The Heat Is On


The tide has clearly shifted. I am back from nine days on the road, and in forum after forum, from Virginia to Illinois, to New Mexico, Louisiana, and Ohio, citizens are anxious about health reform and about the Obama administration's aggressive expansion of government spending.

While Democratic leaders in Congress and the "Gang of Six" senators pledge to press on with reform, it is hard for me to see how members, especially Democrats in marginal districts, will be able to vote for any version of the bills making their way through Congress.

The public is losing trust. And the White House still doesn't seem to get it that it's the substance of the legislation, not its failure at messaging, that is the problem. You can't keep changing the sales pitch when the product is the same, but the White House nonetheless perseveres, now saying it is our "moral obligation" to pass reform.

First the message was, we had to fix health care to fix the economy. Then, we had to spend more money to get health costs down. Next, we must have change because the status quo is unsustainable. And always there was the promise that nothing needs to change for anyone who likes their doctor and their health plan.

But it would be a mistake to believe they are giving up. Four out of five key congressional committees have passed health reform bills, Democrats still hold strong majorities in both houses of Congress, and the president is determined to sign a bill by the end of the year.

The echoes of the Clinton failure are eerily familiar. I recall Sen. Jay Rockefeller (D-WV) famously telling an audience in 1994, "We're going to pass health reform whether the American people like it or not."

This debate is far from over.



The term "divide and conquer" is taking on new meaning in the battles taking place within the Democratic party, especially over whether they will continue to fight for a "public plan." And the president is just one more person in the intra-party fray.

Politico, our new favorite website, reports: "President Barack Obama on Thursday said his health secretary didn't misspeak when she said that the administration doesn't consider a government-run health insurance option the only way to reform the health care system.

"Speaking to conservative talk-show host Michael Smerconish, Obama endorsed the stance taken by Health Secretary Kathleen Sebelius — suggesting that he is willing to move away from a government-run insurance option if it means striking a deal on health care reform legislation. Sebelius said Sunday that the public option is 'not the essential element' of reform."

But House Speaker Nancy Pelosi said yesterday that she absolutely cannot get a health reform bill through the House without a public plan and that she plans to press forward with her bill.

So we have the Speaker of the House and the President of the United States arguing before the country about a fundamental pillar of reform. Not good.



Losing discipline. In 2008, President Obama's campaign was unbelievably disciplined, with surrogates religiously sticking to their prepared scripts. But it's the president who now goes off script, giving credence to critics who talk about "death panels," joking about "pulling the plug on grandma," and equating his proposed government health insurance program with the post office. But the flubs don't end there:


  • The White House had to pull the plug on this week after an outcry from citizens who felt their government was asking other people to report them for speaking out against the president's health reform agenda. The scheme engendered both ridicule and fear — not easy to do.


  • Senior Obama advisor David Axelrod is getting hammered for what many perceive to be profiting from the television ads that pro-reform organizations are placing through his former Chicago firm, AKPD Message and Media, which still owes him $2 million for his buy-out.


  • The Cash for Clunkers program is running out of gas and angering dealers across the country who have junked perfectly good cars, filled out mountains of paperwork, and still wait for checks from Washington to compensate them for deals they already have closed. That, after Congress had to quickly infuse another $2 billion into the $1 billion program. If Washington can't even get this program right, how on earth do people think they can trust government with their health care?



Peggy Noonan writes in The Wall Street Journal today in "Pull the Plug on ObamaCare": "Looking back, this must have been the White House health-care strategy:

"Health care as a subject is extraordinarily sticky, messy and confusing. It's inherently complicated, and it's personal. There are land mines all over the place. Don't make the mistake the Clintons made and create a plan that gets picked apart, shot down, and injures the standing of the president. Instead, push it off on Congress. Let them come up with a dozen plans. It will keep them busy. It will convince them yet again of their importance and autonomy. It will allow them to vent, and perhaps even exhaust, their animal spirits. Various items and elements within each bill will get picked off by the public. Fine, that's to be expected. The bills may in fact yield a target-rich environment. Fine again. Maybe health care's foes will get lost in the din and run out of ammo. Maybe they'll exhaust their animal spirits, too.

