Archive for August, 2009
Democrats have promised Americans an extensive health insurance benefit package—one as good as that held by members of Congress. They also want to move much of the regulatory power over health insurance markets from the state level, where it currently lies, to the national level.
To see what this would mean in practice, let’s turn to the states. Among the regulations states enact are benefit mandates, which outline the specific treatments that must be covered in all plans offered in a state.
As researchers at the Council for Affordable Health Insurance write:
“While mandates make health insurance more comprehensive, they also make it more expensive because mandates require insurers to pay for care consumers previously funded out of their own pockets. We estimate that mandated benefits currently increase the cost of basic health coverage from a little less than 20% to perhaps 50%…”
The “consumer protection” of a rich benefit package mandated nationwide would actually drive up insurance costs. Moreover, our political system creates pressures for politicians to enact mandates:
“Elected representatives find it difficult to oppose any legislation that promises enhanced care to potentially motivated voters. The sponsors of mandates know this fact of political life…By the late 1960s, state legislatures had passed only a handful of mandated benefits; today, the Council for Affordable Health Insurance (CAHI) has identified 2,133 mandated benefits and providers. And more are on their way.”
It is likely that the federal one-size-fits all benefit package, as proposed in the bills moving through Congress, will end up resembling a state like Massachusetts (with 52 total mandates) rather than one like Utah (with only 23 mandates). The Democrats’ reforms would mean more mandates and higher—not lower—health insurance costs.
Washington likes to style itself as the center of the political universe, but this summer, the real action is in the states. At town-hall meetings, voters are giving their elected representatives plenty to think about.
Many lawmakers and the Obama administration have made it clear they want to pass massive health care legislation that includes a contentious option for a government-run health insurance plan.
Americans are smart to be nervous. This attempt for the government to enter the insurance market directly to “keep insurance companies honest” and “increase competition” may sound benign. It’s not. It will erode competition and change how anyone with some form of health insurance gets and pays for health care services.
If, for example, Congress passed and the president signed America’s Affordable Health Choices Act of 2009 (H.R. 3200), the law would have devastating effects. According to the Lewin Group, a highly respected health care policy and management consulting firm, by the law’s third year:
• Forty-eight percent of privately insured Americans would transition out of private insurance. Out of an estimated 172.5 million people with private health insurance, there would be a decline of 83.4 million people.
• Fifty-six percent of Americans with employer-based coverage would lose their current insurance. Of the estimated 158.1 million Americans with employer-based coverage, 88.1 million people would be shifted out of their current employer-based plan.
• An estimated 34 percent of the uninsured in America would still lack coverage. Of about 49.1 million people without health insurance, the legislation would only reduce the uninsured by 32.6 million people, leaving 16.5 million people without coverage. (more…)
The President and fellow Democrats seem to be switching their message on health care – pushing for reforming health insurance rather than overhauling the entire health care system.
The White House is proposing heavy new regulations on private health insurance market under the guise of so—called “consumer protections.” Many of the policies suggested by the Administration and Congress would result in sweeping, complex and highly discretionary new federal regulation of the health care system.
Consumers need protections not just from insurers but from the government as well. Americans should beware.
Here are few studies that shed some light on the real impact these proposals would have on the marketplace as well as a Heritage Foundation piece on better ways to help consumers:
Health Care News
Last week NBC News released a poll showing that while 36% of Americans believed President Barack Obama’s health care plan was a “good idea,” 42% of Americans believed it was a “bad idea.” NBC’s explanation for this inconvenient truth? “[M]isperceptions about the president’s plans for reform … that nonpartisan fact-checkers say are untrue.” Specifically NBC found that 55% of Americans believed Obamacare “will give health insurance coverage to illegal immigrants,” 54% believed it “will lead to a government takeover of the health care system,” 50% believed it “will use taxpayer dollars to pay for women to have abortions,” and 45% believed it “will allow the government to make decisions about when to stop providing medical care to the elderly.”
The President has since copied NBC’s diagnosis, devoting his Saturday Weekly Address to debunking these “phony claims.” The problem for NBC News, and the White House, is that every one of these concerns has rock solid foundation in fact.
Obamacare Will Provide Health Benefits to Illegal Immigrants: The President is correct when he says that the idea to provide illegal immigrants with health insurance “has never been on the table.” The problem is that the American people also know that despite the fact that our immigration laws did not intend it, there are 12 million persons illegally in the United States. The issue is enforcement and the provisions in H.R. 3200 are completely inadequate to ensure that illegal immigrants do not illegally obtain health care through the bill. In the House Ways and Means mark up of H.R. 3200, Rep. Dean Heller (R-NV) introduced an amendment that would use two citizenship status verification systems, the Income and Eligibility Verification System (IEVS) and Systematic Alien Verification for Entitlements (SAVE) programs, to establish an individual’s eligibility to obtain the bill’s proposed affordability credits or enroll in the public insurance option. Both programs are currently used to determine citizenship status and eligibility for other public assistance programs. Safeguards to guarantee that only citizens can access federal health care benefits are necessary, considering that the US Census Bureau currently estimates that 9.6 million of the uninsured are not US citizens. The Heller amendment failed on a straight party-line vote. (more…)
What is the best estimate of how a public plan for health insurance, as outlined in the health bill Democrats are moving through the House, would impact American health care
In seeking an answer to this question, The Heritage Foundation commissioned The Lewin Group, a highly respected health care policy and management consulting firm, to examine the national impact of the bill (H.R. 3200, the “American Affordable Health Choices Act of 2009”).
