Friday, September 25, 2009

McConnell blasts regime over Humana “gag order”

The federal government resorted to bullying tactics when it ordered an investigation of Humana -- one of the country's biggest private insurers -- for its decision to send customers a letter alerting them about pending health reform legislation, a leading Republican charged Wednesday.

U.S. health officials launched the probe after the Louisville-based company mailed a letter to patients enrolled in its Medicare Advantage plans -- private options that replace standard Medicare -- warning that President Obama's health overhaul could eliminate important benefits of the program.

Humana said in its letter that if Medicare Advantage funding gets cut, "millions of seniors and disabled individuals ... could lose many of the important benefits and services that make Medicare Advantage health plans so valuable."

Republican Senate Minority leader Mitch McConnell blasted the investigation of Humana on Wednesday, calling it a "federal gag order" that seeks to silence a health provider that disagrees with the administration. McConnell said he's called for a complete legal justification of the probe. "This is so clearly an outrage," McConnell said on the Senate floor. "For explaining to seniors how legislation might affect them, the federal government has now issued a gag order on that company, and any other company that communicates with clients on the issue, telling them to shut up -- or else. "This is precisely the kind of thing Americans are worried about with the administration's health care plan. They're worried that government agencies which were created to enforce violations even-handedly will instead be used against those who voice a different point of view," he said.

The investigation was first suggested by Senate Finance Committee Chairman Max Baucus, whose committee has jurisdiction over Medicare. The Centers for Medicare & Medicaid Services (CMS) -- which officiates over the Medicare program for seniors and Medicare Advantage options -- ordered a "cease and desist" order on all of Humana's health care mailings until the investigation is concluded.

Baucus has called the Humana letter a "scare tactic" meant to distort the current reforms under consideration. The CMS alleges that Humana's letter may have violated federal regulations, but the information distributed by the health provider was supported by the nonpartisan, independent analysis of the Congressional Budget Office.

Obama has insisted that despite planned cuts to Medicare providers, seniors would not see their benefits reduced under a health care overhaul. But CBO Director Douglas Elmendorf contradicted that Tuesday under questioning by Finance Committee Republicans, saying seniors in the private Medicare Advantage plans could see reduced benefits under Baucus' legislation. Proposed changes "would reduce the extra benefits that would be made available to beneficiaries through Medicare Advantage plans," Elmendorf said.

Humana spokesman Jim Turner said Wednesday that the company is cooperating with CMS in its investigation. But, Turner added, "We also believe Medicare Advantage members deserve to know the impact that funding cuts of the magnitude being discussed would have on benefits and premiums."

A Republican aide told that the investigation is a clear breach of First Amendment rights and said the Republican leader is asking the CMS to provide legal justification for its investigation. The aide said CMS's investigation follows a pattern of intimidation put forth by the administration for any kind of dissent in the health care debate.

The Democratic Senatorial Campaign Committee lashed out at McConnell's charges Wednesday, saying, "If there was ever any doubt who Republicans are looking out for in the health care debate, Mitch McConnell has offered conclusive proof: the insurance companies. "Republicans jeopardize their own credibility when they choose to defend big insurance companies trying to make false claims about senior citizens," the DSCC said in a press release.

Nine months into Obama's administration, no administrator of the CMS has been named -- leading some Republicans to question whether the White House had a direct hand in silencing Humana.

While the administration referred all questions about the investigation to CMS, White House spokesman Reid Cherlin said the confirmation of a CMS administrator "is a priority for the administration." CMS did not immediately answer requests for comment.

House Ways and Means Committee ranking member Rep. Dave Camp, R-Mich., has called on CMS to provide additional information on the so-called gag order, including the person or persons who authorized the agency to issue it. "I have never seen anything like this and I question if politics was the deciding factor," Camp said in a press release. "Given that the administration has failed for more than eight months to nominate a director for CMS, I wonder if undue political pressure may have been applied on the CMS staff. "It is Congress' responsibility to find out the facts and protect the interests of the American people. We need to know who contacted CMS, when they did it and what was said," he said.


