Consumer Power Report #238

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 – [http://content.healthaffairs.org/cgi/content/full/hlthaff.2010.0788v1#ABS] 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.

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).

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.”

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.

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.”