Tag: Public Option

Op-Ed: Sustainable Healthcare Reform

Jul 29, 2009• 12

By LAWRENCE W. ARRINGTON

President Obama made a risky wager when he decided to let Congress take the lead on crafting health care legislation, rather than presenting his own reform package. Congress is not known for taking bold, decisive leadership on tough issues. Normally, it reacts and gridlocks; it doesn’t lead.

As Congress takes its usual August recess without acting, it appears that Obama’s strategy has failed. But, has it? Is there a deeper strategy? What’s really at stake here?

Obama reportedly reasoned that Congress will do better in the long-run if it protects its institutional prerogative as law maker and doesn’t take on the appearance of being the President’s rubber stamp. This is a plausible calculation. The last time Congress was asked to respond to a President’s health care reform proposal during the Clinton years it did so by throwing the whole package in the trash can.Continue reading…

Speculators Bet Reform Won’t Hurt Industry

Jul 27, 2009• 19

By DON JOHNSON

Speculators seem to be betting that a watered down health insurance reform bill won’t hurt health insurers, hospitals, drug makers or medical device and supply manufacturers.

Stocks for almost all of these health sectors and for exchange trade funds that track health stock indexes turned higher last week. Why?

1. Congress is not going to get health bills through the Senate or the House in face of strong opposition by a minority of Democrats in both houses. This means opponents of the health insurance reform bills will have at least 45 days to convince members of Congress and the public that the bills favored by the president and his hard left supporters in Congress are a bad idea.

2. It is very unlikely that Congress will create a public option health plan, or Government HMO (Fannie Med). The votes aren’t there. This is a bit bullish for health insurers over the short term. White House talk about taxing insurers that offer gold plated health benefit plans makes no sense because few do. If such taxes were enacted, insurers would stop offering or administering such plans, and self-insured employers probably would drop them as long as union contracts didn’t lock them into such plans.

3. If the very liberal Coastal Democrats who lead Congress and most of the five commitees drafting health insurance legislation want to get the support of Democrats from Western, Midwestern and Southern states, they’ll have to up Medicare payments to providers in those states. This is bullish for hospital chains, which operate mostly in the fly-over states.

4. The Congressional Budget Office Saturday threw cold water on the idea of putting MedPac, a panel of self-interested health care and medical experts who would be subject to tremendous political pressure from Congress, in charge of deciding what insurers would cover and how much they would pay for procedures. The panel would save only $2 billion out of trillions over 10 years, the CBO guessed. And it was being generous to the idea that MedPac would save anything. This is good for drug and medical device makers, because it lessens the threat of new price and utilization controls on their products.

5. While www.intrade.com bettors think there’s at least a 46% chance that some kind of health insurance reform will be enacted before year end, the polls are showing Americans are increasingly opposing the bills before Congress. The politicians who created the laws and regulations that make Medicare, Medicaid, SCHIP and state and federal regulations of health insurance markets unworkable failures are promising to fix the health markets. They have less and less credibility every day.

6. Proposals to tax millionaires to pay for covering the uninsured and increasing benefits for others are in trouble, if not dead on arrival. The economy’s in no shape to be stalled by tax hikes, and there appear to be enough Democrats opposed to the tax to stop it.

7. While the so-called Blue Dog Democrats are stalling health insurance reform for economic and ideological reasons, the Congressional Black Caucus has made it clear that it won’t support a bill that the Blue Dogs will support. Throw in the opposition by anti-abortionists who don’t want the legislation to use taxpayers money to pay for abortions, and you have a pretty complex political problem for President Obama, Sen. Majority Leader Harry Reid (D-NV) and Speaker Nancy Pelosi (D-CA). While the Speaker claimed Sunday that she has the votes to pass health insurance reform, few believe her.

Some Democrats are saying that drafting health insurance reform bills is 70% to 80% done and it won’t take long to get a bill. Other Democrats are saying they want to take the time to write good legislation. The question is, can the Democrats and a few Republicans resolve the last 20% to 30% of the issues that need to be agreed upon to get a bill? It doesn’t look very good for health insurance reform at the moment, but some kind of a bill may pass in the next year or so, if not this year. Presidents Reagan, Clinton and Bush II all enacted major health legislation in their third and later years in office. All three bills have been financial and health care disasters.

Charts for health insurers are here.

Charts for hospital chains are here.

Charts for drug makers are here.

Charts for medical device and supply makers are here.

Charts for long-term care stocks are here.

Chart for health stock exchange traded funds are here.