Mandatory insurance: Yes, it’s a tax

By Jeff Jacoby

IT WAS A PERFECTLY straightforward question. The answer was anything but. President Obama vows not to raise taxes on any American family earning less than $250,000 a year. Yet he backs legislation that would force every American to carry health insurance or pay a hefty penalty to the IRS. Such an “individual mandate’’ is included in all the major health care bills making their way through Congress, including the legislation unveiled by Senate Finance Committee Chairman Max Baucus last week. So when ABC’s George Stephanopoulos interviewed the president on Sunday, he raised the obvious challenge: “Under this mandate, the government is forcing people to spend money [to buy insurance], fining you if you don’t. How is that not a tax?’’

Obama replied that the individual mandate “is absolutely not a tax increase,’’ since, in his view, there is good reason to impose it. He stuck to that position even when confronted with Merriam-Webster’s definition of “tax’’ - “a charge, usually of money, imposed by authority on persons or property for public purposes.’’

“George,’’ chided Obama, “the fact that you looked up Merriam’s Dictionary . . . indicates to me that you’re stretching a little bit right now.’’ But the only one “stretching’’ was the president, whose position was at odds with the legislation itself. “The consequence for not maintaining insurance would be an excise tax,’’ notes the committee staff report on the Baucus bill. “The excise tax would be assessed through the tax code and applied as an additional amount of Federal tax owed.’’

Obama isn’t the first politician to maintain that a mandate to buy health insurance isn’t just another middle-class tax. Mitt Romney did so as governor of Massachusetts, boasting in 2006 that thanks to his signature health care law, “every uninsured citizen in Massachusetts will soon have affordable health insurance, and the costs of health care will be reduced. And we will need no new taxes . . . to make this happen.’’ But isn’t the penalty that law imposes on the uninsured - a penalty that this year will run as high as $1,068 per person - a tax? Gosh, no, enthused Romney: “It’s a personal responsibility principle.’’

Whatever it’s called, it hasn’t transformed Massachusetts into an Eden of universal coverage. According to the Department of Revenue, nearly 200,000 state taxpayers remained uninsured at the beginning of 2008. And the individual mandate hasn’t made insurance in the Bay State more affordable: Massachusetts has the highest health insurance premiums in the nation.

Far from holding insurance costs down, “reform’’ in Massachusetts seems to have had the opposite effect. “Insurance premiums rose by 7.4 percent in 2007, 8-12 percent in 2008, and are expected to rise 9 percent this year,’’ notes Michael Tanner of the Cato Institute. “By comparison, nationwide insurance costs rose by 6.1 percent in 2007, just 4.7 percent in 2008, and are projected to increase 6.4 percent this year.’’

However tempting it may seem, universal health coverage cannot be achieved by waving a legislative wand and ordering every citizen to buy insurance. Supporters of an individual health-insurance mandate like to compare it to the nearly universal requirement for auto insurance, but far from proving their point, it undermines it. True, auto insurance is mandatory almost everywhere. Yet nearly 15 percent of motorists remain uninsured.

Requiring that drivers be insured, Obama told Stephanopoulos, “is a fair way to make sure that if you hit my car . . . I’m not covering all the costs.’’ Auto insurance is required, however, only if you choose to own a car and drive it on public roads. Under ObamaCare (as with RomneyCare), health insurance would be compulsory no matter what you did or didn’t do.

It is a myth that those who don’t buy health insurance are basically free riders who unload their medical costs onto the backs of more responsible Americans. In truth, most of the uninsured are young, fit, and unlikely to need medical care. Why should they be forced to pay for expensive insurance they don’t need?

The right way to expand coverage is not to scourge the healthy with new taxes, but to win them over with lower premiums. Deregulation is a far better strategy than compulsion. If insurers were free to compete for business across state lines, for example, and if states would repeal the excessive benefit requirements that have driven up the cost of insurance, premiums would shrink and so would the ranks of the uninsured.

