Consumer Power Report #207

Consumer Power Report #207
December 21, 2009

Greg Scandlen

Greg Scandlen is a senior fellow of The Heartland Institute and founder and director of... (read full bio)

I don't know where to start this week. A little prognosticating would be in order, but I have no idea what to say. Mr. Obama said the Congress is "on the precipice," and I can't argue with that. But generally being on the precipice is a dangerous place to be. It comes right before "falling off the cliff."

There appear to be six to eight Democrats in the Senate who would prefer not to vote for this monstrosity. But they'll probably do it anyway. No one quite knows what is in the bill, and they won't until Harry Reid's "manager's amendment" is brought forth. And even then, Mr. Reid has shown that he doesn't much like to actually write legislation. He prefers, in Dan Perrin's language, to offer "vapor" amendments to "vapor" bills.

The Medicare buy-in idea was one example. No one except the Leader's staff and the CBO ever saw what he was proposing. All they knew was that there was a Medicare buy-in. But it was such a patently bad idea that it is was dropped even before it was seen.

Joe Lieberman was given the credit (or blame) for killing that idea, but it wasn't just him. About a dozen Democrat Senators, mostly from rural states where the hospitals already lose a lot of money from Medicare underpayment, wrote to the Leader to tell him they wouldn't support it.

But most likely this will pass in the Senate. The question then becomes, what does the House do? They will be under huge pressure from the White House to simply pass the Senate bill as written. That avoids having to go to a messy conference where more mischief can occur. At this point Obama doesn't care what is in the bill as long as he gets a signing ceremony before the State of the Union speech.

Then it will take about six months for people to find out what these jokers have done to our health care -- just in time for the 2010 elections.


IN THIS ISSUE:


FLAWED UNDERPINNINGS

The Wall Street Journal took a close look at some of the underpinnings of ObamaCare and found them wanting. It writes, "ObamaCare's core promise--better quality care for everyone at lower costs--is being exposed as an illusion as it degenerates into the raw exercise of political power."

It says the whole premise is based on Peter Orszag's notion that "as much as 30% of health spending is waste that doesn't affect outcomes. He argued the country could save $700 billion a year without harming quality--more than enough to pay for universal coverage." This free lunch sounded swell, except now, "the new cost-control apologists concede that there isn't any actual plan for controlling costs." Peter Orszag is now admitting, "that 'we don't know enough' to produce results right away, the key is to encourage 'continuous improvement' through pilot programs and demonstration projects. Cost containment will actually take years to decades, Mr. Orszag conceded."

And, the other enabler, "Atul Gawande, likewise owned up to the fact that there is 'no master plan for dealing with the problem of soaring medical costs,' only a battery of small scale experiments."

The Journal remembers back in 1983, it was promised that using "Diagnostic Related Groups (DRGs)" for Medicare hospital payment would help control costs. How's that worked out? "Nominal Medicare spending has risen on average at an annual rate of 9.6% since 1980. Over the same period total Medicare spending has grown 13-fold, climbing from 1.2% of the economy to 3.2% today."

The article further quotes Mr. Orszag as saying, "Everything that has been put forward in health policy discussions for a decade is in this bill. What specifically else would you do?" The paper responds better than I could have. It says --

Hmmm. One liberal sage noted in a 2007 paper that "four decades of empirical research" have shown that insulating people through third-party insurance coverage "from the full cost of health care has been responsible for anywhere from 10% to 50% of the large increase in health expenditures." Ultimately, he concluded, increasing cost-sharing would give individuals a direct stake in more prudent purchasing, as opposed to today's invisible health dollars that vanish as more expensive premiums, foregone wages and higher taxes.

Those are the words of Jason Furman, now the White House deputy economic director who seems to have been put into witness protection. Every serious health economist in the country recommends reforming the tax exclusion for employer-sponsored insurance, perhaps by converting it to a deduction or credit. Cost control will never stick unless it is extricated from politics and transferred to individuals to make their own trade-offs.

