The Politics of Health Care

[Body-by-Guinness]

Precisely, which is why single data point comparative studies are pretty useless when it comes time to address a nuanced issue. Presented as a single item the question appears to be "what do Americans need to do to live as long as the Japanese, et al?" The more nuanced data makes the question become: "how do we inspire cultural changes that will increase longevity in these national subset?" In view of the well documented failure of government to address these sorts of issues in these same subsets where, say, education, is concerned, one would hope suggestions are forwarded that don't rely on more of the same.

[JDN]

As the article pointed out and I am glad you agree;

"To combat the problem of health inequity, they recommend that governments follow the shining example of Nordic countries that have introduced policies which encourage equality of benefits and service, full employment, gender equity, and low levels of social exclusion.

As a method of encouraging equality of benefits, it should be noted that most the the industrialized highly rated countries have some form of a national health insurance plan.

[Crafty_Dog]

Well, didn't Sweden just let Saab go under?  

Also, see the Islam in Europe thread, it appears there is an argument to be made that Sweden, perhaps in part due to the burdens of its nanny state, seems to lack the will to defend itself from Lebanonization.

[Body-by-Guinness]

I actually do not agree with WHO's socialist agenda and think that so many other throw money at the problem solutions have failed so spectacularly that I'm baffled when recapitulation is suggested. I note further there are black American sub-cultures like the Gulla and the Geechee that embrace a different set of cultural ethics which appear to be related to a lower incidence of social pathologies found in other black populations. Alas, when members of those sub-cultures like Clarence Thomas ascend, one side of the aisle demonizes him and hangs "Uncle Tom" appellations while tapping their foot along to rap, hip hop, and gangster culture.

Egalitarian solutions failed in the Soviet Union, failed in Mao's China, fail in school districts throughout this nation, to name a few. How 'bout if before we start throwing money we don't have at solutions like the ones that haven't worked before we instead reward responsible behavior and chastise irresponsible? Or does that suggestion make me too culturally insensitive to be suffered further?

[JDN]

Well, didn't Sweden just let Saab go under?  

That is bad?
I wish we had let Chrysler and GM as well as a lot more banks go under. 
At least Sweden showed some common sense.

And... at least Sweden has a health system, a social support system, and test scores among high school students far superior to the US
that enables the workers to get back on their feet faster.

However, the subject at hand is mortality; they simply live longer...
Maybe (?) because they, like most of the countries high on the list have a national health care plan?

[G M]

Well, didn't Sweden just let Saab go under?  

However, the subject at hand is mortality; they simply live longer...
Maybe (?) because they, like most of the countries high on the list have a national health care plan?

**Yeah, generations of government healthcare has done wonders for American Indians. Let's give everyone this level of care!**

http://info.ihs.gov/Disparities.asp

INDIAN HEALTH DISPARITIES

Members of 562 federally recognized American Indian and Alaska Native Tribes and their descendants are eligible for services provided by the Indian Health Service (IHS). The IHS is an agency within the Department of Health and Human Services that provides a comprehensive health service delivery system for approximately 1.9 million of the nation’s estimated 3.3 million American Indians and Alaska Natives (American Indian and Alaska Native alone; bridged 2000 census ) . Its annual appropriation is approximately $3.35 billion. The IHS strives for maximum Tribal involvement in meeting the health needs of its service population, who live mainly on or near reservations and in rural communities in 35 states, mostly in the western United States and Alaska.

Approximately 57% of American Indians and Alaska Natives living in the United States rely on the IHS to provide access to health care services in 46 hospitals and over 600 other facilities operated by the IHS, Tribes, and Alaska Native corporations, or purchased from private providers.
The American Indian and Alaska Native people have long experienced lower health status when compared with other Americans. Lower life expectancy and the disproportionate disease burden exist perhaps because of inadequate education, disproportionate poverty, discrimination in the delivery of health services, and cultural differences. These are broad quality of life issues rooted in economic adversity and poor social conditions.
American Indians and Alaska Natives born today have a life expectancy that is 4.6 years less than the U.S. all races population (72.3 years to 76.9 years, respectively; 1999-2001 rates), and American Indian and Alaska Native infants die at a rate of nearly 12 per every 1,000 live births, as compared to 7 per 1,000 for the U.S. all races population (2002-2004 rates).
American Indians and Alaska Natives die at higher rates than other Americans from tuberculosis (750% higher), alcoholism (550% higher), diabetes (190% higher), unintentional injuries (150% higher), homicide (100% higher) and suicide (70% higher). (Rates adjusted for misreporting of Indian race on state death certificates; 2002-2004 rates. )
Given the higher health status enjoyed by most Americans, the lingering health disparities of American Indians and Alaska Natives are troubling. In trying to account for the disparities, health care experts, policymakers, and Tribal Leaders are looking at many factors that impact upon the health of Indian people, including the adequacy of funding for the Indian health care delivery system.
The American Indian and Alaska Native population has several characteristics different from the U.S. all races population that would impact upon assessing the cost for providing similar health services enjoyed by most Americans. The Indian population is younger, because of higher mortality, than the U.S. all races. The IHS service population is predominately rural, which should suggest lower costs; however, the disproportionate incidence of disease and medical conditions experienced by the Indian population raises the costs, which almost obliterates the lower cost offsets.

[JDN]

Don't know about American Indians (no disrespect meant).  But ask BbyG; he seems to be the self appointed expert on statistical subsets and sub cultures.

Perhaps a better and much broader example of a government sponsored plan covering tens of millions of Americans is Medicare; most older people I know including my parents are quite happy with the
system. 

[G M]

**Yeah, we can't afford medicare now. This program is already a looming disaster. So let's spend more?**

Unsustainable Medicare
Fixes for the program's funding will be needed soon.
Saturday, May 5, 2007; Page A16

THE RELEASE last week of the annual report of the Medicare trustees underscores an unavoidable fact that too many politicians have nonetheless been avoiding for too long: Of all the entitlement programs, Medicare is on the most dangerously unsustainable financial course, squeezed simultaneously by rising health-care costs and an aging population.

When Congress passed the Medicare prescription drug bill four years ago, it included a mechanism designed to call attention to runaway spending in the health care program for seniors and the disabled. Medicare is funded by a combination of payroll taxes (hospital costs) and general revenue (doctor's visits and prescription drug costs). Bureaucratic alarms sound if the Medicare trustees project that the share of funds to be drawn from the general Treasury is set to exceed 45 percent in the near future. That alarm sounded for the first time last year and was repeated again last week. The second warning requires that the president -- in the budget he will submit early next year -- propose changes to reduce Medicare's drain on the Treasury. Under the law, Congress must quickly consider those remedies, though it doesn't have to act.

This is an especially blunt instrument to deal with an especially large problem, and the Bush administration's proposed solution, to require automatic cuts, is too crude. The challenge facing Medicare isn't how it's funded, it's how much it costs. Indeed, the program was designed to be financed in a hybrid fashion, and the very prescription drug bill that included the arbitrary 45 percent trigger tilted the mix more toward general revenue.

President Bush, to his credit, has proposed some ways of taming the Medicare monster. In this year's budget, he calls for $66 billion in Medicare cuts over the next five years. Of this, $10 billion would come from requiring higher-income beneficiaries -- $80,000 in annual income, $160,000 for a couple -- to pay higher premiums for prescription drug coverage, as they do now for their basic coverage, and by ending the indexing of this income test. The income ceiling may require adjustment, but for now this is a sensible proposal; in any event, higher premiums for the better-off should have been part of the plan from the start. Also worth discussing are the administration's proposals to cut payments to hospitals, nursing homes and other providers. But Democrats have greeted the proposals with more hostility than interest.

The administration can be faulted for insisting on retaining an expensive, lopsided payment scheme by which private insurance plans "competing" with traditional Medicare receive a government subsidy for doing so. These private plans have been growing rapidly, and they now cover one in five beneficiaries. That would be fine if such "Medicare Advantage" plans were competing on a level playing field, but they're not: The government is paying them on average 12 percent more than traditional fee-for-service providers. The Medicare policy board that advises Congress has endorsed leveling this playing field. The higher payments, according to the Congressional Budget Office, amount to $65 billion over five years, and $160 billion over 10. No wonder the companies that market these plans are lobbying so furiously to keep their undue Medicare advantage.

[Body-by-Guinness]

But ask BbyG; he seems to be the self appointed expert on statistical subsets and sub cultures.

No just speaking to data sets already mentioned that you then ignore while petulantly positing another stupid argument. At what point do you note how poorly your technique works?

Hey, didn't see the UK on the single axis mortality stats you're attempting to weave an argument from. Seeing how they already have the health care system and other social programs you're pining for in the US, what does that say about the point you're already doing a poor job making?

[JDN]

Odd, most of the world's general public accepts the World Health Organization statistics except you BbyG.
And nearly every health organization in the world utilizes their statistics and findings.
But then I forgot you are an MD and a world famous Epidemiologist.   

You find some obscure Black American subcultures and therefore conclude the WHO statistics invalid...
Or you try to find an anomaly...

And that's your brilliant argument to disregard the entire WHO findings?
 

Do you ever read your own manure?  You should; it's good for a laugh.
 

[Crafty_Dog]

Helluva afterdinner conversation here gentlemen , , , 

[G M]

Odd, most of the world's general public accepts the World Health Organization statistics except you BbyG.
And nearly every health organization in the world utilizes their statistics and findings.
But then I forgot you are an MD and a world famous Epidemiologist.   

**I guess BBG should follow your example and only comment on things he has expertise in, right?**

[Boyo]

Here is something interesting from the WSJ .I wasn't sure where to post in the science thread or here but since it deals with the WHO and in a back door way healthcare here it is.

Malaria, Politics and DDT
The U.N. bows to the anti-insecticide lobby
 
In 2006, after 25 years and 50 million preventable deaths, the World Health Organization reversed course and endorsed widespread use of the insecticide DDT to combat malaria. So much for that. Earlier this month, the U.N. agency quietly reverted to promoting less effective methods for attacking the disease. The result is a victory for politics over public health, and millions of the world's poor will suffer as a result.

The U.N. now plans to advocate for drastic reductions in the use of DDT, which kills or repels the mosquitoes that spread malaria. The aim "is to achieve a 30% cut in the application of DDT worldwide by 2014 and its total phase-out by the early 2020s, if not sooner," said WHO and the U.N. Environment Program in a statement on May 6.

Citing a five-year pilot program that reduced malaria cases in Mexico and South America by distributing antimalaria chloroquine pills to uninfected people, U.N. officials are ready to push for a "zero DDT world." Sounds nice, except for the facts. It's true that chloroquine has proven effective when used therapeutically, as in Brazil. But it's also true that scientists have questioned the safety of the drug as an oral prophylactic because it is toxic and has been shown to cause heart problems.

Most malarial deaths occur in sub-Saharan Africa, where chloroquine once worked but started failing in the 1970s as the parasite developed resistance. Even if the drugs were still effective in Africa, they're expensive and thus impractical for one of the world's poorest regions. That's not an argument against chloroquine, bed nets or other interventions. But it is an argument for continuing to make DDT spraying a key part of any effort to eradicate malaria, which kills about a million people -- mainly children -- every year. Nearly all of this spraying is done indoors, by the way, to block mosquito nesting at night. It is not sprayed willy-nilly in jungle habitat.

WHO is not saying that DDT shouldn't be used. But by revoking its stamp of approval, it sends a clear message to donors and afflicted countries that it prefers more politically correct interventions, even if they don't work as well. In recent years, countries like Uganda, Tanzania and Zambia have started or expanded DDT spraying, often with the help of outside aid groups. But these governments are also eager to remain in the U.N.'s good graces, and donors typically are less interested in funding interventions that WHO discourages.

"Sadly, WHO's about-face has nothing to do with science or health and everything to do with bending to the will of well-placed environmentalists," says Roger Bate of Africa Fighting Malaria. "Bed net manufacturers and sellers of less-effective insecticides also don't benefit when DDT is employed and therefore oppose it, often behind the scenes."

It's no coincidence that WHO officials were joined by the head of the U.N. Environment Program to announce the new policy. There's no evidence that spraying DDT in the amounts necessary to kill dangerous mosquitoes imperils crops, animals or human health. But that didn't stop green groups like the Pesticide Action Network from urging the public to celebrate World Malaria Day last month by telling "the U.S. to protect children and families from malaria without spraying pesticides like DDT inside people's homes."

"We must take a position based on the science and the data," said WHO's malaria chief, Arata Kochi, in 2006. "One of the best tools we have against malaria is indoor residual spraying. Of the dozen or so insecticides WHO has approved as safe for house spraying, the most effective is DDT." Mr. Kochi was right then, even if other WHO officials are now bowing to pressure to pretend otherwise.


Boyo



 

[JDN]

GM; the American Medical Association, et al seem to to accept and use WHO's findings.
Basically everyone does.....
Not perfect, but normal practice...

And oddly enough, since this particular forum is "The Politics of Health Care" except perhaps
for CCP's greater personal knowledge I am an "expert" using the term loosely having spend over ten years advising large (10,000+ employees) corporations
on their medical plans and having been married to a Board Certified Neurologist (I took care of the business aspects for her) for a number of years.

[Body-by-Guinness]

Do you ever read your own manure?  You should; it's good for a laugh.

I expect more hip waders are donned reading your inanities.

Again you dodge a larger point by thrumming your chest about a single data point and copping snotty attitudes about a UN agency cited as an authority. As the post about DDT should show, UN sponsored agencies are not paragons of scientific virtue so quoting their findings as the final word on the subject demonstrate your failings, not mine.

