Pediatric Research Bill: Obamacare’s Road to Rationing?

A PDF of this Issue Brief is available on the Heritage Foundation website.

Later this month, the House of Representatives could consider legislation regarding pediatric research.[1] Legislation regarding this issue (H.R. 1724) was first introduced in April, and a new version of the bill (H.R. 2019) was introduced in May.

Although largely similar, H.R. 1724 would require the director of the National Institutes of Health (NIH) to provide a justification for any existing grants studying health economics, and would prohibit new grants until “a federal law has been enacted authorizing the National Institutes of Health to use funding specifically for health economics research.”[2] Press reports indicate that H.R. 2019 excludes the restrictions included in H.R. 1724 “in order to please Democrats who favor the research.”[3]

This is a mistake. The House should ensure that H.R. 1724’s proposed restrictions on health economics research remain in any NIH-related legislation that comes to the House floor. To do otherwise would provide tacit approval to Obamacare’s road to government-rationed health care.

Proposed Restriction a Necessary Protection

The provision omitted from H.R. 2019 would have instituted an important and necessary protection on taxpayer-funded research on cost-effectiveness in health care. In recent years, the federal government has funded numerous such studies. For instance, a June 2011 Government Accountability Office report examining projects funded by the “stimulus” highlighted NIH grants studying the cost-effectiveness of various medical treatments, including:

  • “A Comprehensive Model to Assess the Cost-Effectiveness of Patient Navigation,”
  • “Cost-Effectiveness of Hormonal Therapy for Clinically Localized Prostate Cancer;”
  • “Clinical and Cost-Effectiveness of Biologics in Rheumatoid Arthritis,” and
  • “Cost-Effectiveness of HIV-Related Mental Health Interventions.”[4]

Liberals Favor Cost-Effectiveness Research

Setting aside the wisdom of using taxpayer funds to examine the cost-effectiveness of various treatments, such research could eventually be used to deny patients access to certain kinds of care. Quotes from key policymakers reveal how some would use cost-effectiveness research as a way for government bureaucrats to block access to treatments that are deemed too costly:

  • Former Senator Tom Daschle (D–SD), President Obama’s first choice for Secretary of Health and Human Services, wrote in 2008 that “we won’t be able to make a significant dent in health-care spending without getting into the nitty-gritty of which treatments are the most clinically valuable and cost effective. That means taking a harder look at the real costs and benefits of new drugs and procedures.”[5]
  • In a 2009 interview with The New York Times, President Obama argued that “the chronically ill and those toward the end of their lives are accounting for potentially 80 percent of the total health care bill out here.… There is going to have to be a very difficult democratic conversation that takes place.”[6]
  • Former Medicare Administrator Dr. Donald Berwick, in his infamous 2009 interview, strongly argued in favor of taxpayer-funded cost-effectiveness research when stating that “the decision is not whether or not we will ration care—the decision is whether we will ration with our eyes open.”[7]

Lawmakers have already expressed their desire to use cost-effectiveness research to restrict access to certain treatments. A report prepared by the House Appropriations Committee in 2009, discussing “stimulus” funding for the types of projects highlighted above, noted that thanks to the research funding, “those items, procedures, and interventions that are most effective to prevent, control, and treat health conditions will be utilized, while those that are found to be less effective and in some cases more expensive will no longer be prescribed.”[8]

Road to Rationing

Although research comparing the relative merits and costs of medical treatments may sound appealing, past experience has demonstrated that such research can, and often is, used as a blunt tool by governments to restrict access to certain kinds of care. At a time when genetic advances have opened the door to personalized medical treatments, Obamacare has moved health policy in the opposite direction, expanding the federal bureaucracy in an attempt to micromanage the health care system.[9]

Imposing the restrictions on cost-effectiveness research included in H.R. 1724 would represent a good first step in restoring the balance between federal bureaucrats and patients.

 



[1]Daniel Newhauser, “Mindful of Previous Defeat, Cantor Pushes Bill to Increase Pediatric Research,” Roll Call, June 10, 2011, http://www.rollcall.com/news/mindful_of_previous_defeat_cantor_pushes_bill_to_increase_pediatric-225436-1.html?zkPrintable=true (accessed June 13, 2013).

[2]The Kids First Research Act of 2013, H.R. 1724, § 4.

[3]Newhauser, “Mindful of Previous Defeat.”

[4]U.S. Government Accountability Office, HHS Research Awards: Use of Recovery Act and Patient Protection and Affordable Care Act Funds for Comparative Effectiveness Research, GAO-11-712R, June 14, 2011, http://www.gao.gov/new.items/d11712r.pdf (accessed June 13, 2013).

