Wednesday, August 19, 2009

Rebutting the Misinformation Misinformation About Health Care

Accusations are flying about misinformation in the health care reform debate. President Obama, Democrats, and the drive-by media accuse Republicans, talk radio hosts, and “ignorant” conservatives of spreading lies about the House Bill (HR 3200) and their efforts to “reform” the system. Who’s telling the truth? A quick examination of motives could easily answer the question, but doing so would not give the truth much more credibility as the argument would invariably turn back to baseless accusations. Instead, I’ll go point-by-point through the talking points and reveal the truth more concretely.

First, let me address the issue of Health Insurance. Health Insurance, or sickness insurance, didn’t appear in this country until about 1911. Therefore, we have not always had Health Insurance; but we haven’t always had much in the way of healthcare either. I doubt anyone would have purchased insurance for the rare instances they went to a doctor to be bled out. Nonetheless, we talk about Health Insurance as being inextricably linked with Health Care. However, this is a mischaracterization. Absent Health Insurance one can still get Health Care – they just have to pay for it directly. Doing so is quite feasible as long as you are not beset by a major illness or injury. Even with the high cost of Health Care, paying out of pocket can be achievable for many people as doctors and medical facilities offer discounts to people paying directly and they will arrange for payment plans.

Still, many people have medical issues come up that are extremely expensive. Just having a baby can rack up a 5 digit bill. Therefore, we buy Health Insurance to offset the risk exposure to expensive Health Care costs. Contrary to the view of the President, Health Insurers do not (and cannot) exist to pay exorbitant Health Care costs for everyone. They hedge their bet by insuring large numbers of people. The gamble is that more insured will remain healthy and use less Health Care than will be unhealthy and require large sums of Health Care. If insurers don’t make money (even non-profits) then they won’t exist. In spite of their profit motive there is a symbiotic relationship between insurers and insured; if there wasn’t, they wouldn’t have any customers. Insured benefit because they mitigate their Health Care cost exposure while insurers benefit by making money – this is the impetus behind every business.

Now let’s start debunking some myths:

(A) You get to keep your private health insurance

I attended the Obama Town Hall in Grand Junction, Colorado on August 15th. During that event, President Obama said twice that Americans would get to keep their private Health Insurance plan and their doctors. He further criticized opponents for suggesting otherwise. A woman behind me, an ardent Obama fan, repeated the mantra before and after the event. I finally turned to her and told her that was a lie. On what basis did I say that? Am I an ignorant fear mongering Nazi?

It turns out that I have read the entire House Bill. Section 102 specifically states that you can only keep your existing Health Insurance the shorter of 5 years or when any term or condition changes. Terms and conditions are defined in the bill as co-pays, co-insurance, premiums, etc. Therefore, when your insurer raises premiums to offset the additional financial risk imposed by the “consumer protection” sections of the bill, e.g. “free” preventive care, no lifetime caps, no refusal for pre-existing conditions, your Health Insurance plan must become a qualified plan. The Bill doesn’t expressly define a qualified plan. It provides some minimum standards of coverage, but it leaves the details to the Health Choices Commissioner. Section 142 establishes the Health Choices Commissioner who is to be appointed by the President. This new unelected official is aptly named because he or she will get to decide what your health choices are. Specifically, the duties assigned to the Commissioner include defining and enforcing the benefit standards for qualified health plans.

Could your Health Insurance plan remain in place as a qualified plan? Perhaps, we don’t know, but it’s not going to be your choice or your employer’s choice…it’s the choice of the Health Choices Commissioner – ultimately the President’s choice. If your Health Insurance changes it’s also entirely possible your doctor will not accept that insurance plan; therefore, per the bill, you will not be able to keep your Health Insurance plan as it exists today and your ability to keep your doctor (other than paying out of pocket) is in jeopardy. But don’t worry, the government will decide for you.

(B) Rationing

All the King’s helpers and all the King’s men claim that the Health Care Bill won’t let government rationing begin. (Sorry for the knock-off of a Children’s fairy tale, but I think all fairy tales should rhyme) Meanwhile, Republicans, conservatives, and talk radio says quite the opposite. Who’s right?

