Helping the Medically Needy, Part One

By Greg Scandlen

In an earlier posting I said that health reform needs to be broken out into several discrete topics, with each one debated on its own. I listed them as –

— Medicare payment reform
— Insurance regulation
— Assistance to the needy
— Management technology upgrades
— Workforce initiatives
— Quality improvement initiatives
— Professional liability reform

These are just top of the head. There are certainly other topics that need discussion. But these are a pretty good beginning. It was nonsensical for the Democrats in Congress to lump them all together in a single package, and think there could be any rational understanding or even discussion of the proposal. As I said, ObamaCare was simply too big to ever succeed.

Now that we’ve spent some time on the last item on the list, professional liability, let’s introduce a new topic – assistance to the needy.

In my opinion, by far the most elegant idea was developed by John Goodman and written about in many places but perhaps most comprehensively ten years ago in Characteristics Of An Ideal Health Care System.

I call it elegant because it is simple to understand, can be applied universally with a minimum of administration, and will actually get the job done.

The two basic ideas are these:

  1. People should be insured if at all possible, but they cannot really be required  (“mandated”) to do so. All that can be done is fine them if they fail to do it. Let’s assume the fine is $2,000 per person. Fining non-compliers $2,000 is precisely the same as rewarding compliers $2,000. So giving a voucher in the amount of $2,000 for every person who has health insurance is exactly the same as placing a $2,000 fine on those who fail to have it. In either case, non-compliers are $2,000 worse off than compliers.
  2. We already know how much our society values health coverage. We know that by how much our society spends to provide care to the uninsured. This isn’t part of John’s argument, but I would add we also know by how much we currently subsidize those with employer-based coverage. Curiously that number is about the same in both cases. In 2007, the Congress’s Joint Committee on Taxation reported that the value of the exclusion for employer-based coverage was $143.3 billion in foregone income taxes and $100.7 billion in foregone payroll taxes, or $244 billion in that year alone. Assuming 160 million people receiving employer-sponsored benefits, that is $1,525 per person in 2007. Goodman estimated that in Texas in 2001, each uninsured person received about $1,000 in free care. So, our ballpark estimate of $2,000 per person today is probably not far off the mark.

So, John’s proposal is to provide a voucher of $2,000 (or so) to every person who buys health insurance. Those who do not choose to buy it would have their voucher deposited in a safety net program. This would be financed by eliminating the employer exclusion, as well as other existing free-care programs for the uninsured.

Before we get into the politics (winners and losers) of this idea, let’s supplement it with some additional thoughts.

  1. It is clear (at least to me) that some not-small number of people cannot handle coping with any kind of insurance program. They may be mentally ill, drug addicted, illiterate, or in some other way dysfunctional. There are people with poor impulse control who are simply unable to plan ahead even for a few weeks. They don’t keep appointments, don’t fill prescriptions, don’t understand the difference between an optometrist and an ophthalmologist. It is simplistic to think that sticking an insurance card in their wallet will do anything positive for them. It will not. These folks need the direct provision of services, not insurance of any kind. The Goodman proposal is the only idea out there that accounts for their needs.
  2. Very low-income people’s needs could be supplemented with state funds, especially if this idea supplanted Medicaid – and it should. Medicaid is a very poor insurance program that looks great on paper but pays so poorly that many enrollees can’t find a doctor to see them. Hence, about one-third of the uninsured are already eligible but haven’t bothered to enroll. Rather than corralling people into a Medicaid ghetto, this proposal would enable them to have real insurance, just like their neighbors. It also accounts for frequent changes in eligibility, as people get and lose jobs.
  3. Similarly for SCHIP. It has never made sense to divorce children from their parents to obtain health insurance. One policy is hard enough to understand without having several different programs for different family members. It would also be more affordable for children to be covered as dependents on their parents policy than to farm them out to a state program. I mean, ObamaCare is allowing independent “children” to age 26 to stay on their parents’ policies. Why in the world should an 8-year old be treated differently?
  4. The current punitive approach in ObamaCare is so full of holes that it will never actually work. Most of the uninsured are too poor to pay taxes, so a tax penalty will have absolutely no effect on them. Goodman’s approach rewards everyone equally, regardless of their income level.

I’m going to leave it there for now, but there will be much more to say about all this in future postings.

