Consumer Power Report #200

Published October 31, 2009

We’re keeping it short this week. I’ll just note that this is the 200th issue of Consumer Power Report. It’s a milestone of sorts, though I have been doing similar newsletters since launching the Health Benefits Letter in 1991. Interesting how the technology has changed over that time, going from mail-out hard copy, to fax-out, and now e-mail. We will likely convert this to a blog eventually.

While the technology has changed, the issues never seem to. We are still rebutting the same empty rhetoric we did when we first started. It is not encouraging. The statists just never seem to be able to learn from experience. They get their policies adopted. The policies fail and are repealed. And they try yet again to adopt the same policies all over. It is like there is a health reform industry that simply doesn’t know how to do anything else. They are eternally blind to what actually works and keep promoting what has been proven to fail. Alas.



I don’t make bets on the political process anymore. Not since I lost a $50 bet with a colleague this summer. I had wagered back in January that the Dems would get something passed by the summer. It seemed like with substantial majorities in the House and Senate, a popular and articulate new president, and interest groups falling over themselves to get their seats at the table, there was no stopping it.

Then came the Tea Parties that kept growing bigger, and the Town Hall Meetings, then the March on Washington. Finally, public opinion turned solidly against these efforts at reform, and if there is one thing politicians are good at it is reading opinion surveys.

It is not over yet. The president could still offer enough ambassadorships to countries with warm climates to get the votes he needs. So I’m not going to bet against these bills passing. But as of this writing it appears there are not the votes in either House to pass anything remotely resembling the current legislation.

And President Obama is looking ineffectual. His administration knows how to demonize its opponents (Fox News, the U.S. Chamber, Humana, AHIP, etc.). That is a skill it perfected in the campaign. But it does not seem to have learned how to close the deal with its friends. For the past several weeks the liberals have been demanding that Obama come out of his shell and provide some leadership. But he doesn’t seem to know how to operate without his TelePrompter. He has still not gone beyond the feel-good platitudes, of “lower costs, improve quality, and cover everybody.”

So Congress is left to its own devices. Harry Reid went out on a limb to propose some mish mash of the two bills in the Senate and Nancy Pelosi is introducing a similar House bill. Neither has been scored yet by CBO and both contain the seeds of their own destruction — big tax increases, more federal intrusion, mandates on the states, employers, and individuals, and absolutely nothing that will lower costs.

Can they get the votes? Who knows? As of this writing neither body has the votes to pass the bills. The latest nose count by the Majority Whip in the House, James Clyburn, indicates Pelosi doesn’t even have 200 votes (218 are needed).

In the Senate, 60 votes are required, not just once but repeatedly. People who know Senate procedures better than I do tell me 60 votes are required to begin the debate, 60 votes are required to pass amendments to the bill on the floor, and 60 votes are required to end debate and call the vote — at which time only 50 votes would be needed.

My Democratic friends say the Dems will all vote to begin the debate, anything else would be a slap down of their own chosen leader. On the other hand, if the original Reid bill includes provisions that are unacceptable, like a “public option,” some Dems may vote against consideration because it would take 60 votes to remove the objectionable provision through amendment, and that is unlikely.

Meanwhile, this whole enterprise is beginning to stink to high Heaven. What most people have been focused on are broad, sweeping provisions that are poorly defined. Just how do states “opt out” in Reid’s proposal? No one has the slightest idea. It just sounds good.

But in addition to these mega issues are tens of thousands of smaller issues that very few people understand. Any one of these thousands of issues could have a profound effect on your health care and on the economy as a whole. Just as one example, NCPA’s John Goodman did a detailed analysis of the economic consequences of the mandates and subsidies in the Baucus bill. He concludes that they will have an immense effect on the hiring and compensation practices of virtually every employer in the United States. I shared Dr. Goodman’s analysis with some of my Democratic friends and they were unconcerned. One dismissed it by saying he didn’t have his facts right (with no explanation of what he got wrong) and another dismissed it by saying, “Oh, that’s just the Baucus bill. That’s no longer on the table.”

Whaaaaa?!?! Is this any way to run a railroad? How can people so blithely support such massive legislation with absolutely no understanding of the consequences?

It is endemic when politicians get involved. They fundamentally don’t understand what they are doing so they rely on platitudes and sweeping generalities that make for good sound bites. In my presentations I often cite the following examples:

1988, Massachusetts Governor Michael Dukakis
“Massachusetts will (now) be the first state in the country to enact universal health insurance.”

1989, Oregon Governor Barbara Roberts
“Today our dreams of providing effective and affordable health care to all Oregonians have come true.”

1992, Tennessee Governor Ned McWherter
“Tennessee will [now] cover at least 95 percent of its citizens.”

1992, Vermont Governor Howard Dean
“This is an incredibly exciting moment that should make all Vermonters proud.”

These statements were all made by governors at the signing ceremonies for new legislation. One might think they had solved all the problems in health care. But, in fact, all of these laws failed and have since been repealed.

They all failed precisely because they had not done the kind of analysis John Goodman has provided. They relied on empty slogans.

Similar things have occurred in New Jersey, Maine, Washington, and other states that set out to “reform” health care politically. And the exact same thing will happen nationally if any of these bills becomes law. Unfortunately, it is a whole lot harder to repeal laws in Congress than it is in the states. Even when the program is a complete disaster that ruins lives, there will always be some special interest that benefits from it and will fight tooth and nail to keep the law in place.

Let us hope there are enough Democrats in Congress with the good sense and humility to back away from this misadventure before it is too late.


Reid Doesn’t Have the Votes

House Doesn’t Have the Votes
The Plum Line

Moderates Revolt
Associated Press

Democrats Divided
New York Times

The Baucus Bill Explained
John Goodman’s Blog

Will Mandates Work?
Washington Post

The Consolidated House Bill, all 1,990 pages
Courtesy of Rep. Burgess


Below is a smattering of interesting reading from the past week. I’m not going to try to put it into a coherent article.

The Gallup Survey finds that the portion of people who identify themselves as conservative has surged in the past few months, while liberals and moderates have dropped off a bit. The article includes a time-line graph of the same poll since 1992.

SOURCE: Gallup Survey

The Associated Press ran an article showing the evil insurance companies aren’t so profitable after all. The article says, “Health insurers posted a 2.2 percent profit margin last year, placing them 35th on the Fortune 500 list of top industries. As is typical, other health sectors did much better — drugs and medical products and services were both in the top 10.”

SOURCE: Associated Press

Here’s a riveting story from 60 Minutes about Medicare fraud.


Here’s a fascinating review of two new books on the financial catastrophe and Washington’s response to it. The books argue that Ben Bernanke has over-studied the Depression and as a result he is making the classic general’s mistake of re-fighting the last war.

SOURCE: Washington Post

The New York Times published an article comparing the leaders of two of the most important special interest groups in Washington, Karen Ignagni of AHIP and Bill Tauzin of PhRMA.

SOURCE: New York Times

The Wall Street Journal ran an article on consumer shopping for health care services. It includes citations for a host of new Web-based services.

SOURCE: Wall Street Journal