[5]Tom Daschle, Scott Greenberger, and Jeanne Lambrew, Critical: What We Can Do about the Health Care Crisis (New York: Thomas Dunne Books, 2008), pp. 172–173.

[6]David Leonhardt, “After the Great Recession,” The New York Times, April 28, 2009, http://www.nytimes.com/2009/05/03/magazine/03Obama-t.html (accessed June 13, 2013).

[7]Biotechnology Healthcare, “Rethinking Comparative Effectiveness Research,” June 2009, http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2799075/pdf/bth06_2p035.pdf (accessed June 13, 2013).

[8]Helen Evans, “Comparative Effectiveness in Health Care Reform: Lessons from Abroad,” Heritage Foundation Backgrounder No. 2239, February 4, 2009, note 3, http://www.heritage.org/research/reports/2009/02/comparative-effectiveness-in-health-care-reform-lessons-from-abroad.

[9]Kathryn Nix, “Comparative Effectiveness Research Under Obamacare: A Slippery Slope to Health Care Rationing,” Heritage Foundation Backgrounder No. 2679, April 12, 2012, http://www.heritage.org/research/reports/2012/04/comparative-effectiveness-research-under-obamacare-a-slippery-slope-to-health-care-rationing.

How Obamacare — And Big Hospitals — Will Raise Health Costs

The New York Times published a column highlighting one way Obamacare will raise health costs: by promoting hospital industry consolidation that will force prices higher.

The Times highlighted the case of two Chicago-area hospital systems whose merger was investigated by the Federal Trade Commission in 2000. The article notes that one hospital CEO “had told his board that the deal would ‘increase our leverage, limited as it might be,’ the investigation found, and ‘help our negotiating posture’ with managed care organizations.”

The other hospital’s CEO said that “it would be real tough for any of the Fortune 40 companies in this area…to walk from [the merged hospital group] and 1,700 of their doctors.” The end result of the merger:

It was a great deal for the hospitals. The fees they charged to insurers soared. One insurer, UniCare, said it had to accept a jump of 7 to 30 percent for its health maintenance organizations and 80 percent for its preferred provider organizations.

Aetna said it swallowed price increases of 45 to 47 percent over a three-year period. “There probably would have been a walkaway point with the two independently,” testified Robert Mendonsa, an Aetna general manager for sales and network contracting. “But with the two together, that was a different conversation.”

And who was left holding the bag? Not the shareholders of UniCare or Aetna. It was the people who bought their policies, who either paid higher premiums directly or whose wages grew more slowly to compensate for the rising cost of their company health plans.

Industry mergers give hospitals more market clout to raise prices—and those higher, “take it or leave it” prices are passed on to all Americans in the form of higher insurance premiums.

What has Obamacare done to solve this problem? It’s made it worse. The Times quotes Martin Gaynor, an expert on industry consolidation, about this “potentially troubling” aspect of the law:

Professor Gaynor, for instance, worries that accountable care organizations may prove anticompetitive. Merger activity has jumped in anticipation of the law’s coming fully into effect.

“Hospitals want to maintain their revenue streams and enhance their bargaining leverage,” said Professor Gaynor. “This [i.e., Obamacare] is a way to do so.”

Obamacare as a way for hospitals to “enhance their bargaining leverage”? No wonder they endorsed the law. However, the American people will be paying the price—quite literally—for years to come.

This post was originally published at The Daily Signal.

Morning Bell: The IRS, Obamacare, and You, By the Numbers

Chilling new details emerged yesterday about the IRS targeting scandal, as representatives from six conservative groups testified before Congress about the scrutiny and demands they faced from Obama administration bureaucrats.

Yesterday’s testimony reminded us once again why Washington bureaucrats cannot be trusted, and why Americans should be so concerned about the new powers granted to the IRS as a result of Obamacare.

These powers are so vast, in fact, they’re difficult to put into words. So instead, we decided to give you the numbers:

18New taxes in Obamacare, including 12 that directly violate then-Senator Barack Obama’s “firm pledge” to those making under $250,000 per year that he would not “raise any of your taxes.”

47—New provisions Obamacare charges the IRS with implementing, according to the Government Accountability Office.

$695Tax for not buying “government-approved” health insurance the IRS will be charged with enforcing on all Americans.

1,954—Full-time bureaucrats the IRS wants to devote to Obamacare implementation and enforcement in the upcoming fiscal year.