"Summer will pass, the fight confined to the public versus Congress. And at the end, in the fall, the beauty part: The president swoops in and saves the day, forcing together an ultimate and more moderate plan that doesn't contain the more controversial elements but does constitute a successful first step toward universal health care.

"That's not what happened."



The quote of the week. . . comes from an article in The New York Times profiling Sen. Max Baucus, chairman of the Senate Finance Committee. "After speaking at a preventive-care conference here last week, he was swarmed by protesters. Or, in Mr. Baucus's words, 'agitators, whose sole goal was to intimidate, disrupt and not let any meaningful conversation go on.' There were a couple of people in
the crowd "with YouTubes," Mr. Baucus added.

"With YouTubes?" And this is the man who many people are trusting to lead the effort to reform one-sixth of our economy? This reminds me of Michael Scott from NBC's "The Office" saying, "Someone should get YouTube over here to film this." Good grief.

Next week, I'm off to Utah and Colorado. More to come. . .

Grace-Marie Turner


Recent News Articles and Studies

A Reform That's Scary
The Obama Health Plan: Rationing, Higher Taxes, and Lower Quality Care
The Whole Foods Alternative to ObamaCare
ObamaCare Is All About Rationing
Turning Uncle Sam into Peeping Tom
Health Co-ops: Slow Road to Government Care
Putting the Public's Money Where Its Mouth Is
Administrative Expenses of Health Plans
Should We Fight Today's War on Obesity Like the Last War on Tobacco?
Consumer Driven Health Plans Surpass HMOs in Popularity with Employees
Access Delayed, Access Denied: Waiting for New Medicines in Canada


A Reform That's Scary
Grace-Marie Turner, Galen Institute
Chicago Tribune, 08/21/09

President Obama's claims about what his health reform plan will accomplish — that health reform will lower costs, cover everybody and allow people to keep their health insurance — are simply not supported by facts, Turner writes. Many Americans are now rejecting these claims, and for good reason. Facts are stubborn things. And that's exactly why the White House is having such a tough time.


The Obama Health Plan: Rationing, Higher Taxes, and Lower Quality Care
Peter Ferrara, Institute for Policy Innovation and American Civil Rights Union
The Heartland Institute, 08/09

The health care overhaul bills championed by the Obama administration and congressional Democrats would result in less health care for consumers and higher taxes for all, writes Ferrara. The study finds that the Obama health care overhaul legislation would impose rationing of health care procedures that will deny consumers care they seek; restrict consumers' freedom of choice over doctors and hospitals; expand the number of health care entitlements to new groups of consumers; and trigger sharply higher taxes to pay for the overhaul. Real, long-lasting reform can be accomplished without the government taking over the health care system, Ferrara concludes.

The Whole Foods Alternative to ObamaCare
John Mackey, Whole Foods Market Inc.
The Wall Street Journal, 08/11/09

While we clearly need health care reform, the last thing our country needs is a massive new health care entitlement that will create hundreds of billions of dollars of new unfunded deficits and move us much closer to a government takeover of our health care system, writes Mackey, co-founder and CEO of Whole Foods. Instead, we should be trying to achieve reforms by moving in the opposite direction — toward less government control and more individual empowerment. Whatever reforms are enacted it is essential that they be financially responsible, and that we have the freedom to choose doctors and the health care services that best suit our own unique set of lifestyle choices, Mackey writes.

Mackey's op-ed piece has left some Whole Foods loyalists enraged, with many saying Mackey was out of line to opine against the liberal base that has made his fortune possible, ABC News reports. Countless Whole Foods shoppers have taken their gripes with Mackey's op-ed to the Internet, where people on the social networking sites Twitter and Facebook are calling for a boycott of the store. (In contrast, we are shopping at Whole Foods to show our support for Mackey's very sensible proposals and popular HSA plan.)

