WH Blog: Reality Check: WellPoint Analysis Continues the Misinformation Campaign — Reason Magazine: In Health Care, Nobody Knows Anything — Capitol Confidential:  HHS Chief Actuary on ObamaCare Total Health Care Spending Will Go Up, Not Down — When Asked Where the Constitution Authorizes Congress to Order Americans To Buy Health Insurance, Pelosi Says: ‘Are You Serious?’ — “Hoyer on Constitutional Law” — Doctors warn Medicare patients will have fewer options if Congress allows 21.5 percent reduction in payments — Johanns: Healthcare meetings a ‘shameful’ series of ‘backroom deals’


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So the White House is more knowledgeable than the medical experts?

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Reality Check: WellPoint Analysis Continues the Misinformation Campaign

Posted by Jesse Lee – FRI, OCTOBER 23

Constructive debate on health care is always welcome. It’s an important part of the process of achieving meaningful reform. Unfortunately, what we’ve seen out of the insurance industry over the past few weeks can’t be categorized as either “constructive” or even a “debate” but rather a misinformation campaign designed to confuse and distract attention from those who are seeking real health care solutions.

The most recent salvo was a set of state-by-state analyses released yesterday by WellPoint claiming that under health reform individual premiums would skyrocket. Like the now widely discredited report from America’s Health Insurance Plans (AHIP) and the deeply flawed Blue Cross Blue Shield analysis, the WellPoint study arrives at its conclusion by cherry picking certain policies and ignoring major aspects of reform that would affect both the number of people covered and the premiums they would pay.
Among the policies that WellPoint’s study consciously ignores: special policies for young adults including premium credits and a special “young invincibles” plan; reinsurance to lower the cost of catastrophic care; and the benefits of creating a new health exchange, which the non-partisan CBO says will reduce premiums. As a result, WellPoint reaches almost exactly the opposite conclusion that the Congressional Budget Office (CBO) and other independent health experts have reached about the benefits of health insurance reforms.
Bottom line: if you take a flawed methodology and break it down state by state, you still end up with a flawed result.
The WellPoint analysis did make one novel argument worth noting. It argued that imposing fees on health insurance providers and drug and device makers represents a tax on individuals and families. This is an argument that is being echoed by conservative think tanks like AEI. But the claim does not withstand scrutiny for at least three reasons:
  • First, the idea that the entire fee will be passed on to consumers is not credible – especially given the policy design. The policy assesses a flat amount per year, paid by companies based on their market share, beginning in 2010. The assumption that these companies will accumulate the amount of these fees and pass them along in a lump sum to enrollees later simply does not make sense.
  • Second, these fees are intended to recapture part of the benefits these businesses will get from reform. No one disputes that newly insuring nearly 30 million more Americans will increase their access to needed services – translating into new business for insurers, drug companies and device makers and other providers. This new revenue would far exceed the amount of the new fees – so if you believe that they will pass along the new assessment, they will also pass along their new windfall to consumers.
  • Third, the fees help improve and expand coverage and thus reduce the $1,000 hidden tax tens of millions of Americans pay for the uncompensated care of the uninsured. Even if you believed that somehow companies would find a way to pass the fees along, they would be more than outweighed by the benefits middle-class families would get from not only hundreds of billions of dollars in health care tax credits but from reducing the hidden tax they currently pay for the uninsured.


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In Health Care, Nobody Knows Anything

Two new industry studies reignite the debate about what makes health care so expensive.

Reason Magazine – Ronald Bailey | October 20, 2009

Nobody knows anything,” is the famous dictum that screenwriter William Goldman once asserted about Hollywood movie-making. Goldman was saying that movie producers have no clue about whether or not a movie will sell until it hits the theaters. There is no formula for a hit movie.

Figuring out health care in America is only slightly more complicated and mysterious than making a hit movie. Fifty million Americans are unable to buy health insurance and premiums have doubled over the past decade. Health care spending in 2009 consumes about $2.5 trillion, more than 17 percent of our gross domestic product. And as spending has skyrocketed, improvements in health outcomes have been real, but modest. What’s going on?

On Saturday, President Barack Obama denounced two new studies, sponsored by the health insurance industry, which found that current health care reform bills in Congress will increase premium prices for consumers. One study, done for the lobbying group America’s Health Insurance Plans by the consultancy PriceWaterhouseCoopers, found that the provisions in the Senate bill sponsored by Sen. Max Baucus (D-Mont.) would add $1,700 a year to the cost of family coverage in 2013 and $600 for a single person. By 2019, family premiums could be $4,000 higher and individual premiums could be $1,500 higher. A weak individual coverage mandate, coupled with a guarantee issue requirement, no preexisting condition limits, and no rating based on health status would significantly boost insurance premiums.