60,000,000—Medical records the IRS has been charged with improperly seizing, raising concerns about whether the agency can handle the personal health insurance information all Americans will be required to submit to the IRS.

$439,584,000—The IRS’s request for new spending on Obamacare implementation in the upcoming fiscal year; the request did not specify how much of those funds the IRS will spend on the “Cupid shuffle.”

6,100,000,000—Man-hours Americans already devote to tax compliance, according to the National Taxpayer Advocate, a burden that will rise significantly thanks to Obamacare.

$1,000,000,000,000—New revenue raised by Obamacare in its first 10 years alone, according to the Congressional Budget Office, sums that will only rise in future decades.

If ever there were an argument as to why Obamacare should be repealed and defunded, these numbers—coupled with the IRS revelations of recent weeks—tell the tale.

This post was originally published at The Daily Signal.

The IRS, Obamacare, and You: The Government Is Coming for Your Health Insurance Records

Thanks to Obamacare, all Americans will now have to submit their health insurance information to the Internal Revenue Service (IRS). Sadly, this new requirement comes at the same time that serious questions have been raised about the IRS’s ability to manage personal health records competently.

As American Enterprise Institute scholar Scott Gottlieb noted:

An unnamed health care provider in California is suing the IRS and 15 unnamed agents, alleging that they improperly seized some 60 million medical records of 10 million Americans, including medical records of all California state judges, on March 11, 2011.

The complaint alleges that IRS agents exceeded the scope of their search warrant, seizing not just financial records, but “information on psychological counseling, gynecological counseling, sexual and drug treatment, and other sensitive medical treatment data.”

The alleged data seizure occurred at roughly the same time in which employees in another division of the IRS targeted tea party and other conservative groups due to their political beliefs. If true, these new allegations regarding seized medical records would further undermine trust in the IRS’s ability to conduct its affairs properly and to manage the sensitive and confidential information all Americans submit to the agency every year.

As this week’s entire series has shown, the IRS’s reach within Obamacare seemingly knows no bounds. Armed with new bureaucrats and funded by a massive spending blitz, the IRS will implement trillions of dollars in tax increases; issue new regulations, edicts, and orders; impose new paperwork burdens on all Americans; and increase the scope of government intrusion into the lives of ordinary, law-abiding citizens.

Prior to the recent scandals, many Americans thought the IRS could not be trusted to implement Obamacare in a competent and impartial manner. Now they know it. It’s one more reason why Congress should repeal Obamacare once and for all.

This post was originally published at The Daily Signal.

The IRS, Obamacare, and You: The IRS Will Know Your Health Insurance Information

“Among the questions [Administration] officials expect people to have about [Obamacare] are…How can they fill out their tax forms correctly?” –The Washington Post, article on March 22, 2010, the day Obamacare was signed into law

Of all the provisions in Obamacare the Internal Revenue Service (IRS) oversees, the most far-reaching is the mandate for all Americans to purchase government-approved health insurance. Unprecedented in its scope—forcing all Americans to buy a product, and taxing them due to their very existence if they do not—the mandate will require Americans to submit their insurance information to the IRS.

Section 1502 of Obamacare includes pages of requirements that insurers will have to submit to the IRS documenting people’s health coverage, including individuals’ names, Social Security numbers, whether or not the health plan is “government-approved” coverage complying with the mandate, and “such other information as the [Treasury] Secretary (i.e., the IRS) may require.” Individuals will also get copies of these forms, and have to submit them to the government with their tax returns.

The IRS has yet to release the official copy of the mandate compliance form, but Americans for Tax Reform (ATR) prepared a projection of what the form might look like. Sadly, the ATR estimate of a one-page mandate form may actually underestimate the scope of the paperwork involved. Consider Massachusetts’s real-life example of the paperwork burdens necessary to ensure compliance with the mandate:

A new three-page schedule had to be completed and filed with…the state tax return. In addition, a 10-page booklet with instructions and worksheets accompanies the other instructions and worksheets for the state income tax return.

If the IRS mandate form is three pages long, it will be longer than form 1040, which most Americans use to file their taxes.

Most Americans find completing their taxes every year difficult enough as it is. According to the National Taxpayer Advocate’s annual report:

Individuals and businesses spend about 6.1 billion hours a year complying with the filing requirements of the Internal Revenue code. If tax compliance were an industry, it would be one of the largest in the United States. To consume 6.1 billion hours, the “tax industry” requires the equivalent of more than three million full-time workers.

Given the onerous paperwork burdens our country already faces thanks to the tax code, Americans do not need or want to face more bureaucratic hassles to provide personal health information to the IRS.

