Will “Doc Fix” Include a Compromise on Children’s Health Insurance?

Democrats on the Senate Finance Committee issued a news release Saturday expressing concern about provisions for children’s health insurance in the Medicare “doc fix” bill taking shape in the House. Media coverage of the children’s health program has largely focused on the length of the extension: Senate Democrats want a four-year extension, while a summary of the House agreement released Friday has a two-year reauthorization. But there are other, fundamental policy disagreements.

The disagreements are rooted in a letter issued by the Centers for Medicare and Medicaid Services (CMS) in August 2007. Congress was due to reauthorize the children’s health insurance program that fall, and the letter applied two principles to state programs: It targeted resources first toward families making less than 200% of the federal poverty level (now $48,500 for a family of four). If states wished to expand children’s health insurance to families with incomes greater than 250% of the federal poverty level, they had to first cover at least 95% of children in the lowest income group. The letter also instructed states to take steps to ensure that children and families were not dropping private, employer-provided coverage to enroll in taxpayer-funded programs.

Democrats reacted to the letter by refusing to vote on President George W. Bush’s nominee for CMS administrator in the Senate. The Democratic-controlled Congress passed legislation expanding children’s health insurance October 2007 and January 2008, but President Bush, viewing the bills as inconsistent with the policy goals his administration had outlined, vetoed the measures. House Republicans sustained his veto on both occasions.

Upon taking office, President Barack Obama ordered his secretary of health and human services, Kathleen Sebelius, to rescind the August 2007 memo. In February 2009 congressional Democrats enacted the children’s health insurance program expansion that had previously eluded them. Many Republicans believe the program should be targeted toward the lowest-income families, as it was initially designed. Draft reauthorization language issued by the House Energy and Commerce Committee last month would focus “funding on low-income families” to “address concerns about crowding out private coverage and subsidizing upper-middle-class families,” according to a summary.

The bipartisan deal to amend Medicare’s “doc fix” includes a two-year reauthorization of the children’s health insurance program, but policy details of that extension haven’t been released. Unless Republicans and Democrats can agree on a compromise—which eluded Congress and the Bush administration in 2007-08—one party may have to renege on policies it has adhered to for years. There are questions about the fiscal sustainability of the “doc fix,” but the philosophical questions may be no less difficult.

This post was originally published at the Wall Street Journal Think Tank blog.

Obamacare and the Pitfalls of Congressional Legislating

Weeks before Congress embarked on its final push to put Obamacare on the statute books, then-House Speaker Nancy Pelosi infamously stated that Congress had to pass the bill “so that you can find out what’s in it.” But last week, a staffer at the heart of drafting the legislation admitted that Congress itself failed to comprehend the implications of the provisions it imposed upon the American people.

On Friday, a Capitol Hill newspaper published a story outlining the history of Obamacare’s employer mandate and whether the administration might delay its implementation still further. In the article, Yvette Fontenot—a lobbyist who helped write the bill for then-Senate Finance Committee Chairman Max Baucus and later worked on implementing the legislation at the White House—admitted that when Mr. Baucus’s staff drafted the employer mandate, “we didn’t have a very good handle on how difficult operationalizing the provision would be at that time.”

Indeed, the employer mandate has proved difficult to implement. Defining who counts as a full-time employee across a variety of industries and creating databases to track employees’ hours have taxed regulators and companies alike. While the administration has cited these difficulties in twice delaying the mandate’s implementation, the law’s critics take a different view—believing the administration postponed the mandate to avoid potential stories about job losses prior to the 2014 elections.

Likewise, the import of Ms. Fontenot’s admission. Liberals and supporters of a strong executive might argue that her comments highlight the need for agency rulemaking, rather than placing final authority in the hands of inexpert legislators and overtaxed congressional staff—essentially saving Congress from itself. House Speaker John Boehner obviously disagrees. The Ohio Republican views the impending House vote exploring legal action against the administration as one way for the legislature to regain its authority.

But more broadly, conservatives would argue that Ms. Fontenot’s comments highlight the need for a more deliberative—and more humble—Congress, one quicker to acknowledge its own flaws, and change its processes accordingly. Recall that Max Baucus—the prime congressional author of Obamacare—said four years ago that he didn’t want to “waste my time” reading the legislation, because “we hire experts.” But one of those “experts” now says she didn’t understand how one of the major portions of the bill would work. It makes a very compelling argument that Congress, rather than relying on agency employees to resolve its self-imposed problems, should instead revert to the Hippocratic oath, and focus first and foremost on doing no legislative harm.

This post was originally published at the Wall Street Journal Think Tank blog.

Medicare’s Sustainable Growth Rate: Principles for Reform

A PDF of this Backgrounder can be found on the Heritage Foundation website.

Congress may soon revisit the issue of Medicare physician reimbursement payment. Much of the legislative discussion will focus on the sustainable growth rate (SGR) formula. The SGR was enacted as part of the Balanced Budget Act in 1997 as a mechanism to update yearly Medicare physician reimbursements. Under that formula, the federal government computes an annual target for Medicare physician spending based in large part on annual changes in economic growth as measured by gross domestic product (GDP). Physician spending exceeding the growth in GDP in any given year will result in a proportional and automatic cut in Medicare physician reimbursement the following year.

In theory, the SGR was a major improvement over the volume control updates that Congress enacted in 1989. In practice, the SGR mandated deep and politically unacceptable cuts in future years’ Medicare payments. The reason: Physician spending routinely exceeded annual targets. It was quickly becoming clear that the SGR was unworkable. Since 2003, majorities in Congress have routinely blocked the fundamentally flawed SGR formula from going into effect because the applicable cuts would threaten seniors’ access to care. For 2014, the formula calls for a Medicare physician reimbursement cut of almost 25 percent. Not surprisingly, many policymakers have concluded that the SGR must be repealed or replaced.

A Chance for Real Reform. The House Energy and Commerce Committee recently released a revised discussion draft of legislation regarding physician payment,[1] on the heels of a statement of principles initially released by the House Ways and Means and the Energy and Commerce Committees in February.[2] Likewise, the chair and Ranking Member of the Senate Finance Committee recently issued a request for “stakeholder” comment about the future of physician payment.[3]

While Congress’s immediate focus on the SGR is right and proper, it should not be shortsighted. The SGR is merely representative of a much larger problem: Medicare’s outdated system of administrative pricing, price controls, and inefficient central planning. This system both underpays and overpays doctors and other medical professionals, encourages cost shifting and gaming among providers, distorts the medical market, and undercuts the delivery of efficient and effective care. The overriding policy issue is whether Congress will view the SGR narrowly, as something to be “fixed”; or whether the debate can be the platform for a broader discussion of the need for a much better Medicare future, where administrative pricing is replaced by price competition, central planning is replaced by market-driven innovation, and the delivery of high-quality patient care is the product of the best professional judgment of members of the medical profession.

The ultimate policy objective, therefore, should be to transform Medicare into a defined-contribution (“premium support”) system, based on the free-market principles of consumer choice and competition—a system where medical services are priced through private negotiations between plans and providers, reflecting the true market conditions of supply and demand. In the meantime, as part of a transition to such a program, Medicare physician payment should be frozen at current levels for three to five years. Any additional costs to the taxpayer should be offset by savings from well-vetted reforms of the current program, plus a lifting of existing payment caps, a requirement for transparent pricing, and expanded options for doctors and patients.

A Crude and Clumsy Attempt to Break Spending

The SGR mechanism, as noted, links aggregate Medicare payment to changes in the general economy as measured by GDP. If spending exceeds the GDP target, the SGR adjusts physician reimbursements downward; if spending remains below target, the SGR increases physician reimbursements accordingly.[4]

By linking specific Medicare payments to the general performance of the economy, Congress established a fiscal target bearing little resemblance to the actual cost of medical goods and services. Other targets, such as the consumer price index (CPI) or the medical economic index, provide a clearer link to price inflation and general health cost growth. Moreover, the SGR’s explicit link to the size of the economy means that in economic downturns, the target—and thus physician reimbursement levels—will actually decline.

The fact that the SGR remains an aggregate spending target also presents a collective action problem for the Medicare program. Because the SGR targets physician spending as a whole, and not the spending patterns of individual physicians or physician practices, individual doctors have a strong incentive to maximize their own volume of services performed, and thus their own reimbursement levels.[5]

For all these reasons, Congress has consistently modified the SGR targets over the past decade. While the slowdown in health costs surrounding the move to managed care plans in the late 1990s prevented the SGR targets from being hit in the program’s first few years, spending soon exceeded the statutory targets. Although Congress allowed the SGR’s reimbursement cuts to take effect in 2002, in 2003 (and each year since) Congress overrode the statutory reductions with a series of freezes, or modest payment increases, in SGR target levels.[6]

The annual, albeit temporary, payment increases mandated by Congress since 2003 have resulted in a series of fiscal cliffs for physicians and the Medicare program. Because prior Congresses overrode the SGR targets only for short periods, doctors have faced the prospect of increasingly large reimbursement cuts should Congress not forestall the reimbursement cuts.[7] For instance, should Congress not act before January 1, 2014, the SGR will reset at its lower, statutory target, resulting in an immediate reduction in reimbursement levels of over 24 percent, with additional cuts in succeeding years.[8] According to the Congressional Budget Office (CBO), permanently freezing SGR target levels would cost $139.1 billion over 10 years[9]—a significant sum, but about half the $273.3 billion that the CBO estimated an SGR freeze would cost in July 2012.[10]

As a mechanism to contain costs, therefore, the SGR has fallen short. While physicians have received below-inflation updates in Medicare payment levels since 2003, evidence strongly suggests that doctors have compensated for these lower reimbursement levels by increasing the volume of services provided. According to data from the Medicare Payment Advisory Commission, while physician updates grew by less than 10 percent between 2000 and 2011, overall physician spending per beneficiary grew by more than 70 percent over the same period, largely because the volume of services provided to beneficiaries rose rapidly.[11]

However, as a mechanism to control overall spending on Medicare, the SGR has provided an impetus for re-examining spending priorities within other portions of the Medicare program. While generally ineffective at controlling physician spending, the annual SGR target has nonetheless forced Washington policymakers continually to re-examine overall Medicare spending, and encouraged continued debate on structural Medicare reform as well as generated intense discussion on incremental but meaningful reforms in the current program.