Docs in a Skinner Box

By Jane Orient, MD, Association of American Physicians and Surgeons

Behavior modification for physicians, as through pay for performance (“P4P”), is a central feature of “healthcare reform.”

The P4P idea, while now becoming explicit for physicians, is actually pervasive in society. “Do this, and you’ll get that” is the core of pop behaviorism, writes Alfie Kohn in his 1993 book Punished by Rewards. American managers are fundamentalists in their adherence to the Skinnerian model of motivation, he states.

When an influential idea is so widely shared that we no longer even notice it, it is time to fear its hold on us. Quoting Arthur Koestler’s The Act of Creation, Kohn notes:  “For the anthropomorphic view of the rat, American psychology substituted a rattomorphic view of man.”

CMS Director Donald Berwick, M. D., a great admirer of the Japanese industrial model and its potential for standardizing physician behavior, is apparently not aware of the conclusion of W. Edwards Deming, who was sent to Japan to study that model.

“Pay is not a motivator,” says Deming. And the system for appraising and rewarding merit “is the most powerful inhibitor to quality and productivity in the Western world.”  He adds that it “nourishes short-term performance, annihilates long-term planning, builds fear, demolishes teamwork, nourishes rivalry, and…leaves people bitter.” Kohn notes that it is also simply unfair when it holds people responsible for factors beyond their control. One variation on the behaviorist theme that practically guarantees enmity is the collective (“shared”) reward. Since one troublemaker can spoil it for all, it calls forth a particularly noxious form of peer pressure. “This gambit is one of the most transparently manipulative strategies used by people in power.”

P4P, in Kohn’s view, is “an inherently flawed concept.”

Nevertheless, the current Administration has launched “one of the most ambitious behaviorist-style policy projects in American political history,” writes Christine Rosen (“Now Behave,” Commentary, July/August 2010). Regulation czar Cass Sunstein is a member of the behavioral brain trust that intends to bring about profound changes through specifications and regulations.

Accountable Care Organizations (ACOs)

The main difference between ACOs and HMOs is size—5,000 enrollees versus hundreds of thousands, writes Kip Sullivan for Physicians for a National Health Program California. Accountability for cost will be achieved by shifting insurance risk to providers, who are required to achieve “measured quality improvements.” The “defined population,” derived from fee-for-service Medicare recipients, apparently is assigned by the HHS Secretary, based on rules about who provides the majority of the patient’s primary care. Each primary practitioner is supposed to be part of only one ACO (NEJM 10/7/10). A booming industry has arisen to advise on ACO formation, even though the rules and information infrastructure still do not exist.

One problem to be ironed out is how to get around antitrust law, anti-kickback law, and restrictions on physician self-referral.

In an ACO, doctors are “double agents playing the dual role of caregiver and insurance underwriter,” writes Robert Geist, M.D. “ACOs are gatekeeping organizations to serve the purposes of ‘payers’…under the guise of the grander purposes of ‘society.’”

The AMA Board has apparently decided to do everything it can to promote ACOs, writes David McKalip, M.D. AMA president Cecil Wilson, M.D., told the House of Delegates that he would work to get small practices networked into ACOs—and didn’t seem to think that there is any role for any doctor to ever work outside an ACO. P4P is a mandatory and integral part of ACO implementation, Dr. McKalip adds. Yet AMA leaders continue to ignore the directive to actively oppose P4P programs that are not compliant with AMA principles.

For hospitals, ACOs offer another opportunity to garner money and power in the developing feudal medical system. “Global” payments for “episodes of care”—perhaps lasting 6 to 12 months—will guarantee skimping on payment to the serfs for the care of sick livestock, writes Lawrence Huntoon, M.D., Ph.D. Companies that specialize in investigating “disruptive” physicians seem to be springing up everywhere, he notes. One found 8 “independent” physician members of the medical executive committee guilty of being “intimidating.”

Docs out of the Box

In George Orwell’s novel Animal Farm,  the initial success of the socialist experiment depended heavily on the efforts of the loyal, strong horse Boxer, who responded to every setback with the resolve to work a little harder, and who had unquestioning faith in Napoleon, the leading pig. What will happen if Boxer retires early, or defies Napoleon—or if doctors decide to stop pushing the little lever to get their reward of a food pellet?