This post was originally published at The Daily Signal.

Paul Krugman’s California Dreamin’

Since California released its health care exchange premium rates late last week, liberals such as Paul Krugman have argued that Obamacare’s predicted “rate shock” will fail to materialize next year. At least three reasons explain why liberals’ argument falls short:

1. Dubious Assumptions About Exchange Enrollment

Some independent observers questioned whether the insurance companies in California’s exchange made favorable—and dubious—assumptions about the people who would buy insurance on the exchange next year. The Washington Post noted that “if sick people sign up en masse next year…that could dramatically increase costs for insurers, who would then have to recoup the money by increasing premiums.” One vice president at Avalere Health, a consulting firm, told the Post that a delayed premium spike could happen:

[The projected premium rates] are low enough that you have to think, are there going to be health plans in this market that are underwater…. It’s so hard to predict because you don’t know who’s going to show up on the market.

2. A Pre-Existing Preview

While no one knows who will sign up for exchange coverage next year, an Obamacare program already up and running—one established for individuals with pre-existing conditions—has attracted far sicker enrollees than first anticipated. As The New York Times reported last week:

The administration had predicted that up to 400,000 people would enroll in the program, created by the 2010 health care law. In fact, about 135,000 have enrolled, but the cost of their claims has far exceeded White House estimates, exhausting most of the $5 billion provided by Congress….

When the federal program for people with pre-existing conditions ends on Jan. 1, 2014, many of them are expected to go into private health plans offered through new insurance markets being established in every state. Federal and state officials worry that an influx of people with serious illnesses could destabilize these markets, leading to higher premiums for other subscribers.

People in the pre-existing condition program have been much sicker than actuaries predicted at the time the law passed. If that phenomenon repeats itself in the exchanges—either because only sick individuals enroll, or because employers struggling with high health costs dump their workers into the exchanges—premiums will rise significantly in future years.

3. Bait and Switch

As a column in Bloomberg notes, for all the press around California’s supposedly low exchange premiums, officials generated such spin only by comparing apples to oranges:

Covered California, the state-run health insurance exchange, yesterday heralded a conclusion that individual health insurance premiums in 2014 may be less than they are today. Covered California predicted that rates for individuals in 2014 will range from 2 percent above to 29 percent below average small employer premiums this year.

Does anything about that sound strange to you? It should. The only way Covered California’s experts arrive at their conclusion is to compare apples to oranges—that is, comparing next year’s individual premiums to this year’s small employer premiums. (Emphasis added.)

Therein lies one of Obamacare’s many flaws. Liberals now argue that while some may pay more for coverage, they will get “better” benefits in return. However, when campaigning in 2008, then-Senator Barack Obama didn’t say he would raise premiums; he said he would give Americans better coverage: He promised repeatedly that he would cut premiums by an average of $2,500 per family. That gap between Obamacare’s rhetoric and its reality makes arguments such as Krugman’s seem fanciful by comparison.

This post was originally published at The Daily Signal.

The IRS, Obamacare, and You: The Complexity

The many federal bureaucrats working on Obamacare implementation within the IRS stand at the center of an intricate web of government and regulation that will ensnare all Americans in its grasp.

The Government Accountability Office (GAO) last year released a report with a chart showing all the bureaucratic offices and divisions within the IRS charged with carrying out Obamacare. Nowhere in the chart do the words doctor or patient appear—as clear a sign as any that Obamacare is not about health care; it’s about government power. And heading up this entire effort has been Sarah Hall Ingram, the same official previously in charge of the IRS unit that subjected conservative groups to additional scrutiny for their political beliefs.

HCchart

The GAO made clear the extent of the IRS’s involvement with Obamacare:

The Internal Revenue Services’ implementation of [Obamacare] is a massive undertaking that involves 47 separate statutory provisions and extensive coordination across not only IRS, but multiple agencies and external partners. For example, IRS must coordinate with other federal agencies and states in providing assistance to qualifying individuals for health insurance premiums.

And just in case you were wondering, here is the list of the 47 separate provisions government auditors said the IRS will need to implement as part of Obamacare:

This post was originally published at The Daily Signal.

 

HCtable

The IRS, Obamacare, and You: The Spending

Getting the Obamacare “train wreck” up and running will cost the Internal Revenue Service (IRS) an estimated $881 million between 2010 and 2013, according to the Government Accountability Office. As of last June, the IRS had already requested more than half a billion dollars from an implementation “slush fund” established in Obamacare.

