Summary of the proposed health-care reform bills.

Nearly all Americans are interested in enacting health-care reform legislation. I think that is because we are a deeply generous, caring people. Surely the dominant interest in reform springs from concern for low-income Americans who cannot afford health insurance.

Recently 5 health-care reform bills have been passed by committees of the U. S. House and Senate. The bills differ in how to cover the costs, but are fairly similar in the proposed benefits. Ironically, about half of the uninsured will remain so if any combination of these bills is finally adopted.

The bills propose major and minor changes to nearly every aspect of American health-care, driving up everyone’s costs and leading us down the path toward rationing. Because each of the bills is so enormous and deals with so many subjects, including some almost unrelated to health-care, very few members of the public, few journalists, and almost certainly few members of Congress have much understanding of the bills’ contents. There remains widespread hope that the bills will address the important issues and leave what we like mostly untouched. Unfortunately, that hope is not justified. The bills exacerbate the most critical issues (like the Medicare and Medicaid financial crises) and leave millions of poor Americans without insurance. Much more could be accomplished with much less expenditure and far less perturbation.

Below I have set forth a summary of the good and bad things the bills would do, along with the really important reforms that they neglect. Highlighted words or phrases provide links to explanatory information. My intent is to update this list as the final bill takes shape, and in the meantime to edit and correct items in the summary as necessary. Please check back.


Good things the proposed bills would do:

1. Provide health insurance to some of the low-income Americans who are not now insured.

2. Make health insurance available to people with pre-existing conditions.

3. Eliminate annual or lifetime benefits caps.

4. Support the view that health-care should be every person’s right.

5. Make minor reforms to Medicare and Medicaid.

6. Provide some incentives to encourage more primary care physicians and rural doctors.

7. Promote certain experiments to seek medical cost reductions.

8. Reduce individual health plan cancellations.


Bad things the proposed bills would do:

1. Impose an excise tax penalty for simply being an American, with an exemption for those of us with “qualified” health insurance plans.

2. Attempt to force healthy young workers to pay much of the cost of insuring “everyone.”

3. Raid the Medicare Trust Fund to misapply hundreds of billions of dollars for non-Medicare purposes, accelerating the pending Medicare financial crisis.

4. Defraud the public by collecting 10 years’ taxes to provide only 5 to 7 years’ benefits.

5. Reduce consumer choices in health insurance plans by forcing all plans to provide a comprehensive list of benefits and a minimum actuarial payout.

6. Impose benefit mandates that many people would not choose and that raise all insurance premiums.

7. Indirectly greatly increase insurance premiums via benefit mandates and “guaranteed issue.”

8. Drive many individuals and families who do not have employer plans to drop their private health insurance plans because of unaffordable increases in premiums.

9. Create a major financial incentive for people without employer insurance to opt out of health insurance, paying a low “excise tax” penalty, and then buy “guaranteed issue” policies for only as long as they have a serious illness.

10. Provide financial incentives for small businesses not to provide health insurance to their employees, or to drop their present insurance plans.

11. Probably destroy the market for non-employer plans. (In New York State, for example, “guaranteed issue” and attendant drastic premium increases have meant a drop in individual coverage from almost 6% of working adults to a bit over 0.2%).

12. Increase drug prices through an industry-wide excise tax.

13. Increase medical device and equipment prices through an industry-wide excise tax.

14. Reduce or eliminate medical innovation by imposing new taxes on the industry.

15. Penalize doctors who prescribe expensive treatments, regardless whether or not they represent “best practice.”

16. Create a cost-shifting environment that leads inevitably to health-care rationing and bureaucratically guided limits on end-of-life care.

17. Eliminate many of the few reasons that exist for consumers to control health-care costs, most obviously Health Savings Accounts and various co-pays.

18. Impose huge added Medicaid cost burdens on all state budgets by mandating increases in eligibility (and penalties for not signing up).

19. Increase job-related costs for all but the very smallest businesses.

20. Discourage job creation in this major recession by imposing new job-related costs on employers and new taxes on the income groups likeliest to create jobs.