Coercive insurance mandates are a prescription for more misery, not less. Massachusetts is learning that lesson the hard way. The rest of America doesn’t have to.


Are We Really all Healthcare Collectivists Now?

“We have to do something about health care.” The scariest word in that sentence is not something. It’s we. The first-person plural form is not merely a convenience, as in “We’re in for a cold winter.” It indicates that decisions about “the healthcare system” should be made collectively, with one decision binding everyone. That’s collectivism.

So why is virtually everyone a collectivist when it comes to health care? I do not exaggerate. Every prominent participant in the current debate over how to “reform” the medical industry approaches the issue in collectivist terms. They have differences at the margin–tax increases versus tax credits, a government-run “public option” versus subsidized nonprofit cooperatives–but there is no disagreement that “we” must have a policy.

But why must we do anything about health care? Why can’t you do what you want, I do what I want, and he and she do what they want? Isn’t that what’s supposed to happen in a free society? Reformers would say that costs are rising too much and some people can’t afford insurance. But that is no answer. It tells us only that possibly ameliorable conditions exist, not that collectivism is a good approach.

When we see problems in other important markets, most of us don’t expect televised presidential town-hall meetings, congressional committees, and omnibus legislation to give us the answer. We individually adjust our behavior in the marketplace and anticipate that entrepreneurs will cater to us. Solutions, with inevitable tradeoffs, are micro, marginal, and tailored to individual needs, not macro, holistic, and procrustean. Out of this arises an orderly marketplace–without a conscious overall plan. No one has found a better way to make masses of people better off.

Why is health care different? Must we collectively reinvent the industry? The social knowledge problem that F. A. Hayek spelled out should make us wary of any collective response.

The reformers’ stock answer is that this is something only we, acting through the “democratic process,” can handle. That’s an assertion. Where’s the proof? What if earlier collectivist decisions gave us rising medical and insurance costs?

In fact they did. Nearly every aspect of medicine and health insurance that the politicians say needs fixing is the result of “our”–that is, politicians’–previous attempts to fix something. Much of the escalation of prices comes from consumer demand freed from normal cost constraints thanks to third-party payers: government-privileged insurance companies, Medicare, and Medicaid. While that intervention boosts demand by eliminating cost consciousness, others constrict supply: occupational licensing, insurance mandates and barriers to entry, patents on drugs and devices, FDA regulations, certificate-of-need requirements, and more.

So let’s hear no more about what we–collectively and coercively–must do about health care. If government would get out of the way, we–individually and cooperatively–will figure out what to do. Collectivism and government planning trample freedom and foster social stupidity. Individualism and free markets respect each person’s dignity and liberty while getting the most out of the “wisdom of crowds” in the marketplace.


Cap and Trade Legislation Would Increase Uninsured By Millions

The U.S. Senate can increase the number of Americans with health insurance by tens of millions -- at zero cost to taxpayers -- by rejecting cap-and-trade legislation passed by the U.S. House, according to a policy analysis just released by The National Center for Public Policy Research.

In June, the U.S. House of Representatives approved the American Clean Energy and Security Act -- commonly referred to as the Waxman-Markey bill after its principal sponsors, Henry Waxman (D-CA) and Edward Markey (D-MA) -- which seeks to reduce U.S. greenhouse gas emissions by more than 80 percent by 2050.

The National Center for Public Policy Research contends the Waxman-Markey bill would increase energy prices, slow the economy and result in higher unemployment. This, in turn, the group says, would increase the number of uninsured.

"For every one percentage point increase in unemployment, 1.1 million Americans lose their health insurance coverage," said David A. Ridenour, Vice President of The National Center for Public Policy Research. "With the Waxman-Markey legislation projected to cost an average of 1.15 million jobs annually between 2012 and 2030, this could translate into tens of millions of Americans losing their health insurance coverage. The best health care reform is doing nothing at all -- at least on cap-and-trade."

