Pressing On

Highlights

Why the rush? Congressional leaders and the White House are pushing forward with their aggressive agenda to remake our health sector as though they are oblivious to the fear and outrage outside the Beltway and the pleas of the American people to put on the brakes.

Only one in five Americans say their health insurance coverage and the quality of the care they receive will improve if a bill passes Congress this year. But the Senate Finance Committee nonetheless presses on, slogging its way through more than 500 amendments to the chairman's 220-page "summary" of legislation — ("Read the bill! What bill?") No number of amendments can turn this dinosaur into a race horse. They need to start over.

The hubris is breathtaking in the decisions legislators are willing to make to order people's lives, intrude into their heath care decisions, and spend voters' and taxpayers' money for generations to come.

Why don't they stop? The best explanation I've heard is that the leadership is convinced that the reason ClintonCare led to such a huge defeat in the 1994 elections was that Congress failed to get a bill passed. If they would have just tried harder, the thinking goes, voters would not have retaliated against Democrats at the ballot box and instead would have thanked them for passing health reform.

Can they possibly be this out of touch? Inside the Beltway, anything is possible.

 

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A few truths that are making life very uncomfortable for the president and those supporting the major bills before Congress:

  • The individual mandate is indeed a tax. A top congressional tax expert told the Senate Finance Committee this week that the penalty for not complying with the requirement to buy health insurance is an excise tax that will hit the middle class.
  • Seniors will lose benefits and possibly even their chance to be in a private Medicare plan with proposed cuts to the Medicare Advantage program.
  • 100 million or more Americans are at risk of losing the health coverage they have now if the public plan and mandates are adopted.
  • Young people will be forced to pay more for coverage to subsidize older people.
  • Businesses will be less, not more, competitive when they face the higher taxes and the regulatory quagmire that the health reform bill would create.
  • Health costs will go up, not down, when health plans and medical devices and equipment are taxed and when the government requires everyone to have a rich benefits package.
  • Doctors will be paid less and will have even less freedom to make medical decisions than they do today.
  • States will be on the hook for billions more in spending if Medicaid is expanded to 133% of poverty.

The bottom line: It's a tax-and-spend plan for a government take-over of health care that will cause health costs to rise and mean a significant loss of freedom for all Americans.

The Wall Street Journal had a good collection of letters on Tuesday about a commentary by Finance Chairman Max Baucus, with writers criticizing "the idea that health-care costs and premiums will decline when policies are mandated to include everything under the sun" and for the ideas that health costs can be lowered by "increasing subsidies and squeezing businesses with additional taxes and fees with no adverse effect on the deficit or jobs."

The American people get it! Congress needs to wake up.

 

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So what is going to happen? It's really much more about politics now than policy. The White House wants a win any way possible. Liberals continue to spar over the "public plan" with their vision of wresting health care from the evil grip of private companies and into the safe hands of the government and labor unions. The Finance Committee hopes to complete work on its bill next week so the full Senate can vote on a bill shortly after. House leaders are pushing for action by mid-October.

The leadership is not planning any recesses in October in hopes they can get health care passed before members have any more opportunities to meet with their constituents.

The odds of passage diminish every day that the bills sit out there and people learn more about what is in them. In my 36 years in Washington, I've never seen anything like the apparent determination of the Congress to act against the will of the people.

 

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Cease and desist. The administration pushed too far in trying to muzzle Humana for telling members of its Medicare Advantage health plans that the legislation before Congress could lead to cuts in their benefits. Private plans are paid more but virtually all of the money must go back into benefits for seniors, which is why 11 million of them have signed up.

HHS Secretary Kathleen Sebelius sent a letter telling the company to stop sending out letters about the risks of Medicare Advantage cuts. The Senate's top Republican, Mitch McConnell, is from Kentucky, which happens to be the state where Humana is headquartered. Sen. McConnell and other top Senate GOP leaders wrote Sec. Sebelius to say they will hold up any more confirmations for appointees to her department until she retracts the cease-and-desist letter to Humana.

Tempers are starting to flare, both inside and outside the Beltway. That is not a bad thing.