Members of Congress have generally insisted on paying for the annual “fixes” to the SGR, as such legislation would otherwise raise Medicare spending and increase the deficit. In 2009, the Senate considered legislation that would have permanently increased Medicare physician reimbursements without offsetting spending reductions.[12] When confronted with an unpaid “doc fix,” a bipartisan majority of 53 Senators rejected this legislation,[13] which would have increased federal deficits by $247 billion over 10 years,[14] and up to $1.9 trillion over 75 years.[15]

Over and above the basic principle that Congress should not increase Medicare spending at a time of record deficits, the SGR has provided a vehicle to enact modest reforms to the Medicare program on an annual basis. For instance, legislation addressing the “fiscal cliff” expanded Medicare competitive bidding to diabetes supplies, and enacted new anti-fraud measures, to help finance a one-year “doc fix” for 2013.[16]

When considering SGR legislation this year, Congress must balance the competing interests of the physician community and the Medicare program as a whole. While the SGR has not slowed cost growth, and the annual “doc fix” exercise has caused uncertainty for physicians, the Medicare program as a whole faces massive deficits—the Medicare trust fund lost $105.6 billion over the past five years, deficits that are expected to continue and accelerate as the baby-boom generation retires.[17] Simply repealing the SGR without fundamentally reforming Medicare would have significant unintended consequences for future taxpayers and beneficiaries alike.

More or Less Government Control Over Medical Practice?

Designing a replacement for the SGR formula brings with it many of its own problems. Proposals to replace the SGR with a system of reimbursing doctors based on quality measures—“pay for performance,” for example —will necessitate an even stronger role for the Medicare bureaucracy in dictating physician behaviors than the current flawed system.

Well before the creation of the SGR mechanism for updating reimbursement, Medicare physician payment has, over the past 25 years, been defined by the heavy hand of bureaucratic micromanagement. In 1989, Congress enacted a resource-based relative value system (RBRVS) for determining physician payments, which focused on determining the “right” payment for a particular service by calculating the cost of performing that service when compared to other services.[18]

Based on a “social science” measurement, the RBRVS attempted to quantify the “value units” of providing medical services, such as the time, energy, and effort that goes into providing a medical service, adjusted by geographic costs and malpractice expenses. A patient with a simple ear infection would require different amounts of a physician’s time than a patient with chronic heart failure, for example, and the RBRVS intended to compensate doctors “fairly” for each service. Organized medicine, particularly the American Medical Association, initially endorsed the new fee schedule as a way of redistributing income from high-priced specialists to lower-paid general practitioners.

In theory, the RBRVS was widely hailed by its proponents as a “scientific” answer to the perennial problem of physician payment.[19] In practice, the result has been a highly politicized process of rent-seeking, as lobbyists of different provider groups feverishly scrambled to secure higher reimbursements through the political process. However well-intentioned, the past quarter century has demonstrated the failure of the RBRVS as an accurate method of compensating physicians who participate in Medicare. Even as the federal government attempts to find the “right” price of every physician service, it has seemingly failed to remember the value of any of them. Unsurprisingly, the creation of more than 7,000 separate procedure codes has not ensured that nearly 850,000 Medicare providers are being compensated fairly for their services.[20] Indeed, the RBRVS has failed in one of its central goals: Created 25 years ago to help increase the relative value of allegedly underpriced primary care services, the RBRVS system has only exacerbated price disparities between primary and specialist care.[21]

In the aftermath of this failure, some in Congress have proposed a new system no less audacious—and no less reliant on the hand of government. Instead of the RBRVS method of pricing services partially based on the archaic labor theory of value—that compensation for physician services should be determined by the amount of time and resources put into the work—the new proposals attempt to quantify the “value” to patients of a particular service by measuring its “effectiveness.”

Pay for Performance or Compliance? Generally speaking, the new theory of pay-for-performance medicine attempts to determine physicians’ “value” and thus reimbursement through compliance with, and performance on, a series of metrics and guidelines determined by federal bureaucrats, medical societies, or a combination of the two. For instance, the House’s discussion draft discusses an “update incentive program” under which the Secretary of Health and Human Services (HHS) would be required to publish a “competency measure set” of quality measures, and then “develop and apply…appropriate methodologies for assessing the performance of fee schedule providers” on those measures.[22]

The language in the House discussion draft—linking Medicare physician pay to compliance with government-established guidelines—accelerates a troubling trend reinforced by Obamacare itself. The national health care law, with 165 provisions affecting Medicare,[23] not only retains the SGR, but, like the SGR, it also imposes a hard cap on the growth of all Medicare spending. It creates an Independent Payment Advisory Board (IPAB), which will have the power to enforce the cap, and recommend even more Medicare reimbursement cuts for physicians and other medical professionals. It creates new institutions to change Medicare payment and delivery through administrative action, such as the Center for Medicare and Medicaid Innovation, with demonstration programs designed to end traditional fee-for-service (FFS) payments. Beyond these new institutions, the health law creates new Medicare “quality” programs and extends the Physician Quality Reporting Initiative (PQRI), which will enforce new bonus and penalty payments for physician compliance. As the Congressional Research Service (CRS) reported in its first evaluation of the statute, the new law “makes several changes to the Medicare program that have the potential to affect physicians and how they practice in ways both small and large, immediately and over time.”[24]

For example, Obamacare mandates a 2 percent reduction in Medicare physician payments for doctors that do “not satisfactorily submit data” to Washington officials,[25] and a 1 percent reduction for physicians who fail to follow bureaucrat-defined “cost” metrics.[26] In separate legislation also signed by President Obama, the Administration received the authority to reduce payments to physicians by a further 3 percent if they do not follow Washington-imposed guidelines for electronic health records.[27]

To their credit, the authors of the House discussion draft emphasize the role of medical specialty societies in determining quality metrics, thereby hoping to assuage concerns about federal bureaucrats’ direct involvement in the practice of medicine. This does not, however, solve the fundamental problem. The entire premise of a Medicare pay-for-performance regime—which is really a payment for compliance—directly contradicts the opening verbiage of the original Medicare statute:

Nothing in this title shall be construed to authorize any federal officer or employee to exercise any supervision or control over the practice of medicine or the manner in which medical services are provided, or over the selection, tenure, or compensation of any officer or employee of any institution, agency, or person providing health services; or to exercise any supervision or control over the administration or operation of any such institution, agency, or person.[28]

The threshold question is this: Should government officials “exercise any supervision or control” over the practice of medicine? It matters not whether some physicians choose to comply with Washington’s mandates on their practices, or whether some leaders of some specialty societies see value in serving as arbiters of some new Medicare pay-for-performance structure. Under the original Medicare statute, all physicians should have the freedom to practice medicine using their own professional judgment in treating a patient, without meddling—whether in the form of new federal mandates, “quality” metrics, or other bureaucratic criteria—from either the federal government or its intermediaries.

The flaws in Medicare’s pay-for-performance approach have been well defined elsewhere.[29] The myriad regulations and mandates that such criteria spawn interfere in the practice of medicine, placing an invisible barrier amid the already attenuated relationship between doctor and patient. Worse, the one-size-fits-all methodologies imposed by Washington-enforced mandates directly contradict the great promise of the growing movement toward personalized medicine.[30]

Despite its inherent flaws, a bureaucracy-driven compliance regime remains a shibboleth of leftist health policy analysts who believe that a new system of federal micromanagement can fix the flaws of the old one. Former Senator Tom Daschle (D–SD), President Obama’s first choice for Secretary of HHS, wrote in 2008 that government interference in medical care was not the problem, it was the solution:

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.[31]

Obamacare epitomizes this governing philosophy of administrative control, giving the Secretary almost 2,000 separate orders with which to micromanage the health care system.[32] Members of Congress who rightly criticized Obamacare for granting the Secretary nearly unprecedented discretionary authority over the financing and delivery of medical care should be greatly concerned with enacting SGR replacement legislation that would further expand the Secretary’s control.[33]

Principles for Congressional Action

As it has since 2003, Congress likely will consider legislation later this year addressing the deep cut mandated by the SGR formula. Absent changes in current law, a cut of nearly 25 percent will take effect on January 1, 2014.

