A Summit Primer

Republican leaders and the White House are publicly sparring over next week’s health-reform summit, with President Obama demanding the GOP bring its own comprehensive health plan and House Republican leader John Boehner asking the White House to “assure the American people that Democratic leadership is not putting together any kind of backroom deal or plotting any kind of legislative trickery” to get its legislation passed.

This does not bode well for an open dialogue at Blair House about a bipartisan agreement on health reform.

If actions speak louder than words, then it is relatively clear the White House is using the meeting as a set-up to make one last, big push to get its huge health-care bill passed before Easter.

Congressional operatives admit they are planning to move from bipartisanship to ultra-partisanship. Aides to Speaker Pelosi have outlined a tortured parliamentary path to enactment, demanding that the Senate use its 51-vote reconciliation process to ram through changes the House wants made to the Senate bill. Only then would the House hold its nose and vote for final passage.

The scheme won’t work, but the first challenge is convincing Democrats to start over. They need to admit that the problem wasn’t the marketing but the fundamental substance of Obamacare.

A parade of independent studies shows that the legislation before Congress fails to achieve its most basic goals and would create an avalanche of unintended consequences throughout the rest of the health sector and economy. The American people simply do not want this legislation, as evidenced in the latest Rasmussen poll showing that 61 percent of those surveyed say Congress should start all over on health reform.

Here is a reminder of what would happen if the Democratic leadership’s health-care legislation passed:

*Health costs would continue to rise. The Congressional Budget Office says health-insurance premiums would continue their steady upward climb under the Reid bill. Families purchasing insurance in the individual market would see an increase of $2,100 in the year 2016, over and above increases they already would be facing as health-insurance premiums continued to rise at about twice the rate of general inflation.

That means those families would be paying $15,200 for health insurance if the Senate bill passed, and $13,100 if it didn’t. Families who get health insurance through small businesses would be paying $19,200 in six years, and those working for large firms, $20,100.

PricewaterhouseCoopers released a study, commissioned by America’s Health Insurance Plans, that showed the cost of a family plan in 2019 would be $4,000 a year higher if reform passed.

*Federal health spending would increase. Chief Medicare actuary Rick Foster estimates that under the Senate bill, “Federal expenditures would increase by a net total of $279 billion” between 2010 and 2019.

*People would lose the coverage they have today. Steep cuts in Medicare Advantage would mean that at least one-third of seniors likely would lose their comprehensive Medicare Advantage coverage as their plans withdrew from the program, cut their benefits, or raised their premiums.

As for people with employer-sponsored insurance, the CBO says that 10 million of them could lose their current coverage. Independent studies by the Lewin Group found that a full “public plan” option would mean 83 million Americans could lose private coverage.

*Taxes would increase . . . on the middle class. The bills call for nearly $500 billion in new taxes, including taxes on insurance companies, Cadillac health plans, medical devices, and “the rich” — taxes that would hit the middle class and increase prices and health-insurance costs for consumers.

And the requirement that all individuals carry health insurance would come with tax penalties for non-compliance. Congressional tax expert Thomas Barthold told the Senate Finance Committee that these penalties would amount to an excise tax that would hit the middle class.

*The bills just wouldn’t work. The American Academy of Actuaries (AAA), in a 21-page letter to Congress, critiqued the House and Senate bills and said major changes must be made to avoid a series of damaging consequences.

For example, the AAA found significant problems with the new long-term-care entitlement program (the CLASS program) that the legislation would create. The AAA said that “given the way the program is structured, severe adverse selection would result in very high premiums that are likely to be unaffordable for much of the intended population, threatening the viability of the program.”

Medicare actuary Rick Foster also concludes that “there is a very serious risk that the problem of adverse selection would make the CLASS program unsustainable.”

*The deficit would increase. Former CBO director Doug Holtz-Eakin concludes that the legislation “can claim to be deficit-neutral only because during its first decade it offers 10 years of taxes compared with six years of subsidies, making it look far cheaper initially than it really is (while still costing more than $800 billion). The Republican staff of the Senate Budget Committee estimates that, fully implemented, Democratic legislation would cost $2.4 trillion over 10 years, nearly three times the cost projected by the Congressional Budget Office.”

Further, the Congressional Budget Office shows that the Senate bill double-counts Medicare savings. Savings to the Medicare program “would be received by the government only once . . . they cannot be set aside to pay for future Medicare spending and, at the same time, pay for current spending on other parts of the legislation or on other programs.”

Rick Foster makes the same point: A series of accounting maneuvers makes it appear that Medicare’s Part A trust fund would be in better shape under the Reid bill, but that’s not so. “In practice, the improved Part A financing cannot be simultaneously used to finance other Federal outlays (such as the coverage expansion under [the Reid bill]) and to extend the trust fund,” Foster writes. Foster also says that making the cuts to Medicare that Reid’s bill requires would “represent an exceedingly difficult challenge.”

