Beware the Cost of ObamaCare

From the cost to taxpayers, to the loss of job-based coverage — and jobs! — to the devastating impact on innovation, ObamaCare already is leaving a wake of wreckage as it barrels toward implementation in 2014.

Let’s start with its terribly misguided approach to containing Medicare costs in the law — the Independent Payment Advisory Board (IPAB). At noon today, I will be on Capitol Hill participating in an important briefing on Medicare reform hosted by the American Enterprise Institute. At the briefing, we will release Galen’s latest paper, “Repealing and replacing IPAB with better solutions.”

In the paper, we warn that 15 IPAB technocrats will have unprecedented, and likely unconstitutional, powers to direct hundreds of billions of dollars in Medicare spending. Yet the tools they have are limited to making deeper and deeper reductions in payments. Price controls and centralized government micromanagement never work, and they won’t work any better when decisions are moved out of the political process and handed over to this unelected board.

Congress must instead focus on aligning incentives so providers are forced to compete to offer seniors the best value in health care, which experience with Part D proves will lower costs and provide a path to sustainability for Medicare.

There is and has been for years widespread agreement in the policy community that premium support is the right way to reform Medicare and begin to contain costs, and speakers at the AEI briefing will likely reinforce this. Part D is a successful, working model for premium support, and it is the path forward.

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11 million HSAs. America’s Health Insurance Plans finds that 11.4 million Americans were covered by HSA-eligible high-deductible health plans as of January, an increase of more than 14 percent from last year. This shows, once again, that market-based, consumer-friendly options are popular. Be sure to follow Roy Ramthun, “Mr. HSA,” for all the details.

With more than 11 million people in HSAs and another 11 million seniors voluntarily selecting private Medicare Advantage plans, people are voting to show that they want choice, competition, and private sector options in health care. The big question: Will ObamaCare allow them to survive?

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Cost and lost coverage: The cost of ObamaCare continues to demand our attention. Twenty-nine of the nation’s governors, all Republicans, sent a letter to congressional leaders this week saying that the escalating costs of Medicaid are “not sustainable.” They outlined seven principles for reform calling for flexibility and state control.

And the cost of ObamaCare to the federal government will be equally unsustainable. Former CBO director Doug Holtz-Eakin and Wisconsin Sen. Ron Johnson had a commentary in The Washington Post yesterday about the huge cost of entitlement expansion through the Exchanges.

It builds on the McKinsey & Company survey that I wrote about in my Wall Street Journal piece last week in which I concluded that as many as 78 million people with health insurance through their jobs will likely lose that coverage under ObamaCare and be shoved into the government exchanges.

Doug and Sen. Johnson validated the conclusion when they wrote:

A recent employer survey by McKinsey & Co. found that more than half of all American companies are likely to “dump” their workers into the government-run exchanges. If half of the 180 million workers who enjoy employer-provided care wind up in the exchanges, the annual cost of Obamacare would increase by $400 billion by 2021. If the other half eventually follows suit, and all American employees wind up in the exchanges — which we believe is a goal of ObamaCare — then the annual cost of the exchanges would increase by more than $800 billion. Like Medicare in 1965, this would be more than nine times the original cost estimate of $93 billion each year ($893 billion vs. $93 billion).

This extraordinary additional cost is being ignored by the administration. Rather than honestly discussing the likely cost of these new benefits, and ensuring that they match our budget realities, the White House has tried to dodge the issue. When Health and Human Services Secretary Kathleen Sebelius recently appeared before a Senate subcommittee, one of us questioned her about the likely cost of the exchanges. Instead of tackling the question head-on, she called it “cynical.”

But it’s not cynical to think that employers will choose to improve their companies’ bottom lines while enabling their employees to take advantage of generous heath-care subsidies. In fact, Joel Ario, Sebelius’s own director of exchanges, recently said that if the exchanges work well, employers may well say, “I can now dump my people into the exchange and it would be good for them, good for me.”

This isn’t cynicism; this is realism.

