Friday, January 29, 2010

British bureaucracy and the baby

By Meegan Cornforth

Why do British politicians think that their National Health System is so wonderful? Braving the snow and icy conditions one recent afternoon on Christmas holidays in London, I visited a doctor’s surgery near my sister’s home to make an appointment for her newborn baby. Rather than being a simple endeavour of securing the next available timeslot, it was an annoyingly bureaucratic experience.

It began with a stern lecture from the receptionist for not following the rules. The NHS requires patients to be formally registered with the practice before the doctor sees them. Appointments must be made in the morning for the same day only. In addition, you cannot make phone appointments but must visit the surgery in person. This particular rule appears to have been established by the practice itself to sidestep confusion with the Appointments Line – an NHS telephone booking system so complicated that it requires an 18-page user guide!

The complexity of NHS regulations means that everyone is confused about procedure – patients and practices alike. And although many British surgeries are over-burdened, the NHS prevents patients from visiting GPs outside their designated catchment zone. In effect, the NHS would rather keep you in a crowded waiting room than let you see an available doctor.

In the world of the NHS, the patient is treated like an errant child whose punishment is to wade through a quagmire of bureaucracy to receive treatment. Fortunately in my case, the receptionist decided that given my colonial ignorance and argumentativeness, it was easier for her to break the rules ‘just this once, mind’ and give my little niece an appointment that very evening. A cherished victory of common sense over bureaucracy.

In an increasingly authoritarian Britain, the ill-functioning NHS is just one example of the difficulties imposed on the lives of citizens by too much regulation and government involvement.

At the forthcoming UK elections, Conservative Party leader David Cameron looks set to oust embattled Prime Minister Gordon Brown from 10 Downing Street. But don’t hold your breath for a Conservative victory to loosen the state’s bureaucratic grip over the country. Although Cameron has occasionally mused on leading Britain into a new ‘post-bureaucratic age,’ this supposed big government sceptic has just plastered Britain with campaign posters promising: ‘I’ll cut the deficit, not the NHS.’

Any British child could tell him that there is plenty of NHS red tape waiting to be cut.

The above is a press release from the Centre for Independent Studies, dated January 29. Enquiries to Snail mail: PO Box 92, St Leonards, NSW, Australia 1590.

Last week, the voters sent a message to Washington. Last night, Obama made clear he will not listen

The key passage in the State of the Union Address last night was this:
So, no, I will not give up on trying to change the tone of our politics. I know it's an election year. And after last week, it's clear that campaign fever has come even earlier than usual. But we still need to govern.

To Democrats, I would remind you that we still have the largest majority in decades, and the people expect us to solve problems, not run for the hills. And if the Republican leadership is going to insist that 60 votes in the Senate are required to do any business at all in this town--a supermajority--then the responsibility to govern is now yours as well. Just saying no to everything may be good short-term politics, but it's not leadership. We were sent here to serve our citizens, not our ambitions. So let's show the American people that we can do it together.

The nub of it was the statement explaining away the election result by analogy to a disease: "After last week, it's clear that campaign fever has come even earlier than usual." If the voters of Massachusetts sent a message, President Obama refuses to listen.

In a moment of faux humility, he said of ObamaCare's failure: "I take my share of the blame for not explaining it more clearly to the American people." He will not listen to us; he expects us to listen to him as he explains this monstrosity again, "more clearly" this time, he promises.

On his personal blog, Robert George of the New York Post offers an astute and somewhat charitable analysis:
I didn't have time to pour [pore?] through all SOTUs given, but I can't remember when a POTUS explicitly reminded his side of the size of its majority and the other side the price that comes with asserting that 60 votes are necessary for passage of major bills.

He was, at that moment warning that Democrats risked being labeled cowards and Republicans obstructionists if his agenda wasn't pushed through. Was that serious ass-covering ("If this all falls apart, it's your fault, not mine!")? Maybe, but it's not a completely unfair reading of the current political reality. . . .

