Why Bother With Smoke and Mirrors?

When the Congressional Budget Office released its savings estimates on the health reform package, Democrats danced in the aisles. There, finally, was proof that they were not just irresponsible spenders. The comprehensive package was pegged by the CBO as reducing the deficit over the the next 20 years.

Take note, however, where these savings come from. The total deficit reduction of the bill was estimated at $138 billion over 10 years. Of that, about $20 billion was related to changes in how educational loans are written and administered. The health reform provisions accounted for about $118 billion over 10 years.

A review of the line-by-line analysis points out a few overall weaknesses in the plan. For one, most of the provisions are either budget neutral or add to spending. Only a few lines contribute to a reduction, and of those few lines only a few are large numbers. This concentrates the "savings" in a few very specific areas while spreading the "spending" out across dozens of provisions. What that means is that if only one of the "savings" lines fails to come out as predicted, it could throw off the whole calculation.

For example, COB predicts a deficit decrease of $132 billion from decreases in "Medicare Advantage Payments." If only this one line fails of its purpose, then all of the alleged savings to be accomplished under this reform bill are obliterated.

Another line predicts $156.6 billion in savings from "Revision of Certain Market Basket Updates and Incorporation of services Productivity Improvements into Market Basket Updates that do not Already Incorporate Such Improvements." Is that not clear? The lawfirm Arent Fox provides some elucidation: "[This section] incorporates a productivity adjustment into the market basket update for inpatient hospitals, home health providers, hospice providers, inpatient psychiatric facilities, long-term care hospitals, and inpatients rehabilitation facilities. The beginning of the productivity adjustment varies, depending on provider type. The provision provides additional market basket reductions for certain providers, and incorporates a productivity adjustment into payment updates for Part B providers who do not already have such an adjustment." So $156 billion in the "savings" rests upon reducing the amount paid to Medicare providers using some kind of complex formula.

Now if that sounds a little familiar, it should. In 1997 Congress hatched a scheme to reduce the amount paid to Medicare physicians using some kind of complex formula. But when the formula kicked in, the AMA screamed bloody murder, and . . . yep, you guessed it, the cut didn't happen because Congress acted to put it off. Didn't happen in '98, '99, '00, '01, '02, '03, '04, '05, '06, '07, '08, '09, and if the Democrat leadership has their way, it won't happen in 2010 either. What's the price tag for the "doc fix" legislation? For the short term proposals, it's either $9 billion or $18 billion depending on whom you ask and which version is being discussed. Either way, it's far less than the $156 billion that the "productivity adjustment" is supposed to squeeze out of Medicare to pay for health reform.

So if Congress doesn't have the stomach to reduce Medicare spending by 18 billion, how likely to you think it is that the $156 billion cut is ever going to materialize?

In my opinion, not a bit likely at all.

Now if you factor out just that one line, the net savings of the health reform bill are gone and the whole thing is in the red by $38 billion. And that's assuming the expense side isn't underestimated by 40% like Medicare Part D was. By the way, the long-term "fix" for the Medicare physician payment "problem" is estimated at over $200 billion - - or, 1.8 times the total estimated health care savings under the reform bill.

When Congress was considering the North Atlantic Free Trade Agreement (NAFTA) in 1992, Presidential candidate Ross Perot used the phrase "a giant sucking sound" to describe the noise made by US jobs heading south for Mexico should NAFTA go into effect. (Which it did, and which they did.)

If you listen carefully right now, you will hear a "giant flushing sound" and that is the sound of the US economy going down the drain under the crushing weight of the total health care spend. The stimulus bill might give us a temporary bump, but most agree that over a long term arc the amount of resources we direct to paying for simple health care is astounding and unsustainable.

Although touted as a deficit reducer, health reform is a big fat spending bill whose net savings are based on a few huge cuts which Congress knows damn good and well are never going to happen.

It's Time For Government Reform

If the health care reform debate taught me nothing else, it is that our federal system of government is broken, broken, broken.

It cannot be said that a house of government that "passes" laws by not voting on them, as the House of Representatives did, is at all a functional house of government.

