Trying Times

Things are getting more, not less, difficult for Democrats as they try to meet their deadline of getting a health reform bill through the Senate before Christmas and to the president by the end of January.

Just a few examples:


  • Docs object: A coalition representing more than 240,000 physicians and surgeons, including the powerful California Medical Association, sent a letter to Sen. Reid on Tuesday saying they oppose his bill. They oppose government intrusion into medical decision-making such as creation of a non-elected Medicare board with the authority to make law without congressional action, penalties on doctors if they don't participate in a new federal quality reporting program, and have six other major complaints.

  • Higher costs: The Congressional Budget Office reported on Monday that health insurance premiums will continue their steady upward march and may even rise faster for some if Sen. Harry Reid's health reform plan passes. The CBO says that families purchasing insurance in the individual market would see an increase of $2,100 in the year 2016, over and above increases they already will be facing as health insurance premiums continue to rise at about twice the rate of general inflation.

    That means those families would be paying $15,200 for health insurance if Reid's bill passes, and $13,100 if it doesn't. Families who get health insurance through small businesses will be paying $19,200 in six years, and those working for large firms, $20,100. While taxpayer-funded subsidies will reduce premiums for some, that is not the change the American people were promised.

  • Plummeting support: Public opinion polls nationally and in the states show a majority of Americans oppose the reform plan. On Monday, Rasmussen Reports said 53% of likely voters oppose "the health care reform plan proposed by President Obama and the congressional Democrats," and only 41% percent support it.

  • Move on: Democrat advisor James Carville and Democracy Corps released a new survey showing the White House and Congress had better change the conversation — and fast — to the economy, or they will face voter wrath next November. The issue is jobs, jobs, jobs, not health reform.

  • Wait for these campaign ads: And 58 Senate Democrats, including many from very vulnerable seats, voted explicitly yesterday to use $450 billion from Medicare to partly pay for reform, defeating an amendment by Sen. John McCain that would have stopped the cuts.

  • AARP changes its tune: The AARP is in the very awkward position of promoting legislation that would use such big Medicare "savings" to pay for reform, with quotes now surfacing about how they raised an uproar over much smaller cuts in years past.

    AARP legislative director John Rother said in 1993, "It would be devastating" if the Clinton administration were to cut $53 billion from the program for deficit reduction, adding that the late Sen. Patrick Moynihan's proposal to trim an additional $35 billion from the program would be unacceptable.

    In 1995, an AARP spokesperson told The Washington Post, "We're prepared to fight with everything we've got" when Congress proposed $283 billion in Medicare payment reductions.

  • Beat the clock: White House Budget Director Peter Orszag told reporters yesterday it "will be years to decades" before America can have an efficient health care system, even if Congress passes a major overhaul this year. There are indeed major and serious problems that must be fixed in our health sector and change will take a long time, but this doesn't help Sen. Reid with his sprint to beat the Christmas time clock.

  • It's $2.5 trillion: Sen. Baucus acknowledged in floor remarks on Wednesday that the real 10-year cost of the Senate bill will be $2.5 trillion, "…whether you use a ten-year number or when you start in 2010 or start in 2014, wherever you start at, so it is still either $1 trillion or it's $2.5 trillion, depending on where you start."

Sen. Reid says he wants to call for cloture on the bill as early as next week, clearly irritated by three days of debate before the first amendment vote on his 2,074-page bill that reengineers one-sixth of our economy.

His problem is that he has to satisfy the demands of 60 senators, many of whom have specific changes they want to make to the bill before they can call it their own. He's threatening to make senators work nights, weekends, and through the holidays to get it done. He's trying to cobble together a manager's amendment to wrap all the troublesome issues into one package, telling reporters he's working behind the scenes and focused on "getting my deals done."

You have to wonder what has happened to the democratic process. The American people are not being listened to, the bill doesn't achieve the promises that Democratic leaders and President Obama have made (as I detail in several commentary articles we highlight below), and Democrats realize that passing this bill may become a huge albatross to members seeking reelection.

What am I missing here?!

Small hr

A new study by Oliver Wyman, Inc. contradicts the CBO study, showing that premiums will rise by 54% in the individual market in five years if the Reid bill passes. The study, commissioned by the Blue Cross and Blue Shield Association, said the CBO underestimated the adverse selection that would occur with guaranteed issue provisions in the bill that allow people to wait to buy coverage when they need it, and that newly-insured people will be 20% more costly than those in the individual market today.

Further, there are regional differences in rating laws today that would blunt the cost increase in some states, but two-thirds of Americans live in states where average premiums will be much higher than the national average.

