Obamacare and the Aims of Progressivism

Obamacare and the Aims of Progressivism
August 20, 2014

Benjamin Domenech

Benjamin Domenech (bdomenech@heartland.org) is a senior fellow at The Heartland Institute. Domenech... (read full bio)

Consumer Power Report #433

Greg Scandlen notes the provision of health care, historically, has been an arena populated in America by a host of civil society institutions. These institutions were purposefully displaced by government over the course of the past century:

These associations were formed by working class men and women from all ethnic groups. In some cases they owned and operated their own hospitals. They also provided schools and orphanages for the children of deceased members, sickness funds for members who were unable to work, relocation assistance to help workers go where the jobs were, and moral support to families in times of trouble.

In the early 20th Century, these organizations came under attack by the Progressive Movement, which opposed self-help as interfering with the preferred dependency on and loyalty to the State. The Progressives also disparaged traditional values such as thrift, which got in the way of an economy ever more dependent on consumer spending. One leader of the Progressives is quoted as arguing in 1916 that, “Democracy is the progress of all, through all, under the leadership of the wisest.” The idea that common workmen could provide for their own needs was offensive to those who thought only an educated elite could order the affairs of society.

Greg writes at length about this subject in a new paper from the Citizens’ Council for Health Freedom. The widespread provision of charity care and service was also a major factor – which has again been crowded out by government in the form of Obamacare:

As more Americans gain insurance under the federal health law, hospitals are rethinking their charity programs, with some scaling back help for those who could have signed up for coverage but didn’t.

The move is prompted by concerns that offering free or discounted care to low-income uninsured patients might dissuade them from getting government-subsidized coverage.

If a patient is eligible to purchase subsidized coverage through the law’s online marketplaces but doesn’t sign up, should hospitals “provide charity care on the same level of generosity as they were previously?” asks Peter Cunningham, a health policy expert at Virginia Commonwealth University.

Most hospitals are still wrestling with that question, but a few have gone ahead and changed their programs, Cunningham says.

The online charity care policy at Southern New Hampshire Medical Center in Nashua, for example, now states that “applicants who refuse to purchase federally-mandated health insurance when they are eligible to do so will not be awarded charitable care.”

The same rule disqualifies aid to those who refuse to apply for expanded Medicaid, which New Hampshire lawmakers voted to extend, beginning Aug. 15.

Little wonder that, given this type of crackdown on the charity care side of things and the expanded promise of coverage to new Medicaid recipients, hospitals are seeing another Emergency Room spike:

Experts thought if people bought health insurance through the Affordable Care Act, they would find a private doctor and stop using hospital emergency rooms for their primary care.

Well, more people have health insurance. But they are still crowding into emergency departments across the nation.

An online study by the American College of Emergency Room Physicians found that nearly half of its members have seen a rise in visits since Jan. 1 when ACA coverage began. A resounding 86 percent of the physicians said they expect that number to continue growing.

In Philadelphia, emergency room visits were 8 percent higher in June than in November 2013, according to the Delaware Valley Healthcare Council, which collects data from 70 percent of the region’s hospitals.

“We find that when people don’t have health care, there is a degree of pent-up demand,” said Alex Rosenau, the ER physicians’ group and an ER doctor in Allentown. “People finally feel like they can go get medical care once they have some insurance.”

The spike in emergency room visits isn’t totally surprising. Rosenau said when Massachusetts enacted its own health care reform in 2006, everyone predicted the newly insured would find a private doctor. Instead, emergency departments saw a 3 to 7 percent increase in volume.

“Insurance does not equal access,” said Rosenau, adding that his group believes everyone should have access to care. “They know when they go to the emergency department, they are going to be seen.”

Complicating the matter is the growing shortage of primary care physicians. People who have never had a private doctor may have trouble finding one. So they continue to rely on emergency rooms.

It’s almost as if the crowding-out effects of government can have negative or unanticipated ramifications, particularly when they impact and warp the decisions people make about their lives.

-- Benjamin Domenech


IN THIS ISSUE:


TAXPAYERS ARE ON THE HOOK FOR OBAMACARE’S RISK

Despite the president’s assurance that “if you like your health plan, you can keep your health plan,” Obamacare caused significant disruption to people’s coverage as the health insurance exchanges prepared for their first open enrollment. Beginning October 1, 2013, insurers knew they would struggle to price policies in the exchanges accurately.

The Affordable Care Act (ACA) included three mechanisms to backstop insurers’ risks: risk adjustment, reinsurance and risk corridors. The first, risk adjustment, consists of perpetual transfers of money from unexpectedly profitable insurers to unexpectedly loss-making insurers and is – at least conceptually – necessary to mitigate risk in a market where insurers are forbidden to charge beneficiaries actuarially accurate premiums.

