Consumer Power Report #245

Published October 29, 2010

Wow, hard to imagine the election is only a week away. Whatever the final outcome it is certain to be a very big gain for the Republicans, not only in Congress but in the states and local governments as well. All of the credit – all of it – goes to the great awakening and mobilization of ordinary Americans under the Tea Party banner. The Republican brand is still held in low esteem by most voters. The ONLY reason these voters are willing to vote Republican is in the hope that the party has been fundamentally changed by this awakening.

I remember in 1994, I was taking my daughter on a tour of college campuses in Virginia and North Carolina. We had just got done at Duke when the election results started coming in. The depth of the wave was evident as we listened to the local results on the car radio. Republicans were winning everything, from town council to county commissioners to state-wide races to congressional seats. This was in areas that hadn’t elected a Republican since Reconstruction.

That year, too, was driven by a tidal wave of ordinary Americans who were afraid of what Democratic majorities were doing to the country, though at that time there was no national identity for the movement. Peter Jennings on ABC called it a temper tantrum by voters – unruly children who didn’t understand what their betters were doing for them.

This year President Obama is already providing the narrative. He is attributing this wave to people who can’t think straight because they are afraid. The parallels are striking.

The elite may not have learned anything in the intervening 16 years, but I hope the rest of us have. I was running CAHI at the time, and after the election our funding dried up. Our funders all said they had spent a lot of money on the election and now that the Republicans were in charge, they had nothing to worry about. They walked away just when they could have made a very big difference.

Folks, the election is only the beginning. The fact that the free market people walked away in 1995 is exactly what allowed the Congressional Republicans to go astray. It is not enough to elect good people. All that gets you is a hearing – a chance to make your case. This is especially true in health care.

I cannot emphasize this strongly enough – Republicans don’t care about health care! They don’t understand it and they aren’t interested in it. What they are proposing today are just the warmed-over ideas of the past eight years (tort reform, association health plans, interstate purchase, etc.) They don’t understand the pernicious role of third-party payment, or the importance of patient empowerment, or the distortions of the tax laws. Even the best of them, like Bobby Jindahl, are still tilting towards managed care.

If you want something positive done about health care, you can’t stop at the elections. This is the time to plan for 2011 and budget for substantial contributions to the organizations that can make the case with the new Congress and the new governors.

The ball is now in your court. If you fail to deliver now you will have no one but yourself to blame for the outcome.

— Greg Scandlen



Speaking of CAHI, it has just released its latest update of mandated benefits in the states. Nothing has improved here, either. The number keeps growing every year and now totals 2,156, or 43 per state. The top five are Rhode Island (69), Maryland (67), Minnesota (64), Texas (60), and Connecticut (59). The five states with the fewest are Idaho (13), Alabama (19), Hawaii (23), Michigan (25), and Utah (25).

Once again, Republicans don’t have any better understanding of what they are doing than Democrats do. Texas enacts all kinds of mandates, but it is one of the most “conservative” states in the country. On the other hand, Hawaii and Michigan are among the most Democratic states.

These people simply don’t understand that no matter how worthy a particular benefit might be for some people, it raises costs for everybody and causes more people to be uninsured. Mandates are nothing but a tax. The state thinks infertile people should get in vitro fertilization at not much cost, so instead of starting a public program to pay for it by taxing everyone, it mandates insurance coverage and taxes only those people who are responsible enough to buy insurance.

It isn’t fair, it isn’t right, and it is supported by Republicans every bit as much as by Democrats.

SOURCE: CAHI’s complete list of Mandated Benefits


One of the most fundamental principles of liberty is that the government should be run by the rule of law, not by the whim of men. Citizens can be assured that they know what the rules are and can behave accordingly in the sure knowledge that the rules apply to everyone equally. This is a complete change from earlier monarchies and more recent dictatorships where the king or the dictator can make up the rules as he goes along, rewarding friends and punishing enemies.

Obamacare has turned that principle on its head. Suddenly there is no certain rule that applies to all. Instead, the secretary of HHS may apply the rules to some and waive them for others based on nothing more than how she happens to be feeling at the moment. So, McDonald’s and some teacher unions were told they didn’t have to abide by the minimum benefits requirement of Obamacare. This dispensation did not apply to all fast food restaurants, or all unions, only those that found favor in Secretary Sebelius’s eyes. Others may also apply for similar treatment, but they had better hope that Mrs. Sebelius isn’t suffering from indigestion when she reviews their application.

Bloomberg reports that John Green of NAHU and James Klein of the American Benefits Council are similarly seeking special favors from the commissars, this time to waive the requirement that employers who change carriers will forfeit their “grandfathered” status.