It cannot be said that a house of government intended to represent the States, as the Senate is supposed to, can validly produce a law so antagonistic to the States as the reform bills unless it is broken, broken, broken.

I defy any Representative or Senator --Republican or Democrat or Independent-- to claim that they read and understood the actual legislative language of the reform bills before the bills were voted on. That is not responsible government by any sane measure.

Health reform was a political football game, and the American people lost. They lost because Democrats didn't know what they were voting for; and because Republicans and the few Democrat holdouts didn't know what they were voting against. I say again: that is not responsible government by any sane measure.

I suggest, therefore, that the next "reform" initiative be to put the federal government back in its place: in Washington, at work, on issues of national importance. Not in my backyard; not in my doctor's office; not in my kids' schools; not in my bed.

It's also time to start putting political parties where they belong: on the street, organizing, getting out votes, promoting ideas, holding discussions, publishing materials. Political parties have a valid role in the marketplace of ideas. Where they do not belong, however, is behind the curtain of the voting booth and inside the offices of our public representatives. We can begin the challenging road of restoring the independence of our elected officials by insulating the process by which they are elected from undue party influence. And that begins in the voting booth.

The following amendment espouses these ideals: a limited federal government; transparency in federal legislation; genuniness of the federal legislative "act"; the sanctity of the act of casting a vote.

I firmly believe that we are at a momentous time in our country's history. We can continue down a path that will eventually lead to obliteration of the individual states, or we can reaffirm that the federal government is intended to govern among the states, not within them. We can continue down a path that serves obscurity in our fundamental acts of democracy like voting and passing laws; or we can restore them to clarity. We can turn away in disgust when our legislative body devolves into a ridiculous posse of clowns, or we can demand more respect ---indeed reverence--- in their use of the power we have delegated to them by our vote.

We can say, now, that we have strayed too far from the freedom our founders intended for us; or we can succumb to the notion that others decide for us how much of our liberty we wish to trade for common welfare.

The choice is ours.


AMENDMENT XXVII

Section 1. [1] The seventeenth article of amendment to the Constitution of the United States is hereby repealed.

[2] If the Legislature of a State shall fail to choose a Senator before the first annual meeting of the Congress, the Executive Authority of the State shall issue a Writ of Election to fill such vacancy.

Section 2. The authority of the Congress to regulate commerce among the several States shall extend only to affirmative acts of commerce among parties located in diverse States, or the consummation of which acts will occur in diverse States.

Section 3. [1] Every Bill creating new law or amending existing law when introduced in either the House of Representatives or the Senate, and every amendment thereafter made to such Bill, must have all new matter underscored, and all matter eliminated by amendment from existing law must appear in its proper place enclosed in brackets.

[2] No amendment shall be allowed to any Bill which is not germane to the original object or purpose thereof.

[3] No Bill shall be passed by the House of Representatives or the Senate other than upon an affirmative vote upon the Bill, and recorded in its Journal of Proceedings.

Section 4. The purpose of an election being to choose a suitable individual to fill an office, in any election held for the office of President of the United States, or the office of Vice President, or of Representative or Senator, any ballot in such election shall indicate only the office subject to election and the name of each candidate therefor, and all other information concerning the candidates, including his or her party affiliations, if any, shall be stricken from the ballot.

If We Built a Large Wooden Badger . . .

Monty Python fans fondly recall the scene from "The Holy Grail" in which Arthur and his knights build a large wooden rabbit to gain entry --Trojan-horse style--into a French castle. But Sir Bedivere, who is the mastermind of the plan, forgot to tell the knights the part about hiding out in the rabbit before the French took it inside the walls. Lying outside the castle, Bedivere reveals the part of the plan in which he, Galahad, and Lancelot leap out of the rabbit and take the French by surprise. The audience gets the problem a half second before Bedivere does. When he realizes he can't leap out of the rabbit when he's not IN the rabbit to begin with, he then suggests an alternative plan: "If we built a large, wooden badger . . . "

That scene came to mind when reading today's New York Times opinion section, in which David Leonhardt ponders "How can we learn to say no?" Americans use too much health care, he ponders, so how do we get them to stop?

