Saturday, December 12, 2009

Health Reform Deal Greeted Cautiously By Moderate Dems

A deal to unite Senate Democrats behind their health plan seems to be creating its own divisions. Liberals agreed to drop demands for a government-run insurer. In return, the bill would let people ages 55-64 "buy in" to Medicare and let small firms and individuals get private, nonprofit insurance, much like that available under the Federal Employees Health Benefits Program (FEHBP).

Majority Leader Harry Reid, D-Nev., said the deal "has something that we think should satisfy everybody." But the lack of specifics, especially about the Medicare buy-in, is raising concerns.

"Until we see the details about it, it's hard to really react," said Ron Pollack, executive director at Families USA, a liberal health care group. "The Medicare buy-in could be helpful, but whether it is more helpful than people going into the exchange, especially those who are eligible for subsidies, is hard to determine."

One prominent senator said he was worried about the impact on his home state as well as the overall budget impact. "My initial reaction to this was the state I represent," said Senate Budget Committee Chairman Kent Conrad, D-N.D. "An additional cohort on Medicare means Medicare rates of reimbursement, and my state is third or second lowest in Medicare reimbursement. I'm also concerned about Medicare solvency, and that's why I need to see the Congressional Budget Office analysis before making a final decision."

When asked if higher Medicare reimbursement rates for North Dakota would win him over to the plan, he replied: "It would make it more palatable, but I want to make it clear, while my first obligation is my state, I've also got a broader obligation. Even if they fixed rates for my state, if the CBO analysis came back that this would have an adverse effect on the solvency of Medicare, I'd still have to resist it."

Sen. Joe Lieberman, I-Conn., who had strongly opposed a public option, said in a statement that he would reserve judgment until he learns more about the impact on Medicare's solvency.

Robert Zirkelbach, a spokesman for America's Health Insurance Plans, an industry group, said the plan "would add millions of people to a Medicare program that the trustees say will start running a deficit in the near future." According to the Medicare Trustees, the hospital portion of Medicare will begin running a deficit in 2017. Medicare has a present-value unfunded liability of $13 trillion over the next 75 years.


The public option you have when you are not having a public option

Only in the nation's capitol could people pushing Obamacare keep a straight face while claiming that a new health insurance operation to be run by the same government agency that manages the federal bureaucracy is actually a private program. Senate Majority Leader Harry Reid, hoping to mollify the liberal wing of his party, insists that it's still a "public option," but everybody else on the Democratic side seems to think the public option has been replaced by this new "private" option. Thus, Reuters News Agency reported that "Democratic Senate sources said the substitute would create a non-profit plan operated by private insurers but administered by the Office of Personnel Management, which supervises health coverage for federal workers." The OPM runs the Federal Employee Health Benefits Program, but that is only part of its duties in managing the federal government's 2 million-plus career civil service workers.

Call it what they will, Reid and his fellow Obamacrats are still doing what they've been doing for months, seeking 60 Senate votes for a trillion-dollar federal takeover of the nation's health care system. First, it was the banking and automotive industries disappearing into Leviathan's gaping maw; now the health care industry, accounting for one-sixth of the private economy, is about to become a ward of the government, too. If they succeed, Reid and the Obamacrats will turn the day-to-day operation of the world's best health care system over to the same bumbling cast of characters who managed the TARP bailout for pinstriped thieves on Wall Street, the mortgage foreclosure crisis birthed by ACORN's government-backed banking industry blackmail, and the Cash-for-Clunkers debacle. Sleep tight tonight, America, because Barack, Harry and Nancy are taking good care of you.

If the claim that government-run health insurance can be a "private" program is patently absurd, this latest Senate Obamacare deal actually includes something even more bizarre. Millions more Americans are to be made eligible for Medicare, which is supposed to be cut by $500 billion to pay for this Rube Goldberg contraption. Go figure. As it is, Medicare is the federal government's biggest entitlement program and the one closest to bankruptcy. According to the latest Medicare Trustees Report, the program has a $36 trillion unfunded liability that is certain to explode in 2011 when the first of the baby boomers retire and begin drawing benefits. Try as Reid and the Obamacrats might, there is no getting away from this cold, hard fact: The government has for decades promised Medicare benefits it cannot pay for without either raising taxes or cutting benefits promised under other government programs. When private corporations promise benefits they can't deliver, it's called "fraud" and company executives go to jail. When Washington politicians do the same thing, it's called "health care reform."


