Former Alaska governor Sarah Palin, who played a major and highly controversial role in the health reform debate last year, published her response to the Obama plan on her Facebook page yesterday. In the spirit of debate, THCB is republishing the full text of her remarks.
The President has wrestled control of the health care debate away from Nancy Pelosi and Harry Reid by finally introducing his own plan. Unfortunately, the White House’s proposal includes everything we found untenable about the old Senate bill – only this one is even more expensive! This is what you might call putting “perfume on a pig.”
What’s in this “new” proposal? It has the unpopular (and arguably unconstitutional)individual mandate that forces people and employers to purchase health insurance – only this time with much harsher fines on employers who choose not to go along with another expensive government mandate. It has provisions that will make employers think twice before expanding their workforce. It has cuts to Medicare Advantage, a popular program which allows seniors to pay a little more money out of pocket for better coverage. And, of course, it still has sweetheart deals – only this time they’ve been extended even more.
We don’t know what the final long-term cost of this will be because the Congressional Budget Office hasn’t had a chance to calculate costs. We do know that the White House recognizes that its proposal will cost tens of billions more over the next ten years than the already-expensive $2.5 trillion Senate bill. The Presidentpromised last July that he won’t sign a health care bill if it “adds even one dime to our deficit over the next decade.” But he’s now proposing a health care bill withuncertain fiscal repercussions that could lead to endless deficits.
It is hard to see how the health care plan the President released this week changes anything.
There is nothing new in it save a health insurance rate regulatory board that is an awkward political proposal at best. What powers would it really have and how would it operate in conjunction with the states already
charged with insurance company oversight are just two of the first questions it does not answer.
Fundamentally, what good would insurance rate regulation do if the President’s plan has only tepid cost containment built into it in the first place?
There are not the votes in the House right now to pass this new proposal—or the Senate bill. There are not likely even the votes in the Senate under a 51-vote rule for the President’s new plan.
That could change if the President scores a game changer on Thursday at Blair House that finally moves the polls from the 40% approval rating Democrats have had on health care to something over 50%.
Does it matter whether health insurance exchanges are state-level or national? I used to think that it wasn’t a major issue, but my opinion has changed.
During the health reform debate early in 2009, I thought that other exchange design issues were more important than whether they are organized at the state or national level. In my view, who is eligible to join (all small business employees or just those who receive subsidies?), whether the exchange is the exclusive market for individuals and small groups, and how the exchange will be protected from an adverse selection “death spiral” are critical design features and will determine whether the exchanges are successful.
It seemed to me that the arguments put forward by advocates of a national exchange were not compelling. The most common argument was that a national exchange was needed in order to gain sufficient size, which would supposedly give the exchange more bargaining power with health insurers. But I always thought that size was more important at the local level. Health insurers negotiate provider contracts locally, not nationally, and they gain leverage based on their size locally regardless of how big they are nationwide. In addition, the “bargaining power” argument is relevant only if the exchange is negotiating rates with insurers. In an “all comers” model, the exchange isn’t negotiating rates; it relies on healthy competition among insurers to drive down premiums.
Is it unconstitutional to mandate health insurance? It seems unprecedented to require citizens to purchase insurance simply because they live in the U.S. (rather than as a condition of driving a car or owning a business, for instance). Therefore, several credentialed, conservative lawyers think that compulsory health insurance is unconstitutional. See here and here and here. Their reasoning is unconvincing and deeply flawed. Since I’m writing in part for a non-legal audience, I’ll start with some basics and provide a lay explanation. (Go here for a fuller account).
Constitutional attacks fall into two basic categories: (1) lack of federal power (Congress simply lacks any power to do this under the main body of the Constitution); and (2) violation of individual rights protected by the “Bill of Rights.” Considering (1), Congress has ample power and precedent through the Constitution’s “Commerce Clause” to regulate just about any aspect of the national economy. Health insurance is quintessentially an economic good. The only possible objection is that mandating its purchase is not the same as “regulating” its purchase, but a mandate is just a stronger form of regulation. When Congressional power exists, nothing in law says that stronger actions are less supported than weaker ones.
On Monday, liberals sneered when insurers’ stocks rose, indicating that speculators thought ObamaCare (HR 3590) would be good for the big regional companies. But today several of the stocks are sinking, probably in response to University of Chicago Professor Richard A. Epstein’s op-ed piece in The Wall Street Journal, “Harry Reid turns insurance into a public utility; the health bill creates a massive cash crunch and then bankruptcies for many insurers.”
Here are charts for AET, CI, CVH, HS, HUM, UNH and WLP. Click on a chart for more information. The stocks that are sinking serve the individual and small group markets. Those that are rising are less invested in those markets, I think.
Now, the big companies might benefit from having smaller insurers that serve individuals and small employers bankrupted. But they would be crushed by new regulations and price controls that would not allow them to make profits. Nothing in the bill says insurers should be allowed to earn market returns. That means they’re as likely to go bankrupt as the smaller insurers.
