Consumer Power Report #182

Published June 12, 2009

There is just too much going on, and it is going to get worse before it gets better. I try to pull information together in some semblance of coherence, but these days I read 10 times more stuff than I can possibly include in this newsletter.

BTW, my e-mail was not working for almost two weeks. Please don’t think I was ignoring you if I didn’t respond to something you sent. Most likely I didn’t receive it. Everything seems to be working now but please use [email protected] as the preferred address. Thanks.



Most of the Washington interest groups have been expressing support for “health care reform” so as to ensure they get “a seat at the table” and defend their interests. They want to be “on board before the train leaves the station,” and other such idiotic ideas. Keep in mind that it was precisely Kennedy’s staff they have been meeting with.

Now, in spite of such groveling, Senator Kennedy’s staff has released a rough draft of the bill he intends to introduce. I’ve read the whole thing, but Keith Hennessey beat me to the punch in writing up a short description, linked here. I’ll just add some emphasis.

Let’s start with the most cynical of all the manipulations in the bill. It starts out on page two with a “Declaration of Rights.”


It is the right of patients to select the doctor of their choice.

A strong doctor-patient relationship is essential to the practice of medicine, and patients have a right to an effective doctor-patient relationship.

Doctors and other health professionals have the right to judge what is best for their patients.

Nothing in this Act or the amendments made by this Act interferes with the rights described in this section.

Sounds great, doesn’t it? And if you believe any of this, there is a bridge in Brooklyn you should invest in. In fact, within the first 10 pages all of these “rights” are nullified. On page 8, qualified health plans are required to “develop and implement a reimbursement structure that provides incentives for: case management, care coordination, disease management, discharge planning, best clinical practices, evidence based medicine, and wellness and prevention activities.” And they are required to do all this while following the payment policies of the Medicare program.

So much for the AMA’s seat at the table.

Insurers aren’t faring much better. Oh sure, they are getting a mandate that requires everyone to buy what they sell. But they are required to stay within loss-ratio minimums, even while managing physician behavior, provide federally dictated benefits, offer coverage without any annual or lifetime maximums and OOP limits based on the HSA standards, and use community rating with only an age adjustment. There will be no adjustments for behavior or gender, and in fact there appears to be no provision for denying coverage based on non-payment of premiums. They will also have to continue covering “children” to age 27, without any requirement that the “child” still be living with his or her parents. Oh, and their “marketing practices” will be regulated by the federal government.

Boy, that seat at the table worked out great for AHIP, didn’t it?

Of course, NAHU fared even worse. There will be no brokers or agents in Mr. Kennedy’s system. Instead, the state “Gateways” (the new term for insurance exchange) will contract with “navigators,” which will “conduct public education, distribute fair and impartial information, and assist with enrollment.” The navigators may be unions, trade groups, or “other entities” (maybe like ACORN). Commissions are not allowed.

Employers wanted a seat at the table to avoid an employer mandate. Guess what? Yep, they got a mandate and also a new restriction on ERISA that prohibits any employer with fewer than 250 employees from self-funding.

But the people who really get the shaft in this system are consumers and taxpayers. The government will create a massive new regulatory structure that will all have to be paid for by the taxpayers, and taxpayers will also be providing free Medicaid coverage for everyone up to 150 percent of poverty and subsidizing everyone up to 500 percent of poverty — that means a family of four making $110,000 a year. Other people will be required to have insurance coverage at all times and under all circumstances. To enforce this and to determine how much of a subsidy you might be eligible for, the government will combine all of its health information technology with income information from the IRS and the Social Security Administration. Now, if you have a financial reversal and your income drops, you may be able to get a “hardship deferral” … but you will have to apply to the federal government for it.

Ain’t this fun? Aren’t you feeling well-represented by all those seats at the table?


As an illustration of what those seats at the table cost, the AMA is falling all over itself trying to get the nuance just right. An article by Robert Pear in The New York Times (strong> on June 10 reports that, “the American Medical Association is letting Congress know that it will oppose creation of a government-sponsored insurance plan.” The article quotes an AMA statement to the Senate Finance Committee as saying, “The A.M.A. does not believe that creating a public health insurance option for non-disabled individuals under age 65 is the best way to expand health insurance coverage and lower costs. The introduction of a new public plan threatens to restrict patient choice by driving out private insurers, which currently provide coverage for nearly 70 percent of Americans.”

But the article also noted that, “If the doctors are too aggressive in fighting the public plan, they risk alienating Democrats whose support they need for legislation to increase their Medicare fees.”

Not only that, but they may lose their cherished seat at the table, and the president is coming out to Chicago to talk to the AMA’s annual meeting on Monday. How embarrassing if Mr. Obama got up on the podium to announce that in this game of musical chairs, the AMA’s seat has just been taken away.

So the organization quickly backpedaled, releasing this statement (

WASHINGTON, June 11 /PRNewswire-USNewswire/ — Statement attributable to: Nancy H. Nielsen, M.D. President, American Medical Association.

“Make no mistake: Health reform that covers the uninsured is AMA’s top priority this year. Every American deserves affordable, high-quality health care coverage.

“Today’s New York Times story creates a false impression about the AMA’s position on a public plan option in health care reform legislation. The AMA opposes any public plan that forces physicians to participate, expands the fiscally challenged Medicare program or pays Medicare rates, but the AMA is willing to consider other variations of a public plan that are currently under discussion in Congress. This includes a federally chartered co-op health plan or a level playing field option for all plans. The AMA is working to achieve meaningful health reform this year and is ready to stand behind legislation that includes coverage options that work for patients and physicians.”