Of physicians responding to a 2010 Physicians Foundation survey, 40% said they would drop out of patient care within the next 3 years. About 60% said “reform” would compel them to close or significantly restrict their practice to certain patients. While more than half thought that patient volume would increase, 69% said they did not have the time or resources to see more patients while maintaining quality. About 16% said they planned to switch to a cash-based on concierge practice.

“Reinforcement” is a negative for excellence, even when cast in the form of an incentive rather than a punishment.

More on Medical Liability

By Greg Scandlen

The feedback I got from the original post has been great. I have responded to a lot of it in the comments section. But first, let’s keep in mind that the Congressional Republicans are looking to do something in this area right now. One of their biggest criticisms of last year’s “reform” effort was it did nothing to address the liability issue.

So, the first question is really what if anything should Congress (the federal government) be doing to reform the current system? My own view is that they have no business meddling in state tort law. For better or worse, the states are responsible for their own tort systems, and what they do will have an impact on the economic climate in their own state. Some states are famous for being plaintiff-friendly and local economies suffer because of it. Tort reform, broadly speaking, is a huge issue all by itself and needs concentrated attention. For instance, the way we do class actions is, in my opinion, obscene and benefits no one but attorneys.

But the focus of this blog is on health care, and the question before us is how to create a system of compensation that is more rational and fair, and whether there is a federal role in creating such a system. I don’t think it is possible to do it under tort law for all the reasons I mentioned before.

No one (including my wife) seems to like the idea of a tax on providers to pay for a compensation pool. I would think getting out from under the cost of malpractice premiums and the terror of court would be worth it, but the distrust of the federal government is so high that the words “federal” and “tax” sends people running for the hills. People are convinced (with good reason) that the Feds would use the money for other purposes, and use their new power to control physician behavior.

Not using a tax is not a deal-killer, however. It is not hard to imagine a voluntary system that enables physicians to mutually pool their resources into a patient compensation fund to recompense injured patients. Physicians who choose not to participate could continue to take their chances with the tender mercies of the courts. Such a system would need to be sanctioned by Congress (or, less likely, a state legislature) and participants freed of the tort system.

Some physicians seem comfortable with the tort system because that is what they are used to. I am scratching my head over that one. One physician told me he thought my system would be fine, but should be paid for by patients. I replied directly to him that that would be a non-started for reasons that seem obvious to me, but in case they aren’t to you, let me list a few:

  • A reformed system would relieve physicians (and hospitals) from their current costs of malpractice insurance, so paying nothing into a new system would give them quite a windfall.
  • Patients do not cause medical mishaps, physicians do. While a reformed system should not be fault-finding, you do not want to get into a blame the victim game, either.
  • Physicians really have to take the “greedy doctor” syndrome seriously. It is not something I agree with, but plenty of people do. The AMA hasn’t helped with its seeming lack of concern about the plight of patients as long as the Docs are well paid.
  • Patients very often do not have the resources of physicians. It is hardly fair to expect a working stiff to pay for the insurance to fix the problem caused by a less-than-optimal physician.

The point of this exercise has been to make damaged patients whole while freeing physicians of the burden of litigation. I am rather surprised that the Docs are not more receptive to such a change.

But, in any case, let me paste below a description of the system New Zealand has set up. This was provided to me by John McLaughry of the Ethan Allen Institute and put forth by William Hsiao as part of his report to the Vermont legislature in creating a single payer system in that state:

From William Hsiao
Alternatively, Vermont could replace its current civil malpractice tort system with a no-fault compensation system for providers. In discussing a move to a no-fault compensation system, we use the model of New Zealand, with reference to comparable models in Scandinavia, to provide a background on the system and evidence on its potential impact in Vermont.

