How Government-Run Health Care Worsened the Coronavirus Crisis

Leftist politicians have spent a great amount of time over the past two months attacking President Trump for his handling of the coronavirus crisis. But instead of reflexively criticizing the administration, those liberals might want to examine how the left’s dream of government-run health care has exacerbated the crisis within the United States.

One of the major causes of the dearth of testing over the past several months: Low payments from Medicare, which led to low payment rates from private insurance plans. It may come as a shock to people like Rep. Alexandria Ocasio-Cortez (D-NY), but guess what labs did when low payments meant they suffered a financial loss for every coronavirus patient tested? They performed fewer tests.

Low Reimbursements Equals Fewer Tests

A recent expose in USA Today highlighted how Medicare “lowballed payments” to labs for coronavirus tests, leading those labs to restrict the number of tests they performed. An executive at one lab, Aaron Domenico, told the paper that “I’m an American first, and if I could do it for cost, I’d be happy to do it for the people at cost.” But Medicare initially reimbursed laboratories only $51 for a coronavirus test, much less than Domenico’s costs of $67 per test.

Paying $51 for a diagnostic test sounds like a lot, but Medicare gives laboratories nearly twice that amount, or approximately $96, to test for the flu. And government bureaucrats setting unrealistically low prices meant that private insurers followed Medicare’s lead. Little wonder that the head of the National Independent Laboratory Association said “a number of labs are holding back” on performing additional tests “because they didn’t want to lose money.”

Thankfully, on April 14 Medicare raised its reimbursement for a coronavirus test from $51 to $100. Unsurprisingly, the number of tests performed daily has roughly doubled since that point. Centers for Medicare and Medicaid Services (CMS) Administrator Seema Verma said she “recognized that there may have been some issues with reimbursement” discouraging labs from performing coronavirus tests.

Bureaucrats Can’t Micromanage Health Care

Therein lies one of the major problems with government-run health care: The notion that federal bureaucrats can determine the correct price for every prescription drug, laboratory test, physician service, or hospital procedure across the country. Donald Berwick, a former CMS administrator who helped develop Sen. Elizabeth Warren’s single-payer proposal, once said, “I want to see that in the city of San Diego or Seattle there are exactly as many MRI units as needed when operating at full capacity. Not less and not more.”

Berwick’s comments suggest that the federal government can determine the “right” amount of MRI units in each city, and use policy levers to achieve that “correct” outcome. But the coronavirus testing fiasco demonstrates how federal bureaucrats often do a poor job of trying to micromanage health care from Washington. Paying doctors and laboratories too much will encourage over-consumption of care, while paying too little discourages providers from even offering the service.

Low Payments Lead to Job Losses, Too

The problems with coronavirus testing also preview the left’s efforts to expand government-run health care. For instance, Joe Biden’s campaign platform calls for a government-run health plan that “will reduce costs for patients by negotiating lower prices from hospitals and other health care providers.”

But all these proposals—whether they would abolish private insurance outright, as Warren and Sen. Bernie Sanders support, or offer a government-run “option,” as in Biden’s platform—would have the government “negotiate” prices by forcing doctors, nurses, and hospitals to accept less money. By lowering payment levels, those plans would lead to massive job losses—as many as 1.5 million jobs in hospitals alone under a transition to single-payer, according to one estimate in the prestigious Journal of the American Medical Association.

The pay cuts and furloughs affecting many front-line health workers—the health-care sector lost 1.4 million jobs during the month of April—provide a preview of the future. Instead of suffering temporary revenue declines due to the coronavirus pandemic, hospitals and medical practices would face permanent reductions in revenue from lower-paying government programs.

Worse yet, care will suffer when people cannot access the care they need at the paltry prices government programs will pay. While the left lays the coronavirus testing flaws at the feet of President Trump, they should look instead at the government-run programs they support as a major source of the problem. Voters being asked to endorse the movement towards socialism in November should take note as well.

This post was originally published at The Federalist.