Based on the proposals released to date, leaders on key committees intend to use this year’s legislation to construct a permanent replacement for the SGR, with a new reimbursement model heavily focused on quality metrics. The goal of securing a higher quality of services for taxpayer dollars is clearly laudable. But Congress should remain mindful of the consequences of additional intrusion in the doctor–patient relationship, and of the fact that the SGR constitutes merely one piece of a larger entitlement structure in need of fundamental reform.

When considering Medicare physician payment legislation, Congress should:

  • Reject any provisions that micromanage the doctor–patient relationship. Whether under the name of pay-for-performance, clinical guidelines, or quality metrics, programs emphasizing physician compliance with government-imposed standards are inconsistent with the original intent of the Medicare statute, which safeguards the professional independence and integrity of the medical profession and sacrosanct character of the doctor–patient relationship. Placing additional authority in the hands of government bureaucrats to dictate the practice of physicians undermines these principles as well as patient trust.
  • Restore balance billing and the right to private contracting. Consistent with a return to free-market principles, Congress should remove the current statutory prohibitions on balance billing—when doctors bill patients for the part of the health-service charge not reimbursed by Medicare—while also repealing the oppressive restriction that prohibits doctors who engage in any transactions with beneficiaries outside Medicare’s parameters from receiving Medicare reimbursements for two years.[34] Keeping the heavy hand of government out of the doctor–patient relationship requires removing regulatory restrictions that prevent senior citizens from engaging physicians on financial terms that both find fair and advantageous. When coupled with transparency guidelines ensuring that seniors clearly understand the prices and the terms of these contractual arrangements, balance billing and private contracting can remove many of the financial pressures imposed by Medicare’s top-down, government-dictated pricing system.
  • Insist that fundamental, long-term SGR reform be paired with fundamental, long-term Medicare reform. Experts on all sides of the political spectrum agree that the flawed SGR mechanism should be replaced. The best replacement for the SGR and the entire system of current Medicare financing lies in a defined-contribution (premium support) system that fundamentally reforms and enhances the entire Medicare program. In the short term, Congress can take several important incremental steps to re-structure the traditional Medicare program as part of a transition to a premium support system.[35] However, Congress should not attempt to enact a fundamental change to the SGR coupled solely with incremental reforms to the larger Medicare program. To do so would remove an impetus for the major structural reforms that Medicare needs in order to ensure its solvency for future generations.

Conclusion

Congress once again appears poised to grapple with a problem of its own making—namely, the SGR formula for physician reimbursement. Members in both the House and Senate have solicited proposals for alternatives, and have committed to considering SGR proposals this year.

However, when constructing alternatives to the SGR, Congress should heed the lessons of experience. The system of administrative pricing for Medicare physician payment, in effect for nearly 25 years, has proven cumbersome, bureaucratic, and unworkable. Moving further in the direction of pay-for-performance medicine, as some proposals have suggested, would merely substitute medical societies for the role currently played by omnipotent government bureaucrats, attempting to impose one-size-fits-all medical care from Washington.

Conversely, while the SGR has not succeeded in its initial goal of containing Medicare physician spending, the perennial “doc fix” bills have forced Congress to enact changes in the Medicare program, many of which constituted real progress in reforming entitlement spending. Completely repealing or replacing the SGR, without first ensuring fundamental reform of the entire Medicare program, would actively subvert attempts to make the program sustainable for future generations.

The SGR debate presents Members of Congress with both an opportunity and a challenge. The opportunity lies in enacting reforms that can expand market forces in Medicare and enhance the program’s viability. The challenge lies in resisting the siren call that yet another form of federally micromanaged health care can succeed when all past iterations have failed. Seniors and future generations should hope that Congress chooses to embrace the opportunity and rise to the challenge.

 



[1] House Energy and Commerce Committee discussion draft of Medicare physician payment legislation, June 28, 2013, http://energycommerce.house.gov/sites/republicans.energycommerce.house.gov/files/BILLS-113hr-PIH-SGRreform.pdf (accessed July 11, 2013).

[2] House Energy and Commerce Committee and Ways and Means Committee joint framework for Medicare physician payment reform, “Overview of SGR Repeal and Reform Proposal,” February 7, 2013, http://energycommerce.house.gov/sites/republicans.energycommerce.house.gov/files/20130207SGRReform.pdf (accessed July 11 2013).

[3] News release, “Baucus, Hatch Call on Health Care Providers to Pitch in and Provide Ideas to Improve Medicare Physician Payment System,” U.S. Senate Committee on Finance, May 10, 2013, http://www.finance.senate.gov/newsroom/chairman/release/?id=fba99c75-981f-4917-9836-ae49d47453a1 (accessed July 11, 2013).

[4] Mark Miller, “Moving Forward from the Sustainable Growth Rate (SGR) System,” testimony before the Finance Committee, U.S. Senate, at a hearing on “Advancing Reform: Medicare Physician Payments,” May 14, 2013, p. 2, http://www.finance.senate.gov/imo/media/doc/MedPAC%20SGR%20testimony%20with%20attachments_SFC_5%2014%202013.pdf (accessed July 11, 2013).

[5] Ibid., p. 3.

[6] The full list of statutory adjustments to the SGR conversion factor enacted by Congress since 2003 can be found in amendments to the United States Code, 42 U.S.C. 1395w-4(d)(5) et seq.

[7] Beginning with the Tax Relief and Health Care Act of 2006 (P.L. 109–432), Congress provided that temporary payment increases overriding the SGR cuts would not be used in setting the SGR targets for future years—thus ensuring a “cliff” when the target re-sets at the lower level.

[8] The Centers for Medicare and Medicaid Services has estimated a preliminary SGR conversion factor update of 24.4 percent for calendar year 2014. Centers for Medicare and Medicaid Services, “Estimated Sustainable Growth Rate and Conversion Factor for Medicare Payments to Physicians in 2014,” April 2013, p. 8, Table 5, http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SustainableGRatesConFact/Downloads/sgr2014p.pdf (accessed July 11, 2013).

[9] Congressional Budget Office, “Medicare’s Payments to Physicians: The Budgetary Impact of Alternative Policies Relative to CBO’s May 2013 Baseline,” May 14, 2013, http://cbo.gov/sites/default/files/cbofiles/attachments/44184_May_2013_SGR.pdf (accessed July 11, 2013).

[10] Congressional Budget Office, “Medicare’s Payments to Physicians: The Budgetary Impact of Alternative Policies Relative to CBO’s March 2012 Baseline,” July 31, 2012, http://cbo.gov/sites/default/files/cbofiles/attachments/43502-SGR%20Options2012.pdf (accessed July 11, 2013).

[11] Miller, testimony before Finance Committee, U.S. Senate, Figures 1 and 2, p. 4.

[12] Medicare Physician Fairness Act of 2009, S. 1776 (111th Congress).

[13] Senate Roll Call 325 of 2009, October 21, 2009, http://www.senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cfm.cfm?congress=111&session=1&vote=00325 (accessed July 11, 2013).

[14] Congressional Budget Office, cost estimate for S. 1776, October 26, 2009, http://cbo.gov/sites/default/files/cbofiles/ftpdocs/106xx/doc10674/s1776greggltr.pdf (accessed July 11, 2013).

[15] Andrew Rettenmaier and Thomas Saving, “How the Medicare ‘Doc Fix’ Would Add to the Long-Term Medicare Debt,” Heritage Foundation WebMemo No. 2695, November 13, 2009, http://www.heritage.org/research/reports/2009/11/how-the-medicare-doc-fix-would-add-to-the-long-term-medicare-debt.

[16] American Taxpayer Relief Act of 2013, Public Law 112–240, Sections 636 and 638.

[17] Centers for Medicare and Medicaid Services, 2013 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds, May 31, 2013, p. 58, Table II.B4, http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/ReportsTrustFunds/Downloads/TR2013.pdf (accessed July 11, 2013).

[18] Section 6102 of the Omnibus Budget Reconciliation Act of 1989, Public Law 101–239, established a Medicare physician fee schedule based on the RBRVS, effective in January 1992.

[19] Robert E. Moffit, “Back to the Future: Medicare’s Resurrection of the Labor Theory of Value,” Regulation (Fall 1992), pp. 54–63.

[20] Medicare Payment Advisory Commission, Report to the Congress: Medicare Payment Policy, March 2013, p. 79, http://medpac.gov/documents/Mar13_EntireReport.pdf (accessed July 11, 2013).

[21] Ibid., p. 95.

[22] House discussion draft, pp. 3–5.

[23] Centers for Medicare and Medicaid Services, 2013 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds, p. 2.

[24] Patricia A. Davis et al., “Medicare Provisions in PPACA (P.L. 111–148),” Congressional Research Service Report for Congress No. R41196, April 21, 2010, http://assets.opencrs.com/rpts/11-148_20100421.pdf (accessed July 12, 2013).

[25] Patient Protection and Affordable Care Act, Public Law 111–148, Section 3002(b).

[26] Ibid., Section 3007.

[27] American Recovery and Reinvestment Act, Public Law 111–5, Section 4101(b).

[28] 42 U.S.C. 1395.

[29] Richard Dolinar and Luke Leininger, “Pay for Performance or Compliance? A Second Opinion on Medicare Reimbursement,” Heritage Foundation Backgrounder No. 1882, October 5, 2005, http://www.heritage.org/research/reports/2005/10/pay-for-performance-or-compliance-a-second-opinion-on-medicare-reimbursement.

[30] Ibid.

[31] 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.