It doesn’t say anywhere in the Bill that the government is going to ration care, but no one in their right mind would write it that way. However, the authority and mechanisms for rationing Health Care are rampant throughout the Bill. As mentioned above, Section 142 establishes the Health Choices Commissioner to define covered benefits in public AND private Health Insurance plans. If the government determines colonoscopies for people over the age of 70 aren’t cost effective, then guess what’s not covered?

Section 123 establishes the “Health Benefits Advisory Committee,” chaired by the Surgeon General (also appointed by the President), to “…recommend covered benefits and essential, enhanced, and premium plans.” Section 124 provides the process for “…adoption of recommendations; adoption of benefits standards…” by the Secretary of Health and Human Services (appointed by the President).

If you took the exact words from Section 3121 and put them in a document describing China’s Health Care system our State Department would be issuing grievances against China for trying to manipulate their population through Health Care. China’s plan would be called sinister and controlling. Apparently when it appears in our Bill it is going to promote better health and efficiency and lower costs. This section describes the development of a “…national strategy that is designed to improve the Nation’s health through evidence-based clinical and community prevention and wellness activities…” The strategy will be implemented by the “Task Force on Clinical Preventive Services” described in section 3131.

Throughout the Bill there are sections (the above sections included, you can also check out section 1401, “Comparative Effectiveness Research”) describing research with the intent of determining the best quality of care and best medical outcomes. While this sounds great on a purely philosophical level, the words “cost” and “effectiveness” appear as qualifiers for the research conclusions. Therefore, the Bill is promoting the coverage for procedures or treatments that are the most cost effective. This is no different than the exclusions found in Canada and the United Kingdom wherein their government’s decided certain drugs or procedures were not “cost effective.” Although this may seem reasonable, you have to realize these decisions will result in rationing on an economic basis. For example, Drug A might extend, on average, Grandma’s life 3 years but it costs four times what Drug B costs which will extend Grandma’s life 1 year on average. The entire population will be reduced to averages and the government will decide how much an extra 2 years of your life are worth.

As long as resources are scare – money and Health Care – there will be rationed health care. It’s unavoidable. President Obama and his ilk contend that private insurers already ration care, which is true. However, the difference is that private insurers have an incentive to provide better coverage and offer more options: they want more customers and the bigger profits that come with more customers. The Government only has incentives to limit options and coverage. Furthermore, the government will generalize its "effectiveness" research to all Americans regardless of geographic or cultural differences that impact health care outcomes.

Finally, regardless of your position on rationing, it is expressly apparent that HR 3200 would grant a massive amount of new control over our Health Care to the Federal Government. This cannot be disputed. I challenge anyone to find the section in the Bill that explicitly says the Government will not ration our Health Care.

(C) We will pay the costs of the Health Care Bill through savings in Medicare.

I lost count of how many times President Obama has said this. He wraps it together in a nifty package that includes a statement with some element of truth. He claims that our country’s massive deficits are exacerbated by Health Care costs, specifically the cost of Medicare/Medicaid. That’s were the truth ends in his monologue.

Obama contends we can reign in deficit spending by improving efficiencies in Medicare. This is a lie for two reasons: 1) The CBO estimates the savings in Medicare via HR 3200 will amount to less than $219 Billion over 10 years (read it for yourself at http://www.cbo.gov/ftpdocs/104xx/doc10464/hr3200.pdf) and 2) Medicare has an unfunded liability in excess of $60 Trillion.

No amount of modification of the Health Care Bill will overcome the massive fiscal black hole of Medicare. While efficiencies in Medicare are needed, the reason behind the unfunded liability is the rapidly growing disparity between those who are working and paying FICA to those who are retired and drawing benefits. This disparity is going to increase dramatically as the Baby Boomers retire in droves in the next decade. Even if impressive efficiencies were garnered from Medicare (laugh) the sheer number of people on Medicare will outpace the revenue. The only ways to resolve the financial disparity is to cut benefits (ration), cut the number of insured or increase the age requirements, and/or increase taxes. All of which the President claims will not happen.