*Doctors and hospitals would become insolvent. Achieving deficit neutrality depends on Congress’s making massive cuts to physician and hospital payments under Medicare — cuts that Congress has virtually no will to implement. But if the cuts were implemented, Foster says that in a decade, one out of five hospitals and nursing homes would become unprofitable, threatening patient access to Medicare services. The 21 percent cut in Medicare payments on March 1 is the next death-defying cliff Congress must figure out how to avoid.

*Job creation would suffer: The new taxes on businesses and individuals would further retard job creation and the economic recovery, and the higher health costs would discourage small businesses — the engine of job creation — from hiring. U.S. Chamber of Commerce president Tom Donohue said: “Congress, the administration and the states must recognize that our weak economy simply could not sustain all the new taxes, regulations and mandates now under consideration. It’s a sure-fire recipe for double-dip recession, or worse.”

WellPoint mined its own actuarial data to model the basics of the plan incorporated in the House bill, using data from 14 states where it runs Blue Cross plans. In all 14, it found that the legislation would drive up premiums for small businesses and individuals — the very people who get economies moving.

This is just a reminder of the damage that the Democratic bills would do. Republicans need to be ready to put their own ideas on the table at next week’s summit.

Published in National Review Online: Critical Condition, February 17, 2010.

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100 votes short? One of the more telling comments about the prospects for final passage of health reform came from a top House Democratic official quoted in a Politico article today entitled, "Family Feud: Nancy Pelosi at Odds with President Obama":

"Though Pelosi and other House Democrats have made it clear that they're angry with the Senate, they're also frustrated with the president, upset that he hasn't come to terms with the problems of getting legislation through the upper chamber — or done enough to overcome them.

"He wants a jobs bill, we get a jobs bill," the official said. "He wanted health care, we got health care. Then the answer is, 'You just need to twist enough arms to pass the Senate bill.' You can twist arms if you've got a handful of them to twist. You can't twist over 100 arms. There needs to be some reality check there."

So that must mean the House is a long, long way from having enough votes to pass the Senate bill. And the path to reconciling the differences is as difficult as driving the streets of Washington in this week's crippling snowstorms. Clearly the February 25 health care summit is a desperate effort by the White House to save the health overhaul effort.

The leaders should step back and look for the path that is possible. There are things that Congress could do but the changes need to be targeted as part of a step-by-step approach to reform, as I outline in my latest National Review commentary.

********

A summit primer: But the Democratic leadership nonetheless presses forward. The latest tactic is to convince people that health care in America is so broken that the Congress has a duty to pass the Senate bill "to get something done" — even if it means using a process that would throw any pretense of bipartisanship out the window.

Speaker Pelosi has outlined yet another tortured parliamentary scenario to get the measure passed before Easter, using the 51-vote reconciliation process in the Senate. That would be an admission that they don't even have enough Democratic Senate votes to get a bill passed!

The scheme won't work.

A parade of independent studies shows that the legislation before Congress fails to achieve its most basic goals, and it would create an avalanche of unintended consequences throughout the rest of the health sector and economy.

Here is a refresher with some points that defenders of patient-centered medical care could make at the summit to answer those who insist the Democratic leadership's bills must be passed:

  • Overall health costs will continue to rise: The Congressional Budget Office says health insurance premiums will continue their steady upward climb under the Reid bill. 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 the Senate 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.

    PricewaterhouseCoopers released a study, commissioned by America's Health Insurance Plans, which showed the cost of a family plan in 2019 would be $4,000 a year higher if reform passes.

  • Federal health spending will increase: Chief Medicare Actuary Rick Foster estimates that under the Senate bill, "Federal expenditures would increase by a net total of $279 billion" between 2010 and 2019.

  • People will lose the coverage they have today: Steep cuts in Medicare Advantage would mean that at least one-third of seniors likely would lose their comprehensive Medicare Advantage coverage as their plans withdraw from the program, cut their benefits, or raise their premiums.

    And as for people with employer-sponsored insurance, CBO says 10 million of them could lose their current coverage. Independent studies by The Lewin Group found that earlier versions of the legislation could mean 83 million Americans would lose private coverage.

  • Taxes will increase … on the middle class: The bills call for nearly $500 billion in new taxes, including taxes on insurance companies, Cadillac health plans, medical devices, and "the rich" — taxes that will hit the middle class and increase prices and health insurance costs for consumers.