[32] Michael Leavitt, “Health Reform’s Central Flaw: Too Much Power in One Office,” The Washington Post, February 18, 2011, http://www.washingtonpost.com/wp-dyn/content/article/2011/02/17/AR2011021705824.html (accessed July 11, 2013).

[33] For further information on the HHS Secretary’s powers, see John S. Hoff, “Implementing Obamacare: A New Exercise in Old-Fashioned Central Planning,” Heritage Foundation Backgrounder No. 2459, September 10, 2010, http://www.heritage.org/research/reports/2010/09/implementing-obamacare-a-new-exercise-in-old-fashioned-central-planning.

[34] Section 4507 of the Balanced Budget Act, Public Law 105–33.

[35] Robert E. Moffit, “The First Stage of Medicare Reform: Fixing the Current Program,” Heritage Foundation Backgrounder No. 2611, October 17, 2011, http://www.heritage.org/research/reports/2011/10/the-first-stage-of-medicare-reform-fixing-the-current-program.

Barack Obama’s Tax Cuts — For Insurance Companies

The President’s campaign flyer includes some interesting claims on health care.  It also includes some curious language on taxes: “The President has provided new tax cuts to help the middle class afford higher education and health care.”  We’ve debunked this myth in its entirety here.  But it’s worth reiterating the key point: The President’s claims to the contrary, the law and record are very clear about the fact that this massive new entitlement will go straight into the pockets of the insurance industry:

  • Section 1412(c)(2)(A) of the law provides that “The Secretary of the Treasury shall make the advance payment under this section of any premium tax credit allowed under section 36B of the Internal Revenue Code of 1986 to the issuer of a qualified health plan on a monthly basis.”
  • Page 37 of the report on the Finance Committee bill states: “The Committee Bill provides a refundable tax credit for eligible individuals and families who purchase health insurance through the state exchanges.  The premium tax credit, which is refundable and payable in advance directly to the insurer, subsidizes the purchase of certain health insurance plans through the state exchanges.”

Even liberal professor Jonathan Gruber – a paid Obamacare consultantadmitted in an interview that “Most households will never actually get their hands on the credits, so their existing tax liabilities won’t actually change.  In most cases, credits will go straight to insurance companies, to pay for health benefits.”  And according to CBO’s updated estimates, Obamacare will now provide over $1 trillion in spending on subsidies, which will go directly into the pockets of insurance companies.

Of course, candidate Obama opposed sending subsidies straight to insurance companies when he ran for President, only to flip-flop on this issue when he signed Obamacare.  An Obama campaign ad derided Senator McCain’s proposal to subsidize insurance through tax credits: “That tax credit?  McCain’s own Web site said it goes straight to the insurance companies, not to you, leaving you on your own…”  Likewise, in a campaign speech, candidate Obama vilified Senator McCain for this policy: “But the new tax credit [McCain’s] proposing?  That wouldn’t go to you.  It would go directly to your insurance company – not your bank account.”

Presidential flip-flops and insurance company giveaways are real signs of change – but they’re certainly not hope and change, and they’re not the true reform our health sector needs.

Neera Tanden and Obamacare’s $1 Trillion Tax Cut for Insurers

Speaking on Face the Nation yesterday, Center for American Progress CEO Neera Tanden claimed that Obamacare “is a massive tax cut for – in health care.  It’s a six-hundred-billion-dollar tax cut for health care.  It’s a tax cut to middle-class families.”  Tanden’s claims to the contrary, the law and record are very clear about the fact that this massive new entitlement will go straight into the pockets of the insurance industry:

  • Section 1412(c)(2)(A) of the law provides that “The Secretary of the Treasury shall make the advance payment under this section of any premium tax credit allowed under section 36B of the Internal Revenue Code of 1986 to the issuer of a qualified health plan on a monthly basis.”
  • Page 37 of the report on the Finance Committee bill states: “The Committee Bill provides a refundable tax credit for eligible individuals and families who purchase health insurance through the state exchanges.  The premium tax credit, which is refundable and payable in advance directly to the insurer, subsidizes the purchase of certain health insurance plans through the state exchanges.”

Even liberal professor Jonathan Gruber – a paid Obamacare consultantadmitted in an interview that “Most households will never actually get their hands on the credits, so their existing tax liabilities won’t actually change.  In most cases, credits will go straight to insurance companies, to pay for health benefits.”  And according to CBO’s updated estimates, Obamacare will now provide over $1 trillion in spending on subsidies, which will go directly into the pockets of insurance companies.

Of course, candidate Obama opposed sending subsidies straight to insurance companies when he ran for President.  An Obama campaign ad derided Senator McCain’s proposal to subsidize insurance through tax credits: “That tax credit?  McCain’s own Web site said it goes straight to the insurance companies, not to you, leaving you on your own…”  Likewise, in a campaign speech, candidate Obama vilified Senator McCain for this policy: “But the new tax credit [McCain’s] proposing?  That wouldn’t go to you.  It would go directly to your insurance company – not your bank account.”

In making her false claims that middle class families – as opposed to insurance companies – would actually receive these tax cuts, Tanden contradicted both the words of candidate Obama – on whose 2008 campaign she worked – and someone who has written multiple papers for the organization she leads.  It’s unfortunate that Obamacare supporters feel the need to twist the facts in such a blatantly obvious manner to try to gin up support for their unpopular health care law.

Why Obamacare Is NOT a Tax Cut

By now you’ve heard claims from President Obama and others that Obamacare provides a massive middle-class tax cut – largely by funding coverage for health insurance through Exchanges.  We figured we would take this opportunity to summarize why that claim doesn’t hold water:

CBO Scores Most of the “Tax Cuts” as Government Spending

We previously noted that, according to CBO’s March 2012 baseline, projected spending on insurance subsidies totaled $806 billion during FY2013-22.  As of March, $628 billion of that $806 billion was classified by CBO as government spending, NOT reduced tax revenues.  But since the Supreme Court’s ruling on Obamacare, those numbers have actually increased.  CBO now assumes more low-income people who previously would have enrolled in Medicaid will receive Exchange subsidies instead in light of the Court decision.  In its updated score of the repeal bill, CBO last week projected that $793 billion of the $1.017 trillion in subsidies represent government outlays, NOT revenue reductions.  That means that over 78% of Obamacare insurance subsidies are pure government spending to individuals who have no income tax liability.

Democrats are quick to cite CBO to claim that Obamacare will reduce the deficit – why aren’t they also quick to cite CBO when it states that the subsidies are NOT a tax cut, but instead largely comprise new government spending?

Democrat Claims on “Tax Cuts” Undermine the Social Security Trust Fund

When confronted with the fact that most of the Exchange subsidies constitute outlay spending by the federal government, President Obama and Democrats argue that these refundable tax credits – i.e., people receiving refunds even though they have zero income tax liability – offset payroll taxes paid by the low-income.  But Democrats have told Republicans for years that those payroll taxes are used solely to fund Social Security benefits, meaning those workers will get their payroll taxes back in future benefits (and especially in the case of low-income workers, will get their payroll taxes back and then some, due to the way Social Security benefits are calculated).  Do Democrats now want to admit that the Social Security Trust Fund is effectively meaningless, and that those who pay only payroll taxes are funding general government obligations rather than their own retirement benefits…?

Low-Income Individuals Don’t Pay Enough Other Taxes to Offset this “Tax Cut”

Even if you disregard points #1 and #2 above, and believe that the subsidies will offset payroll and other taxes paid by individuals, the massive subsidies will still overwhelm many individuals’ total tax liability – federal, state, AND local.  In its analysis of the fiscal impacts of the Supreme Court ruling, CBO noted that in 2022, Exchange subsidies for low-income individuals – i.e., those persons who were originally projected to enroll in Medicaid, but who will now enroll in Exchanges instead due to the Court ruling – will average about $9,000 per year.  These low-income individuals have incomes under 138% of the federal poverty level ($15,414.60 for a single person, $31,809 for a family of four in 2012).

To put it into perspective: A single person with income of 138% FPL, or $15,414.60, would pay total federal payroll taxes of $2,358.44 (that includes employee AND employer shares).  Assume also for illustrative purposes that this person would pay $1,541.46 in state and local income taxes, given a combined 10% state and local tax rate.  As noted above, this person’s average insurance subsidy will total $9,000.  Given payroll and state/local income tax liability totaling $3899.90, that means the individual in question would have to pay an additional $5100.10 in sales taxes for the federal subsidy to offset existing tax liability.  And at a 6% local sales tax rate, an individual with income of $15,414.6 would have to spend just over $85,000 – enough to buy a Platinum Edition Cadillac Escalade – to pay enough sales tax to have a net tax liability.

All this is to say that there is virtually NO WAY some of the individuals receiving subsidies will pay enough in payroll taxes, state and local taxes, sales taxes, or any other kind of taxes for the subsidies to offset taxes they actually paid – as opposed to the government spending money to buy them health insurance.

Obamacare Subsidies are Paid Directly to Insurance Companies

Democrats’ claims to the contrary, the law and record are very clear about the fact that this massive new entitlement will go straight into the pockets of the insurance industry:

  • Section 1412(c)(2)(A) of the law provides that “The Secretary of the Treasury shall make the advance payment under this section of any premium tax credit allowed under section 36B of the Internal Revenue Code of 1986 to the issuer of a qualified health plan on a monthly basis.”
  • Page 37 of the report on the Finance Committee bill states: “The Committee Bill provides a refundable tax credit for eligible individuals and families who purchase health insurance through the state exchanges.  The premium tax credit, which is refundable and payable in advance directly to the insurer, subsidizes the purchase of certain health insurance plans through the state exchanges.”