Grace-Marie Turner

Recent News Articles and Studies

Is Medicare a Model to Be Followed or Avoided?
Compulsory Insurance Has Consequences
Medicaid Expansions
This Dinosaur Just Can't Be Changed
Fearful Symmetry: The Fall and Rise of Canada's Founding Values
Healthier Choice: An Examination of Market-Based Reforms for New York's Uninsured
Public Health Reform Option Would Hurt State Budgets
Current Health Insurance Reform Proposals vs. Real Reform and Economic Growth
Baucus Blunders
Doubling Down on a Flawed Insurance Model
Mandatory Insurance Is Unconstitutional
Canadian Health Policy Failures: What's Wrong? Who Gets Hurt? Why Nothing Changes
Some Firms Are Already Bending Stubborn Health Care Cost Curve

GALEN IN THE NEWS

Is Medicare a Model to Be Followed or Avoided?
The Wall Street Journal, 09/18/09

The Wall Street Journal published several responses to the op-ed on "Medicare Is No Model for Health Reform" by Grace-Marie Turner and AEI's Joe Antos. The responses noted that Medicare is making significant cuts in payments for the administration of cancer drugs and for diagnostic imaging and radiation treatment. At the same time, costs per covered life of Medicare beneficiaries have risen 10% faster per year since 1971 than premiums for private health insurance.

Compulsory Insurance Has Consequences
Grace-Marie Turner, Galen Institute
The Washington Examiner, 09/25/09

Americans increasingly fear that health reform is something Congress is planning to do TO them, not FOR them, Turner writes. Nowhere is this truer than with Washington's plan to require every American to have health insurance or face a hefty new tax. For starters, imposing an "individual mandate" means the government must define what constitutes acceptable health insurance. Hundreds of billions of dollars in new taxpayer subsidies would be needed to help Americans pay for this rich coverage. Families that don't buy insurance would face a new tax of up to $1,900 a year. Employers would be required to provide health insurance, help their workers pay premiums, or face penalties. The mandate also puts the federal government in the business of regulating health insurance, inevitably triggering price controls and leading to restrictions on access to care. Only one in five Americans say their health insurance coverage and the quality of the care they receive will improve if a bill passes Congress this year.

Medicaid Expansions
Grace-Marie Turner, Galen Institute
National Journal Expert Blogs: Health Care, 09/21/09

Congress should head back to the drawing board on Medicaid reform, Turner writes. While millions of people rely on Medicaid as a vital safety net, expanding this program to people up to 133% of poverty disadvantages the most vulnerable Medicaid recipients, most of whom have no other options for care, because they now must compete for dollars and benefits with millions more people.

This Dinosaur Just Can't Be Changed
Grace-Marie Turner, Galen Institute
National Review Online: Critical Condition, 09/21/09

More than 550 amendments were filed last Friday to the Senate Finance Committee's health reform bill, but short of starting over, it will be impossible to make enough changes to turn this dinosaur into a race horse, Turner writes in a blog post for National Review Online's Critical Condition blog.

Fearful Symmetry: The Fall and Rise of Canada's Founding Values
Brian Lee Crowley, Galen Institute and Atlantic Institute for Market Studies
Key Porter Books, 09/09

In the 1960s, Canada began a seismic shift away from the core policies and values upon which the country had been built. A nation of "makers" transformed itself into a nation of "takers." Crowley, senior fellow at the Galen Institute, argues that the time has come for the pendulum to swing back — back to a time when Canadians were less willing to rely on the state for support; when people went where the work was rather than waiting for the work to come to them. Crowley's book is required reading for anyone who is interested in where Canada began, where it's been, and where it's going.

