Consumer Power Report #217

Consumer Power Report #217
April 16, 2010

Greg Scandlen

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

I was having an exchange with a physician friend. He argued that advocating repeal of the ObamaCare law is a bad strategy. He thought there were some good things in it that should be preserved. He wrote, "So a more realistic pragmatic approach is needed or the opponents will simply be painted as being ANTI - Health Care Reform. Repeal isn't happening, and top Republicans are backing off from this approach."

I responded that this law is not "health reform." In fact it takes every problem in the health care system and makes it worse. I have been listing these problems for years:

Health Care is too bureaucratic. This law will make it even more so. It creates hundreds of new boards and commissions that will substitute their own judgment for that of the health care professionals actually involved in the care. And the rules for who gets what subsidy and when are as complex as the tax code.

Health Care is unaccountable. But this law will make it less accountable. It will require providers to respond to the demands of third-party payers, not to patients.

Health Care is inconvenient for the patient. This law will make it even less convenient. It will increase waiting lists and interfere with new ways of delivering services (such as disallowing any new physician-owned specialty hospitals.)

Health Care delivers questionable quality. This law will remove any question. Quality will suffer. As mentioned above, waiting lists will expand dramatically, but as important physicians will be replaced by nurse practitioners and other non-MD providers. The law is explicit, for example, that certified nurse midwives will be paid the same as OB-GYNs.

Health Care is far too expensive. This law will make it even more expensive by removing the constraints that currently exist, such as cost-sharing for certain services. Even provisions like the minimum loss ratio standards will tend to raise, not lower, premiums. Now, many people will be subsidized, so they will not feel the pain of the higher costs. But that does not lower the underlying costs, it merely shifts costs from the insured to the taxpayer.

This law is not health reform because it does not address the cause of the problems in our health care system – excessive reliance on third-party payment. It does just the opposite. It increases the use of third-party payers and further insulates the health care consumer from any knowledge of the cost of the services consumed.

My friend is correct, however, that repeal will not help UNLESS it is based on a clear understanding of what real reform is.

-- Greg Scandlen


IN THIS ISSUE:


CONFUSION

Figuring out how to implement this law is like playing a game of 52 Pick Up. The entire deck of cards has been thrown up into the air and it is anyone's guess how they will come down. Only one thing is certain -- everyone is confused.

The McClatchy newspapers headlines a piece, "Health care overhaul spawns mass confusion for public." Margaret Talev writes, "Two weeks after President Barack Obama signed the big health care overhaul into law, Americans are struggling to understand how -- and when -- the sweeping measure will affect them. Questions reflecting confusion have flooded insurance companies, doctors' offices, human resources departments and business groups." The on-line broker eHealthInsurance is "inundated" with calls from people who want to sign up for that "free ObamaCare."

The article adds, "The Obama administration is embarking on a years-long public education campaign about the overhaul. However, much of the guidance will depend on Department of Health and Human Services regulations that are still being developed."

SOURCE: McClatchy

It isn't just the public. In The New York Times Robert Pear writes, "Baffled by Health Plan? So Are Some Lawmakers." He reports, "In a new report, the Congressional Research Service says the law may have significant unintended consequences for the 'personal health insurance coverage' of senators, representatives and their staff members."

Apparently the new law may drop the FEHBP program for "some" members of Congress and their staffs, but perhaps not all. Committee staff seem to be treated differently than the personal staff of Congressmen, and new members of Congress may be treated differently than existing members. But, "this provision was written in an imprecise, confusing way, so it is not clear when it takes effect."

Mr. Pear adds, "The confusion raises the inevitable question: If they did not know exactly what they were doing to themselves, did lawmakers who wrote and passed the bill fully grasp the details of how it would influence the lives of other Americans?" And Rep Jason Chaffetz (R-UT) is quoted as saying, "If members of Congress cannot explain how it's going to work for them and their staff, how will they explain it to the rest of America?"

