Weekly Newsletter: August 31, 2009

More Problems with Government-Run Health Care

This past week saw two additional reports from the United Kingdom on how and why that country’s government-run health care system doesn’t work for many of its patients. On Wednesday, the Welsh Assembly Government hinted that it would block access to several cancer drugs, reversing a January decision that would allow patients access to these treatments. The apparent reversal came after the National Institute for Clinical Excellence (NICE) ruled the drugs were not cost-effective—giving the Welsh Government grounds to deny patients access to effective but expensive treatments solely on cost grounds. One patient on the cancer drug Sutent reacted with anger and frustration to the new development: “It is working for me. I don’t see how they can refuse it if it is working. It’s an expensive drug but what price life?”

The next day, a patient advocacy group highlighted problems with basic services at hospitals in England, citing cases of patients left in their own waste and similar problems where family members noted “at no time…did we feel there was ever anyone who cared for patients enough.” In an interview, the head of the Patients Association discussed the problems with a bureaucratic culture in Britain’s National Health Service:

The most awful part of this for many people is that they ring the hospital, they write the hospital, they make a complaint, “Why did my mum die in this terrible state, sitting here in her own…body [waste]…Why did she have to end her days like this?” Nobody answers, nobody phones back, and if they do, they’re very defensive. What does it cost to say, “I’m so sorry this happened—I’m going to find out why and stop it happening in the future?”

Many Members may not be surprised by these stories, which illustrate the problems created by government-run health systems—a bureaucratic culture showing little regard for patient needs and a strong inclination to deny patients access to life-sustaining but costly treatments. Examples such as these from Britain’s NHS represent the prime reason why Republicans believe that doctors and patients, not government bureaucrats, should make health care decisions in a reformed system.

The Real Reason Why Democrats Ignore Liability Reform

This past Tuesday, Rep. Jim Moran (D-VA) held a town hall with former Vermont Governor Howard Dean. When asked by one of Rep. Moran’s constituent, the licensed physician—and known advocate of a government-run health plan—Gov. Dean gave a straight-forward answer:

“This is the answer from a doctor and a politician. Here’s why tort reform is not in the bill. When you go to pass a really enormous bill like that, the more stuff you put in it, the more enemies you make, right? And the reason that tort reform is not in the bill is because the people who wrote it did not want to take on the trial lawyers in addition to everyone else they were taking on. And that is the plain and simple truth.”

In other words, Democrats support a government takeover of health care—except when it comes to the parts of health care controlled by the trial bar.

A Question of Identity

The same exchange at Tuesday’s town hall meeting was also noteworthy for Rep. Moran’s insistence that the constituent show identification before putting forth his query. This exchange follows a similar policy instituted by Rep. Gene Green (D-TX) at his town hall meetings.

However, some Members may note that House Democrats’ health care takeover legislation (H.R. 3200) includes no provisions requiring individuals to show any proof of identity or citizenship in order to receive taxpayer-subsidized health insurance—which could allow individuals engaging in identity theft, or undocumented immigrants, to obtain government-funded health care. The ID policy implemented by Democrats like Reps. Moran and Green at their town hall meetings begs an important question: Why should the process to ask a question of one’s Congressman be more rigorous than policies to ensure ineligible individuals receive taxpayer-subsidized health care?

Weekly Newsletter: August 24, 2009

Deficit Time Bomb Set to “Explode” Tomorrow

Tomorrow, both the Office of Management and Budget (OMB) and the Congressional Budget Office (CBO) will release their updated deficit projections for both the current fiscal year and the upcoming decade. Press reports released late Friday night indicate that the OMB deficit projections will increase by $2 trillion over ten years when compared to the President’s projections of only six months ago—to a deficit of more than $9 trillion this decade alone. While no such estimates have leaked out of CBO ahead of that non-partisan office’s release of its budget numbers, unemployment has already exceeded CBO’s March projections, as have estimates for long-term Treasury interest rates—suggesting that federal revenues may drop more than expected, even as the federal government’s cost of borrowing continues to grow.

Given these impending reports, many Members may be concerned by Democrat attempts to enact health “reform” that will expand federal entitlement obligations while seemingly ignoring the United States’ capacity to carry its existing fiscal obligations, let alone the impact of any future programs created. Particularly after Treasury Secretary Geithner’s claims of the United States’ fiscal rectitude were publicly mocked by an audience during his recent visit to China, Members may believe that Democrats would be wise to provide much more clarity—and spending restraint—before embarking on a new and costly government takeover of health care.

The Face of Government Rationing

From Oregon comes a story that may represent the face of health care across America under Democrats’ “brave new world.” Barbara Wagner, a patient in the state’s Oregon Health Plan, had a request for a chemotherapy drug denied, only to have the same denial letter inform her that the plan would pay for “physician aid in dying.” While the drug denied by the plan—one which would allow Barbara to treat her cancer and live—costs $4,000 per month, the approved drug—which would cause her to die—costs but $100. When contacted by a local news station about the health plan’s priorities, the chairman of a board that sets priorities for the government plan claimed that, “If we invest thousands and thousands of dollars in one person’s days or weeks, we are taking away those dollars from someone.”

