A Speech, Not a Plan


President Obama's speech last night soared with oratory but fell flat in delivering on his promise to present details or any substantive new policy initiatives for his health reform plan.

He may get a few days of lift from the passion and cheers in the House chambers, but the hard realities of policy will continue to chill prospects for getting sweeping reform legislation enacted. A few examples:


  • Paying for reform. The president said "the plan I'm proposing will cost around $900 billion over 10 years" and that "we've estimated that most of this plan can be paid for by finding savings within the existing health care system, a system that is currently full of waste and abuse."

    He dropped talk of higher taxes on the rich to pay for the reform plan, perhaps after realizing that much of the burden would fall on small businesses. So that means that, apart from some new taxes on health insurance (which will just be passed along to consumers), the massive coverage expansions will be paid for by curtailing Medicare and Medicaid waste and abuse and making them more efficient.

    That doesn't pass the laugh test. I testified before the House Energy and Commerce Committee in 2008 about seven rules that the Bush administration had written to curtail documented fraud and abuse in the Medicaid program. The fraud was documented by the Government Accountability Office and the Inspector General at the Department of Health and Human Services — things such as using Medicaid money to take people shopping for party dresses and to Bingo games.

    But Congress has done everything it can to stop implementation of the Bush rules to stop documented fraud. What do you think the chances are that they will be able to pay for their $900 billion reform plan mostly with savings from Medicare and Medicaid?


  • Rising health costs. Gone is the campaign promise that every family will save $2,500 a year on health costs when the Obama plan is implemented. It has been replaced with new language that says reform "will slow the growth of health care costs for our families, our businesses, and our government."

    Slowing the growth of health costs is a much different agenda. But even with that, he offered little or nothing of substance to explain how he would achieve that goal.


  • Keeping the coverage you have now. The president has changed his rhetoric about no one losing the coverage or doctors they have now. Now he says "nothing in this plan will require you or your employer to change the coverage or the doctor you have." The operable word is "require."

    But the employer mandate is still in place, and the president still wants the new public plan. So there would be every incentive for employers to drop coverage, pay the new tax, and send their employees packing to the public plan, many involuntarily. The Lewin Group says between 88 million and 120 million Americans would find themselves in the new government-run health program. But they wouldn't be required to join.

    Do you find that reassuring?

So what we heard last night was a campaign speech which was, by the way, alarming in his threats to those who oppose him.

Promises made are not promises kept. Michael Tanner of Cato has a good new paper out that details the very difficult challenges of getting from promise to policy.

The president began his speech by saying: "We know we must reform this system. The question is how." We're still waiting for answers.



Our own focus group: I gave a speech last evening sponsored by Birthright Israel NEXT in New York City to a wonderful audience of young people. In my talk, I explained the pillars of the reform plans making their way through Congress, all of which continue to be part of the president's agenda, took questions, and then we watched the president's speech together on TV.

These young adults are going to be paying the bills for many years for the promises being made today, and we stayed for nearly an hour afterward discussing the speech. Several of them said that they continue to be "dazzled" by his speaking style and will support anything he says. They said the president's call to "make health reform a moral duty" made them more willing to accept compromises.

Others were more critical: "I don't trust that he will be able to do what he says. He said during the campaign he would get rid of earmarks, but the stimulus bill was nothing but pork." Another said: "There's just no way that he can cover more people and not have it cost any more money. It's just political talk, and the spending frightens me."

All of them wanted more details on how he actually will fulfill the promises he made.

Don't we all.



The uninsured: About 16 million previously uninsured people vanished last night during the president's speech. "There are now more than 30 million American citizens who cannot get coverage," he said. In every other speech he has given, he has cited Census Bureau numbers showing about 46 million people uninsured. The latest numbers came out today, showing the number virtually unchanged.

If solving the problem of the uninsured is as easy as changing the numbers, we should have thought of that before!

It's not clear what he's subtracted. Here's a great chart that breaks this down.

Legal and illegal immigrants account for about 10 million and therefore would not be classified as "American citizens." About 10 million more are eligible for existing government programs but are not enrolled. Another 9 million make more than $75,000 and are assumed to be able to afford coverage. And 6 million are eligible for but not enrolled in employer-sponsored coverage.