21. Apply the wrong fix to “Cadillac” health insurance plans—assess an excise tax on insurers instead of taxing the excess premiums to the insured.

22. Destroy Health Savings Accounts by mandating benefits that are totally incompatible with the high-deductible insurance plan concept.

23. Semi-destroy Medicare Advantage (a Medicare option particularly favored by lower-income and minority people, which is chosen by over 20% of Medicare beneficiaries)--forcing some 8.5 million Americans out of this program.

24. Encourage many doctors to quit their practices, by further increasing physician costs and reducing physician income.

25. Give unfair breaks (such as exemption from “Cadillac plan” excise taxes and waiver of co-pays) to union workers and union retirees—what does that have to do with “reform?”

26. Promote unionization of the health-care industry—what does that have to do with “reform?”

27. Make the Internal Revenue Service the health-insurance cop.

28. Impose a medley of unpopular new and/or increased taxes.

29.  Introduce a novel exercise in socialism which is clearly intended to be a major step toward a single-payer scheme: The proposed “public option.” It would be a sibling agency to Medicare and Medicaid, and would be in essence an enormous new health insurance company owned and operated by the Federal government. It does not relate to any of the declared goals of health-care reform.


Important things that the bills don’t even attempt to do:

1. Get most of the uninsured Americans insured—health insurance premiums will remain beyond the reach of most middle-income people.

2. Make health insurance affordable to average income individuals and families—the bills will result in higher premiums, widely estimated to be a 40% jump.

3. “Bend the curve” to lower health-care costs—the only idea that actually seems to work is to give consumers more reasons to be conscientious about costs, but the bills actually reduce such incentives.

4. Reduce the rapid escalation of health-insurance premiums. Other than vague ideas to reduce the national costs by improving “quality” and determining “best practices,” the bills provide nothing to reduce premium cost escalation.

5. Address the Medicare and Medicaid financial crises. The bills are designed to exacerbate these problems.

6. Rein in rapidly escalating Medicaid costs, a matter that is critical to state finances as well as Federal. The bills greatly expand eligibility and reduce some co-pay categories.

7. Eliminate ineligible enrollees in Medicaid and S-CHIP.

8. Meaningfully address Medicare and Medicaid waste and fraud (said to cost over $60 billion/year).  That actually doesn't even require legislation--the President could simply order more vigorous enforcement.

9. Reconcile Medicare and Medicaid payments with actual provider costs; underpayment by the Federal programs causes cost-shifting that distorts health-care economics and encourages providers to decline Medicare and Medicaid patients. 

10. Eliminate the painfully unfair scheme where employer-provided health insurance is tax-free and individual plans are not.

11. Establish a nationwide health insurance market. (That reform would be essentially cost-free!)

12. Increase health-insurance competition.

13. Lower drug costs.

14. Provide medical tort reform (including defensive medicine, it imposes a cost burden estimated to exceed $240 billion/year).

15. Eliminate the practice of defensive medicine (estimated to add at least $191 billion/year to American health-care costs).

16. Reform the FDA to reduce the astronomical cost of working a new drug candidate through the approval process.

17. Eliminate the FDA’s practice of protecting existing drugs from competition by setting impossible “efficacy” hurdles for new drug candidates.

18. Expedite FDA approval of new drugs, devices, and procedures.


And the questions:

1.  Is bad legislation in the name of a public good better than no legislation?

2.  Will moderate Democrats and liberal Republicans join the Congressional leadership to ram this atrocious legislation down the throats of the American public?

3.  Can the Congress summon the integrity to junk this wretched set of proposals and start over to reform American health-care in a sincere and bipartisan manner?

Ramming through the Federal health-care takeover.

Here's a straight-talk editorial that summarizes the Congressional health-care "reform" effort quickly and accurately:  http://www.investors.com/NewsAndAnalysis/Article.aspx?id=509361.

Bailing wire and duct tape in the name of health-care reform.

