Who's Scaring Whom?


A plethora of polls hit the news this morning, showing that the American people are increasingly worried about President Obama's health reform plan, fearing that their health costs will rise and the quality of their care will get worse if the plan goes into effect.

The president spent much of his time during his speeches yesterday answering what he described as cynical scare tactics by critics.

"These folks need to stop scaring everybody," he said.

With all due respect, Mr. President, I think you are the one doing the scaring.

It began during the ABC News broadcast at the White House last month:

In response to a 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."


Then during his prime-time news conference last week, Mr. Obama angered doctors when he said: ". . . you come in and you've got a bad sore throat, or your child has a bad sore throat or has repeated sore throats, the doctor may look at the reimbursement system and say to himself, you know what, I make a lot more money if I take this kid's tonsils out."

Not good.

The president further fueled fears when he talked last week about "a blue pill and a red pill" and suggested that the blue pill is the better choice if it is "half the price of the red pill."

And many of those turning out at tea parties and holding up protest signs around the country are seniors, worried about the hundreds of billions of dollars in Medicare "savings" going to fund the health reform plan.

Time Magazine has a new cover story showing Mr. Obama in a doctor's smock. One thing people don't want is politicians making decisions about what health care they get, but that is the message he is sending.

The American people know best what's right for them, and they don't want government dictating their choices. The centralized reform plans making their way through Congress would do just that rather than realigning incentives so people can make more decisions for themselves. The remarkable thing is how quickly the American people are catching on.

It's not that we won't have rationing of health care. Someone has to make choices. The American people are just very frightened about turning this power over to big government.



House Republicans released a reform plan yesterday under the leadership of Rep. Tom Price, a physician who heads the Republican Study Committee. There is a lot to like in the outline that was circulated this morning:


  • It offers a mixture of tax credits and deductions to help people purchase private insurance, giving them more control and portability.
  • It gives people much more freedom in where and how they purchase health insurance, including allowing those on Medicare, Medicaid, and SCHIP to have the choice of private insurance.
  • It provides for a stronger safety net for those with higher health risks.

The plan relies on incentives rather than government micro-management to give people more choices, more information, and more control over their health care and health coverage decisions.

I will be writing more about this plan as details emerge. In particular, I'd like to see them begin the process of repairing the seriously flawed tax provision that provides an unlimited tax break for job-based health insurance — a regressive policy that contributes to health inflation and drives up the number of uninsured. There is growing bipartisan awareness that this must be fixed. Someone must take it on.



I have three articles in major publications today:

In the New York Post, I write about the latest agreement on Capitol Hill:


House Democrats are playing a game of Whack-a-Mole as they try to devise a health-reform bill to reengineer one-sixth of our economy, but the latest "agreement" announced Wednesday makes no progress in repairing the deeply flawed legislation.

In The Oklahoman, I write about the problems Massachusetts is facing with its reform effort:


Massachusetts is boasting that it now has the lowest uninsured rate in the country. Many congressional lawmakers say this is proof that the massive health reform package the Bay State passed three years ago is working and that its main pillars should be replicated on a national scale.

Not so fast. The promises of reform are facing reality in the Bay State. Health costs are higher than ever, putting more financial pressures on taxpayers, citizens and businesses. Newly insured citizens are having trouble finding a physician who will see them, and emergency rooms in many hospitals are more crowded than ever.

In National Review Online, I write about the importance of supporting medical innovation:


The Washington Post is aligning itself with anti-innovation liberals in arguing that Congress should shorten the time frame in which companies that develop new biologic drugs can recoup their investments. The Obama administration has favored a seven-year period in which the companies would have "market exclusivity," and the Post editorializes that "any additional protection would be not only unnecessary but harmful."

But one of the few good provisions in the Affordable Health Choices Act making its way through Congress is a provision that would create a twelve-year market exclusivity period for brand-name biologic drugs.

See the articles section below for each of the links.



And here's a question:

The White House and many Democratic leaders in Congress are ready to fall on their swords insisting that any health reform legislation must include a new government health insurance program.

Yet more than six months since his inauguration, President Obama still has not appointed anyone to head the two gigantic programs the government already is charged with running — Medicare and Medicaid.

Set aside the huge problem that the government has absolutely zero expertise in running the proposed public plan. The administration can't seem to get around to nominating anyone to administer the Centers for Medicare and Medicaid Services to run these public programs that will spend more than $700 billion this year.