Barack Obama is daring Democrats to walk away from him on health care--now that each chamber has passed a bill. A party legislative dream of decades is tantalizingly close. November may prove that Massachusetts was the warning sign that Republicans and many independents believe it to be. But Obama has put down the gauntlet to declare that he deserves to have half his first term play out before the post-mortems of his presidency are carved in stone--regardless of how unpopular health care is at this moment.

In short, Obama is faced with the perpetual tug in politics--does an elected leader stick to the inner compass or does he follow what the polls (and one special election) tell him?

Obama seems willing to bet his congressional majority on the former. That's why this was a give-no-inch political speech.

This seems unlikely to work as an electoral strategy--which is to say that many Democrats seem likely to lose their seats if they follow Obama's urging and support widely hated initiatives like ObamaCare. That would seem to be the clear political message of Massachusetts, and surely enough Democrats received it to make Obama's approach unlikely to succeed as a legislative strategy.

Putting together the slim House majority and Senate supermajority for ObamaCare was an arduous enough task for Harry Pelosi and Nancy Reid. The results of their work were thrown into disarray by the election in Massachusetts, and reassembling the majorities (or even just the House majority) will be even harder than assembling them in the first place. Rather than study the "legal implications of Einstein's theory of relativity," Obama should have examined the political implications of the second law of thermodynamics.

Obama did not deliver what many observers expected: a show of humility, and a scaling back of his vast ideological ambitions, à la Bill Clinton after the 1994 elections. George argues that this expectation was unreasonable:
Huh!!! Really?

Losing Ted Kennedy's Senate seat is the political equivalent of losing both chambers of Congress--including the Democratic House for the first time in 40 years! Conservatives really want to make that comparison? Obama appears to be making the bet that a president gets two years before the inevitable midterm correction delivered by the voters. To toss aside all plans now would be the mark of someone with absolutely NO backbone.

We look at it differently. The special election in Massachusetts was a gift for Obama and the Democrats--an early warning that the country strongly rejects their priorities. By plowing ahead with those priorities anyway, Obama is squandering an opportunity to bring his ambitions into line with the views of the electorate--a chance President Clinton did not have until his party had already lost its majority.

Our surmise is that Obama's approach reflects a defect of character more than a carefully wrought strategy. We may be proved wrong about this--the real test will come in 2011 and 2012, assuming the Republicans do make big gains this November--but our preliminary reading is that the president combines the worst traits of his two predecessors. He is ideologically overambitious, to an even greater extent than Clinton was in his first term. And he is as arrogant and inflexible as George W. Bush's harshest critics accused him of being.


Obama: I know better than you

The American people simply do not matter to Barack Obama. He said so himself last night as he attempted his first State of the Union Address, declaring, "[W]hen I ran for president, I promised I wouldn't just do what was popular -- I would do what was necessary." This was a nice way of saying he had heard the overwhelming opposition to his Big Government agenda — and he has decided to plow ahead anyway.

"I will not walk away" from the government health care takeover, he said, and "neither should the people in this chamber." This, in spite of devastating resistance to the scheme that would ration care, raise premiums, drive people off of their insurance, cut benefits, and bankrupt the treasury with over $1.5 trillion in costs over ten years once fully implemented.

All told, 58 percent oppose the plan in Scott Rasmussen's last weekly poll on the subject. His tracking has been way ahead of the curve on opposition to the health care takeover. While apologists were claiming majority support for plans like the "public option," Rasmussen has polled clear opposition for most of 2009.

Barack Obama doesn't care. With only an occasional glance at the glaring reality that the American people really are not in favor of his plans, Obama's State of the Union was mostly a "stay the course" campaign rally, coupled with blind assertions as to the correctness of his position. Not to mention his bull-headed insistence that the Democrats get it done and "not run for the hills."

For example, he came close to prevaricating (to put it kindly) about losses from the Troubled Asset Relief Program: "[W]e have recovered most of the money we spent on the banks. To recover the rest, I have proposed a fee on the biggest banks." Only, the biggest banks are the ones who have paid TARP back in full, with interest.

Most of the $120 billion in losses have arisen under loans to AIG (not a bank), GM (not a bank), and Chrysler (not a bank). It was Obama's own Treasury secretary, Timothy Geithner who testified to Congress, "There is a significant likelihood that we will not be repaid for the full value of our investments in AIG, GM and Chrysler."