Under current tax law, the cost of employer-provided health insurance is a deductable employer expense and the benefit is tax-free to the employee. This policy is generally recognized to constitute a subsidy to employees—the government forgoes tax revenues that it could otherwise claim through their income taxes. The crazy aspect is that an employer plan can provide an unlimited health insurance benefit to employees, far in excess of most plans.

For simplicity, let’s focus the discussion on family coverage, although it applies to individual employee coverage as well. In some existing “gold-plated” plans (often designed for high income employees) the employer’s cost per family is well above $20,000/year, reaching as much as $40,000/year. In contrast, the Congressional Budget Office estimates that this year’s average US cost for employer-provided family coverage is $13,000 per year. It is absurd and awful public policy to provide such a rich subsidy.

To help pay for the reforms, the Senate Finance Committee health-care reform bill proposes to levy on the insurance provider a 40% excise tax on the amount that the employer’s family premium for such a “gold-plated” health insurance plan exceeds $21,000/year, indexed for inflation. (It is understood that the insurance provider will add the excise tax cost into the premium, passing the cost on to the employer.) This “reform” is deeply flawed: (1) Any reform to the current scheme should certainly set the tax-free ceiling much lower—perhaps at 10% above the average for the employee’s state. A ceiling 60% above the average cost is absurdly high! The bill is designed to scrape up some revenue while allowing an unsound public policy to remain basically unchanged. (2) Furthermore, this excise tax provision will fail to raise the projected revenues, because at 40% the excise tax will cause most employers to reduce their plans to fit under the ceiling. (3) Obviously the correct fix is to make the excess premium over the ceiling taxable income to the employee. The bill ducks a proper reform of the existing law so that we can all pretend that it does not levy an increase in personal income taxes.

Will you support a bill that, in the name of reform, uses bailing wire and duct tape to preserve bad public policy—and by design fails to raise the intended revenues?

How about passing a massive, complex bill that's designed to fail?

The preliminary “scoring” of the new Senate Finance Committee health-reform bill was delivered by the Congressional Budget Office yesterday. It indicates that by 2019 the “reform” will still leave some 25 million people in America uninsured! That’s 9% of the projected population. In his speech to the Congress, President Obama said that there are currently 30 million uninsured, about 10% of today’s population. That means that this enormous and complex “reform” bill will barely move the needle on the problem of the uninsured poor. I will write to you separately about the overall cost of the bill and the proposed financing schemes, but the intent of this message is to point out that the bill is almost a complete failure in terms of its stated objectives. Do you plan to vote for a health-care reform bill even if it is designed to fail?

So every doctor will be a "death panel!"

The new health-care reform bill currently being debated in the Senate Finance Committee has many amazing but nearly undetectable gotchas.  One of the most outrageous is to use financial penalties to force doctors to use cheap diagnostics and treatments or, in effect, be fined.  (No wonder that Senator Baucus is in a great hurry to get the bill out of committee!)

As reported in a Sept. 25 Washington Post editorial “Death panels by proxy:”

“The offending provision is on pages 80-81 of the unamended Baucus bill, hidden amid a lot of similar legislative mumbo-jumbo about Medicare payments to doctors. The key sentence: ‘Beginning in 2015, payment would be reduced by five percent if an aggregation of the physician's resource use is at or above the 90th percentile of national utilization.’ Translated into plain English, it means that in any year in which a particular doctor's average per-patient Medicare costs are in the top 10 percent in the nation, the feds will cut the doctor's payments by 5 percent.

“Forget results. This provision makes no account for the results of care, its quality or even its efficiency.”

Forget also about whether the doctor specializes in difficult or extreme illnesses. Just keep mindlessly slamming him or her in the wallet. The idea is quite simply to drive doctors to choose cheaper treatments even when only expensive alternatives make sense, or make the best sense. It is a corollary of the nonsensical notion that expensive medical procedures are by definition bad and wasteful.  Will you support a so-called health-care reform bill laden with stealth provisions to deny effective care to all Americans?

Take a look before you vote!