Time for another "nonny nonny boo boo," I suppose, as it appears to be your strongest argument.
 

[Crafty_Dog]

Do you ever read your own manure?  You should; it's good for a laugh.

I expect more hip waders are donned reading your inanities.
====================

OK folks, taking a poll here:  Any suggestions for the tone the conversation seems to be establishing?

a) Its the internet, what else do you expect
b) continue to call to their better nature
c) or?

[ccp]

water boarding

[Body-by-Guinness]

Suits me. Bet I'd hold out longer.

[JDN]

water boarding

But please don't tell me CCP that you would be the attending physician? 
 

[Crafty_Dog]

Humor is good.

Now take a dozen deep breaths and start FRESH with NO backward looking cracks please!!!

[Crafty_Dog]

Politicians wouldn't be politicians if they didn't trim their sails to the prevailing winds. Even so, the emerging 180-degree turn by Democrats on taxes and health insurance is one for the record books.

 
AP
 Democrats have spent years arguing that proposals to equalize the tax treatment of health insurance are an outrage against the American people. Workers pay no income or payroll taxes on the value of job-based plans, but the same hand isn't extended to individuals who must buy coverage on their own. Last year liberals mauled John McCain for daring to touch the employer-based exclusion to finance more coverage for the individually uninsured. He was proposing "a multitrillion-dollar tax hike -- the largest middle-class tax hike in history," said Barack Obama, whose TV ads were brutal.

But now Democrats need the money to finance $1.2 trillion or more for their new health insurance entitlement. Last week Senate Finance Chairman Max Baucus released his revenue "policy options" and high on the list is . . . taxing health benefits. Or listen to White House budget director Peter Orszag, who recently told CNN's John King that the exclusion "was not in the President's campaign plan, it wasn't in our budget. Clearly, some Members of Congress are putting it on the table and we are going to have to let this play out."

Mr. King tried again. "Let this play out. But would the President sign a bill that includes a pretty significant tax increase? That would be a tax increase." Mr. Orszag: "We're not going to be -- I think it's premature to be commenting on individual items . . . There are lots of ideas that are being put on the table." Translation: You betcha he'd sign it.

The tax exclusion is such a big revenue prize because Mr. Baucus is scrubbing every other tax nook and cranny and only coming up with rounding errors. A sampler:

- Impose an excise tax on hard alcohol, beer and some kinds of wine. That would be in addition to a sin tax on beverages sweetened with sugar or high-fructose corn syrup, such as soda. Mr. Baucus doesn't offer revenue estimates, though the Congressional Budget Office says a $16 per proof gallon alcohol tax might raise $60 billion over 10 years, and another $50.4 billion at three cents per 12 ounces of sugary drink.

- End or limit the tax-exempt status of charitable hospitals, which only costs currently a mere $6 billion a year.

- Make college students in work-study programs subject to the payroll tax. Also targeted are medical residents, perhaps on the principle that they'll one day be "rich" doctors. CBO has no score on these.

- Reducing Medicare reimbursement rates for supposedly "over valued physician services," such as diagnostic imaging. CBO says that requiring doctors to get prior clearance could save $1 billion in 10 years.

- For individuals with high-deductible insurance plans, contributions to health savings accounts would no longer be tax deductible. That would penalize patients who choose plans that encourage them to be informed consumers. CBO says that banning HSA payments entirely would yield all of $10 billion.

By contrast, the employer-based exclusion offers a huge money pot -- an estimated $226 billion in 2008. Yet as liberal MIT economist Jonathan Gruber recently told Mr. Baucus's committee, "no health expert today would ever set up a health system with such an enormous tax subsidy to a particular form of insurance" (his emphasis). It creates a coverage gap between workers who receive it from their employers and those who pay -- or can't afford to pay -- with after-tax money.

The tax exclusion is also one reason health costs continue to rise. It encourages workers to take an extra dollar of compensation in fringe benefits instead of cash while also routing low-deductible health spending through third parties. Some 84 cents of every medical dollar is spent by someone other than the patient. The insured have no incentives to make cost-conscious decisions about care.

So reforming the exclusion would inject a dose of discipline into American medicine. But for most Democrats the goal isn't to create a more rational health-insurance market. They simply want the revenue for another government program. Mr. Baucus won't target gold-plated employer insurance plans in general, because union-negotiated benefits are usually gold-plated. Rather, he may cap or phase out the exclusion by income, starting with workers earning more than $200,000. Insurance options that don't conform to government diktats (health savings accounts) would also lose any tax advantage. This would do nothing for market efficiency, but it would be one more stealth tax increase.

Democrats owe an apology to Mr. McCain, and it'll be fascinating to see if they will now suffer a political backlash of their own making. Having told the country that this tax reform is really a tax increase, Democrats are opening themselves to the same attacks they leveled against Republicans.

They could avoid that fate if they used the tax exclusion money to finance, say, a tax credit for the uninsured. That would be a genuinely bipartisan reform. But liberals won't accept that because they want to take one giant step toward government-run health care. And the only way they can pay for it is by taxing everything in sight, including your current health insurance.

 

[Body-by-Guinness]

Ah the joys of government run health care. Government mandates that patients be treated within four hours of admittance. Strapped for resources, hospitals don't have the beds to admit, so the meet the mandate by leaving patients languishing in ambulances etc:

Patients forced to wait hours in ambulances parked outside A&E departments
Ambulance chiefs have warned that lives are being put at risk "on a daily basis" by long delays allowing patients into Accident and Emergency units.
 
By Laura Donnelly, Health Correspondent
Last Updated: 10:04PM BST 30 May 2009

An investigation by The Sunday Telegraph has found that thousands of 999 patients are being left to wait in ambulances in car parks and holding bays, or in hospital corridors – in some cases for more than five hours – before they can even join the queue for urgent treatment.

Experts warn that hospitals are deliberately delaying when they accept patients – or are diverting them to different sites – in order to meet Government targets to treat people within fours hours of admitting them.
 
The extent of the problems have been revealed in correspondence between senior health officials, obtained under the Freedom of Information Act, which also show their serious concerns about the dangers the delays pose to patients.

A letter by Sir Graham Meldrum, chairman of West Midlands Ambulance Service, sent to hospital chief executives last November warns that patients are "being put at risk on a daily basis", with 7,600 patients a month facing delays of more than 30 minutes – a situation which has since deteriorated, with more than 8,000 such delays in March.

The documents also reveal an investigation into the death of a patient who waited three hours to be seen by A&E staff after being taken by ambulance to The Royal Wolverhampton Hospitals Trust.

On two occasions in January, ambulances took more than five hours to unload patients at Queen's Hospital in Romford, Essex.

In the same month, journeys to Weston-super-Mare hospital in Somerset were repeatedly held up, with more than a dozen waits of two hours, including delays of four and five hours.
Dozens of A&E units refused all 999 arrivals for periods of several hours, on hundreds of occasions, forcing crews to take desperately sick patients on lengthy journeys, and shifting pressures to other hospitals, the documents show.

In the course of six months, hospitals in the West Midlands ordered a "divert" on more than 450 occasions, closing A&E units to all 999 arrivals for hours at a time.

During a six-week period last autumn, hospital chiefs in the north east of England closed casualty units to 999 arrivals on 34 occasions, for up to 19 hours at a time.

Internal documents from the London Ambulance Service reports of extensive delays throughout December: "Ambulances have queued in large numbers for up to five hours to unload, and two hour delays were relatively common," it says.

The briefing note, written in January, says hospitals were so short-staffed that ambulance staff were regularly forced to look after multiple patients simultaneously, so that colleagues could respond to 999 calls.

Delays to patients arriving to A&E by ambulance are increasing in many parts of the country as hospitals struggle to cope with a massive increase in the number of emergency hospital admissions since family doctors stopped providing routine out-of-hours care.

Since the changes were made five years ago, the number of emergency hospital admissions has risen by 30 per cent, while the number of beds fell by more than 20,000.
More than 100,000 ambulance journeys were delayed at casualty units by more than 30 minutes in the month of March alone – an increase of 18 per cent in 12 months.
Mike Penning, the shadow health minister, said: "Labour's tick box culture is forcing staff to prioritise the four hour target ahead of ensuring patient get the treatment they need.
"It is madness that all of this has happened at a time when the number of people being admitted to A&E units is soaring."

Ambulance staff and patients groups said hospitals were routinely ignoring NHS guidance which says the "clock" for the A&E four hour wait should start 15 minutes after an ambulance arrives on site.

Katherine Murphy, from the Patients Association, said: "We are hearing increasing numbers of stories of seriously-ill patients lying in pain in ambulances, worried out of their mind, while others are taken on long journeys because casualty units have been closed.

"The guidance may say they should not be delayed, but the A&E target is the one that comes with financial penalties attached, and it is the one hospitals care about."
Most ambulance trusts measure delays by "turnaround time" – the time between the ambulance's arrival at A&E and its availability for the next call.
It includes any time cleaning or restocking the vehicle, which should take no more than a few minutes.

Research by one ambulance trust found three quarters of delays occurred before the patient was handed over to staff, and that 84 per cent of those cases were connected to bed shortages.

Sam Oestricher, ambulance representative for trade union Unison, said ambulances were being treated "as mobile waiting rooms".
He said: "Our members are spending hours effectively babysitting patients, who have been rushed to A&E departments because they need to be seen urgently.
"It leaves patients and crews in a terribly anxious, frustrating situation, and it greatly increases the risks."

Jim Wardrope, A&E consultant at Sheffield Northern Hospital and past president of the College of Emergency Medicine said: "The whole system is running hot, so that when the pressure comes, it backs up quickly and we end up desperately searching for trolleys."

Health Minister Ben Bradshaw said "severe action" would be taken against any hospitals found to be keeping patients in ambulances in an attempt to cheat on the A&E targets.
He added: "The vast majority of hospitals up and down the country are meeting the four hour target without keeping people waiting in ambulances."

More than 4,800 people have backed The Sunday Telegraph's Heal Our Hospitals campaign, which is calling for a review of hospital targets to make sure they work to improve quality of care.

http://www.telegraph.co.uk/health/healthnews/5412191/Patients-forced-to-wait-hours-in-ambulances-parked-outside-AandE-departments.html
http://www.telegraph.co.uk/health/healthnews/5412191/Patients-forced-to-wait-hours-in-ambulances-parked-outside-AandE-departments.html

[ccp]

Where I am patients are triaged.  Waits for the true emergencies are low but when the ED is busy some could wait for hours.
I don't see any other way.
All our lives are going to be nothing more than following mandates.
For doctors it already is that way, but it will get worse.

You should only use so much electricity, water, sugar, gas, oil, than the government hopes you do use more because then they can tax you/us.

Flush more than once per day per person per household then more can be confiscated.
Pelosi wants to inventory "everything".

I assume there will be a tax for too much TV, sitting, blogging, message boards.  Hey if your not walking your fat.  We tax for cigarettes alcohol why not for each pound you are over a certain BMI?

A National sales tax is coming. 

On and on.  Crafty you are so right.  We are totally screwed.

[Body-by-Guinness]

There Is No Such Thing As a Free Health Care. But There Are Lots of Things Called Free-er Health Care That Get Really, Really Expensive In Ways That Range Far Beyond Dollars and Cents.

Nick Gillespie | June 2, 2009, 8:09am

Get ready for the Summer of Glove, as in rubber-examination gloves used for digital exams. This time the patient is the entire U.S. economy, which we're being told suffers from bloating and sluggishness due to way too much spending on health care.

Legislation to revamp the health-care system likely would cut the rate of annual growth in costs by 1.5 percentage points, increasing the gross domestic product by more than 2 percent in 2020 above what it would be if no changes were made, according to projections by President Barack Obama's Council of Economic Advisers.

"Health care reform is incredibly important not just for the American people but for the American economy," Christina Romer, who chairs the council, said in a briefing for reporters on the CEA report released this morning.

Those are the types of bold, long-term predictions that hold as much water as an 88-year-old man on a full-liquid diet. I mean, really, if you're going to make predictions that are completely pulled out of your ass, why not follow what Treasury did with the TARP bailout and just choose a "really big number" picked out of thin air?

More to the point, the Wile E. Coyote Super Geniuses in D.C. have been working overtime since their junior-high theses on proposals to finally fix health care (despite it not being totally clear what the term even means, or how it means very different things to very similar people).

They have seen the past and it didn't work. But that doesn't mean it can't not work this time:

Democrats, who control both the House and Senate, are considering proposals that would require employers to cover all full-time workers or pay a penalty to the government; create a "health exchange" to allow consumers to buy insurance at lower, group rates; set up a new government-run plan to cover some of the uninsured; and levy new taxes to pay for universal coverage.

Employer mandates. Insurance pools. Government programs. New taxes. Hope and change, and even without Tom Daschle in the cabinet! I don't know they do it, but goddamn, it's beautiful.

Exactly how any of the above differs from what we're already doing escapes me. Our health care system is the ugly accretion of decades of stupid government policies (starting with the decision not to tax employer-based health care costs as compensation, thus pushing the idea of tying coverage to the workplace) that have gotten gnarlier and more twisted with each additional, incremental add-on.

So, if you're actually legislatin' in the 21st century on the promise of hope and change, why not actually start thinking about doing some things that are genuinely different and have at least a snowball's chance in hell of working?

Start with injecting actual market forces into health care by disrupting professional cartels that raise the cost of buying any prescription drug by $100 or whatever you get charged for a perfunctory doctor's visit (and by the way, start questioning the prescription drug regime too)?

