Change Vs. Security

Highlights

ABC News anchor Charlie Gibson shook his head after Wednesday night's broadcast from the White House, frustrated he had not been able to draw out more details from President Obama about the sweeping health reform plan that he is pushing.

Gibson, as well as the doctors, patients, businesspeople, and others in the audience, posed some tough questions. But most of the president's answers came from his standard talking points and went unchallenged. He spoke for 45 minutes of the 75 minutes of actual airtime.

His comments about who controls medical decisions got a lot of attention. A neurologist in the audience asked the president if he would say that he wouldn't seek extraordinary help for his wife or daughters if they became sick and if the government health plan he's proposing limited the tests or treatment they could get.

"President Obama struggled to explain today whether his health care reform proposals would force normal Americans to make sacrifices that wealthier, more powerful people — like the president himself — wouldn't face," ABC News wrote in a follow-up report.

"If it's my family member, if it's my wife, if it's my children, if it's my grandmother, I always want them to get the very best care," Mr. Obama said, just as virtually everyone else would.

But in response to another question from a woman whose 105-year-old mother received a pacemaker at age 100, Mr. Obama said families need better information so they don't unthinkingly approve "additional tests or additional drugs that the evidence shows is not necessarily going to improve care."

Then he added: "Maybe you're better off not having the surgery, but taking the painkiller." Ouch! That was not what people wanted to hear because it reinforced fears about government involvement in medical decisions, as The Wall Street Journal editorializes today.

Change vs. Security: People want details about the president's plans and more information about how it is going to affect them. They aren't getting that, but instead, vague promises that everything will be okay and "we need to pass reform" for the sake of the country.

That's not good enough. Mr. Obama's dilemma is that when it comes to health care, most people pick security over change.

ABC News' detailed article recapping the event is worth reading. And here are the two questions I had ready to ask if I had been called on.

No crystal ball, but . . . Here's what I see happening with the reform debate:

President Obama and Congress have been on a fast track in hopes of voting on major health reform legislation this summer. But committees are bogged down and cracks are starting to show as they overreach with policies that would have a sweeping impact on the lives of 300 million Americans and on our economy for decades to come.

Passage of a major health reform bill is anything but a done deal. The White House and Democratic leaders in Congress are finding it increasingly difficult to get support for the major provisions of their plan, including an employer mandate and a government health insurance program. They are having even more difficulty finding the money to pay for their sweeping overhaul, and liberals are ready to oppose any plan that doesn't include universal coverage.

I don't have a crystal ball, but it is increasingly likely that they will try to pass a scaled-back bill later this year and call it a "down payment" on health reform. Then they'll try to boost their margins in Congress in 2010, promising passage of the rest of the reform agenda in 2011.

Just a guess. But this is going to be a marathon, not a sprint. It is just unthinkable that Congress could pass one bill to reengineer one-sixth of our vast economy and "fix what's broken with health care in America," as Mr. Obama promises.

Lessons from Massachusetts: Galen Research Director Tara Persico and I have a major new paper out this week (which we have been working on for months) entitled "Massachusetts' Health Reform Plan: Miracle or Muddle?"

It is so very important to study Massachusetts' efforts to achieve universal coverage because the state uses many of the same tools that Congress is considering to overhaul the nation's health sector. Massachusetts even had a head start with a low uninsured rate, broad bi-partisan support for the reform plan, and billions of dollars in subsidies from the federal government.

Well over half of those newly enrolled in health coverage in Massachusetts are in free or heavily subsidized plans, causing significant budget pressures for the state. Physician and medical workforce shortages have been exacerbated, with half of the state's internists and family physicians closing their practices to new patients. And rising costs for health insurance and health care continue to pose the biggest challenge to the success of the reform effort.

The state is facing growing opposition from businesses and individuals to the mandates. Citizens are also frustrated that they are required to have expensive health insurance but have difficulty finding physicians who will see them. Further, the promise has not been fulfilled that hospital costs would go down as fewer uninsured people have sought care in emergency rooms.

Among the Massachusetts reform initiatives that are being considered by Congress: an individual mandate, employer play-or-pay mandate, a national health insurance exchange, strict regulation of private health insurance, expansion of Medicaid, and a government-mandated health benefits package.

Before proceeding to implement this experiment on a nationwide scale, it would be wise to learn more about how the reform plan in this sophisticated, highly-motivated state is developing.

And a quick note about the week's opinion polls: The New York Times released a survey on Sunday saying "Americans overwhelmingly support substantial changes to the health care system and are strongly behind one of the most contentious proposals Congress is considering,
a government-run insurance plan to compete with private insurers." It also says, "most Americans would be willing to pay higher taxes so everyone could have health insurance."

Not so fast. On Wednesday, The Washington Post released its own poll, showing "broad public anxiety about the potential impact of reform legislation."