The federal government is now starting to build the institutions that will try to reduce the soaring growth of health care costs. There will be a group to compare the effectiveness of different treatments, a so-called Medicare innovation center and a Medicare oversight board that can set payment rates.

Suspend your disbelief for a moment and take it as true that such institutions really will try to reduce the soaring growth of health care costs. Leonhardt goes on:

But all these groups will face the same basic problem. Deep down, Americans tend to believe that more care is better care.

That line illustrates the ultimate fallacy underlying Democrat health policy. Personally, I do not believe that Americans, deep down, believe that more care is better care.

And, in fact, neither does Leonhardt. He points out, later on in the piece:

When patients are given information about potential benefits and risks, they seem to choose less invasive care, on average, than doctors do, according to early studies. Some people, of course, decide that aggressive care is right for them -- like the cancer patient (and palliative care doctor) profiled in this newspaper a few days ago. They are willing to accept the risks and side effects that come with treatment. Many people, however, go the other way once they understand the trade-offs.

They decide the risk of incontinence and impotence isn’t worth the marginal chance of preventing prostate cancer. Or they choose cardiac drugs and lifestyle changes over stenting. Or they opt to skip the prenatal test to determine if their baby has Down syndrome. Or, in the toughest situation of all, they decide to leave an intensive care unit and enter a hospice. (Emphasis mine)

Wow. So thanks, Sir Bedivere, for pointing out after the fact that Americans don't really believe deep down that more care is better care. That our addiction to health care spending isn't really genetic or cultural. Rather, Americans appear to be hopelessly stuck in a system that rewards them for acting as if more care is better care. And that is a difference of colossal proportion.

Because to me it looks like we really don't need massively expensive new government institutions to begin making more rational decisions for us about health care spending. To me, it looks like what we need is for the decision to be more relevant to the patient.

But that's not the direction we've gone. Instead, we've herded millions more people INTO the system that rewards "spend 'til the end" behavior. Some reform.

But what about the badger? Leonhardt again:

So figuring out how we can say no may be the single toughest and most important task facing the people who will be in charge of carrying out reform.

Take heed: how WE - - not you, not I, but "we" - - how WE can say no will be the most important task facing THE PEOPLE WHO WILL BE IN CHARGE OF CARRYING OUT REFORM. That's the mindset of the reformists - - WE in charge know better than the stupid unwashed masses about what's good for their health.

I am an American. I work, I pay my bills, I make decisions every day about what's worth spending my money on. I do NOT need a Washington bureaucrat deciding how "WE" can say no. I DO need the people in charge of carrying out reform to get out of the way and let a truly free market bring down health costs. That's what will help me the most.

The answer to the problem that government has created is NOT - - is NEVER - - more government.

And just to close the loop, remember that at the end of the "badger" scene, the French launch the rabbit out of the castle with a catapult. The rabbit lands on Gawains' page, who was having a hard time running away because he was so weighted down with luggage.

Extend the analogy as far as you wish. The royalty come up with "the plan," "the plan" fails miserably, ultimately backfires, and ends up killing the poor working stiff who was busting his balls for a living humping luggage for the royalty. The royalty, by the way, get safely away into the bushes.

Thanks, Sir Bedivere, but no thanks. Yours is a medieval logic that should be left in the past.

Republicans Don't Get It Either

The reason we don't have a genuine health reform proposal on the table is because Republicans don't get it either. It's like watching two monkeys trying to figure out how to turn a nut, and one picks up a hammer, and the other picks up a screwdriver, and they both go at it while the wrench lays there unused.

Today's Albany Times-Union provides a nice example. On page A3, Republican Congressional candidate Chris Gibson is quoted touting his party's reform ideas:

"I believe that [the recent health reform package] was a step in the wrong direction," Gibson said, explaining he would support legislation to reduce health costs by capping medical malpractice awards, allowing people to buy insurance across state lines and more closely scrutinizing fraud."

Now as luck would have it, in the same edition on page A1, the paper reports on a recent record-busting medical malpractice award: $5.2 million. What happened? An arrogant obstetrician refused three requests by another attending doctor to look at a post-surgery patient suspected of internal bleeding. Eventually he went back in, but it was too late. The patient was 32. She left a police officer husband and two kids behind.