Inject some actual price signals into the system by getting rid of the tax-code hocus-pocus that creates third-party payer systems and gets employers, most of whom can't turn a goddamn dollar at their chosen field of expertise, into the business of providing health care?

Take an example from fields such as dentistry and eyecare, where fewer services are covered by insurance and hence more open to the sorts of competition and discovery process that routinely drives prices down and the level of services up in every area of exchange from airline tickets to hamburgers to high-tech computer gear. And recognize that health insurance is not the same as health; indeed, it's not quite clear just exactly how the two are linked.

And also take a deep breath and recognize that spending more money on health care is not necessarily a bad thing, if it's the free choice of people (which currently it isn't). Like eating more prepared meals, it can be a glorious sign of increasing wealth.

But most of all, stop acting like characters from Tennessee Williams or William Faulkner. Learn from the past already, don't just mindlessly repeat it.

http://www.reason.com/blog/show/133880.html

[HUSS]

hahahahahahaha, i hope this hurts everyone who voted for him. I would love to witness the facial expressions of every single moron for voted for obama when they realize that not only did he lie to them but he is violating them 10X worse the then evil GWB did.

Obama said to be open to taxing health benefits

By ERICA WERNER, Associated Press Writer Erica Werner, Associated Press Writer – Tue Jun 2, 7:43 pm ET
WASHINGTON – President Barack Obama is leaving the door open to taxing health care benefits, something he campaigned hard against while running for president. Senate Finance Committee Chairman Max Baucus, D-Mont., raised the issue with Obama during a private meeting Tuesday with the president and other Democratic senators and later reported the president's response: "It's on the table. It's an option."

The federal government would reap about $250 billion a year if it treated health care benefits given to employees like wages and taxed them.

Baucus and others are eyeing that money as they search for ways to pay for a costly health care overhaul that would extend coverage to 50 million Americans who are now uninsured. That could cost some $1.5 trillion over 10 years.

The president adamantly opposed health benefit taxes during the campaign, arguing they would undermine job-based coverage. But he's now indicating openness to that suggestion from Congress, even if he criticized Republican presidential rival John McCain for proposing a sweeping version of the same basic idea.

Obama has made some suggestions of his own for paying for a health care overhaul, including cuts to Medicare and limiting tax deductions wealthy people can take, but they've run into opposition from Congress. And, they only add up to about $630 billion over 10 years.

"The president made it clear during the campaign that he has serious concerns about taxing health care benefits," White House spokesman Reid Cherlin said in a statement about Tuesday's meeting.

"He stated again his belief that health reform can't wait another year, and that while all options should be considered, those options should include the revenue proposals that he included in his budget," Cherlin said. "He made it very clear that he prefers the approach he has already outlined."

Some experts think limiting the tax exclusion for health benefits is the only way to get the necessary money to pay for a sweeping health care overhaul. But there's opposition from organized labor and from many Democrats, including House Ways and Means Chairman Charles Rangel, D-N.Y., who said recently there was "no way" he would support the approach.

Baucus wants to look at limiting — but not entirely eliminating — the tax-free status of employer-provided health benefits. Obama is leaving the details of crafting a health care bill to Congress and used Tuesday's meeting to urge senators to swift action.

"This window between now and the August recess I think is going to be the make-or-break period," Obama said before the meeting was closed to reporters. "This is the time where we've got to get this running."

___

Associated Press writers Philip Elliott and Ricardo Alonso-Zaldivar contributed to this report.

[DougMacG]

Huss notes the meaninglessness of Obama's positions in the campaign to his own positions now.  Unbelievable how many times on so many topics that has already happened, starting with when he joked (?) about things said in a campaign when he appointed Hillary to be Sec. of State.

I was most struck by a phrase tucked at the end of the AP story:


"... Obama said before the meeting was closed to reporters" !!!


When it was the old Hillary task force or when it is the new leftist machine, they do that to get things done for the American people.  When it was Cheney trying to develop a proposal for energy production so that the economy would not collapse in 8 years (whoops), it was black helicopters and evil conspiracies. 

[Crafty_Dog]

GOP Health Plan Contrasts With Obamacare

While Democrats fret about how to find another $1.5 trillion to pay for their scheme to expand government health care to include all Americans, congressional Republicans have introduced their alternative Patients' Choice Act. The Act, which has no chance of passage by a Democrat-controlled Congress committed to expanding federal bureaucracy and power, is an attempt to redirect $300 billion in federal tax deductions from the employer-based health system that was created after World War II.

Under the proposal, families would qualify for tax credits of $5,700 a year and individuals $2,300 to buy insurance and invest in health savings accounts. Up to one-fourth of any unspent money in the accounts could be rolled over to the next year. The bill would allow lower-income Americans a way out of the Medicaid trap rapidly careening toward its inevitable bankruptcy less than eight years hence because it is $34 trillion in debt. In fact, Medicare is so deep in debt that devoting 100 percent of GDP to it still won't make this single government program solvent.

Despite admitting the insolvency of our national finances when he said last week, "[W]e are out of money," Barack Obama is trying to sell the notion that the proposed federal takeover of 18 percent of the nation's economy via his new health care plans somehow helps the nation economically. Obama also suggested myopically that $200 billion could be shaved from Medicare over the next 10 years (the program is bankrupt about three years earlier) even though a majority of physicians now refuse to see Medicare patients because of artificially low reimbursement rates. Instead of squandering the nation's future health care with legions of expensive bureaucrats, the GOP alternative deserves serious consideration because it doesn't cost the taxpayers anything and doesn't require the creation of a massive government bureaucracy to operate.

[ccp]

"Under the proposal, families would qualify for tax credits of $5,700 a year and individuals $2,300 to buy insurance and invest in health savings accounts. Up to one-fourth of any unspent money in the accounts could be rolled over to the next year. The bill would allow lower-income Americans a way out of the Medicaid trap"

How much do people on medicaid pay in taxes that this deduction is even going to apply to them?

 

[Crafty_Dog]

Dunno, but does not the term "tax credit" mean a one-to-one relationship with taxes paid?  In contrast, a deduction is worth only the % paid on the income/gain-- yes? 

Thus, if I am correct, most any taxes paid by these people (no doubt there will be some exceptions) will be applicable here.

Of course, the devil is in the details.

[Body-by-Guinness]

Kennedy’s Health Bill: A First Look

Posted by Michael D. Tanner

A draft of Sen. Ted Kennedy’s health care reform bill is finally available, and it is difficult to overstate how far he would move us to a government-run health care system. An initial read-through reveals among the key provisions:

An individual mandate, requiring that every American purchase a “qualified” insurance plan. (Sec. 161(a)) The mandate will be enforced through the tax code with Americans required to pay a penalty if they fail to comply.  In an extraordinary delegation of congressional authority, the Kennedy bill would give the Secretaries of Treasury and Health and Human Services the power to determine what this penalty should be. Individuals would be required to submit information on their insurance status over the previous year to the Secretary of HHS, along with “any such other information as the Secretary may require.” (Sec. 6055(b)(2) and (3)). Individuals who already have insurance could keep it. However, if they changed plans (or presumably changed jobs), their new insurance would have to meet the definition of “qualified.”

A “pay or play” employer mandate requiring employers to provide all workers with health insurance and pay a minimum amount of the premium, or pay a tax (Sec 162). Again, the amount of the new tax is left to the discretion of the Secretaries of HHS and Treasury. Some small employers would be exempt from the mandate, but the size of those firms remains TBA. (Sec. 3113(g)) Companies with fewer than 250 workers would be forbidden to self-ensure. (Sec. 2720)

A new federal bureaucracy, the Medical Advisory Council, which would determine what benefits will be required to be part of your “qualified” insurance plan. (Sec. 3103(h) and (i)). Lest anyone think Congress won’t get involved. The Council’s decisions can be disapproved by Congress if, say, they don’t mandate inclusion by a favored provider group or disease constituency. (Sec 3103(g)).

Massive new federal subsidies. Medicaid would be expanded to individuals earning 150 percent of the poverty level, and the federal government would pay all incremental costs of the increased enrollment. (Sec 152.) Single, childless adults would become eligible for Medicaid. Even more egregious, individuals and families with incomes between 150-500 percent of the poverty level ($110,250 for a family of four) would be eligible for subsidies on a sliding scale-basis.(Sec. 3111(b)(1)(A-G)).

Insurers would be required to accept all applicants regardless of their health (guaranteed issue) and forbid insurers from basing insurance premiums on risk factors (Community rating). There does not appear to be any exception for lifestyle factors, such as smoking, alcohol or drug use, diet, exercise, etc. Thus, not only will the young and healthy be forced to pay higher premiums to subsidize the old and unhealthy, but the responsible will be forced to pay more to subsidize the irresponsible.
A “public option” operating in competition with private insurance (Section 31__). How this plan would be funded, the level of premiums, etc. is left mostly TBA. In response to criticism, the Kennedy bill does require that the public plan pay providers 10 percent above Medicare reimbursement rates. (Sec 31__(B)). That would still allow for a considerable degree of cost-shifting to private insurance. And, we should recall that such promises are ephemeral. When Medicare began, proponents promised it would reimburse at the same rate as insurance. That promise didn’t last long.

States would be prodded to set up “gateways,” similar to Massachusetts’ “connector.” (Sec 3104(a)) If a state fails to do so, the federal government will set one up for them. (Sec. 3104(d)) The federal government would provide grants to states to help them set up these gateways. The amount of the grants is, you guessed it, left to the discretion of the Secretary of HHS. Gateways may also fund their operations by assessing a surcharge on insurers. Sec. 3101(b)(5)(A)/

A new federal long-term care program (Sec 171).

Kennedy does not include any estimate of how much his plan would cost, nor any proposal for how to pay for it.

More details will undoubtedly emerge, but it is very clear that the Kennedy plan would put one-sixth of the US economy and some of our most important, personal, and private decisions firmly under the thumb of the federal government.

Michael D. Tanner • June 8, 2009 @ 2:40 pm

http://www.cato-at-liberty.org/2009/06/08/kennedys-health-bill-a-first-look/

Primary source:

http://keithhennessey.com/wp-content/uploads/2009/06/kennedy_health_bill_draft.txt

[Body-by-Guinness]

June 09, 2009, 4:00 a.m.

How Not to Reform Health Care
Massachusetts is widely touted as a model for health-care reform. It isn’t.

By Michael Tanner

As the national debate over health-care reform begins, many in Congress are looking to Massachusetts as a model for what that reform might look like. Indeed, from mandates and subsidies to some form of exchange or “connector,” many of the key components of the Massachusetts reforms are likely to end up in the bill to be voted on this year.

But three years after it was voted in, experience suggests the “Massachusetts model” actually provides an object lesson in how not to reform health care. The program has failed in its main goal of achieving universal coverage. It has failed to restrain the growth in health-care costs. And it has greatly exceeded its initial budget, placing new burdens on the state’s taxpayers.

There is no doubt that the Massachusetts program has reduced the number of people without health insurance in the state — but by how much is a matter of considerable dispute. According to official statistics, the state’s uninsured rate has declined from 10.4 percent in 2006 to just 2.6 percent today. However, there are several reasons for doubting the accuracy of this number. For example, a door-to-door survey by the Census Bureau in March 2008 estimated that 5.4 percent of state residents were uninsured. And an examination of state income-tax returns indicates that roughly 5 percent of residents were uninsured as of Jan. 1, 2008. The best estimates suggest that more than 200,000 Massachusetts residents remain uninsured, out of the 670,000 uninsured in 2006. That’s a far cry from the “universal coverage” that was promised when the bill was passed.

Health-care costs continue to rise much faster in Massachusetts than in the nation as a whole. Proponents of the reform promised that it would reduce costs. Gov. Mitt Romney said “the cost of health care would be reduced” and the plan would make health insurance “affordable” for every Massachusetts citizen. Supporters went so far as to suggest that the reforms would reduce the price of individual insurance policies by 25 to 40 percent. In reality, since the program became law, insurance premiums have been increasing by 10 to 12 percent per year, nearly double the national average. On average, health insurance costs $16,897 a year for a family of four in Massachusetts, compared to $12,700 nationally. Meanwhile, total health-care spending in the state has increased by 28 percent.

New regulation and bureaucracy are limiting consumer choice and adding to costs. A new mandate for prescription-drug coverage was added, and high-deductible policies were restricted. Some Massachusetts residents who were happy with their old insurance policies have had to change their coverage in order to comply with the mandates.

Although much of the burden falls on individual policy-holders, the costs to the taxpayers have also skyrocketed. Despite one tax increase already, the program faces huge deficits in the future. As a result, the state is considering caps on insurance premiums, cuts in reimbursements to providers, and even the possibility of a “global budget” on health-care spending — with its attendant rationing.

The reforms have added a new burden on companies, especially smaller ones, wanting to do business in the state. The Small Business and Entrepreneurship Council cites the Massachusetts health-care regulations and the mandate on companies as its reasons for ranking Massachusetts dead last among the 50 states for business-friendly health-care policies.

A shortage of providers, combined with higher demand, is increasing waiting times to see a physician, especially primary-care providers. The wait for seeing an internist, for example, has nearly doubled since the reforms were implemented.

Supreme Court Justice Louis Brandeis rightly called America’s state governments “the laboratories of democracy.” States are able to experiment with policies on a small scale before these policies are adopted by the whole nation.

Let us hope that Congress learns from the failure of the Massachusetts experiment.

— Michael Tanner is a senior fellow at the Cato Institute and the co-author of Healthy Competition: What’s Holding Back Health Care and How to Free It.