ObamaCare Is All About Rationing
Martin Feldstein
The Wall Street Journal, 08/19/09

Although administration officials are eager to deny it, rationing health care is central to President Barack Obama's health plan, writes Feldstein, former economic advisor to President Reagan. The Obama strategy is to reduce health costs by rationing the services that we and future generations of patients will receive. But a better solution to the problem of private overconsumption of health services would be to eliminate the tax rule that is causing the excessive insurance and the resulting rise in health spending. Alternatively, Congress could strengthen the incentives in the existing law for health savings accounts with high insurance copayments. Either way, the result would be more cost-conscious behavior that would lower health care spending.

Turning Uncle Sam into Peeping Tom
Diana Furchtgott-Roth, Hudson Institute
National Review Online, 08/20/09

Buried in the 1,017 pages of the House Democrats' health care bill is a little-noticed provision that for the first time could give the government access to the checking or credit card information of every American, Furchtgott-Roth writes. What is envisioned is a "machine-readable health plan beneficiary card" that, in addition to information about a person's medical history, will contain checking account or credit card information, so as to allow electronic payments and, if a person is lucky, occasional remittances. The required collection of such data is unprecedented. At no other time has the government sought to collect this type of financial information from everyone in America. With section 163 of the House health care bill, information we keep from our closest friends would be open to government snoopers. We would not know which bureaucrats were looking into our checking or credit card accounts, or what they intended to do with that information.

Health Co-ops: Slow Road to Government Care
Scott Harrington, Wharton School of the University of Pennsylvania and the American Enterprise Institute
The Wall Street Journal, 08/20/09

Government authorized co-ops would serve no useful purpose and would risk the same adverse consequences as a public plan, Harrington writes. Absent taxpayer subsidies or special rules, co-ops would not have any inherent advantage over private health insurers in establishing provider networks, negotiating with providers, and monitoring health care utilization and fraud. Proposed co-ops would instead require billions of dollars of "start-up" subsidies. More important, the creation of government-authorized co-ops would entail significant risk of ongoing subsidies by taxpayers (if not by private health insurance buyers), of substantial private insurance crowd-out, and of eventual conversion to a government-run plan. Compared with a public plan, government-authorized co-op
s could simply be a slower road to government health care. The potential benefits are nil; the potential costs are large.

Putting the Public's Money Where Its Mouth Is
Daniel P. Kessler and David W. Brady, Hoover Institution
Health Affairs Web Exclusive, 08/18/09

Although a large number of Americans may support major health reform, only a minority would be willing to pay for it, Kessler and Brady write. In a January 2009 nationally representative survey, researchers asked Americans whether they would be willing to pay the higher taxes necessary to cut the number of uninsured Americans by either a half or a quarter, through either Medicaid expansion or government subsidies to help low- and moderate-income people and their employers purchase insurance. Researchers also asked whether survey participants would pay higher taxes to support a government subsidy to help chronically ill people purchase health coverage. Tax increases sufficient to pay for expanding coverage even to one-quarter of the uninsured were simply too large to attract majority support. Only the subsidy for chronically ill people received majority support.

Administrative Expenses of Health Plans
Douglas B. Sherlock, CFA
Sherlock Company, 08/09

Private health plans' costs to administer benefits represented an average of only 9% of premiums across all policies sold, according to this study prepared for the Blue Cross and Blue Shield Association. Sherlock Company reviewed combined data from 36 Blue Cross and Blue Shield companies and non-Blues health plans participating in performance benchmarking studies in 2008. The report finds that prior estimates that private health plans' administrative costs were two to three times higher than actual costs were based on estimates that were so old that they did not reflect changes in industry practices, including advances in electronic processing that speed payment to providers and reduce costs. The report also finds that private plans perform those administrative functions that Medicare performs at a lower cost. Private plans are able to perform administrative functions for $12.51 per member per month compared to $13.19 per month for Medicare.

