Consumer Power Report #206

Published December 11, 2009

If you are in San Diego or know people who are, The Heartland Institute is holding a Health Care Roundtable on December 15 at the Marina Village Conference Center from 9:00 am to noon. Three of our physician friends will be speaking, doctors James Knight, Herb Rubin, and Vijay Goel, along with David Nott of the Reason Foundation and John O’Hara, Jim Lakely, and Peter Fotos, all of Heartland.

Heartland has sponsored events like this all over the country and they have been very successful. Particularly interesting is always the discussion after the presentations.

For more information or to register go the Heartland Web site



I’ve been very critical of The Heritage Foundation for its support in the past of initiatives like the Massachusetts legislation. But now Heritage is making up for past sins in spades. It is doing the most comprehensive analysis of the current issues of any organization. It just released a landmark legal analysis of the constitutional issues around an individual mandate. Written by Randy Barnett, Nathaniel Stewart, and Todd Gaziano, the analysis argues that a personal mandate is both “unprecedented and unconstitutional.”

The paper argues that Congress has never — ever — tried to do something like this. Not even in times of war when national survival was at stake did it force farmers to grow food for the troops or workers to build tanks. “And what Congress cannot do during wartime, with national survival at stake, it cannot do in peacetime simply to avoid the political cost of raising taxes to pay for desired government programs.”

The authors accuse members of Congress of a breach in their duty “to determine the constitutionality of legislation independently of how the Supreme Court has ruled or may rule in the future.” It is not enough to pass laws willy-nilly just because they think it would be a swell idea. This is still a government of limited and enumerated powers, and forcing people to buy something they don’t wish to buy ain’t one of those powers.

SOURCE: The Heritage Foundation

Stephen Hyde is also digging into the individual mandate on his blog. He writes, “In effect, insurance mandates are a required license to breathe. The often heard argument-by-analogy is that it’s no big deal, because we already require drivers to buy auto liability insurance. But driving is a privilege subject to reasonable public safety regulation and comes with the right to abstain–as 100,000,000 non-driving Americans do.”

He goes on to list five weak arguments in favor of a mandate and 15 stronger arguments against it. And this is just the first of a two-part series.

SOURCE: Hyde on Health Care

The amazing thing is that a mandate is so superfluous. CNNMoney reports on a recent study by that found “Half of Individual Policyholders Paid $132 or Less per Month.” The story goes on to say, “According to the report, in 2009 the median non-group health insurance premium for an individual in the United States was $1,584 per year ($132 per month) and the average deductible was $2,326. Combined, annual premiums and deductibles account for approximately 7.7 percent of median household income for 2008 ($50,303) as reported by the US Census Bureau.”

Now, if individuals got the same tax break as employers and if there were a back-up mechanism for high-risk applicants, we might dramatically reduce the numbers of uninsured without turning the Constitution on its head.



Harry Reid is an amazing fellow. He keeps making stuff up out of whole cloth and the media reports it as if he is an oracle. The latest is his resolution of the “public option” fracas. The New York Times reported it as, “Reid Says Deal Resolves the Impasse on the Public Option.” And the Washington Post wrote, “Senate Democrats on Wednesday largely embraced a compromise that dropped a ‘public option’ from health-care legislation.”

SOURCE: New York Times; Washington Post

But what deal? Dan Perrin writes, “Senator Reid has a deal — trust him — he just cannot tell you about it. Why can’t Senator Reid provide details? Because according to Senator Lieberman, “there is no legislative language.” Perrin goes on to say, “The Reid ‘deal’ has no legislative language and the one Senator who the deal is supposed to placate is instead using phrases like being ‘vigilant about protecting and extending the solvency’ of Medicare and that he is going to read the fine print — when it exists. In other words, Senator Lieberman is not supporting the Reid vapor deal.”

SOURCE: Dan Perrin on Red State

Investor’s Business Daily is a bit more restrained than The New York Times and Washington Post. A story by Dave Hochberg is headlined, “Health Reform Deal Greeted Cautiously By Moderate Dems.” It says, “A deal to unite Senate Democrats behind their health plan seems to be creating its own divisions.”

