Making Policy by Headlines

Senate Finance Chairman Max Baucus got the headline he wanted out of The New York Times today: “Health care bill gets green light in cost analysis.” And the lead in the paper’s first editions was even better for him: “Democrats rejoiced over news that the Senate’s measure met White House expectations and would reduce the deficit.”

Which goes to show that the chairman is capable of contorting policy that dramatically transforms one-sixth of our economy to fit into the scoring boxes of the Congressional Budget Office.

This is a bad bill that is filled with false promises, and it will lead to higher health costs for taxpayers and consumers and lower-quality care for millions of Americans.

But never mind that. The CBO says the chairman’s description of his bill (there’s still no actual bill) would cost $829 billion over ten years, would reduce the deficit by $81 billion, and would provide health insurance for 29 million more people. Check. Check. Check.

Economist Diana Furchtgott-Roth writes today in Real Clear Markets, “By this congressional logic, America could insure all 6 billion people in the world at a savings of trillions of dollars.”

Budget expert Jim Capretta explains that the bill uses a fake budget firewall that will come crashing down once the legislation is signed. More taxes will be needed to pay for new subsidies for more people to get more and more expensive insurance. And the promised cuts to Medicare and Medicaid will never materialize.

Capretta adds, "Sen. Baucus shoehorns a $1.5 to $2 trillion 'universal coverage' scheme into an $830 billion sack."

Some of the savings come from putting even more people on Medicaid, the most inefficient, wasteful health plan in America that confines people to substandard care. The bill will be paid for by new taxes and illusionary savings in federal Medicare and Medicaid spending. And it still leaves 25 million people without health insurance.

The deals to gain support for health reform from key industry groups are starting to get chewed up by the legislative sausage factory. Health insurance companies, for example, are finding that the individual mandate is beginning to fray as members back away from the enforcement provisions that would be needed for it to work. Hospitals say the plan leaves too many uninsured and needs to cover millions more people to minimize their costs of uncompensated care. And the realization is starting to sink in with Americans that they would be required to have expensive, federally-mandated policies or pay a new tax.

The Finance Committee is expected to vote on its bill on Tuesday, then the full Senate plans to start debating health reform later this month.

The most astute observers of policy say that if the Senate passes a bill, Congress will enact a new health reform law, and they put the odds at 50-50. I can’t argue with th
at right now. And this frightens me because the American people are being completely shut out of this conversation.

We are in the field with some polling questions now and will report back to you next week.


A tax for a tax: Here’s just one example of how the bizarre, upside-down world of Washington works. Sen. Jon Kyl (R-AZ) tried and failed to convince his colleagues on the Senate Finance Committee last week to drop a $40 billion tax on medical devices from its health-reform bill, arguing correctly that the tax simply will be passed on to consumers in the form of higher costs.

Recalling that one of the primary goals of the reform effort is to lower the cost of health care and insurance, this tax makes little sense. Nonetheless, Kyl’s amendment was defeated.

But even more bizarre is that Kyl was forced to offer an “offset,” i.e., another tax, to get rid of a tax on medical devices that doesn’t even exist today.

This shows that the health-reform legislation moving through Congress is turning into a lose-lose-lose scenario for taxpayers, consumers, and patients: To eliminate one tax, members must come up with another to offset it. The tax increases inevitably will increase health costs for consumers. And the new taxes -— not to mention the crushing new rules and regulations on the health sector —- will discourage innovation and lead to lower quality care. That’s quite a trick, considering health “reform” is designed to benefit all of us -— at a cost of $1 trillion or more.

The new tax Kyl wanted eliminated would be levied on medical products that cost more than $100, such as glucose monitors, stents, hip replacements, and electric scooters.

The device companies thought they had a deal during negotiations over health reform earlier this year, voluntarily offering to cut costs. But Congress is looking in every corner to find revenue to pay for its government takeover of our health sector and decided their offering wasn’t enough.