National Review Online - http://article.nationalreview.com/?q=NDNiY2ZiNTZkYzgyNWViYzU3ZDBkYmYwZTc4ZmUxNmI=

[Crafty_Dog]

By KARL ROVE

It was a sobering breakfast with one of the smartest Republicans on Capitol Hill. We can fix a lot of bad stuff President Barack Obama might do, he told me. But if Mr. Obama signs into law a "public option," government-run insurance program as part of health-care reform we won't be able to undo the damage.

I'd go the Republican member of Congress one further: If Democrats enact a public-option health-insurance program, America is on the way to becoming a European-style welfare state. To prevent this from happening, there are five arguments Republicans must make.

 
The first is it's unnecessary. Advocates say a government-run insurance program is needed to provide competition for private health insurance. But 1,300 companies sell health insurance plans. That's competition enough. The results of robust private competition to provide the Medicare drug benefit underscore this. When it was approved, the Congressional Budget Office estimated it would cost $74 billion a year by 2008. Nearly 100 providers deliver the drug benefit, competing on better benefits, more choices, and lower prices. So the actual cost was $44 billion in 2008 -- nearly 41% less than predicted. No government plan was needed to guarantee competition's benefits.

Second, a public option will undercut private insurers and pass the tab to taxpayers and health providers just as it does in existing government-run programs. For example, Medicare pays hospitals 71% and doctors 81% of what private insurers pay.

Who covers the rest? Government passes the bill for the outstanding balance to providers and families not covered by government programs. This cost-shifting amounts to a forced subsidy. Families pay about $1,800 more a year for someone else's health care as a result, according to a recent study by Milliman Inc. It's also why many doctors limit how many Medicare patients they take: They can afford only so much charity care.

Fixing prices at less than market rates will continue under any public option. Sen. Edward Kennedy's proposal, for example, has Washington paying providers what Medicare does plus 10%. That will lead to health providers offering less care.

Third, government-run health insurance would crater the private insurance market, forcing most Americans onto the government plan. The Lewin Group estimates 70% of people with private insurance -- 120 million Americans -- will quickly lose what they now get from private companies and be forced onto the government-run rolls as businesses decide it is more cost-effective for them to drop coverage. They'd be happy to shift some of the expense -- and all of the administration headaches -- to Washington. And once the private insurance market has been dismantled it will be gone.

Fourth, the public option is far too expensive. The cost of Medicare -- the purest form of a government-run "public choice" for seniors -- will start exceeding its payroll-tax "trust fund" in 2017. The Obama administration estimates its health reforms will cost as much as $1.5 trillion over the next 10 years. It is no coincidence the Obama budget nearly triples the national debt over that same period.

Medicare and Medicaid cost much more than estimated when they were adopted. One reason is there's no competition for these government-run insurance programs. In the same way, Americans can expect a public option to cost far more than the Obama administration's rosy estimates.

Fifth, the public option puts government firmly in the middle of the relationship between patients and their doctors. If you think insurance companies are bad, imagine what happens when government is the insurance carrier, with little or no competition and no concern you'll change to another company.

In other words, the public option is just phony. It's a bait-and-switch tactic meant to reassure people that the president's goals are less radical than they are. Mr. Obama's real aim, as some candid Democrats admit, is a single-payer, government-run health-care system.

Health care desperately needs far-reaching reforms that put patients and their doctors in charge, bring the benefits of competition and market forces to bear, and ensure access to affordable and portable health care for every American. Republicans have plans to achieve this, and they must make their case for reform in every available forum.

Defeating the public option should be a top priority for the GOP this year. Otherwise, our nation will be changed in damaging ways almost impossible to reverse.

Mr. Rove is the former senior adviser and deputy chief of staff to President George W. Bush.

[ccp]

Notice that other than prescription savings he doesn't tell us the truth about where the savings are coming from.
It is going to come from limiting access to specialists, tests, and other services the "experts" will deem are "inappropriate".  It will be based on population based studies and essentially be like HMO medicine.  Care will be monitored (medicare already is anyway), and restricted in ways akin to Millman and Robinson flow charts that private risk managers use to determine what they will and what they won't pay for.

My understanding of this (though I am by no means an expert)  is that outcomes data is used to determine if doing things more cheaply or restricting care increases hospitalization, rehospitalization, death or morbidity rates.  I am not clear that the data is proof the care is as safe or as good.  It depends what one is measuring when determining the "outcomes".  On the other hand I am not clear there is any data that suggests health care is worse though it is certainly less convenient. For harder to measure outcomes itmay be worse.

As for the prescription savings I do agree that many patients are on more expensive non generic drugs that are no better of more effective than cheaper generic older drugs.

This is what the EMR is for.  To collect all the data and then come out with dictates that will instruct providers on how we must deliver care.  It will be mandated.  Whether private insurers can survive I am not sure.  I don't necessarily jump to the conclusion that some from the right are trying to scare us all into believing that "there is absolutely no way private health insurance will be doomed but that could very well be the case.  Certainly BO despite whatever he says he is certainly working with the goal in mind of a national health care system.  There is really no other rational conclusion.   BO's people have been looking at these things for years.  It ain't new.  It ain't BOs ideas though he obviously embraces them wholeheartedly.

In any case, there is no question BO isn't leveling with us about his real intentions:

Obama calls for new health care spending cuts AP  Reuters – President Barack Obama speaks about reforming America's health care system at a Wisconsin Town Hall … Josh Gerstein Josh Gerstein – Sat Jun 13, 7:06 am ET
President Barack Obama says he's now found savings that will pay almost all the costs of a massive overhaul of America's health care system.

Obama on Saturday is announcing an additional $313 billion in new proposed savings that he says would bring the total funding available for his top-priority health insurance reform to nearly $950 billion over 10 years.

White House officials insisted the new savings were rock-solid, but also acknowledged they had yet to settle on a specific mechanism to achieve lower prescription drug costs that make up nearly one-quarter of the new savings.

“Any honest accounting must prepare for the fact that health care reform will require additional costs in the short term in order to reduce spending in the long term,” Obama says in his weekly radio and Internet address. “Today, I am announcing an additional $313 billion in savings that will rein in unnecessary spending, and increase efficiency and the quality of care.”

The new proposals from Obama came as the drive for health care reform reaches a pivotal juncture in Congress. On Monday, the Senate Finance Committee is scheduled to receive Congressional Budget Office estimates on a slew of health-care options. On Wednesday, the committee is expected to unveil proposed legislation.

In advance of those milestones, the White House was moving aggressively to counter public criticism that funding plans for the health reform effort are unrealistic, particularly in the face of an expected 10-year pricetag of $1 trillion or more. Some analysts have faulted the White House for being overly optimistic about savings and tone-deaf to which tax-raising proposals are likely to fly in Congress.

In his address Saturday, Obama refers to a 10-year total of more than $600 billion in “savings” for health care. However, he does not explain in his latest comments that, under his revised budget released last month, $326 billion of that amount would come from tax hikes on Americans making over $250,000 a year, “loophole closers,” and higher fees for some government services.

In a conference call with reporters Friday, Office of Management and Budget Director Peter Orszag said the latest announcement signaled that the White House had met its obligation to identify funding sources for a broad-based effort to make health insurance more affordable and more widely available.

“We are making good on this promise to fully finance health care reform over the next decade,” Orszag declared.

//
The bulk of the new $313 billion in savings would come from cutting or reducing the growth of payments to hospitals, medical equipment manufacturers and laboratories — though the major cuts don't target doctors, Orszag said.

Over the next decade, $110 billion is slated to come from reducing reimbursements to take account of what Orszag described as the ability of providers to improve their efficiency. “Health care services should be able to achieve and do achieve productivity improvements over time,” he said. According to a fact sheet released by the White House, future increases in such Medicare payments would be reduced based on an assumption that health care providers achieve half the productivity increases seen elsewhere in the economy. The budget official said the reductions would take place even if providers failed to garner the projected efficiencies.

Another $106 billion would come from cuts in so-called disproportionate share payments the federal government makes to hospitals with large numbers of uninsured patients. “As the ranks of uninsured decline under health reform, those payments become less necessary,” Orszag said.

 

About $75 billion is slated to come from lower payments for prescription drugs. However, Orszag said the White House was “in discussions with stakeholders over the best way of achieving that $75 billion.”

Notwithstanding that ambiguity, Orszag asserted that the White House had put forward $950 billion in budgetary offsets that could be use to fund health reform. He called the proposals "hard" and "scoreable," meaning that they were sufficiently certain and specific to pass muster with CBO officials who formally tally the cost of budget items.

Asked about the discrepancy, Orszag said, “There’s been continuous skepticism that we will come forward with detail….The detail on the $75 billion for prescription drugs will be forthcoming in the very near future and I will rest my reputation as a former CBO director on the fact that there are multiple ways in which those savings can be achieved and we are committed to achieving that level of savings in this package.”

There were signs that the announcement of the additional $313 billion of savings may have been rushed. In addition to the vagueness about the $75 billion in lower drug costs, the White House’s health care reform coordinator, Nancy-Ann DeParle, did not join a conference call with reporters to announce the new proposals. Her presence had been advertised in advance, but a spokesman said she was in another meeting and could not participate.

The cuts and savings are likely to engender warnings from providers that de-facto rationing will occur as patients in some areas find themselves unable to find providers willing to perform lab tests, X-rays and the like, due to the lower reimbursement rates.

Hospitals are also likely to protest that the disproportionate share payments, which are targeted for cuts of 75 percent, are vital to maintaining hospitals in costly urban centers, and to keeping teaching hospitals viable.

“It is unlikely to be an exact match on a hospital-by-hospital basis but what we believe will occur is that the remaining DSH payments that will still exist can be better targeted to the hospitals most in need,” Orszag said.

 

[Body-by-Guinness]

June 12, 2009
A New Public Health Plan: How Congressional Details Will Impact Doctors and Patients
by Greg D’Angelo
WebMemo #2482
President Obama and congressional leaders are proposing the creation of a new public health insurance plan to compete with private insurance plans. The President first proposed a public insurance option during the 2008 presidential campaign, but now the details and design of this new option--like most other aspects of the health reform legislation currently under development--have been left almost entirely to Congress.

Many in Congress are looking to Medicare as a model for a new public health plan, yet they fail to realize the consequences for patients and providers alike, as millions of Americans would lose the private coverage that they have today.

Crucial Details

According to the Lewin Group, a nationally prominent econometrics firm, the two most crucial design details of this new option are the size of employers eligible to buy into the new plan and the provider payment levels used for reimbursement under the plan.[1]

These key issues are bound to be contentious in the upcoming debate over health care reform.[2] The Obama campaign proposal would have made individuals without employer coverage, the self-employed, and small employers (defined as fewer than 25 employees) eligible for the public plan. But the President never specified provider payment levels or the method for determining reimbursement rates for doctors, hospitals, and other medical professionals for the thousands of medical services that would be delivered.[3]

Members of Congress and their staffs will thus have to hammer out these crucial details in legislation if a public plan is to be introduced.

Unlevel Playing Field

If Congress creates a public plan modeled on Medicare--as some have previously proposed--the result, of course, would be to undercut any pretense of a promised "level playing field" for competition with private health insurance.[4] Public plan premiums would be 25-40 percent lower than private insurance premiums as the public plan would reimburse providers less than private payers would--and often less than the cost of care delivered.

Payment rates for doctors and hospitals under public programs are set administratively, not by the market. They are, on average, lower than private payment rates for similar care.[5] Medicare provider payments for hospital care are only 71 percent of private rates, while Medicare provider payments for physician care are only 81 percent of private rates.[6] In other words, Medicare payment levels are roughly 19-29 percent lower than private levels.

Congress's ability to impose low provider payments and artificially reduce the cost of the public option compared to private insurance will increase enrollment in the public plan while crowding out, or displacing, existing private coverage.

Loss of Private Coverage

When considering a public plan modeled after Medicare, Lewin finds that the estimated reduction in the number of uninsured does not vary greatly (observing a change of only 800,000 individuals) as eligibility for the plan is extended beyond small employers to employers of all sizes.[7] Instead, there is a substantial increase in enrollment in the public plan and in the loss of private coverage.

If the public plan were opened to only small employers, enrollment in the public plan would reach 42.9 million, and 32 million Americans would lose their private coverage.[8] However, if the public plan is opened to all employers, enrollment in the public plan increases dramatically to 131.2 million, and 119.1 million Americans would lose their private coverage.[9] In this particular case, of the 171.6 million people who currently have private coverage, about 70 percent of them would lose the coverage that they have today.[10]

More specifically, of the estimated 157.4 million Americans who have private employer coverage, up to 107.6 million people could lose their private employer coverage, even if they like it and would prefer to keep it.[11]

Imposing Higher Costs on Individuals and Families

Increased enrollment in a new public plan would likely result in higher premiums for those with private insurance.

Historically, public programs--specifically Medicare and Medicaid--have reimbursed providers at levels below the costs of their services. For example, in 2003, on average, Medicare paid hospitals only 95 percent of the cost of providing services, while Medicaid paid hospitals only 89 percent of the cost of providing services.[12] These below-cost payments in public programs are at least in part offset by above-cost reimbursements to providers by private payers--as evidenced by hospital reimbursements to the tune of 122 percent of costs in 2003.[13] This cost-shift, in turn, inflates private health insurance premiums for individuals and families.[14]

The cost-shift dynamic plays a prominent role in the health care sector. A study by the actuarial firm Milliman calculated that public programs currently shift $88.8 billion in costs onto private payers per year, increasing the typical American family's annual private health insurance premium by $1,512, or 10.6 percent.[15] Moreover, Lewin speculates that a new public plan could increase the annual cost-shift per privately insured by as much as $526, which will only serve to further perpetuate the crowd-out of private insurance.[16]

Lower Incomes for Physician and Hospitals

A new public plan could also significantly reduce provider incomes. As more people gain insurance, physicians and hospitals would benefit from decreased levels of uncompensated care. However, the increase in public coverage along with new demands to provide services to the newly insured could outweigh any increased revenues from reductions in uncompensated care.

