Consumer Power Report #181

Published June 5, 2009

I’m very excited that the new CHCC Web site ( is up–just in time for the Big Debate. Please take a look. We have retained most of the things that made the old site special, including the Book Store and the Speakers Bureau (which needs to be updated.) And we have added some new features, including links to all the CHCC videos from the past several years.

Please let me know if you would like to be included in the Speakers Bureau (for members only) or have videos that we should be featuring on the site. We also want to upgrade the “resources” page, which hasn’t been updated for some time.

I am having problems with my [email protected] email so please use [email protected] for the time being.



The Rasmussen Survey finds voters are evenly split on the urgency of health reform. A press release says, “Forty-six percent (46%) believe the Obama administration should move ahead with health care reform, while 45% say it should wait until the economy improves, according to a new Rasmussen Reports national telephone survey.”

SOURCE: Rasmussen Surveys

Jane Norman in Congressional Quarterly quoted me and several other free-market advocates as being discouraged about the lack of unity from our side of the fence. One quote that got circulated in the blogosphere was, “Scandlen had few kind words for Republicans in Congress, who would seem to be natural allies. While they are often criticized for being too ideological, he said, they have displayed no ideology on health care, and not even much real interest. ‘They are virtually useless,’ Scandlen said. ‘There are a few bright lights, but not many.'”

I’ll stand by that. We can’t wait around hoping for Congressional leadership on this issue.

SOURCE: Congressional Quarterly

Meanwhile as things become less abstract, the Democrats’ unity is being tested as well. The New York Times reports, “A significant split has developed between the two Democratic senators leading efforts to remake the nation’s health care system.” Apparently Senators Baucus and Kennedy are especially divided over whether to include a government option.

SOURCE: New York Times

The chronic problem for Democrats is their impulse to over-reach. The Wall Street Journal reports Mr. Kennedy wants to add “a new disability-insurance program that would automatically enroll all American workers as part of the sweeping health-care bill he is preparing to introduce.” For a premium of $65 a month, people would collect $50 a day if they cannot perform three “activities of daily living.” Most commentators I’ve heard from say there are far better policies out there on the market.

SOURCE: Wall Street Journal

Writing in USAToday, Susan Page reports “Hurdles Remain in Obama’s Push to Revamp Health Care.” She writes, “This year’s fast-track timetable on health care calls for leaders of key congressional committees to unveil legislation this month, debate it next month, and pass it before leaving for the summer recess in August. Final passage would follow in September or October, before next year’s elections start to complicate things. That, at least, is the plan. So what could possibly go wrong?” She goes on to describe how it may not all be smooth sailing.


One of the obstacles, of course, is that the single-payer folks are uninterested in anything less. Victoria Colliver writes in the San Francisco Chronicle, “Frustrated by the exclusion of government-financed medical care from the debate to revamp the nation’s troubled health system, advocates of a ‘single-payer’ plan are increasingly turning to demonstrations and civil disobedience as a way to get their message across.”

SOURCE: San Francisco Chronicle

Amid all the hooplah fomented by the single-payer crowd, consumer-driven health care (the real Power to the People!) gets lost. But John Torinus writes in the Milwaukee Journal Sentinel, “Consumer-driven health care is the only practical solution.” He says the health reform debate “comes down to a battle of political philosophies: one a top-down model of how the world should work, the other bottom-up. It can be characterized as bureaucrat-driven vs. consumer-driven.” He describes some of the problems that existing government programs have, and says, “it is proof positive that there isn’t enough money in the system to let the government run a poorly managed program that would expand to many more Americans. In contrast, there is plenty of money in the system if the grass-roots revolution on consumer-driven health care is allowed to flourish and if the principles learned in the private sector are incorporated into the necessary public plans that serve as a safety net.”

SOURCE: Journal Sentinel


We are about the repeat the mistakes of the early 1960s when the Kennedy Administration hired “the best and the brightest of their generation” who were certain they could effectively manage their way out of any situation. These included such luminaries as Robert McNamara and the ever-present Alain Enthoven. These are the very same folks that made such a hash of Vietnam, resulting in the loss of 50,000 young Americans because these Ivy League managers believed they were smarter than the military professionals who actually knew something about fighting wars.

An example was provided recently by the New York Times‘ David Sanger (, who profiled 31-year-old “Brian Deese, a not-quite graduate of Yale Law School who had never set foot in an automotive assembly plant until he took on his nearly unseen role in remaking the American automotive industry.” His sole experience was as a political operative for the Hillary Clinton campaign.