Many Members may be saddened, but not surprised, by the government-run Oregon Health Plan’s misplaced priorities. The plan has a history of rationing access to care, creating a list of priorities and refusing to pay for certain treatments and procedures ranked low on the priority scale. In fact, Oregon’s most recent list of “bureaucrat-approved” treatments gives abortion higher priority than ectopic pregnancies or infections stemming from a miscarriage.

Given these skewed priorities in one state—where a bureaucracy will pay for life-destroying treatments, but not life-sustaining ones—many Members may believe that Democrats’ government takeover of health care could replicate the Oregon model across the United States. In the legislation, a board of bureaucrats will be empowered to require individuals to purchase certain coverage—giving unelected officials significant power over all Americans’ health care. Coupled with its lack of prohibitions on government programs using cost-effectiveness tests to deny access to treatments, the legislation’s high and unsustainable costs could well lead to rationing by federal bureaucrats on the same terms as the Oregon model—where, by denying access to life-saving treatments, government ensures that a life-and-death choice for patients isn’t really a choice at all.

Weekly Newsletter: August 17, 2009

Not an “Option”

Yesterday’s Sunday talk shows saw several White House officials—including Health and Human Services Secretary Kathleen Sebelius and press secretary Robert Gibbs—indicating the Administration’s willingness to strike the so-called “public option” from health “reform” legislation in lieu of a system of health insurance cooperatives. The apparent reversal comes amid growing criticism of Democrats’ attempted government takeover of health care, and surveys from outside experts indicating that as many as 114 million Americans could lose their current coverage if a government-run health plan were created.

Despite the apparent change in tone by the Administration, recent press reports indicate that the House Democrat majority—at the insistence of its liberal Members—will continue to include a government-run plan in any legislation considered on the House floor. Indeed, just before Congress embarked on its August recess, Speaker Pelosi reportedly acquiesced to a floor vote on a single-payer health care system.

While supporting the White House’s newfound conciliatory tone, Members may still have many other concerns surrounding the legislation—including nearly $1.6 trillion in spending, an increase in the federal deficit in the short-term and the long-term, abolition of the private market for individual health insurance, and onerous tax increases on the middle class and large and small businesses alike. Many of these concerns surround issues tangential to the Administration’s stated goal of reducing health costs—and many of the new mandates, regulations, and bureaucracies will raise costs for both the private sector and the federal government.

Similarly, while Members may support the concept of increasing private insurance market competition, Members may also be concerned by the import of some of the cooperative proposals being discussed. Many leading Democrats have made statements equating co-op proposals to a government-run “public option,” and most of the proposals being discussed would involve billions of dollars of federal cash infusions to fund the co-ops—which could lead to additional federal dollars being spent to bail such institutions out if they prove unsuccessful. Therefore, Members may be concerned that the co-op proposals being advanced by Democrats will do for health care what Fannie Mae and Freddie Mac have done for the housing sector.

“Just the Facts, Ma’am”

Amidst all the White House claims of “misinformation” surrounding access to treatments and government rationing, it bears worth repeating that the United Kingdom and other countries with government-run health plans deny costly therapies to patients, particularly older patients. For instance, a report regarding Britain’s National Health Service released in June prompted complaints from patient advocates that senior citizens receive sub-standard care; one activist found it “appalling that people over 75 are not getting the care they need…it is scandalous that not everyone is getting” access to treatment. In its coverage of the report, the BBC relayed the story of one 74-year old ovarian cancer patient, who according to her daughter had to travel to Iran in order to receive a proper diagnosis:

Mum started to have bleeding early in 2007. She went to the [general practitioner], but they just took her off her [hormone replacement therapy] and sent her to a gynecologist. He said it was probably just stress. It was only when she went back to visit family in Iran and saw a doctor there that she was diagnosed. They did a scan and found a large lump in her fallopian tube. When she came back to the UK, doctors found the cancer had spread to one of her lymph glands. It was the size of a tennis ball. She then had a six-week wait before having a hysterectomy and then chemo. Her treatment was very good, but the diagnosis was abysmal. If it had been found 18 months earlier, it could have been removed easily and she wouldn’t have needed a hysterectomy or chemo.”

Given that President Obama’s key advisors have admitted that government-run health plans will always be under-funded—and that waiting times are an acceptable “trade off between patient costs and capital costs”—many Members may be highly skeptical of any claims that a government takeover of health care will not lead to denial of life-saving treatments for patients.

Other key facts surrounding Democrats’ health care “reform” include these:

  • Individuals who like their current plan may not be able to keep it—millions of seniors will lose access to Medicare Advantage plans under Democrats’ proposed cuts, employers may drop coverage due to costly federal mandates imposed in the bills, and the House legislation would abolish the private market for individual health insurance entirely;
  • The non-partisan Congressional Budget Office has confirmed that all the bills being considered would raise, not lower, the growth of health costs—CBO has estimated that the House bill would increase the federal deficit by $239 billion in its first ten years, and “would probably generate substantial increases in federal budget deficits” in the years following;
  • The bills include tax increases on families with incomes under $250,000 who cannot afford to purchase “bureaucrat-approved” health coverage—a violation of then-Senator Obama’s campaign promise not to raise taxes on the middle class;
  • Job losses will result from the more than $800 billion in tax increases included in the House bill—according to a model developed by President Obama’s chief economic advisors, as many as 5.5 million jobs could be lost.