Compounding the issue is the fact that the Trust Fund established for Medicare is a joke. For decades FICA revenues have been sufficient to pay the cost of our social programs and the surpluses were put into a trust fund. The money in the trust fund was “invested” in Treasuries. This sounds like a good idea – earn some interest on the surplus. However, the money paid to purchase the Treasury Securities was then spent by Congress to fund its deficit spending in the General Budget. In theory, there is a massive Trust Fund to pay for Medicare, but in reality there is no money to pay back those Treasuries. The Government must either raise taxes or borrow more money to pay back the Trust Funds.

No matter how you spin it, Medicare is BROKE. Claiming that we will pay the cost of the Health Care Bill with savings from Medicare is like telling the bartender you’re going to pay for your tab with savings from happy hour on all your future drink purchases. It’s illogical and irrational.

(D) The Public Insurance Option is needed to keep private insurers honest / Level playing field

You would have to be the biggest economic ignoramus to believe this argument. In addition, it is belied by this inconvenient little thing called the truth. Recently, President Obama has backed down from his staunch support for the Public Option in the Health Care Bill. However, he now appears to be backing a co-op plan. To borrow from Shakespeare, a pile of donkey poop by any other name should smell as horrid.

First, let’s talk about a level playing field. While HR 3200 does state that a public option must conform to the requirements for a “qualified” health plan, this requirement is hardly enough to equalize the public and private plans. President Obama claimed in Grand Junction that the public option would have to negotiate rates with doctors just like the private insurers do. However, the Government currently pays 47% of the Nation’s Health Care costs; it has tremendous negotiating power. The 1,200 private insurers together pay about 35% of the Nation’s Health Care costs. Medicare pays $0.55 on the dollar for reimbursements to doctors while private insurers pay an average of $0.85 on the dollar. One would expect similar results with a public option. Therefore, the public option immediately has a cost advantage.

Obama also claimed the public option would have to collect premiums. Fine, but what happens when the public plan’s expenditures exceed revenue? A private insurer would have to make changes, cut costs, raise rates, negotiate better deals. A public insurer can borrow money from America’s grandchildren and deficit spend. Just because you collect premiums doesn’t mean you’re subject to the same rules and have the same resources.

Finally, the Bill expressly defines a disparity in the playing field. Section 116 mandates a “loss ratio” (which translates into a mandated profit ratio) for private insurers. This ratio will be determined by the government. However, section 222 allows the public option to maintain a “contingency margin” to offset unforeseen outlays. These are two distinctly different ratios for public versus private insurers and both are determined by the government. Thus, the Bill obviates any chance at a level playing field.

What about keeping private insurers honest? Well, the bill already mandates a maximum profit per Section 116. The bill also provides several coverage requirements private insurers must meet throughout the 100s sections. In addition, the Bill gives the Health Choices Commissioner the power to determine what benefits each private insurer must provide. What more could a public option possibly do to “keep private insurers honest?”

The truth is the public option functions as a fall-back when all the private insurers go out of business – it is the doorway to a single-payer system. With the provisions in this Bill the private insurers will be unable to compete. Premiums will necessarily increase to offset the cost of “free” preventive care, no lifetime maximums, lower co-insurance, and preexisting condition exemptions. If any insurers remain following the implementation of the Bill, the Health Choices Commissioner can finish them off with more draconian requirements. This may sound like far flung conspiracy theorizing, but we know Obama wants a single payer system per his campaign speeches to the SEIU and the vehement support for the public option among liberal Dems is further evidence. Several Democrats have said there is no reform without the public option. Such a statement is so incongruous that it clearly evinces the true motivations behind the public option.

(E) The Health Care Bill will provide Health Care for all Americans.

Talk about setting your goals low – all Americans already have Health Care, they might not be able to afford it, but they absolutely have it. The real issue is the affordability of Health Care, not its availability. However, the Bill addresses Health Insurance and does nothing to change the fundamental problems in the system that drive up Health Care costs. If you disagree then tell me which sections in the Bill will improve the trajectory of Health Care costs.