SOURCE: Wall Street Journal


THE MANDATE -- GETTING IT FROM ALL SIDES

At Cato, Michael Cannon remembers what CBO did to ClintonCare back in the 1990s. He writes, "In its 1994 score of the Clinton plan, Bob Reischauer's CBO included those mandated 'private' payments in the federal budget -- i.e., as federal revenues and federal expenditures." That effectively killed the bill by ballooning its impact on the federal budget. Yet, this year, "congressional Democrats have very carefully tailored their individual and employer mandates to avoid CBO's definition of what shall be counted in the federal budget."

When mandated spending crosses the line to become a tax is an interesting, if esoteric, question. Mr. Cannon concludes, "Crafting the private-sector mandates such that they fall just a hair short of CBO's criteria for inclusion in the federal budget does not reduce their cost, nor does it make those mandates any less binding. But it dramatically reduces the apparent cost of the legislation. It is the reason we're all talking about an $848 billion Reid bill, rather than a $2.1 trillion Reid bill."

SOURCE: Cato Institute

Dr. Linda Halderman writes in the American Thinker that "Consumer Choice (is) Dead on Arrival" in the Senate bill. She writes, "Part of the problem with individual mandates is enforcement. Voters have consistently rejected mandates that would use the tax code or wage garnishment to ensure compliance. Without 'teeth,' mandates provide no compelling reason to purchase expensive, unwanted insurance policies before an individual becomes ill. And even harsh penalties would miss the unemployed and non-citizens, who represent a large percentage of the growth in the uninsured."

She explores this issue in some depth and goes on to conclude, in a very understated way, "The bill being debated in the United States Senate represents a fundamentally different approach to how Americans participate in health care coverage decisions. Whether that approach is consistent with what Americans value remains debatable."

SOURCE: American Thinker

Even the Left is getting agitated over the mandate idea. The Heritage Foundation put together an impressive collection of the war against the mandate--from the Left. It quotes Howard Dean as saying, "You're going to be forced to buy health insurance from a company that is going to take an average of 27% of your money, and there is no choice about that. If you don't buy that insurance you are going to get a fine." And Dean's Democracy for America released this statement about the White House:

What they are actually talking about is something called the "individual mandate." That's a section of the law that requires every single American to buy health insurance or break the law and face penalties and fines. So, the bill doesn't actually "cover" 30 million more Americans -- instead it makes them criminals if they don't buy insurance from the same companies that got us into this mess.

Heritage also cites Markos Moulitsas, founder of the Daily Kos, as saying:

My take is that it's unconscionable to force people to buy a product from a private insurer that enjoys sanctioned monopoly status. It'd be like forcing everyone to attend baseball games, but instead of watching the Yankees, they were forced to watch the Kansas City Royals. Or Washington Nationals. It would effectively be a tax -- and a huge one -- paid directly to a private industry. Without any mechanisms to control costs, this is yet another bailout for yet another reviled industry.

And the Left-Wing blog, FireDogLake:

The health insurance Americans are forced to purchase will not be affordable. Middle class families (making 300%-400% of FPL) will only get subsidies sufficient to make the premiums for the second cheapest insurance at the low quality silver level (70% actuarial) cost 10% of their income. ... The individual mandate in this bill is nothing more than government-enforced private taxation on behalf of large, for-profit corporations. It would be just one more step toward corporate serfdom.

It even remembers that Barack Obama himself campaigned against an individual mandate saying, "Now, Massachusetts has a mandate right now. They have exempted 20 percent of the uninsured because they have concluded that that 20 percent can't afford it. In some cases, there are people who are paying fines and still can't afford it, so now they're worse off than they were. They don't have health insurance and they're paying a fine."