Senate Compromise Scares Medical Professionals

Senate Democrats on Wednesday largely embraced a compromise that dropped a "public option" from health-care legislation, setting aside their concerns about aspects of the consensus plan in the hopes that the deal hatched by negotiators would serve as a rallying point in their push for the passage of reforms.

Industry groups representing doctors and hospitals attacked one of the alternatives in the deal, designed to take the place of a proposed government-run insurance program, in the hours after Senate leaders announced it Tuesday night. They argued that a plan by liberal Democrats to allow uninsured individuals as young as 55 to buy into Medicare would be financially untenable and would jeopardize access to health-care services for millions of Americans.

But even Democrats who were not thrilled with the buy-in program applauded the deal's central component: replacing the public option with two national private insurance policies under the oversight of the Office of Personnel Management, the agency that administers health benefits for federal employees. "If there's 60 senators who can reach agreement, I'm for it," said Finance Committee Chairman Max Baucus (D-Mont.), a chief sponsor of the bill, who represents the kind of rural state that industry groups said would be harmed by a Medicare buy-in. "Sometimes you've got to do a little bit on the liberal end and a little bit on the moderate end to reach agreement. And that's what's going on."

Earlier Wednesday, President Obama gave the compromise a major boost, praising Senate Democrats for producing "a creative new framework" to provide coverage to uninsured Americans without relying on a public option, an idea that has long divided Democrats and threatened final passage.

"I support this effort, especially since it's aimed at increasing choice and competition and lowering cost," Obama said at a health-care event near the White House, where he was joined by a handful of Senate Democrats. "So I want to thank all of you for sticking with it, for all those late nights, all the long weekends that you guys have put in. With so much at stake, this is well worth all of our efforts."

Senate Majority Leader Harry M. Reid (D-Nev.) announced the compromise Tuesday night after overseeing days of negotiations between moderate and liberal Democrats over the last sticking points preventing all 60 members of his caucus from supporting the legislation.

Reid was expected to include the new insurance program and the expansion of Medicare eligibility in the "manager's amendment" of last-minute changes to the $848 billion bill that he submitted Wednesday night to the Congressional Budget Office. But Democratic aides said the Medicare provision could still be dropped or altered before the measure advances to the floor. That could happen as soon as next week, assuming Reid can answer remaining questions. Democrats hope to keep the legislation on track for final passage before Christmas.

Lawmakers remained wary of the objections of hospital and doctor groups, which have considerable influence on Capitol Hill. The groups believe their members could be the big losers under the proposal to allow people as young as 55 to buy into Medicare, because the program pays providers at much lower rates than private insurers, and because older Americans are the greatest consumers of health-care services.

Hospital representatives said the idea also would violate a deal they reached with the White House this year to give up $155 billion in Medicare payments over the next decade. The concession helped to lower the cost of a health-care package that promised hospitals a pool of at least 30 million newly insured customers.

"Such a policy will further negatively impact hospitals, after we have already agreed to contribute the maximum level of sustainable reductions that community hospitals can reasonably endure," the Federation of American Hospitals said in an e-mail to its members. The American Hospital Association urged the 5,000 facilities and 37,000 individuals in its membership to lobby senators "to reject expansion of Medicare."

American Medical Association President J. James Rohack warned Wednesday on his blog that expanding Medicare would jeopardize access to physician services not only for near-retirees, but for millions of people older than 65 who already are covered by the federal plan.

A Medicare buy-in program would "adversely impact American society by putting people into a government program that is going broke with the combination of Baby Boomers entering in 2012 as they turn 65," Rohack wrote. "We would add millions of more patients to a program where it is difficult for a new enrollee to get an appointment with a physician."