Aside from the Bill being a misplaced hernia of massive government, the Congressional Budget Office released a report on July 17, 2009 that said 17 Million Americans would remain uninsured if the House Bill was signed into law. Therefore, even the ill conceived goals of the Bill will be ineffective. Despite the breathy sales pitch from our politicians and media, the Bill fails to even meet their tantamount claim – that it will provide Health Care for all. Want more proof? Section 1112 provides the Bill’s definition for significant reduction in uninsurance as a reduction in the number of uninsured by 8%. Check my math, but 8% doesn’t seem very close to 100%.

(F) Medicare recipients won’t be affected.

Considering 63%, by page count, of HR 3200 consists of modifications to the Social Security Act (Medicare), this contention is hard to believe. The entirety of Division B of the Bill concerns Medicare. Just by the sheer complexity of the Act and this Bill there are bound to be unintended consequences, but from reading the Bill it is apparent there are intended consequences as well.

As referenced above, the CBO reported there would be a $219 Billion reduction in Medicare. That’s not all because of efficiency either, it’s because they are cutting parts of the program out. Furthermore, the Bill contains numerous “Pilot Programs” designed to test pay for performance incentives to participating Medicare providers with the intent to implement those programs at a later date. Like a few things in the Bill, this sounds good upon initial review, but pay careful attention to the success criteria.

In one program, the providers with a lower per capita utilization rate will be compensated better than those with higher utilization rates. While you might be inclined to think this is a great way to incentivize doctors to reduce waste, there is a more dire consequence. If you compare utilization rates between Fort Collins, Colorado and Buloxi, Mississippi the doctors in Fort Collins will almost assuredly have lower utilization rate because the population is very active and healthy compared to Buloxi with its highest-in-the-Nation obesity rates. Therefore, this program would take resources away from an area that is more likely to need those same resources. The Bill states that no more money can be spent in the pilot programs than otherwise would have been spent without the program; therefore, some will get more and some less.

Additionally, Section 1401, “Comparative Effectiveness Research,” is in Division B of the Bill. This section, among many others, describes research intended to determine more cost effective treatments. While being cost effective is important, this section is a guarantee the government will reduce covered benefits for Medicare recipients.

(G) Small businesses will benefit from the Bill.

…and drinking six beers a day is good for your liver. Both of these statements are patently false.

Section 313 of the Bill describes the increased payroll taxes on small businesses with total annual payroll outlays of $250,000 or more. In a CBO analysis on the preference for private versus public Health Insurance (which is flawed because it assumes private insurance premiums will remain unchanged) the CBO uses $40,000 as an average worker’s salary. Given that assumption, this Bill will start imposing additional taxes on companies with 6 or more employees. I’m not sure about you, but in my book a company of six (including the owners) is still a small business. Even those small businesses currently providing some form of Health Insurance to their employees may be subject to the tax if the government decides, at its discretion, that the employer’s coverage is not “sufficient.”

Section 312 would again penalize small businesses with a minimum contribution requirement if the government deems the employer is not contributing enough money to the employee’s Health Insurance.

Finally, Section 441 imposes a surcharge on high income individuals (those making $350,000 per year or more). This ignores the fact that most small businesses are partnerships or LLCs. The member owners of these type of business formations pay taxes on their percentage of the profits from the business as if it were personal income (i.e. they are taxed on their salaries from the business AND their profits from the business). They pay these taxes even if all the profit is reinvested in the company. Therefore, this provision will effectively tax small businesses making more than $350,000 per year; it’s not just about individuals.

Section 421 provides a tax credit to small businesses providing Health Insurance to its employees…provided they have fewer than 10 employees (prorated for each employee beyond 10)…and provided the employees don’t make more than $80,000…and provided they employees don’t make more than $20,000 (prorated beyond that). At best, the employer gets a tax credit for 50% of the cost of providing the insurance. In Grand Junction, Obama told a woman who owns a small software company in Colorado Springs that while he wasn’t sure, she would probably be better off with the Health Care Bill. However, his statement completely ignores Sections 312, 313, 441, and the caveats of Section 421; not to mention the fact that most software engineers make more than $80,000 per year.