In a report to Congress this spring, the IRS disclosed the amounts of spending and numbers of employees devoted to Obamacare implementation from 2010 through 2012. Among other areas, the IRS devoted:

  • $2.1 million and 13 full-time employees to implement the tax increases on drug manufacturers and health insurers,
  • $12 million and 150 full-time employees to “customer service support,”
  • $405.2 million and 700 full-time employees to creating the infrastructure to support the exchanges and the individual mandate tax, and
  • $20.8 million and 161 full-time employees to “promot[e] compliance with other new provisions.”

This gusher of new spending will continue even after Obamacare is up and running. In its budget submission this year, the IRS requested even more spending—a whopping $439.6 million—and 1,954 new employees.

This ongoing spending—over $1 billion in just the law’s first four years—only adds to the trillions in new entitlement programs created by the law. It’s one more reason Obamacare is unaffordable—for the taxpayers forced to fund it, and forced to live under new IRS mandates, edicts, and regulations.

As we’ve previously noted, Obamacare includes no fewer than 18 separate tax increases, raising at least $1 trillion in the law’s first 10 years alone. Worse yet, the IRS will need to spend billions of dollars of taxpayers’ hard-earned money to take these trillions in new revenues from taxpayers.

This post was originally published at The Daily Signal.

The IRS, Obamacare, and You: The Taxes

With the IRS under fire for its improper targeting of tea party groups, many Americans have also raised concerns about the agency’s activities relating to Obamacare. This week, we’ll be taking a look at just some of the many ways in which the IRS will be intimately involved with implementing the massive law.

It starts with taxes. According to the Congressional Budget Office, Obamacare raises over $1 trillion in revenue in its first 10 years—and more after that. You name it, Obamacare taxes it. As Heritage Foundation President Jim DeMint recently stated:

Obamacare taxes most people with health insurance, and most people without health insurance. Likewise, the law taxes many employers who provide health insurance, and most employers who don’t provide health insurance.

Obamacare contains no fewer than 18 tax increases. What’s more, 12 of these taxes will be borne by the middle class, directly breaking President Obama’s 2008 “firm pledge” to those making under $250,000 per year that he would not “raise any of your taxes.” For instance, many seniors will end up paying the 2.3 percent tax on medical devices as the price of wheelchairs, defibrillators, and other needed medical equipment will rise.

Here’s a list of all the Obamacare taxes to be administered by the IRS.

This post was originally published at The Daily Signal.

Big Hospitals’ Obamacare Deal Betrays Seniors and the Poor

A backroom deal made during the writing of Obamacare will harm seniors and the poor, according to The Wall Street Journal (WSJ).

During their closed-room dealings with the Obama Administration, the hospital industry’s lobbyists agreed to support Obamacare—provided that the law placed restrictions on physician-owned “specialty” hospitals, noted WSJ. These innovative specialty hospitals frequently have quality outcomes better than most traditional facilities, but no matter—the big hospital lobbyists wanted to eliminate a source of competition. So Obamacare prohibits new physician-owned hospitals from receiving Medicare payments — and prohibits most existing facilities from expanding if they wish to keep treating Medicare patients.

WSJ highlighted the actions specialty hospitals have been forced to take in response to these Obamacare restrictions:

Forest Park Medical Center in Dallas has stopped accepting Medicare patients, allowing it to escape the law’s restrictions entirely…. Rejecting Medicare ‘was a big leap, but we felt like the law gave us no choice,’ said J. Robert Wyatt, a Forest Park founder….

Other doctor-owned facilities are asking the federal government to let them duck the law’s restrictions altogether. Doctors Hospital at Renaissance near McAllen, Texas, is trying to get a waiver allowing it to expand as more than 53% of its payments come through the Medicaid federal-state insurance program for the poor.

In other words, because hospital lobbyists cut a backroom deal to support Obamacare, seniors and low-income patients have fewer health care options. Think that these examples of Americans losing access to care would prompt the hospital-industrial complex to reconsider its backroom deal? Not a chance:

Any effort to undo the expansion limits faces an uphill battle with Democrats, because the restrictions were a deal-breaker for hospitals when the White House sought their support for the law in 2009, industry lobbyists say.

Obamacare’s backroom deals (the “Louisiana Purchase,” the “Gator Aid,” and the “Cornhusker Kickback”) represented the worst in politics—well-heeled lobbyists seeking to obtain government largesse through pork-barrel spending and regulatory loopholes. The Wall Street Journal story reminds us how those backroom deals have real-world consequences when it comes to medical access—another example of how Obamacare has harmed patient care.

This post was originally published at The Daily Signal.