The article quotes Ron Pollack of FamiliesUSA as being skeptical. He says, “Until we see the details about it, it’s hard to really react. The Medicare buy-in could be helpful, but whether it is more helpful than people going into the exchange, especially those who are eligible for subsidies, is hard to determine.” And Sen. Kent Conrad (D-ND) is quoted as saying, “An additional cohort on Medicare means Medicare rates of reimbursement, and my state is third or second lowest in Medicare reimbursement. I’m also concerned about Medicare solvency, and that’s why I need to see the Congressional Budget Office analysis before making a final decision.”

The article also quotes me as pointing out that most people on Medicare find they also have to buy a private MediGap policy, so the Medicare buy-in provision doesn’t sound like it will do very much good for anybody. In fact, it is certain that Medicare would not meet the requirements for credible coverage on the legislation. After all, the core program does not cover prescription drugs and does not have a limit on out-of-pocket expenses.

SOURCE: Investor’s Business Daily

In the American Spectator, Philip Klein goes even further. He writes that Reid’s new approach is “worse than the public option.” He says, “the so-called ‘compromise’ would actually move the nation much closer to a government-run health care system than the public option itself.” He explains, “expanding Medicare would go further to advance the original aims of liberals than the watered down version of the public option.”

Mr. Klein even quotes officials at the much-vaunted Mayo Clinic as saying, “The current Medicare payment system is financially unsustainable. Any plan to expand Medicare, which is the government’s largest public plan, beyond its current scope does not solve the nation’s health care crisis, but compounds it.”

SOURCE: Philip Klein

Even the editors of the Washington Post agree with Mr. Klein. They write, “the last-minute introduction of this idea within the broader context of health reform raises numerous questions — not least of which is whether this proposal is a far more dramatic step toward a single-payer system than lawmakers on either side realize.” And they add, “Presumably, the expanded Medicare program would pay Medicare rates to providers, raising the question of the spillover effects on a health-care system already stressed by a dramatic expansion of Medicaid.”

The Post concludes, “The irony of this late-breaking Medicare proposal is that it could be a bigger step toward a single-payer system than the milquetoast public option plans rejected by Senate moderates as too disruptive of the private market.”

SOURCE: Washington Post editorial

And Politico reports that Sen. Olympia Snowe (R-ME) is adamant that she will not vote for a bill with a Medicare buy-in. The article quotes her as saying, “I can’t see it. I am talking to a lot of my providers this afternoon and I know they are mighty unhappy.”

Politico reports, “Senators say they are still waiting on details from Reid and the Congressional Budget Office about the proposal, which would allow people 55 to 64 years old to purchase coverage in the insurance program for the elderly. It is unlikely Reid will be able to lock in those votes until the CBO returns its cost estimate, which isn’t expected until the weekend at the earliest. The timetable leaves little wiggle room for Reid to complete the bill before Christmas.” And it quotes Sen. Evan Bayh (D-IN) as saying, “I would kind of like to see how it works.”

SOURCE: Olympia Snowe


All of this is rattling the special interests that thought they were cagey enough to cut deals that would stick with the Democrats. Just how much do these guys get paid for being idiots? The AMA and the AHA are suddenly worried about a big expansion of Medicare payment rates to a whole new population on top of the big expansion of Medicaid payments. PhRMA is looking at the rebirth of its worst fear — “reimportation” of drugs from price-controlled countries. Even AARP is nervous about the Independent Medicare Advisory Board (IMAB), which would be empowered to cut Medicare benefits almost unilaterally.

The Washington Post summarizes all this nicely in an article headlined, “Deals cut with health groups may be at peril.” The article says, “On the floor and behind closed doors, the Senate wrestled Saturday with amendments that would impose additional cost-control requirements on hospitals, doctors and drug companies, squeezing out savings beyond the considerable sums those groups had already volunteered to give up.”

It goes on to cite an amendment sponsored by Senators Lieberman, Specter, and Collins that would “impose stiff penalties on hospitals with high infection rates.” And one sponsored by Sen. Dorgan that would “permit U.S. pharmacies and drug wholesalers to import lower-priced medications from other countries, including Canada.” There is also an amendment sponsored by Sen. Nelson that “would transfer about 6 million seniors eligible for Medicare into the Medicaid program, which pays much lower prices for the same drugs.” And AARP is going up against the White House in opposing the IMAB. The Post writes, “Senior White House officials view the board as a critical component of health reform, the enforcement mechanism to guarantee that all the well-intentioned ideas for making hospitals and doctors more efficient translate into savings for the government.”