Members of Congress should have ample time to read a bill before voting on it, and the press and public should as well. As you know, Congressman Brian Baird (D-WA) and Congressman Greg Walden (R-OR) have submitted a discharge petition that would bring Congressman Baird's "72 Hour Rule" (HR 554) to the House floor for a vote. Please sign the petition and vote for the resolution. You can help inject a little bit of transparency into the law-making process.

FDA rules to suppress competition.

In his op-ed article "The FDA Rejects Another Good Cancer Drug" (Wall Street Journal, Sept. 24), Matt Alsante says that the FDA stipulated that for the drug Yondelis to be approved it would have to show a six-week improvement over the most effective therapy now being used. What awful public policy! Americans don't need the FDA protecting existing drugs from new competition--only Big Pharma needs that. It is especially wrong-headed to block a proven cancer drug, since such drugs typically work for some patients and not for others. More options available to physicians will lead to more remissions. (By the way, even though Yondelis met FDA's demands it was rejected!)  Surely the laws empowering the FDA do not include a mandate to minimize competition for approved drugs. There is reason to question any preemptive FDA role regarding efficacy--how about letting the market work? But suppressing new drugs because they do not out-perform existing drugs is pernicious nonsense, suggestive of corruption. Nearly everyone in America is distressed or outraged about drug costs: It's the FDA's doing. Among our obvious needs is more competition; the FDA sees its role as preventing competition.

Health-care reform smoke dreams--what are they smoking?

President Obama says that, without reform, unnecessary Medicare and Medicaid expenditures resulting from fraud, waste, and inefficiency over the next 10 years will amount to $622 billion. That’s over $60 billion per year! Even in Washington, DC, that’s a lot of money—enough for an aggressive program to eliminate the causes. Yet none of the health-care reform bills under consideration in the Congress will begin to close those senseless rat-holes. Certainly they pay lip service to savings, with 50-odd new boards and Commissions, bonuses to hospitals for improving care, and increased penalties for fraud convictions. But a careful reading shows all of these measures to be hopes and dreams, characteristic of all of the failed attempts throughout history to reign in Federal expenditures and eliminate fraud and predatory raids on the Treasury. It is unreasonable to project substantial savings from such vague hopes, although the promoters of the bills include many billions of such savings in their financial scoring. Will you support a bill that combines enormous new expenditure levels with toothless, token provisions to eliminate Medicare and Medicaid fraud, waste, and inefficiency?

Surely you're joking, Mr. Baucus!

A fundamental concept in the health-care reform proposals of President Obama and Congressional leaders is to nudge all but the smallest companies into providing health insurance to their employees. Weirdly, the new health-care reform bill currently being debated in the Senate Finance Committee would create a perverse incentive for a company without employee health insurance to opt out. The bill would require a company opting out to pay a Federal penalty of only $400/year times its total number of employees. According to the Congressional Budget Office, average employer cost in 2009 to insure an individual will be about $5,000 and about $13,000 to insure an employee’s family. The $400 opt-out would be a terrific bargain! Although most companies that currently provide health insurance would be unlikely to drop their plans, the proposed nudge would be meaningless to the rest. Is this some kind of joke?

The dog eats my homework every day!

“This probably sounds a little crazy to some people that we are voting on something before we have seen legislative language.” Chairman Baucus of the Senate Finance Committee has a reason why the health-care reform bill-in-progress “can’t” be shown to the public: It would take his committee staff two weeks to post the bill online. Utter nonsense!

Link to an exceptional blog.

Just discovered the blog "Liberty's Watchdogs."  Highly recommended!  In particular, please see http://libertyswatchdogs.blogspot.com/2009/08/why-obama-gives-us-wee-wee-but-no_23.html#comment-form for a comprehensive, level-headed review of the health-care reform proposals in play.

Bring on the leeches!

On 9/23 in Senate Finance Committee debate, Chairman Max Baucus and others argued that Medicare is on a path to fiscal insolvency, perhaps as soon as 2017, and that diverting $400 billion of Medicare spending to non-Medicare uses would help ward off that disaster. That sounds just like bringing out a bucket of leeches to cure a patient afflicted with pernicious anemia. Do you subscribe to this Alice in Wonderland logic?