, like the “public option” that liberals (including President Obama) wanted in Obamacare. Shumlin hired experts such as Jonathan Gruber to come up with a government-only plan, got the legislature to pass it, and ran for re-election on it.

He knew it mattered nationally: “If Vermont gets single-payer health care right, which I believe we will, other states will follow,” said Shumlin at the time. “If we screw it up, it will set back this effort for a long time. So I know we have a tremendous amount of responsibility, not only to Vermonters.”

Then last week, he canceled it. There will be no single-payer plan – socialized medicine -- in Vermont.

As the Journal explains, “Mr. Shumlin’s budget gremlins concluded the plan was too expensive and would damage the state economy.

“As crises of faith go, this is Mikhail Gorbachev circa 1991 territory. Mr. Shumlin ran in 2010 on an explicit single-payer platform in the most liberal state east of California, and the plan was conceived as a model for other states. He called his retreat ‘the greatest disappointment of my political life so far.’ May there be others.”

Shumlin realized the plan was simply too expensive. The Journal explains:

“Under the Vermont plan, all 625,000 state residents were to be automatically enrolled in the government plan, with the same benefits for all. As with Medicare, employers would be subject to a payroll tax that would reduce wages, and workers would pay a premium based on a sliding income scale. . . .

“If Mr. Shumlin would give to each according to his need, he would take from each far more than his ability to pay. The state accountants estimated that his plan required an 11.5% tax on worker payroll, with no exceptions.

“Individuals, meanwhile, would have paid as much as 9.5% of earnings, which would have applied to everyone making more than four times the poverty level, or $102,220 for a family of four—hardly the 1%. The full $2.59 billion in necessary funding would roughly double current state revenues (about $2.85 billion today).”

This wouldn’t save Vermonters money. For one thing, the plan mandated not gold-plated insurance but platinum-plated – it mandated an “actuarial value” of 94%, meaning that patients would cover only 6% of the cost of their care. This is a certain formula for patients and providers paying no attention of cost and value. It instead would have tried to control costs by imposing punitively low payment rates on providers. The federal government tries this now with its single-payer system for the poor, Medicaid, leading to shortages of doctors who will accept Medicaid patients.

Worse, it shifted the costs in ways taxpayers would see as unjust. Even liberal media observers admit this. “The proposed taxes would ask higher earners to spend more on health care than they do now — in some cases, far more,” noted the website Vox, which also pointed out that an 11.5% payroll tax hits high-wage payrolls much harder than low-wage ones. And remember where the burden of payroll taxes falls: On workers’ wages. Don’t believe me? Ask Jonathan Gruber.

It was all too much for Vermont to afford. The Journal lauds Shumlin for waking up:

His ideological comrades are rarely dissuaded by the prospect of economic damage, as ObamaCare proves. But Mr. Shumlin has succeeded in making Vermont a national model: By admitting that single payer will make health care both more expensive and less efficient, he has shown other states what not to do.”

Perhaps he had little choice: If Vermont really did add 21% more in tax to incomes, the people it hoped would pay for everyone’s health care could have fled to another less hostile state. If single-payer is imposed nationally, where can the targeted taxpayers run? Simple: They can work and earn that much less, to the detriment of the people they would have employed or served.

Let this be a warning, then, as the nation thinks about what will replace the mess of Obamacare. Putting more power and money into the hands of government isn’t just morally wrong, it’s unaffordable.