The Fix Is Not In

Cost remains the central issue in the health-reform debate, and the news last week was not good for leaders on either side of Capitol Hill — first with a vote in the Senate blocking a deficit-spending trick and then with a new report showing the House bill would actually increase health costs.

The vote last Wednesday on the “Doc Fix” stunned everyone, even, apparently, Majority Leader Harry Reid (D., Nev.). His plan was to shove $247 billion under the carpet by pretending that a permanent increase in Medicare’s payment rates to doctors didn’t count toward the costs of overall health reform. But he ran into a firestorm of opposition, with twelve Democrats plus Independent Joe Lieberman voting with all 40 Republicans to reject the ploy (final vote 47–53).

The reason: The fix wasn’t paid for. No one wants to see doctor payments cut by 21 percent, as they will be without congressional action, but the Reid plan would have added to the deficit — not “one dime,” but $247 billion. Fiscally responsible Democrats and Republicans joined forces to just say no.

This means it is going to be much more difficult for members of Congress to stuff the whole reform package into the $900 billion bag the president has given them. The $400 billion in Medicare and Medicaid “savings” will not happen, and Reid and other leaders are still scrambling to find a mix of $500 billion in new taxes that can win enough votes to pass. No one has put together that magic formula.

In the House, an analysis of the main health-reform bill gave members heartburn. The Republican leader of the Ways and Means Committee, Rep. Dave Camp (Mich.), asked the chief actuary of the Centers for Medicare and Medicaid Services, Rick Foster, to analyze the bill his committee had produced.

Foster concluded that if the bill passed, health expenditures would be 2.1 percent higher than they would be otherwise. Further, just 93 percent of those in America would have health insurance, millions of people would lose the private health coverage they have now, and individuals and businesses would pay $182 billion in penalties over the next decade for violating federal health-insurance mandates.

Speaker Nancy Pelosi (D., Calif.) discounted the findings, saying that she has moved past the House Ways and Means bill and therefore the analysis was moot. But most insiders say that bill is indeed the basis for the negotiations taking place behind closed doors.

So let’s get this straight: Congress is planning to add at least $1 trillion to federal spending, throw 13 million seniors off of their Medicare Advantage plans, impose half a trillion dollars in new taxes, require individuals and businesses to buy health insurance that is more expensive than many can afford now — and tax them if they don’t comply — and all of this will cause health-care costs to actually go up? And we still don’t get to universal coverage?

While the American people clearly believe that health reform is needed, the policies being developed in Congress are increasingly out of step with public opinion. The Galen Institute just released a new poll in which we asked people what they think of the proposals that Congress is considering (rather than the innocuous, mushy questions many other pollsters ask).

We found that people don’t want to be forced to buy health insurance or pay a new tax, they don’t want seniors’ Medicare benefits to be cut to pay for coverage for the uninsured, and they don’t want the middle class to have to pay higher taxes. Instead, they want a targeted approach to reform.

It is not clear whether Congress will eventually heed the will of the American people, but it is clear that the leadership is charging ahead with a sweeping and aggressive reform plan without a full airing and debate.

— Grace-Marie Turner is president of the Galen Institute, a non-profit research organization focusing on market-based health reform.

Published in National Review Online: Critical Condition, October 26, 2009

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Cost matters: The cost of health care remains the central issue in the health reform debate, and that's why the news this week was so bad for leaders on both sides of Capitol Hill.

  • First, the Senate. Wednesday's vote on the "Doc Fix" stunned everyone, even, apparently, Senate Majority Leader Harry Reid. His plan was to shove $247 billion under the carpet and pretend that a permanent increase in Medicare's payment rates to doctors shouldn't count as part of overall health reform. But he ran into a firestorm of opposition, with 12 Democrats plus Independent Joe Lieberman voting with all 40 Republicans to reject the ploy (final vote 47-53).

The reason: The fix wasn't paid for and would have added to the deficit. No one wants to see doctor payments cut by 21%, as they will be without congressional action, but the Reid plan would have added to the deficit — not "one dime," but 247 billion "dollars." Fiscally responsible Democrats and Republicans joined forces to just say no.