SOURCE: Heritage Compilation of Democrats


THE POLLS KEEP GETTING WORSE

Speaking of the 2010 elections, the polls keep getting worse for incumbents who support this mess. A brand new NBC/WSJ survey finds that the "Tea Party" has more support than either the Republican of Democratic Parties.

 

Party -- Favorable -- Unfavorable

Democrats -- 35% -- 41%
Republicans -- 28% -- 43%
Tea Party -- 41% -- 23%

This poll also finds that Obama's approval rating is at 47 percent (below 50 percent for the first time for this survey), and that approval of the health bills in Congress has fallen to its lowest level to date, with a mere 32 percent saying its a good idea and 47 percent saying its a bad idea. William McInturff, who was one of the pollsters, is quoted as saying, "this is the survey where the wheels came off the bus."

SOURCE: Wall Street Journal; NBC News

Gallup is a little more kind to the Democrats, but it also finds a plurality against the bills in Congress, with 48 percent opposing them and only 46 percent in support. It is even worse when the "leaners" are removed, with only 36 percent in favor and 43 percent opposed. This is better than the first week in November, however. At that time Gallup found a mere 29 percent were in favor and 38 percent opposed.

SOURCE: Gallup

And the Washington Post/ABC survey just piles on. It finds that 51 percent oppose the bills while 44 percent support them. The survey reports, "Two-thirds say the health-care reforms would add to the federal deficit, with two-thirds of those people calling such an increase not worth it, [and] by a 2 to 1 margin, more Americans say a new system will weaken rather than strengthen the Medicare system." The article sums up saying, "after a year of exhortation by President Obama and Democratic leaders and a high-octane national debate, there is minimal public enthusiasm for the kind of comprehensive changes in health care now under consideration. There are also signs the political fight has hurt the president's general standing with the public."

SOURCE: Washington Post


SHORT TAKES

Writing in Investor's Business Daily, Dave Hogberg notes that Massachusetts is considering legislation that would allow health insurers to set their payments to doctors and hospitals at 110 percent of Medicare and require providers to accept that payment in full as a condition of licensure. Of course Medicare doesn't pay enough to enable providers to stay in business and a 10 percent bump ain't gonna change that. Let's hope those clever lobbyists at the AMA and AHA are paying attention. Of course, why should they care? When they stop lobbying for the health care providers, they'll simply pack up their briefcase and go lobby for someone else. It's not their license and livelihood on the line.

SOURCE: Investor's Business Daily Blog

The docs have started a new group -- Physicians for Responsible Reform -- with 10 physician members of Congress as its core. In a statement Dr. John Gill says, "we are reaching out to physicians all across the country to get their input on what health care reform measures will improve, rather than hinder, the quality of care they are able to give to their patients." The group holds monthly conference calls with Congressman and Dr. Tom Price chairing, and it has developed a list of goals as its mission statement.

SOURCE: Physicians News

CIGNA has released the latest in a series of reports on its experience with consumer-driven health care programs. It cites the key findings as:

  • Immediate and sustainable cost savings: CDHP medical costs are 14 percent less than traditional plans the first year, cumulative cost savings rise to 19 percent in the second year, 23 percent in the third year, and 26 percent in the fourth year.
  • Higher levels of care: People with CIGNA Choice Fund received recommended care at compliance rates that were similar to or better than those covered by traditional CIGNA health plans. Key indicators such as use of preventive care, evidence-based care, and disease management program participation were measurably better among those in CIGNA CDHPs than those in PPOs and HMOs.
  • Less cost for those with chronic conditions: Medical cost trend was substantially less for CIGNA Choice Fund customers with hypertension (27 percent less), joint disease (21 percent less), and diabetes (15 percent less) than for individuals with either of those diseases in traditional CIGNA health plans. According to the study data, the cost savings were achieved without sacrificing care.

The press release includes a link to the study.

SOURCE: CIGNA

Greg Scandlen

Greg Scandlen is a senior fellow of The Heartland Institute and founder and director of... (read full bio)