But now, Anna Edney writes in the National Journal’s CongressDaily ( that “The American Medical Association’s retraction of its perceived opposition to a public insurance option Thursday did not sit well with some of its members — who hope to bring the issue to a head at the physician group’s annual meeting next week where President Obama, the leading public option supporter, is expected to speak.”

She goes on, “The statement might have matted some ruffled feathers among Democrats on Capitol Hill, but some AMA members balked at the turnaround. Lobbyists representing different AMA blocs said the topic should prove divisive next week in Chicago when AMA gathers for its annual conference.”

Golly, it is hard to be politically correct.

To make matters even more difficult, the Tea Party coalitions have just announced a rally outside the AMA’s conference hotel for Saturday, June 13. Its statement reads:

“Senator Kennedy has given Congress until Monday June 15 to submit amendments to his bill that amounts to a government take-over of health care decision making and financing. Senator Kennedy’s bill would destroy American Medicine as we know it leading to rationing and total power to insurance companies and government over health care decisions.

“Americans are and should be outraged. President Obama will be speaking to the AMA meeting in Chicago on Monday as well. The AMA leaders are meeting all day Saturday and need to hear from you.

“Patriots in the Chicago area should show up with their signs to let the AMA leaders know that they need to tell the President.

“1. No government take over of medicine — no public option and no individual insurance mandates. Patients First – Government last!

“2. Congress should have a reasonable debate and give time for Americans to see his bill and provide feedback.

“Please bring signs and stand at 415 E. Wacker Drive along the river in front of the Hyatt Regency Hotel. Bring your signs. Freedom-loving doctors are likely to join you (but will leave for a 3 pm meeting)


We just got this note from Kathryn Serkes at AAPS:

According to Tom Coburn (as of conversation yesterday)
– the deadline for amendments to the Kennedy bill is MONDAY
– a notice has been sent out that mark-up will begin TUESDAY

Sen. Coburn says they still don’t even have the language on 3 sections of the bill.

And of course, it hasn’t been scored.

So I’d encourage everyone to send out alerts to members telling Senate to WAIT on bill until we have actually language, and know how much it will cost. Taxpayers should be outraged, no matter what their position.

Kathryn Serkes
Director, Policy & Public Affairs
Association of American Physicians & Surgeons (202) 333 3855

And this from Dr. James Knight:

I got this email message today, and returned the call. Turns out he (a senate staffer) was actually looking for the author of some paper that said that HSAs would be “bad” for diabetics. He was clearly working from the point of view of trying to undermine HSAs. I tried to give the other side of the story which he listened to politely. I’m not sure where his information will end up, but my guess is he is gathering ammunition aimed at weakening HSAs and FSAs. He said specifically that distributions need to be substantiated. I don’t think this is going to go well at all.

James G. Knight MD

From: O’Brien, Brett (Aging) [mailto:Brett_O’[email protected]] Sent: Friday, June 12, 2009 6:56 AM To: [email protected] Subject: US Senate and Consumer Directed Health Care

Dear Mr. Knight,

My name is Brett O’Brien and I work on the Senate’s Special Committee on Aging. I am researching Health Savings Accounts and I am particularly interested in how “HSAs” affect diabetics. I was hoping to speak with you more in-depth about this issue. Please email me or my number is 224-0185 with when you are available. Thank you again and I look forward to speaking with you.

Brett O’Brien


The American Academy of Actuaries (AAA) has released a new analysis of consumer-driven health. This is an important contribution to the literature because AAA has always been impeccably rigorous in its methods, to the point of expressing real skepticism in the past about the potential benefits of CDH. In the past it argued, correctly, that how well CDH worked depended on how consumers viewed the money in the account. If they saw it as their own money there would be substantial economizing, but if they saw it as the employer’s money there would not be. They said it was impossible to know ahead of time how consumers would behave, and therefore AAA gave a very tepid endorsement to the idea.

Now AAA believes there is enough data available to begin to answer that question. It formed a work group of 33 senior actuaries to review and summarize the data and address four questions:

  • Do CDH designs result in any first-year cost savings and/or favorable effects on cost trends beyond the first year?
  • Are the apparently positive results presented by market participants real or the result of favorable selection?
  • Are cost savings generated at the expense of necessary care or the result of delayed or inappropriate avoidance of care?
  • Are CDH plans merely a device for employers to shift more of the total benefit cost to employees?

The work group digs deeply into each question and concludes, “The primary indications are that properly designed CDH plans can produce significant (even substantial) savings without adversely affecting member health status. To the knowledge of the work group, no data-based study has emerged that presents a contrary view.”

There is plenty of other quotable material here, but I encourage you to read the study for yourself and circulate it to any doubters you may know. If we applied an “evidence-based” standard to public policy the Washington intelligentsia would be hailing consumer-driven health as the fulfillment of everything they have been hoping for in health policy for the past 30 years.

SOURCE: American Academy of Actuaries


The National Center for Policy Analysis is circulating a petition in support of four “key elements of any health care reform plan” — Choice, Access, Fairness, and Responsibility. Go to to find out more.

The Galen Institute has announced the winners of its video competition. It’s kind of a hoot. They can be viewed at,8/action,show_content/id,71/category_id,0/blog_id,1212/type,33/

AEI’s Tom Miller had a short op-ed against individual mandates published in USA Today. Read it at

The U.S. Chamber of Commerce has just announced a grass roots campaign to focus not only on health care but on broader economic issues as well. See

The single payer folks also have announced a new campaign — “Everybody In, Nobody out!” Sounds like a threat to me. They are selling a whole lot of merchandise with that theme. See

The Tea Party Patriots are also selling merchandise, but they are doing a whole lot more, especially organizing rallies and events on Independence Day and focusing on health care throughout the summer. See

Patients United Now is hosting three rallies next week and planning a whole lot more through the summer. It has one of the best Web sites I’ve seen –