More Dreck From WHOHR

I received some more dreck from the Director of the The White House Office of Health Reform Nancy Ann DeParle today, and it's worth another sendup so here goes:

Good afternoon,

Welcome back, Ms. DeParle. I hope you brought something better than cheap slogans this time.

$1,115 -- that's the average monthly premium for employer-sponsored family coverage in 2009. Annually, that amounts to $13,375, or roughly the yearly income of someone working a minimum wage job.(1)

Numbers! Oh, goody. Now there's something. Let me see if I've got some numbers here I can throw back at you . . .

OK here's one: $3,260.74 Guess what that is? It's the average monthly premium for a state-mandated family health insurance policy issued in Albany County, New York.(1-1) Did you notice that it's about three times the national average? I wonder why that is? Well for one, this is a "guaranteed issue" policy - - that means the insurers who offer it can't "ration care based on who's sick and who's healthy" (which are the words you used describe the process of medical underwriting in the letter you sent me last week) - - just like the kind of policy your health insurance reform aims to achieve.

And something else - - this policy's "guaranteed renewable," which means that the insurer can't cancel the policy if the individual turns out to be a 'bad risk'. You're aiming for that, too. We've had these kinds of policies available in New York for the better part of 15 years. And there are lots of mandated benefits loaded in to the policy. And so it costs three times what an average person pays in other parts of the world.

So take a good look at that number ($3,260.74) because it's a number in your future: guaranteed issue and guaranteed renewability are both on your agenda, and they push up premiums for everyone who buys the policy. Are you going to mention that later on, or . . . ?

Oh I should mention that that number I gave you is the low figure, for an "HMO" option that requires use of a limited network of providers. If you want freedom to see providers outside of the network you can get that too, but your premium goes up to an average of $3,989.45 a month. Do you know what kind of car you could drive for 4 Gs a month Ms. DeParle? Yes, I bet you do.

It gets worse: a recent survey found that if we do nothing, over the next ten years, out-of-pocket expenses for Americans with health insurance could increase 35 percent in every state in the country.(2)

Geez, 35% is a big number and for the moment I'm going to take it at face value - - let's see what I've got to come back with . . .

Got it: 4% That's the average annual inflation rate for medical care (not insurance) over the previous ten years, according to January 2010 Bureau of Labor Statistics data.(2-2) If you don't believe me check my footnote.

Now what's 4% x 10 years . . . let's leave off the "fuzzy math" of compounding and just say 40%, shall we? It works out better for you anyway.

So if we do nothing, the cost of medical care paid out-of-pocket is going to keep on going up at the same speed it's been going up for the last ten years. Shocking!

But tell me, since your reform plan deals with health *insurance* reform, not health *care* reform, how exactly is it going to be any different if reform passes?

Before you answer that, let's actually take a look at your source. Page 8 points out that a 35% increase in out-of-pocket costs is actually a WORST CASE SCENARIO. You're not scare-mongering, are you Ms. DeParle?

Let's dig a little deeper. Page 8 also says this: "Individual and family spending on out-of-pocket premiums and medical care increases by the largest percentage in Nevada and Arizona, driven by population growth. It increases by the least in the District of Columbia due to its projected population decline." Does the President's health reform plan intend to bend the out-of-pocket cost curve by prohibiting population growth in Nevada and Arizona? That would be a very interesting kind of reform indeed.

Page 8 also says: "The next smallest increase in individual and family spending is in Massachusetts - - in this case because many who lose private coverage obtain public coverage, and because the baseline level of individual spending is relatively high, given their high private coverage rates under state health insurance reform." So what that means is that in states that have already enacted health reform the cost of doing nothing is . . . not so bad as it might be otherwise.

And page 9 of your source says this: "We recognize that health reform will be costly. If enacted, government expenditures will increase by more than shown here [in this report] because of increases in Medicaid enrollment and subsidies to low-income people."

So I'll translate yet again: if health reform is enacted, in is anticipated that more people will lose their private coverage, and end up in public plans.

And now since you used a worst-case scenario from this report, I'll borrow a worst-case scenario from it as well. It's on page 8 also: "In the worst case, all states would see their Medicaid/CHIP costs rise by more than 75% from 2009 to 2019. Half the states would face cost increases of more than 100 percent."

These are your source's words, Ms. DeParle, not mine: if health reform is enacted, government expenditures will increase by more than 75% over the next ten years, and in half the states will more than double.

Here's the last number I'll throw at you before we get back to your letter: $44,339,402,218. Forty-four billion dollars that New York spent on Medicaid in state fiscal year 2007. What will that number look like in 2019? At least $77 billion, possible more than $88 billion. And surely you know New York is having a difficult time writing checks these days, even without the additional burden of reform. Did you also know states are trying to *cut* Medicaid expenses, not increase them? If you think I'm fooling, you can read about it here.

