Consumer Power Report #193

Published September 4, 2009

For some time now, commentators have been bemoaning the loss of comity in Washington. They fondly remember how Ronald Reagan would get together with Tip O’Neill in the evening for drinks and Irish humor.

This remembrance may be tainted with nostalgia. I seem to remember that Reagan was treated as a pariah by a lot of Washington. He was a B-List actor who didn’t have a brain in his body, a dangerous cowboy, and all that.

Still, something changed to turn Washington into a mean and vicious place, according to these commentators. I think it was the nomination of Robert Bork to the Supreme Court, and Ted Kennedy’s attack on him. Here was a highly respected professor of law, a brilliant intellectual, and Kennedy went to the floor of the Senate to accuse him of trying to return to the days of segregated lunch counters and back-alley abortions. Kennedy allies rummaged through Mr. Bork’s video rental history hoping to find something compromising. There had never been anything like this in the history of Supreme Court nominations. All sense of civility was thrown out the window to prevent the confirmation. All boundaries were broken. We have never recovered.

The story was repeated with the investigation and prosecution of Ray Donovan, Reagan’s Secretary of Labor. He was acquitted of all charges, but was so damaged he ended up asking, “Where do I go to get my reputation back?” It was repeated again with Clarence Thomas. It is raw ambition and power-seeking by the Left. Don’t just disagree with your opponents: destroy them, humiliate them, ruin them.

Now we are descending into a whole new level of Hell. The Obama Justice Department is trying to criminalize policy differences they have with the previous administration. Not just change the policy, but bring criminal charges against those whose policies were different. Is this a precedent they really want to set? Don’t they realize that some day they will be the “previous administration?”

And in the Senate the Democrats are seriously considering using budget reconciliation to pass health reform, requiring a razor-thin 50 votes (the vice president breaks a tie) to enact the biggest domestic policy change ever in the United States, with a direct effect on every single American and 17 percent of the economy–far, far bigger than Social Security or Medicare.

Again, do they really want to go there? Democrats used the filibuster pretty effectively during the Bush years. Do they really want to give that up? Or is their lust for power so overwhelming that they will do anything and everything to get their way?



Meanwhile, the president is going to give yet another prime-time speech on health care, this one an address to a joint session of Congress. I guess he has worn out this supply of prime-time speeches to the nation, press conferences, and town hall meetings at the White House. This may be the only arrow left in his quiver, but it is remarkable that he would resort to it at this point in his presidency. Byron York points out that the last three presidents each used this occasion just once. The two Bushes used it for true national emergencies, the Gulf War and 9/11. Clinton used it to push his health reforms, and that didn’t work out so well.

The address had better be a knock out. As we reported recently, even Drew Altman, president of the Kaiser Family Foundation, is struck that eight months into this process we still don’t have answers to basic questions, such as:

1. How high up the income scale will subsidies go?

2. Is there an individual requirement to obtain coverage and how severe are the penalties for not complying?

3. What coverage will people get?

4. How much will insurers be allowed to vary premiums by age?

5. What will be available for the lowest income Americans?

But the odds of getting specifics are not high, according to The New York Times. It reports, “officials said Mr. Obama was unlikely to unveil a detailed legislative plan of his own.” It adds, “Democratic leaders in Congress–many of whom had said earlier in the summer that they saw no need to scale back their ambitions–made clear that their political calculations had changed.”

The article goes on to quote one White House officials as saying, “It’s so important to get a deal, he will do almost anything it takes to get one.” Well, that should make for an inspiring speech.

The article adds, “If Mr. Obama does not gain traction by making these concessions, his allies on Capitol Hill said, they may have to consider bigger changes. For example, they said, rather than requiring all Americans to carry health insurance, Congress might start by requiring coverage of children, or families with children.” So, what exactly is he going to talk about?

SOURCE: New York Times; Byron York


The Brookings Institution’s Henry Aaron provides in the New England Journal of Medicine a reality check that Mr. Obama might want to read. Mr. Aaron is a long-standing proponent of health reform, but he is no fool. He writes, “No health care reform bill can succeed unless Congress finds the money to pay for it. The challenge is brutally simple. The up-front costs of extending coverage are certain and immediate. The savings from delivery-system reform are speculative and slow. U.S. budget projections indicate explosive increases in government borrowing and rapid increases in debt-service costs, which could cause lenders to lose faith in the nation’s repayment capacity. Prospects are so bleak that not even the achievement of the worthy goals of health care reform justify increasing already perilous budget deficits.”

He walks through a brutally realistic picture of budget and legislative realities and concludes, “The challenge of finding acceptable ways of paying for near-universal coverage is formidable and may prove insurmountable. It is therefore essential to identify elements of the full plan that would set the stage for later reforms and that can be financed at a politically digestible price.”

We’ll see next week if Mr. Obama is listening.

SOURCE: New England Journal of Medicine


Writing in USA Today, Julie Appleby describes one of the least-discussed issues of the current debate, the restrictions on risk-based rating of premiums. Everyone seems to just blithely accept that some version of community rating is a good thing and inevitable. Neither is true.

She writes, “For years, insurers have charged older customers far more than younger ones, in part because of older residents’ higher use of medical services. Now, as Congress wrestles with a health care overhaul aimed at covering the majority of the 46 million uninsured, that discrepancy is one area targeted for change.” She says the change could have a profound effect on tens of millions of people who are currently insured.

The article says, “Average medical spending per person among 18- to 44-year-olds was $2,079 in 2006, the latest data available from the federal Agency for Healthcare Research and Quality. Spending for 45- to 64-year-olds was $4,866, about 2.3 times more.” But, “There’s a much greater ratio depending on how you cut the data,” says Robert Zirkelbach, spokesman for America’s Health Insurance Plans. “If you break it into quartiles, there would be a 5-to-1 gap.”

