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Health Policy Matters

Friday, November, 20, 2009

Duplicity and Deceit

By Grace-Marie Turner

The 2,074-page health reform bill that Senate Majority Leader Harry Reid unveiled Wednesday is a maze of complexity and duplicity. It would spend $848 billion over 10 years to provide new subsidies for health coverage, increase taxes by $486 billion, and allegedly cut spending by $491 billion. All the while, it pretends to use this massive government expansion to cut the deficit.

The American people aren’t buying it. A new Quinnipiac poll released yesterday shows that only 19 percent of those surveyed believe that President Obama will keep his promise that health reform won’t add to the federal deficit; 72 percent don’t believe it.

The new taxes never will be enough to pay for Reid’s reform plan, and Congress does not have the will to make the cuts to Medicare and Medicaid that he plans to use to bring down the bill’s advertised cost.

The American people continue to tell pollsters that they believe the health reform bills that Congress is considering would not only increase the deficit, but also drive up health costs, reduce the quality of care, and increase government bureaucracy.

They are correct. Here are a dozen reasons why:

  1. Bait and Switch: The bill starts collecting new and higher taxes next year, but the coverage benefits don’t start until 2014 or later. Sending collections agents out four years before benefits begin is one of the budget gimmicks that Sen. Reid used so he can claim that the cost of his bill is under $900 billion, as the president has demanded.

  2. The real cost: The actual 10-year cost of the legislation, once the spending begins, will be at least $2.5 trillion. And it gets worse. Budget expert Jim Capretta estimates that the bill will lead to a $4.9 trillion spending increase over 20 years.

  3. The uninsured are still with us. The bill leaves 24 million people without insurance by 2019, not even close to the promised goal of universal coverage. This will be a serious problem for hospitals that still will be treating uninsured people, including illegal immigrants. The bill reduces payments by $43 billion to hospitals that serve a large number of low-income patients.

  4. Job-killing taxes on employers: Employers will be faced with new penalties and taxes, especially if they hire workers who qualify for any of the new federal subsidies for health insurance. According to the Congressional Budget Office, “Firms with more than 50 workers that did not offer coverage would have to pay a penalty of $750 for each full-time worker if any of their workers obtained subsidized coverage through the insurance exchanges.”

  5. Doc-Fix gimmick: And Sen. Reid is playing more games with the so-called “doc-fix,” providing a slight increase for next year but then pretending that Medicare payments to doctors will be cut by 23% the following year and that they will stay at that level for good. Doctors should be hopping mad. The House showed what a charade this is yesterday in a separate vote to give doctors their payment increase next year.

  6. Bending the cost curve up: Despite the president’s promise to lower the cost curve, the CBO says that the federal commitment to health spending “would be about $160 billion higher under the legislation than under current law.”

  7. Abortion: Reid would allow the new government insurance plan he creates to cover abortions and would allow companies that receive federal funds to offer policies that include abortion coverage, saying premium funds rather than taxpayer money would be used. The National Right to Life Committee said the Reid language is “completely unacceptable.” This will lead to a major floor battle.

  8. Losing your current coverage: About five million people would lose their current employment-based coverage, and millions of seniors would lose their private Medicare Advantage coverage as the program is cut by $118 billion. Many of the 11 million seniors in Medicare Advantage plans are lower-income seniors who have chosen to enroll because the program provides better benefits and lower costs than traditional Medicare.

  9. Scarce subsidies: Despite spending $338 billion on new subsidies through the health insurance exchange, just 19 million people will qualify for help with their costs -- even though everyone is required to have government-defined health insurance or pay a penalty. A lot of people will get sticker shock when they see the high cost of the new insurance they are required to buy and realize they don’t get any help with premiums.

  10. Worst-of-both-worlds mandates: Individuals will be required to purchase health insurance, but the penalties are relatively light, providing an incentive for the young and healthy to opt out of coverage. But health insurance companies still will be required to sell policies to anyone who applies. Which means people can wait until they need expensive medical treatment to buy coverage. Which means premiums for everyone left in the pool will soar.