Republicans and their business allies strongly criticized the Senate bill, portraying it as a threat to jobs. The National Federation of Independent Business, a small-business association, released a statement opposing the legislation as an inadequate response to rising costs. Sen. Mike Enzi (R-Wyo.), who helped to negotiate an earlier version of the Senate bill, called the revised measure "a job landslide" that would bury employers "under an avalanche of new regulations."

Although Democratic senators expressed confidence that the bill will pass, they professed to know few details about the public-option deal, kept under wraps by Reid while the CBO analyzes the cost. "I don't know what the deal is," Sen. Bill Nelson (Fla.) said as he emerged Wednesday night from a Democratic caucus meeting. "But I think at the end of the day that we'll have 60 votes."

One question as of late Wednesday was whether a "trigger" mechanism would be included in the Office of Personnel Management program, creating a public option if the private plans were unable to provide affordable coverage. That is a crucial distinction for Sen. Joseph I. Lieberman (Conn.), an independent member of the Democratic caucus, who has ruled out supporting a public option in any form.

Lieberman said he has heard different variations of the OPM idea and remains unclear on the status of the trigger. But he warned: "If there's a trigger, I can't support it."

Despite lingering concerns, key uncommitted Democrats -- including Lieberman -- appeared to be warming to the legislation. Speaking at a news conference in which she announced a package of small-business amendments, Sen. Mary Landrieu (La.) declined to endorse the bill but spoke favorably of the public-option alternatives, describing both the OPM plans and the Medicare buy-in program as potentially beneficial.

Sen. Blanche Lincoln (Ark.) said she liked the OPM idea but sounded less certain about expanding Medicare. "You might find that other products offered in the exchange might be less costly," she said. "Medicare is a pretty good plan. So it might be expensive."


Kill the insurance mandate

If Congress manages to pass a health-insurance bill in the next few weeks, it will undoubtedly require every person to have medical coverage or pay a fine. If someone’s employer doesn’t offer a policy, he will be obligated to buy one for himself no matter how expensive. (Subsidies will be available to lower- and middle-income people.)

Coverage is not likely to be cheap because the bill that President Obama signs will also undoubtedly mandate that “basic” coverage contain far more than coverage for bankruptcy-threatening catastrophic illness. It will also include a large variety of elective and preventive services that are actually inappropriate for insurance, since they are discretionary. The day of high-deductible, low-cost insurance will be gone. Congress and the president will decree that you must have Cadillac coverage even if a Ford suits your needs and your budget better.

Everyone who believes he lives in a free country should be asking himself, By what authority do the Congress and the president force me to buy insurance?

That this question is hardly discussed is an ominous sign. The public discussion about so-called health-care reform has focused almost entirely on whether the government should compete with private insurers through a “public option.” Abortion financing and the impact on the budget deficit have also gotten their share of attention.

But nearly everyone takes for granted the government’s authority to force us to buy medical insurance. How does that square with the traditional American belief that government should leave you alone unless you commit a crime against person or property? Where does compulsory health insurance fit into that principle?

I imagine that most people think that the government doesn’t even need specific grounds to exert that power. If a majority of Congress and the president in their wisdom think we need insurance, then they can compel us to buy it — or so the implicit reasoning seems to go.

But that shouldn’t be good enough for a country whose founding document speaks of inalienable rights to life, liberty, and the pursuit of happiness, not to mention the right of revolution.

Even the Congressional Budget Office calls the mandate “unprecedented,” adding, “The government has never required people to buy any good or service as a condition of lawful residence in the United States.”

So why aren’t we all asking, “By what authority?” Senate Majority Leader Harry Reid’s 2,074-page bill tries to answer that question. It states that health insurance is interstate commerce, which Congress has the power to regulate under the Constitution’s Commerce Clause. The first question that should arise is that even if you grant that government may regulate interstate commerce, what does forcing consumers to buy insurance have to do with regulation? The bill states that the mandate is necessary because the insurance market won’t work effectively without it. And why not? Because the same bill also compels insurance companies to cover everyone essentially at the same price regardless of health status. If the sick and the healthy must be charged the same premium and healthy people choose to opt out of insurance, then premiums to the remaining sick policyholders will be higher than otherwise. Therefore, the healthy must be forbidden to opt out. Hence the mandate.

