Consumer Power Report #238

Published September 13, 2010

This was a weekend of activity in Washington, DC. Many freedom-loving people were in town, meeting together under the aegis of a variety of pro-market, pro-liberty organizations. On Sunday, many of them gathered to protest and express their views along Pennsylvania Avenue – not in violence or bitterness, but out of a shared belief that freedom is worth defending, and that their children deserve better than to be saddled with the costs of today’s mistakes so that we may live more comfortably.

There is a line that is shared commonly in the Tea Party movement which I think is a powerful expression of what we are witnessing across the country today: “Government goes to those who show up.” If the American people want to be heard, they have to show up – because if they do not, we know the pressure of organized labor, special interests, and corporate interests who wish to game the system will show up. But when focused on Washington, the power of a few vocal, dedicated Americans who demand to be heard is often greater than all the organized mercenary lobbyists you can count.

In a new podcast at Health Care News, Anne Sorock of the Sam Adams Alliance talked with me about that group’s interesting research into the Tea Party movement, and some of their surprising findings. You can listen to that podcast here, and subscribe to our podcast feed here.

It was also a weekend of remembrance. Many ceremonies were held for those who lost friends and family, in DC, in New York, in Pennsylvania. Nearly everyone I know has a connection to someone lost, and we all have our ways of honoring their memory. For my part, I hosted a dinner with friends from across the country – including one very close friend who survived that awful day because he took the time to show up and vote in the local primary election before going in to work in Tower 2. I hope you all had the time to set September 11 aside and spend the day with friends and loved ones, before turning once again to the matters of politics and policy that demand our earnest attention.

– Benjamin Domenech



Last week at the White House, President Obama gave his first press conference since May. He was asked by ABC News’ Jake Tapper for a response to the latest Centers for Medicare & Medicaid Services actuarial report. “On health care reform, this is six months since health care passed. You pledged that you would bend the cost curve,” Tapper said. “And CMS reported yesterday that the cost curve is actually bending up: from 6.1 percent to 6.3 percent post-health care legislation.”

The president responded by emphasizing that bending the cost curve would take time, and that the health care legislation was the right thing to do–but when Tapper interrupted to re-emphasize the CMS numbers, he said:

“As I said, I haven’t read the entire study. Maybe you have. But – you know, if – if you – if what the reports are true, what they’re saying is, is that as a consequence of us getting 30 million additional people health care, at the margins that’s going to increase our costs, we knew that. We didn’t think that we were going to cover 30 million people for free. But that the long-term trend in terms of how much the average family is going to be paying for health insurance is going to be improved as a consequence of health care. And – and so our goal on health care is if we can get instead of health care costs going up 6 percent a year, it’s going up at the level of inflation, maybe just slightly above inflation, we’ve made huge progress. And by the way, that is the single most important thing we could do in terms of reducing our deficit. That’s why we did it. That’s why it’s important. And that’s why we’re going to implement it effectively.”

“I haven’t read the whole study,” the president says. “Maybe you have.” Well, I have, and I hope you will too – [] here it is. It should take roughly 30 minutes of your time (less if you’re a fast reader and if you skip the graphs), and it contains several important points. I wish the president would take the time to read it, as it might alter his ridiculously optimistic views concerning his goals on health care costs.

As the New York Post notes, CMS finds, “Health spending is expected to hit $2.6 trillion this year, or 17.5 percent of the economy, but would spike when many of the new reforms take effect in 2014. Costs then are expected to rise by 9.7 percent, as compared to the pre-law expected increase of 6.6 percent.”



The Congressional Research Service has released a new study that has several frightening conclusions regarding the costs of Obama’s health reforms for the states. CRS doesn’t provide a cost estimate – they’re very careful not to – but they do note that other states have reached their own conclusions regarding the costs of implementation. Here are a few of those estimates:

  • North Dakota estimated the new health care law’s additional costs to its state at $1.1 billion.
  • Texas estimated $27 billion
  • Indiana estimated $3.6 billion
  • Virginia estimated $1.5 billion
  • Louisiana estimated $7.1 billion
  • Nebraska estimated $766 million
  • Oklahoma estimated $441 million

So we’re looking at a cost to taxpayers and states of at minimum $180 billion, and extrapolating across other states, perhaps more than $300 billion. Even if these estimates are only roughly accurate, this is far more than the $114 billion deficit savings President Obama is citing as “the single most important thing we could do in terms of reducing our deficit.” What’s more, these savings exist thanks only to the Congressional Budget Office’s rules regarding how they calculate such things (including assumptions regarding the “Doc Fix” and other matters).