If Dick Cheney had his way, that family would have been left with $250,000. Personally, I think $5.2 million's not enough. I'd like to see the physician indentured to the family for the rest of his life - - which, incidentally, would not be spent working as a physician. That chapter would be closed.

It's easy to talk about caps when there's no face in the story.

Coincidentally, or perhaps not, yet another story in the same edition describes the ongoing rise in Caesarean-section rates. Research into this phenomenon suggests that the increase is largely for the convenience of the attending physicians. C-sections are twice as expensive as normal deliveries, and are three times deadlier to the mom.

In a third party payor system, the decision to have a C-section gets split up among a bunch of different players. The health plan recognizes the problem and tries systematically to reduce the number of C-sections. It's first suggestion is to pay physicians more for not performing C-sections; health plan lawyers ixnay that suggestion because it violates federal law. (Never mind that C-sections are risky and unnecessary - - you can't pay physicians to not perform a service.)

The health plan's next suggestion is to devise a quality standard and pay physicians more for meeting the standard - - a national benchmark, say. The physician then publicly decries the health plan's "cookbook medicine" plan and tells the health plan to stop telling him/her how to practice medicine.

Where's the patient in all this? Well, all she knows is that her physician wants to do something and the health plan is saying no. Because that's all health plans do: deny, deny, deny.

I suggest that if the patient were responsible for the costs of the medical care, a number of factors would come in to play. The patient would see the real cost of the decision to have a C-section. Given the tremendous impact, the patient would likely question the value of the C-section. Once informed of the additional risks and the additional costs, the patient would probably say C-section only if absolutely positively unavoidably necessary. Which is as it should be. And all of this would happen in a conversation between the patient and the physician, where neither one can vilify a third party for being unreasonable. Which, again, is as it should be. C-section rates would drop, all on their own, and lots of unnecessary care would be removed from the system. The overall spend would go down.

That is where health reform needs to go. Anything else is just a hammer on a nut, or a bad screw job, depending on your party preferences.

Pick up the wrench.

It's Still About Costs

Witness Massachusetts, the poster child of Democrat health reform efforts:

State regulators said yesterday that they will probably change the complex formula they use to determine how many Massachusetts residents face a tax penalty for not having health insurance, because spiraling costs are making coverage unaffordable for too many people.

I persist in believing that health care costs will continue to rise unabated unless and until individual Americans pay a majority of their medical expenses out of pocket. Until then, patients and providers alike will be spending "other people's money."

Also of interest was this nice summation from the traditionally left-leaning Washington Post, which appeared in today's Albany Times-Union:

But the long-term threat is no joke, as Obama has acknowledged many times. If he does not pivot, the country will be in serious trouble.

Why? According to a Congressional Budget Office analysis published last week, Obama's budget plan has the government spending one-quarter of the national economy (25.2 percent of gross domestic product) 10 years from now, while collecting revenue that's less than one-fifth (19.6 percent).

Such a gap isn't sustainable for any country. The United States would have to borrow so much money that in interest alone the government would be spending 4.1 percent of GDP -- compared with 1.4 percent this year.

So we should be happy about health care reform because it trims the deficit, right? Not so fast.

The President touts health reform in part because it will reduce the deficit -- according to the CBO, by $143 billion in the next 10 years.

That sounds pretty good, until you consider that Obama would need the equivalent of 70 additional health bills to undo the $9.8 trillion that his budgets will add to the deficit during the next 10 years, according to the CBO.

(Actually, it would take something like 220 health care bills of deficit reduction. The savings from health care are more like $44 billion, once you subtract $70 billion in premiums that people will pay for long-term insurance and $29 billion they will pay into the Social Security trust fund, all of which will have to be paid out later. Either way, it's pretty scary.)

I never bought that health reform was necessary before fiscal reform can take place. Health reform was a golden opportunity for fiscal reform, and Obama blew it by cutting special interest deals with big pharma and the AMA.

That's not change I can live with.