SOURCE: New York Times; Manchester Union Leader

The Los Angeles Times is also confused, headlining a story, "New Healthcare Law is Full of Unknowns." The article by Lisa Girion says, "About the only thing Dr. Philip Schwarzman can be sure of under the national healthcare overhaul is that he is adding his daughters, ages 23 and 25, to his health plan immediately. Much less clear to Schwarzman is how the sweeping law will affect the emergency department at Providence St. Joseph Medical Center in Burbank, where he is medical director."

Dr. Schwarzman is quoted as saying, "It's incredibly complicated. It's hard to predict what's going to happen." For instance, according to the article, "One of the rationales for the healthcare overhaul was that it would ease pressure on emergency rooms like St. Joe's. As more people acquire insurance, the idea goes, more will get regular medical care." But, "at most hospitals, most emergency room patients at St. Joe's already have insurance. They go to emergency rooms not because they have no physician but because they are too sick or impatient to wait for an office appointment."

The article adds, "The new law also will increase the number of people on Medi-Cal. Because the government health program for the poor pays less than private insurers, hospitals will be pressured to treat more people at lower cost per case, said St. Joe's chief executive, Barry Wolfman."

SOURCE: Los Angeles Times

Of course it isn't just the public and Congress that is confused. The president seems to be as well. Speaking at a town hall meeting, he took 17 minutes to try to answer a simple question about taxes. A lady asked, "Is it a wise decision to add more taxes to us for the health care, because we are over taxed as it is?" You have probably seen snippets of his answer, but NewsBusters has provided the whole thing. Tell me if you can follow his answer.

SOURCE: NewsBusters


DRILLING DOWN

Every day that goes by we discover more "interesting" provisions in the legislation, any one of which could have been a controversial proposal in its own right. Apparently the thinking is that by putting a thousand such provisions in a single bill, no one will be able to focus on any particular problem.

More information is coming out about the requirement that preventive services be covered by all health plans without cost-sharing. The Agency for Healthcare Research and Quality released a simple "pocket guide" to its determination of what is considered "prevention." Curiously most of it is not "prevention" at all but diagnostic screening of existing conditions.

SOURCE: AHRQ

The law firm of McDermott Will & Emery has been digging into some of the new provisions and released a statement on the effects on Ambulatory Surgery Centers (ASCs). It writes, "As a result of the new legislation, ASCs may face Medicare reimbursement challenges in the near future."

In particular, Medicare payments will no longer be adjusted just for inflation but will include a "productivity adjustment." It explains, this is "defined under the new law as the 10-year rolling average of productivity gains in the general economy." And it adds, "Most significantly, the new law provides that application of the productivity adjustment may result in a negative update, which could reduce payments from one year to the next." Had this been done in 2010, there would have been a decrease in Medicare payments instead of the 1.2 percent increase.

Also CMS is supposed to study "whether to expand Medicare's acquired conditions policy to ASCs" and is required to "implement a value-based purchasing program for ASCs."

SOURCE: McDermott Will & Emery

Reuters reports that, "Now that the U.S. healthcare reform plan is law, the federal government is turning to states to institute key components -- some of which have never existed before -- and do so in a tight timeframe." The article says because Congress used reconciliation to pass the bill it was not able to update the deadlines of the original bill, so "states and the U.S. government have missed deadlines they must now address retroactively."

SOURCE: Reuters

The Associated Press reports on the growing use of nurse practitioners for primary care. It reports that 28 states are expanding the roles of NPs, in some cases to include prescribing narcotics or running clinics independently of any physician supervision. Naturally, the AMA doesn't like this trend, but who cares what the AMA thinks anymore? It has made itself entirely irrelevant to any public policy dispute.

Like many articles these days, this one assumes that the promise of expanded enrollment is already achieved. It says, "With 32 million more Americans gaining health insurance within a few years, the health care overhaul is putting more money into nurse-managed clinics." Right. Would anyone like to make a wager on this? I'm willing to bet that the number of newly insured will be closer to 15 million than 32 million -- assuming this law goes into effect exactly as written.

