Ryan-Wyden: The best Medicare proposal yet

Oregon Democratic Sen. Ron Wyden is getting hammered by the White House for his courageous move to join House Budget Chairman Paul Ryan in co-sponsoring the best Medicare modernization proposal yet.

The Ryan-Wyden plan would move Medicare to a more modern defined-benefit program and give seniors a choice of competing plans — plans that would have an incentive to innovate and produce the best care at the best prices. Seniors would be guaranteed coverage, including traditional Medicare, and lower-income seniors would get extra help, including a funded account to pay for out-of-pocket expenses. Prices would be determined by the marketplace, not Washington’s price controls. It also creates a path to a more seamless transition from job-based private insurance to Medicare.

Importantly, Ryan-Wyden plan builds on the structure that has had bi-partisan support for more than a decade and which virtually everyone who has studied Medicare reform agrees is the platform to save the program from bankruptcy and from bankrupting the federal government.

This shows, once again, that Sen. Wyden is a serious legislator concerned about good policy, and it also shows that legislative proposals are improved when Republicans and Democrats work together. This is the platform for reform moving forward.

And the White House was, of course, cutting in its attacks of Sen. Wyden for daring to talk policy when the president is fully focused on politics. The voters are tired of the political games. That time is over. We need to get serious about reform, and this is the most serious proposal yet.

President Obama himself has acknowledged that “if you look at the numbers, then Medicare in particular will run out of money and we will not be able to sustain that program no matter how much taxes go up. I mean, it’s not an option for us to just sit by and do nothing.”

Yet the president proposes we do nothing. If we stick with the Medicare cuts already in law, seniors will see Medicare payments to doctors cut to Medicaid rates, making it extremely difficult to find a doctor to see them, and 15 unelected bureaucrats at the Independent Payment Advisory Board will be put in charge of rationing care through deeper payment cuts. The president does not have a serious or credible solution.

Democrats seem most distressed that the Ryan-Wyden plan weakens their attacks against Republicans. The New York Times reports: “Democrats expressed concerns about the proposal based on policy and politics. A senior Democratic Congressional aide said, ‘This plan gives bipartisan political cover to Ryan and other Republicans against whom we have been waging a very successful political offensive.'”

White House Communications Director Dan Pfeiffer piled on: “The Wyden-Ryan scheme could, over time, cause the traditional Medicare program to ‘wither on the vine’… At the end of the day, this plan would end Medicare as we know it for millions of seniors. Wyden-Ryan is the wrong way to reform Medicare.”

Ryan’s office responded: “The President’s failure to offer credible solutions to the challenges facing Medicare is a disservice to seniors, a disservice to hardworking families, and a disservice to the next generation. A more glaring disappointment is the President’s failure to recognize a sincere effort by a Democrat and a Republican to come together and offer solutions, betraying his own rhetoric and his own commitment to those we have the privilege to serve. America deserves better.”

You can see more details here. Watch for support to build on this serious and credible plan.


More casualties of ObamaCare: ObamaCare is forcing health insurers out of markets across the country, and the first casualties are small businesses and the health insurance agents who serve them.

The House Small Business Committee’s Subcommittee on Investigations, Oversight and Regulations invited me to testify on Thursday at a hearing on an obscure and complex provision in the health overhaul law that is causing widespread damage. Here’s a link to my testimony.

The hearing was entitled, “New Medical Loss Ratios: Increasing Health Care Value or Just Eliminating Jobs?” Washington has the audacity to tell insurers how they must spend premium dollars through its “Medical Loss Ratio” (MLR) dictates.

The provision already is backfiring, forcing private carriers out of markets, giving those that remain incentives to increase premiums, and depriving businesses of the skills and assistance of trained insurance brokers who basically serve as external HR departments for many companies.

In my testimony, I describe how this obscure and complex regulation is:

  • Leading to less competition and higher prices
  • Contributing to lost jobs inside and outside the health sector
  • Threatening to strangle popular Health Savings Accounts with regulations

The deterioration in private-sector coverage already has begun. We published a paper earlier this month, entitled “A radical restructuring of health insurance,” chronicling the numerous health insurance carriers across the country that have been forced to leave markets because they can’t comply with strict and inflexible HHS rules. I provide a list of examples of companies pulling out of markets from New York to Colorado, Indiana to New Mexico, and Virginia to Utah.

