Consumer Power Report #176

Published May 1, 2009

I have never seen the free-market proponents in a debate as discouraged as they are over health care. We had a conference call recently and the mood was bleak. This was compounded by the fact that there was no unity. Everyone has his or her own pet peeve in health care and is uninterested in unifying around a theme. For one person it is wellness, for another it’s insurance company abuses, for another it’s hospital pricing policies, for another it’s expensive prescription drugs, and on and on and on.

I’m sorry, but this is crazy. If one side is yelling “trust the government to decide,” we have to respond with “trust the people to make their own decisions.” More government is not “health care reform.” It is more of what created this mess in the first place.

In This Issue:


I gave a talk last week to the Congressional Health Care Caucus, chaired by Rep. Michael Burgess, M.D. (R-TX). It’s short, no more than five minutes, but I think it lays out the argument pretty well. We have empirical support for all of these statements in the form of PowerPoints and a research paper that captures the data behind it. Check it out and tell me what you think.

SOURCE: You Tube; “Ten Ways Consumer Driven Health Care is a Proven Success.” (research paper)


The states seem to be spinning their wheels this year, waiting for the Feds to do something in health reform. I hope readers from the states mentioned below will weigh in to expand on the information coming from the local papers.

Iowa appears ready to pass a law that is more notable for what it doesn’t do than what is accomplished. The House had been working on a bill that would create an insurance exchange, expand SCHIP, let small businesses buy into the state employee plan, allow the children of illegal immigrants to enroll in public health insurance programs, and ban gifts from Rx companies to physicians.

But these provisions ran into heavy opposition in the state Senate, so the House dropped almost all of it and voted 92 to 3 to approve expanding SCHIP to families at 300 percent of the federal poverty level, but without any funding. It requires parents to enroll their kids in SCHIP if they qualify, but there is no penalty for not doing so. It also created a nine-person panel to recommend how to expand health insurance coverage.

SOURCE: Des Moines Register

Ohio is going Iowa one better. Instead of a mere nine-person panel, Gov. Ted Strickland has appointed a 26-person panel to “to facilitate health care initiatives statewide,” according to the Cleveland Plain Dealer. The article was prompted by a survey of small businesses in Ohio that found 69 percent do not provide health coverage and 71 percent of those that do are “really struggling to do so.”

The article says that 51 percent of respondents “believe government should play a bigger role in regulating the health care market.” But it quotes Carrie Haughawout of the Ohio Small Business Council as saying, “Small businesses don’t have a silver bullet that they think is going to fix health care reform. They need options and they want choices.” The article also points out that individual coverage is roaring as small employer coverage drops. Medical Mutual of Ohio reports a 300 percent increase in the number of individual policies sold so far in 2009. George Stadtlander, chief underwriter of the company, says, “It’s a huge change in our business because it really means we’re becoming a retailer instead of a wholesaler.”

SOURCE: Cleveland Plain Dealer

In New York, health insurance now costs more than the price of renting a two-bedroom apartment in the Financial District, according to Brendan Scott in the New York Post. And it’s not getting any better. The article says, “experts say rates will surge higher this year when companies pass along more than $853 million in insurance-related taxes included in the state budget.”

But in a fit of chutzpah, the state’s deputy superintendent for health, Tony Oechsner, says, “This is a huge problem and a major dysfunction of a broken market in New York.” Oh, yeah. Who broke it dude?

SOURCE: New York Post

Colorado enacted a bill that would “tax” hospitals $600 million and put that money into Medicaid to get a federal match and then pay the money back to the hospitals in the form of increased reimbursement. An article posted on Denver’s ABC affiliate cites Gov. Bill Ritter as saying, “This is the most significant health reform legislation in Colorado in four decades.” He thinks it is pretty clever because, “Ritter said there will be no increased cost to taxpayers.” Except, of course, those who pay federal income taxes. This is in no way health “reform.” It is just a shell game to squeeze money out of the Feds. It has been tried by a whole lot of other states, and if I am not mistaken, the Feds banned the practice about 10 years ago. It will be interesting to see if the new Obama administration will allow it.

SOURCE: The Denver Channel

A survey of employers in Colorado and Wyoming found that they are paying on average 85 percent of the premium for their employees. The article notes, “employers are increasingly turning to consumer-driven health-care plans as part of employees’ benefit packages, such as health savings accounts (HSAs) and health reimbursement arrangements (HRAs).” It says 21 percent of employers are now offering HSAs and 9 percent offer HRAs, up from 15 percent and 6 percent respectively two years ago.

SOURCE: Denver Business Journal

Pennsylvania is dealing with a pretty arcane issue of combat between Highmark Blue Cross and the two leading hospital chains in the Pittsburgh area. An article in the Post-Gazette says, “the West Penn Allegheny Health System (is) suing the University of Pittsburgh Medical Center and Highmark,” apparently for colluding to drive West Penn out of business. In the article commentators are skeptical that the major health plan would want to get rid of one of two competing hospital systems leaving a monopoly provider. And, indeed, the whole situation is puzzling. But it underscores how far we have come from a competitive functioning market in health care. Instead, there are a handful of oligopolies cutting backroom deals that have nothing to do with the needs of patients.

