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.

Why Aren't We Talking About The Cost of Care?

Yet another missive from the persistent Nancy Ann Min DeParle, Director of the White House Office of Health Reform:

Good afternoon,

Hi, Ms. DeParle. I was just spending the afternoon counting the number of millions of dollars in your back account that came from businesses in the health care industry - - the industry you are now seeking to reform. I got up to $5.8 million dollars and that's only in the last three years before you were appointed to the WHOHR. You must spend a lot of time thinking about that money - - it's so much I can hardly get my brain around it myself. But that's just me, because I've never seen a million dollars, not in all my years of working put together.

Anyway, you probably wanted to talk about reforming the health insurance industry. I think you might have made the least money from health insurers in those last three years before your appointment. Maybe that's why they're your current whipping boy. But who can say?

If you’re an American under the age of 65, there's roughly a 50/50 chance that you will find yourself without coverage at some point in the next decade.1

Simply put, losing insurance can happen to anyone.

Yes, and now that you mention it we have this thing called COBRA, which stands for the Consolidated Omnibus Budget Reconciliation Act, and which has been around for quite some time now. COBRA gives anyone who loses their group insurance the right to continue paying for it on their own at nearly the same rate for up to 18 months. Recent federal legislation extended that timeframe to 36 months. States also have laws (usually referred to as "mini-COBRA" laws) that provide similar extension rights and in some cases more lenient extension rights.

So is the issue here the *opportunity* to continue paying for insurance, or the *ability* to continue paying for insurance? Those are two very different things.

At yesterday's health reform event, President Obama told the story of Natoma, a self-employed woman in Ohio who found herself in the position of losing her health insurance after yet another rate hike from her insurance company:

OK. So you mean the *ability* to pay for insurance. So what we are really talking about here is the affordability of insurance premiums in general, not necessarily the loss of coverage due to a specific event.

"She realized that if she paid those health insurance premiums that had been jacked up by 40 percent … she couldn't make ends meet. So January was her last month of being insured.

Say now, the Obama plan would have relieved Natoma of the difficulty of her decision by making it for her: she would not have had the option of foregoing insurance because of the individual mandate. So, whether the reason was that she couldn't make ends meet, or that she just wanted to spend her money on something else, she would not have had the option either way.

You might respond by saying that your reform efforts will lower premiums. Every experience however is to the contrary.

And while I'm thinking about it, if Natoma really couldn't make ends meet, how come she didn't qualify for Medicaid? Details, details.

Like so many responsible Americans -- folks who work hard every day, who try to do the right thing -- she was forced to hang her fortunes on chance... And on Saturday, Natoma was diagnosed with leukemia…

Well of course she was, otherwise why would Obama be talking about her in a speech? But is Natoma's story everyone's story? Here's something from the source you cite on the uninsured: "45 percent of Americans in households making between $50,000 and $100,000 went without health insurance at some point between 1997 and 2006." (see page 2) Do you suppose those moderately well-off households were "forced to hang their fortunes on chance" or do you suppose that they just decided of their own free will to do so?

Should we have the freedom to make bad choices? Perhaps you don't think so, but I do.

Here's something else: "57 percent of Americans under 30 went without insurance between 1997 and 2006." (also on page 2) One might suppose that young and healthy individuals without a lot of disposable income might want to spend their money on other more important things, like repaying educational debt, or building up some good credit history, or maybe putting away early for retirement. Shouldn't they be able to? Your plan for an individual mandate would saddle youths just out of school with an expensive mandate to purchase a product that they will make very little use of. Not good news for young kids, considering that they will also have the highest Social Security Tax imposition ever to deal with, a national debt to be serviced that will amount to 90% of GDP, and a likely doubling of the state and federal outlays for Medicaid. Where exactly is all that money supposed to come from?

"Part of what makes this issue difficult is most of us do have health insurance, we still do.... But what we have to understand is that what's happened to Natoma, there but for the grace of God go any one of us."

Yep, Ms. DeParle, unfortunate things happen to people sometimes, and they don't always have millions in the bank like you to fall back on. Like the young kids that will be forced to buy health insurance when they don't need it and don't want it. That's a rather unfortunate thing, and they won't have yet made their millions.

For Natoma and the millions of other Americans forced to face the burden of medical bills they can't pay while at their most vulnerable -- the time is now for health insurance reform. Watch the video of Natoma's story and learn what more you can do to help spread the word about the need for reform.

Medical bills they can't pay? Now wait a minute, we started out talking about the affordability of *insurance,* and now you are talking about the affordability of health *services.* Those are two very different things, yes? It would be important for the Director of the White House Office of Health Reform to understand that.

Because, you know, if we are going to start talking about medical bills and the actual cost of health care services then we have to start a whole different conversation.