The Blue Cross Blue Shield Association commissioned a new study by the Oliver Wyman consultancy which also found that guaranteed issue and community rating mandates coupled with a weak individual mandate would drive up premiums by 50 percent for individual policies and 19 percent for small group plans.

“Every time we get close to passing reform, the insurance companies produce these phony studies as a prescription and say, ‘Take one of these, and call us in a decade,’” declared the president. “Well, not this time.”

The president is right that we should always be skeptical of studies that find in favor of the groups that sponsor them. And these two insurance industry-sponsored studies do have their flaws. But the finding that guaranteed issue and community rating mandates increase insurance premium prices has been corroborated by other academic researchers. For example, researchers from MIT, the Brookings Institution, and Brigham Young University reported in a 2008 study published in Forum for Health Economics & Policy that community rating regulations increased premiums for high-deductible policies for individuals by as much as 17 percent and families by as much 33 percent in the nongroup market. In addition, the researchers found that the “guarantee issue regulations that accompany community rating regulations in New Jersey are associated with premium increases of well over 100 percent for individual and family policies.” And as my colleague Peter Suderman recently pointed out, Massachusetts, the one state that combines an individual mandate, community rating, and guaranteed issue, now has the highest premiums for family insurance plans in the country.

President Obama also denounced the insurance industry malefactors for “making this last-ditch effort to stop reform even as costs continue to rise and our health care dollars continue to be poured into their profits, bonuses, and administrative costs that do nothing to make us healthy—that often actually go toward figuring out how to avoid covering people.”

Obama is right that administration costs can be quite large. Why would health insurers spend so much money on administration? According to the New England Journal of Medicine, the director of the Office of Management and Budget, Peter Orszag, cites evidence that $830 billion is being spent this year on unnecessary care. That represents about 30 percent of all health care spending. Of course, insurers have a big interest in trying to reduce unnecessary spending, so they hire flocks of administrators to negotiate lower rates and to monitor medical spending charged by doctors and hospital administrators. Government health care programs like Medicare don’t have to negotiate; government agencies just fix prices, which means they fail to combat waste and fraud effectively.

What about those insurance company profits? Back in July, President Obama asserted that health insurance companies are making “record profits.” Not really. The Annenberg Public Policy Center’s FactCheck.org reported, “In general, the health insurance industry did poorly toward the end of 2008 and in the first quarter of 2009, so record profits weren’t likely in the second quarter.” Averaging profits of 3.3 percent, health insurers are the 86th most profitable industry in the U.S., well behind chain restaurants (7.7 percent), electric utilities (6.2 percent), and brewers (18 percent), but ahead of major auto manufacturers (-3.3 percent), resorts and casinos (-8.9 percent), and major airlines (-11 percent).

We’ll pass over the president’s naked attempt to provoke voter envy about the big paychecks of health insurance executives, since taxing them away entirely would not perceptibly lower the costs of health insurance.

So why have health costs, and especially health insurance premiums, skyrocketed since 2000? Let’s look at one plausible theory: market consolidation. In the past two decades, fewer and fewer competitors are exercising more and more monopoly control over health care spending. Case Western Reserve political scientist Joseph White looks at the last time a Democratic administration pushed for health reform. In 1993, recalls White, “costs were expected to quickly hit 14 percent of GDP and rise to 18 percent by the end of the decade.” But that didn’t happen. Why? One plausible story focuses on the rise of health maintenance organizations (HMOs).

The rise of HMOs was enabled by an earlier federal government attempt to rein in health care costs, the Health Maintenance Organization Act of 1973. The idea behind HMOs was that these insurers would control costs by offering a wide array of preventive care to their subscribers. That sounds like a plausible idea until one realizes that people, on average, change insurers every four years or so. An insurer that invested in preventive care was unlikely to reap the cost-saving benefits. Thanks to the spread of HMOs, the 1990s saw the rise in health care expenditures slow down. Why? Chiefly because HMOs fiercely negotiated lower prices from physicians and hospitals. But the era of modest premium price increases didn’t last long.

Hospitals and physicians struck back by beginning to consolidate themselves. As hospital mergers produced local monopolies, they were able to increase their prices substantially. “I find that hospitals increase price by roughly 40 percent following the merger of nearby rivals,” Leemore Dafny, an economist at the Kellogg School of Management at Northwestern University concluded in a 2008 study. Insurers with relatively few patients could not bargain effectively with the new local health monopolies, and so dropped out of those markets.