This means it is going to be much more difficult to stuff the whole reform package into the $900 billion bag the president has given them.

Reporter Chris Frates of Politico wrote after the vote: "The fact that Democrats, who hold a 60-vote majority, could not muster even 51 votes for the bill is a sign of rocky sledding ahead for health care reform."

I still think that the price tag is the biggest problem Sen. Reid faces. The $400 billion in Medicare and Medicaid "savings" are an illusion, and he and other leaders are still scrambling to find a mix of $500 billion in new taxes that can win enough votes to pass a bill. No one has put together that magic formula yet.

  • In the House, an analysis of the main health reform bill gave members heartburn because it said that their plan would bend the cost curve alright, but in the wrong direction.

Ways and Means Committee Republican Leader Dave Camp asked the chief actuary of the Centers for Medicare and Medicaid Services, Rick Foster, to analyze the bill his committee had produced.

Foster concluded that health expenditures would be 2.1% higher in a decade than if the bill didn't pass. Further, just 93% of those in America would have health insurance, millions of people would lose the private health coverage they have now, and individuals and businesses would pay $182 billion in penalties over the next decade for violating federal health insurance mandates.

Speaker Pelosi discounted the findings, saying that she has moved past the House Ways and Means bill and that meant the analysis was moot. But most insiders say that bill is indeed the basis for the negotiations taking place behind closed doors.

So let's get this straight. Congress is planning to add at least $1 trillion to federal spending, throw 13 million seniors out of their Medicare Advantage plans, impose half a trillion dollars in new taxes, require individuals and businesses to buy health insurance that is more expensive than most can afford now — and tax them if they don't comply — and all of this will cause health care costs to actually go up? And we still don't get to universal coverage?

Good grief! Can they possibly get this done?

*******

A great new poll: We released a new poll this week that is getting a lot of attention, and for good reason. We asked people what they think of the proposals that Congress actually is considering (rather than the innocuous mushy questions many other pollsters ask).

As I described in a piece for today's Washington Examiner, people don't want to be forced to buy health insurance or pay a new tax, they don't want seniors' Medicare benefits to be cut to pay for coverage for the uninsured, and they don't want the middle class to have to pay higher taxes, but they do want a targeted approach to reform.

Are they getting the message, do you think?

(Kudos to Jeff Lungren for his help with the survey project.)

*******

An analogy: Many people say we should pass the health reform legislation Congress is developing because "We have to do something!" But that's like saying if you have a painful kidney stone, you should have your kidney removed!

What kind of medicine would it be to do a major expensive operation, sacrifice an organ, and make the patient much sicker? With time and medicines the stone will pass while the otherwise healthy kidney takes over, and prevention can help keep the problem from recurring.

Unfortunately, Congress is planning radical surgery with its sweeping legislation that would impact one-sixth of our economy — and the lives of millions of people for years to come. The American people are doing everything they can to tell Congress they don't want the surgery it is prescribing for our health sector. They want them to be more careful, take time to make sure they are doing the right thing, and go more slowly.

And always, politicians considering health care reform would do well to heed the physicians' principle to do no harm. Be sure to sign our petition to tell Congress just that.


 

GALEN IN THE NEWS

Humpty Dumpty Health Reform?
Grace-Marie Turner, Galen Institute
National Review Online: Critical Condition, 10/19/09

Many of the deals that the White House has been cutting all year with health industry leaders are starting to show the cracks and strains of political pressures in Congress, Turner writes. The challenges they face include cost, universal coverage, tax increases, Medicaid expansion, and mandates. The 80-20 rule will prevail: The big players seem to agree on 80% of reform, but there is 20% that the various parties just can't live with. And it's a different 20% for each one. This deal is going to be incredibly difficult to hold. Read More »

HEALTH REFORM

The Insurance Fix
Thomas P. Miller, American Enterprise Institute and James C. Capretta, Ethics and Public Policy Center
National Review, 11/02/09

The Obama administration has become intent on passing sweeping government reform under the guise of "health insurance reform." However, substantial improvements to private insurance markets can be much more targeted and straightforward, Miller and Capretta write. These include changes to HIPAA and COBRA provisions to ensure portability between insurance plans, measures to prevent higher premium upticks for customers moving from group to individual insurance markets, ensuring that market entrants only face a single risk evaluation, and opportunities for the uninsured to opt back in to the system under new protections. Read More »