Notice the circularity: The mandate is necessary to protect the insurance market from the high premiums caused by the bill containing the mandate. And by what authority are insurers compelled to cover everyone at the same price? The Commerce Clause, of course. However you construe that clause, it is twisted logic for the government to burden interstate commerce through price controls, then impose a mandate on consumers to fix the problems the burden created. (By the way, if health insurance is interstate commerce, why does the federal government stop insurers from selling across state lines?)

Government intervention begets more intervention. When politicians forbid insurers to charge customers according to risk, that is not real insurance. It’s welfare, requiring forced participation by those who would opt out if free to do so. Congress and Obama are about to violate the rights of Americans in an attempt to avoid the mess they know they are about to make. But they forgot something: Free societies don’t have mandates.


Does Regulation Lower Costs? A Personal Experience

For many years I have struggled to breathe through my nose, and decided to do something about it, given that the condition helps cause sleep apnea. The experience of having this condition “fixed” has taught me both about the wonders of modern medical care as well as the idiocy of the medical/government bureaucracy. Unfortunately, the latter slowly is destroying the former.

I won’t describe the procedure, except to say that the local anesthetic was effective, and I have a high pain tolerance. Furthermore, I was surprised that this invasive operation resulted in quick results, making me the beneficiary of something that was medically impossible not long ago.

The procedure itself was good, but the administration of the operation was lacking because it was much more costly than it needed to be. The activity took place in the same-day surgery center at our community’s brand-new hospital, and while the center was impressive, it was not medically necessary for me to be there.

The doctor and I often discuss the economics of medicine and the government policies that are driving the system into ruin, and our encounter that week provided more opportunity for conversation. After he finished and I was leaving, he dropped a small bombshell: He told me that he just as easily and efficiently could have performed this small operation in his office for $250, much less than what my insurance company will be paying for the same procedure.

Obviously, someone will wonder why an insurance company would demand practices that raise its costs. Insurance companies, after all, are private firms that allegedly are trying to make a profit, and why they would impose unnecessary costs on themselves should be a mystery.

It is not hard to solve this paradox, however. The insurance process we have today would not exist in a free market for medical care. Just because a firm providing a service is a profit-seeking corporation does not mean it is engaged in free enterprise.

First and most important, the present system came about because of a quirk in tax policy during World War II. Because of government wage and price controls, companies could not compete for workers by offering better wages, but they could offer benefits such as “health insurance,” a relatively new product that was not taxed as income. Thus health insurance became employer-based, a situation that became institutionalized in the postwar years.

Second, while early insurance tended to provide protection against catastrophic events, the entire apparatus took another turn after Congress enacted Medicare in 1965. This tax-funded plan paid a large percentage of medical costs for senior citizens, and it poured a lot of new money into the medical system. Although doctors at first were leery of this program, they found soon that if they billed it, the government would pay.

At the same time, American labor unions began to demand greater pension and medical benefits, and U.S. companies gave in, creating a huge time bomb that fully exploded when General Motors and Chrysler went bankrupt earlier this year (only to be bailed out by taxpayers who now have alleged ownership of these white elephants). At the time of their bankruptcies, the largest single cost these companies faced was the medical bills of union employees.

What does that have to do with the unnecessary costs for my own operation? Over the years, as the federal and state governments have increased their intrusions into health care, driving up costs, health insurers have become little more than regulated utilities that operate just like other risk-averse bureaucracies, and regulated bureaucracies tend to demand medical procedures that supposedly are safe. Hang the costs.

I must admit that I was tempted to pay the $250 and get the job done in the doctor’s office, as a matter of principle. Unfortunately, after having paid monthly premiums well in excess of that amount, the incentive was for me to get the higher-cost procedure, since I was not paying directly for it. Welcome to “cost containment,” government style.


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