The way I see it, only about 12 million Americans are without affordable options for coverage. Let's keep going Mr. President. We can solve this problem!

Grace-Marie Turner

Recent News Articles and Studies

Targeted Ideas to Improve Health Care
ObamaCare's Crippling Deficits
Health Exchanges: Different Political Railroad Tracks to the Same Station?
Read the Union Health-Care Label
Do Health Care Reformers Fear A Reading Public?
Bending the Curve: Effective Steps to Address Long-Term Health Care Spending Growth
Working Paper: A Preliminary Comparison of Utilization Measures Among Diabetes and Heart Disease Patients in Eight Regional Medicare Advantage Plans and Medicare Fee-for-Service in the Same Service Areas


Targeted Ideas to Improve Health Care
Grace-Marie Turner, Galen Institute
American Maggie, 09/08/09

The American people do not want a $1 trillion plan that includes a new government-run health program, a big expansion of the Medicaid program that is bankrupting the states, and that forces employers and individuals to purchase health insurance defined in Washington, Turner writes. Instead, President Obama and Democratic leaders could gain bipartisan support by moving forward with a targeted approach that would improve access to quality, affordable care by: 1) providing help for the uninsured with a refundable tax credit; 2) giving people more options in purchasing coverage, including buying policies across state lines; and 3) providing a stronger safety net for people who have trouble buying coverage. These targeted changes do not require huge new government bureaucracies and would be embraced by a public skeptical of a radical health care overhaul, Turner concludes.

Turner also discusses the health reform debate and the public option in two posts for National Review Online's Critical Condition blog and describes the effect of health reform on Obama's legacy for The Hill's Congress Blog.


ObamaCare's Crippling Deficits
Martin Feldstein
The Wall Street Journal, 09/07/09

The total cost of ObamaCare over the next decade likely would be closer to $2 trillion than to $1 trillion, Feldstein writes. The House health care bill gives a large subsidy to millions of families with incomes up to three times the poverty level if they buy their insurance through one of the newly created "insurance exchanges." The CBO's cost estimate of $1 trillion understates the number who would receive the subsidy because it ignores the incentive for many firms to drop employer-provided coverage. It also ignores the strong incentive that individuals would have to reduce reportable cash incomes to qualify for higher subsidy rates.

Health Exchanges: Different Political Railroad Tracks to the Same Station?
Thomas P. Miller, American Enterprise Institute
Health Affairs Blog, 09/04/09

Sponsors of health reform bills in the House and Senate seemed to have learned all the wrong lessons, or none at all, from previous attempts at constructing health insurance exchanges, Miller writes. In just about every case, the decision was made to go for more rather than less, under the temptation that a national exchange won't be able to adequately "reform" the insurance marketplace if it leaves too many stray sheep outside its fences. There is a better way. The short version is to start exchanges only at the state level. Use incentives rather than compulsion to encourage enrollment in more sustainable coverage options. Then try to leave everyone else alone while the insurance market adjusts, rather than scare them more with political power grabs that are simply too much, too fast, too untested, and too suspiciously unlimited.

In a separate Health Affairs study, Miller discusses performance measurements for physicians with co-authors Troyen Brennan and Arnold Milstein. Miller was also recently interviewed by the BBC about Obama's health reform plan — for which he suggested additional "political grief counseling" services later this fall. You can listen online here.

Read the Union Health-Care Label
Mark Mix, National Right to Work Committee
The Wall Street Journal, 09/10/09

ObamaCare is a Trojan Horse for more forced unionization, Mix writes. Tucked away in thousands of pages of complex new rules, regulations and mandates are special privileges and giveaways that could have devastating consequences for the health care sector and the American economy at large. For example, the House bill has a $10 billion provision to bail out insolvent union health care plans. It also creates a lucrative professional-development grant program for health care workers that effectively blackballs nonunion medical facilities from participation.