Even liberal professor Jonathan Gruber – a paid Obamacare consultantadmitted in an interview that “Most households will never actually get their hands on the credits, so their existing tax liabilities won’t actually change.  In most cases, credits will go straight to insurance companies, to pay for health benefits.”  And according to CBO’s updated estimates, Obamacare will now provide over $1 trillion in spending on subsidies, which will go directly into the pockets of insurance companies.

Of course, candidate Obama opposed sending subsidies straight to insurance companies when he ran for President, only to flip-flop on this issue when he signed Obamacare.  An Obama campaign ad derided Senator McCain’s proposal to subsidize insurance through tax credits: “That tax credit?  McCain’s own Web site said it goes straight to the insurance companies, not to you, leaving you on your own…”  Likewise, in a campaign speech, candidate Obama vilified Senator McCain for this policy: “But the new tax credit [McCain’s] proposing?  That wouldn’t go to you.  It would go directly to your insurance company – not your bank account.”

If this isn’t enough to convince you, consider a hypothetical example whereby Congress orders the IRS to send checks to Ferrari dealerships to pay for new sports cars for all Americans with incomes under $50,000 per year.  This is clearly NOT a tax cut – because the cost of the Ferrari obviously exceeds any and all taxes low- and middle-income families pay, and because the individuals in question don’t receive cash through the transaction.  It’s the same situation with health insurance.  And unfortunately for the shrinking number of Americans who DO pay taxes, giving $1 trillion in Exchange subsidies straight to insurance companies will prove to be a fiscal wreck that even loads of Ferraris couldn’t begin to match.

46 Reasons to Repeal an Unconstitutional Law NOW

46 50 Reasons to Repeal ALL of Obamacare NOW

Today the Supreme Court struck down portions of Obamacare as unconstitutional – states cannot be “dragooned” into expanding their Medicaid programs according to the law’s dictates. However, a list of 50 particularly onerous or egregious provisions in Obamacare (with sections from the statute duly noted) reveals just how much of this bad law remains. By the most generous interpretation, the Court struck down only four of the 50 egregious policies, illustrating why Congress should immediately repeal the entire measure once and for all. Among many other bad policies, the law:

  1. Imposes $800 billion in tax increases, including no fewer than 12 separate provisions breaking candidate Obama’s “firm pledge” during his campaign that he would not raise “any of your taxes” (Sections 9001-9016)
  2. Forces Americans to purchase a product for the first time ever (Section 1501)
  3. Creates a board of 15 unelected and unaccountable bureaucrats to make binding rulings on how to reduce Medicare spending (Section 3403)
  4. Pays over $800 billion in subsidies straight to health insurance companies (Sections 1401, 1402, and 1412)
  5. Requires all individuals to buy government-approved health insurance plans, imposing new mandates that will raise individual insurance premiums by an average of $2,100 per family (Section 1302)
  6. Forces seniors to lose their current health care, by enacting Medicare Advantage cuts that by 2017 will cut enrollment in half, and cut plan choices by two-thirds (Section 3201)
  7. Imposes a 40 percent tax on health benefits, a direct contradiction of Barack Obama’s campaign promises (Section 9001)
  8. Relies upon government bureaucrats to “issue guidance on best practices of plain language writing” (Section 1311(e)(3)(B))
  9. Provides special benefits to residents of Libby, Montana – home of Max Baucus, the powerful Chairman of the Senate Finance Committee, who helped write the law even though he says he hasn’t read it (Section 10323)
  10. Imposes what a Democrat Governor called the “mother of all unfunded mandates” – new, Washington-dictated requirements of at least $118 billion – at a time when states already face budget deficits totaling a collective $175 billion (Section 2001)
  11. Imposes reductions in Medicare spending that, according to the program’s non-partisan actuary, would cause 40 percent of all Medicare providers to become unprofitable, and could lead to their exit from the program (Section 3401)
  12. Raises premiums on more than 17 million seniors participating in Medicare Part D, so that Big Pharma can benefit from its “rock-solid deal” struck behind closed doors with President Obama and Congressional Democrats (Section 3301)
  13. Creates an institute to undertake research that, according to one draft Committee report prepared by Democrats, could mean that “more expensive [treatments] will no longer be prescribed” (Section 6301)
  14. Creates a multi-billion dollar “slush fund” doled out solely by federal bureaucrats, which has already been used to fund things like bike paths (Section 4002)
  15. Subjects states to myriad new lawsuits, by forcing them to assume legal liability for delivering services to Medicaid patients for the first time in that program’s history (Section 2304)
  16. Permits taxpayer dollars to flow to health plans that fund abortion, in a sharp deviation from prior practice under Democrat and Republican Administrations (Section 1303)
  17. Empowers bureaucrats on a board that has ruled against mammograms and against prostate cancer screenings to make binding determinations about what types of preventive services should be covered (Sections 2713 and 4104)
  18. Precludes poor individuals from having a choice of health care plans by automatically dumping them in the Medicaid program (Section 1413(a))
  19. Creates a new entitlement program that one Democrat called “a Ponzi scheme of the first order, the kind of thing that Bernie Madoff would have been proud of” – a scheme so unsustainable even the Administration was forced to admit it would not work (Section 8002)
  20. Provides $5 billion in taxpayer dollars to a fund that has largely served to bail out unions and other organizations who made unsustainable health care promises to retirees that they cannot afford (Section 1102)
  21. Creates a tax credit so convoluted it requires seven different worksheets to determine eligibility (Section 1421)
  22. Imposes multiple penalties on those who marry, by reducing subsidies (and increasing taxes) for married couples when compared to two individuals cohabiting together (Sections 1401-02)
  23. Extends the Medicare “payroll tax” to unearned income for the first time ever, including new taxes on the sale of some homes (Section 1402)
  24. Impedes state flexibility by requiring Medicaid programs to offer a specific package of benefits, including benefits like family planning services (Sections 2001(a)(2), 2001(c), 1302(b), and 2303(c))
  25. Requires individuals to go to the doctor and get a prescription in order to spend their own Flexible Spending Account money on over-the-counter medicines (Section 9003)
  26. Expands the definition of “low-income” to make 63 percent of non-elderly Americans eligible for “low-income” subsidized insurance (Section 1401)
  27. Imposes a new tax on the makers of goods like pacemakers and hearing aids (Section 9009)
  28. Creates an insurance reimbursement scheme that could result in the federal government obtaining Americans’ medical records (Section 1343)
  29. Permits states to make individuals presumptively eligible for Medicaid for unlimited 60-day periods, thus allowing any individual to receive taxpayer-funded assistance ad infinitum (Section 2303(b))
  30. Allows individuals to purchase insurance on government exchanges – and to receive taxpayer-funded insurance subsidies – WITHOUT verifying their identity as American citizens (Section 1411)
  31. Gives $300 million in higher Medicaid reimbursements to one state as part of the infamous “Louisiana Purchase” – described by ABC News as “what…it take[s] to get a wavering senator to vote for health care reform” (Section 2006)
  32. Raises taxes on firms who cannot afford to buy coverage for their workers (Section 1513)
  33. Forces younger Americans to pay double-digit premium increases so that older workers can pay slightly less (Section 1201)
  34. Prohibits states from modifying their Medicaid programs to include things like modest anti-fraud protections (Section 2001)
  35. Includes a special provision increasing federal payments just for Tennessee (Section 1203(b))
  36. Allows individuals to purchase health insurance across state lines – but only if politicians and bureaucrats agree to allow citizens this privilege (Section 1333)
  37. Allows the HHS Secretary and federal bureaucrats to grant waivers exempting people from Obamacare’s onerous mandates, over half of which have gone to members of union plans (Section 1001)
  38. Creates a pseudo-government-run plan overseen by the federal government (Section 1334)
  39. Removes a demonstration project designed to force government-run Medicare to compete on a level playing field with private plans (Section 1102(f))
  40. Gives the Secretary of HHS an UNLIMITED amount of federal funds to spend funding state insurance Exchanges (Section 1311(a))
  41. Creates a grant program that could be used by liberal groups like ACORN or AARP to conduct “public education activities” surrounding Obamacare (Section 1311(i))
  42. Applies new federal mandates to pre-Obamacare insurance policies, thus proving that you CAN’T keep the insurance plan you had – and liked – before the law passed (Sections 2301 and 10103)
  43. Prohibits individuals harmed by federal bureaucrats from challenging those decisions, either in court or through regulatory processes (Sections 3001, 3003, 3007, 3008, 3021, 3022, 3025, 3133, 3403, 5501, 6001, and 6401)
  44. Earmarks $100 million for “construction of a health care facility,” a “sweetheart deal” inserted by a Democrat Senator trying to win re-election (Section 10502)
  45. Puts yet another Medicaid unfunded mandate on states, by raising payments to primary care physicians, but only for two years, forcing states to come up with another method of funding this unsustainable promise when federal funding expires (Section 1202)
  46. Imposes price controls that have had the effect of costing jobs in the short time since they were first implemented (Section 1001)
  47. Prohibits individuals from spending federal insurance subsidies outside government-approved Exchanges (Section 1401(a))
  48. Provides a special increase in federal hospital payments just for Hawaii (Section 10201(e)(1))
  49. Imposes new reporting requirements that will cost businesses millions of dollars, and affect thousands of restaurants and other establishments across the country (Section 4205)
  50. Codifies 159 new boards, bureaucracies, and programs

The Supreme Court may have struck some of these onerous provisions, but the only way to ensure that ALL these provisions are eliminated – and never return – is to repeal ALL of this unconstitutional law immediately.