Unanswered Questions on Single Payer

This month’s Democratic presidential debate will likely see a continued focus on the single-payer health care proposal endorsed by Sens. Bernie Sanders of Vermont and Elizabeth Warren of Massachusetts. But for all the general discussion — and pointed controversy — over single payer at prior debates, many unanswered questions remain. The moderators should ask Sanders and Warren about the specific details of their legislation, such as:

►Section 901(A) of the bill states that “no benefits shall be available under Title XVIII of the Social Security Act” — i.e., Medicare. And an analyst with the liberal Urban Institute has said that “you can call (the bill) many things — from ambitious to unrealistic. But please don’t call it Medicare.” Why do you insist on calling your proposal “Medicare for All” when it would bear little resemblance to the Medicare program and, in fact, would abolish it outright?

►You have claimed that single payer will make health care a human right. But the bill itself does not guarantee access to a doctor — it only guarantees that patients will have their care paid for if they can find a doctor or hospital willing to treat them. In fact, in 2005, the Canadian Supreme Court ruled that “access to a waiting list is not access to health care,” because patients in that country’s single-payer system could not access care in a timely fashion. Why are you promising the American people access to care when your bill falls short of that promise?

►The Urban Institute estimated that a similar single-payer plan would raise national health care spending by $719.7 billion a year, because abolishing cost-sharing (e.g., deductibles, copayments, etc.) will increase demand for care. But the People’s Policy Project called Urban’s estimates “ridiculous,” because “there is still a hard limit to just how much health care can be performed because there are only so many doctors.” Which position do you agree with — the Urban Institute’s belief that individuals consuming more “free” health care will cause spending to rise, or the position that spending will not increase because at least some people who demand care will not be able to obtain it?

►Countries like Canada and Great Britain, both of which have single-payer health care systems, permit individuals to purchase private insurance if they wish — and many Canadians and Brits choose to do so. Why would you go beyond Canada, Britain and other countries to make private health insurance “unlawful” — and do you believe taking away individuals’ private insurance can pass constitutional muster with the Supreme Court?

►Four years ago, your Senate colleague Robert Menendez, D-N.J., was indicted for accepting nearly $1 million in gifts and favors from a Florida ophthalmologist. Menendez had tried to help that ophthalmologist — who was eventually convicted on 67 counts of defrauding Medicare — in a billing dispute with federal officials. Given this ethically questionable conduct by one of your own colleagues regarding the Medicare program, why does your legislation include no new provisions fighting fraud or corruption, even as it vastly expands the federal government’s power and scope?

►You have criticized President Donald Trump for his supposed attempts to “sabotage” the exchanges created under President Barack Obama’s health care law. How, then, would you stop a future Republican president from sabotaging a single-payer system when your legislation would vest more authority in the federal government than President Trump has?

Once Warren and Sanders finish answering these questions, the American people will likely recognize that, the senators’ claims to the contrary notwithstanding, single payer doesn’t represent a good answer for our health care system at all.

This post was originally published at USA Today.

Liberals’ Medicaid Alarmism

The Senate health care bill is dead, and that’s at least in part due to overheated rhetoric from the left about Medicaid. Many of the over-the-top claims lacked important facts or context, and seemed primarily designed to scare people rather than prompt civil debate.

For instance, liberals claimed that Republican plans to reduce the growth of Medicaid spending by nearly $800 billion in the next decade would “unravel” the program, as Clinton administration labor secretary Robert Reich put it. Yet Obamacare did nearly the exact same thing to Medicare. Obamacare reduced Medicare spending by $716 billion, according to a 2012 Congressional Budget Office estimate. And it did so not to improve Medicare’s ability to pay for care for the next generation of seniors, but instead to fund new Obamacare entitlements.

The liberals who claimed this year’s Republican health bills would “cut” Medicaid are the same ones who endorsed Obamacare’s reductions in Medicare spending. Just look at AARP’s framing of the issue: When Democrats reduce Medicare spending by hundreds of billions of dollars, the organization calls it “taking steps to reduce waste, fraud, abuse, and inefficiency.” But when Republicans reduce Medicaid spending by roughly equivalent amounts, AARP decries “unsustainable cuts” to the program.