  11. Millions more on the dole: ReidCare would add 15 million more people to the rolls of Medicare and the State Children’s Health Insurance Program, exacerbating the long-term budget problems of the states that must share in the costs of this expanded coverage. The bill also creates a new government entitlement program for long-term care insurance. And in another budget gimmick, the government will be collecting taxes for the program within the 10-year budget window, but putting off spending until after that.

  12. Progressive payroll tax: The bill increases the Medicare payroll tax for wealthier Americans, creating a new progressive tax schedule for this tax that surely will be raised to hit the middle class. And the revenue goes into the health reform pot, paying for benefits that have nothing to do with Medicare. This is a dangerous precedent, and only one of the plethora of new and higher taxes included in the plan.

So taxes will go up, bureaucracy will grow, the deficit will swell, and the quality of care will suffer.

Industry leaders are lining up against the plan. The National Federation of Independent Business says it opposes the Senate bill because the employer mandate would be a “disaster for small business,” and it opposes the new taxes and new entitlement programs the bill would create.

America’s Health Insurance Plans say the new health care taxes and fees will raise the cost of insurance for Americans and exacerbate the cost shift from public programs to private plans.

The Senate is scheduled to vote Saturday night (do we see a pattern here?) to bring the bill up for debate. Responsible senators should demand that Sen. Reid start over.

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Curtis Sliwa and Grace-Marie Turner discuss the House and Senate health reform proposals and their impact on small businesses, medical professionals, and American health care consumers and patients in this radio interview.

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A Health Freedom Contract with America

Grace-Marie Turner, Galen Institute
The Orange County Register, 11/18/09

It’s time for lawmakers to stop insisting on a major overhaul of the health sector and reset the debate, Turner writes. Turner describes some common sense, patient-centered reforms that should be at the center of what could be called a “Health Freedom Contract” with the American people, including making insurance portable from job-to-job, allowing people to buy health insurance across state lines, increasing transparency in the health market, and addressing medical malpractice. Read More »

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Learning the Wrong Lessons from the Failure of ClintonCare

Grace-Marie Turner, Galen Institute, 11/13/09

Democrats mistakenly believe they were tossed out of power in the 1994 elections because they failed to pass sweeping reform legislation, Turner writes, with leaders warning that failure to pass a health reform bill this year would be the worst political outcome for them. But polling data from 1994 show that voters punished elected officials at the polls for supporting the Clinton health reform plan, not for failing to pass it. Unless Democrats learn the right lessons from history, they may repeat the 1994 elections, where they are swept from power by an electorate angry that their leaders weren’t listening to their concerns about a very unpopular health reform plan. Read More »

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A Breast Cancer Preview

The Wall Street Journal, 11/19/09

A government panel’s decision to toss out long-time guidelines for breast cancer screening is an all-too-instructive preview of political decisions about cost control and medical treatment that are at the heart of ObamaCare, The Wall Street Journal writes. The panel -– which included no oncologists and radiologists who best know the medical literature –- re-analyzed data with health care spending as a core concern. The effects of this new breast cancer cost-consciousness are likely to be large. More important for the future, every Democratic version of ObamaCare makes this panel an arbiter of the benefits that private insurers will be required to cover as they are converted into government contractors. What are now merely recommendations will become de facto rules, and under national health care, these kinds of cost analyses will inevitably become more common as government decides where finite tax dollars are allowed to go. Read More »

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Cutting Costs Means Getting Smarter

Joseph Antos, American Enterprise Institute
National Journal Expert Blogs: Health Care, 11/16/09

If we truly wish to create a sustainable health system, we cannot rely on easy-to-score budget cuts that keep intact payment methods and delivery methods that have produced unaffordable health care, Antos writes. The key is promoting smarter purchasing and smarter medical practice, and that means changing the way we do business. There is little in the reform bills to suggest that it won’t be business as usual. Read More »

The House bill, which leaves the flawed economic incentives of the fee-for-service system in place, will bend the cost curve upward, not downward, Antos writes in a blog post for The New York Times. Instead, reforms should focus on increasing competition in state insurance markets, reforming the tax exemption for health insurance, creating price transparency, and providing consumers better insurance options. Read More »

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An Individual Mandate for Health Insurance?