50/50 is the latest number in 'Health Reform by the Numbers,' our online campaign to raise awareness about why we just can't wait any longer for health insurance reform. Help spread the word by sharing this message with your family, friends and online networks.

Oh, dear, you're wrapping up already and we never got to talk about medical bills! Like, why can't we talk about the cost of chemotherapy drugs? You know, the kind poor Natoma will need for her cancer treatment? Maybe we can't talk about the cost of chemotherapy drugs for Natoma because of the $80 billion dollar sweetheart deal you cut with big pharma. From the LA Times:

Under the deal, the Pharmaceutical Research and Manufacturers of America, or PhRMA, agreed to provide $80 billion in cost savings over 10 years. It also promised to promote healthcare reform in a multimillion-dollar ad campaign. In return, the White House agreed to consider the $80 billion as a cap on PhRMA's costs in the overhaul legislation. In addition, the White House agreed not to require rebates on sales of commonly prescribed drugs to patients enrolled jointly in Medicaid and Medicare.

So, Ms. DeParle, your boss traded the support of the pharmaceutical industry in exchange for TAKING ANY DOWNWARD PRESSURE ON PRESCRIPTION DRUG COSTS OFF THE TABLE FOR THE NEXT TEN YEARS. This is how our elected leaders are dealing with the "biggest threat to our nation's balance sheet?"

Hey, um. The Kaiser Foundation had this to say about prescription drugs: "While prescriptions are a relatively small share of overall health spending (11%), they are a key driver of health spending trends, growing almost twice as fast all other health services in recent years."(1-1)

And when Barack Obama was running for President he said: "The 2003 Medicare Prescription Drug Improvement and Modernization Act bans the government from negotiating down the prices of prescription drugs, even though the Department of Veterans Affairs’ negotiation of prescription drug prices with drug companies has garnered significant savings for taxpayers. Barack Obama and Joe Biden will repeal the ban on direct negotiation with drug companies and use the resulting savings, which could be as high as $30 billion [a year], to further invest in improving health care coverage and quality."(2-2)

So is it clearer now why we're not talking about health care costs? Obama traded away $300 billion dollars worth of potential savings in health care costs in order to get pharma's support for his current health insurance reform effort. They're untouchable now. And they got it for a promise.

Let's get it done.

Yeah. I'm feeling pretty "did" these days. Can't wait for tomorrow . . .

---------------
1 Department of the Treasury, The Risk of Losing Health Insurance Over a Decade
(1-1) Kaiser Family Foundation, Prescription Drugs
(2-2) BARACK OBAMA AND JOE BIDEN’S PLAN TO LOWER HEALTH CARE COSTS
AND ENSURE AFFORDABLE, ACCESSIBLE HEALTH COVERAGE FOR ALL

I Was Wrong And I Admit It

In an earlier post I said this about Obama's health care proposal:

Imagine a salesman that walked up to your house, looked at your missing front door, and said, "You know, if you bought some new windows you could really snug up this place." If you buy the Obama proposal you are paying for new windows while ignoring your missing front door.

Boy was I wrong about that. I had overlooked a then very-recent re-analysis of the President's 2011 budget proposal by the Congressional Budget Office. Kind of buried in there was the following line:

Under the President’s budget, debt held by the public would grow from $7.5 trillion (53 percent of GDP) at the end of 2009 to $20.3 trillion (90 percent of GDP) at the end of 2020. (emphasis mine)

And then this:

Mandatory outlays under the President’s proposals would be above CBO’s baseline projections by $1.9 trillion (or 8 percent) over the 2011–2020 period, about one-third of which would stem from net additional spending related to proposed changes to the health insurance system and health care programs. (emphasis mine again)

So I take back may analogy; it was a poor one. I should have said this:

Imagine a salesman that walked up to your house that had just been hit by a tornado, looked at your missing front doorgiant scrap heap, and said, "You know, if you bought some new windows you could really snug up this place." If you buy the Obama proposal you are paying for new windows while ignoring your missing front doorthe fact that the rest of your house is completely fucking wrecked.

In 2020 my oldest child will be 22, and on the verge of entering the job market for the first time. I'd like someone to explain to him the rationale for increasing the debt load that is ALREADY expected to be crushing by the time he is of working age. I'd like someone to explain why the President is focusing on health care instead of righting our economy and getting our national balance sheet back where it belongs. I'd like someone to explain to him why the biggest threat to our nation's balance sheet - - THE COST OF HEALTH CARE - - goes completely unaddressed in his reform proposal. I'd like someone to explain to this sweet boy, who goes to bed dreaming about hockey and video games, who loves the New York Yankees, who wants to manage a professional sports team one day, why our so-called representatives are lining up to pass a bill in service of a slogan championed by a vulgar stand-up comic: "Let's get it done." He deserves more than that.