Democrats Afraid of Obamacare’s Shadow

Politico reported late last week that Finance Committee Chairman Baucus will not schedule a confirmation hearing for Acting CMS Administrator Marilyn Tavenner.  The article provided some hint as to the reasoning behind the Chairman’s position: “If she [Tavenner] did have a hearing, it would likely be dominated by controversial health reform politics.”  In other words, Chairman Baucus and Democrats are shelving confirmation proceedings for a major Administration post – again – because they don’t want to talk about Obamacare.

As noted above, this isn’t the first time that Democrats have attempted to avoid debating the controversial health care law.  With respect to Tavenner’s predecessor, Donald Berwick, Chairman Baucus could also have called a confirmation hearing any time he liked, but chose not to do so.  Even as liberals alleged that “Republicans refuse[d] to even have [sic] a hearing” about Dr. Berwick, the fact remains that Republicans have no power to block the Senate Finance Committee from moving forward on Berwick’s nomination, Tavenner’s nomination, or any other nomination.

Much as the White House may want to blame Republican obstruction for the delays in confirming a CMS Administrator, the Administration should take a closer look in the mirror at its own party’s actions.  While the White House alleged that Dr. Berwick’s nomination was blocked because senators “put political interests above the best interests of the American people,” it was Democrats who did not want to call a hearing, and were afraid to discuss either Berwick or Obamacare at any point during the second half of 2010, their huge Senate majorities notwithstanding.  Moreover, according to key Democrat staffers, the Administration wanted to appoint a CMS Administrator in 2009, but decided not to, perhaps because it did not want to tell the American people who would actually implement Obamacare prior to its enactment.

Some may find the irony that even as the Administration attempts to sell the unpopular law to the American people, Democrats in Congress appear to have settled on a “Don’t Mention the War” strategy towards the 2700-page legislative behemoth.  Regardless, the net effect will be that unconfirmed bureaucrats have been given control over every American’s health insurance, and a budget larger than the Pentagon’s, for four years without so much as a cursory hearing.

208 Things in Obamacare that Obama and Democrats Support

Last week, former HELP Committee staffer John McDonough wrote a list of “50 provisions I ask the media to ask Romney et al. if they are committed to repealing as President.”  McDonough noted that “there are [Obamacare] provisions opponents could pick out to create an alternative list for elimination.”

We here at RPC know a challenge when we hear one; our list is submitted below, with sections from the statute duly noted.  Remember when reading this list:  We KNOW that President Obama and Democrats all support these provisions in Obamacare – because they all voted to enact them into law.  So members of the media can readily ask President Obama and Democrat Members of Congress why they supported a law that…

  1. Imposes $800 billion in tax increases, including no fewer than 12 separate provisions breaking candidate Obama’s “firm pledge” during his campaign that he would not raise “any of your taxes” (Sections 9001-9016)?
  2. Forces Americans to purchase a product for the first time ever (Section 1501)?
  3. Creates a board of 15 unelected and unaccountable bureaucrats to make binding rulings on how to reduce Medicare spending (Section 3403)?
  4. Pays over $800 billion in subsidies straight to health insurance companies (Sections 1401, 1402, and 1412)?
  5. Requires all individuals to buy government-approved health insurance plans, imposing new mandates that will raise individual insurance premiums by an average of $2,100 per family (Section 1302)?
  6. Forces seniors to lose their current health care, by enacting Medicare Advantage cuts that by 2017 will cut enrollment in half, and cut plan choices by two-thirds (Section 3201)?
  7. Imposes a 40 percent tax on health benefits, a direct contradiction of Barack Obama’s campaign promises (Section 9001)?
  8. Relies upon government bureaucrats to “issue guidance on best practices of plain language writing” (Section 1311(e)(3)(B))?
  9. Provides special benefits to residents of Libby, Montana – home of Max Baucus, the powerful Chairman of the Senate Finance Committee, who helped write the law even though he says he hasn’t read it (Section 10323)?
  10. Imposes what a Democrat Governor called the “mother of all unfunded mandates” – new, Washington-dictated requirements of at least $118 billion – at a time when states already face budget deficits totaling a collective $175 billion (Section 2001)?
  11. Imposes reductions in Medicare spending that, according to the program’s non-partisan actuary, would cause 40 percent of all Medicare providers to become unprofitable, and could lead to their exit from the program (Section 3401)?
  12. Raises premiums on more than 17 million seniors participating in Medicare Part D, so that Big Pharma can benefit from its “rock-solid deal” struck behind closed doors with President Obama and Congressional Democrats (Section 3301)?
  13. Creates an institute to undertake research that, according to one draft Committee report prepared by Democrats, could mean that “more expensive [treatments] will no longer be prescribed” (Section 6301)?
  14. Creates a multi-billion dollar “slush fund” doled out solely by federal bureaucrats, which has already been used to fund things like bike paths (Section 4002)?
  15. Subjects states to myriad new lawsuits, by forcing them to assume legal liability for delivering services to Medicaid patients for the first time in that program’s history (Section 2304)?
  16. Permits taxpayer dollars to flow to health plans that fund abortion, in a sharp deviation from prior practice under Democrat and Republican Administrations (Section 1303)?
  17. Empowers bureaucrats on a board that has ruled against mammograms and against prostate cancer screenings to make binding determinations about what types of preventive services should be covered (Sections 2713 and 4104)?
  18. Precludes poor individuals from having a choice of health care plans by automatically dumping them in the Medicaid program (Section 1413(a))?
  19. Creates a new entitlement program that one Democrat called “a Ponzi scheme of the first order, the kind of thing that Bernie Madoff would have been proud of” – a scheme so unsustainable even the Administration was forced to admit it would not work (Section 8002)?
  20. Provides $5 billion in taxpayer dollars to a fund that has largely served to bail out unions and other organizations who made unsustainable health care promises to retirees that they cannot afford (Section 1102)?
  21. Creates a tax credit so convoluted it requires seven different worksheets to determine eligibility (Section 1421)?
  22. Imposes multiple penalties on those who marry, by reducing subsidies (and increasing taxes) for married couples when compared to two individuals cohabiting together (Sections 1401-02)?
  23. Extends the Medicare “payroll tax” to unearned income for the first time ever, including new taxes on the sale of some homes (Section 1402)?
  24. Impedes state flexibility by requiring Medicaid programs to offer a specific package of benefits, including benefits like family planning services (Sections 2001(a)(2), 2001(c), 1302(b), and 2303(c))?
  25. Requires individuals to go to the doctor and get a prescription in order to spend their own Flexible Spending Account money on over-the-counter medicines (Section 9003)?
  26. Expands the definition of “low-income” to make 63 percent of non-elderly Americans eligible for “low-income” subsidized insurance (Section 1401)?
  27. Imposes a new tax on the makers of goods like pacemakers and hearing aids (Section 9009)?
  28. Creates an insurance reimbursement scheme that could result in the federal government obtaining Americans’ medical records (Section 1343)?
  29. Permits states to make individuals presumptively eligible for Medicaid for unlimited 60-day periods, thus allowing any individual to receive taxpayer-funded assistance ad infinitum (Section 2303(b))?
  30. Allows individuals to purchase insurance on government exchanges – and to receive taxpayer-funded insurance subsidies – WITHOUT verifying their identity as American citizens (Section 1411)?
  31. Gives $300 million in higher Medicaid reimbursements to one state as part of the infamous “Louisiana Purchase” – described by ABC News as “what…it take[s] to get a wavering senator to vote for health care reform” (Section 2006)?
  32. Raises taxes on firms who cannot afford to buy coverage for their workers (Section 1513)?
  33. Forces younger Americans to pay double-digit premium increases so that older workers can pay slightly less (Section 1201)?
  34. Prohibits states from modifying their Medicaid programs to include things like modest anti-fraud protections (Section 2001)?
  35. Includes a special provision increasing federal payments just for Tennessee (Section 1203(b))?
  36. Allows individuals to purchase health insurance across state lines – but only if politicians and bureaucrats agree to allow citizens this privilege (Section 1333)?
  37. Allows the HHS Secretary and federal bureaucrats to grant waivers exempting people from Obamacare’s onerous mandates, over half of which have gone to members of union plans (Section 1001)?
  38. Creates a pseudo-government-run plan overseen by the federal government (Section 1334)?
  39. Removes a demonstration project designed to force government-run Medicare to compete on a level playing field with private plans (Section 1102(f))?
  40. Gives the Secretary of HHS an UNLIMITED amount of federal funds to spend funding state insurance Exchanges (Section 1311(a))?
  41. Creates a grant program that could be used by liberal groups like ACORN or AARP to conduct “public education activities” surrounding Obamacare (Section 1311(i))?
  42. Applies new federal mandates to pre-Obamacare insurance policies, thus proving that you CAN’T keep the insurance plan you had – and liked – before the law passed (Sections 2301 and 10103)?
  43. Prohibits individuals harmed by federal bureaucrats from challenging those decisions, either in court or through regulatory processes (Sections 3001, 3003, 3007, 3008, 3021, 3022, 3025, 3133, 3403, 5501, 6001, AND 6401)?
  44. Earmarks $100 million for “construction of a health care facility,” a “sweetheart deal” inserted by a Democrat Senator trying to win re-election (Section 10502)?
  45. Puts yet another Medicaid unfunded mandate on states, by raising payments to primary care physicians, but only for two years, forcing states to come up with another method of funding this unsustainable promise when federal funding expires (Section 1202)?
  46. Imposes price controls that have had the effect of costing jobs in the short time since they were first implemented (Section 1001)?
  47. Prohibits individuals from spending federal insurance subsidies outside government-approved Exchanges (Section 1401(a))?
  48. Provides a special increase in federal hospital payments just for Hawaii (Section 10201(e)(1))?
  49. Imposes new reporting requirements that will cost businesses millions of dollars, and affect thousands of restaurants and other establishments across the country (Section 4205)?