If all employers become eligible for the public plan, the annual net income of hospitals could fall by $36 billion while the annual net income of physicians could drop by $33.1 billion. Increasing demands on health care providers coupled with decreasing provider incomes could compromise patients' access to high-quality care. Faced with low reimbursement, doctors are already reportedly opting out of Medicare--a problem that is likely to be exacerbated with the creation of a new public plan.[17]

Consider the Consequences

Discussions surrounding the creation of a new public plan, based on Medicare and intended to compete with private health plans, have not adequately considered the potential consequences for patients and providers.

Creating a new public health plan option is likely in direct conflict with the many promises Congress and the Obama Administration have made regarding health reform.

While many claim that a public plan would merely represent an alternative choice to private health plans operating on "a level playing field," the reality is that Congress will use the government's power to artificially deflate the cost of the public plan by lowering provider reimbursement rates.

It has been suggested repeatedly that if Americans like their health plan they can keep it and that nothing would change except that they would pay less. But the creation of a new public plan modeled on Medicare could result in the loss of the private coverage that millions have today by undermining the current system of employer-sponsored insurance. Those who are actually able to keeping their private insurance will likely be forced to pay more--not less--to cross-subsidize the public plan.

While patients have been ensured their choice of doctor and care without government interference, great uncertainties remain regarding what the future holds for the doctor-patient relationship as millions of Americans are pushed into a new public plan.

The Devil Is in the Details

It is unlikely that Congress and the President will be able enact a major overhaul of the health care system that both includes a new public health insurance option and meets their many oft-stated promises.

When it comes to health care policy, what politicians promise is less important than the details of their policy prescriptions. Watch carefully.

Greg D'Angelo is Policy Analyst in the Center for Health Policy Studies at The Heritage Foundation.


[1]The Lewin Group, "Opening a Buy-In to a Public Plan: Implications for Premiums, Coverage and Provider Reimbursement," February 11, 2009, at http://www.lewin.com/content/publications/OpeningBuyInPublicPlan.pdf (June 11, 2009); see alsothe Lewin Group, "The Cost and Coverage Impacts of a Public Plan: Alternative Design Options," April 6, 2009, at http://www.lewin.com/content
/publications/LewinCostandCoverageImpactsofPublicPlan-Alternative%
20DesignOptions.pdf (June 11, 2009).

[2]President Barack Obama, letter to Senators Edward M. Kennedy and Max Baucus, June 3, 2009, at http://www.whitehouse.gov/the_press_office/Letter-f
rom-President-Obama-to-Chairmen-Edward-M-Kennedy-and-Max-Baucus/ (June 11, 2009). See also Robert Pear, "2 Democrats Spearheading Health Bill Are Split,"The New York Times, May 30, 2009, at http://www.nytimes.com/2009/
05/30/health/policy/30health.html (June 11, 2009); Robert Pear, "Kennedy and Baucus ‘Seek Common Ground' on Health Care Legislation," The Caucus, May 30, 2009, at http://thecaucus.blogs.nytimes.com/
2009/05/30/kennedy-and-baucus-seek-common-ground-on-health-care-
legislation/?hp (June 11, 2009); "Text of a letter from Republicans on the Senate Finance Committee to the President," U.S. Senate, June 5, 2009, at http://www.heritage.org/Research/HealthCare/upload/
6509No_Public_Plan_SFCLetter.pdf (June 11, 2009).
[3]See Obama for America, "Barack Obama and Joe Biden's Plan to Lower Health Care Costs and Ensure Affordable, Accessible Health Coverage for All," at http://www.barackobama.com/pdf/issues/Health careFullPlan.pdf (June 11, 2009); The Lewin Group, "McCain and Obama Health Care Policies: Cost and Coverage Compared," October 15, 2008, pp. ES1-ES4, 5, 21, and Appendix B (B20-B27), at http://www.lewin.com/content/publications/TheLewinGroupMcCain-
ObamaHealthReformAnalysisRev10-15-08.pdf (June 11, 2009).

[4]Cathy Schoen, Karen Davis, and Sara R. Collins, "Building Blocks for Reform: Achieving Universal Coverage with Private and Public Group Health Insurance," Health Affairs, Vol. 27, No. 3 (May 2008), at http://content.healthaffai
rs.org/cgi/content/abstract/27/3/646 (June 11, 2009); Cathy Schoen, Karen Davis, and Sara R. Collins, "The Building Blocks of Health Reform: Achieving Universal Coverage and Health System Savings," Commonwealth Fund, May 2008, at http://www.commonwealthfund.org/~/media/Files/Publications/Issue
%20Brief/2008/May/The%20Building%20Blocks%20of%20Health%20Reform%20%
20Achieving%20Universal%20Coverage%20and%20Health%20System%
20Savings/Davis_buildingblocks_1135_ib%20pdf.pdf (June 11, 2009); Commonwealth Commission on a High Performance Health System, "The Path to a High Performance U.S. Health System: A 2020 Vision and the Policies to Pave the Way," February 2009, at http://www.commonwealthfund.org/Cont
ent/Publications/Fund-Reports/2009/Feb/The-Path-to-a-High-Performance-U
S-Health-System.aspx (June 11, 2009); "A Path to a High Performance U.S. Health System: Technical Documentation," prepared by The Lewin Group for the Commonwealth Fund, February 19, 2009, at http://www.lewin.com/content/publications/LewinPATHTechnical
Documentation.pdf (June 11, 2009).

[5]Congressional Budget Office, "Key Issues in Analyzing Major Health Insurance Proposals," December 2008, pp. XIX, 91-97, at http://www.cbo.
gov/ftpdocs/99xx/doc9924/12-18-KeyIssues.pdf(June 11, 2009).

[6]Ingenix Consulting in partnership with the Lewin Group, "The Obama Health Reform Proposal: Impact on Payers," December 8, 2008, p. 7. See also two other studies by the same authors: "The Obama Health Reform Proposal: Impact on Providers," December 9, 2008, p. 4;"The Obama Health Reform Proposal: Impact on Employers," December 16, 2008, p. 3, 5-6.
[7]John Sheils, the Lewin Group, "The Cost and Coverage Impacts of a Public Plan," testimony before the Committee on Ways and Means, U.S. House of Representatives, April 29, 2009, at http://www.lewin.com/content/publications/
Testimony_April_29,_2009.pdf (June 11, 2009).
[8]Ibid.
[9]Ibid.
[10]Ibid.
[11]Ibid.
[12]The Lewin Group, "Opening a Buy-In to a Public Plan"; see also Allen Dobson, Joan DaVanzo, and Namrata Sen, "The Foundation, History and Implications of the Cost-Shift Hydraulic," the Lewin Group, July 15, 2005, at http://www.fah.org/fahCMS/Documents/Future%20of%20Hospital%20Care/Dobson%
20slides%207.7.05%20History%20and%20Foundation%20of%20the%20Cost-Shift.pdf (June 11, 2009); Allen Dobson, Joan DaVanzo, and Namrata Sen, "The Cost-Shift Payment ‘Hydraulic': Foundation, History, and Implications," Health Affairs, Vol. 25, No. 1 (January 2006), at http://content.healthaffairs.org/cgi/conten
t/abstract/25/1/22 (June 11, 2009).

[13]Ibid. Lewin suggests MedPAC data indicate that this cost-shifting hydraulic may have accelerated in recent years. As hospital payments declined to 91 percent of costs by 2007, over the same time private payer rates increased to 132 percent of costs.
[14]The Lewin Group, based on its analysis of the available cost-shift literature, concludes that about 40 percent of the costs of low public payments and uncompensated care are passed on to the privately insured in the form of higher prices.
[15]Will Fox and John Pickering, "Hospital and Physician Cost Shift: Payment Level Comparison of Medicare, Medicaid, and Commercial Payers," Milliman, December 2008, pp. 2-4, at http://www.milliman.com/expertise/healthcare/p
ublications/rr/pdfs/hospital-physician-cost-shift-RR12-01-08.pdf (June 11, 2009).
[16]Figure assumes Medicare payment rates and all employers eligible for the public plan. See Sheils, "The Cost and Coverage Impacts of a Public Plan."
[17]Julie Connelly, "Doctors Are Opting out of Medicare," The New York Times, April 1, 2009, at http://www.nytimes.com/2009/04/02/business/
retirementspecial/02health.html?_r=1 (June 11, 2009).

http://www.heritage.org/Research/HealthCare/wm2482.cfm

[ccp]

*The cost-shift dynamic plays a prominent role in the health care sector. A study by the actuarial firm Milliman calculated that public programs currently shift $88.8 billion in costs onto private payers per year, increasing the typical American family's annual private health insurance premium by $1,512, or 10.6 percent.[15] Moreover, Lewin speculates that a new public plan could increase the annual cost-shift per privately insured by as much as $526, which will only serve to further perpetuate the crowd-out of private insurance.[16]*

Milliman again (see my previous post).

This makes sense.  Someone has to pay for all the medicaid that doesn't cover a providers costs.  I doubt doctors lose money on medicare.  I am not sure about whether or not hospitals do.

One can only imagine the cost shifts to the rest of the country when we start subsidizing another 40 million.

How many of those are illegals I wonder?
I wonder how many of these are people with pre existing conditions who want insurance but cannot get?
I assume the rest simply can't afford it.

[Body-by-Guinness]

This piece makes me nervous in that it intimates a behavior modification heavy hand is in order, but it's nice to see this debate framed in empiric rather than idealistic terms.

OPINIONJUNE 12, 2009
How Safeway Is Cutting Health-Care Costs
Market-based solutions can reduce the national health-care bill by 40%.

By STEVEN A. BURD

Effective health-care reform must meet two objectives: 1) It must secure coverage for all Americans, and 2) it must dramatically lower the cost of health care. Health-care spending has outpaced the rise in all other consumer spending by nearly a factor of three since 1980, increasing to 18% of GDP in 2009 from 9% of GDP. This disturbing trend will not change regardless of who pays these costs -- government or the private sector -- unless we can find a way to improve the health of our citizens. Failure to do so will make American companies less competitive in the global marketplace, increase taxes, and undermine our economy.

At Safeway we believe that well-designed health-care reform, utilizing market-based solutions, can ultimately reduce our nation's health-care bill by 40%. The key to achieving these savings is health-care plans that reward healthy behavior. As a self-insured employer, Safeway designed just such a plan in 2005 and has made continuous improvements each year. The results have been remarkable. During this four-year period, we have kept our per capita health-care costs flat (that includes both the employee and the employer portion), while most American companies' costs have increased 38% over the same four years.


Martin Kozlowski
Safeway's plan capitalizes on two key insights gained in 2005. The first is that 70% of all health-care costs are the direct result of behavior. The second insight, which is well understood by the providers of health care, is that 74% of all costs are confined to four chronic conditions (cardiovascular disease, cancer, diabetes and obesity). Furthermore, 80% of cardiovascular disease and diabetes is preventable, 60% of cancers are preventable, and more than 90% of obesity is preventable.

As much as we would like to take credit for being a health-care innovator, Safeway has done nothing more than borrow from the well-tested automobile insurance model. For decades, driving behavior has been correlated with accident risk and has therefore translated into premium differences among drivers. Stated somewhat differently, the auto-insurance industry has long recognized the role of personal responsibility. As a result, bad behaviors (like speeding, tickets for failure to follow the rules of the road, and frequency of accidents) are considered when establishing insurance premiums. Bad driver premiums are not subsidized by the good driver premiums.

As with most employers, Safeway's employees pay a portion of their own health care through premiums, co-pays and deductibles. The big difference between Safeway and most employers is that we have pronounced differences in premiums that reflect each covered member's behaviors. Our plan utilizes a provision in the 1996 Health Insurance Portability and Accountability Act that permits employers to differentiate premiums based on behaviors. Currently we are focused on tobacco usage, healthy weight, blood pressure and cholesterol levels.

Safeway's Healthy Measures program is completely voluntary and currently covers 74% of the insured nonunion work force. Employees are tested for the four measures cited above and receive premium discounts off a "base level" premium for each test they pass. Data is collected by outside parties and not shared with company management. If they pass all four tests, annual premiums are reduced $780 for individuals and $1,560 for families. Should they fail any or all tests, they can be tested again in 12 months. If they pass or have made appropriate progress on something like obesity, the company provides a refund equal to the premium differences established at the beginning of the plan year.

At Safeway, we are building a culture of health and fitness. The numbers speak for themselves. Our obesity and smoking rates are roughly 70% of the national average and our health-care costs for four years have been held constant. When surveyed, 78% of our employees rated our plan good, very good or excellent. In addition, 76% asked for more financial incentives to reward healthy behaviors. We have heard from dozens of employees who lost weight, lowered their blood-pressure and cholesterol levels, and are enjoying better health because of this program. Many discovered for the first time that they have high blood pressure, and others have been told by their doctor that they have added years to their life.

Today, we are constrained by current laws from increasing these incentives. We reward plan members $312 per year for not using tobacco, yet the annual cost of insuring a tobacco user is $1,400. Reform legislation needs to raise the federal legal limits so that incentives can better match the true incremental benefit of not engaging in these unhealthy behaviors. If these limits are appropriately increased, I am confident Safeway's per capita health-care costs will decline for at least another five years as our work force becomes healthier.