    And the mandate that all individuals must carry health insurance comes with tax penalties for non-compliance. And that is indeed a tax, according to top congressional tax expert, Thomas Barthold. He told the Senate Finance Committee that the penalty for not complying with the requirement to buy health insurance is an excise tax that will hit the middle class.

  • The bills just don't work: The American Academy of Actuaries, in a 21-page letter to Congress, critiqued the House and Senate bills and said major changes must be made to avoid a series of damaging consequences.

    As just one of many examples, the actuaries described the significant problems with the new long term-care entitlement program the legislation would create, called the CLASS Act. The actuaries said that "given the way the program is structured, severe adverse selection would result in very high premiums that are likely to be unaffordable for much of the intended population, threatening the viability of the program."

    Medicare actuary Rick Foster also concludes that "there is a very serious risk that the problem of adverse selection would make the CLASS program unsustainable."

  • The deficit will increase: Former CBO Director Doug Holtz-Eakin concludes the bills "can claim to be deficit-neutral only because during its first decade it offers 10 years of taxes compared with six years of subsidies, making it look far cheaper initially than it really is (while still costing more than $800 billion).

    "The Republican staff of the Senate Budget Committee estimates that, fully implemented, Democratic legislation would cost $2.4 trillion over 10 years, nearly three times the cost projected by the Congressional Budget Office."

    Further, the Congressional Budget Office shows the Senate bill double-counts Medicare savings. Savings to the Medicare program "would be received by the government only once … they cannot be set aside to pay for future Medicare spending and, at the same time, pay for current spending on other parts of the legislation or on other programs."

    Rick Foster makes the same point: A series of accounting maneuvers makes it appear that Medicare's Part A trust fund would be in better shape under the Reid bill, but that's not so. "In practice, the improved Part A financing cannot be simultaneously used to finance other Federal outlays (such as the coverage expansion under [the Reid bill]) and to extend the trust fund," Foster writes.

    Further, Foster says that making the cuts to Medicare that Reid's bill requires would "represent an exceedingly difficult challenge."

  • Doctors and hospitals will become insolvent: Achieving deficit neutrality depends upon Congress making massive cuts to physician and hospital Medicare payments which Congress has virtually no will to do. But if the cuts are implemented, Foster says that in a decade, one out of five hospitals and nursing homes would become unprofitable, threatening patient access to Medicare services. The 21% cut in Medicare payments on March 1 is the next death-defying cliff the Congress must figure out how to avoid.

  • Job creation will suffer: The new taxes on businesses and individuals will further retard jobs creation and the recovery, and the higher health costs will discourage small businesses — the engine of job creation — from hiring. US Chamber of Commerce President Tom Donohue said: "Congress, the administration and the states must recognize that our weak economy simply could not sustain all the new taxes, regulations and mandates now under consideration. It's a sure-fire recipe for double-dip recession, or worse."

    WellPoint mined its own actuarial data to model the basics of the plan incorporated in the House bill, using data from 14 states where it runs Blue Cross plans. In all 14, it found that the legislation would drive up premiums for small businesses and individuals — the very people who get economies moving.

Just a reminder of the damage these bills would do. The problem is not the marketing. The problem is the substance of these bills, Mr. President. This is the wrong prescription.

CLIP OF THE WEEK

In this week's Clip of the Week, former Speaker of the House Newt Gingrich looks at what went wrong with Congress's massive health overhaul plan, and outlines his thoughts on crafting a health reform proposal focused on helping patients and the American people.

GALEN IN THE NEWS

Solutions or Showmanship at the Summit?

Grace-Marie Turner, Galen Institute
National Review Online: Critical Condition, 02/08/10

In his address in Baltimore two weeks ago, President Obama listed Republican ideas he says have been incorporated into Democratic health reform legislation. Getting these right could be a start for a bipartisan agreement, starting with inter-state purchase of health insurance, catastrophic health insurance for young people, high-risk pools for uninsured people with pre-existing conditions, and small business health plans. Republicans might add ideas incorporated in the platforms of both Senators McCain and Obama during the campaign, including agreement on the importance of targeted financial help for the uninsured, greater use of information technology and electronic medical records, and new incentives for care delivery. Add medical liability reform, and it's a good start. Read More »

Obama and Republicans Must Start Over From Scratch

Grace-Marie Turner, Galen Institute
The Buffalo News, 02/09/10

The only path to passage of reform legislation now is for the president and leaders in Congress to scrap the current approach and work with members from both sides of the aisle to come up with a smaller, more reasonable step-by-step approach to reform, Turner writes. So long as Congress and the president recognize that Americans value private health insurance and don't want huge disruptions in their medical care or massive new taxes and entitlement costs, a new conversation can begin toward achieving real health reform. Read More »