SOURCE: Associated Press

Speaking of irrelevant, the National Association of Health Underwriters (NAHU) put out a statement upon enactment of the new law saying that it fails to rein in the costs of health care and includes "an unworkable individual mandate which will encourage people to wait until they are sick to purchase coverage." The statement adds, "Tens of billions of dollars in new insurer fees and taxes, expansion of Medicaid, tight limits on age rating and high minimum benefit levels will make private health insurance unaffordable for the hundreds of millions of Americans who are currently insured."

True enough. So what is NAHU going to do about it? "We will continue to work with the administration and members of Congress to help minimize the potential health insurance cost increase." How's that been working out for ya, hmmm?

Curiously, NAHU doesn't say a word about the minimum loss ratios that will kill broker commissions, and therefore the incomes of its members.

SOURCE: NAHU Statement, published in CDHC Solutions


DREW ALTMAN'S TAKE

Drew Altman, president of the Kaiser Family Foundation, writes about the implementation problems the Obama administration is facing. He says the first challenge is to explain it to the American people -- "now that health reform is the law of the land all you have to do is turn on the car radio or the TV or talk to a taxi driver to see that the American people have flipped a switch in their heads. They will continue to have opinions about the law but what they are desperately trying to figure out now is what the law means for them." He adds, "over time the benefits the law provides will be highly valued by the American people, but it will be crucial to develop mechanisms to answer people's questions and link them to the benefits the law provides."

The next challenge, he says, is the actual implementation: "There are substantial implementation challenges to be met at HHS and some at other Federal agencies, but by far the biggest challenges will unfold in the states. Among the major responsibilities states have are: setting up the insurance exchanges for small business and individuals; enforcing the new insurance reforms; and overseeing the new Medicaid expansion that for the first time provides coverage to all low-income people whether or not they have children, but brings with it new administrative challenges such as outreach and enrollment of new populations, integrating Medicaid with the new exchanges, and applying new income eligibility standards established under the law."

Now I've known Drew slightly for a long time and think he has done a great job at KFF, but he suffers from the same myopia that plagues most of the intellectual elite. You will note that above he talks about listening to the car radio, TV, and taxi drivers. Apparently riding in a cab is the extent of his exposure to actual working Americans. But later in his essay he confirms this impression. He writes, "reforming health care is not like fixing a problem with your car. You don't find the problem, identify a solution and then it is fixed." Huh? Apparently Drew has never actually worked on a car, especially an old beat-up jalopy with a lot of miles and rust on it. You don't just identify a solution and then POOF! it is fixed. There are all kinds of problems you will encounter: rusted bolts, obsolete parts, the wrong tools. Just diagnosing the cause of the problem can be a challenge.

Drew thinks this law provides benefits that will be "highly valued by the American people." That may be true for a few, but for the vast majority there is far more here to despise than to like. Drew needs to get out more.

SOURCE: Kaiser Family Foundation


THE POLLS

Or Drew could simply look at the polls to get a sense of what Americans are thinking.

Rasmussen finds, "Three weeks after Congress passed its new national health care plan, support for repeal of the measure has risen four points to 58%. That includes 50% of U.S. voters who strongly favor repeal." He adds, "52% believe the health care plan will be bad for the country. Thirty-nine percent (39%) think it will be good for the country, and one percent (1%) more say it will have no impact."

SOURCE: Rasmussen

Now, it isn't just Rasmussen. The Associated Press reports, "Opposition to President Barack Obama's health care law jumped after he signed it -- a clear indication his victory could become a liability for Democrats in this fall's elections." It goes on, "A new Associated Press-GfK poll finds Americans oppose the health care remake 50 percent to 39 percent. Before a divided Congress finally passed the bill and Obama signed it at a jubilant White House ceremony last month, public opinion was about evenly split. Another 10 percent of Americans say they are neutral."

SOURCE: Associated Press

And Real Clear Politics compiled all the recent polls and found the average of 10 different polls puts the opposition to this bill at 52.5 percent against 40.2 percent in favor of it -- a spread of 12.3 percentage points. Only one of the 10 polls has the opposition at less than 50 percent, and that was back on March 23.

SOURCE: Real Clear Politics

Greg Scandlen

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