Early Warning Signs

Fortune magazine has a blockbuster report out this week that shows major companies are beginning to recognize the extraordinary risk of continuing to provide health benefits for their workers under ObamaCare.

It reports that "many companies are examining a course that was heretofore unthinkable, dumping the health care coverage they provide to their workers in exchange for paying penalty fees to the government."

If this happens — and there is every incentive for companies to do this — the costs of the health overhaul law would skyrocket, and tens of millions of Americans would lose their job-based plans and be forced to get coverage in the publicly operated state exchanges due to begin in 2014. This will send fear into the hearts of working Americans who have been promised over and over that if they like their current coverage, they can keep their insurance.

Stability may not be an option. The risks to the companies of the fines, penalties, mandates, and exposure to risk under ObamaCare are just too great.

The companies' revelations came as a by-product of an ill-fated demand from Energy and Commerce Chairman Henry Waxman, who was furious at them for having the audacity to follow SEC rules and report the earnings losses they would suffer as a result of just one provision of ObamaCare (the loss of part of a tax break for providing retiree health benefits).

Rep. Waxman demanded every document from the four companies he subpoenaed that discussed what the bill would do to their health costs. He got 1,100 pages and quickly cancelled the hearing where the companies were slated to testify. Clearly Democrats did not want the full story to come out.

But now it has. The documents show the companies analyzed the impact of the law on their businesses — as any responsible company must do — and the conclusions are undeniable: It would be a lot cheaper to pay the fines for not providing coverage than to continue to provide health insurance, especially the ultra-expensive plans that will be required under the law.

"AT&T revealed that it spends $2.4 billion a year on coverage for its almost 300,000 active employees, a number that would fall to $600 million if AT&T stopped providing health care coverage and paid the penalty option instead," Fortune reported.

This process has done a great service to the country. These reports are the canary in the coal mine warning politicians, businesses, and consumers of the huge risk and upheaval that will be created by ObamaCare. No one can afford this new law, especially taxpayers who will foot a much bigger bill for coverage if companies opt out.

And if Republicans should take control of one or both houses of Congress this November, I have a bridge to sell to anyone who expects them to increase the mandate penalty to equal the cost of coverage. It won't happen. This law must be changed.

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Why ObamaCare is failing: Speaking of opting out, 19 states decided to let the Feds come in to run the new health risk pools I wrote about in my Wall Street Journal piece last week. And now we learn that 41 states have filed various challenges against ObamaCare. They simply are not going to stand for being treated like contractors and tax collectors for the federal government to implement a law that most say they cannot afford and that many say will subject their residents to unconstitutional mandates.

My husband and I had the privilege of attending the AEI Annual Dinner last evening and Gen. David Petraeus was the keynote speaker. What an elegant and beautifully organized speech he gave that has relevance for the health debate as well as the restructuring of the Army under his command.

Here's the essence of his speech (which, to his credit, I remember without taking a note): 1) Start with a Big Idea and get the idea right; 2) Communicate the plan up and down and across, but mostly down so those required to participate understand it; 3) Implement the plan carefully and with attention to the vision as well as detail; 4) Learn from the process to inject these lessons into the next phase of the operation.

ObamaCare doesn't meet Petraeus' test: The Big Idea was wrong because it made far too many changes with a careless disregard for the unintended consequences (see above). On communication, the White House and congressional leaders failed because they are ignoring how smart the American people are in actually understanding this unpopular plan. Implementation is getting more difficult by the day, both because it is such a poorly written bill and because those in charge of implementation, including states and businesses, are balking. And we have yet to see if they learn any lessons from this fiasco.

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Obama's fiery rhetoric: Columnist Mort Kondracke has a very insightful piece in today's CQ Politics. He examines the dichotomy between President Obama's fiery and at times reckless rhetoric blasting business and industry, right after he sidles up to them when he needs their help in passing his legislative agenda. "You almost suspect that the administration and its leader are bipolar," Kondracke writes.

After wooing and cajoling health sector companies to support his health overhaul plan, even convincing them to spend hundreds of millions of dollars on ads to promote it, he and his aides now are on the attack. HHS Secretary Sebelius said she expects to be in "hand-to-hand combat" with the insurance companies as she tries to rule how they operate.

In one moment, Obama criticizes the "vilification and over-the-top rhetoric [that] closes the door to the possibility of compromise," and in the next, he and his staff make unfounded and inflammatory accusations against business, scoring political points while denying facts.