Grace-Marie Turner

Recent News Articles and Studies< /strong>

Health Care 'Compromise': Blue Dogs Get Taken
Sweeping Reform Has Some Dangers
Don't Stifle Innovation
Healthcare Reforms Warnings from France and Canada
The Lewin Group's National & State Analyses of the July 15 Draft of the American Affordable Health Choices Act of 2009
Health Care Reform Conference Call
Five Freedoms You'd Lose in Health Care Reform
Stop Paying the Crooks: Solutions to End the Fraud That Threatens Your Healthcare
Government Threat to World-Class Medicine
Capital Malpractice: How a Washington Takeover of Health Care Will Hurt States
Fannie Med? Why a "Public Option" Is Hazardous to Your Health
Medical Debt: Is Our Healthcare System Bankrupting Americans?
A Primer on Medicare Financing


Health Care 'Compromise': Blue Dogs Get Taken
Grace-Marie Turner, Galen Institute
New York Post, 07/30/09

The fragile agreement before the Energy and Commerce Committee makes no progress in repairing the deeply flawed legislation making its way through the House, Turner writes. Delaying action on a bill before the fall likely foretells failure for a sweeping reform agenda. Lawmakers should prepare to head back to the drawing board when they return with new ideas and feedback from constituents fresh in their minds.

Sweeping Reform Has Some Dangers
Grace-Marie Turner, Galen Institute
The Oklahoman, 07/29/09

Instead of looking to Massachusetts as a model for reform, federal lawmakers should see the state's experience as offering strong evidence that more government intervention may very likely cause our health care system to get sicker.

Don't Stifle Innovation
Grace-Marie Turner, Galen Institute
National Review Online: Critical Condition, 07/29/09

American lawmakers should take heed of the lessons Europe has learned about protecting intellectual property rights with these new medicines that are likely to produce the ground-breaking cures of the 21st century. The European Union's equivalent of the FDA grants twelve years of data exclusivity to biologic innovators, which prevents follow-on firms from gaining access to a biologic's research data for a pre-specified period of time. By following Europe's lead in respecting the special status of this new genre of medicines, American lawmakers could ensure that our drug supply remains safe and make certain that biotechnology companies have the incentives they need to continue developing these new medicines.

Healthcare Reforms Warnings from France and Canada
Brian Lee Crowley, Galen Institute and Atlantic Institute for Market Studies (Canada) and Valentin Petkantchin, Institut economique Molinari (Paris and Brussels)
Reuters: The Great Debate, 07/20/09

Experience in both France and Canada shows that government health insurance and government financing inescapably lead to a crackdown on health care providers and bureaucratization of the entire health care system, Crowley and Petkantchin write. Americans should look carefully at this experience before going any further down the slippery slope of state-controlled health care.


The Lewin Group's National & State Analyses of the July 15 Draft of the American Affordable Health Choices Act of 2009
Marguerite Higgins, The Heritage Foundation
FixHealthCarePolicy.com, 07/28/09

This Lewin Group analysis, commissioned by The Heritage Foundation, describes local level impacts of legislation being developed in Congress. They assess the impact on select states, including Maine, Montana, Nebraska, New Mexico, Pennsylvania, and Virginia. For example, in Maine:

  • 72% of privately insured Maine residents would transition out of private insurance
  • 78% of Maine residents with employer-based coverage would lose their current insurance
  • 86% of Maine residents in a health insurance exchange would end up in the public plan
  • 32% of the uninsured in Maine would still lack coverage
  • Physicians in Maine would see their net annual income decline by $271.7 million, with an average loss in income of $55,692 per physician

Health Care Reform Conference Call
American Enterprise Institute, 07/22/09

On July 22, AEI's health policy scholars provided analysis and answered questions on health care reform during a conference call. Scott Gottlieb, Joe Antos, Jack Calfee, Tom Miller, and Bob Helms discussed the health bills, the implications of recent CBO reports and the prognosis for floor action before Congress leaves for its August recess.

Five Freedoms You'd Lose in Health Care Reform
Shawn Tully
CNNMoney.com, 07/24/09

Tully describes the five freedoms that Americans would lose under Obamacare: Freedom to choose what's in your plan; freedom to be rewarded for healthy living, or pay your real costs; freedom to choose high-deductible coverage; freedom to keep your existing plan; and freedom to choose your doctors.

Stop Paying the Crooks: Solutions to End the Fraud That Threatens Your Healthcare
Edited by James R. Frogue
Center for Health Transformation, 07/09

With outrageous stories of fraud and abuse, including a Brooklyn dentist who filed 991 claims in one day and 150 men who received maternity benefits from the New York State Medicaid system, the book is authored by a collaboration of experts from a variety of fields including health care, information technology and the credit card industry. Their goal is to find the solutions to end fraudulent waste and abuse and help put America's health care system — and the economy — on sound financial footing.