Karen Pollitz, project director at Georgetown University’s Health Policy Institute, is quoted as calling this ratio “obscene” and a “tax on getting old.”

But the core problem of the uninsured is not with older people, but with younger people. The article says, “At the heart of the debate is how to get younger people–currently the group least likely to have insurance–to buy coverage.” It adds, “All the proposals in Congress would require almost everyone to carry insurance and impose a financial penalty on those who do not. Still, young people won’t enroll if prices are set too high, warns James Gelfand, senior manager of health policy for the U.S. Chamber of Commerce. ‘Young and invincible people don’t want any insurance, much less a gold-plated (plan),’ which is how they may view policies if a 2-1 ratio makes them expensive or the plans include benefits they don’t want, he says.”

Marian Mulkey, a senior program officer at the California Health Care Foundation, is quoted as saying a two-to-one ratio would cause premiums to double for young people in California while cutting them by half for older people. “If you have someone in their 20s struggling to pay for a policy that costs $80 a month, and it goes up to $150, what would you have to do with subsidies or penalties to get them to buy it?” she asks. “Conversely, (for people in their 50s or 60s) if you could bring premiums down to $600, maybe they’re in a much better position to keep the policy. This is the challenge.”

The online version of this story generated more than 1,000 comments.



One of the best analyses I’ve seen is by Jerome Groopman and Pamela Hartzband in The Wall Street Journal. Both writers are physicians and on the staff of Beth Israel Deaconess Medical Center and on the faculty of Harvard Medical School. They walk through many of the fallacies of the current debate, including:

  • Americans receive only 55 percent of recommended care.
  • The World Health Organization ranks the U.S. 37th in the world in quality.
  • We need to implement “best practices.”
  • No government bureaucrat will come between you and your doctor.

The authors explain where each idea comes from and thoroughly deconstruct the fallacy. Excellent reading.

SOURCE: Wall Street Journal

Another common fallacy is that preventive care will save a bunch of money–enough to pay for health reform over the long term. An article by Lori Montgomery in the Washington Post summarizes a number of articles in the current Health Affairs, including one authored by Michael O’Grady who says, “There’s no free lunch here. Prevention will not pay for everything. But it’s not as expensive as it looks at first blush.”

The article says, “Using data from long-standing clinical trials, researchers projected the cost of caring for people with Type 2 diabetes as they progress from diagnosis to various complications and death. Enrolling federally-insured patients in a simple but aggressive program to control the disease would cost the government $1,024 per person per year–money that largely would be recovered after 25 years through lower spending on dialysis, kidney transplants, amputations and other forms of treatment, the study found. However, except for the youngest diabetics, the additional services would add to overall health spending, not decrease it, the study shows.” And diabetes is considered the one condition that is most amenable to preventive care.

The article adds, “In its own analysis of preventive care, CBO said earlier this month that the cost of making cancer screening, cholesterol management and other services broadly available is likely to far outweigh any savings ultimately generated. The new study looks at a more narrow population–people already diagnosed with diabetes–and projects the cost of providing them with a very specific regimen of frequent checkups and diagnostic tests that has produced predictable results in clinical trials.”

SOURCE: Washington Post

Charles Krauthammer anticipated this new research in an op-ed published on August 14, “The Great ‘Prevention’ Myth.”

He quotes Obama as saying, “(Prevention) saves lives. It also saves money.” But then he adds, “Reform proponents repeat this like a mantra. Because it seems so intuitive, it has become conventional wisdom. But like most conventional wisdom, it is wrong. Overall, preventive care increases medical costs.”

Krauthammer goes on, “The idea that prevention is somehow intrinsically economically different from treatment–that treatment increases costs and prevention lowers them–is simply nonsense. Prevention is a wondrous good, but in the aggregate it costs society money.”

SOURCE: Washington Post


Most of the health reform dreamers look to the U.K. as a model of what we should be doing. Great Britain is about a decade ahead of us in moving toward national health information technology, comparative effectiveness research, and pay-for-performance. The results of these experiments are not encouraging. Here are some recent headlines:

‘Cruel and neglectful’ care of one million NHS patients exposed
One million NHS patients have been the victims of appalling care in hospitals across Britain, according to a major report released today.

Women heart attack victims ‘are dying needlessly’

Sentenced to death on the NHS
Patients with terminal illnesses are being made to die prematurely under an NHS scheme to help end their lives, leading doctors have warned.

You get the drift. But, by golly, they’ve got costs under control, eh?


I got two reactions to my introductory note last week. I am not including the writers’ names because I have not asked their permission to do so. Both are consultants, one with a Ph.D. and the other an M.D.

“Something is terribly wrong when you try to capitalize on Senator Kennedy’s death with this message about end-of-life care. I am not aware of any proposals that would deny end-of-life care. If you want to spread this kind of innuendo, then I suggest that you not include me on your distribution list.”

And then there’s this:

“I was pleased to learn from your email on Ted Kennedy that there are in fact limitless resources for end of life care healthcare. Perhaps you could explain to your readers the exact source of these resources since some of us have been laboring under the apparently mistaken impression that resources were finite.

“I’ve enjoyed your writings, but that editorial demeaned not only the subject, but your readers and your own efforts as well. And since most of us shuffling on this mortal coil are aware of our own mortality, the observation that ‘Senator Kennedy has died, as we knew he would’ does not exactly seem like an overachievement in forecasting.”

So, on one hand we should not suggest that there may be limits to what can be provided at the end of life, but on the other hand, we should not suggest that there are no limits to end of life care. Got it. I will try to do better in the future.