SOURCE: The Heartland Institute


What a headline! Yes, you read that right – $9.9 billion with a “B.” I’m still writing a story on this, but I’ll give you a taste of what Maureen Martin, my colleague, had to say about it:

“The shocking headline on the Los Angeles Times story – that California insurance regulators are seeking $9.9 billion in penalties from PacifiCare – couldn’t be more misleading. And California insurance regulators couldn’t be more abusive in seeking them. The company has not had its opportunity to present its side of the case yet, which the company says will show the vast majority of the alleged violations are technical in nature. The $9.9 billion number represents the maximum possible penalty. Previous high penalties were in the $8-$10 million range. The alleged violations took place in the two years following UnitedHealth Group’s 2005 acquisition of PacifiCare. In 2010, the California Office of the Patient Advocate published a survey of PacifiCare members, who gave the company and two others Five Stars, the highest possible rating.”

Of course, as this Associated Press story indicates, there’s always the possibility that more insurers will be facing the threat of these gargantuan lawsuits if they continue in their premium-raising ways. How dare they respond to expensive new policy requirements by passing the expense on to customers! AHIP has already responded with a strongly worded letter, but we all know how effective those tend to be in today’s Washington.



I had a piece published at the Washington Examiner last week concerning Medicaid; I hope you’ll read and consider it. It concerns one of the disturbing “untold stories” about the federal legislation – namely, how the new law’s expansion of Medicaid will burden African-Americans. As I explain:

“The evidence for this unsettling conclusion is solid and data-driven. According to a Congressional oversight report released by the Senate’s two serving physicians, Dr. Tom Coburn (R-OK) and Dr. John Barrasso (R-WY), the president’s choice to expand Medicaid services dramatically will have a disproportionate impact on the health of the poor – and as a side effect it will trap a significant percentage of African-Americans in a ghetto of poor medical care.

“Academic studies have repeatedly confirmed Medicaid patients experience poorer health outcomes and higher infant mortality rates. In July a new report from the University of Virginia found even worse performance: surgical patients on Medicaid actually fare worse than the uninsured. They are 13 percent more likely to die than those who have no insurance and 97 percent more likely to die than patients with private insurance. Yes, you read that right – having no coverage at all is statistically better than being covered by Medicaid.”

Jamming 16 to 18 million more Americans into the Medicaid system is a recipe for disaster, and it will perpetuate a racial divide that forces a higher proportion of the African-American population into the program than any other major ethnic group – more than 30 percent.

SOURCE: Washington Examiner


One more point on the deficit issue. Writing in The Wall Street Journal last week, Peter Ferrara – author of a forthcoming report from The Heartland Institute – writes with Larry Hunter of the Social Security Institute on the Medicare cuts contained within the president’s law:

“Altogether, ObamaCare cuts $818 billion from Medicare Part A (hospital insurance) from 2014-2023, the first 10 years of its full implementation, and $3.2 trillion over the first 20 years, 2014-2033. Adding in ObamaCare cuts for Medicare Part B (physicians fees and other services) brings the total cut to $1.05 trillion over the first 10 years and $4.95 trillion over the first 20 years. These draconian cuts in Medicare payments to doctors, hospitals and other health-care providers that serve America’s seniors were the basis for the Congressional Budget Office’s official ‘score’ – repeatedly cited by the president – that the health-reform legislation would actually reduce the federal deficit. But Mr. Obama never disclosed how that deficit reduction would actually be achieved.”

In the coming fight over funding for this legislation, it’s important to remember the wide gap – already apparent to every observer – between the promises made in order to pass this legislation and the actual benefits.

SOURCE: Wall Street Journal