Kondracke concludes that Obama is "a liberal without the slightest idea of how private enterprises create wealth — and [is] deeply suspicious of their practitioners." I believe that is right. Obama simply has no idea of the risk, the incredibly hard work, and the forces of competition that create the genius of the marketplace.

"But he knows that unifying rhetoric is what the country wants to hear. So, one day it's one thing. Another day, it's another. If this is right, it won't stop and it's very sad."

Sadly true.

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Crazy, immoral US health care: Don't miss our Clip of the Week today. The physician tapped to run the Centers for Medicare and Medicaid Services, Dr. Donald Berwick, gives a big wet kiss to the British National Health Service. "I am a romantic about the NHS; I love it," he says. "All I need to do to rediscover the romance is to look at the health care of my own country," which he calls "crazy" and "immoral."

A hat tip to Bob Goldberg of the Center for Medicine in the Public Interest for his article in The American Spectator about Berwick's 2008 speech on the 60th anniversary of the NHS.

Berwick has a reputation as a man strongly committed to coordinated care and delivery system reform. But he will fit right in to an administration that is hostile to the marketplace.

He talks of the "darkness of private enterprise," his distrust of market forces, the importance of r
edistribution, and the inestimable value of placing "politicians between the people served and the people serving them." And yet he implores the NHS to "put the patient at the center for everything that you do." How would that work, exactly?

We are in big trouble as Dr. Berwick will be in charge of administering big chunks of ObamaCare. Some of these quotes might be useful to bring up during his confirmation hearings.

CLIP OF THE WEEK

Dr. Donald Berwick on Britain's National Health Service

This week's Clip of the Week features Dr. Donald Berwick, President Obama's nominee to be Administrator of the Centers for Medicare & Medicaid Services, praising Britain's nationalized health system at a 2008 conference.
Watch now >>


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GALEN IN THE NEWS

Foster's Report Validates Fears

Grace-Marie Turner, Galen Institute
National Journal Expert Blogs: Health Care, 05/03/10

A report by a respected, non-partisan analyst shows that many of the promises made by ObamaCare's proponents will be broken, Turner writes. Medicare Actuary Rick Foster shows that businesses and families will face higher premiums, millions of people will lose their current coverage, seniors will have difficulty accessing care, and health spending will increase. Foster's analysis gives credence to the fears that the American people have about the law. When Americans begin to feel the impact of the overhaul law, they will see there was independent evidence of the false promises proponents made to gain votes to enact this unpopular legislation.
Read More »

Foster's analysis already has had an impact on decisions regarding one of the first programs launched under ObamaCare — the new temporary high-risk pools for the uninsured, Turner writes for TownHall.com. Congress allocated $5 billion to fund the pools until 2014 when enrollees would be transferred into new health insurance exchanges. But Foster found that the $5 billion "would be expended during the first 1 to 3 calendar years of operation." That means states could have to fill the funding void. Nineteen states told HHS Secretary Kathleen Sebelius, "No thanks," when she asked if they planned to run these new programs. The states don't want to be responsible for the added cost of the federal high-risk program and wisely chose to protect their taxpayers from yet another unfunded liability.
Read More »

High-Risk Pools Underfunded, Are Burden For States

Grace-Marie Turner discusses the recent state high-risk pool deadline, and why the 19 states who opted to have the federal government run their pools have the right idea.
Watch now »

HEALTH REFORM

Healthcare's Impact on the Low-Skilled Worker

Diana Furchtgott-Roth, Hudson Institute
RealClearMarkets, 05/06/10

In the name of expanding health care coverage, the administration is making it harder than ever for unskilled workers to get started in the workforce, Furchtgott-Roth writes, and they will be among those most disadvantaged by the health overhaul law. Every employer with more than 50 workers will either have to offer health insurance or pay an annual penalty of $2,000 for each "full-time equivalent worker." This will be bad news for employees who work part-time, because the extra cost of their mandatory health insurance or the penalty will be a large percentage of their wage. With 15 million Americans out of work, and millions more discouraged job seekers withdrawn from the labor force, Congress and the administration should focus on getting people back to work. Instead, with the health care bill, Washington is condemning more unskilled Americans to the ranks of the unemployed.
Read More »