More pertinent to health care are Peter Orszag and Atul Gawande, by all accounts both geniuses, but people whose very brilliance may be their greatest weakness. Like a lot of bright people they are subject to hubris, a feeling that they are so much brighter than the people around them that they are never wrong.

Mr. Orszag runs the Office of Management and Budget (OMB) and is convinced the United States “wastes ” $700 billion a year on unnecessary health care. If we could only get rid of all that waste, he argues, we could not only improve health care, but balance the federal budget for generations to come. He wrote recently in the Wall Street Journal (, “If we can move our nation toward the proven and successful practices adopted by lower-cost areas and hospitals, some economists believe health-care costs could be reduced by 30% — or about $700 billion a year — without compromising the quality of care.”

Like Robert McNamara, he believes this can be done through better management systems. He writes, “There are four key steps: 1) health information technology, because we can’t improve what we don’t measure; 2) more research into what works and what doesn’t, so doctors don’t recommend treatments that don’t improve health; 3) prevention and wellness, so that people do the things that keep them healthy and avoid costs associated with health risks such as smoking and obesity; and 4) changes in financial incentives for providers so that they are incentivized rather than penalized for delivering high-quality care.”

He fails to understand that management systems can go only so far. For instance, it is easy to look at a particular case in hindsight and say this, that, or the other service didn’t pay off and should not have been performed, but it is a whole lot harder to know that ahead of time when the patient is bleeding and in pain and the doctor has 10 seconds to make a decision. Like Mr. Deese, Mr. Orszag has never had this kind of responsibility. He’s a numbers cruncher.

The same thing cannot be said of Dr. Gawande. He is a real doctor, a surgeon, and he knows his way around an OR. He had a marvelous article published in the New Yorker ( in which he puzzles over McAllen, Texas, “one of the most expensive health-care markets in the country.”

He spends a great deal of time on the scene, talking to physicians and hospital administrators there. For my taste, he is a little too scornful of their ignorance of national statistics. They are, after all, focused on running their businesses. But he finally concludes that is exactly the problem. He says they should be more like the non-profit Mayo Clinics which has everyone on salary. Again, for my taste this is a bit too much like a mother asking her younger son “why can’t you be more like your brother?” Or like the boast that in Lake Woebegone all children are above average. Over the years we have had plenty of examples that non-profits can be as bad as or worse than for-profit systems, and that putting physicians on salary can lead to under treatment and professional neglect.

CHCC member Donna Kinney was even more insightful. In an exchange of e-mails she said, “It seems pretty clear that Gawande drew the wrong conclusions. The most notable difference between McAllen and ANYWHERE else, according to the published Dartmouth data, is that McAllen has far fewer physicians. The result of this is that there is very little ambulatory care, far more inpatient days and a larger proportion of the care is delivered in the emergency room. It’s the shortage of physicians in McAllen that is causing cost to be so high. I don’t know how Gawande missed it.”

She went on to explain, “When patients can’t get office visits, they go to the emergency room and they don’t go until they are very sick (because ER wait times can be 4 to 8 hours or more). Note that the emergency rooms are included in ‘outpatient’ care in the Dartmouth data. Also note that Dartmouth data is Medicare only, so it’s not because patients are uninsured. And yes, patients in the emergency room are more likely to get more diagnostic testing than patients seen in physician office visits. Partly because they come in sicker, and partly because the ER physician has to diagnose fast and get patients out of the ER — they can’t wait for the results of one test before ordering the next one.”

She also noted there is a physician shortage in El Paso, too, but people there tend to cross the border into Juarez, Mexico for physician services, but there is no similar opportunity across the border from McAllen.

So, again, the problem with putting the best and the brightest in charge of everything is that they sometimes miss the obvious and are not sufficiently humble to question their own assumptions.


The Rand Corporation was once considered a respected source of objective information. It used rigorous analysis to help shape public understanding of the issues before us.

That was then, this is now.

Although it still sticks the slogan “Facts you can use, analysis you can trust” at the top of its papers, today it is so lazy and superficial that it is a wonder they actually pay people to write this stuff. One example was the short paper Rand did on health information technology ( . The paper was widely cited as supporting a major appropriation for health IT, but in fact the paper was completely one-sided and looked only at positive research. It deliberately ignored any research that suggested health IT would increase medical errors or would be difficult to implement.

More recently, Rand issued a paper on out-of-pocket (OOP) spending ( that, again, relies solely on studies that suggest OOP spending is a growing burden for Americans and is not distributed fairly between economic classes. And it applies such a shallow analysis that it provides absolutely no understanding of the issue.

The paper cites various studies from people fretting that folks are paying 5 percent to 10 percent of income for health care services. Yet the nation as a whole spends 16 percent of its income on health care. Anyone spending 10 percent is getting a bargain.