SOURCE: Pittsburgh Post Gazette


Good ol’ Massachusetts keeps everybody guessing about what will happen next. The (soon to be shuttered?) Boston Globe reports that older people in the state don’t like having to pay more for health insurance than the young folks do. Yep, us Baby Boomers expect everybody else to pay our bills for us. It used to be our parents and now it’s our kids and grandkids.

In tried and true “new journalism” style, the article by Kay Lazar starts right out with an anecdote — poor Sue Rummel “scaled back her coverage” when her premiums jumped 16 percent last year. “Then she tore cartilage in her right knee, and her downsized health safety net failed to protect her pocketbook. Surgery left her with $2,400 in unpaid bills.” She is not happy.

But wait a minute. Much further back in the article it turns out that, “Rummel would have had to pay $567 a month for comprehensive coverage, but opted for a more basic plan that cost $376.” So to avoid $2,400 in “unpaid bills” for an event that may have never happened, she would have had to pay $2,292 in premiums. What exactly is the problem here?

Now, granted health coverage in Massachusetts is outrageously expensive and the state failed to do anything at all to lower costs. It just mandated that everyone buy coverage regardless of the cost. But most of this article is whining because younger people who consume hardly any health services get to pay less. So, instead of putting the blame where it belongs — on the state — groups like AARP want “lawmakers to tackle the larger issue of age-based pricing.”

Nancy Turnbull, dean of the Harvard School of Public Health and a member of the Connector Board, says age-based rating is “unfair” and likens it to race-based rating. She also would like to include out-of-pocket spending to determine if coverage is affordable and therefore subject to the mandate. But Jonathan Gruber objects to that idea because, “it might encourage more people to go without insurance because they would be exempt from the tax penalty — a trend, he said, that would erode the state’s initiative to get nearly everyone covered.”

I can’t wait until Obama subjects the entire country to this kind of micromanagement.

SOURCE: Boston Globe

The web site Fierce Healthcare reports that Massachusetts is “facing [a] substantial physician shortage over [the] next decade.” It cites articles in the Boston Herald and a study from the Massachusetts Medical Society in saying, “Part of the expected shortage is driven by a loss of physicians due to retirement, though other sources have noted that the demand for primary care physicians created by the state’s health plan has exacerbated the issue.”

SOURCE: Fierce Healthcare

The Boston Globe also reports that the use of hospital emergency rooms is soaring in Massachusetts. It says, “the cost of caring for ER patients has soared 17 percent over two years, despite efforts to direct patients with non-urgent problems to primary care doctors instead, according to new state data.” Nearly half of the 2.5 million ER visits in 2007 “didn’t require immediate treatment, or could have been treated in a doctors’ office,” according to the article.

The article by Loz Kowalczyk goes on to say, “Several physicians and policy makers said the state information, along with other new data from Harvard researchers, suggests that emergency room crowding and rising costs will not be solved by providing people with health insurance alone, despite optimistic talk by politicians who advocated for the law.”

“Despite optimistic talk by politicians” could be the theme song for the next four years.

SOURCE: Boston Globe

By the way, it is worth noting, as The Wall Street Journal has, that rising use of the emergency room is NOT coming from the uninsured, but from “those whose incomes put them at more than four times the poverty level, and who typically get their care at a doctor’s office.” While use of ERs grew by 26 percent from 1996 and 2004, “the percentage of uninsured ER patients remained flat, at roughly 15 percent.”

The story concludes, “this has important implications for the national health-reform push. If you give everyone insurance, there are going to be more people trying to get in to see primary-care doctors — and, perhaps, heading to the emergency room when they can’t get an appointment.”

SOURCE: Wall Street Journal


Writing in The New York Times, Robert Pear headlines a story, “Shortage of Doctors an Obstacle to Obama Goals.” He says, “Obama administration officials, alarmed at doctor shortages, are looking for ways to increase the supply of physicians to meet the needs of an aging population and millions of uninsured people who would gain coverage under legislation championed by the president.”

So what are they planning to do about it? “Increase Medicare payments to general practitioners, at the expense of high-paid specialists” and “encourage greater use of nurse practitioners and physician assistants.”

Could these people possibly be any dumber? They want to boost primary care payment (by a smidgeon) by taking it away from specialists — at a time when we also need specialists? And the shortage of nurses is even more acute than the shortage of primary care physicians. Meanwhile everything else they are doing — mandatory purchase of health IT systems, federal interference with physician practice, raising taxes on any family making more than $250,000 (like a two-physician couple), etc. — is calculated to discourage and dishearten existing physicians and drive them faster into retirement.

SOURCE: The New York Times

These kinds of issues will never be raised because of the decision by the Obama Administration and Congressional Democrats to short-cut debate by using the budget reconciliation process. Former Sen. John Sununu points out in The Wall Street Journal that reconciliation limits debate to 20 hours — TWENTY HOURS! For the most important and sweeping change in health care of our lifetimes!

Obviously these people and these ideas cannot stand scrutiny. They want to do it all on a hurry-up basis before the American people can find out what they are up to. What did you expect from a Senate Majority Leader who stated publicly that Americans who want to visit the Capitol smell bad and offend his refined sensibilities?

Below is a collection of articles on the reconciliation decision.

SOURCE: The Wall Street Journal;
Washington Post;
The New York Times