The Healthy Measures program currently applies only to our nonunion work force. While we have numerous health and wellness provisions in our union contracts, we are working with union leaders like Joe Hansen of the United Food and Commercial Workers to incorporate healthy measures provisions in our union work force as well.

While comprehensive health-care reform needs to address a number of other key issues, we believe that personal responsibility and financial incentives are the path to a healthier America. By our calculation, if the nation had adopted our approach in 2005, the nation's direct health-care bill would be $550 billion less than it is today. This is almost four times the $150 billion that most experts estimate to be the cost of covering today's 47 million uninsured. The implication is that we can achieve health-care reform with universal coverage and declining per capita health-care costs.

There is a very real possibility that we will see positive transformational health-care reform in the near future. I am encouraged by the effort I see on Capitol Hill, particularly the bipartisan effort in the Senate. While some tough issues remain, if we continue to work in a bipartisan manner I believe we will resolve these issues successfully and find agreement on meaningful reform.

Mr. Burd is CEO of Safeway Inc., and the founder of the Coalition to Advance Healthcare Reform.

http://online.wsj.com/article/SB124476804026308603.html#

[ccp]

June 15, 2009
Naive, Hypocritical and Dishonest
By Robert Samuelson

WASHINGTON -- It's hard to know whether President Obama's health care "reform" is naive, hypocritical or simply dishonest. Probably all three. The president keeps saying it's imperative to control runaway health spending. He's right. The trouble is that what's being promoted as health care "reform" almost certainly won't suppress spending and, quite probably, will do the opposite.

A new report from Obama's own Council of Economic Advisers shows why controlling health costs is so important. Since 1975, annual health spending per person, adjusted for inflation, has grown 2.1 percentage points faster than overall economic growth per person. Should this trend continue, the CEA projects that:

-- Health spending, which was 5 percent of the economy (gross domestic product, GDP) in 1960 and is reckoned at almost 18 percent today, would grow to 34 percent of GDP by 2040 -- a third of the economy.

-- Medicare and Medicaid, the government insurance programs for the elderly and poor, would increase from 6 percent of GDP now to 15 percent in 2040 -- roughly equal to three-quarters of present federal spending.

-- Employer-paid insurance premiums for family coverage, which grew 85 percent in inflation-adjusted terms from 1996 to $11,941 in 2006, would increase to $25,200 by 2025 and $45,000 in 2040 (all figures in "constant 2008 dollars"). The huge costs would force employers to reduce take-home pay.

The message in these dismal figures is that uncontrolled health spending is almost single-handedly determining national priorities. It's reducing discretionary income, raising taxes, widening budget deficits and squeezing other government programs. Worse, much medical spending is wasted, the CEA report says. It doesn't improve Americans' health; some care is unneeded or ineffective.

The Obama administration's response is to talk endlessly about restraining health spending -- "bending the curve'' is the buzz -- as if talk would suffice. The president summoned the heads of major health care trade groups representing doctors, hospitals, drug companies and medical device firms to the White House. All pledged to bend the curve. This is mostly public relations. Does anyone believe that the American Medical Association can control the nation's 800,000 doctors or that the American Hospital Association can command the 5,700 hospitals?

The central cause of runaway health spending is clear. Hospitals and doctors are paid mostly on a fee-for-service basis and reimbursed by insurance, either private or governmental. The open-ended payment system encourages doctors and hospitals to provide more services -- and patients to expect them. It also favors new medical technologies, which are made profitable by heavy use. Unfortunately, what pleases providers and patients individually hurts the nation as a whole.

That's the crux of the health care dilemma, and Obama hasn't confronted it. His emphasis on controlling costs is cosmetic. The main aim of health care "reform" now being fashioned in Congress is to provide insurance to most of the 46 million uncovered Americans. This is popular and seems the moral thing to do. After all, hardly anyone wants to be without insurance. But the extra coverage might actually worsen the spending problem.

How much healthier today's uninsured would be with that coverage is unclear. They already receive health care -- $116 billion worth in 2008, estimates Families USA, an advocacy group. Some is paid by the uninsured themselves (37 percent), some by government and charities (26 percent). The remaining "uncompensated care" is either absorbed by doctors and hospitals or shifted to higher private insurance premiums. Some uninsured would benefit from coverage, but others wouldn't. Either they're healthy (40 percent are between ages 18 and 34) or would receive ineffective care.

The one certain consequence of expanding insurance coverage is that it would raise spending. When people have insurance, they use more health services. That's one reason why Obama's campaign proposal was estimated to cost $1.2 trillion over a decade (the other reason is that the federal government would pick up some costs now paid by others). Indeed, the higher demand for health care might raise costs across the board, increasing both government spending and private premiums.

No doubt the health program that Congress fashions will counter this reality by including some provisions intended to cut costs ("bundled payments" to hospitals, "evidence-based guidelines," electronic record keeping). In the past, scattershot measures have barely affected health spending. What's needed is a fundamental remaking of the health care sector -- a sweeping "restructuring"-- that would overhaul fee-for-service payment and reduce the fragmentation of care.

The place to start would be costly Medicare, the nation's largest insurance program serving 45 million elderly and disabled. Of course, this would be unpopular, because it would disrupt delivery patterns and reimbursement practices. It's easier to pretend to be curbing health spending while expanding coverage and spending. Presidents have done that for decades, and it's why most health industries see "reform" as a good deal.

Copyright 2009, Washington Post Writers Group

[Body-by-Guinness]

Price controls worked so well for Nixon, Ford, Carter, and the Soviet Union for that matter that it appears its time has come once again.

Price Controls "Pay" for President Obama's Health Care Reforms

Ronald Bailey | June 15, 2009, 3:12pm

Today in a speech before the American Medical Association, President Barack Obama outlined how he plans to raise the $1 trillion necessary to pay for his proposed health care reform agenda over the next decade. First, the president cited his $635 billion health reserve fund as the famous "down payment" for his reform agenda. About half - $300 billion - of this aspirational reserve fund is "paid for" by capping the tax breaks on charitable deductions of rich Americans to 28 percent. Never mind that this proposed tax hike has yet to pass Congress and that many key Democratic leaders on Capitol Hill oppose it.

Another chunk of the notional Health Reserve Fund will come from reducing payments - $177 billion - to private Medicare Advantage companies that provide insurance coverage for about 10 million Medicare beneficiaries. The president also plans to reduce hospital Medicare reimbursements by $25 billion over the next ten years. Another $30 billion is accounted for by charging wealthier Medicare beneficiaries more for their drugs. 

In his weekly radio address and his speech today, President Obama claimed to have found an additional $313 billion in Medicare and Medicaid savings over the next ten years which will help pay for his $1 trillion health care reform agenda. These savings include a cut of $109 billion in payments to physicians based on recalculating the federal government's productivity payment formula.

Another $106 billion will come from cuts in payments to hospitals for treating uninsured people. The argument here is that once the reforms are enacted there won't be many uninsured people seeking uncompensated services at hospitals. This gambit may "save" money for Medicare and Medicaid, but some other agency or enterprise will be paying for the hospital services that the newly insured receive. Isn't this shifting the pots from which $106 billion will come rather than reducing overall spending on hospital care? Isn't it likely that a good part of the $106 billion will have to come from the president's proposed government insurance scheme?

More "savings" of $75 billion that could used to "pay for" President Obama's health care reforms would come from "more efficient purchasing" of prescription drugs. The Medicare Part D prescription drug plan was adopted in 2003 with a non-interference clause that promised that the federal government would not impose price controls on pharmaceuticals. Of course, when Medicare was established in 1965, the government made the same promise to physicians and hospital then. I suspect that "more efficient purchasing" is just a nicer way of saying "price controls." And it should be noted that according to the president, "we can save about one billion more by rooting out waste, abuse, and fraud throughout our health care system." Just a billion?

After parsing the numbers, it looks as though most the "savings" that President Obama wants to use to finance his health care reforms are achieved by imposing price controls.

It must be asked: can federal government "savings" projected over a decade really be credible in any case? Recall that in December 2000, the Clinton administration declared that "the United States can be debt-free this decade. By dedicating the entire budget surplus to debt reduction, the United States can eliminate its publicly held debt by FY 2009."

It is undeniable that health care in America needs massive reform. But the best step toward health care reform would be to begin unwinding our dysfunctional system of third party insurance payments and shifting toward consumer driven health care. But President Obama has made it clear that it not the direction he intends to go.

http://www.reason.com/blog/show/134126.html

[Body-by-Guinness]

June 16, 2009, 3:38 PM
Democrats Defend Health Care Plans, Despite Cost Estimate
By DAVID M. HERSZENHORN AND ROBERT PEAR
Senate Democrats and the White House struggled on Tuesday to respond to an initial financial analysis by the Congressional Budget Office showing that a main proposal for overhauling health care would cost $1 trillion over 10 years but would leave 36 million Americans uninsured.

The preliminary analysis by the budget office, a nonpartisan number-crunching agency, showed Democrats falling far short of their goal, which is to provide insurance to all Americans and offset the expense of doing so with new taxes or cost savings. And Republicans quickly seized on the figures to charge that the Democrats’ efforts would fail.

In trying to answer both the Republican criticism and basic questions about the cost analysis, the Democrats exposed deep internal disagreements over how to pay for revamping the health care system, with some pushing to tax employer-provided health benefits above a pre-set limit, and others preferring tax increases outside the health arena.

Despite the challenges presented by the cost estimates for its sweeping bill, the Senate health committee said it would proceed on Wednesday with its first public work on the legislation.

“Obviously, we thought we’d get better numbers based on earlier work that was done, but this can’t stop you,” said Senator Christopher J. Dodd, Democrat of Connecticut, who is leading the efforts on the committee. “You have to move ahead and dealing with it accordingly and getting additional numbers where you can.”

The Senate Finance Committee, which is developing its own bill, said it would delay releasing a detailed description of its proposal for several days, partly out of concern over cost estimates from the budget office.

The cost study provided ready ammunition to critics, including the Republican Senate leader, Mitch McConnell of Kentucky.

“Preliminary estimates for this flawed legislative proposal are staggering,” Mr. McConnell said in a speech on the Senate floor. “The health care proposal being put together is not only extremely defective, it will cost a fortune. And that cost will come straight out of the taxpayer’s pocketbook.”

Mr. Dodd and other leaders of the Senate health committee argued at a news conference that the spending analysis did not factor in major components of the legislation that have yet to be made public, including a proposal for a new government-run insurance program that they said would save billions of dollars.

The Democrats, however, had no answers for several other concerns raised by the analysis, including the projection that the plan would leave 36 million people uninsured. The analysis also cast doubt on the Democrats’ claim that no one will lose coverage they now enjoy, concluding that 11 million people would change plans, for better or worse.

The cost-analysis also revealed some other potential consequences of the Health committee bill, including the possibility that some children could end up shifted off of Medicaid and the Children’s Health Insurance Program, which provide comprehensive health coverage, and instead be required to obtain new insurance with less extensive benefits. Advocates for children were already gearing up to fight that change.

The White House press secretary, Robert Gibbs, said on Tuesday afternoon: “One incomplete older proposal I don’t think is indicative of where we are now.”

But expanding coverage without adding to the deficit is looking like a steeper challenge than even many of the leading proponents of a health care overhaul had imagined.

Mr. Dodd and other Democrats complained that the budget office analysis did not reflect hundreds of billions of dollars in anticipated savings as broad structural changes in the system yield more efficient and cost-effective services. As a practical matter, however, Congress must abide by the budget office figures.

But Democrats are deeply divided over how to pay for their plan.

Mr. Dodd said he was opposed to taxing employer-provided benefits and would prefer other proposals, including limits on tax deductions for the highest wage-earners proposed by President Obama earlier this year, including some limits on the deduction of charitable donations.

Members of the Senate Finance Committee, including its chairman, Senator Max Baucus, Democrat of Montana, are developing a proposal that would tax employer-provided benefits. And Mr. Baucus said he believes that Mr. Obama would be open to the proposal, even though the president opposed the idea while campaigning for office.

Senator Tom Harkin, Democrat of Iowa, and a member of the health committee, said he was not necessarily opposed to taxing health benefits but that new taxes on unhealthy foods, including perhaps sodas and other high-sugar foods, might be appropriate.

http://thecaucus.blogs.nytimes.com/2009/06/16/democrats-defend-health-care-plans-despite-cost-estimate/

[Crafty_Dog]

The following is a draft of a speech titled "The Obama Years: A Reappraisal" that mysteriously was never delivered at the 2070 national meeting of the Institute of Advanced Obamalogy:

So it came to pass in the waning days of the health-care wars that Democrats learned the American people really didn't want a nationalized health-care industry.

The Obama administration's "public option," which all knew to be a vote for a government takeover, proved a drink too stiff for four or five Democratic senators whose re-election was not in the bag.

President Obama applauded himself for achieving "85% of what we set out to accomplish." But pundits and wonks were in despair. They retreated to their watering holes and cried into their Stoli martinis. The cause of their lives was over. A once-in-a-generation opportunity had been muffed. Without a massive bill in Congress, with many titles and subtitles and subchapters, they moaned, there was no hope for fixing all that ailed the American health-care system.

 
But politics went on, and while the armies of wonkdom mourned, three little-known congressmen (Eric Paul, Ryan Cantor and Kemp Newtley) discovered an unexpected public enthusiasm for a flat tax.