And instead of including a 50th item on our list, we’re going to include 159 separate items.  These are the 159 new boards, bureaucracies, and programs created by Obamacare.  You can find the list below, or here.

No matter which way you look at it, this list provides 208 easy reasons why the American people still continue to reject Democrats’ unpopular 2700-page health care law.

 

Obamacare’s 159 New Boards, Bureaucracies, Commissions, and Programs

  1. Grant program for consumer assistance offices (Section 1002, p. 37)
  2. Grant program for states to monitor premium increases (Section 1003, p. 42)
  3. Committee to review administrative simplification standards (Section 1104, p. 71)
  4. Demonstration program for state wellness programs (Section 1201, p. 93)
  5. Grant program to establish state Exchanges (Section 1311(a), p. 130)
  6. State American Health Benefit Exchanges (Section 1311(b), p. 131)
  7. Exchange grants to establish consumer navigator programs (Section 1311(i), p. 150)
  8. Grant program for state cooperatives (Section 1322, p. 169)
  9. Advisory board for state cooperatives (Section 1322(b)(3), p. 173)
  10. Private purchasing council for state cooperatives (Section 1322(d), p. 177)
  11. State basic health plan programs (Section 1331, p. 201)
  12. State-based reinsurance program (Section 1341, p. 226)
  13. Program of risk corridors for individual and small group markets (Section 1342, p. 233)
  14. Program to determine eligibility for Exchange participation (Section 1411, p. 267)
  15. Program for advance determination of tax credit eligibility (Section 1412, p. 288)
  16. Grant program to implement health IT enrollment standards (Section 1561, p. 370)
  17. Federal Coordinated Health Care Office for dual eligible beneficiaries (Section 2602, p. 512)
  18. Medicaid quality measurement program (Section 2701, p. 518)
  19. Medicaid health home program for people with chronic conditions, and grants for planning same (Section 2703, p. 524)
  20. Medicaid demonstration project to evaluate bundled payments (Section 2704, p. 532)
  21. Medicaid demonstration project for global payment system (Section 2705, p. 536)
  22. Medicaid demonstration project for accountable care organizations (Section 2706, p. 538)
  23. Medicaid demonstration project for emergency psychiatric care (Section 2707, p. 540)
  24. Grant program for delivery of services to individuals with postpartum depression (Section 2952(b), p. 591)
  25. State allotments for grants to promote personal responsibility education programs (Section 2953, p. 596)
  26. Medicare value-based purchasing program (Section 3001(a), p. 613)
  27. Medicare value-based purchasing demonstration program for critical access hospitals (Section 3001(b), p. 637)
  28. Medicare value-based purchasing program for skilled nursing facilities (Section 3006(a), p. 666)
  29. Medicare value-based purchasing program for home health agencies (Section 3006(b), p. 668)
  30. Interagency Working Group on Health Care Quality (Section 3012, p. 688)
  31. Grant program to develop health care quality measures (Section 3013, p. 693)
  32. Center for Medicare and Medicaid Innovation (Section 3021, p. 712)
  33. Medicare shared savings program (Section 3022, p. 728)
  34. Medicare pilot program on payment bundling (Section 3023, p. 739)
  35. Independence at home medical practice demonstration program (Section 3024, p. 752)
  36. Program for use of patient safety organizations to reduce hospital readmission rates (Section 3025(b), p. 775)
  37. Community-based care transitions program (Section 3026, p. 776)
  38. Demonstration project for payment of complex diagnostic laboratory tests (Section 3113, p. 800)
  39. Medicare hospice concurrent care demonstration project (Section 3140, p. 850)
  40. Independent Payment Advisory Board (Section 3403, p. 982)
  41. Consumer Advisory Council for Independent Payment Advisory Board (Section 3403, p. 1027)
  42. Grant program for technical assistance to providers implementing health quality practices (Section 3501, p. 1043)
  43. Grant program to establish interdisciplinary health teams (Section 3502, p. 1048)
  44. Grant program to implement medication therapy management (Section 3503, p. 1055)
  45. Grant program to support emergency care pilot programs (Section 3504, p. 1061)
  46. Grant program to promote universal access to trauma services (Section 3505(b), p. 1081)
  47. Grant program to develop and promote shared decision-making aids (Section 3506, p. 1088)
  48. Grant program to support implementation of shared decision-making (Section 3506, p. 1091)
  49. Grant program to integrate quality improvement in clinical education (Section 3508, p. 1095)
  50. Health and Human Services Coordinating Committee on Women’s Health (Section 3509(a), p. 1098)
  51. Centers for Disease Control Office of Women’s Health (Section 3509(b), p. 1102)
  52. Agency for Healthcare Research and Quality Office of Women’s Health (Section 3509(e), p. 1105)
  53. Health Resources and Services Administration Office of Women’s Health (Section 3509(f), p. 1106)
  54. Food and Drug Administration Office of Women’s Health (Section 3509(g), p. 1109)
  55. National Prevention, Health Promotion, and Public Health Council (Section 4001, p. 1114)
  56. Advisory Group on Prevention, Health Promotion, and Integrative and Public Health (Section 4001(f), p. 1117)
  57. Prevention and Public Health Fund (Section 4002, p. 1121)
  58. Community Preventive Services Task Force (Section 4003(b), p. 1126)
  59. Grant program to support school-based health centers (Section 4101, p. 1135)
  60. Grant program to promote research-based dental caries disease management (Section 4102, p. 1147)
  61. Grant program for States to prevent chronic disease in Medicaid beneficiaries (Section 4108, p. 1174)
  62. Community transformation grants (Section 4201, p. 1182)
  63. Grant program to provide public health interventions (Section 4202, p. 1188)
  64. Demonstration program of grants to improve child immunization rates (Section 4204(b), p. 1200)
  65. Pilot program for risk-factor assessments provided through community health centers (Section 4206, p. 1215)
  66. Grant program to increase epidemiology and laboratory capacity (Section 4304, p. 1233)
  67. Interagency Pain Research Coordinating Committee (Section 4305, p. 1238)
  68. National Health Care Workforce Commission (Section 5101, p. 1256)
  69. Grant program to plan health care workforce development activities (Section 5102(c), p. 1275)
  70. Grant program to implement health care workforce development activities (Section 5102(d), p. 1279)
  71. Pediatric specialty loan repayment program (Section 5203, p. 1295)
  72. Public Health Workforce Loan Repayment Program (Section 5204, p. 1300)
  73. Allied Health Loan Forgiveness Program (Section 5205, p. 1305)
  74. Grant program to provide mid-career training for health professionals (Section 5206, p. 1307)
  75. Grant program to fund nurse-managed health clinics (Section 5208, p. 1310)
  76. Grant program to support primary care training programs (Section 5301, p. 1315)
  77. Grant program to fund training for direct care workers (Section 5302, p. 1322)
  78. Grant program to develop dental training programs (Section 5303, p. 1325)
  79. Demonstration program to increase access to dental health care in underserved communities (Section 5304, p. 1331)
  80. Grant program to promote geriatric education centers (Section 5305, p. 1334)
  81. Grant program to promote health professionals entering geriatrics (Section 5305, p. 1339)
  82. Grant program to promote training in mental and behavioral health (Section 5306, p. 1344)
  83. Grant program to promote nurse retention programs (Section 5309, p. 1354)
  84. Student loan forgiveness for nursing school faculty (Section 5311(b), p. 1360)
  85. Grant program to promote positive health behaviors and outcomes (Section 5313, p. 1364)
  86. Public Health Sciences Track for medical students (Section 5315, p. 1372)
  87. Primary Care Extension Program to educate providers (Section 5405, p. 1404)
  88. Grant program for demonstration projects to address health workforce shortage needs (Section 5507, p. 1442)
  89. Grant program for demonstration projects to develop training programs for home health aides (Section 5507, p. 1447)
  90. Grant program to establish new primary care residency programs (Section 5508(a), p. 1458)
  91. Program of payments to teaching health centers that sponsor medical residency training (Section 5508(c), p. 1462)
  92. Graduate nurse education demonstration program (Section 5509, p. 1472)
  93. Grant program to establish demonstration projects for community-based mental health settings (Section 5604, p. 1486)
  94. Commission on Key National Indicators (Section 5605, p. 1489)
  95. Quality assurance and performance improvement program for skilled nursing facilities (Section 6102, p. 1554)
  96. Special focus facility program for skilled nursing facilities (Section 6103(a)(3), p. 1561)
  97. Special focus facility program for nursing facilities (Section 6103(b)(3), p. 1568)
  98. National independent monitor pilot program for skilled nursing facilities and nursing facilities (Section 6112, p. 1589)
  99. Demonstration projects for nursing facilities involved in the culture change movement (Section 6114, p. 1597)
  100. Patient-Centered Outcomes Research Institute (Section 6301, p. 1619)
  101. Standing methodology committee for Patient-Centered Outcomes Research Institute (Section 6301, p. 1629)
  102. Board of Governors for Patient-Centered Outcomes Research Institute (Section 6301, p. 1638)
  103. Patient-Centered Outcomes Research Trust Fund (Section 6301(e), p. 1656)
  104. Elder Justice Coordinating Council (Section 6703, p. 1773)
  105. Advisory Board on Elder Abuse, Neglect, and Exploitation (Section 6703, p. 1776)
  106. Grant program to create elder abuse forensic centers (Section 6703, p. 1783)
  107. Grant program to promote continuing education for long-term care staffers (Section 6703, p. 1787)
  108. Grant program to improve management practices and training (Section 6703, p. 1788)
  109. Grant program to subsidize costs of electronic health records (Section 6703, p. 1791)
  110. Grant program to promote adult protective services (Section 6703, p. 1796)
  111. Grant program to conduct elder abuse detection and prevention (Section 6703, p. 1798)
  112. Grant program to support long-term care ombudsmen (Section 6703, p. 1800)
  113. National Training Institute for long-term care surveyors (Section 6703, p. 1806)
  114. Grant program to fund State surveys of long-term care residences (Section 6703, p. 1809)
  115. CLASS Independence Fund (Section 8002, p. 1926)
  116. CLASS Independence Fund Board of Trustees (Section 8002, p. 1927)
  117. CLASS Independence Advisory Council (Section 8002, p. 1931)
  118. Personal Care Attendants Workforce Advisory Panel (Section 8002(c), p. 1938)
  119. Multi-state health plans offered by Office of Personnel Management (Section 10104(p), p. 2086)
  120. Advisory board for multi-state health plans (Section 10104(p), p. 2094)
  121. Pregnancy Assistance Fund (Section 10212, p. 2164)
  122. Value-based purchasing program for ambulatory surgical centers (Section 10301, p. 2176)
  123. Demonstration project for payment adjustments to home health services (Section 10315, p. 2200)
  124. Pilot program for care of individuals in environmental emergency declaration areas (Section 10323, p. 2223)
  125. Grant program to screen at-risk individuals for environmental health conditions (Section 10323(b), p. 2231)
  126. Pilot programs to implement value-based purchasing (Section 10326, p. 2242)
  127. Grant program to support community-based collaborative care networks (Section 10333, p. 2265)
  128. Centers for Disease Control Office of Minority Health (Section 10334, p. 2272)
  129. Health Resources and Services Administration Office of Minority Health (Section 10334, p. 2272)
  130. Substance Abuse and Mental Health Services Administration Office of Minority Health (Section 10334, p. 2272)
  131. Agency for Healthcare Research and Quality Office of Minority Health (Section 10334, p. 2272)
  132. Food and Drug Administration Office of Minority Health (Section 10334, p. 2272)
  133. Centers for Medicare and Medicaid Services Office of Minority Health (Section 10334, p. 2272)
  134. Grant program to promote small business wellness programs (Section 10408, p. 2285)
  135. Cures Acceleration Network (Section 10409, p. 2289)
  136. Cures Acceleration Network Review Board (Section 10409, p. 2291)
  137. Grant program for Cures Acceleration Network (Section 10409, p. 2297)
  138. Grant program to promote centers of excellence for depression (Section 10410, p. 2304)
  139. Advisory committee for young women’s breast health awareness education campaign (Section 10413, p. 2322)
  140. Grant program to provide assistance to provide information to young women with breast cancer (Section 10413, p. 2326)
  141. Interagency Access to Health Care in Alaska Task Force (Section 10501, p. 2329)
  142. Grant program to train nurse practitioners as primary care providers (Section 10501(e), p. 2332)
  143. Grant program for community-based diabetes prevention (Section 10501(g), p. 2337)
  144. Grant program for providers who treat a high percentage of medically underserved populations (Section 10501(k), p. 2343)
  145. Grant program to recruit students to practice in underserved communities (Section 10501(l), p. 2344)
  146. Community Health Center Fund (Section 10503, p. 2355)
  147. Demonstration project to provide access to health care for the uninsured at reduced fees (Section 10504, p. 2357)
  148. Demonstration program to explore alternatives to tort litigation (Section 10607, p. 2369)
  149. Indian Health demonstration program for chronic shortages of health professionals (S. 1790, Section 112, p. 24)*
  150. Office of Indian Men’s Health (S. 1790, Section 136, p. 71)*
  151. Indian Country modular component facilities demonstration program (S. 1790, Section 146, p. 108)*
  152. Indian mobile health stations demonstration program (S. 1790, Section 147, p. 111)*
  153. Office of Direct Service Tribes (S. 1790, Section 172, p. 151)*
  154. Indian Health Service mental health technician training program (S. 1790, Section 181, p. 173)*
  155. Indian Health Service program for treatment of child sexual abuse victims (S. 1790, Section 181, p. 192)*
  156. Indian Health Service program for treatment of domestic violence and sexual abuse (S. 1790, Section 181, p. 194)*
  157. Indian youth telemental health demonstration project (S. 1790, Section 181, p. 204)*
  158. Indian youth life skills demonstration project (S. 1790, Section 181, p. 220)*
  159. Indian Health Service Director of HIV/AIDS Prevention and Treatment (S. 1790, Section 199B, p. 258)*