– 48% of privately insured Americans would transition out of private insurance.
– 56% of Americans with employer-based coverage would lose their current insurance.
– 34% of the uninsured in America would still lack coverage.
– Physicians would see their payment levels decline by $31.7 billion as a consequence of the new public plan.
– Hospitals could see their net annual income fall by $61.9 billion, which roughly eliminates hospital total margins.
With estimates from Lewin, the Congressional Budget Office and other groups projecting that millions would lose their private care coverage, it’s important for Congress to slow down the speedy process of pushing through a massive overhaul to our health care system and examine what would and wouldn’t really work.
Different versions of a “public plan” for health insurance have been proposed. In “Why a New Public Plan Will Not Improve American Health Care,” Walton J. Francis dissects the most prominent proposals and explains the pitfalls in each.
Two especially troubling elements of many proposals are government price controls—which are payment rates set by law rather than emerging from a competitive market—and mandatory provider participation requirements—which demand that doctors accept patients with public plan coverage. If a public plan included these regulations, it would not be on a level playing field with private plans.
A public plan proposal by Dr. Jacob Hacker of the University of California-Berkley includes these two elements, calling for “expanding a benefit-enriched variant of Original Medicare to Americans of all ages.” A similar plan from Dr. Karen Davis and colleagues of The Commonwealth Fund also preserves “government-dictated payment rates.”
Dr. John Holahan and Dr. Linda Blumberg of the Urban Institute have designed a public plan while remaining vague on whether it includes price controls and mandatory provider participation. However, “implicit in [Holahan and Blumberg’s] proposal is that the core requirements for a public plan are the ability of the government to compel provider participation and to dictate the prices of medical goods and services provided.”
Although these three plans are put forth with the goals of boosting choice and competition, they would actually undermine these important values. They would “displace most private sector health plan enrollment,” and their enactment would lead America towards a “single-payer system with private plans tolerated as second-rate alternatives.”
Arguments that these plans could contain costs or boost quality by modeling themselves on Medicare overlook the fraud and lack of managed care in traditional Medicare and the quality deficiencies in an existing public health insurance program— Medicaid.
Francis concluded, “No governmental entity in the United States actually administers a true health insurance plan,” so there is little preparation for this type of program. Finally, “Congress will not let the public plan fail,” so “competition and choice” in health care markets would become a memory.
Arguments for the creation of a public health insurance plan are grounded in four key claims. In “Illusions of Cost Control in Public Health Care Plans,” Heritage expert Robert Book, Ph.D., explains that all four are false.
The first claim is that “Medicare has controlled cost growth better than private-sector health plans.” The reality is that “when payments from all sources are considered, spending on Medicare beneficiaries is increasing faster than spending on the privately insured.” The amount Medicare spends per beneficiary is growing slowly, but Medicare is paying a shrinking share of its beneficiaries’ total health costs. The total amount spent on health care for individuals enrolled in Medicare is actually growing faster than the amount spent on individuals in private insurance.
The second claim is that “Medicare’s administrative costs are lower than the private sector’s.” The reality is that “per beneficiary, Medicare’s administrative costs are substantially higher than the private sector’s.” Medicare appears to have lower administrative costs because these costs are usually expressed as a percentage of total health costs. But because Medicare beneficiaries are all elderly, disabled, or diagnosed with end-stage renal disease, they have high total health care costs. Even though administrative costs are high in Medicare, when they are divided by the very large total health care costs within Medicare, the resulting percentage is small.
The third claim is that “bargaining power of public health insurance plans significantly reduces provider costs.” The reality is that “public plans do not bargain with providers, and bargaining power cannot affect provider costs. When providers use the political process to seek payments higher than those offered by public plans, they often succeed.” To the extent that Medicare pays providers less than private plans, it is because of the government’s regulatory power, not to any “bargaining.” More broadly, bargaining power does nothing to get at reducing the actual costs of care. Furthermore, the consistent success of physicians in lobbying Congress to raise payment levels above the formulas specified by law calls into questions the ability of any public plan to save money by reducing payments to providers.
The fourth claim is that “public insurance has pioneered new payment and quality-improvement methods that have frequently set the standard for private plans.” The reality is that “private-sector organizations have introduced new quality-improvement methods, new customer services, disease management, and coverage of preventive care.” Such innovations include the managed care HMO, a plan designed to coordinate care and reduce spending. The traditional Medicare fee-for-service plan does not include this innovation.
Tags: public plan
Perhaps the most controversial piece of Democrats’ health reform proposals is a new government-run (or “public”) health program. The plan would be offered nationwide and would be modeled after Medicare. Democrats argue that a public plan would give consumers another choice when purchasing insurance. The public plan, they claim, would inject competition into private insurance markets. Public plan supporters also argue that the plan would be designed to have low administrative costs, zero profits, and the ability to negotiate with suppliers, all of which would supposedly help control rising health costs.
However, analysts at The Heritage Foundation have cut through this political rhetoric and exposed the many dangers in the public plan proposal that Democrats are failing to mention:
Tags: public plan
Health Care News
“I cannot support this bill in the version it is in now. We can do better. We can make it better.” — to a crowd in Cross City, Florida, holding a copy of the House bill passed by the Energy and Commerce Committee (August 17, 2009, CNN News)
Case in point: The White House now has a taxpayer-funded Web site to “reality check” credible criticisms and arguments. Problem is the videos “debunking” each “myth” are low on facts.
Tags: reality check
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