But not to worry, Obama says, "I am not interested in punishing banks." Only, he is. He asserted that "Our most urgent task upon taking office was to shore up the same banks that helped cause this crisis." By that, he means, take over, regulate, and monopolize. You know, punish.

Despite all of his bald distortions, Barack Obama's greatest transgression in this speech was more a sin of omission than commission in his historical account of what actually happened. In fact, the only entities Obama is not interested in targeting are those most directly responsible for the mess.

Obama had positively nothing to say about Fannie Mae, Freddie Mac, and the Federal Reserve (government-created entities all), whose errant policies of loose lending and easy money coupled together to incentivize borrowing on an unprecedented level, inflate the housing bubble, sell worthless securities worldwide, and bring the economy to brink of ruin. Not one word.

Even as George Bush was attempting to justify the unprecedented bailouts his Administration ushered in, he at least acknowledged the role played by, for example, too-low interest rates. Instead, Obama presented a bizarre, disjointed address that was almost completely disconnected from reality, save for the touch of icy indifference to the express will of the American people not to proceed on this course.

But then, by now, that is what the American people have come to expect from the imperial, impervious president.


Health reform: Where to go from here

The Scott Brown political earthquake has had more far-reaching implications than anyone anticipated. With the public admission of Nancy Pelosi that she does not have the votes in the House to pass the Senate health bill, President Obama's government takeover of health care appears to have stalled out, at least for now.

What this means is that Republicans and conservatives now have the first real opportunity to be heard on alternative health reform ideas. To prevent the return of socialized medicine to center stage, we should move aggressively with reforms that will solve what the public is really concerned about.

Cover the Uninsured

The well-kept secret of health policy over the past year is that the uninsured can be covered for little additional net cost, without the government takeover of health care, rationing, new health care bureaucracies, or any of the other central components of Obamacare.

No one wants to see anyone suffer or worse because they can't get essential health care. The lack of a clear safety net for the uninsured is what gives Democrats the political lift to keep coming back for socialized medicine. Reform now should focus on the modest changes necessary to establish a true safety net that will ensure that no one will be denied essential health care. Only that will permanently protect the health care of the American people from government takeover and control.

Real health reform should begin with Medicaid, which already spends over $400 billion a year providing substandard health care coverage for 50 million poor Americans. Congress should transform Medicaid to provide assistance to purchase private health insurance for all those who otherwise could not afford coverage, ideally with health insurance vouchers. This one step would enormously benefit the poor already on Medicaid. The program today pays doctors and hospitals only 60% of costs for their health care services for the poor. As a result, close to half of all doctors and hospitals won't take Medicaid patients. This is already a form of rationing, as Medicaid patients find obtaining health care increasingly difficult, and studies show they suffer worse health outcomes as a result. Health insurance vouchers would free the poor from this Medicaid ghetto, enabling them to obtain the same health care as the middle class, because they would be able to buy the same health insurance in the market.

Ideally this would be done by reforming Medicaid financing to provide the federal assistance to the states for the program through finite block grants, which do not vary by matching increased state Medicaid spending as under the current system. With finite block grants, states that innovate to reduce costs can keep the savings. States that operate programs with continued runaway costs would pay those additional costs themselves. Such reforms worked spectacularly to stop the runaway costs of the old AFDC program when Congress adopted welfare reform in 1996.

Give states the incentive to embrace such reform with a block grant formula that would provide states with increased funding sufficient to provide assistance to all those who truly cannot afford health insurance, counting continued state Medicaid funding, along with broad flexibility to redesign their Medicaid programs. The voters of each state can then decide how much assistance for the purchase of health insurance to provide each family at different income levels. This would rightly vary with the different income and cost levels of each state.

This would not cost much because only about 12 million Americans arguably cannot afford health insurance without some public assistance. Out of the 47 million uninsured we keep hearing about, 9.7 million are already eligible for current government programs like Medicaid or SCHIP but haven't signed up. Another 6 million are eligible for employer sponsored insurance but have not signed up for that either. Another 9 million are in families earning more than $75,000 per year. Another 10.2 million are immigrants, legal or illegal, and not U.S. citizens.