The Bill well illustrates the mentality in Washington DC that employers owe their employees Health Insurance. Our Federal Government treats business as its personal check book as if there is an unlimited balance available for their unabridged use. This ideology forgets that employers provide Health Insurance to their employees as a competitive advantage – to attract the top talent. There are industries where employment is not as competitive and the company may have no incentive to provide Health Insurance.

Wal-Mart is a common mark for liberals who despise free markets. They absolutely loathe Wal-Mart. Wal-Mart doesn’t provide Health Insurance to its normal hourly workers, but let’s examine the facts. 1) A full-time, minimum wage worker at Wal-Mart will make about $17,000 per year. 2) Providing individual insurance for that worker would cost about $3,000 per year ($11,000 for a family plan). 3) Wal-Mart has a backlog of employment applications. Given these facts, why would any sane manager at Wal-Mart spend 18% (65% for a family plan) of an employee’s salary on a Health Insurance plan? To lure the hundreds of other people who already dropped off an application? If Wal-Mart is required to provide insurance to all its employees, or else face an additional 8% tax on its payrolls, to whom do you think the additional costs will be passed? Everyone, including the Wal-Mart workers. This is effectively a tax on all Americans through higher consumer prices. Even those who don’t shop at Wal-Mart will experience higher costs at other retail centers because the same laws apply to other stores, and retailers that benchmark against Wal-Mart will commensurately raise their prices.

(H) The Bill will make Health Care more Affordable

There is no reason to believe this is true. While some Americans may get Health Insurance that didn’t have it already, thereby cost shifting to other Americans, nothing in the Bill addresses the root causes of our high health care costs. In fact, the CBO said the July 14th version of the Bill would increase Health Care costs.

The primary drivers behind our high cost of Health Care are:

1) Medical Malpractice – insurance for malpractice costs in excess of $150,000 per year per physician. Furthermore, doctors often perform more tests than necessary to insulate themselves from malpractice suits. There is no malpractice/tort reform offered in the Bill.

2) Illegal Aliens – Illegal aliens use a disproportionate share of our emergency rooms but don’t pay for their treatment and don’t pay taxes. The Bill excludes them from Government insurance coverage (as it should) but also doesn’t mandate they purchase their own insurance (in contrast to the requirement for citizens to purchase it). Likewise, there is nothing in the Bill to address the porous border with Mexico.

3) Innovation – Up to 50% of our increase in Health Care costs can be attributed to advancements in medical innovations. The Bill does not address innovation in any way – and it shouldn’t. Turns out, I’m willing to pay higher costs for advanced treatments.

4) Moral Hazard – Americans with insurance, private or public, do not make decisions about their Health Care based upon costs. Because insurance insulates individuals from the actual costs of the services provided there is no incentive to spend less. Health Savings Accounts address this in part by making the individual responsible for managing the funds available to pay for their Health Care. However, the House Bill makes Moral Hazard worse by mandating “free” preventive care and trying to further insulate the consumers from the costs. Instead, the Bill shifts the cost decision making to the government, i.e. government rationing, and provides incentives for doctors to cut costs – decisions that should be made by the patient in consultation with the doctor.

(I) Death panels for Grandma

No…the Bill doesn’t have a section with the words “Death Panel.” However, it must have a section that effectively means the same thing because the Senate leadership said that section (1233) would be dropped in the Senate version of the Bill.

Section 1233 authorizes Medicare to reimburse doctors for providing consultative sessions to patients on end-of-life planning. It’s not that end-of-life planning shouldn’t be discussed – it’s the existence of this section in the Bill juxtaposed against President Obama's speeches wherein he lectures on the benefits of taking a pill to ease your pain over elective surgery that may not extend your life very long. Furthermore, conflate the Bill with Presidential advisor Ezekiel Emmanuel’s writings noting that our Health Care dollars are better spent on individuals aged between their teens and 40s because investing in small children may not pay dividends and old people have a diminishing value to society. Taken in context, Section 1233 is disturbing. Furthermore, a physician should not be given the responsibility of explaining living wills, healthcare proxies, and medical powers of attorney. Those are documents an attorney should be discussing with people.