Do Health Care Reformers Fear A Reading Public?
Sen. John Cornyn and Benjamin E. Sasse, University of Texas
Forbes.com, 09/09/09

An unprecedented number of voters are actually reading the draft health reform legislation, Sen. Cornyn and Sasse write. At overflowing town hall events, broad cross-sections of America — patients to providers, students to seniors, small-business owners to corporate executives — are reciting page and line numbers from the 1,000 page bills. In most cases, questioners have shown greater command of the technical substance of these proposals than many who have voted for the legislation. Beltway insiders do not seem to realize that average Americans no longer take politicians' vague promises at face value. By paying serious heed to the public's fear — that a Washington that doesn't read its bills is as likely to break what works as fix what's broken — Obama can rebuild the trust of the American people in their leaders.


Bending the Curve: Effective Steps to Address Long-Term Health Care Spending Growth
The Brookings Institution, 09/09

Ten health policy experts, led by Brookings' Mark McClellan, offer steps to reduce the growth of health spending while also improving the quality of health care. The proposal recognizes that standard short-term measures to address rising costs, like reducing prices, are not sufficient. Instead, legislation must support necessary changes and improvements in health care by reforming payment systems, regulations, and institutions that currently prevent patients from consistently getting the best quality care at the lowest cost. The group of experts also includes AEI's Joe Antos and Mark Pauly of the University of Pennsylvania.


Working Paper: A Preliminary Comparison of Utilization Measures Among Diabetes and Heart Disease Patients in Eight Regional M
edicare Advantage Plans and Medicare Fee-for-Service in the Same Service Areas

America's Health Insurance Plans, 09/09

This report describes a new effort to compare patterns of care among patients in Medicare Advantage (MA) plans and in Medicare's traditional fee-for-service (FFS) program. The utilization measures include hospital admissions and days, re-admissions, "potentially avoidable" admissions, as well as outpatient, emergency room (ER), and office visits. Highlights:

  • Medicare Advantage patients had 18% fewer inpatient days and 12% fewer inpatient admissions compared with Medicare FFS patients.
  • MA patients had 30% fewer ER visits and 44% fewer readmissions compared with FFS patients.
  • MA patients had a 22% increase in office visits and a 6% increase in outpatient visits compared with Medicare FFS patients.


Upcoming Events

Health Reform Then and Now: What Do We Need to Know?
American Enterprise Institute Event
Friday, September 11, 2009, 9:00 a.m. – 11:15 a.m.
Washington, DC

Ask the Experts About Reform: Where Are We Now and Where Are We Headed?
Alliance for Health Reform Briefing
Monday, September 14, 2009, 12:15 p.m. – 2:00 p.m.
Washington, DC

Listening to Summer: Town Hall Lessons
Congressional Health Care Caucus Policy Forum
Tuesday, September 15, 2009, 8:00 a.m. – 8:50 a.m.
Washington, DC
Grace-Marie Turner will speak at this event. For more information, please contact Eric Wilson.

Medicaid Health Plans in Health Reform: A Policy Discussion
Medicaid Health Plans of America Event
Wednesday, September 16, 2009, 9:00 a.m. – 10:00 a.m.
Washington, DC
For more information, please contact Thanh Buscarini.

Great Expectations: What Lawmakers Must Do to Reform U.S. Health Care
National Press Club Newsmakers Luncheon
Friday, September 18, 2009, 12:30 p.m. – 2:00 p.m.
Washington, DC
For more information, please contact Nora O'Sullivan.

The Joint Defense of Freedom in American Medicine: A Briefing
Americans for Free Choice in Medicine Event
Saturday, September 19, 2009, 2:00 p.m. – 5:00 p.m.
Washington, DC

Universal Health Care: Are the People Ready for It?
Woodrow Wilson International Center for Scholars Event
Monday, September 21, 2009, 3:00 p.m. – 5:00 p.m.
Washington, DC

Harlingen Healthcare Reform Dialog Meeting
Texas Health Institute Event
Thursday, September 23, 2009
Harlingen, TX

The Economic Consequences of Chairman Rangel's Health Care Tax Increases
The Heritage Foundation Event
Wednesday, September 23, 2009, 12:00 p.m. – 1:00 p.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 www.galen.org.

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