Just give the assistance necessary, counting what they can reasonably pay based on their income, to that 12 million to buy private health insurance. That is the key to avoiding a multitrillion-dollar new entitlement involving government rationing, which would trash the best health care in the world the American people now enjoy. With broader welfare reforms involving positive incentives, we could end up with less total government spending than today.

Completing the Safety Net

But a second step is necessary as well to ensure a complete safety net. Federal funding should also be provided to help each state set up an uninsurable risk pool. Those uninsured who become too sick to purchase health insurance in the market for the first time, perhaps because they have contracted cancer or heart disease, for example, would be assured of guaranteed coverage through the risk pool. They would be charged a premium for this coverage based on their ability to pay, ensuring that they will not be asked to pay more than they could afford. Federal and state funding would cover remaining costs.

Such risk pools already exist in over 30 states, and for the most part they work well at relatively little cost to the taxpayers because few people actually become truly uninsurable. This works far better than forcing insurers to cover everyone regardless of pre-existing conditions, or regulation such as guaranteed issue (forcing insurers to cover everyone who applies regardless of health condition) or community rating (forcing insurers to charge the same or nearly the same to all regardless of health condition). Such regulation has been proven beyond dispute to cause health insurance premiums to soar. That is because it is like requiring insurers to provide fire insurance for houses that are already on fire. With the above reforms, those cost increases are completely avoided, while ensuring that everyone has someplace to go to get essential coverage and care.

The law already provides that insurers cannot cut off already existing policyholders, or impose discriminatory rate increases, because they become sick while covered. That would be like allowing fire insurers to cut off coverage for houses once they catch on fire. If this law needs to be modernized, it should be.

With these reforms, those who have insurance can keep it, those who can't afford it are given help to buy it, and those who nevertheless remain uninsured and then become too sick to buy it have a back up safety net in the risk pools. Notice that this completely solves the problem of the uninsured without any individual or employer mandate, which are unnecessary gateways to enormous trouble. Once the government adopts such mandates, it is inexorably led down the path to socialized medicine.

Controlling Costs

A few, simple, additional reforms would help greatly to reduce health costs as well. Insurers should be allowed to sell health policies nationwide across state lines, subject to the regulation of their home states. This would reduce costs through increased competition, as well as greatly expand consumer choice.

Medical malpractice reform would also reduce costs. Non-economic damages, such as compensation for pain and suffering, should be sharply limited. Punitive damages should apply only in criminal proceedings, not in civil trials. Traditional tort standards for medical liability should be strictly enforced. Doctors and hospitals should be responsible only for damages for which they were the proximate cause.

Health Savings Accounts (HSAs) involve health insurance with high deductibles in the range of $2,000 to $6,000 per year, which reduces the cost of such insurance by 25% to 40%. These cost savings are kept in the HSA to pay health expenses below the deductible, growing beyond the deductible amount in a year or so. This gives patients incentives to control costs, as they keep unspent funds in their accounts for future uses, such as health care, retirement income, or others. With this new patient interest in controlling costs, which they don't have with traditional health insurance that pays for almost everything, doctors and hospitals would increasingly compete to control costs in serving patients.

The American Academy of Actuaries released a report last year on experience with consumer driven health care plans, such as HSAs or the quite similar Health Reimbursement Arrangements (HRAs). It showed that these are the only plans that are controlling and even reducing health care costs, and that patients with such coverage are using more chronic and preventive care. That's why employers and health insurers are increasingly turning to these products.

Greg Scandlen provides more detail in a new study from the Heartland Institute, "Ten Ways Consumer-Driven Health Care Is a Proven Success." He reports that experience with HSAs and HRAs shows:

Once people have control of their own money and are able to make their own choices, they suddenly become very interested in seeking out information about costs and quality. They are more likely to listen to their doctor and look for ways to lower their own costs. They are more likely to change their lifestyles because it is their money on the line, not an insurance company's.

He adds that those covered with these plans choose lower cost health options, sharply reduce visits to hospital emergency rooms, and are more likely to participate in wellness programs and to use preventative services.