All these reasons should give the American people pause before embracing Democrats’ proposed government takeover of the health care industry.

Weekly Newsletter: August 10, 2009

Will States Drop their Medicaid Programs?

The past week saw significant developments in the relationship of States—and specifically their Medicaid programs—to Democrats’ health “reform” legislation. On Thursday, Senate Finance Committee Chairman Max Baucus admitted that it would be impossible for Congress to pass legislation expanding coverage through Medicaid without passing some of the costs for that expansion on to the States. This development came on the heels of an agreement with Blue Dog Democrats sitting on the Energy and Commerce Committee, which requires States to pay 10 percent of the proposed Medicaid expansion, beginning in 2015. According to a preliminary Congressional Budget Office (CBO) score of H.R. 3200 as introduced, this provision alone would require States to pay an additional $35.8 billion in matching funds over the next decade.

State frustration over what Tennessee Governor Phil Bredesen—a Democrat—dubbed “the mother of all unfunded mandates” boiled over in a Friday New York Times article chronicling States’ problems in funding their existing Medicaid programs. The piece quoted Washington State Governor Christine Gregoire—also a Democrat—opposing any Medicaid expansion not fully paid for by the federal government. Washington State’s Medicaid director went further about the ramifications of the Democrat proposals being considered:

“I can foresee a situation where states would say ‘I don’t have enough in general funds to put up my share of this new expanded Medicaid program, and I have to get out of the Medicaid program’….That’s what I think the doomsday scenario is here.”

Some Members may not be surprised by the bipartisan opposition to a massive new unfunded mandate on States—one designed to mask the true cost of Democrats’ proposed government takeover of health care. Members may note that one possible solution—premium assistance programs that would allow beneficiaries a voluntary choice of private coverage options, and in so doing save States and the federal government billions of dollars—has yet to receive serious consideration from the majority. Members may believe that these kinds of common-sense solutions, rather than government takeovers funded by tens of billions in unfunded mandates, represent a better way to expand access to affordable, quality health coverage.

Pelosi Abrogates White House Agreement—Will the Blue Dog “Compromise” Be Next?

Also this week, the White House confirmed its participation in an agreement between Senate Democrats and the pharmaceutical industry to contribute “voluntary” savings to finance health care legislation—and then, at the behest of Speaker Pelosi and other House Democrats, promptly switched course. On Thursday, press reports indicated that the Obama Administration had consented to an agreement reached between Finance Committee Chairman Baucus and drug manufacturers that would limit industry cost savings as part of a health care overhaul to $80 billion. However, the next day, Congressional Democrats erupted; a spokesman for Speaker Pelosi indicated her desire “to squeeze more money out of the system, including from the pharmaceutical industry,” and Energy and Commerce Committee Chairman Waxman said that “I think PhRMA should contribute more than PhRMA wants to contribute.” As a result, the White House sought to reassure Democrat lawmakers about the non-existence of an agreement, even as a spokesman “reconfirmed the deal again…suggesting a possible misunderstanding,” as the New York Times reported.

Some Members may not be surprised by these developments, given that the “voluntary” concessions agreed to by various industry groups have in many cases been extracted under public pressure. Moreover, some Members may note comments from Congressional leaders indicating that the pharmaceutical concord may not be the only agreement that the Democrat majority in the House walks away from; in particular, the Associated Press reported the very day an agreement was reached with Blue Dog Democrats that, “senior Congressional aides cast [the agreement] as a temporary accommodation, saying leaders had not committed to support it once the bill advances to the floor of the House in the fall.”

Weekly Newsletter: August 3, 2009

“See You in September…”

The House adjourned for its August recess last Friday without having begun floor consideration of Democrats’ health “reform” legislation, and the Senate is expected to act in similar fashion later this week. While the Energy and Commerce Committee gave its approval to an amended bill (H.R. 3200), the Senate Finance Committee announced it would not be considering legislation before September. That month could also see floor action in the House, as Democrat leaders work to integrate the three versions approved by the various committees.

However, many Members may advocate a different approach—one that scraps Democrats’ government takeover of health care as currently constructed and instead focuses on common-sense solutions that will reduce the growth of health care costs and make access to quality care more affordable. Many positive solutions to health care—such as reasonable limits on medical liability suits to reduce defensive medicine practices, and greater incentives for healthy behaviors—require neither the $1.6 trillion in new federal spending nor the $820 billion in job-killing tax increases included in the House bill. Most importantly, such incremental solutions would not involve creating a government-run health plan that could cause as many as 114 million Americans to lose their current coverage, and up to 5.5 million Americans to lose their jobs.