The other two mechanisms, reinsurance and risk corridors, were designed to protect insurers from unforeseen losses in Obamacare’s first three years, when insurers would not have enough experience to know how much risk they faced. These financial protections are critical to insurers’ ability to survive in the exchanges through the end of 2016. Both schemes persist only through the first three years of Obamacare, by the end of which its architects believed actuarial risks in the exchanges will have stabilized.

SOURCE: John R. Graham, NCPA


ARE INSURERS AVOIDING SICK PATIENTS?

Ending insurance discrimination against the sick was a central goal of the nation’s health care overhaul, but leading patient groups say that promise is being undermined by new barriers from insurers.

The insurance industry responds that critics are confusing legitimate cost-control with bias. Some state regulators, however, say there’s reason to be concerned about policies that shift costs to patients and narrow their choices of hospitals and doctors.

With open enrollment for 2015 three months away, the Obama administration is being pressed to enforce the Affordable Care Act’s anti-discrimination provisions. Some regulations have been issued; others are pending after more than four years.

More than 300 patient advocacy groups recently wrote Health and Human Services Secretary Sylvia Mathews Burwell to complain about some insurer tactics that “are highly discriminatory against patients with chronic health conditions and may ... violate the (law’s) nondiscrimination provisions.”

Among the groups were the AIDS Institute, the American Lung Association, Easter Seals, the Epilepsy Foundation, the Leukemia & Lymphoma Society, the National Alliance on Mental Illness, the National Kidney Foundation and United Cerebral Palsy. All supported the law. Coverage of expensive drugs tops their concerns.

The advocates also say they are disappointed by how difficult it’s proved for consumers to get a full picture of plans sold on the new insurance exchanges. Digging is often required to learn crucial details such as drugs covered, exact copayments and which doctors and hospitals are in the network.

SOURCE: Ricardo Alonso-Zaldivar, Associated Press


HALBIG MAY GO STRAIGHT TO SCOTUS

Obamacare challengers in the Halbig case have asked the D.C. Circuit Court of Appeals not to review a three-judge panel’s ruling against federal exchange subsidies, instead calling for “final resolution by the Supreme Court.”

The backstory: one month ago a divided three-judge panel prohibited Obamacare subsidies for residents buying from the federal exchange. The Obama administration asked the full D.C. Circuit bench to rehear the case, which is reserved for matters of exceptional importance.

The challengers don’t want that, because if they lose at the D.C. Circuit it would make the Supreme Court less likely to take the case.

“There is no doubt that this case is of great national importance. Not due to the legal principles at stake – this is a straightforward statutory construction case under well-established principles – but rather due to its policy implications for ongoing implementation of the Affordable Care Act (‘ACA’). Those implications, however, are precisely why rehearing would not be appropriate here, as Judges of this Court have recognized in many analogous cases,” the plaintiffs wrote in the brief filed Monday.

SOURCE: Sahil Kapur, TalkingPointsMemo


PFIZER IS LIABLE FOR HARM CAUSED BY GENERIC

Should brand-name drug makers be held liable if consumers are harmed by a medicine made by a generic rival?

The Alabama Supreme Court believes the answer is yes. And the court has upheld its own controversial ruling that Pfizer can be sued by an Alabama man who claimed he was injured by a generic version of its Reglan heartburn medicine. Why? The brand-name drug maker purportedly failed to warn his physician about the risks.

The decision is potentially significant, because this is one of the few cases in which a court has found that a brand-name drug maker can be sued, even though a consumer had taken only the generic version. Consequently, the ruling may be considered by other courts deciding similar cases and prompt still more such lawsuits.

The issue has been under a microscope ever since the U.S. Supreme Court limited claims against generic drug makers. In 2011, the court decided generic drug makers are unable to make changes to product labeling, even when alerted to side effects, unless a brand-name drug maker has made such a change. This meant generic drug makers should not be held accountable for a failure to warn against risks.

In the case in Alabama, a man named Danny Weeks was prescribed a generic version of Reglan and developed tardive dyskinesia, a serious and permanent movement disorder. He later accused Wyeth, which was bought by Pfizer, of failing to warn his physician of the long-term use of the drug. For its part, Pfizer argued it did not have a direct relationship with the consumer and, therefore, had no responsibility.

But the Alabama court disagreed.

SOURCE: Ed Silverman, Wall Street Journal


USA TODAY ENDORSES RIGHT TO TRY LEGISLATION

The deadly Ebola outbreak spreading through Africa is so extreme, it is driving health officials to do something that they would instinctively resist in normal circumstances: Subject patients to unproven experimental drugs.