Both men are hopeful. Green is quoted in the article as saying, “they are listening, they are interested in hearing what’s going on out there.” And Klein says, “I think they really do care what businesses are saying.” Of course, if these men had been quoted in the press as saying the commissars don’t care or don’t listen, the chances of being favorably received in court would not be high. The powers-that-be like it when supplicants are on their knees.

SOURCE: Bloomberg


The AMA’s Washington office took exception to what I had written last issue that it had decided to cut a deal to accept a 10 percent SGR cut in exchange for allowing balance billing in Medicare. I will take their word for it. My sources on the Hill are not always right, and sometimes expectations are mistaken for predictions.

The DC office passed on a press release it sent out on September 29, which I will paste below in its entirety –

Washington, D.C. — The AMA, along with medical societies representing 50 states and the District of Columbia and 65 national physician organizations, united to send a strong message to Congress – immediate action is needed to stop the drastic 30 percent Medicare payment cuts looming at the end of this year to protect seniors’ access to health care.

Congress has repeatedly failed to fix the flawed Medicare physician payment formula, relying instead on temporary reprieves from scheduled cuts. The latest of these temporary delays stabilized Medicare physician payments only through the end of November. If action is not taken quickly by Congress, on December 1 Medicare payments for physician services will be slashed by more than 23 percent. An additional cut of 6.5 percent will follow on January 1.

“The AMA is calling on Congress to immediately address this impending crisis when they return to Washington after the November elections,” said AMA President Cecil B. Wilson, M.D. “Without action to stop the cuts, Congress will create a Medicare meltdown with access to care threatened for seniors and the baby boomers who will begin entering Medicare in January. Ultimately, a permanent solution must be passed to fix this broken system, but Congress must first stop the 30 percent payment cuts threatening seniors’ access to care now.”

Severe instability in the Medicare system is already compromising access to health care for America’s seniors. According to a 2010 MedPAC survey, about 1 in 4 seniors looking for a new primary care physician had trouble finding one.

“The threat of cuts to already low Medicare rates has left many physicians uncertain about the future of Medicare in their practice,” said Dr. Wilson. “The massive cuts scheduled at the end of this year come during the same time period when physicians can change their status within the Medicare program. Although these physicians are dedicated to their Medicare patients, many will be forced to consider changes including limiting the number of Medicare patients they can accept. Congress must send a strong message by stopping these cuts and committing to fixing this broken payment system that threatens access to care for patients.”

As I said, I will accept that this is the official position of the AMA, but I don’t find it very comforting or persuasive. It is asking Congress to fix in a lame duck session what it was unwilling to address during the Great Health Reform Debate. I’m not sure why the AMA thinks there will be any more reason for the Democrats to tackle this in November than it has been the rest of the year. Far more likely, in my opinion, is that the Democrats will simply let it ride so the Republicans will have to deal with it as soon as they are sworn in. Ditto with the Bush tax cuts. At most, there may be a one-month extension of current policies. The new Congress will not get even a week to get oriented before all this comes crashing down.


My article last issue on ACOs got quite a bit of attention, mostly appreciation for raising an under-reported story. There was not a word of defense of the ACO concept. It is as if everyone knows very well what a fraud this whole thing is, and no one chooses to defend it – even those who are trying to profit by it.

Physicians for a National Health Program (PNHP) is at least as disgusted as I am by the charade. Kip Sullivan had a wonderful article on the PNHP Web site that tears it apart even better than I did. He begins with a bang, saying, “The ‘accountable care organization’ (ACO) is the latest fad in American health policy. It remains an unknown concept to the vast majority of the public, including most doctors, but it is all the rage among health policy analysts as well as lawmakers who sit on heath policy committees in Congress and in state legislatures.” He points out that the label was invented only in 2006, presumably to sanitize the discredited HMO concept.

He walks us through the history of how the expression developed (mostly by Elliot Fisher and MedPac), and provides links to the supporting documents. He raises a host of unanswered questions and contradictions, and then concludes:

Despite the failure of the HMO and the managed-care tools pioneered by the HMO to work as advertised, believers in managed care remain convinced that something like the HMO is still the solution to the US health care crisis. They are driven to this conclusion by their inaccurate diagnosis of the crisis – that the fee-for-service system is the cause of high US health care costs.

Because the ACO so closely resembles the HMO, there is no reason to expect the ACO will perform any better than the HMO did. Like the HMO movement, the ACO movement will probably damage quality on balance and have no impact on costs, and may even raise costs. Costs may rise because administrative costs will go up (both for insurers and providers), and because providers will be larger.

Advocates of ACOs are among the most passionate advocates of evidence-based medicine. They should practice what they preach. They should encourage pilot projects which test clearly defined examples of the ACO concept (or better yet, some of the tools ACOs will allegedly use to improve care and cut costs), and when research on these pilots has demonstrated that ACOs are safe and effective, then and only then should ACO advocates promote widespread adoption of ACOs.

SOURCE Physicians for a National Health Program