In New Zealand, the Accident Compensation Corporation (ACC) adjudicates all injury claims and administers the country’s no-fault compensation system. In 2008, the ACC’s operating costs equaled 12 percent of claims.[149, 150] Claim payments required by the ACC are, on average, less than US $30,000. Physician indemnity insurance costs less than US$1,000 per year for all specialties in 2005.[149] The ACC model provides redress through a fixed award schedule intended to ensure that claimants with similar disabilities receive similar awards.[149] Awards are comprised of four compensation categories: 1) treatment and rehabilitation costs, 2) earnings reimbursement (up to 80% of a claimant’s lost earnings at the time of injury up until a set maximum), 3) a lump-sum payment of up to $70,000 for permanent impairment, and 4) support for dependents. The fact that New Zealand already provides free medical care also reduces the cost of awards because, unlike the U.S., this component of compensation is not at issue. The no-fault system also allows New Zealand to focus on reducing rehabilitation and return-to-work times. Recent reforms have improved public perception of the system, as 60 percent of respondents now view the ACC with confidence, up from 42% in December 2005.[150]

As of 2005, New Zealand replaced the term “compensable medical injury” with “treatment injury.” A treatment injury includes all personal injuries occurring during medical treatment, irrespective of whether negligence was involved, creating a no-fault medical liability system. To prove treatment injury, a causal link between treatment and injury must be shown, while injuries that are a “necessary part” of treatment are not covered. This change was made partially because of research which showed that even with an easy claims process, only about 3.3% of potentially compensable events resulted in successful awards. This number cannot be directly compared to the U.S. rate of 3%, since this refers to the percentage of adverse, negligent events that result in claims; however the New Zealand number refers to the percentage of all potentially compensable adverse events that receive payment. Moreover, the same study reviewed hospital records in New Zealand and showed that about 2% admissions were associated with an adverse event potentially compensable by the ACC.[151] Although an appropriate comparison would adjust for differences in case-mix, patient severity, and technology change, this compares favorably to the U.S. adverse-events rate of 3.7% mentioned above. Since the 2005 reform, medical claims to the ACC have increased as hoped from an average of 2,000 per year to over 5,000 in 2008. The system has historically compensated about 40% of claims. 23[149] Assuming pre-reform per claims costs of about US$30,000 and a 40% acceptance rate, claims costs would have jumped to US $61 million per year in 2008 or about 0.4% of New Zealand’s total health expenditure[152], comparing favorably to U.S. malpractice costs of about 2% of total health spending.24

Another interesting aspect of New Zealand’s system is the creation of a separate process for patients seeking non-monetary remedies for injuries they perceive were caused by medical treatment. A government official called the Health and Disability Commissioner (HDC) receives complaints from patients and attempts to resolve them using advocacy, mediation/investigation and disseminates the findings to improve care quality.[153]

In addition to New Zealand, all Scandinavian nations operate some form of no-fault medical-error compensation system, as well. The Scandinavian nations have similarly short waiting times to claims resolution as New Zealand and allow the patient a right to a jury trial after two appeals.




Vermont to go Single Payer?

By John McClaughry of Vermont’s Ethan Allen Institute

Dr. William Hsaio of the Harvard School of Public Health has just delivered his long awaited recommendations for installing a single payer health care system in Vermont.

Newly elected Democratic Gov. Peter Shumlin has enthusiastically supported single payer and welcomed the Hsaio report. He has hired Anya Rader Wallack, the architect of Gov. Howard Dean’s 1994 health care collapse, to head his “dream team” of health care wizards to implement some form of Hsaio’s recommendations. The Senate is 22-8 Democratic and the House is 102-48 Democrat + Progressive.

At last the great moment has come when, in Hsaio’s words, “Vermont can show the way forward [sic] for the rest of the United States.”

So far as I know there is no indigenous organized opposition to the Shumlin-Hsaio
program. With a Governor and large legislative majorities eager to vote Yes on a package of their own design, every affected group has little choice but to try to cut their own best deal – or, in some cases, begin retirement or relocation planning.

Since Gov. Howard Dean drove out the insurance carriers in 1992 (community rating, guaranteed issue), Blue Cross/Blue Shield of Vermont, the principal beneficiary of that legislation, is the only remaining small group and non group carrier. It is also a ward of the state, and surely sees its future role as administering the Hsaio-Shumlin single payer plan.

The Vermont Congressional delegation – all enthusiastic supporters – held a news conference to announce they would see to it that Vermont gets a waiver from Obamacare to allow it to impose this system ASAP, instead of waiting until 2017 as required by PPACA.

What would help us most is a concise, pungent critique of Hsaio’s report (especially Option 3, the “public/private partnership single payer plan”) by some respected analyst with a PhD in health care economics.