SOURCE: Washington Post

The Associated Press focuses on PhRMA’s new concerns in an article headlined, “Drugmakers’ support for health overhaul tested.” It writes, “The pharmaceutical industry may have to cough up more than the $80 billion it agreed to contribute to President Barack Obama’s health overhaul effort, reflecting pressure from Democrats and their supporters for more money to cover older and low-income people.”

The article says the industry has spent $137 million in lobbying in favor of health reform this year with the understanding it would be hit with no more than $80 billion in giveaways over 10 years. But “the health package the House approved last month would count on getting about $140 billion from drug companies to defray additional health care costs over the next decade. Industry officials say the version the Senate is debating may already pluck close to $100 billion from drugmakers — and an expected parade of amendments could boost that by billions more.”

SOURCE: Associated Press

Writing in the Washington Examiner, Tim Carney thinks this current round of frenzy masks the real truth, which is that these reforms are “corporate welfare benefiting health insurers and drug makers rather than a populist assault on a greedy industry.”

He says the anti-industry rhetoric of the Democrats is a facade that is “crumbling now that the final bill is being crafted.” They constantly rail against the insurance industry, for instance, but “the measure still contains the insurers’ grand prize, the individual mandate — a federal requirement that every individual buy sufficiently comprehensive health insurance.” He points out that “Obama set records for raising funds from the drug industry and the health insurance industry. In fact, Obama’s health-insurance haul was more than the industry gave to the last five Republican presidential nominees combined.”

SOURCE: Washington Examiner

The New York Times reports that while the AMA has been supportive of these reforms, “many other medical groups were unqualified in their opposition.” For instance, “A coalition representing 240,000 physician specialists, like the American College of Surgeons and the American Society of Cataract and Refractive Surgery, said that it ‘must oppose the bill as currently written.'”

It says the opposition also includes state medical societies in the three biggest states in the Union, California, Texas, and Florida.

SOURCE: New York Times


Public Opinion Slips

With all of this chaos public opinion continues to slide. Politico reports only 38 percent of Americans now favor the bills in Congress while 52 percent oppose them. This is based on the very reliable Quinnipiac survey, which also finds an even greater share, 56 percent, disapproving of the way Obama is handling health care. The poll also finds:

  • American voters say 63 – 30 percent that extending health insurance to all will raise their cost of health care, although they are split 47 – 46 percent on whether they are willing to pay more to make sure everyone is covered.
  • Voters split 48 – 46 percent on whether they think covering everyone will decrease the quality of their own care, but by 71 – 21 percent they do not think universal coverage is worth lower quality of care.

SOURCE: Politico (polls)

Impact on Small Biz

Minnesota’s Citizens Council on Health Care has published a paper by Twila Brase and Linda Gorman on the impact on small business of the current reform proposals, including these:

  • New Taxes – New taxes and assessments are imposed on business for failure to provide coverage, employee use of tax credits, waiting periods for insurance eligibility, funding for state health insurance exchanges, high-income individuals.
  • Play or Pay – The House bill penalizes businesses that do not provide health benefits with taxes at 2 – 8 percent of payroll. The rates are not indexed for inflation.
  • Limits Business Expansion – The House bill’s tax on high-income individuals is expected to act as a direct tax on business expansion since many small business owners finance expansion using income reported on their individual tax returns. The tax includes a 5.4 percent increase in capital gains tax. In addition, high-income earners will pay the planned increase in the payroll tax at a higher rate: 3.4 percent.
  • Definitions Matter – The definition of ‘large employer’ and ‘small employer’ are important. They determine which taxes, penalties, and requirements apply.
  • Waiting Period Prohibited – The Senate Bill limits waiting periods for employee coverage to 90 days and fines employers who have 1-2 month waiting periods.
  • Reporting Requirements – Both bills require government reporting of company and employee health insurance status, including details specific to each employee.
  • HSAs and Whistleblowers – The Senate bill threatens health savings accounts. The House bill provides whistleblower protections to employees.

SOURCE: Citizens Council on Health Care

In Praise of Mitch Daniels

Washington Post‘s Stephan Pearlstein wrote a column in praise of Indiana Gov. Mitch Daniels. It is an odd column since I don’t believe Pearlstein has ever said anything positive about HSAs, let alone any Republican, but he does here. It is also odd because he uses it mostly as an opportunity to bash the GOP’s “other Mitch,” as in Sen. Mitch McConnell (R-KY), Senate Minority Leader.

SOURCE: Pearlstein in the Post