Thomas P. Miller, American Enterprise Institute
Georgetown Law Center, 11/16/09

The more rigid and narrowly defined an individual insurance mandate, the more likely will be legal challenges to it under statutory and constitutional law, Miller writes. It is important to understand and define the degree to which a mandate may limit an individual’s ability to direct resources for personal care. As such, the goal of achieving broader coverage could be accomplished through more indirect and less harmful ways. For example, we have achieved a non-mandate mandate in parts B and D of Medicare wherein you are charged higher premiums if you don’t opt in initially when first eligible. This has accomplished most of the universal coverage goal for the elderly and suggests that the indirect way of achieving broader coverage -– through the loss of a tax subsidy or the loss of the benefit -– gets you almost as far as trying to punish people directly to do it. Of course, the real limits with regard to an individual insurance purchasing mandate are not as much legal as they are political, economic, and administrative. Those latter factors ultimately will determine the scope and scale of any insurance mandate, as well as whether we have one or not. Read More »

Miller’s remarks are adapted from comments during a panel discussion of “The Constitutionality of Mandates to Purchase Health Insurance” at the April 27, 2009 Georgetown Law Center’s “Legal Solutions in Health Reform Spring Symposium.” Other panelists included Mark Hall of Wake Forest University School of Law and Len Nichols of New America Foundation. Read More »

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Health ‘Reform’ Gets a Failing Grade

Jeffrey S. Flier, Harvard Medical School
The Wall Street Journal, 11/17/09

The Dean of the Harvard Medical School gives the health reform debate a failing grade. In this commentary, he writes that those for whom the central issue is health -- not politics -- have been left in the lurch. Our health care system suffers from problems of cost, access and quality, and needs major reform. Tax policy drives employment-based insurance; this begets overinsurance and drives costs upward while creating inequities for the unemployed and self-employed. A regulatory morass limits innovation. And deep flaws in Medicare and Medicaid drive spending without optimizing care. Speeches and news reports can lead you to believe that proposed congressional legislation would tackle the problems of cost, access and quality. But that's not true. The various bills do deal with access by expanding Medicaid and mandating subsidized insurance at substantial cost -- and thus addresses an important social goal. However, there are no provisions to substantively control the growth of costs or raise the quality of care. So the overall effort will fail to qualify as reform. Read More »

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Medicaid: The Forgotten Issue in Health Reform

Robert B. Helms
American Enterprise Institute, 11/09

Instead of making simple reforms to the way federal funds are distributed for Medicaid, current health care legislation seeks only to expand the program, Helms writes. The present growth of federal expenditures on Medicaid is not sustainable, however. In order to ensure that the people who most need assistance for health care continue to receive it, Congress should be making fundamental reforms to the Medicaid program first. These include giving block grants to the states, reforming the federal matching-rate formula, and reducing marginal incentives to expand Medicaid. Read More »

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Bending the Productivity Curve: Why America Leads the World in Medical Innovation

Glen Whitman, California State University and Raymond Raad, New York Presbyterian Hospital/Weill Cornell Medical Center
Cato Institute, 11/18/09

In three of the four general categories of innovation examined in this paper -- basic science, diagnostics, and therapeutics -- the U.S. has contributed more than any other country, and in some cases, more than all other countries combined, Whitman and Raad write. In general, Americans tend to receive more new treatments and pay more for them -- a fact that is usually regarded as a fault of the American system. That interpretation, if not entirely wrong, is at least incomplete. Rapid adoption and extensive use of new treatments and technologies create an incentive to develop those techniques in the first place. When the U.S. subsidizes medical innovation, the whole world benefits. That is a virtue of the American system not reflected in comparative life expectancy and mortality statistics. Read More »

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