According to White, the result of the 1990s orgy of insurer and provider consolidation was that “there were half as many health plans in 2004 as in 1996.” In addition, “in thirty-eight states the largest firm controlled at least one-third of the insurance market; in sixteen states it controlled at least half.” In this analysis, insurers and hospitals have evolved into local oligopolies. One plausible story, it seems, is that an ever more monopolistic health care system has been fueling the recent double digit increases in health care costs…]

**EXCELLENT READING **HIGHLY RECOMMENDED READING OF FULL ARTICLE**


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HHS Chief Actuary on ObamaCare: Total Health Care Spending Will Go Up, Not Down

by Capitol Confidential

Richard Foster, Chief Actuary for the Department of Health and Human Services’ Centers for Medicare and Medicaid Services, released this week to several Congressional offices a financial analysis of HR 3200, the House version of ObamaCare. He reached some inconvenient conclusions for President Obama and Congressional Leadership:

-“Total national health expenditures under this bill would increase by an estimated 2.7 percent in 2019…”

-“The additional demand for health services could be difficult to meet initially with existing health provider resources and could lead to price increases, cost-shifting, and/or changes in providers’ willingness to treat patients with low-reimbursement health coverage.”

-More than half of the expansion in coverage (18 million out of 34 million) would be from increased Medicaid coverage.

-12 million people would lose employer-sponsored coverage.

-The productivity adjustments to Medicare are “unrealistic” and providers “might end their participation” because the cuts would make serving Medicare beneficiaries unprofitable.

-Medicare Advantage enrollment would decrease by 64 percent (from a projected level of 13.2 million to 4.7 million under the proposal).

As of today, HHS still hadn’t published the analysis on their website, even though it was written by its own staff. We have a feeling it may never find a home there. So, we’ve brought it to you directly. Full financial analysis


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When Asked Where the Constitution Authorizes Congress to Order Americans To Buy Health Insurance, Pelosi Says: ‘Are You Serious?’

By Matt Cover, Staff Writer

CNSNews.com) – When CNSNews.com asked House Speaker Nancy Pelosi (D-Calif.) on Thursday where the Constitution authorized Congress to order Americans to buy health insurance–a mandate included in both the House and Senate versions of the health care bill–Pelosi dismissed the question by saying: “Are you serious? Are you serious?”

Pelosi’s press secretary later responded to written follow-up questions from CNSNews.com by emailing CNSNews.com a press release on the “Constitutionality of Health Insurance Reform,” that argues that Congress derives the authority to mandate that people purchase health insurance from its constitutional power to regulate interstate commerce.


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“Hoyer on Constitutional Law”

Radio Vice Online – by SoundOffSister

Luckily, that book was not required reading in my constitutional law classes.  Had it been, I strongly suspect that I would have failed the Florida bar exam “with flying colors”.

Representative Steny Hoyer (D. Md.) was recently asked a series of questions by CNSNews about the constitutionality of the proposed mandate that all Americans purchase health insurance or pay a tax.  His answers are more than a little revealing, particularly coming from a graduate of Georgetown Law School.

House Majority Leader Steny Hoyer (D-Md.) said that the individual health insurance mandates included in every health reform bill, which require Americans to have insurance, were “like paying taxes.” He added that Congress has “broad authority” to force Americans to purchase other things as well, so long as it was trying to promote “the general welfare.”

Well, let’s see.  The only place in the Constitution where the phrase “general welfare” can be found as relates to Congressional power is Article I, Section 8.  That section provides that,

Congress shall have power to lay and collect taxes…to provide for the…general welfare.

Under this section, Congress had the power to say, lay a and collect a tax on wages to pay for Social Security or Medicare as they are taxes to provide for the general welfare.  And, besides, in theory at least, with Social Security and Medicare you are  getting your own money back when you start to collect the benefits.  But the mandatory purchase of insurance is an entirely different matter, unless we rewrite the Constitution to say,

Congress shall have power to mandate the purchase of goods and services [in this case, insurance] to provide for the general welfare.

The best example I can give here is, under Rep. Hoyer’s version of the Constitution, Congress would have the power to mandate that all Americans purchase a membership in a health club, as that will promote the general welfare because people will become healthier.  Can anyone seriously contend that Congress has that power?

When addressing this issue in 1994, the Congressional Budget Office reported to Congress,

“the individual mandate  [is] an unprecedented form of federal action.”  This is because “the government has never required people to buy any good or service as a condition of lawful residence in the United States.”

But, Rep. Hoyer’s arrogance is even more frightening than his lack of  knowledge of the Constitution.


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Doctors warn Medicare patients will have fewer options if Congress allows 21.5 percent reduction in payments

By Monica Scott The Grand Rapids Press

GRAND RAPIDS — Senior citizens will find it harder to find a doctor who accepts Medicare if Congress does not stop a 21.5 percent cut in payment rates, say physicians and hospitals.

“We might as well start building bigger emergency rooms, because that’s where people will be if they don’t have access to a regular physician,” said Micki Benz, vice president of development for Saint Mary’s Health Care. “In the end, people’s care will suffer, and we will all end up paying more.”