HEALTH REFORM

Health Reform Summitry's Limbo Rock

Tom Miller, American Enterprise Institute
National Journal Expert Blogs: Health Care, 02/11/10

Even when a televised "summit" gathers the highest level of government officials, the search for common ground may descend to the lowest common denominator, at best, or just provide a more artificial replay of their respective twin peaks of political posturing, at worst (e.g. trying to turn Rep. Ryan's Roadmap into Roadkill), Miller writes. He takes a look at several of the listed congressional Republican proposals that have drawn little serious scrutiny until now, including more seriously structured high-risk pool concepts, extending HIPAA's group market portability protections against pre-existing conditions, eliminating health insurance spending caps, and interstate insurance purchasing. Read More »

This is How the Health Care Overhaul Ends

Joseph Antos, American Enterprise Institute
The American, 02/09/10

The Blair House meeting will effectively end the health reform debate for this year, Antos writes. The president will be able to say he tried to reach out, but Republicans would not engage. Republicans will be able to say that Democrats would not budge from a position that the public has rejected. The two sides will, once again, talk past each other. We'll see in November which argument is more persuasive to voters — but the outcome of the election will depend much more on jobs and the economy, not the failure to pass a big health care bill. Read More »

The Antitrust Exemption For Health Insurers: Meaningful Or Not?

Jenny Gold
Kaiser Health News, 02/08/10

Kaiser Health News provides a short primer on the antitrust exemption for health and medical liability insurers, which the House is looking to repeal. Proponents say that the legislation would spur competition among insurers and bring down costs for consumers. But many antitrust experts say that ending the exemption — by repealing the 1945 McCarran-Ferguson Act — wouldn't significantly increase competition or reduce premiums. Read More »

Scientific Misconduct: The Manipulation of Evidence for Political Advocacy in Health Care and Climate Policy

George Avery, Purdue University
Cato Institute, 02/08/10

Science is increasingly being manipulated by those who try to use it to justify political choices based on their ethical preferences and who are willing to suppress evidence of conflict between those preferences and the underlying reality, Avery writes. In health care policy, critics have long worried about the inordinate influence of pharmaceutical and medical device manufacturers on research to show the safety and viability of new products. Recent information, however, shows that government agencies may cause more problems in this area — a worrisome development considering that health care legislation recently passed by the United States Senate would allow federal agencies to punish organizations whose researchers publish results that conflict with what the agency feels is appropriate. Read More »

Health-Care Reform Could Create a Litigation Explosion

Curt Levey, Committee for Justice
The Wall Street Journal, 02/10/10

By creating new federally enforceable rights and obligations, layers of complex federal regulations, and dozens of new programs and agencies — not to mention 50 newfangled "exchanges" — ObamaCare would guarantee a flood of litigation, Levey writes. The sources of litigation will be many, ranging from individual coverage disputes to other constitutional claims. In between, there's enough vague and ambiguous statutory language to keep lawyers employed for decades. That means more mone
y wasted on attorney fees, physicians focused on legal rather than medical considerations, and growing delays in our already overburdened courts.

Read More »

On Health Bill, GOP's Road Is A New Map

Robert Pear and David M. Herszenhorn
The New York Times, 02/09/10

Congressional Republicans have laid out principles and alternatives that provide a road map to what a Republican health care bill would look like if they had the power to decide the outcome, Pear and Herszenhorn write. When Republicans take President Obama up on his invitation to hash out their differences over health care this month, they will carry with them a fairly well-developed set of ideas intended to make health insurance more widely available and affordable, by emphasizing tax incentives and state innovations, with no new federal mandates and only a modest expansion of the federal safety net. Read More »

A Simple Health-Care Fix Fizzles Out

Keith J. Winstein
The Wall Street Journal, 02/11/10

An examination of one of the best-known examples of a comparative-effectiveness analysis shows how complicated such a seemingly straightforward idea can get, The Wall Street Journal writes. The "Courage" study, published in the New England Journal of Medicine in 2007, found that the most common heart surgery — a $15,000 procedure that unclogs arteries using a small scaffold or stent — usually yields no additional benefit when used with a cocktail of generic drugs in patients suffering from chronic chest pain. But physicians said the study was flawed and didn't account for individual patient needs, showing how difficult it is to apply mega studies to specific patients. Read More »

Events

County Health Rankings
Robert Wood Johnson Foundation and University of Wisconsin Briefing
Wednesday, February 17, 2010
9:30am-11:30am
Washington, DC

Would the Senate Health Care Bill Keep The Poor Poor?
Cato Institute Policy Forum
Monday, February 22, 2010
12:00pm
Washington, DC

The Promise of E-Health in the Developing World
Health Affairs Briefing
Tuesday, February 16, 2010
9:00am – 12:00pm
Washington, DC

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