Likewise the issue of caps on spending. A group of health care advocacy organizations sent a letter to Capitol Hill last month expressing “grave concern about potential changes to the fundamental structure and purpose of Medicaid,” saying they “vehemently oppose converting Medicaid’s funding into a capped financing structure.”

But this objection to capped payments also seems ironic at best, and disingenuous at worst. Section 3403 of Obamacare imposed per capita caps on Medicare spending, to be enforced by the Independent Payment Advisory Board — a group of unelected bureaucrats. So why did many of the same organizations who claim they “vehemently oppose” capped funding for Medicaid, endorse a health care bill that created the same funding structure for Medicare? Is it because a Democratic president proposed the former change, and a Republican Congress is debating the latter?

Then there’s the alarm raised by Andy Slavitt, a former head of Medicare, Medicaid and the Affordable Care Act during the Obama administration. He recently claimed that Republicans had a secret plan “not just to cut Medicaid, but to allow states to eliminate it.” He said a “new waiver process” in the Senate bill — really a modification of an existing Obamacare waiver — would allow states to transfer Medicaid beneficiaries to private coverage, thereby allowing them to “eliminate” Medicaid.

Yet the Obamacare waiver process explicitly prohibits changes to Medicaid — and the Senate bill would not have changed that. In addition, states have always had the ability to “eliminate” Medicaid; the federal government can’t force states to participate in the program. That’s why Arizona didn’t join until 1982, nearly two decades after Medicaid’s creation. States have remained in Medicaid because the federal government provides significant funding to them for their programs — and that funding would continue to rise, albeit more slowly, under both the House and Senate bills.

To be sure, both sides have exhibited their share of political opportunism. Republicans shouldn’t have attacked Obamacare’s Medicare savings as “cuts” — a reduction in projected growth rates should never be considered a “cut” in government spending. And conservatives were guaranteed to reap the political whirlwind sooner or later.

But the left’s hyperbolic rhetoric, coupled with some pretty apparent hypocrisy, not only helped kill the Senate health bill. It did the American people a disservice by detracting from the debate on health care that our country deserves.

This post was originally published at USA Today.

Nancy Pelosi and Entitlement “Reform”

This afternoon, USA Today published an op-ed from former Speaker Pelosi expressing her opposition to an increase in the Medicare retirement age.  Pelosi claimed that “We can do better – and we have.  Democrats are the only ones who have enacted a plan that extends the solvency of Medicare without cutting benefits through [Obamacare].”

Pelosi’s claims are particularly ironic, because last November, one leading Democrat admitted that the party “took a half a trillion dollars out of Medicare in [Obamacare], the health care bill” to pay for Obamacare’s new programs.  That speaker?  Nancy Pelosi.

Pelosi is right about one thing: We CAN do better – better than Obamacare.  And we should take no lessons on entitlement “reform” from someone who by her own admission “took half a trillion dollars out of Medicare” to pay for more new unsustainable federal programs.

Obamacare Hurting Jobs — And Patients

Yesterday the US Chamber of Commerce released its updated survey of small businesses.  The polling data revealed what many Americans already know – that Obamacare is increasing uncertainty and reducing hiring.  A whopping 74% of businesses said that Obamacare makes it harder for their firms to hire new workers, and 30% said they are not hiring thanks to Obamacare.  The survey is consistent with other reports; analysts at UBS have stated that Obamacare is “arguably the biggest impediment to hiring, particularly hiring of less skilled workers,” and the President of the Federal Reserve Bank of Atlanta has “frequently heard strong comments to the effect of ‘my company won’t hire a single additional worker until we know what health insurance costs are going to be.’”

Physicians are similarly unenthused about the impact of Obamacare on their practices.  As an op-ed in this morning’s USA Today notes, “many doctors are becoming wary of the law at a time when only one in three Americans support it.”  The piece cites a recent Deloitte survey of physicians, which found that 83% of physicians believe Obamacare will increase wait times, while only 27% believe the law will reduce costs through efficiency savings.