Once they are established, the costs of entitlement programs tend to spiral out of control. At a time when our nation is being crushed under a mountain of debt, it’s dangerous to bet that Obamacare will reverse the trend. That’s especially true when you consider the danger that the exchanges will experience far higher utilization than the Obama administration has budgeted.

At a recent hearing, the only defense that Health Secretary Sebelius could give as to why employers will keep offering coverage was a “ban on large employers even considering exchanges for at least the first five years.”

However, the Secretary’s assertion missed a critical point — Section 1312(f)(2)(B) of the statute prohibits employers from converting their employer plans to the Exchange as a group, but there is nothing stopping employers from dumping their coverage entirely and letting their workers migrate to the Exchange as individuals.

Beware the costs and consequences of ObamaCare. This law just can’t work.

CLIPS OF THE WEEK

Grace-Marie Turner on FOX Business

In this video, Grace-Marie Turner discusses how as many as 78 million Americans could lose their employer health coverage.
Watch now >>

 

 

Sen. John Barrasso on Why ObamaCare Is Wrong for America

Sen. Barrasso discusses Grace-Marie Turner’s recent Wall Street Journal op-ed, “No You Can’t Keep Your Health Insurance” and Why ObamaCare Is Wrong for America (Broadside/HarperCollins).

Watch now >>

 

 

GALEN IN THE NEWS

Repealing and Replacing IPAB with Better Solutions

Grace-Marie Turner
Galen Institute, 06/17/11

The Independent Payment Advisory Board (IPAB), created by Congress as part of the Patient Protection and Affordable Care Act as a means of containing Medicare spending, is unprecedented in the power given to unelected officials to direct hundreds of billions of dollars in federal spending. The IPAB will give unelected, unaccountable government appointees the power to make decisions about payment policy in Medicare that will ultimately determine whether millions of seniors have access to the care they need. The more people learn about the IPAB, the more they will insist that it be repealed and replaced with better solutions. What is needed is a plan that will achieve the goal of moderating Medicare spending but does it in a way that is not destructive to patient access to care and to quality and innovation. The IPAB will fail, and we must begin now with solutions that will work to make Medicare more sustainable for the future.

Read More »

Needed: Lessons in Leadership

Grace-Marie Turner
National Review Online: Critical Condition, 06/03/11

Former American Medical Assocation president Donald Palmisano, M.D., knows a thing or two about leadership, and the updated and amplified version of his book could not be more appropriate for our times. On Leadership: Essential Principles for Business, Political and Personal Success serves as an indispensible guide with lessons from successful leaders whose decisions have a sweeping impact on nations and from those whose decisions save a single life. The book is a mixture of true stories, including some of the author’s own, that exemplify the essential characteristics of a leader: courage, persistence, decisiveness, communication, creativity, and doing your homework. Each chapter ends with lessons learned. The lessons in the concluding chapter about “Emerging leaders in a time of crisis” seem most relevant: “It’s time for a new generation of leaders,” he declares, and he believes that the American people are ready.

Read More »

There’s No Choice But Change

Grace-Marie Turner
The Health Care Blog, 06/14/11

The escalating political debate about the future of Medicare reveals a fear of change coupled with the growing recognition that change is essential to sustain the program for the future. House Budget Chairman Paul Ryan recognizes that reality in his proposal to begin modernizing the program, starting 10 years from now. He wants the next generation of seniors to have more choices and lower costs through competition. They would get guaranteed private coverage through a modernized Medicare program that works much like the health program members of Congress have today. Voters face a clear choice. Do we want to continue down a path of price controls, restrictions on access and government-rationed health care? Or do we want to modernize Medicare — and save it — so seniors have the security of access to care and choices of coverage with competition driving costs down?