STATE ISSUES

Healthier Choice: An Examination of Market-Based Reforms for New York's Uninsured
Stephen T. Parente, University of Minnesota and Tarren Bragdon, Manhattan Institute
Manhattan Institute, 09/09

Parente and Bragdon constructed a micro-simulation model to assess the potential impact on health premium costs and coverage of four individual insurance market reforms. The market reforms this paper proposes are: repeal of community rating and guaranteed issue laws, approval of HSAs for New York's individual insurance market, permission for individuals to shop for approved and affordable health insurance policies across state lines, and approval of "mandate-lite" plans, which permit insurers to offer plans with narrower coverage for sale in New York. While each of these reforms would have some effect on reducing the number of uninsured, repeal of New York's community rating and guaranteed issue laws would have the greatest impact, potentially reducing the price of individual insurance coverage by 42% and encouraging up to 37% of the uninsured to buy coverage.

Public Health Reform Option Would Hurt State Budgets
Janet Trautwein, National Association of Health Underwriters
The Detroit News, 09/18/09

A public option could make the terrible fiscal situation of the states even worse, Trautwein writes. Taxes paid by private insurers are a major source of income for most state governments. For instance, in at least 37 states, HMOs pay premium, income, corporate or franchise taxes, with rates as high as 3.5%. Similarly, Blue Cross Blue Shield plans, many of which are not-for-profit, pay premium taxes in at least 34 states. A new public insurance program run by the feds will poach customers from private insurers, driving many out of business in the process. And if there are fewer insurance companies — and fewer privately insured consumers — state insurance tax revenues will dwindle. For most states, such a drop in tax income would be catastrophic. More than 90% of taxes paid by insurers fund programs unrelated to insurance. Without tax revenue from insurers, state governments will likely be forced to cut funding for vital programs.

HEALTH REFORM

Current Health Insurance Reform Proposals vs. Real Reform and Economic Growth
Karen A. Campbell, Ph.D.
The Heritage Foundation, 09/23/09

The proposed surtax on high-income individuals to finance health reform would impose deadweight losses on the economy, depressing employment and slowing economic growth, Campbell writes. Imposing a penalty tax on higher incomes discourages entrepreneurs at the threshold from creating the additional value and causes those above the threshold to spend resources to avoid taxes rather than spending resources productively. The lost opportunities from the surtax would accumulate over time. By 2019, the economy would have 452,000 fewer jobs than it would have without the tax. The deadweight loss from the tax — the value of all the things that could have been produced with the resources that were used to comply with and legally avoid the tax — would steadily increase. This cost would average $46.7 billion per year from 2011 to 2019. Further, the high-income penalty is a very costly way to raise revenue. For every $1 of new tax revenue the government actually receives, taxpayers must pay $2.50 in other taxes and lost economic opportunities.

Baucus Blunders
Peter Ferrara, Institute for Policy Innovation
The American Spectator, 09/23/09

The Baucus bill is hazardous to your health, as well as your wallet, Ferrara writes. The Baucus plan will lead to higher health costs, runaway entitlements, high taxes and deficits, and cuts in Medicare. The Baucus bill also provides the foundation for government rationing of health care. This is done through bureaucracies granted the power to make decisions regarding "comparative effectiveness," which involves the government deciding what medical treatments work and what don't, and "cost effectiveness," which involves whether particular medical treatments are worth the cost and whether or when new medical technologies and breakthroughs can be adopted and implemented.

Doubling Down on a Flawed Insurance Model
John F. Cogan, R. Glenn Hubbard, and Daniel Kessler
The Wall Street Journal, 09/25/09

The proposed unprecedented intrusion of government into private markets will have adverse effects on people with insurance in both the short and long run, Cogan et al. write. With 30 million to 40 million newly insured persons under the administration's plan, aggregate health care demand will increase significantly. But when demand expands prices increase. Cogan et al. estimate that the higher demand will increase health insurance premiums for the typical family plan by about 10%. Because an employer-sponsored family insurance plan cost $12,680 in 2008, this translates into an increase of about $1,200 in the typical annual premium.

Mandatory Insurance Is Unconstitutional
David B. Rivkin, Jr. and Lee A. Casey
The Wall Street Journal, 09/18/09

Federal legislation requiring that every American have health insurance is profoundly unconstitutional, Rivkin and Casey write. Health care backers have framed the mandate as a "tax" rather than a regulation. But Congress cannot so simply avoid the constitutional limits on its power. Taxation can favor one industry or course of action over another, but a "tax" that falls exclusively on anyone who is uninsured is a penalty beyond Congress' authority.