I have the capacity to present a critique of it, but do not have the academic credentials to get serious attention. Furthermore, EAI has long been viewed (and denounced) here as anachronistically committed to right wing free market gospel, and thus irrelevant. (“Freedom? You think that will work?”)

EAI can not identify any 501c4 or business groups who might form a Citizens Committee to Save Our Health Care. EAI does not lobby legislators, other than to put policy briefs in their mail boxes.

I put all this to you so that you will understand that the socialist health care aliens have landed here in Vermont, co-opted the brains of the indigenous inhabitants, and injected a large dose of dangerous spores into the Petri dish. If enacted here, this infection will be heading your way soon.

Your help would be appreciated – even just publicizing this infection.

Fixing Medical Liability

By Greg Scandlen

(Note: I am hoping for and expect some vigorous comment and discussion on this issue. Fire away!)

One of the key points for the Republicans going forward is what to do about professional liability. This was ignored in ObamaCare, but is essential in any health reform proposal.

We have been wrestling with it for decades without much success. There have been a handful of states that have taken action, notably Texas and California, with good results. Other states, like Illinois, have tried, but in that case the state Supreme Court disallowed any limit on what plaintiffs could collect, so threw the law out.

As with a lot of intractable issues, sometimes the problem is that we aren’t thinking about it in the right way. The problem needs to be reframed to get us out of the cul-de-sac. Let me try to do that here.

First principles. Tort law is a state, not a federal responsibility. Some of my physician friends are so frustrated by the control the trial bar seems to have over state legislatures, that they are looking to the Feds for relief. I understand the sentiment, but I don’t think it is a good idea to sacrifice Constitutional principles of federalism for expediency. Plus, I’m not sure the trial attorneys are any less influential in Congress than they are at the state level. And, if the Feds take over the issue and get it wrong, it will be nearly impossible to fix in the future.

A better approach would be to remove professional liability from the tort system entirely. There are enormous problems with using the courts to remedy the consequences of poor medical outcomes. Notice I say “poor outcomes.” Many of the malpractice complaints have nothing to do with “malpractice” per se. The physician is not shown to have committed any error, or to have been negligent or incompetent. Things simply didn’t work out the way the patient hoped. If a jury is sympathetic to the plaintiff, it may provide an award regardless of the performance of the physician.

There are other problems with using the tort system in these cases:

  • Many patients are uncomfortable bringing suit or in dealing with lawyers. They avoid courtrooms, so have no mechanism for curing their complaint.
  • Contingency fees often mean that the complainant receives only a fraction of the award, with 25% or more going to the attorney.
  • Marginal cases are likely not to be brought at all. An attorney working on a contingency will cherry pick only the strongest cases and not risk investing time on a borderline case.
  • When there is real negligence or incompetence, the offending physician is not disciplined other than having to pay higher insurance premiums. The medical board may not even be notified of the problem, so the physician is free to continue being negligent or incompetent.
  • If the suit is settled before judgment, there is no record of the outcome, so no one knows that a particular physician has a problem.
  • Finally, using the courts is expensive and slow. It may be months or years before a damaged patient receives any compensation. Those may be months or years of extreme discomfort or pain for the patient, and real economic damage until the case is resolved.

Let me offer a better approach. This would be a no-fault system that would allow, but not require, legal representation. There would be a pool of money for awards financed by a tax on all health care providers, possibly as a percentage of income. This tax would be strictly dedicated to funding the pool. Providers would benefit by not having to pay malpractice premiums. Awards would be made by an administrative law judge (ALJ), kind of like the Workers Compensation system used by most states. The standard for awards would not be punitive, but be aimed at making the patient whole. Decisions by the ALJ could be appealed to a higher level of adjudication. The ALJ would notify regulatory boards of cases of negligence or incompetence, and the discipline of the offending provider would be left to the appropriate regulatory board. All cases and all awards would be public information. Every patient would be notified of his or her rights of remedy prior to receiving a service. Creditors of the damaged patient would be informed that a case is underway, so would be more patient in collecting debts.

This could be a federal system, like the federal bankruptcy courts. It would allow the states to continue their tort law systems in tact, but remove medical liability from those systems.

I don’t know if total costs would be any less than the current system, but I think it would be far more efficient and fair to both patients and providers.

