Consumer Power Report: Headed to the Supremes

Published November 14, 2011

The Supreme Court has undertaken the incredible span of five-and-a-half hours for argument in the cases against President Barack Obama’s health care law. According to the order released today, the Court will tackle this issue in the spring, which means the matter could be decided well before the 2012 elections.

The arguments will center on Florida v. HHS, the strongest of the challenges to the law and the one that will cut to the central issue of the individual mandate’s constitutionality. Justices also will consider a small business association’s argument concerning the severability of the mandate, as well as a question on whether the suit violates the Anti-Injunction Act, a sticky issue in the lower courts. The advantage of including the NFIB is evident:

The National Federation of Independent Business, which was also a party to the Florida v. HHS lawsuit, was granted cert “limited to the issue of severability presented by Question 3” of their petition, which was “whether the ACA must be invalidated in its entirety because it is non-severable from the individual mandate that exceeds Congress’ limited and enumerated powers under the Constitution.” Hence, all of the key questions from the various lawsuits will be considered through the lens of the Eleventh Circuit’s decision to declare the mandate to be unconstitutional, while upholding the rest of the law.

While it’s foolish to predict what decision the Supreme Court will make, the expectation on the part of industry and legislatures across the country is that the Court may ultimately strike down the individual mandate along with a few other associated provisions of the law. It seems very unlikely we will emerge from the spring with anything less than a clear understanding of whether the individual mandate is constitutional or not, whether it is severable or not, and whether the accompanying matters of covering pre-existing conditions and other requirements are also going to be stripped. Oh, and don’t cross your fingers about a Kagan recusal.

This would leave many things – the exchanges, the price controls, IPAB, the medical device tax, and numerous other taxes and regulations, intact. However, it also would make much of the law unworkable when it comes to the health care marketplace – forcing Congress to reopen the law following the election, either to repeal it entirely (as Republicans wish) or to fix it (as Democrats desire).

Given that, there is simply no justification for spending one more dime of taxpayer money on implementation of this law.

Today’s news is a key step forward toward a legal resolution that will spark another round of health care policy battles. Even now, Capitol Hill Democrat staffers are hard at work trying to craft potential fallback plans if the mandate does indeed fall. A year ago, they dismissed this idea as foolish and extreme. Now, the winds have changed.

— Benjamin Domenech



The latest report from Kenneth Artz:

[Healthy Indiana] was designed to promote prevention, personal responsibility, and cost-conscious consumption of health care services. Indiana now wants to extend HIP, which expires on December 31, 2012, to cover an expected 400,000 new enrollees for Medicaid who will become eligible under Obamacare beginning in 2014.

Unfortunately, federal officials have not approved the extension, according to Seema Verma, founder of SVC, Inc., a medical consulting firm, and one of the architects of HIP.

“We applied for an extension with the Department of Health and Human Services in March 2011. They turned us down because they hadn’t written the regulations for Obamacare yet. Now we will have to go through the CMS and request a waiver through a State Plan Amendment (SPA) by showing there have been modifications to HIP and that it is budget-neutral. This is much more complicated than getting an extension and means that we will have to renew the plan every three to five years. We hope to apply for the waiver by the end of the year,” said Verma.

Unfortunately, HIP is running out of time. If the waiver is not approved in the coming months, HIP will expire and the patients who get their insurance through the program will lose their health insurance, says Verma.

“We think this would be a very bad outcome for the state since the program’s level of satisfaction is at an unheard-of 98 percent approval rating,” said Verma.

SOURCE: The Heartland Institute


My latest oped is in the Virginian-Pilot:

Obama’s health care law requires each state to create a health insurance exchange. In Massachusetts, the exchange + subsidy + mandate model created the most expensive health insurance premiums in the country and even more bureaucracy and government mandates.

That’s why prominent Republican governors – including Bobby Jindal in Louisiana and Rick Scott in Florida – have rejected Obama’s exchanges and the promised taxpayer funding. Only 14 states have decided to implement exchanges. Most are waiting until the major legal challenges and upcoming election are decided.

As one of the few Republicans moving forward with an exchange, McDonnell has been repeatedly cited by Obama’s supporters as proving that even smart Republican governors think it’s a good idea.