Except, this paper conveniently neglects to factor in what people are paying in taxes and lost wages. That is of no concern to them, even though there is a direct trade-off between OOP spending and higher taxes or lower wages. Let me illustrate:

A worker who makes $50,000 may have $5,000 in medical expenses, perhaps because he has a $5,000 deductible. This paper considers that a very bad thing.

That same worker might avoid the $5,000 if his employer enriches his benefits. But to do so the employer would reduce his wages to $45,000. The authors of this paper would say HOORAY!!!!! Zero out-of-pocket!!! Nirvana has been reached!

But the worker is no better off. Actually, the worker is worse off because of the administrative cost of processing that $5,000 though a health plan. He gets fewer medical services for the same amount of money.

The same thing applies to taxes. This paper bemoans the fact that lower-income people pay so much OOP as a percentage of income, but it completely ignores the fact that the higher-income folks are paying heavy taxes to pay for the health care needs of those same low-income workers.

This business about the “underinsured” has become a major theme for the Left. The Commonwealth Fund hired Watson Wyatt to do a study of out-of-pocket costs for people with employer-sponsored health insurance. It found, “In 2007, adults with employer coverage faced an average of $729 annually in out-of-pocket costs for medical services, including deductibles and other forms of cost sharing such as copayments and coinsurance. That represents a 34 percent increase from 2004, when the average out-of-pocket burden was $545,” according to the San Antonio Business Journal. ( It is not clear whether “faced” is the same as actually paying these costs or if this was simply the amount of exposure people had.

Curiously, the United States has one of the lowest rates of out-of-pocket spending of all the OECD countries ( — 13 percent of total spending in 2005. Only France (7 percent), Luxembourg (7 percent), and the Netherlands (8 percent) have less. Even Canada relies on OOP spending more than the U.S. at 15 percent. The OECD average is 20 percent. The OECD average for all non-governmental spending is 26 percent. That means there is not a single country in the industrialized world that really has “single payer.” They are all a mixture of public and private spending.


Here’s your chance to make a difference (at no cost, other than a few minutes)

We (Dave Racer and Greg Dattilo) are doing a national survey of at least 50,000 employers, and need to have it completed by June 19. We need your help. Agents are looking for a way to help, but opportunities have been limited. Here is the opportunity to make a huge difference.

Here’s how:

Please clip and paste the email below and send it to every employer on your personal and business email list. Take it yourself, too. It’s that simple.

Here’s why:

We need employers on our side. This should be easy, if they know what lays in store for them. They need to be educated about what Congress wants to do to them.

An outcry from tens of thousands of employers and their employees from across the country will turn the tide in the current debate.

Surveys are a successful way of educating employers. Employers love to give their opinion that a well-written survey delivers.

As the employer completes the survey — — he or she thinks through each question and knowledge and understanding is delivered.

The possible new laws Congress wants to pass will change how employers must do business more than any previous federal legislation. The survey — — as a result, targets mandatory universal health coverage and the Health Insurance Exchange (HIE).

The mandate will force employers into becoming the government’s H.R. department, and drive up their administrative cost. Many small employers say it will put them out of business.

The HIE is where a few government-designed health plans will be purchased and delivered. It will be an Internet-delivered website that will replace the current private market delivery system. Good-bye agents.

This national survey will deliver a unified voice of the employer community in reference to universal coverage and the HIE to Washington, DC.


We need the survey sent out immediately. We will release the findings no later than the end of July … but preferably sooner.

The release will be in the form of a study, media releases, and short articles you can use with all those you know. Congress will be flooded with copies. And everyone who takes the survey will get a copy as well.

— Clip and paste this email and send to your clients —

(Suggested email subject line): Let Congress Hear Your Voice: Take the health reform survey

Please take a few minutes and take this survey. Let your opinion about health reform be heard in Washington, DC and state capitals. Click onto this link or cut and paste it into your browser:

As an insurance agent my job is to educate you and keep you informed about your health insurance program. As you know, Congress is working quickly to change your health insurance program.

The survey will do three things. First, it will help you understand what’s coming out of Washington, DC. Second, it allows you to voice your opinion. Third, it makes sure your voice will be heard by Congress.

This is urgent. Please take the survey now.

I will make sure you receive the results, and show you how to use them to protect your best interest.

To take the survey, paste this link into your browser:

Dave Racer, MLitt
Alethos Press LLC
PO Box 600160, St Paul, MN 55106
Office: 651.472.9585
Alternate Number: 651.340.1911
Cell Phone: 651.247.5650