Click on a chart to see a gallery of charts for a stock or ETF. Disclosure: I own BDX and options on STJ.

Don Johnson blogs at The Business Word Inc. Between 1976 and 1986 he was editor of Modern Healthcare magazine. As its top editor, Don helped build Modern Healthcare, a Crain Communications Inc. publication, into the hospital industry’s leading business magazine and one of the top magazines in the country.

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Live from Aspen: the moderates’ view on Obama health reform

Jul 27, 2009• 14

By Matthew Holt

Paul Krugman’s article today excoriates the Blue Dogs and a former dog Billy Tauzin in particular. He also (as I did a week or so back) wonders where the Dogs were when the Bush tax cuts were bumping the deficit more than the proposed health reform bill will and redistributing wealth from future poorer taxpayers to the very rich in the process.

Funnily enough I’ve been at the Aspen Health Forum where the self-same Billy Tauzin used his not inconsiderable Cajun charm and a dollop of PhRMA’s money to buy me (and a bunch of others) a whisky and a s’more on Saturday night, and took part in a couple of panels I watched on Sunday. We had a couple of brief chats, one about his cancer treatment and another about getting big Pharma to behave better. He claims some progress there (voluntary restrictions on DTC, better posting of clinical trial data, reductions in marketing excess to docs). I suggested that there was more progress required both in pricing policy and PR. He said it was hard, I told him that was why they paid him the big bucks.

Can HR 3200 Be Fixed?

Jul 23, 2009• 55

By ROGER COLLIER

Washington-united-states-capitol-washington-d-c-dccap1 Health care reform looks like it’s stalled. And rightly so, based on the provisions of the House Democrats’ health care reform bill. The grossly misnamed America’s Affordable Health Choices Act (HR 3200) combines the worst of all possible worlds: high taxpayer costs, big increases in federal deficits, and disincentives for businesses to hire, while leaving up to twenty million individuals still uninsured and doing little or nothing to control runaway national health care expenditures.

Although the bill would make health care coverage available to many of the millions who currently cannot afford it, its provisions will potentially add some $200 billion a year to federal expenditures, make only miniscule reductions in Medicare cost trends, and impose play-or-pay provisions and a new surtax that could hurt smaller businesses just as they try to recover from the recession.

So, is there anything that can be done to fix HR 3200 so that it would provide affordable universal health care coverage without increasing federal deficits or halting the recovery from the recession?

Should We Open the VA to All Comers?

Jun 3, 2009• 34

By MERRILL GOOZNER

Merrill Goozner has been writing about economics and health care for many years. The former chief economics correspondent for the Chicago Tribune, Merrill has written for a long list of publications including the New York Times, The American Prospect and The Washington Post. Until March of 2009, Merrill directed the Integrity in Science project at the Center for Science in the Public Interest. His first book, “The $800 Million Dollar Pill – The Truth Behind the Cost of New Drugs ” (University of California Press, 2004) won acclaim from critics for its treatment of the issues facing the health care system and the pharmaceutical industry in particular. You can read more pieces by Merrill at Gooznews.com,where this post first appeared.

Public plan proponents point to Medicare and its low administrative costs as their primary argument for why a similarly-structured public insurance product, offered through a Massachusetts-style insurance exchange (the connector), would dramatically lower health care costs. Not so, says blogger and health plan consultant Joe Paduda, who offered a persuasive rebuttal on the Campaign for America’s Future website last week. Joe made the following points:

1) Medicare has no underwriting or sales expenses or marketing costs. No commissions, either. This saves a lot of admin dollars. This differential would disappear in a health connector-type system, with the playing field leveled by dramatically reducing commercial healthplans’ marketing costs and elimination of their underwriting expense.

2) Medicare has one-time enrollment and dis-enrollment, and greatly simplified eligibility processes. This cuts their costs, but would not continue under a connector model.

His solution? Make the public plan an extension of the Veterans Administration, which he points out has lower costs, higher quality, higher patient satisfaction and lower utilization rates than virtually every other public or private insurance plan.

Good points. But what Paduda failed to note was that the VA also is a single-payer-type system that delivers health care directly, just like the British National Health Service. All its physicians are salaried; it owns its hospitals and clinics. The problem with using the VA as a model for the public plan is that those who would accuse its proponents of advocating for “government-run health care” would be right. How many of those proponents would be willing to stand up and say at that point: “Yes, that’s what we’re for.” Even Physicians for a National Health Plan over its more than three decades of advocacy for a single national health payer (“Medicare for all”) has never called for nationalizing the provision of care.