Speaker Pelosi famously said we had to pass the bill to find out what’s in it.  The latest news shows once again how American job creators and American physicians have not liked what they discovered in the massive 2700-page law.

Eight Ways Obamacare Has Harmed Americans This Year

Yesterday the Administration released a blog post claiming eight ways in which Obamacare is helping Americans.  But in reality, there are far more ways in which the law is wreaking havoc on Americans’ health care and economic security.  Herewith are just eight (plus one!) of the ways in which Obamacare has harmed millions of Americans during 2011:

Higher Premiums:  One of the “success stories” cited in the White House blog post involved a premium increase in Oregon lowered to “only” about 10 percent.  But Candidate Obama repeatedly promised his health care plan would LOWER premiums by $2,500 per family, and do so within his first term.  So a 10 percent premium increase represents yet another broken promise by this Administration.  Sadly, skyrocketing premium increases remain the norm: The price of the average employer-sponsored plan ROSE by more than $2,200 per family since Obama was first elected in 2008, according to studies from the Kaiser Family Foundation.

Jobs Disappearing:  All over the country, firms are having to lay off workers as a result of Obamacare’s tax increases and regulations.  Last month, device manufacturer Stryker announced that it would be shedding “five percent of its workforce over concerns about the impending 2.3 percent medical device tax prescribed by” Obamacare.  And in October, one insurance carrier announced plans to eliminate 110 jobs in Nebraska and Iowa as a “fairly predictable consequence” of Obamacare’s regulations.  That’s a long way from the 4 million jobs Speaker Pelosi claimed Obamacare would create.

Jobs Not Being Created:  Just this week, the owner of the Carl’s Jr. franchise wrote an op-ed in which he discussed the uncertainty surrounding Obamacare, and the fact that his business will reduce capital spending and hiring in anticipation of higher health care costs.  Other experts agree: Investment firm UBS has said Obamacare is “arguably the biggest impediment to hiring,” and the President of the Atlanta Fed said “we’ve frequently heard strong comments to the effect of ‘my company won’t hire a single additional worker until we know what health insurance costs are going to be.’”

Lost Coverage:  The Galen Institute recently released a paper chronicling all the plans that have dropped coverage since Obamacare was enacted into law – literally dozens of plans affecting millions of consumers nationwide.  Sadly, these results are far from atypical; the Administration’s own estimates found that half of all employers – and up to 80% of all small businesses – would lose their current health plan by 2013.

Paperwork Galore:  Already, the Administration has released more than 10,000 pages of regulations and notices regarding Obamacare – and the effects are echoing throughout the health care system.  USA Today recently reported that some medical facilities are actually laying off clinical staff to hire more administrative employees to deal with Obamacare-related paperwork.  And one hospital in Alabama decided to start imposing a new $25 annual fee on its patients to cover the “huge increase in paperwork” and “mountains of new forms” resulting from Obamacare.

Waivers and Favors:  One obvious symbol of Obamacare’s onerous impacts on Americans’ health insurance is the myriad exemptions being granted from the law.  As of July, the Administration approved a whopping 1,578 waivers exempting 3.4 million Americans, many of whom are in union plans, from just some of the law’s mandates.  Even Senate Democrats were forced to send a letter to the Administration asking for a separate waiver from one of Obamacare’s provisions, noting that the law “may cause disruption for farmers and others in the agricultural sector.”

You Can’t Spell Insurance Without I-R-S:  The Wall Street Journal reported on the consequences of just one of Obamacare’s tax increases – restrictions on consumer-directed health accounts like Flexible Spending Arrangements (FSAs) and Health Savings Accounts (HSAs).  New paperwork requirements led physicians to revolt: “‘I am now doing the IRS’s work, and that’s what I resent most,’” said one pediatrician.  And that’s not the only IRS-related provision bogged down in paperwork: An Inspector General report recently revealed that takeup of the small business tax credit has been far short of predictions, possibly because claiming the credit involves filling out seven different worksheets.