This is serving in-flight meals on a plane that has no hope of a safe landing.

Enjoy the peanuts.

It's Not Even Health Insurance Anymore, It's Social Insurance

Ms. DeParle's Wednesday e-mail arrived with this subject line: "8".

The first thing I thought was, "Eight more years! Eight more years!" And in fact it turned out to be more cheerleading from the White House Office of Health Reform.

Good afternoon,

8 -- that's the number of people every minute who are denied coverage, charged a higher rate or otherwise discriminated against because of a pre-existing condition.1

If there's a pre-existing condition, then it's not "insurance coverage" anymore, it's just "cost-sharing."

Black's Law Dictionary defines insurance as "[a] contract whereby one undertakes to indemnify another against loss, damage, or liability arising from an unknown or contingent event and is applicable only to some contingency or act to occur in the future."(1-1)

The key here is that the event against which the insured is protected is an unknown event. That's the fundamental nature of insurance.

When you build a house in a flood zone, for example, you pay much more for insurance because there is a higher probability your home will be damaged. Same for coastal properties that experience hurricanes, and for properties built on a fault that are more likely to experience earthquakes. If the event is more likely than not to occur, it's unlikely you can buy insurance for it.

In a not very dissimliar way, traditional health insurance provided coverage for unanticipated events - - hospitalization, surgeries, medical expenses related to an accident or illness.

Pre-existing condition clauses protect against a concept known as "adverse selection." An example of adverse selection might be an uninsured female who becomes pregnant and then purchases insurance to avoid the high cost of perinatal medical services. Or an uninsured male diagnosed with cancer who then purchases insurance to avoid the high cost of treatment. Both cases violate the fundamental principle of "insurance" because they involve liabilities that are certain to occur and that are known to one of the parties prior to the transaction.

The Obama administration excoriates pre-existing condition clauses as an evil device used by the health insurance industry to "discriminate" against the sick because they believe, fundamentally, that all health care costs incurred by anyone at anytime should be shared.

I turn again to Black's Law Dictionary: "Social insurance: A comprehensive welfare plan established by law, generally compulsory in nature, and based on a program which spreads the cost of benefits among the entire population rather than on individual recipients."

Such a plan has to be compulsory in nature because of adverse selection. After all, if you could buy insurance (therefore obligating yourself to pay premiums) at any time, why would you ever buy it unless you actually needed it? But if only sick people buy coverage, the costs are borne by a smaller population, and therefore premiums go up. Which in turn lowers people's propensity to buy insurance unless they really need it. This spiraling effect can only be met by an individual mandate, and that is why the President's plan includes one.

8 is also the number of lobbyists hired by special interests to influence health reform for every member of Congress in 2009.2

This is a curious statement. It seems to imply that the "special interests" opposed to health reform are swarming the Capitol to put the skids on the current effort. In a way, then, voting "For" health care reform would strike a blow to special-interest politics and send a message of some sort somewhere. But would it?

Take a look at the actual source document DeParle uses for this statement. It shows a total of 4,525 lobbyists for all of 2009. By far the biggest chunk (16%) is in the category of "Trade, Advocacy and Professional Organizations" - - 745 in total. Then comes "Hospitals" with 207 (5%), then "Misc" with 166, and in fourth place "Insurance" with 105 (2%).

Drill down on the "Trade/Advocacy" category and the picture gets clearer. Here's a sample listing: "60 Plus Association," "AARP," "Academy of Managed Care Pharmacy," "AdvaMed," "Alliance for Care at the End of Life," "Alliance for Children and Families," "Alliance for Home Health Quality and Innovation," "Alliance for Quality Nursing Home Care," "Alliance for Retired Americans."

So let's see what these lobbyists were up to:

"They cut it. They chopped it. They reconstructed it," Julian Zelizer, a Princeton University professor of public affairs, said about health reform lobbying. "They didn’t bury it. I don’t think they wanted to." The lack of serious cost controls in House and Senate bills are a direct result of health industry lobbying efforts, Zelizer said. The American Hospital Association, for example, supports expanding coverage to the House bill’s level of 96 percent of legal residents, but it lobbied against expanding Medicaid eligibility to levels prescribed in the House bill, which would hinder hospital profits. It is also lobbying to revise or delay Medicare payment cuts and patient readmission penalties.

Something bears repeating - - Obama's own words here: "By a wide margin, the biggest threat to our nation's balance sheet is the skyrocketing cost of health care."

So the administration's crowning achievement would be to ram through a bill crafted by special interest influence that pretends to be health insurance reform but which is really simply a broadened mandate for socializing health care costs and does nothing to address the biggest threat to our nation's balance sheet. Please, where do I sign?

The facts speak for themselves -- the status quo isn't working, and special interests are doing everything in their power to maintain that status quo.