Through incessant Twittering over the heads of the media, they persuaded millions of voters they'd be better off with lower rates even if it meant giving up tax-free employer provided health insurance. It didn't hurt, either, that the wailing of insurance and medical lobbyists was over-the-top -- convincing voters that the tax benefit really was just a form of corporate welfare disguised as a mostly illusory benefit for individuals.

Though the realization was slow in dawning, policy experts would eventually rediscover what they had known all along (but had conveniently forgotten in order to lend their voices to "solutions" that required ever more government spending) -- that tax reform, in the American context, is health-care reform.

And, lo, it proved true, as 100 million intelligent, well-educated employees of Corporate America were allowed to see for the first time what "tax free" health insurance was really costing them. They saw how it distorted their behavior and caused them to allocate far more of their incomes to the medical-industrial complex than they would have chosen for themselves.

Eyes newly opened, they demanded cheaper insurance options, covering fewer services (cancer wigs, family counseling, in-vitro fertilization), and opted for plans with higher deductibles and co-pays in return for much lower monthly rates.

Because consumers were now spending their "own" money on health care, doctors and hospitals found it necessary to publish and even advertise their prices. A hospital that specialized in heart surgery, performing thousands of procedures a year, found it had both the highest quality and lowest cost -- and now marketed itself as such. Ditto specialists in cancer, diabetes and other conditions.

For the first time, Americans spent less and got more. Spending fell overnight by 13%, which happened to be exactly what economists had predicted if the price tags were restored to health care and consumers were allowed to see clearly what they were getting (or not getting) for their money. As predicted, too, spending thereafter rose only in line with incomes.

What's more, many fewer people remained voluntarily uninsured now that health insurance was no longer a gold-plated extravagance affordable only by those in the top brackets who could slough off 40% of the cost on other taxpayers. Existing programs for the needy, in turn, could be downsized and revamped into voucher programs. The federal budget benefited twice over -- from fewer claimants and from medical care that was less costly. Fiscal wreck was avoided.

In truth, President Obama had been little involved to this point. Following his early domestic "successes," he was spending more and more time abroad sharing his matchless eloquence with previously unblessed audiences from Ulan Bator to Ouagadougou.

A highly symbolic moment, however, came when Mr. Obama, who had put on weight in office and now tipped the scales at nearly 300 pounds, returned from a speaking tour on the virtues of nonproliferation to audiences in the Islamic Republic of Palau. Having overindulged in local delicacies, he was surprised when the White House medical office handed him a Wal-Mart debit card and sent him to a nearby Wal-Mart supercenter boasting "Everyday Low Prices on Gastric Bypass Surgery."

Emerging afterward to the usual crowd of ululating network reporters and bloggers, Mr. Obama pronounced himself entirely pleased and satisfied with the "success of my health-care reforms."

And so it came to pass that historians and Obamalogists would count health-care reform among the incomparable triumphs of the Obama administration, and lost to history would be the names of Eric Paul, Ryan Cantor and Kemp Newtley.

[Body-by-Guinness]

Sen. Kennedy’s Budget-Breaking “Reform” Bill

Posted by Doug Bandow

It appears that the Obama administration has decided to disown the venerable Senator.  No wonder.  The Congressional Budget Office estimated the ten-year cost of Sen. Kennedy’s bill at $1 trillion, but admitted that its analysis was incomplete.

Now the consulting group HSI Network, LLC comes foward with an estimate of $4 trillion:

The Senate Committee on Health, Education, Labor and Pensions (HELP) have proposed a health reform bill called the Affordable Health Choice Act (AHC) that seeks to reduce the number of uninsured and increase health system efficiency and quality. The draft legislation was introduced on June 9th, 2009. The proposal provided adequate information to suggest what the impact would be of AHC using the ARCOLA™ simulation model. AHC would include an individual mandate as well as a pay or plan provision. In addition, it would include a means-tested subsidy with premium supports available for those up to 500% of the federal poverty level. Public plan options in three tiers: Gold, Silver and Bronze are proposed in a structure similar to that of the Massachusetts Connector, except that it is called The Gateway. These public plan options would contain costs by reimbursing providers up to 10% above current reimbursement rates. There is no mention of removing the tax exclusion associated with employer sponsored health insurance. There is also no mention of changes to Medicare and Medicaid, other than fraud prevention, that could provide cost-savings for the coverage expansion proposed. Below, we summarize the impact of the proposed plan in terms of the reduction on uninsured, the 2010 cost, as well as the ten year cost of the plan in 2010 dollars.

HELP Affordable Health Choices Act

Uninsurance is reduced by 99% to cover approximately 47,700,000 people
Subsidy - Tax Recovery = Net cost:
$279,000,000,000 subsidy to the individual market
$180,000,000,000 subsidy to the ESI market with
Net cost: $460,500,000,000 (annual)
Net cost: $4,098,000,000,000 (10 year)
Private sector crowd out: ~79,300,000 lives

HSI figures that a lot more people will take advantage of federal health insurance subsidies, driving costs up far more than indicated by the CBO figure.  (H/t to Phil Klein at the American Spectator online.)

Of course, no one knows what the bill would really cost in operation.  But the history of social insurance and welfare programs is sky-rocketing expense well beyond original projections.  Go back and look at the initial cost estimates for Medicare and Social Security, and you will run from the room simultaneously laughing and crying.

Health care reform would be serious business at any moment of time, but especially when the country faces $10 trillion in new debt over the next decade on top of the existing $11 trillion national debt.  And with the $100 trillion Medicare/Social Security financial bomb lurking in the background, rushing to leap off the financial cliff with this sort of health care legislation would be utterly irresponsible.

http://www.cato-at-liberty.org/2009/06/18/sen-kennedys-budget-breaking-reform-bill/

[Body-by-Guinness]

Wow, when CNBC starts questioning the numbers being bandied by those foisting Obamacare the terms of the debate are surely changing.

http://www.cnbc.com/id/15840232?video=1158405259&play=1

[Body-by-Guinness]

Second post:

Medical Analysis By Milton Friedman
Peter Robinson, 06.19.09, 12:01 AM ET

President Obama, the press, all the Democrats and a fair number of the Republicans in Congress share the same assumption about health care. Whatever you believe should be done about the problem, it sure is complicated.

Yet one man figured it out.

In 2001 the economist Milton Friedman read up on health care, discovered that the inefficiencies in our system trace back to a single policy mistake, worked out a policy test that would help us correct it and then described his findings in a few thousand words of plain English.

Since the end of the Second World War, Friedman explained, medical care in the U.S. has displayed three features: technological advances, increases in spending and rising dissatisfaction.

The first of the three was common to one sector of the economy after another. Agriculture, manufacturing, electronics, communications--all had experienced technological progress. Yet the two final features proved unique to health care. While we were paying less and getting more when buying food or computers, in health care the opposite was happening.

Why?

Because, Friedman saw, most payments for medical care are made not by the patients who receive the care but by third parties, typically employers. Since, in Friedman's phrase, "nobody spends somebody else's money as wisely as he spends his own," this third-payer system by its very nature introduces inefficiencies throughout the health care system.

The reason for this wasteful third-party system? The tax code. Money spent on health care is exempt from the income tax only if the health care is provided through an employer. "We have become so accustomed to employer-provided medical care," Friedman wrote, "that we regard it as part of the natural order. Yet it is thoroughly illogical."

The policy mistake that produced this illogical mess took place during World War II, when the government imposed wage controls. Unable to compete for workers by paying them more, employers began providing medical care, and the new benefit spread rapidly.

When the Internal Revenue Service caught on, requiring employers to include the value of medical benefits as part of the wages they reported, workers, who had grown accustomed to the benefits, protested. Congress responded with legislation that made employer-provided medical benefits tax-exempt.

By the time the 1960s arrived, Americans were used to having third parties pay their medical bills. Thus the enactment of Medicare and Medicaid--under which the government, rather than employers, acted as the third party--seemed perfectly reasonable.

Friedman wrote: "Third-party payment has required the bureaucratization of medical care. ... A medical transaction is not simply between a caregiver and a patient; it has to be approved as 'covered' by a bureaucrat. ... The patient has little ... incentive to be concerned about the cost since it's somebody else's money. The caregiver has become, in effect, an employee of the insurance company or, in the case of Medicare and Medicaid, of the government. ... An inescapable result is that the interest of the patient is often in direct conflict with the interest of the caregiver's ultimate employer."

In that one paragraph of under 100 words, a diagnosis of our ailment.

What should we do about it? Ideally, Friedman argued, we should reverse the mistake that started all the trouble, repealing the tax exemption of employer-provided medical care. Yet Friedman was a realist. Vested interests, he recognized, would make such a radical reform impossible. Instead he believed we should seek incremental changes, asking of each proposal simply whether it would move health care "in the right direction."

Expanding savings accounts that allow individuals control over relevant spending, Friedman argued, would move health care in the right direction. So would extending the tax exemption to all medical expenses, whether they are paid by employers or individuals. A "sweeping socialization of medicine [such as that] proposed by Hilary Clinton"--and, now, by Barack Obama--would not.

Wherever possible, reduce the role of third parties. Increase the autonomy of individuals. Get the government and vast, bureaucratic insurance companies out of the way, permitting the free market to work its effects in health care, just as it does in virtually every other sector of the economy.

That's not too complicated, now, is it?

Peter Robinson, a research fellow at the Hoover Institution at Stanford University and contributor to RobinsonandLong.com, writes a weekly column for Forbes.

http://www.forbes.com/2009/06/18/milton-friedman-medical-insurance-opinions-columnists-health-care.html

[Crafty_Dog]

By DAVID B. RIVKIN JR. and LEE A. CASEY
Is a government-dominated health-care system unconstitutional? A strong case can be made for that proposition, based on the same "right to privacy" that underlies such landmark Supreme Court decisions as Roe v. Wade.

The details of this year's health-care reform bill are still being hammered out. But the end result is sure to be byzantine in complexity. Washington will have immense say over how, when and through whom Americans are treated. Moreover, despite the administration's public pronouncements about painless cuts in wasteful spending, only the most credulous believe that some form of government-directed health-care rationing can be avoided as a means of controlling costs.

The Supreme Court created the right to privacy in the 1960s and used it to strike down a series of state and federal regulations of personal (mostly sexual) conduct. This line of cases began with Griswold v. Connecticut in 1965 (involving marital birth control), and includes the 1973 Roe v. Wade decision legalizing abortion.

The court's underlying rationale was not abortion-specific. Rather, the justices posited a constitutionally mandated zone of personal privacy that must remain free of government regulation, except in the most exceptional circumstances. As the court explained in Planned Parenthood v. Casey (1992), "these matters, involving the most intimate and personal choices a person may make in a lifetime, choices central to personal dignity and autonomy, are central to the liberty protected by the Fourteenth Amendment. At the heart of liberty is the right to define one's own concept of existence, of meaning, of the universe, and the mystery of human life."

It is, of course, difficult to imagine choices more "central to personal dignity and autonomy" than measures to be taken for the prevention and treatment of disease -- measures that may be essential to preserve or extend life itself. Indeed, when the overwhelming moral issues that surround the abortion question are stripped away, what is left is a medical procedure determined to be "necessary" by an expectant mother and her physician.

If the government cannot proscribe -- or even "unduly burden," to use another of the Supreme Court's analytical frameworks -- access to abortion, how can it proscribe access to other medical procedures, including transplants, corrective or restorative surgeries, chemotherapy treatments, or a myriad of other health services that individuals may need or desire?

This type of "burden" analysis will be especially problematic for a national health system because, in the health area, proper care often depends upon an individual's unique physical and even genetic history and characteristics. One size clearly does not fit all, but that is the very essence of governmental regulation -- to impose a regularity (if not uniformity) in the application of governmental power and the dispersal of its largess. Taking key decisions away from patient and physician, or otherwise limiting their available choices, will render any new system constitutionally vulnerable.

It is true, of course, that forms of rationing already exist in our current system. No one who has experienced the marked reluctance to treat aggressively lethal illnesses in the elderly can doubt that. However, what may be permissible for private actors -- including doctors and insurance companies -- is not necessarily lawful when done by the government.

Obviously, the government does not have to pay for any and all services individual citizens may desire. And simply refusing to approve a procedure or treatment under applicable reimbursement rules, as under the government-run Medicare and Medicaid, does not make the system unconstitutional. But if over time, as many critics fear, a "public option" health insurance plan turns into what amounts to a single-payer system, the constitutional issues regarding treatment and reimbursement decisions will be manifold.

The same will be true of a quasi-private system where the government claims a large role in defining acceptable health-insurance coverage and treatments. There will be all sorts of "undue burdens" on the rights of patients to receive the care they may want. Then the litigation will begin.

Anyone who imagines that Congress can simply avoid the constitutional issues -- and lawsuits -- by withdrawing federal court jurisdiction over the new health system must think again. A brief review of the Supreme Court's recent war-on-terror decisions, brought by or on behalf of detained enemy combatants, will disabuse that notion. This area of governmental authority was once nearly immune from judicial intervention. Over the past five years, however, the Supreme Court (supposedly the nonpolitical branch) has unapologetically transformed itself into a full-fledged, policy-making partner with the president and Congress.

In the process, the justices blew past specific congressional efforts to limit their jurisdiction and involvement like a hot rod in the desert. Questions of basic constitutionality (however the court may define them) cannot now be shielded from judicial review.

It is, of course, impossible to predict how and when the courts will ultimately rule on the new health system. Much depends on the details and the extent to which reasonable and practical private alternatives to the national plan remain. In crafting the law, however, its White House and congressional sponsors must keep privacy -- that near absolute right to personal autonomy they have so often praised and promoted -- squarely before them. The only thing that is certain today is that the courts, and not Congress, will have the last word.