Senator McCain Criticizes “Fannie Med”

Speaking in an interview with CNN that aired Sunday, Arizona Senator John McCain criticized one of the main proposals being mooted as a potential “compromise” surrounding a government-run health plan—government-charted health insurance co-operatives. When asked whether he has found a solution he could support, McCain’s response was clear:

I’ve not seen one. The co-ops remind us all of Fannie Mae and Freddie Mac. So I’ve not seen a public option that in my view meets the test of what would really not eventually lead to a government takeover [of health care].

Given recent press reports indicating that discussions in the Senate would spend $6 billion in federal taxpayer subsidies—more than the annual revenues of all but 20 of the nation’s health insurers—in order to create a new health plan that would be the nation’s third-largest insurer, many Members may agree with Senator McCain in asking whether the co-op will function as a truly independent entity, or whether the co-op could do for health care what Fannie Mae and Freddie Mac did for the housing market—dominate the marketplace based on implicit government subsidies until the federal government steps in with a bailout.

Blue Dogs Cut a Deal—and States Suffer

The Energy and Commerce Committee was able to report the Democrat health bill after a “compromise” agreement reached with several Blue Dog Democrats on the Committee. The agreement—which House leaders called a “temporary accommodation” that may not last on the House floor—calls for States to pay 10 percent of the cost of the proposed Medicaid expansion, beginning in 2015. According to a preliminary Congressional Budget Office (CBO) score of H.R. 3200 as introduced, this provision alone would require States to pay an additional $35.8 billion in matching funds over the next decade, to increase the current Medicaid population by 10 million individuals.

However, States cannot afford their current Medicaid programs, which is why Congress included a $90 billion Medicaid bailout in the “stimulus” package. Moreover, State Governors in both parties have already voiced significant concerns about the unfunded mandates in the underlying bill, which prohibits States from reducing or otherwise modifying their existing programs in any way after the bill’s enactment. Many Members may view these unfunded mandates as a budgetary gimmick that shifts new federal spending on to the backs of States in an attempt to mask the full scope of Democrats’ proposed government takeover of health care. More importantly, Members may be concerned that the unsustainable burdens being placed on State governments could prompt some States to drop their Medicaid programs entirely—decreasing, not increasing, the number of individuals with insurance.

Weekly Newsletter: July 13, 2009

Rational Law-Breaking

This past weekend, a Wall Street Journal editorial shined additional light on one of the several difficulties associated with the Massachusetts health reform legislation enacted in 2006. The column notes that one of the Commonwealth’s insurers, Harvard-Pilgrim, found that many individuals were purchasing health coverage at times when they were incurring significant medical expenses, let their insurance coverage pay their bills, and then promptly dropped their coverage after recovering. Specifically, the insurer discovered that 40 percent of new enrollees in the past year stayed on their coverage for fewer than five months—and incurred more than six times expected expenses while covered.

Many Members may not be surprised by this phenomenon, caused largely due to 1) restrictions on insurance carriers to accept all applicants at all times—and charge individuals the same premium regardless of health status, 2) the many mandates and regulations driving up Massachusetts insurance premiums, and 3) the comparatively low taxes associated with violating the Commonwealth’s individual mandate to purchase insurance. Because the cost of coverage is so much more expensive in Massachusetts than the $900 tax for violating the individual mandate, many residents find it cheaper to pay the tax rather than a health insurance premium—knowing full well that in a medical emergency, insurance carriers will be forced to accept their application.

Members may be concerned that these kinds of perverse incentives—all of which exist in the Democrat health proposals currently being considered—would only lead to an upward spiral of insurance premiums that would raise, not lower, health costs for millions of American families. Members may also note that the kinds of coercive measures necessary to enforce compliance with these types of insurance mandates further argue against the government takeover of health insurance proposed by the majority.

Has Pelosi Read the Democrat Health Bill?

At her weekly news conference last Thursday, House Speaker Nancy Pelosi minimized the need for Members of Congress to scrutinize health legislation—and promptly reinforced her own point by demonstrating her lack of knowledge regarding the Democrat bill’s provisions. When asked if she would accept a pledge circulated by the organization Let Freedom Ring for Members of Congress to read health reform legislation before approving a bill that would impact the health care of hundreds of millions of Americans, the Speaker demurred, as The New York Times reported.

In that very same press conference, Pelosi provided demonstrable proof of her apparent reluctance to reading the Democrat health legislation. Congressional Quarterly reported that on Thursday the Speaker noted that “We will not be taxing [health] benefits in any bill that passes the House.” However, the bottom of page 457 of the Democrat “discussion draft” includes the following language—in capital letters and bold-faced print—regarding the financing mechanism for a new Comparative Effectiveness Research Trust Fund:

CHAPTER 34—TAXES ON CERTAIN INSURANCE POLICIES

Given this turn of events, many Members may advise Democrats to spend more time reading the Democrat “reform” legislation. Likewise, Members may oppose the concept of imposing an unprecedented tax on health benefits to fund effectiveness research conducted by a board of federal bureaucrats without any prohibitions on government programs like Medicare and Medicaid using that research to deny access to life-saving drugs and treatments.

