Consumer Power Report #226

Published June 18, 2010

Greg Scandlen is off this week, and personally, I hope he’s using the time to come up with a way to blast through the bureaucratic incompetence preventing cleanup in the Gulf of Mexico. It was in the context of that news story that a friend sent along this quote from Alexis de Tocqueville, but honestly, I think it applies just as much to the new health care regime mandated by Washington. Tocqueville wrote:

“After having thus successively taken each member of the community in its powerful grasp and fashioned him at will, the supreme power then extends its arm over the whole community. It covers the surface of society with a network of small complicated rules, minute and uniform, through which the most original minds and the most energetic characters cannot penetrate, to rise above the crowd. The will of man is not shattered, but softened, bent, and guided; men are seldom forced by it to act, but they are constantly restrained from acting. Such a power does not destroy, but it prevents existence; it does not tyrannize, but it compresses, enervates, extinguishes, and stupefies a people, till each nation is reduced to nothing better than a flock of timid and industrious animals, of which the government is the shepherd.”

Trusting government with disaster response depends on having smart people in the right positions, and avoiding the disastrous results of having every decision made by committees of unelected bureaucrats who face no responsibility for their actions. Prepare for a situation where the same kind of foolhardy approach is made to our national health care policy – except instead of dealing with property and livelihoods, they’re dealing with your actual life.

– Benjamin Domenech



How many times did we hear the promise from President Barack Obama – if you like your plan you can keep it, if you like your doctor you can keep him or her, and so on. We all knew that wasn’t true, but now the Department of Health and Human Services has shown us it’s even worse than some observers expected. Kathryn Nix writes:

“The new regs will make it tough for a lot of those folks to hold onto their current plans, even though the Department of Health and Human Services continues to claim otherwise. That’s because HHS is ready to revoke the ‘grandfathered’ status of existing plans whenever an employer makes what it deems to be a ‘significant’ change in terms of coverage. And the HHS regs show that common adjustments such as an increase in deductibles or co-pays or a reduction in benefits would be considered ‘significant.’

“According to the regulations themselves, by 2013, 51 percent of existing employer-sponsored plans will no longer qualify as ‘grandfathered.’ That’s the mid-range estimate–the percentage of plans that lose grandfathered status could range from 39 percent to as high as 69 percent.”

So most Americans won’t be able to keep their plans, even if they like them; most like their current coverage by wide margins, according to poll data. Good news if you’re in a union, though – your grandfathering regulations are much softer, according to Investor’s Business Daily.

SOURCE: Heritage Foundation Blog; Investor’s Blog


At Health Care News, Charles Arp, a small business owner in Illinois, shares his experience trying to qualify for the supposedly “generous” tax credits under Obama’s law:

“Talk about unintended consequences! My firm would have to reduce its workforce and cut employee wages to benefit from the newly enacted Patient Protection and Affordable Care Act. Is this what the objective should be? I would never consider taking such action. Most of the employees have worked at Pinney for twenty years or more. It did get me thinking, though: Maybe we could divide Pinney Printing Company into two smaller firms. While I’m no expert at gaming the government, like some people, it’s certainly a possibility many will consider. I feel foolish now, after getting my hopes up for a government solution to our problem.”

Across the country, soon thousands of other employers will have similar experiences.

SOURCE: The Heartland Institute


Pointing to the European experience, Scott Gottlieb of the American Enterprise Institute writes on America’s new price control regime, illustrating why pharmaceutical companies will come to regret the deal they cut with the White House:

“Conventional wisdom says that U.S. pharmaceutical companies made out well under the Obama health plan by bargaining with the White House. In reality, all they did was invite the same kinds of price regulation taking root in Europe. The deal undermines the competitive pricing that supports real innovation. It will inevitably increase drug costs inside Medicare, inviting the kind of politically driven price controls that discourage investment. For good measure, the Obama health plan is full of new tools that will enable Medicare to set rules not only on prices, but the clinical criteria for accessing new medicines.”

SOURCE: American


Writing at StateHouseCall, John R. Graham brings up a key point about the coming collapse of insurance brokers:

“A source in Minnesota has told me that a very large insurer has sent a letter to brokers announcing that it is cutting their commissions, because the regulatory burden of ObamaCare (specifically, the mandated Medical Loss Ratio, or MLR) means that the insurer has to cut spending on non-medical services to keep its head above water. I haven’t got any news from other states, in which the insurers’ responses may differ (because Secretary Sebelius may delegate a lot of regulatory authority to state-based exchanges). … I’m not very sympathetic to brokers, but if there’s ever a time when employers needed them, the next few years of chaos will be it.”

This will be particularly painful for small businesses as they navigate unsteady waters.

SOURCE: StateHouseCall


Indiana Gov. Mitch Daniels, whose popular Healthy Indiana program is being rolled back thanks to the new federal regulations, took a hard line against the plan in a speech in Washington, DC this week. You can see his presentation here: [] “Daniels ended a speech Tuesday on the impact of President Obama’s new health law by holding up a prop. It was a large syringe that bore the word, “ObamaCare.” But instead of a needle, it was fitted with a large silver screw shaft. Daniels did it all with a wry and almost bashful sense of humor, but the message from a leading Republican state executive to the federal government was unmistakable: ‘I think we got a scrap coming,’ he said.”

Texas Gov. Rick Perry echoed that response in his interview with me this week, which you can hear in our latest Health Care News podcast.

SOURCE: Daily Caller; Health Policy News


Avik Roy writes at The Apothecary on the increasing questions from mainstream journalists about why the drug development process is clogged:

“One technical challenge for small-molecule drug development today is the revolution spawned by combinatorial chemistry. Combinatorial chemistry is the high-tech process by which companies can rapidly synthesize large numbers of variations to a core molecular backbone. While combinatorial chemistry has so far led to few new drugs (Nexavar is a notable exception), these novel compounds are often patented, limiting the maneuvering room for new players. Antibodies are one way around this problem in some instances, especially now that human gene patents have been invalidated. At the end of the day, though, drug development isn’t getting inherently harder. The obstacles posed by generic drugs and patent barriers are compensated for by new scientific insights and technologies. The biggest issues for the industry remain: (1) the massively increased strictness of the FDA, as discussed above; and (2) how the way we pay for drugs distorts industry’s priorities.”

Scott Gottlieb also has an excellent piece in The Wall Street Journal on other barriers to bringing drugs to market.

SOURCE: Avikroy; Wall Street Journal