Many states are forced to play “Washington-may-I” to plead for relief, arguing that some carriers would be forced to stop selling policies if the states are not given waivers.

Shortly after the hearing, we learned that HHS has also denied Florida its waiver request for flexibility with the MLR rule. Carriers who can’t pass the HHS test will be forced to pay rebates to policyholders.

Because small business owners and self-employed Floridians rely on the small group and individual markets for health insurance, HHS’s decision will mean that fewer companies will be able to operate in the state, giving people fewer options of affordable coverage.

Executive director of the liberal Health Care for America Now Ethan Rome explains what the real motivation is. In praising the decision to deny Florida a waiver, he said: “…the Obama administration is putting $145 million back into consumers’ pockets.”

The Obama administration wants to claim that it will have “recovered” millions of dollars from the “greedy insurance companies” for consumers. HHS can’t grant Florida’s request for an MLR waivers because then there wouldn’t be any rebates to boast about next fall. The rebates are scheduled to be distributed in August/September of 2012. The timing is absolutely no coincidence. You can bet the Obama administration already is writing the speeches and cutting the ads about all of the wonders of ObamaCare.

So politics are in play here. Meanwhile, tens of thousands of health insurance brokers are seeing their livelihoods dry up, killing jobs and driving up the costs of insurance for struggling small business owners.

And HSAs, one of the tools that small businesses have found to be most valuable in helping them offer affordable coverage, could be strangled by the obscure and complex MLR regulations.

The MLR regulations only count payments made directly by insurers toward the 80% ratio for medical expenses. Health care costs paid by individuals below their HSA deductible don’t qualify, making it hard for these plans to meet the test. In other words, HHS rules mean that if an individual pays for a medical service to meet the deductible, the expenditure does not count toward the MLR ratio, even though the full amount is actually a payment for medical services.

As of January, about 11.4 million people were covered by HSA plans. The average deductible for small group HSA plans ranged from $2,820 to $2,957 in 2011, according to industry group America’s Health Insurance Plans. Only about 5 percent of HSA policies have claims above the deductible — missing by a long shot the 80% test.

Legislators would not have had the audacity to directly kill HSAs in writing the health overhaul law. But they have plenty of leeway to do it through regulation. If the MLR rules remain unchanged, HSAs are likely to “wither on the vine,” to quote the White House.


Setting the record straight: Newt Gingrich said during the Iowa GOP debate on Saturday night, “In 1993, in fighting HillaryCare, virtually every conservative saw the mandate as a less-dangerous future than what Hillary was trying to do. The Heritage Foundation was a major advocate of it.”

For the record, the Galen Institute and I in particular have NEVER supported an individual mandate.

Newt continued in the debate: “After HillaryCare disappeared it became more and more obvious that mandates have all sorts of problems built into them … It’s now clear that the mandate, I think, is clearly unconstitutional. But, it started as a conservative effort to stop HillaryCare in the 1990s.”

One of the things that think tanks are supposed to do is to think things through and analyze their likely impact. One of our jobs is to warn lawmakers about likely consequences before policy mistakes are made.

We knew from the beginning that an individual mandate would lead to government determining what kind of health insurance we must buy, huge taxpayer-funded subsidies to help people purchase the expensive new government-mandated coverage, invasions of our privacy so the government can find out if we are complying, and a slew of mandates and regulations.

So no, Newt, most conservatives never have supported an individual mandate. We thought this through and saw exactly where it would lead.

Avik Roy has a terrific piece on National Review about this.


Kudos: The Institute for HealthCare Consumerism has just announced its HealthCare Consumerism Superstars, honoring Roy Ramthun, who literally wrote the book on HSAs. “The inaugural winners of the Public Policy Leadership Award are ‘Mr. HSA’ Roy Ramthun and Kevin McKechnie, the executive director of the ABA/HSA Council. Through their tireless efforts as advocates for health care consumerism and garnering legislative support for account-based health plans, Ramthun and McKechnie have aided in the mainstream adoption of health savings accounts.”