Taxing Jobs—and Small Businesses—In a Recession

Press reports indicate that Democrats may once again attempt to release a Chairmen’s mark for health care legislation this week, after intraparty grumbling prompted the release’s postponement last week. Those same reports indicate that the majority of the bill’s new financing components—more than half a trillion dollars’ worth—will come from a new “surtax” on “high-income earners.”

Many Members may be concerned about the short-sightedness of such an approach, which would harm businesses and kill jobs. As more than half of all individuals in the top tax bracket report significant business income, these tax increases would harm small business owners, potentially resulting in significant job losses. Coming at a time when unemployment stands at its highest levels in 26 years, Members may believe that these new taxes would do nothing to control skyrocketing health care costs—but much to demolish and destroy American jobs.

Article of Note: Déjà Vu All Over Again

This past week The New Republic included an article by former Clinton Administration pollster Stan Greenberg that compared current public attitudes about health care reform to polls taken during the last attempt at comprehensive legislation in 1993-94; Greenberg writes that the similarities proved eerily striking:

“As I reached the last of the questions, I exclaimed: ‘Oh no. It can’t be. Nothing’s changed.’ Then and now, the country proclaimed its readiness for bold reform. In both instances, one-quarter say that the health care system ‘has so many problems that we need to completely rebuild it’; half the country sees ‘good things’ in the current system but believes ‘some major changes are needed.’ Then and now, about 60 percent of the public feel dissatisfied with the current health insurance system. Yet three-quarters are satisfied with their own health insurance–once again eerily parallel numbers….The country divides evenly on whether the greater risk is an unchanged status quo or government reforms that ‘create new problems.’ And, finally, Obama might want to pay attention to how closely his situation echoes Clinton’s. Then and now, more people favor the president’s health care plan than oppose it, but the supporters make up less than a majority.”

The article contains further cautionary notes: Only one-third of seniors support current Democrat proposals, quite possibly because such legislation would divert savings from Medicare to expand new entitlements for younger Americans. And the public remains dubious of what any reform would do to control costs—because, some Members would argue, the Democrat bills would likely increase them.

Some Members may not be surprised by these data, further validated by surveys showing opponents of Democrat health reform outnumber supporters. The polls confirm the belief that Americans remain highly skeptical about government’s ability to control health care costs, and want doctors and patients—not government bureaucrats—determining access to appropriate treatments. Members may view the Greenberg article as yet another reason why Democrats should follow the advice of their own Blue Dog Caucus, slow down the rush to enact a government takeover of the entire health care sector, and instead focus on effective reforms that slow the growth of costs without resorting to heavy-handed involvement by federal bureaucrats.

Weekly Newsletter: July 6, 2009

Health “Reform” Savings to Date: -$7.6 Billion

During Congress’ Independence Day recess, the Administration released proposed rules for physician reimbursement levels in 2010 that would eliminate the cost of physician-administered drugs from the Sustainable Growth Rate (SGR) mechanism used to calculate physician payment levels. According to the Congressional Budget Office, the rule, if implemented, would increase Medicare physician spending by $87.6 billion. Because the Administration did not propose offsetting savings for this new spending, one-quarter of the cost of the proposed change—nearly $22 billion—will be paid directly by seniors in the form of higher Part B premiums, with the remaining cost being absorbed by federal taxpayers.

The Administration’s proposal comes on the heels of a White House announcement that the pharmaceutical industry has committed to find $80 billion in savings to finance the cost of health reform. While details on the industry proposal remain unclear, press reports indicate that much of the proposed $80 billion in savings will not qualify under federal budgetary rules as reducing taxpayer outlays. As a result, the two proposals announced by the Administration will cost federal taxpayers at least $7.6 billion—and if the drug industry proposals do not materialize, significantly more than that amount.

Some Members may be concerned by the Administration’s apparent pattern of combining concrete steps to increase federal health care spending with vague and nebulous promises about future savings. Members may also note that the Medicare savings proposals submitted by the White House could easily finance the cost of repealing the SGR mechanism entirely—thus ensuring seniors’ continued access to physician services—if the Administration were not singularly focused on diverting spending reductions from Medicare to finance expansions of government-run health care to younger populations.

Senate Democrats Make It Harder to Hire the Poor

As they attempt to recover from a month which saw their initial plans for health reform legislation scrapped due to unacceptably high budget scores, Democrats on the Senate Finance Committee have discovered a potential “solution” that may be worse than the problem it attempts to remedy. In order to encourage firms to continue to offer health coverage to their workers, the Finance Committee’s revised proposal would require employers that do not offer coverage to pay for half of the cost of any Medicaid beneficiaries employed by the firm, as well as the full cost of any “low-income” subsidies for individuals with income up to three times the federal poverty level ($66,150 for a family of four).

Outside groups from the Heritage Foundation to the liberal Center for Budget and Policy Priorities have criticized the Finance Committee proposal, which could in practice lead to hiring discrimination against low-wage workers. For instance, a single mother would prove much less attractive to an employer from a financial perspective than a college-age student from a wealthy family—the former would cost the firm additional money in “fair share” contributions, while the latter would not.