Government Threat to World-Class Medicine
Dr. Daniel H. Johnson, Jr., Dr. Donald J. Palmisano and Dr. William G. Plested III
The Washington Times, 07/23/09

Drs. Johnson, Palmisano and Plested — three former presidents of the American Medical Association — write that the AMA's recent letter of support of the House health care bill ignores or violates many of the AMA's most important legislative priorities and implements a government option that could restrict doctors' ability to provide patients with the care they need. They write that the AMA's endorsement of the public option is in direct conflict with its long-standing policy of reducing government interference with medical decisions and is antithetical to wh
at most doctors in America support. The House health care bill also ignores two of the AMA's top advocacy priorities: the right of patients and physicians to privately contract without government interference or penalty, and the addition of proven medical-liability reforms.

Capital Malpractice: How a Washington Takeover of Health Care Will Hurt States
Rep. John Boehner (R-OH) and Governor Tim Pawlenty (R-MN)
GOP State Solutions, 07/27/09

The health care legislation currently moving its way through Congress will take power away from the states, increase state costs by expanding Medicaid, and add a $1.6 trillion burden on the American middle class over the next ten years, Rep. Boehner and Gov. Pawlenty write. It will force states to comply with complex new federal regulations and directives, preventing them from developing health care programs that best fit the needs of their residents, and will potentially saddle governors and state legislatures with massive unfunded federal mandates.

Fannie Med? Why a "Public Option" Is Hazardous to Your Health
Michael F. Cannon
Cato Institute, 08/06/09

The central problem with proposals to create a new government program is not that government is less efficient than private insurers but rather that government can hide its inefficiencies and draw consumers away from private insurance, despite offering an inferior product, Cannon writes. Congress should reject proposals to create a new government health insurance program — not for the sake of private insurers, who would be subject to unfair competition, but for the sake of American patients, who would be subject to unnecessary morbidity and mortality.


Medical Debt: Is Our Healthcare System Bankrupting Americans?
Aparna Mathur
Testimony to the House of Representatives Committee on the Judiciary, 07/28/09

Mathur explores the extent to which household medical debts can be held responsible for consumer bankruptcy filings. Although recent studies claim that more than 50% of all personal bankruptcy filings are caused by rising medical debt, Mathur's analysis shows that this is not the case. He studied micro data from nationally representative datasets covering thousands of American families over several years. Medical problems can lead to bankruptcy either directly through the accumulation of medical debt or indirectly through loss of work days and subsequent loss in earnings. Because we ultimately care most about the effect that rising health care costs have on families, it remains hard to justify how bankruptcies due to illnesses that lead to job losses are a direct consequence of rising health care costs alone.

Diana Furchtgott-Roth of the Hudson Institute writes in RealClearMarkets that less than 1% of Americans enter bankruptcy each year. Of those, only 3 to 5% are plausibly bankrupt due to medical debt. These numbers present the inconvenient truth that our health system is not leading to bankruptcy in America.


A Primer on Medicare Financing
Lisa Potetz, Health Policy Alternatives, Inc. and Juliette Cubanski, The Henry J. Kaiser Family Foundation
Kaiser Family Foundation, 07/09

This primer provides an overview of Medicare's financing and examines several methods of assessing the program's long-term financial outlook. It also discusses the factors that drive the growth in Medicare spending, which is primarily due to rising health care costs that affect all public and private payers nationwide. The primer also examines geographic variation in health care spending and its impact on the Medicare program and how rising Medicare costs affect beneficiaries' out-of-pocket spending burden.

Upcoming Events

Show Me the Money: Options for Financing Health Reform
Alliance for Health Reform Briefing
Friday, July 31, 12:00 p.m. – 1:45 p.m.
Washington, DC

Grace-Marie Turner speaking on the Real Wealth with Jim and Tony show
Real Wealth Radio Network Broadcast
Monday, August 3, 2009, 9:00 a.m.

Hurting or Helping Consumers? Destroying Federal Preemption One Industry at a Time
The Heritage Foundation Event
Wednesday, August 5, 2009, 11:30 a.m. – 1:00 p.m.
Washington, DC

Putting the Government in Charge: Why America Should Avoid Europe's Mistakes
The Heritage Foundation Event
Thursday, August 6, 2009, 11:00 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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