Epstein’s impact graph:
The perils of the Reid bill are made evident in a recent Congressional Budget Office (CBO) report that focused on the bill’s rebate program, which holds that once an insurance company spends more than 10% of its revenues on administrative expenses, its customers are entitled to an indefinite statutory rebate determined by state regulatory authorities subject to oversight by the Secretary of Health and Human Services. Defining these administrative costs is a royal headache, but everyone agrees that they are heaviest in the small group and individual markets, where they typically range between 25% and 30%, without the new regulatory hassles.
Equally important, Epstein writes, the bill would turn insurers into heavily regulated utilities without giving them the right to make market rate returns on investments, which is unconstitutional.
That the bill appears unconstitutional may be good news for insurers, but think of the uncertainty that investors in insurers will face for years as the courts take their time deciding the case.
Why is it so hard to change the American health care system? And so much easier to change other countries’ systems?
I pondered this question recently while attending the Commonwealth Fund’s International Symposium on Health in Washington where our latest survey comparing primary care in eleven countries was discussed. I heard presentations describing changes that have been, or are being, implemented in England, France, Germany, Norway, Sweden, Switzerland, the Netherlands, Canada, Australia and New Zealand. In some cases, these are fundamental reforms in how medical care is delivered and how providers are reimbursed. Many of these countries can demonstrate real improvements in the quality of care and efficiency in their systems.
A few days ago my daughter, a physician serving largely the uninsured, came home emotionally drained from a typical day at the office. Most of her afternoon’s patients were seriously ill, facing expensive, complex care, and needlessly so. They had come into such poor health because of inadequate management of chronic conditions and mostly it was due to their inability to pay.
One of the day’s patients was a man in his forties who had been diagnosed with high blood pressure four years prior. Uninsured, he received inconsistent treatment for his condition, leading to a heart attack two years later. The attack precipitated heroic emergency room and then hospital treatments, free to him but expensive to the rest of us, including placement of a stent; however, with the immediate crisis over, lack of money for drugs led once again to gap-filled care. Key in his follow-up care should have been the drug Plavix, considered critical for avoiding clotting after stents, but he couldn’t afford it so he stopped taking it ten months too early. Now, just two years later, he’s developed severe high blood pressure that has damaged both his heart and kidney. Our medical system will provide him once again with heroic and very expensive hospital care, all of which likely could have been avoided if proper health care insurance had enabled his condition to be systematically managed for the past two years. The system as a whole, and likely government funding in particular, will end up paying hundreds of times more because his care was so poorly managed. Of course, we’re also losing a potentially productive man all the while, if not forever.
By Bill Kramer
Is there a “Third School” of reformers that could help us resolve the long debate about how to contain health care spending? Drew Altman’s recent column describes the history of the debate between the “Regulators” and the “Marketeers”, and he suggests that a new school of thought – the “System Reformers” – is in the ascendance. According to Altman:
The Systems Reformers believe that the best way to bend the cost curve is not through external market incentives or regulatory controls, but from the inside out, by creating a smarter health care system with the information base, new delivery models and payment incentives that will improve quality and lower costs. . . .
The Systems Reformers’ paradigm is reflected in the “bending the curve” elements of the health reform legislation currently in Congress, which mostly come in the form of pilot projects and experiments. These include tests of ideas like Accountable Care Organizations, “pay for performance” and “bundled payments,” as well as efforts to create a smarter, evidence-based health delivery system through comparative effectiveness research.
He describes the Systems Reformers’ approach as a “third leg of the stool of cost containment strategies.”
While Altman is right about the importance of the Systems Reformers’ ideas, I don’t consider this to be a new paradigm.
Our nation’s Founders created a pretty good system of government by starting from what they wanted to achieve, exemplified by the Bill of Rights, so perhaps we would be wise to base health care reform on a similar footing. Instead, Congress is doing its usual muddled process to produce legislation that is likely to make no one very happy, but at least tries to minimize the number of people made very unhappy. As is too often the case, it is easier to create straw men to attack than to address the real problems. Insurance companies seem to be everyone’s favorite target to demonize, but the “evil” health insurance industry is like the various other players in the health care system: responding to the numerous and often perverse incentives in the current system. There are bad things done to people by insurance companies — as there are done by doctors, hospitals, government, and just about every other player in the health care system. There are both angels and demons working in health care, but mostly it is just normal people. Perhaps ninety-nine percent of the people working in the health care system try to do right by the people they serve, but “doing right” may not mean the same thing to different people.
Being a futurist is not really about making predictions, but people ask for them anyway.
So here is one: The way things are trending right now, Obama and the Democrats will succeed in getting a reform bill – and it will cost them the Congress in 2010 and possibly the presidency in 2012. Why? Because it will be ineffective at bringing most voters any tangible benefits soon, and ineffective especially at bringing down the cost of health care.
Obama (along with everyone else) repeatedly talks about “affordable” health care. What the bill is most likely to bring is health insurance reform. This is very important, and will bring tangible benefits especially for those who must go without insurance now because they have “pre-existing conditions.” But there is nothing in the bills that are most likely to pass that will really bring down the costs of health care any time soon. Yet the bills demand that the health plans cover many more people, and the providers treat them, while putting in place no mechanisms that would forcefully and quickly control costs – so costs are likely to go up even faster than before.