More broadly, some Members may be concerned by the panoply of proposals that would raise taxes on businesses that cannot afford to provide coverage to their workers. At a time when unemployment stands at 26-year highs—and with job losses still rising—Members may believe that Democrat proposals to impose new job-related taxes on businesses comprise one sure way to delay economic recovery still further.

The Debt Time Bomb

Also during the recess, the Congressional Budget Office sounded yet another cautionary note about the fiscal impact of current government-run health programs—let alone any additional entitlements the Administration wants to create. Last Tuesday, CBO released a letter analyzing the potential impact of an increase in interest rates over the ten-year budget window. Specifically, the letter found that using the most recent “blue chip” economic forecast of long-term interest rate projections would increase total deficit spending by $1.2 trillion over ten years when compared to the March CBO estimate of the President’s budget. If interest rates returned to their average levels during the 1980s, the United States could face an additional $5.6 trillion in red ink—even before the effects of increased spending on health care entitlements are taken into account.

Many Members may be concerned by the implications of the CBO report, which suggests that Democrats have embarked upon health “reform” that will expand federal entitlement obligations while significantly overestimating the United States’ capacity to carry its existing fiscal obligations, let alone the impact of any future programs created. Particularly after Treasury Secretary Geithner’s claims of the United States’ fiscal rectitude were publicly mocked by an audience during his recent visit to China, Members may believe that Democrats would be wise to provide much more clarity—and spending restraint—before embarking on a new and costly initiative to expand government-run health insurance to as many as 120 million Americans.

Weekly Newsletter: June 29, 2009

Government-Run Health Care and Cancer Outcomes

Two stories in the past week from Great Britain provide an interesting backdrop to the Democrat-proposed creation of a government-run health plan to “compete” with private sector coverage.  In the first, a new report released found that up to 15,000 lives could be saved every year if patients in Britain’s National Health Service received the same type of quality care that patients in the United States obtain.  The report prompted complaints from patient advocates that senior citizens receive sub-standard care, as the government rations access to health services for older patients on cost grounds; one activist found it “appalling that people over 75 are not getting the care they need…it is scandalous that not everyone is getting” access to treatment.  In its coverage of the report, the BBC relayed the story of one 74-year old ovarian cancer patient, who according to her daughter had to travel to Iran in order to receive a proper diagnosis:

Mum started to have bleeding early in 2007.  She went to the [general practitioner], but they just took her off her [hormone replacement therapy] and sent her to a gynaecologist.  He said it was probably just stress.  It was only when she went back to visit family in Iran and saw a doctor there that she was diagnosed.  They did a scan and found a large lump in her fallopian tube.  When she came back to the UK, doctors found the cancer had spread to one of her lymph glands.  It was the size of a tennis ball.  She then had a six-week wait before having a hysterectomy and then chemo.  Her treatment was very good, but the diagnosis was abysmal.  If it had been found 18 months earlier, it could have been removed easily and she wouldn’t have needed a hysterectomy or chemo.”

Today the British Government plans to announce plans to give patients the “right” to see a cancer specialist within two weeks of diagnosis—a “right” that significant numbers of patients currently lack.  Coupled with the lack of tools to diagnose cancer promptly in the first instance, some Members may be concerned that the government-run health plan envisioned by many Democrats could lead to worse outcomes for patients—because, as senior Obama Administration official Sherry Glied has previously admitted, government-run health plans will end up under-funded.

A “Firm Pledge” Falls by the Wayside

During last year’s presidential campaign, then-Senator Barack Obama made very clear that he would not raise taxes on the middle class in order to pay for an expansion of government-run health care.  His most famous iteration of this promise came at a rally in Dover, New Hampshire, on September 12, 2008:

“I can make a firm pledge.  Under my plan, no family making less than $250,000 a year will see any form of tax increase.  Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes.”

Yesterday, however, senior Administration advisor David Axelrod backtracked from the “firm pledge” made repeatedly during the campaign.  Given multiple opportunities to reiterate the campaign promise, Axelrod backtracked, saying merely that “there are a number of formulations and we’ll wait and see” whether a middle-class tax increase is one of them.

Some Members may be concerned by this message—but not altogether surprised, given the “flexibility” the President has already exhibited from his campaign positions in opposition to an individual mandate to purchase insurance and taxing health benefits.  In addition to questioning how raising taxes in the middle of a recession will help strengthen the economy, some Members may further question how tax increases will help slow the growth of health care costs—purportedly the Administration’s prime goal for any health reform legislation.

Democrats Finally Discover the “Crowd-Out” Phenomenon

For the better part of the past two weeks, Democrats in the Senate have been working to pare back the cost of their health care overhaul, after a Finance Committee discussion draft reportedly weighed in with a price tag of $1.6 trillion over ten years.  Much of the reason for the high spending came from subsidies to families making as much as $88,200—subsidies which, according to the Congressional Budget Office, would merely encourage these individuals to drop their current coverage and enroll in the government-run health insurance Exchange.  Senate Budget Committee Chairman Conrad was quoted in the New York Times as being “particularly concerned about the possibility that people who now have employer-provided coverage would drop it in favor of government-subsidized coverage, raising the cost to taxpayers.”

