Steamrolling Ahead


The White House and Democratic leaders appear undaunted in their efforts to push sweeping health reform legislation through Congress in record time, even as the head of the Congressional Budget Office told Congress yesterday that the bills would worsen the federal government's "already bleak budget outlook," increase the deficit, and drive the nation more deeply into debt.

Yikes! But worse still, he said the bills won't meet the president's promise of reducing health costs over the long term.

"I'm going to really put you on the spot," Senate Budget Committee Chairman Kent Conrad told CBO Director Douglas Elmendorf. "From what you have seen from the products of the committees that have reported, do you see a successful effort being mounted to bend the long-term cost curve?"

Elmendorf responded: "No, Mr. Chairman," adding, "the legislation significantly expands" costs.

That was a bombshell if there ever was one because President Obama has repeatedly said that his health reform bills must bend the cost curve.

It is not clear how the White House and Democratic leaders are going to recover from this since the problems Elmendorf was describing are woven into the fabric of the bills. Can Sen. Baucus come up with the magic formula? Is there a magic formula?

Two House committees with jurisdiction over health care issues now have approved their Orwellian health take-over bill, joining the Senate Health, Education, Labor, and Pensions Committee. So far, not a single Republican has voted to report the bills out of committee. The House Energy and Commerce Committee and the Senate Finance Committee are still at work.

The chances of the Senate getting a bill to the floor before the August recess have plummeted, meaning that the battle will continue into the fall. And poll after poll shows that the more people hear about these bills, the less they like them.



Mining the details: Our inbox is overflowing with emails from people outraged as they read the details of the House bill. For example:


  • Sec. 1173A would "standardize electronic administrative transactions." But in so doing, it shows the sweeping centralization of authority over health care:

    The financial and administrative standards would "enable the real-time (or near real-time) determination of an individual's financial responsibility at the point of service, and to the extent possible, prior to service, including whether an individual is eligible for a specific service with a specific physician at a specific facility, which may include utilization of a machine-readable health plan beneficiary identification card." (Page 58.)

    The italics are mine, but good grief! This is frightening.


  • Sec. 312 attempts to deal with those pesky economists who say that if you require employers to provide the expensive health insurance the bill would require, that workers would ultimately pay in lower wages and lost jobs.

    So here's what they would do: "For purposes of this section, any contributions on behalf of an employee with respect to which there is a corresponding reduction in the compensation of the employee shall not be treated as an amount paid by the employer." (Page 147.)

    Do they understand basic economics? Apparently not. The possible distortions in the workplace are endless!



Talk about special interest! The American Medical Association yesterday endorsed the House tri-committee bill.

That was a shocker since the House bill would create a powerful government-run health plan that AMA members rightly concluded would lead to further cuts in payments to doctors and hospitals. The AMA House of Delegates voted against endorsing the government plan during its annual meeting last month as many delegates concluded the government plan would lead to complete government control of the health sector.

So what gives? It's all about special interest politics — and political naiveté on the part of the AMA.

According to the Associated Press, the selling point to the AMA was that the bill would repeal the formula that has annually reduced Medicare reimbursements to physicians.

So do they really think that repealing one cost-controlling measure really won't be replaced by another once the public plan is in place? The AMA has just sold their profession to the government.

The Georgia Medical Association is leading the charge to get other state medical associations to reject the AMA endorsement and make it clear they are opposed.



Frustrations on Capitol Hill have reached past the boiling point. Senate Finance Chairman Max Baucus is doing his best to come up with a reasonable, bi-partisan bill and to meet the impossible demands of the White House, his Democratic leaders, and include his friend Sen. Charles Grassley in the negotiations.

He has missed deadline after deadline because he has not been able to thread the needle of writing a bill that is paid for by recapturing money inside the health care system, keeping the price tag under $1 trillion(!), covering all of the uninsured, avoiding a public plan, and on and on.

He missed another deadline yesterday. The leadership is very worried that if they don't ram a bill through both houses before then, that they may not get it done at all as more of the details leak out to the public.

Excuse me, but don't they think we will find out anyway? This legislation would affect every American for generations to come. What happened to representative government?

A very frustrated Sen. Baucus blurted out that "the president isn't helping" by rejecting a cap on the tax exclusion for employee health insurance. He had to call the president to apologize. Without that pot of money, it's almost impossible for them to pay for this sweeping reform.



A note of praise: We were delighted with President Obama's nomination of Dr. Regina Benjamin as Surgeon General. Regina lives and breathes public service, having faced the trials of Job in running a non-profit clinic that serves indigent patients in rural Alabama. She rebuilt after Hurricane Katrina washed away the clinic and again after a devastating fire.

She is very involved in the policy world as well: I served
with her for several years on the National Advisory Council for the Agency for Healthcare Research and Quality, and she attends a confab of health policy experts that meets in Sundance, Utah every October, sponsored by the Health Sector Assembly.

She is a terrific choice — a good physician with clinical experience who knows how to get results.