In a separate paper, Michael Cannon of the Cato Institute writes that compulsory health insurance is actually "a species of national health insurance" and therefore the most sweeping element of all the bills before Congress. Rather than make health insurance compulsory, Congress should make it more affordable by letting individuals control their earnings and choose their own health plan from any state in the Union.

INTERNATIONAL HEALTH SYSTEMS

Canadian Health Policy Failures: What's Wrong? Who Gets Hurt? Why Nothing Changes
Brett Skinner
Fraser Institute, 09/21/09

The cost of the Canadian health care system is spiraling out of control, and Canadians will continue to face lengthy wait times and limited access to new medicines and medical technology unless governments liberalize the health care system and adopt reforms similar to those in Switzerland and the Netherlands, Skinner writes. In his book, Skinner details how Canada tends to be in the lowest ranks among all 30 OECD countries for availability of medical resources including physicians, diagnostic technologies, and new medicines per population, despite having one of the most expensive health care systems.

PATIENT-CENTERED HEALTH CARE

Some Firms Are Already Bending Stubborn Health Care Cost Curve
Roy Ramthun and Merrill Matthews, Council for Affordable Health Insurance
Investor's Business Daily, 09/15/09

President Obama claims we need to "bend the curve" on health care spending, but the only thing that bends that curve — without imposing strict price controls or rationing of medical care — are consumer-driven plans, Ramthun and Matthews write. For Cigna, costs in CDHPs in their first year went down 4%, vs. a 9% increase for those in the company's traditional plans. Aetna saw a decline of 10% for CDHPs vs. an 8% increase in traditional plans, and Uniprise experienced a 15% drop in CDHPs vs. a 7% rise in traditional plans. WellPoint compared its group insurance accounts in 2008 and found HMO and PPO rates went up 7% to 10% from the previous years, while CDHPs went down.

Upcoming Events

Prevention, Lab Tests, and Health Reform: What's the Score?
Sponsored by the American Clinical Laboratory Association, the Advanced Medical Technology Association, and the Results for Life Educational Campaign
Tuesday, September 29, 2009, 12:00 p.m. – 1:45 p.m.
Washington, DC
For more information, please contact Mark Brager at 202-434-7244 or mbrager@advamed.org.

Is it the Federal Government's Responsibility to Provide Health Care for All Americans?
Benjamin Rush Society Debate
Tuesday, September 29, 2009, 7:00 p.m. – 9:00 p.m.
Boston, MA

Budget Reconciliation and the Health Care Reform Debate
Congressional Health Care Caucus Event
Tuesday, September 29, 12:00 p.m. – 1:00 p.m.
Washington, DC

Is it the Federal Government's Responsibility to Provide Health Care for All Americans?
Benjamin Rush Society Debate
Wednesday, September 30, 2009, 5:00 p.m. – 7:00 p.m.
Washington, DC

5th Annual Consumer Health Care Congress
September 30 – October 2, 2009
Alexandria, VA
Grace-Marie Turner will participate in a panel on "Promoting Personal Accountability for Healthy Lifestyle Behaviors and Health Status" at 9:20 a.m. on October 1.

How American Health Care Killed My Father
Cato Institute Capitol Hill Briefing
Thursday, October 1, 2009, 12:00 p.m.
Washington, DC

MCRA 2009 Annual Conference
Managed Care Risk Association Event
October 5-7, 2009
Nashville, TN
Grace-Marie Turner will speak about "What is on the horizon for Health Reform?" on Wednesday, October 7.

 

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Health Policy Matters is a weekly newsletter containing summaries of timely and informative studies and articles on free-market health reform. It features a commentary by Grace-Marie Turner on the major developments a
nd issues of the week as well as summaries of writings by participants in the Health Policy Consensus Group and other articles of interest from the health policy world, plus announcements of coming events. Health Policy Matters is published by the Galen Institute, a not-for-profit public policy organization specializing in information and education on health policy. For more information about the newsletter and our organization, please visit our website at www.galen.org.

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