Some Members may not be surprised by this development, as many Members made the exact same point during debate over reauthorization of the State Children’s Health Insurance Program (SCHIP).  Just last October, officials in Hawaii abandoned their Keiki Care program to expand government-run health coverage to children, because as one official noted, “People who were already able to afford health care began to stop paying for it so they could get it for free” from the federal government.  Some Members may hope that, having finally discovered the “crowd-out” phenomenon and its significant impact on the federal budget, Democrats will shift course from their attempted expansions of government programs as one way to “reform” American health care.

Weekly Newsletter: June 15, 2009

Senior Obama Administration Official Admits: Government-Run Health Plan Will Ration Care

As President Obama travels to Chicago to address the annual convention of the American Medical Association, the writings of one of his senior policy advisors confirm that the government-run health plan he supports will result in doctors being unable to treat their patients.  President Obama recently nominated Sherry Glied to the post of Assistant Secretary for Planning and Evaluation within the Department of Health and Human Services to serve as the chief policy advisor to Secretary Sebelius and the President regarding implementation of health reform.  Dr. Glied has previously stated that government-directed efforts to reduce costs will be ineffective, and that a government-run system will lead to under-funding and a two-tiered health system.  Dr. Glied has also written in support of waiting lines for health care treatments as an acceptable trade-off to save costs, admitting that waiting lines “will in some cases lead to worse health for patients,” but this harm is an acceptable outcome because “on average” most patients won’t suffer.

Coupled with one of President Obama’s recent proposals, to allow a board of federal bureaucrats to make “recommendations on cost reductions” that would have the force of law, some Members may be concerned that Dr. Glied’s position on waiting lines and rationing of health care could lead to exactly the type of approach Tom Daschle proposed—“getting into the nitty-gritty of which treatments are the most…cost-effective.”  While supporting health reform that lowers the growth of health care costs, some Members may believe that the American people want a board of unelected bureaucrats making health decisions for American patients based upon what will cost least “on average”—they should make health decisions based on the advice they receive from their doctors about what works best for them.

A new Policy Brief on this issue can be found here.

Shooting the Messenger

This past week saw the introduction of the first major Democrat health reform bill—albeit one not paid for—and reports that Democrats do not want to achieve the savings necessary to finance their expansion of government-run health care.  The major bill, introduced by Senate HELP Committee Chairman Kennedy, could cost as much as $2 trillion over ten years, according to press reports, but the bill’s only proposal to finance this new government spending is a tax on individuals who do not purchase health insurance that meets federal bureaucrats’ standards.

The effort to avoid paying the full cost of health reform legislation comes from other press reports indicating many Democrats want to rely on scores from the White House’s Office of Management and Budget (OMB), rather than the Congressional Budget Office (CBO), as the arbiter of whether reform legislation is fully paid for over ten years.  The Democrat hope—and expectation—is that White House political officials leading OMB will direct the agency to produce a more favorable score for a health reform bill than the non-partisan CBO.

Many Members may be concerned by this transparent budgetary gimmick, as well as the longer-term implications of subverting CBO’s independence—because the agency’s apolitical appointees dare to speak inconvenient truths—to enact an expansion of government-run health insurance.  However, if Democrats insist on looking to other entities for information about their bill’s implications, some Members may point them to a study by independent actuaries at the Lewin Group, which found that Democrat proposals to create a government-run health plan would cause as many as 120 million Americans to lose their current coverage.

Of Fish and Bureaucrats

Even as some Democrats were advocating budgetary gimmicks to avoid financing the full cost of health reform, others were proposing massive new tax increases to finance government-run care.  House Ways and Means Health Subcommittee Chairman Pete Stark (D-CA) on Thursday called for a two percent income tax surcharge to finance health reform.  Stark also endorsed Congress’ swift timetable to enact a government takeover of health insurance, noting that reform legislation “is like fish without a refrigerator.”  Also on Thursday, Stark commented on the implementation timeline for any legislation that may be enacted—“How quickly can a bureaucracy get going?”

Some Members may view Chairman Stark’s second comment—indicating the bureaucratic, mandate-driven approach to government-run health care—as prompting the need for his seafood-related quip.  Members may agree that, like a fish left out of the refrigerator, the more the American people become exposed to the true implications of Democrat health reform plans—higher taxes, government-run health care, delays for care, and outright denials of life-saving treatment at the hands of government bureaucrats—the more the attractiveness of the legislation will disintegrate and decay.

Dean Screams for Government-Run Health Care

This past week saw a verbal altercation involving former Vermont Governor Howard Dean that demonstrated the problems associated with government-run health care.  Appearing on C-SPAN, Rep. Phil Gingrey (R-GA) pointed out that while Governor Dean is organizing an online petition demanding a government-run health plan be incorporated into any health reform legislation, his family’s own record on government-run health care is mixed—the Governor’s own wife, Dr. Judith Steinberg, dropped out of Vermont’s largest Medicaid managed care program while Dean himself was Governor.  On Wednesday, Dean angrily responded that his wife does accept Medicaid patients, but did not directly answer as to whether she dropped Medicaid patients while Dean was Governor—perhaps because an article from the May 17, 1998 Rutland Herald entitled “Governor’s Wife Cuts Ties with HMO” provides all the evidence necessary to confirm Dr. Gingrey’s allegation.