Raising Mandates, Raising Costs:  The 15-page guidance released by HHS earlier this month gives states the “flexibility” to impose more benefit mandates, not fewer.  It does so by allowing states to mandate an extremely rich benefit package, and do so without paying for the financial consequences of their decision – because the costs instead will be foisted on federal taxpayers funding insurance subsidies in that state.  At this rate, the Congressional Budget Office estimate of a $2,100 per family increase in individual insurance premiums due to Obamacare could very well be an under-estimate.

States Saddled by Mandates:  The annual State Expenditure Report released by the National Association of State Budget Officers revealed that Medicaid is consuming an ever-larger portion of state budgets, much faster than spending on education, corrections, or transportation.  And the reason why Medicaid is crowding out other portions of state budgets is Obamacare; at a time when states face budget deficits totaling a collective $175 billion, Obamacare is imposing new unfunded mandates of at least $118 billion.  Earlier this month the non-partisan Lewin Group released an analysis of the Rhode Island Medicaid program’s global compact waiver, revealing that the state saved tens of millions of dollars through flexibility – progress made despite the Obama Administration’s efforts, not because of them.  While other states could achieve similar savings, the Administration has refused governors’ multiple requests for flexibility from the new Medicaid mandates included in Obamacare.

Another Way Obamacare Is Costing Jobs

Despite claims that Obamacare would create 4 million new jobs, in reality the more than 10,000 pages of Obamacare-related regulations and notices released by the federal government to date have helped to slow hiring by businesses across the economy.  A study released earlier this month by the American Action Forum concluded that Obamacare’s regulations have cost over $12 billion.  That represents a paperwork cost of over 30 million hours, or the equivalent of 15,000 full-time employees, just to handle Obamacare’s new mandates, forms, and regulations.  All those new mandates will strangle the small businesses that are America’s job creators, impeding their ability to innovate, expand their firms, and grow the economy.

Of course, some providers are actually adding jobs thanks to the new law.  USA Today reported last month about one hospital in New Hampshire that is hiring – it’s hiring administrative workers designed to deal with “government reporting requirements….A lot of this is related to the new health care law.”  The move came only AFTER the hospital laid off more than 100 nurses and caregivers.   Such is the nature of the “job creation” and “reform” Obamacare hath wrought.

Administration (Still) Peddling a Raw Deal for Seniors

USA Today reports this morning that the Administration will attempt to trot out more data today regarding the Part D discount program as a way to show seniors are benefiting from Obamacare.  But, as the Associated Press has previously noted, this story comes with a major catch:  Only a fraction – about 1 in 20 – of the 47 million Medicare beneficiaries have benefited from the new discount program.  That means a very small percentage of program participants actually are receiving benefits from Obamacare.

Remember:  All seniors will be pay higher Part D premiums so that only some beneficiaries can receive richer coverage.  The Congressional Budget Office estimated that “the law would lead to an average increase in premiums for Part D beneficiaries of about 4 percent in 2011, rising to about 9 percent in 2019.”  That means that 17 million seniors will higher premiums, but only about 400,000 beneficiaries passing through the doughnut hole will actually receive the full benefit of the discount regime established in the law. (Many of the beneficiaries in the “doughnut hole” are low-income seniors, and the Medicare program already covered their additional costs in the coverage gap prior to Obamacare.)  Some would categorize this redistributive scenario as “spreading the wealth around.”

This drug discount program is clearly a big benefit to special interests, as Big Pharma is virtually guaranteed to increase sales thanks to its “rock-solid deal” struck behind closed doors.  But in reality, Obamacare will provide only modest benefits to a select few seniors, while raising costs for everyone else – and that’s not “reform.”