The drugs are risky. Some have not even been tested on humans. Even so, a World Health Organization ethics committee just declared such use ethical, and its reasoning is hard to dispute, at least for patients who would otherwise die. Some chance is better than none, even with unknown side effects.

Too bad American patients suffering from terminal illnesses have so much trouble getting the same chance.

The process for getting experimental drugs is so daunting that fewer than 1,000 people sought and got federal approval to take such drugs last year.

Food and Drug Administration rules require patients to clear a series of hurdles. First, they and their doctors must find a company to provide its drug. Many drug makers – worried that a patient’s death will spur a lawsuit or harm their chances for final FDA approval – refuse.

Even then, patients still need a hospital review board to sign off, a contract between the hospital and the drug maker, and FDA approval. The FDA application process, according to its own estimates, can take up to 100 hours.

Now, the bureaucratic absurdity is generating a backlash.

Colorado, Louisiana and Missouri recently approved “right to try” laws, which seek to simplify the process. The Michigan Senate passed a bill last Wednesday; in Arizona, an initiative will appear on the November ballot.

These carefully crafted measures allow patients and their doctors to go directly to a pharmaceutical company to seek access to drugs, but only those that have cleared the first phase of clinical trials and remain in development. The laws protect drug makers from lawsuits. And, pointedly, they seek to cut out the FDA, which now has final say.

That’s worth thinking about. The FDA’s system for judging the safety and effectiveness of drugs prevents charlatans from peddling snake oil to desperate people. But in this case, the FDA’s process is fatally flawed.

SOURCE: Editorial Board, USA Today


AMERICAN MEDICINE’S MID-LIFE CRISIS

Dr. Sandeep Jauhar tries to describe and personalize this crisis in his new book, Doctored, an engaging memoir that probes for the source of the “collective malaise” that grips his profession. Jauhar’s 2009 book, Intern, chronicled his harrowing residency at a busy New York hospital, an ordeal that forced him to question his basic assumptions about medicine and what it means to be a physician. His latest effort also grapples with big questions: Jauhar wants to explain why doctors are increasingly unhappy and why, in contrast to the optimism of a century ago, “The conviction that anything is possible is essentially gone.”

By framing the book around his own midlife crisis, Jauhar tries to illuminate the midlife crisis of modern American medicine, now roughly forty years old – from the advent of Medicare to the current upheavals of Obamacare. He begins his account with a new job at the Long Island Jewish Medical Center, where he’s hired as an attending cardiologist specializing in congestive heart failure, a post he hopes will afford him the opportunity “to develop close relationships with critically ill patients and provide long-term care.” Initially, Jahuar basks in the glow of working at a teaching hospital, practicing medicine in an academic setting, mostly free from the financial concerns that consume physicians in private practice, which he considers mercenary and antithetical to his high-minded notions of what the practice of medicine should be.

But the realities of the modern health care system soon obtrude on his ideals. Even at a teaching hospital, his salary is determined in part by how much revenue he generates. Jauhar soon realizes that it’s important to see as many patients as possible, and that being a hospital employee means sacrificing income for security. The divide between physicians employed by hospitals and those in private practice, he discovers, is cavernous; the former have fewer, albeit subtle, pressures on them to maximize hospital revenue, while the latter must constantly hustle for business and build their practices around tests and procedures that pay, regardless of whether patients actually need them.

When Jauhar and his wife start a family, their expenses mount and they realize his hospital salary simply isn’t enough to pay the bills (one notes, however, that they insist on living in Manhattan and sending their son to private school). To make ends meet, he takes a gig doing paid talks for a pharmaceutical company, promoting a new drug used to treat acute heart failure and reasoning that it isn’t “sleazy or unethical” because he’s prescribing the drug anyway. But Jauhar quits after a study raises questions about the drug’s safety, worried that his colleagues will perceive him as a company man.

Eventually, Jauhar is forced to work part-time at a private practice, where he experiences the mercenary side of modern medicine firsthand, mainly in the form of overutilization: if you know an insurance company will pay for a test, it’s hard not to prescribe it. As a physician, he shows a bias against insurance companies but recognizes that hospitals also exert pressure on physicians to tailor treatment around certain procedures, even as managed care organizations constantly question doctors’ judgment by demanding prior authorization for tests and prescriptions.

Together, it all adds up to a loss of professional autonomy that reverberates through the health care system. Without true independence, the doctor-patient relationship breaks down and is replaced by other forces, the chief concerns of which are not necessarily what’s best for the patient.

SOURCE: John Davidson, The Federalist

Benjamin Domenech

Benjamin Domenech (bdomenech@heartland.org) is a senior fellow at The Heartland Institute. Domenech... (read full bio)