Sen. Debbie Stabenow, D-Lansing, failed to get the needed votes Wednesday for legislation she sponsored that would prevent the rate reduction and eliminate the Medicare sustainable growth rate formula.

Lawmakers agree the formula, devised to keep Medicare spending in check, is flawed. But those who opposed Stabenow’s bill say they could not support the almost $250 billion price tag it carries over 10 years.

The slash in physician payments is scheduled to take effect Jan. 1. The annual ritual has been a last-minute scramble to prevent deep cuts, usually settling for a one-year fix instead of reform.

Annual uncertainty
Last year, lawmakers kept a 10.6 percent pay cut from being imposed. But physicians say they need a permanent solution, not the annual uncertainty.

“With a 21 percent cut, you either have to see 21 percent more people to cover the difference or you can’t accept any or as many Medicare patients,” said Dr. Michael Berneking, with Concentra Medical Center. “If you continue to cut, something has to give.”

The impact of a cut will vary depending on how many Medicare patients, most of whom are elderly, a physician serves.

A deteriorating system
Dr. David Blair, president of Advantage Health Physician Network, said Medicare is already a below-average payer to primary care.

He said the planned federal rate cut — along with a 3 percent tax on Medicaid that Michigan lawmakers are considering — will only accelerate the deterioration of primary care practices.

“Fundamental reform is necessary,” Blair said.

“It is estimated 70 percent of U.S. health care spending is around failed chronic disease management.”

Lori Heim, president of the American Academy of Family Physicians, said people should be concerned about limiting health care access to Medicare beneficiaries. She said it was shortsighted of lawmakers to oppose Stabenow’s bill.

“People without a regular physician die earlier,” Heim said. “We have to move away from a volume-based health-care system to one that’s outcomes and quality based.”


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The Hill – By Jordan Fabian

Freshman Sen. Mike Johanns (R-Neb.) in this week’s Republican address condemned the healthcare bill merger process as a “shameful” series of “backroom deals.”

Johanns advanced a line of attack Republicans have used against Democratic leaders since the Senate Finance Committee just over two weeks ago became the last panel to pass their version of healthcare reform legislation.

“President Obama has promised open deliberations in front of C-SPAN cameras for all Americans to learn how reform will impact them. However, a 1,500 page bill, full of carve-outs and backroom deals, is currently being brokered behind closed doors,” Johanns said. “We’re about to significantly alter one-sixth of our economy — now is not the time to shut Americans out.”

Republicans have roundly criticized the merger negotiations headed by Senate Majority Leader Harry Reid (D-Nev.), saying that the closed-door meetings with other Senate leaders and White House officials shut out Republican ideas and lack transparency.

Two Democratic negotiators have fired back. Finance Committee chairman Max Baucus (D-Mont.) and Senate Banking Committee chairman Chris Dodd (D-Conn.) said this week that the negotiations rank among the most transparent in which they have participated. Reid has also posted YouTube videos and Twitter messages following the meetings, though they have not revealed much substance.

But the former Nebraska governor hit on specific charges that senators have been able to insert provisions into the bill that ease the cost on their home states.

“Reports of this deal-making are shameful. Why do Michigan, Rhode Island, Oregon and Nevada get special deals on Medicaid costs? Why do New Yorkers with Cadillac plans get a pass on paying the tax? It is shameful,” he commented.

Johanns, who also served as Agriculture Secretary in the Bush administration, also argued against specific provisions in the bill such as the individual mandate and the potential elimination of before-tax Flexible Spending Accounts.

“The bottom line is this: We’re nearing 10 percent unemployment. We have a record budget deficit, and many families are working hard just to put food on the table and to pay the bills. Yet, there’s no doubt about it: These proposals will negatively impact pocketbooks and paychecks across America,” he said.


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Related Previous Posts:

Breaking: HealthCare Reform Bill Posted

CBO/JCT Preliminary Analysis: America’s Healthy Future Act of 2009 (Baucus Plan)

The Official White House “Lab Coat” Caper (Pravda Edition)

Senate To Use Sleazy Maneuver to Pass ObamaCare

Medicare Advantage Cut 8% Under ObamaCare: Thank You AARP For Supporting Our Seniors

Obama Sunday Talk Shows: A Broken Record

Related Links:

National Center Org:  No Free Lunch: The True Cost of ObamaCare

Politico:  Harry Reid closes in on 60 votes for a public health insurance option

AP via Yahoo:  House health care bill exceeds $1 trillion

Dick Morris And Eileen McGann:  WILL OBAMACARE PASS?

Michelle Malkin:  The bogus death statistic that won’t die

Dakota Voice:  Speaker of the House Embraces Unconstitutional Government

The Weekly Standard:  The Inevitability Myth


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