Ill-Conceived Ranking Makes for Unhealthy Debate
Carl Bialik
The Wall Street Journal, 10/21/09

During the health care debate, one damning statistic keeps popping up in newspaper columns and letters, on cable television and in politicians' statements: The U.S. ranks 37th in the world in health care. The trouble is, the raking is dated and flawed, and has contributed to misconceptions about the quality of the U.S. medical system, Bialik writes. Among all the numbers bandied about in the health care debate, this ranking stands out as particularly misleading. It is based on
a report released nearly a decade ago by the World Health Organization and relies on statistics that are even older and incomplete. Further, the ranking was faulted because it judges health care systems for problems — cultural, behavioral, and economic — that aren't controlled by health care. A WHO spokesman says the organization has no plans to update the rankings, and adds, "We would not consider it current." Read More »

Competition and Health Insurance
Scott Harrington, American Enterprise Institute and University of Pennsylvania's Wharton School
The Wall Street Journal, 10/21/09

Repealing the antitrust exemption for health insurers would not significantly increase competition, and it would not make health insurance coverage either less expensive or more available, Harrington writes. There is no evidence that the exemption has increased health insurers' prices or profits or contributed to higher market concentration. Repealing the McCarron-Ferguson antitrust exemption would also not lower the cost of malpractice insurance, or prevent future malpractice insurance crises. It would instead tend to reduce rate accuracy and undermine competition in already fragile malpractice markets. Read More »

Individual Health Insurance 2009: A Comprehensive Survey of Premiums, Availability, and Benefits
America's Health Insurance Plans, 10/09

The latest in a series of AHIP surveys shows that the market for individually purchased coverage is more affordable and accessible than may be widely known. Nationwide, annual premiums averaged $2,985 for single coverage and $6,328 for family plans in mid-2009. The survey also highlights the contrast in premiums between the young and old: For single policies, annual premiums ranged from $1,350 for persons under age 18, to $5,755 for persons aged 60-64. Premiums varied by state, reflecting a variety of factors, including premium rating and underwriting rules. For example, average annual premiums for single policies reported in the survey ranged from $2,606 in Iowa to $6,630 in New York. Read More »

Taxing the Sick: How "Fees" in Health Care Reform Hurt Patients
Alex Brill
American Enterprise Institute, 10/09

The Senate Finance Committee's health care bill imposes fees on brand name pharmaceutical and medical device manufacturers. These fees are essentially excise taxes, Brill writes. While they have some political appeal given the common but erroneous perception that these companies will be forced to forgo some of their alleged "excessive" profits, the new taxes will essentially require sick people to subsidize health care for other sick people. In addition, the legislation calls for an increase in the Medicaid drug rebate that drug manufacturers must pay to Medicaid. The increase in the rebate will also cause manufacturers to raise prices on consumers. Read More »

Read more about health reform proposals on the Health Reform Hub >>

Events

SAVE THE DATE!
Politicians, Public Options, and Patients: What the Canadian Experience Teaches Us About Political Control of Health Care
Galen Institute and Hudson Institute Event
November 16, 2009
4:00pm – 5:30pm
Washington, DC
Please RSVP to events@hudson.org or call 202-974-2400.

Public Opinion on Health Reform: What Do the Polls Mean?
Alliance for Health Reform Event
Friday, October 23, 2009
12:15pm – 2:00pm
Washington, DC

78th Annual Education Conference
Catholic Medical Association Event
October 21-25, 2009
Springfield, IL

Expanding Health Care Coverage to all Americans
CQ-Roll Call Group Forum
Monday, October 26, 2009
8:00am – 11:00am
Washington, DC

Addressing Pre-Existing Conditions: Bringing Affordable Coverage within Reach
Congressional Health Care Caucus Policy Forum
Monday, October 26, 2009
12:30pm – 1:30pm
Washington, DC

Dispelling Health Care Myths
Commonwealth Club Event
Monday, October 26, 2009
6:00pm – 7:30pm
San Francisco, CA

 

 

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