Scandlen further reports the powerful effect of the incentives in such plans in slashing the growth of costs, saying:

The Mercer Company found that the annual rate of increase for consumer-driven health plans was about half that for PPOs and HMOs. Wellpoint looked at the experience of 8,000 of its group accounts in 2008, and found that PPO and HMO rates rose between 7 percent and 10 percent from the previous year while rates for its consumer-driven plans actually dropped from 2007 to 2008….[S]imilar programs offered by the Postal Workers Union and the Government Employees Health Association had no increase in premiums for four years running.

Finally, Scandlen explains that these plans provide patients with more power and control over their own health care, saying:

Traditional health insurance means the insurance company picks and chooses what providers it will recognize. These providers may be very good for the insurance company, by accepting lower fees, but not so good for the patient. With a consumer-driven plan, and especially with an HSA, patients may go to any health provider they choose so long as the provider is duly licensed and providing a service recognized as a health care expense by the IRS.

Federal and state governments should consequently promote such HSAs as much as possible. HSA options should be allowed for the above Medicaid vouchers. Seniors should be allowed an HSA option in Medicare Advantage. And consumers should be allowed to contribute at least as much to their HSA savings account each year as the deductible on their health insurance.

The Medicaid vouchers discussed above would also reduce the cost of health insurance by transferring Medicaid patients to the private insurance market, ending the cost-shifting to private insurance that currently results from the steep underpayment of doctors and hospitals under Medicaid. In other words, you will see your health insurance premiums go down under such reform because part of what you are paying today is being used to cover the services provided to Medicaid patients, which the government is not paying for despite its promises.

No Rationing

Republicans should move quickly to join together behind this common sense reform package, and communicate it to the public. They should aggressively seek to join with moderate Democrats who want to solve problems rather than promote government power. Conservative and grassroots activists should support such Republicans and Democrats in truly bipartisan collaboration, and help to communicate the message of real, constructive reform.

But Republicans and these new Democrat reformers must stay away from any reform component of any kind providing for health care rationing. These include fixed health care budgets, accountable care organizations, pay for performance, comparative effectiveness dictates, or "cost effectiveness" regulations, among others. This was the main source of grassroots revolt over health reform, and any new reform proposals will be closely monitored by grassroots watchdogs to raise a new angry revolt if they continue to be included. Republicans in particular are vulnerable to third party challengers if they cross the grassroots over this.

Instead, government policy should seek to maximize incentives for investment to maintain the most advanced, cutting edge, high-tech health care system in the world. Americans rightly want access to the latest possible miracle cure drugs and medical technology. Policymakers should tend carefully to maximizing incentives for health care innovation and breakthroughs, taking maximum advantage of rapidly advancing modern medical science. This is a central component of the high standard of living Americans expect, and demand.


California Senate okays single-payer healthcare

The California Senate approved creating a government-run health care system for the nation's most populous state on Thursday, ignoring a veto threat from Gov. Arnold Schwarzenegger. Supporters said it is time for state legislatures to take up the debate as the Obama Administration's national health care proposal falters in Congress. "If it's not to be done at the national level, let us take the lead," said state Sen. Christine Kehoe, D-San Diego.

The move in California comes after Massachusetts voters changed the calculus in Congress by electing a Republican to the Senate who opposes the pending plan.

Democrats are the majority in both houses of the California Legislature. The 40-member state Senate passed the single-payer plan on a 22-14 vote, sending it to the Assembly. One Democrat voted against the measure.

Schwarzenegger promised to veto the proposal, as he has two similar plans that previously reached his desk. Spokeswoman Rachel Arrezola cited the state's massive budget cuts and looming $20 billion deficit in arguing the state cannot afford to shift to a single-payer health care system. "Any elected official who thinks it's a good idea to strap the state with tens of billions of dollars from a government-run health care system is clearly not in touch with what voters need and deserve," Arrezola said.

