Consumer Power Report #234

Published August 16, 2010

Welcome to the Consumer Power Report – Greg Scandlen is off this week.

While in San Diego for a conference with legislators, I had the chance to shake the hand of John R. Graham of the Pacific Research Institute, who recently produced this video explaining the new Web site provided by the federal government.

Within the video, Graham mentions a letter that has been making the rounds on Capitol Hill as a hilarious example of health care reform’s unexpected ramifications. It’s a letter from Majority Leader Harry Reid to HHS Secretary Kathleen Sebelius sent on July 21 – you can read it here. The letter seems to indicate Reid has finally read the health care bill, and after discovering it hurts Nevada hospitals more than it helps them, he is actually complaining to the administration about the bill he worked so hard to pass. Graham explains:

In a July 21 letter to U.S. Secretary of Health and Human Service Kathleen Sebelius, the Senate Majority Leader complains that ObamaCare’s cuts to Medicare will “result in a net reduction in payment to Nevada’s hospitals when they are unable to absorb such a cut.” Furthermore, he questions the method used by the Centers for Medicare and Medicaid Services to calculate the payments to hospitals, and is “very concerned about potential effects on beneficiary access if this regulation is finalized without adjustment.”

Of course, this was the entire point of the measure Senator Reid worked so hard to pass! Roughly half of the estimated cost of Obamacare is, according to the Congressional Budget Office, paid for by making approximately $455 billion in cutbacks to payments to Medicare providers — yes, that means hospitals and doctors. That’s the entire point of controlling cost through government mandates and reduced payments to providers. Why is Reid so surprised? Did he miss a meeting?

Incidents like this illustrate why this ludicrous bill, supported by a great many well-intentioned fools whose inability to understand economics is matched only by their inability to understand human nature, is politically unsustainable. Already politicians like Reid are working to game the system, to exempt their states from the cutbacks made necessary by their own policy decisions as with any public utility. And once the states of the connected and powerful are exempted, others must pay more – and this becomes one more example of government choosing winners and losers in a state-run industry. This is what happens when self-styled elites tell us what’s best for us: “leaders with plans” win, and the American people lose.

– Benjamin Domenech



Of course the big story this past week on the Medicare front was the controversy over the CMS report detailing what the White House proclaimed was a lifeline to the program. Unfortunately for them, as John Goodman notes, the chief Medicare actuary, Richard Foster, disagrees with this optimistic outlook. “For the first time in Medicare history, the Medicare Chief Actuary has called the projections in a Medicare Trustees Report ‘unreasonable’ and ‘implausible’ and encouraged everyone to ignore them and view instead an ‘Illustrative Alternative’ report. The alternative opens this way: ‘The Trustees Report is necessarily based on current law; as a result of questions regarding the operations of certain Medicare provisions, however, the projections shown in the report do not represent the “best estimate” of actual future Medicare expenditures.'” Read Goodman’s post here.

SOURCE: CMS Trust Funds Report; CMS Alternative Scenario


Avik Roy studies the evidence contained within a recent University of Virginia study and finds terrible outcomes for Medicaid patients:

At a cost of nearly $100 billion a year, Obamacare adds 16 million people to the rolls of Medicaid. The President and his allies are most proud of this aspect of the new law, as it helps to fulfill a long-held progressive goal of providing government-funded health insurance to all Americans. Except that Medicaid is broken. Medicaid so severely underpays doctors — reimbursing them at 72 percent of already-stingy Medicare rates — that many physicians refuse to see Medicaid patients. Medicaid patients, in turn, fill up emergency rooms, where they delay the care of the seriously injured. Now comes word, via a large study by the University of Virginia, that surgical patients on Medicaid are 13% more likely to die than those with no insurance at all, and 97% more likely to die than those with private insurance.

Read the abstract of the UVA study here, and more about Medicaid cuts in the latest issue of Health Care News.

SOURCE: National Review; The Heartland Institute


Maureen Martin, my colleague at The Heartland Institute, writes on an emerging problem at the state court level that could bar access to lifesaving drugs over warning label games: “A recent trend in state courts, enabled by the decisions of the United States Supreme Court, could endanger Americans’ access to lifesaving drugs. It’s time for the Court to stop the trend in its tracks. The trend began in 2009 with a $6.7 million Vermont jury verdict in a drug case against pharmaceutical company Wyeth, now a property of Pfizer. The case alleged Wyeth inadequately warned medical workers of the dangers of injecting the anti-nausea drug Phenergan intravenously. At issue: the information on the warning label, which had already gone through a lengthy approval process.” Read and be informed.