In an effort to put the past year's debate over health insurance reform into perspective, we're launching "Health Reform by the Numbers," an online campaign using key figures, like $1,115, to raise awareness about why we can't wait any longer for reform. We'll be sending out a new number every day.

I hope you include some of my numbers too. But I'm pretty sure you won't. While we're paused, let's talk about another number. You suggest that a 35% increase in out-of-pocket expenses is intolerable. Two researchers from the Heritage Foundation recently pointed out that "when Medicare was created in 1965, patients paid 52 percent of health-care expenditures out of pocket, on average. This fell to only 15 percent by 2005."(3-3) Not coincidentally, as out-of-pocket shares fell, medical inflation increased. Because the third-party payor/fee-for-service structure inherently supports wild price increases on the supplier side. So would it be so bad if the out-of-pocket prtion of expenses were to increase? Maybe not so bad as you want to paint it.

$1,115 is more money than what many Americans pay for rent or mortgage.

Yes, just think how unreachable $3,260 must feel! Almost makes me want to move out of New York! (More on that later.)

But there's more to the problem than just numbers.

I should say so. You haven't even begun to touch on the ideological shortcomings of your reform proposal.

Take Leslie Banks, an American mom with a daughter in college. In January of this year, she received a notice from her health insurance provider that her plan was being dropped. To keep the same benefits, the premiums for her and her daughter would more than double. Leslie was told by the insurance company that there was nothing she could do -- it was an across-the-board premium hike. If she paid the same monthly premium amount as before, the deductible would increase from $500 to $5,000, and she and her daughter would no longer have preventive care or prescription coverage.

Good on you. Now let's take a look at Jeff Romoff, CEO of the University of Pittsburgh Medical center. In 2007, Mr. Romoff made $3.95 million dollars, a 20% increase over the previous year. Executives at the Cleveland Clinic and Chicago's Northwestern Memorial Hospital made even more - - $7.5 million and $16.4 million, respectively. These figures are based on an IRS report which found that "the average CEO received $490,000 in total compensation in 2006, and that top executives at 20 of the larger hospitals in the IRS survey received an average of $1.4 million." (4-4) How come Obama isn't railing against greedy hospital executives? Doesn't anyone think that paying a hospital executive $16.4 million dollars in one year is "obscene"?

Incidentally, I don't. I think Mr. Romoff is entitled to every penny the University of Pittsburgh's governance body approves for his salary. If they are foolish enough to do it, it's on their shoulders. I include it here to illustrate the silliness of trotting out an anecdote in support of an argument. Let's just call health reform "Leslie's Law," shall we? I mean, who can argue against something so benign as "Leslie's Law"?

It's important to raise awareness about numbers like $1,115 and stories like Leslie’s because skyrocketing health care costs impact all of us. So take a moment to forward this email to your family, friends and online networks.

I also feel it's important to raise awareness but unlike you I don't think that doubling Medicaid budgets and forcing people into public plans is the proper solution to the problem. The health care crisis will continue so long as third-party-payors continue using a fee-for-service reimbursement model to pay for health care. You can spread out costs by forcing more people to buy insurance, you can chip a half percent or so the premium costs by beating up on "greedy health insurer CEOs," but the bottom line is that care costs more. If care costs go unaddressed, it won't matter how much you spread out the pain of paying: it will be too painful. Yet you don't say so in your pitch for reform. Just who the hell do you think you're fooling?

With all of us working together, we'll send the message loud and clear -- the time is now for health insurance reform. It's time we made our health care system work for American families and small businesses, not just insurance companies.

You just had to sneak that line about insurance companies in there, didn't you? So much for showing up without slogans.

By the by, when the pain of paying for other people's medical expenses gets too much, people who can afford to do so leave.

Let's get it done.

Didn't Larry the Cable Guy say that once?

I'm really looking forward to tomorrow's number. What could it be?


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(1) Kaiser Family Foundation, Employer Health Benefits 2009 Annual Survey.
(1-1) http://www.ins.state.ny.us/hmorates/pdf/Albany.pdf
(2) Bowen Garrett, John Holahan, Lan Doan, and Irene Headen for the Robert Wood Johnson Foundation and Urban Institute, The Cost of Failure to Enact Health Reform: Implications for States
(2-2) Bureau of Labor Statistics
(3-3) Bending the cost curve in the wrong direction, Salt Lake Tribune, March 5, 2010
(4-4) Hospital CEO Pay Comes Under Scrutiny, published at bnet.com., March 5, 2009