Obamacare Hits the States

Several reports in the past week or so have illustrated the impact that the recession – along with Obamacare – are having on state Medicaid budgets nationwide.  To wit:

  1. A front-page article in Monday’s USA Today outlined how “a growing number of states are sharply limiting hospital stays under Medicaid to as few as 10 days a year to control” rising state spending on the program.  A related article noted a major reason for these developments: Obamacare “requires states to maintain Medicaid eligibility and enrollment standards until 2014,” when the coverage expansions under the law take effect.  So the only option states have is to reduce benefit levels or reimbursement amounts.
  2. The Los Angeles Times reported this morning about California’s newly approved 10% reimbursement reduction to many physicians and other Medicaid providers, which the state and federal government both admitted could have a significant impact on beneficiary access.  As noted above, California and other states have been forced to use the crude method of reimbursement adjustments to balance their budgets, because Washington will not grant states flexibility to make other changes in their Medicaid programs.
  3. The liberal Kaiser Family Foundation released its annual survey of state Medicaid programs yesterday.  The report again confirms that states are struggling through tough budget times, made more difficult by Obamacare’s strictures on Medicaid programs.  The report also notes that states are struggling with significant uncertainty surrounding the law itself:

States were asked to identify the biggest challenges for Medicaid in implementing health reform.  Most states identified multiple health care reform implementation challenges.  The most commonly listed challenges included: the fiscal impact of health care reform implementation, the tight implementation timelines, lack of clear federal guidance, limited staff and administrative resources to accomplish all of the required health care reform planning and implementation tasks such as streamlining eligibility processes, building an exchange and integrating Medicaid eligibility and enrollment processes with the exchange, as well as various systems and IT issues, and provider access issues.

In other words, Washington is harming states – both because it’s imposing new mandates on their Medicaid programs, and because it’s not providing clear and timely guidance on those mandates.

  1. An article in Health Affairs published this week provided new estimates of the cost of Obamacare’s Medicaid expansion under a variety of different scenarios.  The Harvard researchers found that the law’s Medicaid expansion could cost as much as $98 billion per year by 2019 – a significant portion of which will be borne by the states.

It’s worth recalling that at a time when states face budget deficits totaling a collective $175 billion, Obamacare is imposing new unfunded mandates of at least $118 billion.  All the developments above reinforce the belief that states cannot afford the Medicaid programs they have now – so why is Obamacare foisting yet more unfunded mandates on the back of broken state Medicaid systems?

More Liberal Judicial Activism

The liberal Center for American Progress has posted an annotated “rebuttal” to Judge Vinson’s decision in the Florida multi-state lawsuit – and to get a clue as to its overall thrust, readers need only examine its first page.  CAP refutes the notion in the ruling that “this case is not about whether the Act is wise or unwise legislation…in fact, it is not really about our health care system at all.  It is principally about our federalist system…”  In fact, CAP argues that “[Judge] Vinson is wrong” to assert that the legal case centers on a discussion of federalism and the role of government, because the law is “already providing benefits to millions of Americans” – and claiming that other principles (i.e., the Constitution) should interfere with people obtaining these alleged benefits demonstrates “a reckless disregard” for these individuals.

Judges, just like Members of Congress, take an oath of office to uphold the Constitution, not to provide benefits to individuals.  For the Center for American Progress or other liberal groups to claim that judges (or anyone else, for that matter) should disregard constitutional principles because the health care law provides does alleged good for some individuals demonstrates a fundamental disregard for the rule of law.  After all, should the crimes of someone like Bernie Madoff be ignored if such an individual donates all their ill-gotten gains to supposedly worthy causes?  This type of reasoning – ignoring constitutional principles to help certain individuals perceived as being worthy of additional aid – represents a pernicious form of judicial activism that many may reject.

On a related note, George Washington University law professor Jonathan Turley – a self-declared supporter of “national health care” – published an op-ed in this morning’s USA Today refuting the notion that Judge Vinson’s ruling qualifies as judicial activism, and pointing out that Democrats have no one but themselves to blame for not including a basic severability clause in the health care law, despite the significant questions about the individual mandate’s constitutionality: “The charge of activism sounds like the lament of every bad gambler after being discouraged from playing a high-risk hand.”