Digging a little deeper, "Most respondents are 'very concerned' that health-care reform would lead to higher costs, lower quality, fewer choices, a bigger deficit, diminished insurance coverage and more government bureaucracy," the Post wrote.

In particular, 62 percent said they support the idea of having the choice of a government health insurance plan, but when they were told that meant some insurers would go out of business, support dropped sharply, to 37 percent.

People are afraid of change, especially in a tumultuous economy. That again could well be the Achilles Heel of health care, since more than 80 percent of those polled said they were happy with their own care and coverage.

And about support for higher taxes in the Times' poll: Only 43 percent were willing to pay as much as $500 in new health care taxes, hardly a drop in the bucket of the actual price tag.

Grace-Marie Turner

Recent News Articles and Studies

Massachusetts' Health Reform Plan: Miracle or Muddle?
The Case for Real Health Care Reform
The Dangers of Fannie Mae Health Care
The President's Trojan Horse
Something for Nothing
Physician Disempowerment: A Transatlantic Malaise
Who Are the Uninsured? An Analysis of America's Uninsured Population, Their Characteristics and Their Health
Socialized Medicine Through the Eyes of a Recipient
Comprehensive Health Reform Discussion Draft

GALEN IN THE NEWS

Massachusetts' Health Reform Plan: Miracle or Muddle?
Grace-Marie Turner and Tara Persico
Galen Institute, 06/26/09

This new Galen paper provides an overview of the Massachusetts health plan and its progress so far toward the state's twin goals of lowering costs by expanding health coverage, using many of the tools Congress is considering. Other states and federal leaders should watch to see if Massachusetts can find the magic formula before proceeding down the same path.

HEALTH CARE REFORM

The Case for Real Health Care Reform
Joseph Antos
American Enterprise Institute, 06/23/09

Antos outlines fundamental principles that must guide health care reform. The "new vision" for American health care advanced by major reform proposals is actually an old one backed up by new regulations and restrictions, including mandates, tight insurance regulation, and the creation of a new public plan. These proposals are flawed and will not work as advertised, writes Antos. He stresses five principles for real health reform: support those who need the help; promote effective competition; promote informed choice; create appropriate financial incentives; and look beyond the confines of medical care. Neither a market-based reform nor a highly regulatory approach to reform will produce an instant cure for the problems facing the health care system, concludes Antos. Real health reform strengthens effective competition, rewards initiative, promotes innovation, and permits failure when poor business decisions are made; levels with the American people about what is possible and necessary and gives them the tools and support to do their part; and lays the foundation for an efficient health care system that is sustainable in the years to come.

The Dangers of Fannie Mae Health Care
John E. Calfee, American Enterprise Institute
The Wall Street Journal, 06/26/09

A new government health insurance program would possess formidable and perhaps overwhelming competitive advantages — generated not by efficiency but by the artificial advantages of "public" status, writes Calfee. It would be all too easy for a public plan to gain a competitive advantage by taking on extra risk while keeping prices low because everyone would expect the federal government to take care of financial surprises down the road. This would have two disastrous consequences. The first would be to cause most Americans now covered by private insurance to move to public insurance — one step away from single-payer health care. The second would be to undermine incentives to develop more of the immensely valuable medical technology that is central to all of health care.

The President's Trojan Horse
Gov. Michael O. Leavitt and Jeffrey H. Anderson, Pacific Research Institute
The Washington Times, 03/23/09

During his recent speech to the American Medical Association, President Obama discussed doctors' concerns about a new government health plan and told them it was an "illegitimate concern" that "a public option is somehow a Trojan horse for a single-payer system." But if the government decides what doctors we use, what drugs we can take, and how much is charged, the system is government-run, write Gov. Leavitt, former Secretary of Health and Human Services, and Anderson, a senior fellow at the Pacific Research Institute. We are prepared to believe, as Mr. Obama watches Congress begin to build the "public option" Trojan horse, following the blueprint he has provided, that it would inevitably lead to a single-payer system. But Mr. Obama apparently honestly thinks the public plan is merely a fine-looking gift for the American people and not the vehicle through which government-run health care will pierce the gates, capture their wallets, and ration their health care. We're just not prepared to believe he's right, they write.

Something for Nothing
David Brooks
The New York Times, 06/22/09

During the May 12 Senate Finance Committee hearing on health care reform, the vast majority of experts agreed that tax exemption on employer-provided health benefits should be a centerpiece of health reform, writes Brooks. It is a giant subsidy to the affluent, drives up health costs, and separates people from the consequences of their decisions. But the plans put together so far by the finance and health committees did not alter the employer exemption. The problem with the committee plans is that they don't do much to change the underlying incentives and consequently don't do much to control costs. We've built an entire health care system (maybe an entire government) on the illusion of something for nothing, writes Brooks. Instead of tackling that basic logic, we've got a reform process that is trying to evade it. Health care reform is important, but it is not worth bankrupting the country over. If this process goes as it has been going — with grand rhetoric and superficial cost containment — then we will be far better off killin
g this effort and starting over in a few years. Maybe then there will be leaders willing to look at the options staring them in the face.