Grace-Marie Turner

Recent News Articles and Studies

Competition in the Health Care Marketplace
Obamacare's Six Worst Flaws
Healthcare Dreams, Healthcare Realities
Income Tax Surtax Should Not Fund Government Health Care Expansion
Obama, Doctors, and Health Reform
Health Care Reform Requires Law Reform
The Massachusetts Health Mess
Massachusetts in Suit Over Cost of Universal Care
Medicaid's Costs, Like Medicare's, Have Risen Far More Than the Costs of Private Health Care


Competition in the Health Care Marketplace
Grace-Marie Turner, Galen Institute
Testimony before the U.S. Senate Commerce, Science, and Transportation Committee's Consumer Protection, Product Safety, and Insurance Subcommittee, 07/16/09

Many of the problems the country is facing involving cost, quality, and access to health care could be addressed by encouraging more competition and empowering consumers to have greater control over decisions involving their care and coverage, Turner said in testimony on Thursday before the U.S. Senate Commerce Committee. Health reform legislation should build on the innovative ideas in the private sector where improvements in the delivery and financing of health care, transparency, and consumer choice are working. For example, companies that have introduced health plans with new incentives for consumers to be engaged as partners in managing health costs generally have seen lower-than-average health cost increases and increased use of preventive services. Competition can work in public and private programs and force the system to be more responsive to consumers, Turner said.

Obamacare's Six Worst Flaws
Grace-Marie Turner, Galen Institute
The Examiner, 07/09/09

Turner describes the six worst flaws contained in the health reform proposals offered by President Obama and congressional leaders and what would happen to health care for the American people if they were implemented. They include: a mandate that individuals purchase insurance; a "pay-or-play" mandate for employers; a uniform, government-defined benefits package; a national health insurance exchange; comparative effectiveness research; and a new government-run health insurance plan.


Healthcare Dreams, Healthcare Realities
Thomas P. Miller, American Enterprise Institute
The American, 07/16/09

President Obama is not the first, or last, chief executive to discover that it was much easier to promise grand dreams on the campaign trail than to reconcile them once in office with the stubborn realities of congressional lawmaking, contradictory public opinion sentiments, and political accountability, Miller writes. Perhaps the signature pledge of the Obama presidential campaign's healthcare plan was that his proposed reforms would not undermine any insurance or physician arrangements that individual Americans already had and wanted to keep. The harsh political reality ahead is that it will be hard to keep what you have when you cannot find it around much longer, writes Miller. What has eroded the premise of that promise are the proposals of the Obama administration and Democratic congressional leaders for much tighter federal regulation of mandatory health insurance benefits, more intrusive government guidance on what might constitute effective medical care worthy of taxpayer-subsidized reimbursement, and a politically favored public plan "option" likely to crowd out many existing private insurance choices. Unfortunately, the real measure of health reform will be between doing something badly (the Obama way), and doing it better (another way). Action without improvement is another luxury we can no longer afford, concludes Miller. Real reform that will actually help, not hurt, is what we need.

Income Tax Surtax Should Not Fund Government Health Care Expansion
Brian M. Riedl and Curtis S. Dubay
The Heritage Foundation, 07/15/09

Congress is reportedly considering raising taxes by at least $540 billion over 10 years to fund President Obama's health care initiative through a "surtax" on top of the highest individual tax rates, Riedl and Dubay write. This 5.4% surtax would raise the average top marginal income tax rate in the U.S. above 52%, which would be higher than just three of the 30 most economically developed countries in the world. On the state level, total taxes paid by top-income earners would exceed countries such as Canada and France. Raising top marginal taxes above most European countries is a horrible model for the U.S. to follow, they write. European countries have chronically higher unemployment levels than the U.S. and persistently lower rates of economic growth. The U.S. will suffer from the same afflictions if it follows in the footsteps of European countries — and worse if it actually surpasses their punitive levels of taxation. Moreover, such a misguided policy will drive business and economic activity out of the U.S. and into other low-tax nations.

Obama, Doctors, and Health Reform
Richard L. Reece, MD
iUniverse, 06/09

Dr. Reece explains what patient-centered care, physician demoralization, the entrepreneurial U.S. culture, and our system's complexities portend for reform. Reform and transformation hinge on how America's individualistic, entrepreneurial, and innovative culture responds to demands for higher quality, lower costs, and greater access. When 78 million baby boomers turn 65 in 2011, they will expect the best medical care and a personal physician to care for them, as will the rest of the population. Will the doctors be there? And what will the care be like? Whatever the answers, it will require more personal involvement and personal responsibility on your part, writes Dr. Reece.


Health Care Reform Requires Law Reform
Timothy S. Jost, Washington and Lee University School of Law
Health Affairs Web Exclusive, 07/16/09

This Health Affairs piece describes the changes in state law that would be required as a result of federal reform of the nation's health care delivery and financing systems. If Congress does create a purchasing exchange or a public plan, for example, federal coverage and underwriting rules would likely preempt existing state standards. These new federal standards wou
ld apply to all health plans — both public and private — within the exchange. It also likely will be necessary for the federal government to create uniform federal coverage and underwriting rules, currently the purview of the states.