How Accountable Care Organizations Came About

By Greg Scandlen

Thanks to the Freedom of Information Act, we were able to secure a transcript of this conversation that took place in a bunker deep underground in the Old Executive Office Building of the White House in 2009 —

Health Economist Joe: “Hey, Fred, whatcha working on?

Health Economist Fred: “Hi, Joe. I’m drafting the new health reform bill for President Obama and Nancy Pelosi.”

H.E. Joe: “Great! It is long overdue. We seriously need health reform.”

H.E. Fred: “Man, I’ll say. The health care system is a mess. Too many people uninsured, costs that are out of control, and quality that is questionable at best.”

H.E. Joe: “Yeah, but that has been the problem for fifty years. Every time we expand coverage or improve quality, the costs go through the roof. Or if we try to lower costs, people lose access and quality gets worse.”

H.E. Fred: “Not this time. We’ve solved that problem.”

H.E. Joe: “No kidding? How the hell did you do that?”

H.E. Fred: “It was easy. We’re going to create a new kind of organization that will take care of it.”

H.E. Joe: “You are? I’ve never heard of an organization like that. What do you mean?”

H.E. Fred: “You’re right. Such an organization has never existed, but it will this time.”

H.E. Joe: “Okay, what’s it going to look like?”

H.E. Fred: “Well, first it has to be interoperable. Next it has to be collaborative. And it certainly has to be high-performing and patient-centered. And of course it will be cooperative and evidence-based and involve all the stakeholders.”

H.E. Joe: “Ooooooh, I like it! Interoperable, collaborative, high-performing, patient-centered, cooperative, evidence-based, and involving all the stakeholders – how can it miss? Is there anything else?”

H.E. Fred: Of course, dummy. It must be also accountable. That is why we are calling it an Accountable Care Organization. That’s the most important thing.”

H.E. Joe: “Yep. There is nothing more important than accountability. But who will it be accountable to?”

H.E. Fred: “Me.”

H.E. Joe: “You?”

H.E. Fred: “Of course, you idiot. That’s how I’m going to keep this job until I retire.”



HIPAA, The Glaring Omission

By Ross Schriftman, RHU, LUTCF, ACBC, MSAA

The day that the U.S. House of Representatives began debating repeal of Obamacare the Secretary of Health and Human Services released a report claiming that there are between 50 million and 129 million non-elderly Americans with pre-existing medical conditions.  According to the report many of 

I am not sure why there would be such a wide range in the numbers of people with pre-existing conditions in this report but even on the low end of 50 million the report indicates that we have high health care costs in this country because we have a lot of sick people.  If the report is correct adding the high number of uninsured with conditions to health insurance coverage will most certainly cost lots of money and will result in higher premiums for everyone.  You can say that the need to get these people covered is an admirable goal.  You can’t say at the same time that adding them will reduce costs.

Listening to the debate on repeal I heard one Democratic member of Congress after another claim that if someone changes jobs and has a pre-existing condition they couldn’t get coverage with their new employer or that condition would not be covered.  Between their statements and the report from the Administration there is not one word mentioned of the protections most Americans already had prior to the passage of last year’s massive “reform” bill.

Fifteen years ago the bipartisan Health Insurance Portability and Accountability Act (HIPAA) was enacted.  This landmark legislation was also known as Kennedy (D-Mass.)/Kassebaum (R-Kansas)  The law guaranteed that if a person changed jobs the new employer’s health plan would cover them.  HIPAA eliminated pre-existing condition clauses for anyone who had coverage from their old employer for at least 18 months and didn’t have a break of more than 63 days in coverage.  It also required each state to set up mechanisms to provide that those who had group coverage could get individual coverage without being turned down or having a pre-existing condition clause applied under reasonable rules. In my state of Pennsylvania the Blue Cross Associations act as the insurer of last resort under HIPAA.

The omission of HIPAA in printed materials and debate by those who support Obamacare is a glaring and purposeful act.  It hurts the ability of millions of Americans to make informed decisions about their health, finances and careers.  For example a person who wanted to take a better job and has a sick child could listen to the debate and read the government report and unfortunately think that that the child’s condition would not be covered under the new employer’s health plan.  This person might then turn down the opportunity to get that better job.