Note: Grace-Marie spoke with President Obama after the ABC broadcast to say that capping the exclusion is good policy, and she hoped he would consider it. "It's really tough politically," he replied. (Yes, because he spent $100 million during last year's campaign trashing the idea . . .) But he did leave the door open during his conversation with Charlie Gibson to consider the idea if Congress presents it to him.

Physician Disempowerment: A Transatlantic Malaise
Center for Medicine in the Public Interest, 05/19/09

Few relationships are more personal, private, and important than the one between doctor and patient. Yet today, on both sides of the Atlantic, physicians are increasingly having their decisions second-guessed by distant third parties. This new book from CMPI chronicles the recent — and pronounced — intrusion by government and other third parties into the private medical relationships that patients have with their doctors. The book also includes essays by doctors who work in the oft-vaunted socialized health care systems of Canada and Europe.

THE UNINSURED

Who Are the Uninsured? An Analysis of America's Uninsured Population, Their Characteristics and Their Health
June E. O'Neill and Dave M. O'Neill, Baruch College and City University of New York
Employment Policies Institute, 06/09

The Census Bureau's estimate of 47 million uninsured dominates nearly all health care policy debates, but is unfortunately a relatively coarse measurement that provides little substantive information about the uninsured that can be used to craft effective policy solutions, find Drs. June and David O'Neill. This study shows that a large fraction of the uninsured (43%) could likely afford health coverage. In addition, it shows that the involuntarily uninsured — those that lack health insurance because they are likely unable to afford it — are demonstrably different from the privately insured. A disproportionately large percentage of the involuntarily uninsured are young, a third are immigrants, close to half are single without children, and close to 40% did not work during the year. Finally, the authors show that while the uninsured use fewer health services, they still receive a large amount of care, and there is little discernable difference in mortality based on insurance status.

INTERNATIONAL HEALTH SYSTEMS

Socialized Medicine Through the Eyes of a Recipient
Diana Furchtgott-Roth, Manhattan Institute
RealClearMarkets, 06/25/09

Furchtgott-Roth's first-hand experience with England's National Health Service teaches us that a single-payer system would radically change the standards of American medicine — for the worse. Socialized medicine killed Furchtgott-Roth's uncle, she writes. He was allergic to penicillin but the doctor gave him a shot of it — soon after he had told Furchtgott-Roth's aunt that he was on the road to recovery. Or, consider Furchtgott-Roth's grandmother, who had the misfortune of having a stroke on a Friday. Furchtgott-Roth asked when the doctor would see her and was told that the doctor would come on Tuesday. When asked if she could pay for someone to see her grandmother over the weekend, the answer was that no one was there to be paid. The elderly are most likely to lose from rationed care, writes Furchtgott-Roth. Her father, a highway planner in England, was instructed to consider deaths of retired people in road accidents as "benefits," because their "consumption" was likely to exceed their "production." With the examples of Britain's NHS, it's astounding that anyone would recommend a single-payer government plan for the United States, concludes Furchtgott-Roth.

STATE ISSUES

Comprehensive Health Reform Discussion Draft
New Jersey Assemblyman Jay Webber
U.S. Committee on Energy and Commerce, Subcommittee on Health, 06/24/09

New Jersey's laws and regulations have limited the selection of health care policies, driven insurers out of the market, caused premiums to soar, and significantly increased the number of people without health insurance in the state, testified Assemblyman Webber. New Jersey residents pay exorbitant rates for health care coverage — an average annual health insurance premium of $10,398, or nearly twice the national average. Not surprisingly, 40% fewer people buy their health insurance on New Jersey's individual health insurance market today than in 1992. The climb of health care coverage costs has hit New Jersey small employers the hardest, with the average cost of providing health insurance doubling in the last six years. In 2007 alone, the average cost of an insurance policy for small companies rose by an average of 9.8%, to $7,251 per employee. Allowing New Jerseyans to purchase regulated health insurance policies from other states would empower consumers to seek out and buy health insurance policies that best fit their needs and budgets, said Assemblyman Webber. For example, Pennsylvania residents can purchase health insurance policies for as little as 40% of the cost of comparable polices in New Jersey.

Upcoming Events

Grace-Marie Turner appearing on FOX Business Network
Friday, June 26, 2009, 1:20 p.m. ET
Grace-Marie Turner will be a guest on Stuart Varney's show on FOX Business. Check your local listings for channel information.

14th Annual Wall Street Comes to Washington Conference
Center for Studying Health System Change Event
Wednesday, July 8, 2009, 9:00 a.m. – 12:00 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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