 

*Section 10221, page 2173 of H.R. 3590 deems that S. 1790 shall be deemed as passed with certain amendments.

Correcting the Record on the Berwick Nomination

The end of Donald Berwick’s tenure as Centers for Medicare and Medicaid Services Administrator last week has resulted in several news stories, as well as points that need rebutting:

  • First, it is NOT correct to state that “Republicans refuse[d] to even have [sic] a hearing” on Berwick’s confirmation – for Republicans have no power to block the Senate Finance Committee from moving forward on Berwick’s nomination (or any other nomination).  Chairman Baucus could have called a confirmation hearing any time he liked, but chose not to do so.
  • Second, if the White House wants to claim that Berwick’s nomination was blocked because senators “put political interests above the best interests of the American people,” their criticisms should be focused on Democrats who did not want to call a hearing, and were afraid to discuss either Berwick or Obamacare at any point during the second half of 2010, their huge Senate majorities notwithstanding.  The White House should also look in the mirror – because according to key Democrat staffers, the Administration wanted to appoint Berwick in 2009, but decided not to, perhaps because it learned of his controversial views and did not want them publicized in the run-up to Obamacare’s passage.  Berwick had previously committed to delivering a public “point-by-point rebuttal” to his critics, but the New York Times noted this weekend that “for political reasons, the Administration did not want him [Berwick] to defend past statements” regarding rationing and British socialized medicine.  In other words, the White House censored Berwick, thereby playing politics with his nomination.
  • Third, the idea that Republican criticisms of Berwick were based on a “caricature” significantly understates the breadth and scope of Berwick’s comments regarding controversial issues.  In an interview with MSNBC’s Chris Hayes over the weekend, Hayes alleged that opposition to Berwick were based on one article about rationing and one speech about the NHS.  Berwick himself claimed his critics had “a lack of authenticity in inquiry.”  But in reality, the more one inquires into Berwick’s history, the more one finds controversial statements focused on a health system driven by government bureaucracy and centralized planning.  One publicly available document shows not just one article or one speech, but 158 separate quotes over 22 pages, and dozens of articles, highlighting Berwick’s troubling views – none of which have been publicly refuted.  Dr. Berwick wrote articles with such titles as “Cost-Effectiveness Analysis in Pediatric Practice,” which makes one wonder:  If these cost-effectiveness analyses were NOT designed with rationing health care in mind, then what exactly was the point of conducting the analysis in the first place?
  • Fourth, the notion that Republican concerns about Berwick were based upon gamesmanship, and that his nomination was merely “derailed by politics” understates the problematic nature of his nomination.  Berwick himself said this weekend that “I did not even know if I was fit for” the CMS post.  This concern about his managerial skills was shared by others in the health policy sphere, who “voiced concerns that Berwick lacked the administrative background for the position.”  Berwick in a 2006 interview admitted: “Inattention to detail is my biggest defect….I can create a mess.”  Couple his lack of managerial expertise with his controversial – and oft-repeated – views, and there were many substantive reasons, both practical and philosophical, for Republicans to question his nomination, not just a desire to score points.

Finally, it’s worth pointing out that in his New York Times interview, Berwick conceded the health care law remains unpopular: “It’s a complex, complicated law.  To explain it takes a while.  To understand it takes an investment that I’m not sure the man or woman in the street wants to make or ought to make….Somehow we have not put together that story in a way that’s compelling.”  That one of Obamacare’s key implementers, and biggest supporters, acknowledges the public continues to reject the law speaks volumes about the 2700-page measure.