While not blaming Dr. Steinberg for dropping out of Medicaid managed care due to the many bureaucratic hassles and low reimbursement, Members may note that these very same problems are likely to plague any government-run health care system.  Some Members may therefore agree with Dr. Gingrey’s rebuttal to Governor Dean:

Under socialized medicine, patients will suffer … they’re going to suffer in New Hampshire, South Carolina and Oklahoma and Arizona and North Dakota and New Mexico, and they’re going to suffer in California and Texas and New York. And they’ll suffer in South Dakota and Oregon and Washington and Michigan … and then they’ll suffer in Washington D.C.

Weekly Newsletter: June 8, 2009

U-Turns Ahead

This past week saw several reversals of key campaign promises by President Obama as it relates to health reform. Tuesday’s meeting with Senate Democrats resulted in press reports indicating the President would be willing to support some type of tax on health insurance benefits as part of an overall legislative package. While some Members may agree on the need for tax equity in the way individuals purchase their health coverage, Members may also oppose efforts to cap or repeal the current employee health insurance exclusion—a tax increase—in order to expand welfare and entitlement spending as part of health reform.

Wednesday saw the public release of a letter in which the President stated his support for “shared responsibility”—meaning a tax on individuals who do not purchase health insurance. However, many Members may agree with candidate Obama—and disagree with President Obama’s new position—who pointed out that in Massachusetts, the one state with an individual mandate, “there are people who are paying fines and still can’t afford [health insurance], so now they’re worse off than they were. They don’t have health insurance and they’re paying a fine.” Members may also agree with recent Obama Administration nominee Sherry Glied, who wrote last year that a mandate “is in many respects analogous to a tax”—and furthermore has the potential to be a “very regressive tax, penalizing uninsured people who genuinely cannot afford to buy coverage.”

Overhanging both reversals lies the signal promise of the Obama campaign:

“I can make a firm pledge. Under my plan, no family making less than $250,000 a year will see any form of tax increase. Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes.”

Many Members may view any attempt to tax individuals who do not purchase health insurance—to say nothing of taxing workers’ health insurance in order to expand the welfare state—as a fundamental breach of his promise from last September.

The Big Winners in Health Reform: Federal Bureaucrats

Several developments during the past week provided important clues to the Democrat vision of health reform. First, President Obama’s letter to Senators Baucus and Kennedy signaled support for allowing the Medicare Payment Advisory Commission (MedPAC) to make “recommendations on cost reductions” that would be binding unless overturned by majorities in both houses of Congress. And draft legislation released by the HELP Committee included the establishment of a Medical Advisory Council to determine the minimum benefit package individuals would have to purchase—or otherwise individuals would be subject to a tax to be determined by the Treasury.

Coupled with Finance Committee Chairman Baucus’ earlier suggestion that insurance commissioners be required to give a “seal of approval” to health plans meeting new federal mandates, the proposals collectively amount to a significant shift in control of health care from doctors and patients to federal bureaucrats:

  • Under Obama’s proposal, bureaucrats would be empowered to enact further binding savings from Medicare, over and above the more than half a trillion in savings the President has proposed;
  • Because the Obama proposal advocates “recommendations on cost reductions” from across the health spectrum, it could quickly turn MedPAC into the type of Federal Health Board—one that could ration health care—proposed by former Senator Tom Daschle;
  • Both the Baucus and Kennedy plans would require individuals to purchase “bureaucrat-approved” health insurance—and many Americans’ current health insurance would be insufficient to meet federal bureaucrats’ new diktats;
  • The Kennedy draft bill also allows federal bureaucrats to set levels of taxation—by permitting them, without any Congressional intervention, to determine the tax penalties assessed to individuals who do not purchase “bureaucrat-approved” coverage.

A Medicaid Card Does Not Mean Access to Care

A recent survey conducted by consultants at Merritt Hawkins, in addition to quantifying the longer wait times in Massachusetts as a result of that state’s health reform initiative, also examined beneficiary access to physicians within Medicaid. Their survey of more than 1,000 medical offices in 15 major metropolitan areas found that just over half of specialists contacted were accepting Medicaid patients. In seven cities, including Washington, DC, Medicaid acceptance was below 50%; in Dallas, fewer than two in five doctors (38.6%) surveyed participate in the Medicaid program. The study found that “Medicaid is not widely accepted in most markets surveyed, in at least some of the medical specialties review, and, in some cases, all of them.”

The report remains consistent with a government-run Medicaid program where in one state only one in six female beneficiaries over 50 obtains a mammogram. Some Members may agree with the report’s conclusions that “Medicaid does not guarantee access to physicians in many cases” and that “plans to expand Medicaid, or to create other forms of government-supported health care insurance that reimburse physicians below their costs, may not have the effect of increasing access for some patients.” Some Members may view the report as further reason to oppose the establishment of a government-run health plan that could force nearly 120 million individuals from their current coverage—and place them into a system where an insurance card “does not guarantee access.”