Yes, and the health care provider special interests appear to have won. Why's that?

Well, here's a number we haven't discussed yet: 5.8

As in, $5.8 million dollars. That's what Nancy Ann Min DeParle was paid by major medical companies in the three years prior to her appointment as Director of the WHOHR.(2-2)

$5.8 million dollars.

Being denied coverage because of a pre-existing condition is something we all know is wrong. And for those 8 people every minute who can't find health coverage or face discrimination because of a pre-existing condition, reform can't wait.

We don't all know it's wrong. We don't all agree with a social insurance mandate. And no one who raked in $5.8 million from specific interests in the health care industry should be overseeing reform efforts, period. THAT is wrong.

Statistics like these help put the past year's debate over health insurance reform into perspective, demonstrating how broken our health insurance system has become.

They certainly do put the debate in perspective. There's one person that doesn't yet seem to have been represented: the health care consumer. Everyone wants to tell the consumer what is best for them. Instead of making room for innovations that will benefit consumers, the Obama administration would decide what's best and shove it down everyone's throat. This is what consumers are tired of. They are tired of being told what doctors to go to; they are tired of being told what services to get, what not to get; they are tired of being told how much to pay; they are tired of complicated systems that allow one special interest or another to juice their position based on some complex rules that only a few people can figure out. They are tired of government officials that pretend to represent our interests but who are really just puppets for this interest or that.

If spending millions shmoozing politicians didn't work, do you think they'd be doing it? That's the saddest point implicit in DeParle's letter.

So in fact, voting "For" health reform will send a message, and the message is that our representatives can be bought, that American ideals like individualism and personal responsibility are "evil," and that special interests really DO run the government.

Sorry, I vote NO. That's not the kind of reform I want. That's not the kind of reform Americans deserve. But it's the kind of reform we will get if we don't wake up soon.

Each day this week, we'll promote a key number on WhiteHouse.gov and social networks like Facebook and Twitter to raise awareness about why the time is now for health insurance reform.

You can help spread the word about the need for health insurance reform by forwarding this email to your family, friends and online networks.

And you can help spread the word about the misplaced reliance of the Obama administration on more government intervention to prop up an archaic health care reimbursement system - - a move that will break America's back and bank - - by sharing this response will your family, friends, and online networks. Click the envelope at the bottom of this entry to generate an e-mail message.

Let's get it done.

They should change this to: "Let's get *something* - - - ANYTHING - - done."




(1) HealthReform.gov, Coverage Denied: How the Current Health Insurance System Leaves Millions Behind
(1-1) Black's Law Dictionary, 6th Ed.
(2) The Center for Public Integrity, Lobbyists Swarm Capitol To Influence Health Reform
(2-2) Health firms paid Nancy-Ann DeParle $5.8 million

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?


--------------------------

(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

What About Health Care Costs?

If someone magically came up with a way to run a health insurance company for free (no employee costs, no building rent, no supplies, no software licensing fees) everyone with health insurance under that company would see something like a 15% discount (13% if you believe health insurers' numbers, 25% if you believe the U.S. Senate Commerce Committee numbers) for the first year. That would be the extent of the reduction.

Health care costs, on the other hand, rise 4% each year. So somewhere between three and six years, whatever gains had been got by running the health plan for free would be eliminated. And yet the medical inflation trend would continue unabated. Health care consumers would be right back to unsustainable costs, with no help in sight and another 4% price hike on the horizon each successive year.

That is why Obama called health care costs the biggest threat to our nation's balance sheet. Eliminating health insurers entirely makes for nice theatrics but in reality accomplishes little to benefit health care consumers.

In an article in the Salt Lake Tribune, two researchers from the Heritage Foundation point out that:

Today's health-care system is fraught with perverse incentives that generate artificially increased spending. But nothing in the House- and Senate-passed health bills, or in the president's plan, would reduce these incentives. And some provisions would make them worse.

In most fields, such as computers and cell phones, new technology usually increases quality and reduces prices. Health care prices, though, often go the opposite way. Not always; drug prices drop when generics replace brand-name drugs, and expensive drugs sometimes replace even-more-expensive surgical interventions. But often, new health technologies increase prices. Why? Health-care prices are determined by a bureaucratic process that prevents competition from driving prices down.

They conclude that the current proposals would bend the health care cost curve, but in the wrong direction.

Advocates of the current reform proposals say that free markets are what got us into the current health care crisis. I say phooey. Our current state is nothing of a free market.

A successful "up" vote on health reform would be a pyhrric victory for Americans who actually work and pay for their health care. They will feel momentarily better for having struck a blow against "evil" health insurers. They will soon find the gains erased and subsumed in the inexorable rise of health care costs. More importantly, lawmakers will have squandered the opportunity to address health reform in a meaningful way while the attention and will to do so were in place.