Should We Fight Today's War on Obesity Like the Last War on Tobacco?
Thomas P. Miller, American Enterprise Institute
The American, 08/07/09

The health consequences of obesity in the U.S. population remain a serious and growing problem. However, government officials, health experts, and the public still have trouble sizing it up accurately, Miller writes. Moderation in one's personal habits should be matched by moderation (or at least more humility) in public policy. Let's not refight the last war with the crude weapons of mass consumption used by the last generation of politicians and public health generals.

In an interview with CBS, Miller says that the advocates of this year's initial version of comprehensive health reform misread the public mood and could not jam it through the political process fast enough. But all of us, hopefully somewhat more chastened and humbler, will be back to consider health reform in another year in a different context.


Consumer Driven Health Plans Surpass HMOs in Popularity with Employees
United Benefit Advisors, 08/18/09

Consumer-driven health plans (CDHPs) in the U.S. have surpassed HMOs in covered employees, according to preliminary results released by United Benefits Advisors from their 2009 UBA Health Plan Survey, the nation's largest health plan benchmarking survey with 17,655 plans from 12,316 employers reporting. CDHPs grew at a rate of 33.9% this past year and now cover more employees (15.4%) than HMO plans (13.6%). The average cost increase for all CDHPs at 6.3% was slightly lower than that of the average of all plan types, which increased 7.3% this year. The 2009 UBA Health Plan Survey found the average employer contribution to a health reimbursement account (HRA) was $1,310 (up from $1,209 in 2008) for a single employee and $2,502 for a family (up from $2,274 in 2008).


Access Delayed, Access Denied: Waiting for New Medicines in Canada
Brett J. Skinner and Mark Rovere
Fraser Institute, 08/17/09

After enduring lengthy waits for the federal government to approve new prescription drugs, Canadian patients all too often discover that their provincial drug plans will not pay for these new medicines, according to this study from the Vancouver-based Fraser Institute. On average, Health Canada took 453 days to approve new drugs for sale, while the provinces added another 314 days to approve new drugs for coverage under provincial drug plans in 2007. Further, the study found that only 10.1% of new drugs approved by Health Canada as safe and effective in 2007 were being fully or partially reimbursed under provincial drug plans by the end of 2008.

Upcoming Events


Grace-Marie Turner speaking on the Morning Show with Sean and Frank
WCBM-AM Radio Broadcast
Monday, August 24, 2009, 8:35 a.m.
Baltimore, MD

Organs for Sale? A Conversation about the Organ Donor Shortage in the U.S.
American Enterprise Institute Event
Monday, August 24, 2009, 11:00 a.m. – 12:00 p.m.
Washington, DC

Grace-Marie Turner speaking on the Small Business Advocate
Nationally Syndicated Radio Broadcast
Tuesday, August 25, 2009, 7:30 a.m.

The Thousand-Page Prescription: Is a Federal Take-Over the Cure for America's Health Crisis?
Pacific Research Institute Event
Wednesday, August 26, 2009, 5:45 p.m. – 7:00 p.m.
San Francisco, CA

Utah Health System Reform Summit
Utah Office of Consumer Health Services Event
Thursday, August 27, 2009, 8:00 a.m. – 3:00 p.m.
Salt Lake City, UT
Grace-Marie Turner will speak at the conference, which is intended to be business-centric and focus on how businesses and their employees may benefit from defined contribution arrangements and the newly-established Utah Health Exchange. For more information, please contact Cheryl Smith at 801-209-9707 or

2009 Inaugural Freedom Conference
The Steamboat Institute Event
August 28-29, 2009
Steamboat Springs, CO
Grace-Marie Turner will speak about “Obama Budget Policies: The Ro
ad to Serfdom” at 2:15 p.m. on Friday, August 28.

Health Reform Then and Now: What Do We Need to Know?
American Enterprise Institute Event
Friday, September 11, 2009, 9:15 a.m. – 11:15 a.m.
Washington, DC



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 and 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

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