And don't miss the best and most important conference of the season, coming up this Wednesday at Union Station. Our conference on The Value of Innovation in Health Care will be a must. Click here for details. This is the conference that will keep you ahead of the curve in the health policy debate. We have confirmed former FDA Commissioner Andy von Eschenbach as our keynote lunch speaker. Other speakers include Reps. Paul Ryan, and Phil Gingrey, M.D.; policy experts such as Tevi Troy, Ph.D. and Thomas Barker, Esq.; and representatives from Walmart, Cerner, and other innovative health care distribution and device companies.

Small hr


This week's clip, from the Center for Medicine in the Public Interest, shows what would happen if the government got to both make th
e rules for and dominate the health industry, using a game of basketball as an analogy.

back to top Back to top


Promises, Promises — Violated at Every Turn

Grace-Marie Turner, Galen Institute
National Review Online: Critical Condition, 12/02/09

President Obama repeatedly promised the American people that his health reform plan would lower their health costs by $2,500 a year for a family. The Congressional Budget Office and actuaries from his own administration say it just ain't so, Turner writes. A report from the Centers for Medicare and Medicaid Services also finds that proposals intended to lower health costs in both the public and private sector would save only $2 billion over ten years, all of which is attributed to the increasingly controversial use of comparative-effectiveness research. Read More »

The Wall Street Journal writes in an editorial that the CBO is confirming that new coverage mandates will drive premiums higher, even as Democrats are declaring victory in claiming that these higher insurance prices don't count because they will be offset by new government subsidies. The bill will increase costs but it will then disguise those costs by transferring them to taxpayers from individuals. They say this is the paleoliberal school of brute-force wealth redistribution, and a very long way from the repeated White House claims that reform is all about "bending the cost curve." The only thing being bent here is the budget truth. Read More »

back to top Back to top

Home Health Cuts Will Backfire

Grace-Marie Turner, Galen Institute
The New York Times: Room for Debate, 12/02/09

The legislation before Congress uses the blunt instrument of new rules, regulations and payment cuts in what surely will be seen as a misguided effort to increase the efficiency of hospitals, nursing homes and home health agencies, Turner writes in this NY Times online forum. The chief actuary of the Centers for Medicare and Medicaid Services, Richard S. Foster, analyzed the impact of these cuts in a recent study and concluded that the proposal is unlikely to save the government money and could put many agencies out of business, jeopardizing access to care for patients. Taking a government hatchet to payments will not achieve the goal of enhanced productivity, Turner writes. That requires the creativity of market forces that are strongly out of favor with this Congress and administration. Read More »

back to top Back to top

The Wrong Operation for What Is Ailing Us

Grace-Marie Turner, Galen Institute
The Oklahoman, 12/02/09

The problems in the U.S. health sector are best addressed with small-scale, targeted reforms, not major surgery, Turner writes. The House and Senate bills would only make the problems in our health sector worse. The House bill would "bend the cost curve" — but in the wrong direction. Millions of people who have private health insurance would lose their current coverage and be forced into the new government health insurance plan. And individuals and businesses who don't comply with the plethora of new federal mandates would have to pay an estimated $182 billion in additional taxes and fines. Read More »

back to top Back to top

Ten Reasons Public Won't Buy Senate Health Care Plan

Grace-Marie Turner, Galen Institute
The Washington Examiner, 11/25/09

The Senate began this week amending Sen. Reid's 2,074-page health reform bill, but this bill cannot be fixed by any number of amendments. Turner describes ten reasons why the public will not support this budget-busting plan, including exploding costs, losing your current coverage, job-killing taxes on employers, increasing future health care spending, and mandates that cause higher premiums and more uninsured. Read More »

back to top Back to top

Turbulence Ahead

Grace-Marie Turner, Galen Institute
National Review Online: Critical Condition, 11/23/09

While Sen. Reid prevailed by winning the 60 votes needed to move his bill forward, the speeches during the debate last month foreshadow the problems ahead, Turner writes. All forms of parliamentary tricks are possible, and Chicago-style persuasion certainly will come into play, but poll after poll show that the American people do not like this legislation and want Congress to put the brakes on and start over. With calls to some offices running 90 to 1 against the bill, one hopes senators are listening. Read More »

back to top Back to top

Medicare Rx: A Season for Health and Wealth

Grace-Marie Turner, Galen Institute
Southeast Missourian, 11/22/09

With Congress debating many changes to the Medicare program, seniors should try to get the most out of this year's open-enrollment period, Turner writes. The Medicare drug-benefit program is designed to keep prices low by forcing private plans to compete against one another, which has resulted in greater choice and flexibility. And because seniors are smart shoppers, the drug benefit has proved to be among the most cost-effective government programs in history. Some lawmak
ers, though, want to change the program because they don't like involvement by the private plans, despite the fact that the program is highly popular with seniors. This could mean that seniors with low incomes would have access to fewer drugs while others wind up paying higher premiums. Read More »