The proposal by Sen. Mark Leno, D-San Francisco, authorizes $1 million to establish a commission that would decide how to pay for the system. The funding plan would ultimately have to be approved by voters. Leno argued the state-run plan would replace the $200 billion Californians already pay for their health care while eliminating insurance companies' share. He previously said the system could use existing state and federal money and a payroll tax, coupled with increased efficiencies from a government-run system. "We are spending $200 billion currently," Leno said. "It is the same $200 billion used in a more efficient, cost-effective fashion."

Republicans derided the timing of the vote, saying Democrats are ignoring the lesson in Massachusetts at their political peril. "This plan is to the left and radical of what couldn't get out of Washington," said Sen. George Runner, R-Lancaster.

Senate President Pro Tem Darrell Steinberg said Republicans refused to support even a $14.7 billion health care reform bill that Schwarzenegger, a Republican, negotiated with Democratic leaders two years ago. "Not a single Republican vote — so what are you for?" asked Steinberg, a Democrat from Sacramento who usually strikes a conciliatory bipartisan tone. "The demagoguery needs to be answered and addressed."

Schwarzenegger's proposal actually was undone by Democrat Don Perata, Steinberg's predecessor in the Senate, when he ordered a financial review that found the plan would be billions of dollars out of balance within a few years.


Australian public health spending on course to disaster

KEVIN Rudd has declared 2010 a year of "major health reform", warning that health spending alone will outstrip state tax revenues within two decades. In the latest in a series of speeches in the lead-up to Australia Day, the Prime Minister yesterday warned that Australia faced the choice of cutting pensions, health services and aged care; running massive deficits; or, his preferred option, boosting productivity as the population aged to help lift tax revenues.

Mr Rudd told a reception in Sydney that the states' health spending was already growing at 11 per cent a year compared with revenue growth of 3 to 4 per cent a year. "Rapidly rising health costs create a real risk (that), absent major policy change, state governments will be overwhelmed by their rising health-spending obligations," he warned. "If current spending and revenue trends continue, Treasury projects that the total health spending of all states will exceed 100 per cent of their tax revenues, excluding the GST, by around 2045-46, and possibly earlier in some states. That is why 2010 must be and will be a year of major health reform."

The big-ticket item remains a new carve-up of commonwealth and state responsibilities to fund and run the nation's public hospitals, with pressure on the federal government to act at next month's Council of Australian Governments meeting. The Rudd government promised during the last election campaign to take over hospitals if the states failed to lift their game by this year. The Prime Minister must now decide whether to embrace a single-funder model for hospitals, with the commonwealth to fund health facilities, but the states to run them.

Mr Rudd said growing health-spending pressures would account for two-thirds of the total projected increase in government spending over the next 40 years. "Forty years ago, Australian government spending on health equated to 1.2 per cent of gross domestic product," Mr Rudd said. "In 2010, Australian government health spending equates to 4 per cent of GDP. And the Intergenerational Report projects that it will rise to 7.1 per cent in 2050. "In dollar terms, that's an increase of over $200 billion by 2050 and equates to an increase in average Australian government health spending per person in real terms from $2290 today to $7210 in 2050."

Australian Medical Association president Andrew Pesce said a single funder would help stop some of the blame game between the states and the commonwealth. "When things go wrong, the states blame the commonwealth," Dr Pesce said. "If there's a single funder, at least you know who is responsible for the money. The commonwealth would be the insurer or purchaser of healthcare and the states would run hospitals."

Mr Rudd surprised and angered health groups by failing to deliver a new agenda on health reform at last month's COAG meeting in Brisbane, but the issue is expected to take centrestage when premiers hold their next meeting, next month. Beyond the central issue of who funds and runs public hospitals, other items to be discussed include primary care and who, other than doctors, should have access to Medicare payments -- such as nurses. There is also a push by aged- care providers again to introduce some form of high-care nursing home bonds and reforms to help fund new infrastructure needs as the population ages.

Health groups have recently complained their patience is wearing thin as the government fails to act on promised reform. But senior Rudd government sources argue the Prime Minister was deliberately taking his time to get the policy right.

In the short term, the rising costs will make for another tough budget for Health Minister Nicola Roxon, who must deliver new spending cuts after targeting private health insurance rebates, IVF and cataract surgery in the last budget.


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