Read More »

HEALTH REFORM

There’s No Limit on Irresponsibility
By Joseph Antos, The American Square, 06/06/11

Coming soon: A bigger, costlier Obamacare
Ron Johnson and Douglas Holtz-Eakin, The Washington Post, 06/16/11

How US Health Care Reform Will Affect Employee Benefits
Shubham Singhal, Jeris Stueland, and Drew Ungerman, McKinsey Quarterly, 06/11

PPACA’s Effects on Maintaining Health Coverage and Jobs: A Review of the Health Care Law’s Regulatory Burden
Scott Harrington, Statement Before the House Energy and Commerce Health Subcommittee, 06/03/11

ObamaCare’s Next Constitutional Challenge
Richard A. Epstein and Mario Loyola, The Wall Street Journal, 06/07/11

Built To Fail: Health Insurance Exchanges Under The Affordable Care Act
Paul Howard and Stephen T. Parente, Kaiser Health News, 06/15/11

Putting Patients in Harm’s Way: A Doctor’s View of Obamacare
Hal C. Scherz, M.D., The Heritage Foundation, 06/14/11

Obamacare is a travesty of lawmaking procedure
George F. Will, Deseret News, 06/12/11

Practicing Medicine Versus Pushing Paper
Steven P. Ringel, Health Affairs, 06/11

Why Hasn’t Anyone Signed Up For the High-Risk Health Insurance Pools?
Megan McArdle, The Atlantic, 06/02/11

ER Docs Frustrated, Burned Out by Repeat Patients: Survey
Alan Mozes, U.S. News & World Report, 06/10/11

Mandates, which govern protections, become issue in health care reform fight
Jennifer Robison, Las Vegas Review-Journal, 06/05/10

Bridging the Gap Between Care and Compensation for Veterans
Sally Satel, Testimony before the House Committee on Veterans’ Affairs, 06/14/11

CONSUMER CHOICE MATTERS® NEWS

January 2011 Census Shows 11.4 Million People Covered by Health Savings Account/High-Deductible Health Plans (HSA/HDHPs)
America’s Health Insurance Plans, 06/11

MEDICARE AND MEDICAID

What Does Medicare Part D Say About the Ryan Plan?
Joseph Antos, RealClearMarkets, 06/15/11

Dems push for negotiated drug pricing in Medicare
Sam Baker, The Hill: Healthwatch, 06/16/11

Medicare Auctions for Durable Medical Equipment: Price Suppression and Research and Development Investment
Benjamin Zycher, Ph.D., Pacific Research Institute, 06/14/11

Moving Beyond Fee-For-Service: The Case for Managed Care in Medicaid
Michael Ramlet and Carey Lafferty, American Action Forum, 06/14/11

Auditing Access to Specialty Care for Children with Public Insurance
Joanna Bisgaier, M.S.W., and Karin V. Rhodes, M.D., The New England Journal of Medicine, 06/16/11

Even Obamacare’s Supporters Don’t Support the Rationing Board
Sally C. Pipes, Forbes.com, 06/13/11

Medicare Part D, Not Medicaid Rebates, Is the Model for Reform
Merrill Matthews, Forbes: Right Directions, 06/09/11

The Nuts and Bolts of Medicare Premium Support Proposals
Beth Fuchs, Ph.D. and Lisa Potetz, The Kaiser Family Foundation Program on Medicare Policy, 06/11

PRESCRIPTION DRUGS

The FDA Should Not Mandate Comparative-Effectiveness Trials
Scott Gottlieb, American Enterprise Institute, 06/11

Feds to Biotech Firms: Shut Up
Scott Gottlieb, The Wall Street Journal, 06/06/10

Events

Grace-Marie Turner on The Small Business Advocate
Nationally Syndicated Radio Broadcast
Monday, June 20, 2011
7:30am ET

Health Care Entitlements: The Road Forward
United States Senate Committee on Finance
Thursday, June 23, 2011
10:00 AM
215 Dirksen Senate Office Building
Washington, DC

Cash for Care?
The Cato Institute
Monday, June 27, 2011
4:00pm
Washington, DC

Health Care and Innovation in Japan
Hudson Institute
Monday, June 27, 2011
3:00pm
Washington, DC

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