back to top Back to top


Medicaid Meltdown: Dropping Medicaid Could Save States $1 Trillion

Dennis G. Smith and Edmund F. Haislmaier
The Heritage Foundation, 12/01/09

By piling billions of dollars in new costs onto states and imposing greater federal control over the states, Congress is recklessly increasing the likelihood that states will exert their own authority as sovereign units of government and end their participation in Medicaid entirely, Smith and Haislmaier write. The savings to state budgets are so enormous that failure to leave Medicaid might be viewed as irresponsible on the part of elected state officials. If all states withdraw from Medicaid, their collective savings would be $725 billion over the 2013-2019 period, but they would exceed $1 trillion over 10 years. The cost to the federal government to replace the state share of Medicaid, however, would be greater than $1 trillion as the entire Medicaid population would become eligible for the new, more expensive federal subsidies for premiums and cost-sharing. Read More »

back to top Back to top


Findings from the 2009 EBRI/MGA Consumer Engagement in Health Care Survey

Paul Fronstin
Employee Benefit Research Institute, 12/09

Individuals in consumer-driven health plans (CDHPs) are more likely than those with traditional coverage to exhibit a number of cost-conscious behaviors, to be more engaged in wellness programs, and to be more inclined to think that financial incentives matter in holding down costs, according to survey results released by EBRI. Highlights:

  • Cost-conscious behavior: Individuals in CDHPs in 2009 were more likely than those with traditional coverage to say that they had checked whether the plan would cover care (61% CDHP vs. 50% traditional); asked for a generic drug instead of a brand name (56% vs. 46%); and checked the price of service before getting care (35% vs. 25%).
  • Wellness program engagement: Slightly more than 70% of CDHP enrollees participated in a health risk assessment, compared with 56% of traditional plan enrollees. Similarly, 53% of CDHP enrollees participated in a health promotion program, compared with 42% among traditional plan enrollees.
  • Financial incentives: 31% of CDHP enrollees would change to doctors who used health information technology in response to lower cost sharing, compared with one-quarter of traditional plan enrollees.

Read More »


back to top Back to top


Can the New Health Subsidies Be Administered?

Gene Steuerle
Urban Institute, 11/23/09

Health reform is not just about health care. It's as much about welfare and taxation as it is about health, Steuerle writes. Health reformers imperil their legislation if they ignore decades of practical experience from administering comparably complex laws and systems. And as currently drafted, this round of health reform almost defies what we have learned about what can be administered. For starters, no information system right now can accommodate Congress's desire to provide a subsidy anywhere from $100 to $20,000 for families with incomes ranging from almost nothing to roughly $80,000. New health subsidies almost inevitably will add complexity, but let's at least make sure they can be administered and that hard-bought lessons in our welfare and tax systems don't go a-begging, Steuerle concludes. Read More »

back to top Back to top


The Fall of the World's Best-Selling Drug

Andrew Jack
Financial Times, 11/28/09

The Financial Times Magazine provides a detailed history of Pfizer's Lipitor and the significant changes taking place in the pharmaceutical industry. Lipitor was not the first, second or even fourth in a new class of drugs, called statins, introduced over the past two decades, but its particular efficacy, combined with intensive development, aggressive marketing and more than a little luck, soon propelled it into that elite group of products ever more desperately sought but rarely found by large drug companies: a "blockbuster," generating sales in excess of $1 billion a year. But the monopoly rights that made Lipitor so lucrative are now set to disappear, the Times reports. Once its patents expire in 2011, generic drug manufacturers will be able to sell it far more cheaply. That is good for patients, but bad for Pfizer as it struggles to maintain its pre-eminent industry ranking. It is also a sobering moment for the entire pharmaceutical industry: Many believe that the circumstances that gave rise to Lipitor's extraordinary success may never occur again. Read More »

back to top Back to top


The Value of Innovation in Health Care
Galen Institute Conference
Wednesday, December 9
, 2009
8:30am – 1pm
Washington, DC

Workplace Wellness Programs, Healthy Behaviors and Health Reform
Alliance for Health Reform Briefing
Monday, December 7, 2009
12:15pm – 2:00pm
Washington, DC

Author Talk with Dr. Tom Lee, author of Chaos and Organization in Health Care
George Washington University School of Public Health and Health Services Event
Tuesday, December 8, 2009
8:30am – 11:00am

Is the Personal Mandate to Buy Health Insurance Unconstitutional?
The Heritage Foundation Event
Wednesday, December 9, 2009
12:30pm – 1:30pm
Washington, DC