Giving out wrong information by our government hurts the very people they claim that they want to help.  To the Republican members’ discredit I didn’t hear one word about HIPAA protections in their response during the debate.

Yes.  There are problems that need to be addressed with our current health care system.  But to make a case and tell people wrong information that can harm them is malpractice on the part of our government officials.



Was I Too Harsh?

By Greg Scandlen

My last post was pretty critical of the House Republicans in their debate over repealing ObamaCare. Was I too mean to them? Not at all. My skepticism about Republicans and health care is well-earned. Most of the leadership of the Republican Party over the past twenty years has been perfectly willing to discard free markets when it suits them.

I am reading George W. Bush’s book, “Decision Points.”  On page 46, he writes, “… I stood with Senators Pete Domenici and Ted Kennedy and signed a bill mandating that insurance companies cover treatment for people with mental illness.” Why did he do this? Because he once had a business partner, Rusty Rose, who had clinical depression. So, it didn’t matter a whit that signing this bill made coverage more expensive for working people, and increased the number of people who couldn’t afford to be covered at all. Good ol’ rich Rusty needed mental health services, so why not make those working stiffs pay for it?

In June of 2008, former Speaker of the House Newt Gingrich and prospective candidate for the Republican nomination for president, said it was “fundamentally immoral” for anyone making over $75,000 a year to be uninsured. He was all for an individual mandate. Gingrich has also been a big proponent of government-mandated health information technology.

The front-runner for the Republican nomination, Mitt Romney, of course was the person who signed the Massachusetts mandate into law, and he defends it to this day. Granted he tries to wiggle out of any comparison of his plan and Obama’s plan, but really the only difference is that one is state and the other is federal. The workings of the two are otherwise identical, to the point that Romney’s point man on his plan, Jon Kingsdale, has written, “We should all feel very proud of having created the model for national health reform. The power of the Bay State’s example is enormously consequential. I believe that national reform would not have happened without it.”

Former Republican Senate Majority Leader Bill Frist is “is urging House Republicans to drop their effort to repeal the health care law,” according to NPR. He went on to wax euphoric over it, saying its elements “need to be preserved, need to be cuddled, need to be snuggled, need to be promoted and need to be implemented… I mean, what came out of Washington, D.C., the vision, the construct, the policy, is beautiful on paper…”

Bob Dole urged Republicans to help pass ObamaCare in October 2009, saying “This is one of the most important measures members of Congress will vote on in their lifetimes if we don’t do it this year I don’t know when we’re gonna do it.” This is the man Republicans chose as their standard bearer in 1996.

These have been the leaders of the Republican Party — former President, former presidential nominee, former speaker of the House, former Senate majority leader, and front-runner for the nomination in 2012.  All could care less about free markets in health care. All want Washington (or Boston) to dictate the health care system.

Fortunately, they are all former office holders. These are the people who destroyed the Republican brand after Ronald Reagan left office. They are the reason Republicans had lower approval ratings than even the Democrats in Congress.

Fortunately there is a new generation now in office. One example is Paul Ryan, who did exactly what needs to be done yesterday. See this short video of his statement during the debate.

These guys have one opportunity – just one – to show the country they have some principles and some spine.

Hits and Misses of the Repeal Debate

By Greg Scandlen

I haven’t been able to watch the whole debate, but I’ve caught a good bit of it.  Here are some thoughts on what is going well and not so well during the endless deliberations.

HIT. The many physicians the Republicans have put forward to comment on repeal. It was so striking that at one point the Dem floor manager George Miller (D-CA) said he now understands why there is such a physician shortage – there are so many physicians in Congress. Pretty funny, but regrettably the large number of lawyers in Congress doesn’t seem to have resulted in a lawyer shortage.

MISS. Several Democratic congressmen from New York and New Jersey have said that if ObamaCare is repealed, thousands of their constituents will be deprived of health insurance due to their pre-existing conditions. No Republican has pointed out that those states have guaranteed issue (GI) for all lines of health insurance, so presumably there is no one in either state who would be deprived of health insurance for having a pre-ex. In fact, it is curious that the Dems have been able to make this such a key talking point, since on top of the GI states, some 37 states have high-risk pools, so no one should be unable to access coverage. Granted they may not be able to afford it, but affordability is a very different issue.