SOURCE: The Heartland Institute


I responded to the latest news from the United Kingdom with some degree of surprise – a report in The Independent that the NHS has spent millions on gag orders for doctors working under the National Health Service (a system beloved by our new head of Medicare & Medicaid Services, Donald Berwick): Here are a few facts to consider:

The real-world outcomes of Berwick’s ‘global treasure’ are appallingly poor. The NHS’s system of state-controlled rationing turns treatable diseases into death sentences. UK cancer survival rates are near the bottom for all of Europe according to the first worldwide study of cancer survival rates (published two years ago in Lancet Oncology). Women who contract breast cancer there have a 46 percent mortality rate, compared with only 25 percent in the United States. Only 19 percent of American men who get prostate cancer die of it, but in Britain it kills 57 percent. The U.K.’s overall cancer mortality rate is more than 38 percent higher than America’s. These are real people who are dying unnecessarily thanks to the ‘global treasure’ Berwick wants to institute here. Incapacitated NHS patients in need of hip surgery must wait nearly 11 months, while those hoping for knee surgery wait nearly 12 months. Typical wait times in the United States for such procedures are less than one month. Three years ago, Britain’s National Institute for Health and Clinical Excellence (NICE) decided the system would only reimburse an innovative but costly new treatment to restore sight for the elderly if a patient was already completely blind in one eye (one being enough, according to the Leaders with Plans). And in a letter to The Daily Telegraph last year, leading health experts claimed terminally ill NHS patients are being falsely categorized as ‘close to death’ in order to justify cutting off life support–which is, after all, awfully expensive. … It’s important to understand that from the perspective of those like Donald Berwick, this is a feature, not a bug. He says the best way to an efficient, humane health care system is ‘rational collective action overriding some individual self-interest.’ This is fine, I suppose, as long as the ‘individual’ being overruled is someone else, ideally someone you don’t know.

SOURCE: The Independent


In an issue that bears monitoring, the American Academy of Family Physicians is pushing back strongly against recommendations from the National Board of Medical Examiners that equate primary care physicians and advanced practice nurses – a practice that some anticipated would increase under President Obama’s national health care reforms. The letter and key excerpts can be found at the AAFP’s Web site:

The AAFP is vigorously objecting to some of the policies of the National Board of Medical Examiners, or NBME, related to health system reform. Specifically, the Academy is taking the NBME to task regarding its policies equating physicians with graduates of programs in clinical advanced practice nursing and graduates of physician assistant master’s programs based on their scopes and depths of practice. In a strongly worded letter from AAFP Board Chair Ted Epperly, M.D., of Boise, Idaho, to NBME President and CEO Donald Melnick, M.D., the Academy said it is ‘surprised and disappointed’ by recommendations in the draft document ‘Policies of the National Board of Medical Examiners Regarding Health System Reform,’ which was approved in principle by the NBME membership in March.



Health care reform is a major aspect in the long-term discussion about America’s entitlement problem and how we deal with the coming generational challenges better than our friends in Greece have. This makes the current battle between New York Times columnist Paul Krugman and Congressman Paul Ryan (R-WI) over the future of entitlement spending all the more depressing, mostly because it’s surprising how quickly the Nobel-prize-winning economist has turned to name-calling and rather obvious games.

“In his Friday column, Krugman called Ryan a ‘charlatan’ and his plan to reform the welfare state and eliminate the debt a ‘fraud’ that is ‘drenched in flimflam sauce.’ Ryan responded to Krugman in the Milwaukee Journal Sentinel over the weekend, and elaborated on his criticisms of Krugman this afternoon. ‘I realize he’s a columnist and not a journalist, yet he could have easily tried to have verified his claims with a phone call or an email,’ Ryan said of Krugman. ‘Instead he went with his confusion and chose to impugn motives,’ said Ryan, ‘which strikes me as a very intellectually lazy exercise or style.'” You can read Ryan’s column here.

SOURCE: Weekly Standard