Three cheers!



Small Business Subcommittee Examines New PPACA MLR Requirements

Grace-Marie Turner testified at this hearing on ObamaCare’s MLR requirement and its effect on job creation.
Watch now >>



New Medical Loss Ratios: Increasing Health Care Value or Just Eliminating Jobs?

Grace-Marie Turner
Testimony before the House Committee on Small Business Subcommittee on Investigations, Oversight and Regulations, 12/15/11

The Patient Protection and Affordable Care Act (PPACA) already is leading to a loss of affordable options for health insurance for small employers, to a loss of jobs inside and outside the health sector, and to higher health costs that make hiring new workers a risky proposition, especially for struggling small businesses. Turner testified that inflexible regulations and dictates from Washington are driving health insurers out of the small group and individual markets, leading to less competition and higher prices, and threatening to strangle the popular Health Savings Accounts.
Read More »

Lipitor And The Future Of Pharmaceutical Innovation

Grace-Marie Turner
Forbes.com, 12/12/11

Late last month, the most popular drug in history, Lipitor, went off patent, allowing a generic version of the cholesterol-lowering drug to enter the market and be sold at lower prices. Different drugs with the same active ingredient work differently for different patients, as everyone who has taken maintenance drugs knows, and Pfizer has developed a novel program that lets people stay on Lipitor, even as more competitors prepare to enter the market. Patients can sign up to get a $4 co-pay card that will allow them to get their prescription filled at generic prices. Pfizer’s deal is a little like GM telling people they can have a Cadillac at Chevy prices. With the growing difficulty of getting drugs through the FDA labyrinth and the rising cost of drug approval, Pfizer must produce revenue for continued research — the lifeblood of pharmaceutical companies. Without this research, the pipeline would run dry, delaying or even killing new medicines for Alzheimer’s, Parkinson’s, and countless other diseases.
Read More »


The Future of U.S. Health Care
Anna Wilde Mathews, The Wall Street Journal, 12/12/11

Out and About
James C. Capretta, The New Atlantis: Diagnosis, 12/13/11

Rule could hit insurance brokers
Jason Millman, Politico, 12/12/11

The Obama Presidency: A Year Before the 2012 Presidential Election
CBS News Poll, 12/09/11

34% of Americans Think PPACA Is a Good Idea
NBC News-Wall Street Journal Poll, 12/11

Newt’s Wrong, Most Conservatives Opposed Insurance Mandate
Merrill Matthews, Forbes: Right Directions, 12/14/11


A Bipartisan Way Forward on Medicare
Sen. Ron Wyden and Rep. Paul Ryan, The Wall Street Journal, 12/15/11

The Wyden-Ryan Breakthrough
The Wall Street Journal, 12/16/11

Cut regulations but not doctor pay to give best health care to seniors
Rep. Tom Price, The Charlotte Observer, 12/16/11

The Federal Government’s Deeply Flawed System For Controlling Medicare Costs
Sally C. Pipes, Forbes.com, 12/13/11

An Independent Evaluation of Rhode Island’s Global Waiver
The Lewin Group, 12/06/11


Modern medicine is undergoing industrialization
Scott Gottlieb, Real Clear Markets, 12/14/11


Findings From the 2011 EBRI/MGA Consumer Engagement in Health Care Survey
Paul Fronstin, Employee Benefit Research Institute, 12/11


Waiting Your Turn: Wait Times for Health Care in Canada, 2011 report
Bacchus Barua, Mark Rovere, Brett J. Skinner, Fraser Institute, 12/12/11


Grace-Marie Turner on the Lou Dobbs Radio Show
Friday, December 16, 2011
3:30pm ET

Nation vs. Nation: Do Countries Compete in Trade, Financial Services and Health Care?
American Enterprise Institute Event
Wednesday, January 18, 2012
9:00am – 12:00pm
Washington, DC

Grace-Marie Turner on Butler on Business
Monday, December 19, 2011
11:15am ET