“The device manufacturers stood up at the White House promising they would contribute to reform with real savings, and we expect they will live up to that promise,” Scott Mulhauser, a spokesman for Senate Finance Committee Democrats, said in a statement. “This reasonable fee will ensure that the industry helps contribute to that reform.”

The cost would be about $4 billion a year, almost half of what the entire industry spends on research and development. The tax would be imposed on revenues, not profits, so even companies that are losing money would be forced to pay. The tax clearly would inhibit investment and development of innovative medical products.


Doctors and government: Sally Pipes of the Pacific Research Institute organized a terrific debate last week at George Washington University with well over 100 medical students in attendance. Sally is the leading force behind creating the Benjamin Rush Society for medical students who are interested in market-based policy solutions to health reform.

Last week’s debate question was whether the government should be responsible for providing health care for all Americans.

The numbers are discouraging because, despite very convincing points made on the “No” side by Rep. Michael Burgess and David Gratzer, both physicians, at least 70% of the medical students still said they want government to be in charge. This is the next generation of physicians, folks. The great majority of them want a government-run health system. Where are we going to go if the medical profession has thrown in the towel?


Information is power: Get ready for the launch next week of our multimedia Health Reform Hub website -– all the news you can use about health reform from the best experts and analysts. Please watch for our announcement via email.


What We Would Have Told Obama

Donald J. Palmisano, William G. Plested II, and Daniel H. Johnson, Jr.
The Wall Street Journal, 10/05/09

The United States has the best health care in the world today, and thanks to the ever-expanding frontiers of science and medical innovation the brightest days are ahead, write Drs. Johnson, Palmisano and Plested, three former presidents of the American Medical Association. It is true that there are Americans who fall through the cracks of our medical system every day –- and as a caring nation, we must do what we can to expand access to medical care to those who need it. But this can be accomplished without a costly and inefficient government overhaul of the entire system, they write. If the goal of reform is to provide the best possible patient care, let’s take the government-controlled “public option” -– and any legislative trick that could lead to a public option -– off the table. It will result in long waiting lines to see a doctor, substandard care, and an end to medical discovery. Read More »

Health Overhaul Is Drawing Close to Floor Debate

Robert Pear and David M. Herszenhorn
The New York Times, 10/03/09

Pear and Herszenhorn provide a summary of the huge issues still remaining in the health reform debate. For example, the major House and Senate bills would require most Americans to carry insurance. This individual mandate could touch off an angry public reaction, especially if the penalties for violations are taxes collected by the IRS. Whether the government should require employers to provide health benefits to their employees, or pay a penalty, is still an open question. Lawmakers have not decided how to pay for the legislation, expected to cost about $900 billion over 10 years, though they insist that it will not add to the deficit. Further, Democrats are divided over whether to create a government insurance company to compete with private insurers and while Congressional leaders say they want to curb the explosive growth of health costs, it is unclear whether the final bill will make a serious effort to do so. Read More »

The Living Truth about “Death Panels”

Scott Gottlieb, M.D., and Elizabeth DuPre
American Enterprise Institute, 10/07/09

The controversy over aspects of the House health care legislation that have been inappropriately equated with “death panels” has obscured the real problems with these provisions. While equating these proposals with death panels is a careless exaggeration, the legislative language about end-of-life counseling is disturbing because of the intrusion it represents into patients’ discretion and the way doctors practice medicine. The provisions are needlessly prescriptive, and they invite the government into private and complex health matters. Proponents believe these policies can save substantial money, but this will not occur. Congress can fix the problem by simplifying the legislation and making the principal goal ensuring patients’ autonomy and providing high-quality care at the end of life. Read More »

The Conservative Case for Reform

Gov. Bobby Jindal
The Washington Post, 10/05/09

Governor Jindal describes 10 ideas to increase the affordability and quality of health care, including voluntary purchasing pools, lawsuit reform, requiring coverage of pre-existing conditions, transparency an
d payment reforms, tax-free health savings accounts, and refundable tax credits. Read More »