Moreover, what doctor needs a special session to explain to a patient the benefits of palliative care? Do you think a doctor wouldn’t explain pain management to an elderly person writhing in pain from cancer treatments unless it was in the Health Care Bill? Do doctors really not tell you about your treatment options, and chances for success of each, unless they’re given a special consultation fee? If they don’t that is a bad doctor, not a lack of government incentive.

When you look at section 1233 in the context of the rest of this Bill it is remarkably obvious the intent is to “sell” seniors on the benefits of dying instead of trying to extend their lives. Extending your life isn’t very cost effective.

(J) Special interest groups are trying to prevent passage of this bill.

This is about 50% true. I represent a special interest group…my family…and they’re pressuring me to oppose this bill because my 2-year-old doesn’t want to work the rest of his life just to pay for the government’s takeover of this country. However, there are a lot of special interest groups that want the Bill to pass.

Some insurance companies and pharmaceuticals are in bed because they get inked into the plan with sweetheart deals. Insurers want the plan because it mandates people to buy insurance (not realizing or being willing to admit the government has it in for them too). Big Pharma pledged its support and didn’t get completely shafted in the Bill. The American Medical Association signed on after Congress cut it a sweetheart deal worth $250 Billion.

However, section 2251, “Cultural and Linguistic Competency Training for Health Care Professionals,” offers some insight into another special interest group that’s very interested in the Bill’s passage. Subparagraph (3)(d) says that, “In awarding grants and contracts under this section, the Secretary [of Health and Human Services] shall give preference to entities that have a demonstrated record of the following: (1) Addressing, or partnering with an entity with experience addressing, the cultural and linguistic competency needs of the population to be served through the grant or contract. (2) Addressing health disparities. (3) Placing health professionals in regions experiencing significant changes in the cultural and linguistic demographics of populations, including communities along the United States-Mexico border. (4) Carrying out activities described in subsection (b) with respect to more than one health profession discipline, specialty, or subspecialty.”

Hmm…I wonder what kind of organization has that type of experience? Oh! I got it! Service Employees International Union! Let’s see…SEIU is directly linked to ACORN (same office and same founders) which is directly linked to President Obama (who he used to work for). In addition, we know that SEIU has been actively involved in crafting the Health Care legislation and its representatives have visited the White House on numerous occasions to discuss Health Care. The SEIU website is replete with “information” as to why we should support the Bill and counters to “conservative lies.” And who has been sending buses of people to Town Hall meetings around the country? I’ll give you a hint, they wear purple shirts and it rhymes with Ess Ee Eye You. Their website also lists all the ways you can support the bill including, shocker, protesting at Town Hall Meetings.

But surely mention in one little section of the Bill isn’t enough to garner so much support, right? Well, in addition to section 2251, the same language appears in sections 2531, 1222 (includes a direct provision for “Community Organizations”), 1302 (The SEIU represents Home Care providers and the Bill’s language would give them preference), 2213, 2214, 2215, 2232, 2252, and 3151. I may have missed a few sections where the preferences are in clear favor of the SEIU.

Thus, the record is set straight. The real impetus behind special interest support comes from the President’s buddy list – the very organizations that are literally writing themselves into the Health Care Bill.

Parting thoughts

The Health Care Bill is a mechanism to realize the goals of Socialist Liberals in their efforts to put control of our lives in the hands of government. While some liberals may be genuinely ignorant about how the World really functions, most are hungry for power. Their supporting constituents fail to understand the implications of massive government expansions, despite an ample history of failures throughout the World - they pay no taxes and therefore have no reason to oppose a handout at the cost of the “rich” whose success they despise in light of their own failures. When the health care bill results in higher consumer costs and undermine their purchasing power they will again blame the free market.

Do not succumb to the liberal spin machine. They are on the run. Unable to defend their plans with facts and data they are resorting to calling their opponents names and accusing them of resorting to the underhanded tactics they openly promote for advancing their agenda. Remain calm and continue to dispel their myths with facts and logic. Someone unable to defend themselves will lash out in an attempt to intimidate their opponents, but it turns out President Obama and Nancy Pelosi need to do better than “nyana nyana boo boo” to convince America it should impale its future on the sword of Socialism.

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