Messrs. Rivkin and Casey worked in the Justice Department under Presidents Reagan and George H.W. Bush.

[Body-by-Guinness]

Bringing Down the House
The sobering lessons of health reform in Massachusetts.
By Darshak Sanghavi
Posted Tuesday, June 23, 2009, at 6:45 AM ET
The debate over achieving universal health care can seem hopelessly confusing. But the issues are actually pretty simple when you consider the lessons of Massachusetts.

In 2006, state lawmakers seeking to broaden health coverage made it illegal to be uninsured. It works like this: Employers have to offer you a health plan. If you are jobless or don't like your employer's plan, you must buy your own. If you don't get one, you pay a stiff fine. This strategy—known as an employer and individual "mandate"—forms the backbone of the national health reform bills now making their way through Congress.

On paper, the experiment was a resounding success. According to an Urban Institute estimate, the number of uninsured residents quickly fell from 13 percent to 7 percent following the law's passage.

And yet, something strange happened. Despite having health insurance, roughly one in 10 state residents still failed to fill prescriptions, ended up with unpaid medical bills, or skipped needed medical care for financial reasons. Hundreds of millions of dollars were spent to insure more Massachusetts citizens, but many people still weren't getting necessary care. What happened?

Assume you're looking to buy insurance. The state has a handy Web site where you can find the cheapest plan. For a young family of four, that plan costs roughly $9,500 per year, which doesn't include a minimum annual deductible of $3,500 before many benefits kick in. (The state helps cover some of the premiums for those who make very little money, but many still have to pay the other fees.) And if anyone is hospitalized or needs a lot of specialized care, you also pay 20 percent of that bill. In this relatively cheap plan, the family can be liable for an extra $10,000 per year of medical costs. This sort of "high deductible" health plan is clearly structured to discourage medical care.

Imagine, for example, that your homeowner's insurance had a $1,000 deductible. If the faucet leaks, you'll try to fix it yourself instead of calling the plumber. The same thing applies to health care. If your newborn has a fever, you might give her Tylenol and just hope there's no serious infection rather than head to the emergency room and face a hefty co-pay.

Why does a progressive state like Massachusetts strong-arm many individuals and businesses into buying expensive insurance plans that don't encourage actual visits to the doctor and hospital? According to the Kaiser Family Foundation, the average person consumes more than $5,000 per year in health care resources. No matter how you slice it, some entity—government, business, or the individual—owes a boatload of cash for medical expenses. The annual costs for the 500,000 or so uninsured Massachusetts residents would run more than $2.5 billion, far in excess of the original state subsidy of $559 million.

That left billions to be paid by businesses and individuals. So for them, a high-deductible plan was a rational gamble. You (or your employer) front just enough money to get some coverage in case of catastrophe and then hope no one actually gets sick. But someone invariably does. As a result, out-of-pocket medical bills are the leading cause of bankruptcies—even though of most affected families actually have health insurance.

The expensive Massachusetts plan is not well-designed to systematically improve anyone's health. Instead, it's a superficial effort to clear the uninsured from the books and then clumsily limit further costs by discouraging care.

This brings us to the real task facing health reformers in our nation. Atul Gawande recently observed that for too long we've been "arguing about whether the solution to high medical costs is to have government or private insurance companies write the checks." What's more important are the doctors who write the bills. The more procedures they do, the more money they make. To fix medicine, he argues, we have to create better incentives for doctors to do right by patients instead of their own bank accounts.

But that's not the whole story. Health care costs are rising everywhere, even in places like Minnesota, which Gawande cites as a prime example of low-cost, high-quality care that should be replicated nationwide. (Per capita health spending is actually 25 percent higher in Minnesota than in Texas, which has a hospital system that Gawande criticizes for profiteering.) In Massachusetts, some employers offering high-quality plans have annual rate increases of 10 percent to 15 percent. These jumps are certainly due to some overuse of services but also indicate increasingly high-technology care.

The lesson of Massachusetts is that really good health care is also really expensive. The concern isn't who writes the checks or who writes the bills. The real question is who makes the tough decisions about the limits of the checks and bills—in other words, who ultimately rations the money. Not everybody can have everything, and the sooner we admit that, the sooner our health care debate will get realistic.

In the haphazard Massachusetts plan, rationing fell to individuals, who then skimped on important prescriptions and routine visits. Gawande would leave rationing to properly incentivized doctors, but we have no data about whether this can be done widely. Others advocate for bodies like the Medicare Payment Advisory Commission (an impartial medical Federal Reserve Board), which can make the hard calls to promote and limit certain kinds of medical care. Britain, for example, has a national institute that makes precisely these decisions, like limiting drug-eluting stents for coronary artery disease and certain pricey drugs for kidney cancer. And health insurance executives here are again talking about "capitation," or fixed global budgets in which a group of health providers gets fixed monthly fees to handle all of a person's health needs.

In the meantime, one thing is sure: Without a smart plan to ration our resources well—that is, stick to a budget—and improve health, simply mandating that employers and individuals buy health insurance will only worsen the mess.

Darshak Sanghavi is a pediatric cardiologist and assistant professor of pediatrics at the University of Massachusetts Medical School. He is the author of A Map of the Child: A Pediatrician's Tour of the Body.
Article URL: http://www.slate.com/id/2221031/

[Crafty_Dog]

I'm not sure I agree with all of that.

As a general economic principle it seems sound to me to have the person consuming a service be the person paying for the service.  Indeed, IMHO a rather large percentage of our problems with this issue come from having someone other than the consumer pay.

It may well be that simply having a small or even no deductible combined with a higher percentage of patient participation in the bill is the way to go-- here I have no opinion.

[Body-by-Guinness]

I've some qualms to, though my purpose in posting the piece was to demonstrate that the MA solution many are touting has serious problems with it. The whole mandating privately purchased insurance at $9,600 that has so high a deductible that users self-impose rationing seems a far cry from the idyllics being touted to sell a government mandated program. Bottom line, each place I look where government is the prime move in health care has some pretty scary elements to it.

[Boyo]

Wow watched the annointed one last night talk about healthcare and I threw up in my mouth. :-DDid he really say that instead of an operation that a person should take pain killers.(paraphrase).

This is the real obama plan:[youtube]http://www.youtube.com/watch?v=dGFXGwHsD_A[/youtube]

Boyo

[Crafty_Dog]

By JOHN E. CALFEE
President Obama and most congressional Democrats say they want to preserve private health insurance. They also want to add a "public plan" to compete with private insurance plans. Their basic argument is that a public plan would offer needed competition, save money through low administrative costs and zero profits, realize greater economies of scale, and be a superior negotiator of the prices of medical services and technology.


 The first three arguments are bogus. The fourth argument is only half-bogus -- but the half that isn't reveals a great danger: If a public plan is inserted into private insurance markets, the American health-care system could rapidly evolve into a single-payer system, which would have devastating effects on R&D for new medical technology.

The first argument, that we need a public plan to spur competition, just isn't plausible. Hundreds of health insurance plans already exist, and employer benefit managers can choose among numerous alternatives. There is no lack of firms willing to compete to provide health insurance.

As to the second argument, what is to be saved by avoiding profits? Nonprofit health insurance firms are common, including many of the Blue Cross-Blue Shield plans. Nonprofit status has not proved to be a reliable source of efficiency and cost-saving. The addition of new nonprofit cooperatives and the like -- as a bipartisan group of senators has proposed -- would make little difference, unless the new plans are given the power to set prices and take on extra risk supported by government subsidies.

Would a public plan have lower administrative costs? Well, how often are public enterprises run more efficiently than private ones? Why did practically all economically advanced nations dismantle their public airlines, phone companies, and so on, invariably obtaining lower administrative costs and consumer prices?

As Stanford University health economist Victor Fuchs has pointed out, what "insurance" firms actually sell to large employers -- which account for the single largest segment of the entire health-care market -- is usually administrative services, not actual insurance. (Large companies are not insured; they pay benefits directly.) There is no reason to expect a Medicare-like public plan to match the administrative efficiency of Aetna, Blue Cross-Blue Shield, Cigna, UnitedHealth Group, and WellPoint. Medicare doesn't even try. It outsources most administrative services to the private sector.

Turning to public plans like Medicare and Medicaid for more efficient administration is a fool's errand.

What about economies of scale? Aetna currently serves about 18 million subscribers, UnitedHealth Care serves between 25 million and 30 million, and WellPoint more than 35 million. That is more than is served by the health-care monopoly of Canada (population 33.6 million), and more than the entire health-care systems of most European nations. Once a plan reaches a few million subscribers, there may not be a lot of economies of scale left that can enable public plans to provide lower prices.

Finally, there is the crucial task of negotiating prices for doctors, hospitals, clinics, drugs, devices and thousands of other items essential to modern health care. Here, there are really two arguments for a public plan. The first is about bargaining skill and the firm size, basic ingredients in any negotiating environment.

There is no reason to think the administrators of a public plan will possess skills superior to those honed by private plan personnel during years of negotiations under the pressure of competition. Nor is there any reason to think that mere size would help.

True enough, relatively small European nations routinely obtain better drug prices than are achieved by mammoth American pharmacy benefit managers such as Express Scripts (50 million patients) and Medco (60 million patients), each of whose numbers exceed the entire citizenry of all but the largest European nations. Even sparsely populated New Zealand (population four million) gets better prices than the giant drug-price negotiators in the American private market.

Their success is due to what economists call "monopsony power." Monopsony occurs when a single buyer negotiates prices with several competing sellers (as opposed to monopoly, where there are many buyers but one seller).

Thus, if you want to sell your branded drug in New Zealand, your prices are negotiated with PharMac, a branch of the government. Much the same is true when selling to Canada, Germany, the Netherlands, and essentially the entire developed world save the United States. The negotiating power of these government entities results from monopsony, not superior skill.

For example, the various sellers of cholesterol drugs (Lipitor, Crestor, and so on) have to compete with one another while they all face a single government negotiator. If one seller balks at government prices, it leaves competitors to pick up more sales. The same is true for most other drug classes and most medical devices. This uneven battle ensures that negotiated prices will be well below those in a competitive market.

But here is where the huge risks of creating a "public plan" to compete with private insurance firms come into focus. Foremost among these risks are the effects of monopsony power in the purchase of medical technology.

The U.S. is unique because it alone is the source of half of world-wide profits that provide the payoff for the complex, lengthy, and expensive process of developing new treatments. When other nations construct their health-care systems, they ignore the impact of their pricing policies on R&D incentives. As the dominant R&D funding wellhead, we do not have that option.

Competitive markets have generated the prices and the profits necessary to induce a steady flow of medical innovation in this country. A public plan option would tend to dismantle that system. The people in charge will not know how to set reimbursement levels to motivate reasonable R&D efforts, and there is no reason to expect them to try. In public plans, the tried-and-true method is to push the prices of suppliers down until something gives -- too few doctors willing to take on Medicare patients, for example -- and then to ease up. That is a destructive approach to medical technology R&D.

Who knows what drugs will not be developed if reimbursement levels for a new multiple-sclerosis treatment are too measly? In virtually every advanced economy but our own, pricing authorities simply make sure prices are high enough so that existing drugs continue to be made available. We can expect a public plan here to do the same. The inevitable result is to drastically under-incentivize R&D.

This problem would not matter if a public plan remained small -- but it would likely grow into a monster. Monopsony negotiating power will generate lower prices, so many consumers will switch to a public plan. Employers eager to offload health-care costs will also dump unwilling employees into the public plan. That is the basis for the Lewin Group's much-cited prediction that a public plan would come to dominate any market in which it is allowed to compete.

Bargaining power, however, is far from the only potential source of below-market prices for public plans. In the home mortgage market, the public plans -- known as Fannie Mae and Freddie Mac -- were for years viewed by investors as less risky because they would be bailed out by the federal government if they took on too much risk. That translated into lower prices (the interest rates paid by borrowers), which eventually translated into extraordinary and unseemly growth, culminating in bankruptcy and a federal bailout.

The lesson for health insurance is clear. All insurance plans -- especially in health-care markets -- have to take on risk. Prudent planning, including the maintenance of reasonable financial reserves, is necessary. That increases costs. It would be all too easy for a public plan to gain a competitive advantage by taking on extra risk while keeping prices low because everyone would expect the federal government to take care of financial surprises down the road.

In sum, a public plan would possess formidable and perhaps overwhelming competitive advantages -- generated not by efficiency but by the artificial advantages of "public" status. This would have two disastrous consequences. The first will be to cause most Americans now covered by private insurance to move to public insurance -- one step away from single-payer health care. The second will be to undermine incentives to develop more of the immensely valuable medical technology that is central to all of health care.

Mr. Calfee is a resident scholar at the American Enterprise Institute.

[DougMacG]

Followup to CCP's point that the number one contributor to the Democratic party is the taxpayer: Before we turn all healthcare workers in America into public workers could we please disband all public employee unions.  In the case of public employment,  there is no evil capitalist, only the will of the people, and therefore there is no underlying justification for employees to organize.

Look at the proportion of teachers union money given to Democrats and imagine the new public unions of doctors, nurses, physicians assistants, radiology technicians, etc. etc. and their demands for more and more money, shorter hours, cushier benefits combined with their political contribution clout.  Reagan won't be there to fire them when they go on strike.

Brit/former Brit? Mark Stein said last week that after national health care starts, all elections are about waiting times for service.  In other words further diluting and obscuring your ability to reward or punish them for their votes on other issues such as war, foreign policy, taxes, spending, judicial confirmations, gun control, abortion, you name it.  It all becomes about health service.

Is that what YOU want?  Not me.