Loss of health insurance coverage, however, is only one of the negative health consequences that would result from a Waxman-Markey-style bill, according to Ridenour.

"The stress and loss of self-esteem that accompanies job loss can lead to unhealthy lifestyles, including substance abuse and poor eating habits," said Ridenour. "The unemployed are more likely to be diagnosed for hypertension, heart disease, diabetes and stroke, and because discretionary income drops with the loss of a job, so too do routine screenings that might prevent late-stage diseases."

Ridenour cites a study by Kate Strully of the State University of New York at Albany showing that involuntarily unemployed factory workers are 83 percent more likely to develop a new health problem than those who keep their job.

A full copy of Ridenour's analysis can be found at


How Missouri Cut Junk Lawsuits


There has been a lot of talk in Washington about cutting wasteful health-care spending, but it is troubling that such talk has not created a sense of urgency for national tort reform. It is especially frustrating because states have already shown that curbing junk lawsuits can cut costs, create jobs, and increase the quality of care available to patients. I know this because that is exactly what happened in Missouri when, as governor, I helped to enact comprehensive reforms.

I took office in January 2005 at a time when runaway lawsuits were driving up the cost of doing business in my state and forcing doctors and other business owners to close their doors. The U.S. Chamber of Commerce Institute for Legal Reform keeps a list of states ranked according to their legal environment. At the time, Missouri ranked among the 10 worst. "Venue-shopping," a tactic that involves shifting a case to a friendly court regardless of where the injury occurred, was common. Defendants could be made to pay 100% of a judgment even if they were only 1% responsible for the injury. And caps on damages had been rendered meaningless by state court decisions.

This legal environment raised the cost of health care for everyone and imposed stiff costs on businesses. It also forced doctors to close their doors. For example, the eastern half of Jackson County, one of Missouri's largest, lost its only neurosurgeons in 2003 due to high malpractice insurance costs. Many other parts of the state suffered from a lack of doctors able to deliver babies. One obstetrician who delivered more than 200 babies annually was forced to quit after his annual insurance premiums skyrocketed 82% in just one year. Making matters worse, few new doctors wanted to move to Missouri. One Kansas City area doctor sent letters to more than 400 physicians finishing their residencies and did not receive a single response back.

To counteract these problems we required that cases be heard in the county where the alleged injury occurred, and we changed the law so that defendants could only be forced to pay a full judgment if their fault exceeded 50%. We put a $350,000 cap on noneconomic damages and created rules to prevent baseless cases from getting off of the ground. Previously, personal injury lawyers could file cases if they got a written affidavit from any qualified health-care provider claiming that there was negligence. We tightened that by requiring that the affidavit come from an active professional practicing substantially the same specialty as the defendant.

We also took another common-sense step. Doctors often express empathy to a suffering patient regardless of fault. Saying you are "sorry" for someone's plight is a testament of good character, and should not be used against you in court. But tort lawyers were claiming that such statements were an admission of guilt. We stopped that abuse.

Tort reform works. Missouri's medical malpractice claims are now at a 30-year low. Average payouts are about $50,000 below the 2005 average. Malpractice insurers are also turning a profit for the fifth year in a row—allowing other insurers to compete for business in Missouri. This will drive down costs, which will save government programs money as well as improve the system for patients. It will also leave doctors with more resources to invest in better care. Since 2005, Missouri has moved up to 31st on the Chamber of Commerce Institute for Legal Reform's list.

Because we passed tort reform, cut taxes and controlled state spending, Missouri's economy is now in better shape than it would have been. During the four years I was in office, about 70,000 net new jobs were created in my state.

Texas has seen similar success from its 2003 tort reforms. The number of doctors applying for a license in that state has increased by 57% and doctors' insurance rates have declined by an average of 27%. There are now more doctors in Texas providing care in previously underserved areas.

There is no reason that the success that Missouri, Texas and other states have experienced cannot be replicated nationally. States are demonstrating that tort reform lowers costs, expands access, and creates jobs. The time to get behind national tort reform is now.


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