Thus far, very little of the debate surrounding the push to overhaul the nation's health care system has focused on the federalism concerns raised by several provisions within legislation pending in Congress, writes Philip Klein of The American Spectator. Taken together, the measures will impose a raft of new financial and regulatory obligations on individual states.

The Massachusetts Health Mess
The Wall Street Journal, 07/11/09

For 15 years Massachusetts has imposed guaranteed issue and community rating mandates that allow people to wait until they're sick, or just before they're about to incur major medical expenses, to buy insurance, writes The Wall Street Journal. A useful case study comes from the community-based health plan Harvard-Pilgrim. The company has seen an "astonishing" uptick in people buying coverage for a few months at a time, running up high medical bills, and then dumping the policy after treatment is completed and paid for. Harvard-Pilgrim estimates that between April 2008 and March 2009, about 40% of its new enrollees stayed with it for fewer than five months and on average incurred about $2,400 per person in monthly medical expenses. That's about 600% higher than Harvard-Pilgrim would have otherwise expected. Massachusetts' individual mandate penalty for not having coverage is only about $900, so people seem to be gaming the Massachusetts system, the Journal writes.

Massachusetts in Suit Over Cost of Universal Care
Abby Goodnough
The New York Times, 07/15/09

A hospital that serves thousands of indigent Massachusetts residents sued the state on Wednesday, charging that its costly universal health care law is forcing the hospital to cover too much of the expense of caring for the poor, writes The New York Times. Boston Medical Center faces a $38 million deficit for the fiscal year ending in September, its first loss in five years. The suit says the hospital will lose more than $100 million next year because the state has lowered Medicaid reimbursement rates and stopped paying Boston Medical "reasonable costs" for treating other poor patients. The central charge in the suit is that the state has siphoned money away from Boston Medical to help pay the considerable cost of insuring all but a small percentage of residents. According to the suit, Massachusetts is now reimbursing Boston Medical only 64 cents for every dollar it spends treating the poor.


Medicaid's Costs, Like Medicare's, Have Risen Far More Than the Costs of Private Health Care
Jeffrey H. Anderson, Ph.D.
Pacific Research Institute, 07/14/09

Proponents of a "public option" for health insurance and of a Medicaid expansion claim that government-run health care reduces costs, but empirical evidence demonstrates the opposite: privately purchased health care has contained costs far better than government-run care, writes Anderson. Since 1970, Medicaid's costs have risen 35% more, per patient, than the combined costs of all health care in America apart from Medicare and Medicaid. This is true despite costs shifted from Medicaid to the Medicare prescription drug benefit and to SCHIP, and despite generous assumptions favoring Medicaid. Whether it's Medicare or Medicaid, the conclusion is the same: government-run health care has proven to be far more expensive, not more affordable, than privately purchased care, concludes Anderson.

Upcoming Events

Who Are the Uninsured?
Cato Institute Capitol Hill Briefing
Monday, July 20, 2009, 12:00 p.m.
Washington, DC

Health Care Forum
Jefferson Area Tea Party Event
Monday, July 20, 2009, 7:00 p.m. – 9:00 p.m.
Charlottesville, VA
Grace-Marie Turner will speak about health care reform options.

Policy Rewind: Health Care in the 2009 Oregon Legislature
Oregon Health Forum Event
Tuesday, July 21, 2009, 7:00 a.m. – 9:00 a.m.
Portland, OR

Spotlight on Health Care Reform
National Journal Group Policy Breakfast
Tuesday, July 21, 2009, 8:00 a.m. – 9:30 a.m.
Washington, DC

Conference to Examine Impact of Health Care Proposals on Virginians
Thomas Jefferson Institute for Public Policy Event
Wednesday, July 22, 2009, 9:00 a.m.
Richmond, VA
For more information, please contact Scott Leake, at or 804-467-5437.

Building a Federal Health Board: Impact on Texas
Texas Health Institute and Harris County Healthcare Alliance Event
Wednesday, July 22, 2009
Houston, TX

When Altruism Isn't Enough: The Case for Compensating Kidney Donors
American Enterprise Institute Book Forum
Wednesday, July 22, 2009, 2:00 p.m. – 3:30 p.m.
Washington, DC

A Firm Target for Medicare Sustainability and a Workable Approach to Get There
The Heritage Foundation Event
Thursday, July 23, 2009, 10:00 a.m. – 11:30 a.m.
Washington, DC

Global Payments: Panacea for Payment Reform?
Philips Webinar
Wednesday, July 29, 2009, 1:30 p.m. – 2:45 p.m. EDT

The Value of Laboratory Screening and Diagnostic Tests for Health Care Improvement
Lewin Group Briefing
Thursday, July 30, 2009, 12:00 p.m. – 1:15 p.m.
Washington, DC
For more information, please contact Kim Bernet at or 202-637-9596.



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
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