Health Care Voucher Provision May Inflate Employer Costs

Jerry Geisel
Business Insurance, 04/19/10

A provision in the new health overhaul law requiring employers to give low-paid employees vouchers to purchase coverage in state health exchanges could sock employers with even bigger health insurance cost increases, Geisel writes. The voucher would not be tied to the plan in which the employee was actually enrolled, but rather equal to what the employer would pay if the employee were enrolled in whichever of its plans offered the largest premium contribution by the employer. The employee could use the voucher to purchase coverage from a state health insurance exchange. If the cost of that policy is less than the value of the voucher, the employee could pocket the difference in cash. As a result, employees remaining with the employer's plan would be the most costly to insure, pushing up the employer's insurance premiums. Experts say the provision is almost certain to result in adverse selection, inflating employer costs.
Read More »

Why the AMA Wants to Muzzle Your Doctor

Hal Scherz, Docs4PatientCare
The Wall Street Journal, 05/07/10

The American Medical Association (AMA), a major cheerleader for ObamaCare, is now trying to silence doctors who oppose it, Scherz writes. The organization wants to protect a monopoly that the federal government has created for it — a medical coding system administered by the AMA that every health care professional and hospital must use if they wish to get paid for the services they provide. This monopoly generates income of $70 million to $100 million annually for the AMA. That makes the AMA less an association looking out for doctors and more a special interest group beholden to Congress and the White House. Yet doctors have not relented. Doctors across the country are educating their patients about how ObamaCare will limit their freedom to make their own health care decisions. It is always medically ethical to tell patients the truth, which is what doctors are now doing by educating them about ObamaCare.
Read More »

Facing Obamacare: What the States Should Do Now

Dennis G. Smith
The Heritage Foundation, 05/03/10

The new health overhaul law will weaken the states in a variety of ways, writes Smith. ObamaCare strikes at traditional state authority and empowers bureaucracy. Further, new federal funds come with yards of strings attached that threaten to strangle states. When governors and state legislators realize that they have been reduced to mere agents and tax collectors for the federal government, bipartisan opposition from the states will be inevitable. At that point, the political momentum for repeal of the current law will build, and Congress and the states — as partners, not opponents — can start over and get health reform done right.
Read More »

The PPACA Penalty Provision and the Internal Revenue Service

Congressional Research Service, 04/30/10

The IRS will enforce the individual mandate penalty in the same manner as taxes, according to this C
RS report. The IRS would be able to assess the penalty based on a person's tax return. Nothing in the health overhaul law limits the IRS's authority or means for assessing the penalty. Given the reporting requirement that the law imposes on anyone who "provides minimum essential coverage to an individual during a calendar year," it seems likely that the IRS will use its matching program to determine which taxpayers should have included the penalty on their returns and then determine whether they did so. But it could take 10 to 18 months between the filing of a return and the IRS's issuing a letter proposing adjustments to the return based on the matching program. Thus, unless there is a change in procedures, it is unlikely that the IRS will assess the penalty on a return before routine processing of the return is completed.
Read More »

Our Big Problem

Theodore Dalrymple
The Wall Street Journal, 05/01/10

Obesity is spreading — and eating away at America's economy and health, Dalrymple writes. But by taking on responsibility for the health consequences of obesity, the government has given itself the locus standi to interfere in many aspects of human existence. If obesity kills, is it not the government's duty to prevent it? He who pays the doctor decides the prophylaxis. Positive encouragement of healthy eating won't work, nor mere printed warnings that some foods are unhealthy. As usual, therefore, prohibition beckons. Regulation of the sugar and fat content of ready-prepared and fast foods is likely to be proposed and perhaps eventually accepted, though not without a very fierce rear-guard action by the food industry. If John Doe will not eat his greens, Uncle Sam will make him — if necessary, by restricting the availability of other foods.
Read More »

Events

Pathways to Payment Innovation in a Post-Health Reform Era
Alliance for Health Reform Briefing
Monday, May 10, 2010
12:15pm – 2:00pm
Washington, DC

Hospital to Home: Improving quality and savings through innovative transition care
Philips Webinar
Wednesday, May 12, 2010
12:00pm – 1:15pm Eastern

Shred ObamaCare Rally
Citizens' Council on Health Care Event
Wednesday, May 12, 2010
11:45am – 12:45pm
St. Paul, MN

Making "Enhanced Use" of Health Information
The Brookings Institution Event
Friday, May 14, 2010
9:00am – 12:30pm
Washington, DC

Is Health Care a Right?
Benjamin Rush Society Debate
Friday, May 14, 2010
12:15pm – 1:15pm
Houston, TX

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