Applying the Lessons of State Health Reform

Michael Bond
National Center for Policy Analysis, 09/09

Lack of health insurance is a significant, persistent problem in New Jersey, Bond writes. The majority of the uninsured are employees of small firms and individuals who have to obtain coverage on their own. In the market for individually purchased insurance, premium costs in New Jersey are nearly twice the national average and among the highest of any state, Bond writes. New Jersey should reform its system with the successes of states like Florida and South Carolina in mind, while also remembering the lesson from Massachusetts. To significantly reduce the number of uninsured, New Jersey should foster competition and choice, and increase incentives to reduce costs and improve quality in both public and private insurance programs. Read More »

The Lesson of State Health-Care Reforms

Peter Suderman, Reason Magazine
The Wall Street Journal, 10/07/09

State governments have tested variants on most of the major components of the health care reform plans currently being considered in Congress, Suderman writes. The results have been dramatically increased premiums in the individual market, spiraling public health care costs, and reduced access to care. For example, health insurance premiums in Massachusetts, which implemented an individual mandate in 2007, have risen significantly faster than the national average. Further, the individual markets in New York, Washington, Kentucky, Maine, New Hampshire, New Jersey and Vermont “deteriorated” after the enactment of guaranteed issue. Individual insurance became significantly more expensive and there was no significant decrease in the number of uninsured. Read More »


Opting Out of Medicare

The Wall Street Journal, 10/04/09

Last week, Washington D.C. District Judge Rosemary Collyer handed a victory to three plaintiffs seeking the right to keep their Social Security benefits even if they reject Medicare, The Wall Street Journal reports in an editorial. The Department of Health and Human Services had sought to dismiss the suit challenged rules that say seniors who withdraw from Medicare Part A must also surrender their Social Security benefits. The judge ruled the plaintiffs have standing to contest their claim on the merits. Keep in mind that the plaintiffs are merely asking for the freedom to spend their own money for their own health insurance. With Medicare careening toward bankruptcy, letting seniors opt out could help save the taxpayers money. The plaintiffs argue, and reasonably so, that they have paid a lifetime of taxes into Social Security and shouldn’t have those benefits denied merely because they are willing to pay for their own medical care. Let’s hope the courts restore a genuine right to choose. Read More »


The Conscience of a Capitalist

Stephen Moore
The Wall Street Journal, 10/03/09

Whole Foods founder John Mackey talks about the firestorm caused by his August op-ed opposing government-run health care, which incited a boycott by some of his left-wing customers. What Mr. Mackey is proposing is more or less what he has already implemented at his company –- a plan that would allow more HSAs, more low-premium, high-deductible plans, more incentives for wellness, and medical malpractice reform. None of these initiatives are in any of the Democratic bills winding their way through Congress and the Whole Foods health care story has been largely ignored by proponents of a government-run system. But it could be a template for those in Washington who want to drive down costs and insure the uninsured, the Journal writes. Read More »

America's Health Care Solutions: Real Reform or Government Takeover?
Society for the Education of Physicians and Patients Event
Tuesday, October 13, 2009
7:00 p.m. – 9:00 p.m.
Pittsburgh, PA

Policy Boot Camp
Institute for Policy Innovation Event
Saturday, October 17, 2009
9:00 a.m. – 12:00 p.m.
Dallas, TX

Medicare Advantage Oversight and Operations Conference
Centers for Medicare and Medicaid Services Event
Monday, October 19, 2009
9:00 a.m. – 6:00 p.m.
Baltimore, MD

78th Annual Education Conference
Catholic Medical Association Event
October 21-25, 2009
Springfield, IL
Grace-Marie Turner will participate in a panel discussion on health care reform at 1:35 p.m. on Thursday, October 22.

Seventh Annual Insurance CEO Roundtable
Oregon Health Forum Event
Thursday, October 22, 2009
7:00 a.m. – 9:00 a.m.
Portland, OR