MISS. I have heard very little discussion of the enormous taxes in ObamaCare. Since cutting taxes is such a key issue for Republicans, one would think that cutting ObamaCare taxes would be reason enough for repeal. Plus, it is a great way to counter the argument that ObamaCare reduces the deficit. If it does so, it is only because it raises taxes dramatically.

HIT. The only Republican I heard who was actually interesting to listen to was Mike Pence. He clearly knows what he is talking about and can articulate it well. They should have given him more time.

MISS. I didn’t hear a single Republican point out that virtually all of the coverage expansion is through Medicaid – which is a lousy insurance program that is bankrupting the states. In fact, this is the “public option” that supposedly was not included. ObamaCare could well be renamed Medicaid Expansion.

MISS. One Democrat congresswoman from California pointed out that there is already a shortage of nurses and physicians, and now there will be millions of more people demanding care. Somehow she turned this into a positive, saying that therefore the law will indeed create jobs. No, it will create waiting lists of patients who need care. You can’t just create a physician by pulling someone off the unemployment line. Sheeesh!

MISS. I didn’t hear a single Republican point out that employers and unions are already voting with their feet on ObamaCare by securing waivers from compliance.

MISS. While the Democrats consistently blasted the Republicans for being in the pockets of the insurance companies, I didn’t hear a single Republican point out that ObamaCare creates an oligopoly of a very few privileged insurers under the Exchanges. Nor did I hear any question the cozy relationship between the Democrats and the drug makers.

Granted I may have missed something, but overall, I am left once again to wonder if the Republicans have the slightest idea of what they are talking about or how to craft a debate — other than maybe Mike Pence and Paul Ryan.

Krauthammer is Wrong

By Greg Scandlen

A few weeks ago Charles Krauthammer made a splash on Fox News by advising Republicans not to defund ObamaCare. He said:

“I am skeptical about taking away the funds because what it will do, it will poke holes in the system. It will make it more chaotic. It will allow some things to be enacted, others to be more slowly or clumsily enacted. In the end, if healthcare collapses or if it becomes utterly unworkable, the Democrats will have a way of saying ‘well, it was all these injuries inflicted by the Republicans that made it not work.”

But like a lot of political commentators, Mr. Krauthammer is focused entirely on the political shenanigans in Washington. He seems unaware that all across America an awful lot of people are investing a lot of money on what they see as the new opportunities presented by ObamaCare.

Politico reports that on the other side of the continent, in San Francisco, thousands of investors are placing bets on the idea that ObamaCare will be implemented pretty much the way it is. In an article headlined, “Investors See Health Law’s Potential,” they report:

As Republicans push forward on repealing health reform, planning the law’s demise, a different conversation is happening among thousands of health care investors gathered in San Francisco for this week’s J.P Morgan Health Care Conference: how to capitalize on health reform’s new business opportunities.

One example is Aetna, that is salivating over all the new business coming to it in the Exchanges:

Aetna is exploring how to capitalize on the individual market, expected to boom in 2014 when Americans must purchase health insurance or pay a fine. “We have major efforts underway to strategize on how to take advantage of those opportunities,” said the insurer’s CFO, Joseph M. Zubretsky, in a presentation to health investors. “We’re clearly understanding the risks…but with millions coming on to the health exchanges, one needs to not only balance risk but really understand the opportunity for growth that exists in this market place.”

Another is Molina Healthcare that sees major profits in Medicaid expansion:

Molina Healthcare, a company that has a large book of business in Medicaid, listed the millions of Americans who will become newly-eligible for Medicaid as a “health reform growth opportunity” in an investor presentation.

Add to that the millions of dollars being spent by employers, hospitals, drug companies, and physician practices on software up-grades, consulting and legal fees, and conferences to learn how to comply with the new requirements, and we are building an enormous infrastructure of businesses that are quite literally invested in this new law.

Once up and running, these interests will not want to throw away the effort. Even if they opposed the bill originally, they will soon become the biggest defenders of it.

That is why it is absolutely critical that implementation be slowed down in any way possible and as soon as possible. These companies need to understand that it is premature to invest a lot of money in this monstrosity. They need to hedge their bets and wait for the dust to settle. Talking about what we might do in 2013 will not cut it. We have to show them today that ObamaCare is on the ropes.