It’s not. The law’s status remains in serious doubt, thanks in part to the efforts of Attorney General Ken Cuccinelli and other Virginia conservatives. The individual mandate is currently pending review by the U.S. Supreme Court over a lawsuit brought by 28 states. The latest polling data indicate only 3 percent of Americans support the law and 80 percent oppose its individual mandate.

Whatever the Supreme Court rules, major changes to Obama’s law are coming in the next Congress – either by Democrats seeking to correct its many flaws or by Republicans seeking to scrap it and replace it with something new.



Good news:

The North Dakota House has defeated a proposal to set up a state-run health insurance exchange. House Republican Majority Leader Al Carlson says it may not be necessary yet to commit to setting up a state-run exchange. …

North Dakota lawmakers had to choose whether to set up a state-run agency or let the federal government do it. On Thursday, House members decided against establishing a state health insurance exchange. The vote was 64 to 30 against.

And bad news:

The Republican-led Michigan Senate took an initial, hesitant step on Thursday toward setting up a state health insurance exchange that would be created under federal health care reform requirements.

The Senate passed a bill by a 25-12 vote that would help set up the Internet-based marketplace to assist small businesses and individuals with buying health insurance. The measure advances to the Republican-led House.

Democrats supported the measure but Republicans were split.

SOURCE: The Republic


Apparently the federal rationing board sounds like a good idea for keeping prices down in the Bay State:

A special commission charged with studying rising health care costs in Massachusetts is recommending the creation of an independent oversight panel to identify acceptable and unacceptable reasons for price variations in care based on which hospital or doctor is used.

The Special Commission on Provider Price Reform was created by lawmakers last year. It also recommends that state regulators be given the authority to settle price disputes between insurers and health care providers if the cost of a medical procedure exceeds the market-based median.

That report is available here.



The latest example for the files:

“Anthem has made a difficult decision to non-renew our Medicare Advantage Freedom Blue RPPO plan in an effort to effectively manage financial and operational performance of our Medicare business,” said Darrel Ng, a spokesman for the company.

Medicare Advantage plans provide Medicare benefits, including prescription drug coverage, through private health insurance plans. Ng said Anthem Blue Cross decided to end its Advantage plan because otherwise, rising costs would have required it to either increase premiums or reduce benefits.

Wanda Jones, president of San Francisco’s New Century Healthcare Institute, said Anthem Blue Cross also may be reacting to changes in federal regulation of Advantage plans that are being implemented as part of health care reform.

“The feds have let these plans know that they intend to make them roll back their costs to match Medicare basic,” Jones said. “It’s Blue Cross wanting to cut its potential losses before they occur.”

Anthem’s decision will affect 113,000 Medicare beneficiaries statewide, and decisions by other health plans to drop their Advantage plans will force another 37,000 beneficiaries in California to switch plans, said Jack Cheevers, a Medicare spokesman.

SOURCE: Marin Independent Journal


Some interesting thoughts:

After a conversation with Gates, one wonders if the drug industry has hurt itself by focusing too much on $100,000 cancer drugs and blockbuster pills that can be sold to millions, and not enough on products that are far more cost-effective. And then, of course, there’s the fact that the entire $600 billion pharmaceutical industry has spent the past decade in a research drought, getting comparatively few new medicines to market.

“Fortunately, our vaccine discovery rate has been better than the recent drug discovery rate of pharma,” Gates said. “And, you know, pharma doing well is important for the world, so hopefully their discovery rate will go up.”

Ten or fifteen years ago, nobody in the drug business would have held up vaccines as profit centers. That was the age of Pfizer’s Viagra having the fastest drug launch in history, of the even bigger cholesterol-lowering medicine Lipitor becoming the best-selling drug in history and forcing Pfizer’s $116 billion buyout of partner Warner-Lambert, ushering in a new age of megamergers that experts believe may have squelched innovation in drug company labs.

Says Gates: “If you 15 years ago had said, ‘How important are vaccines to these various businesses?’ They would have said, “You know, our drug businesses are going to do so well. And vaccines are so tough, particularly because of liability issues.'”

But vaccines, Gates argues, “actually have more impact on health than all the new drugs.” And the pharmaceutical businesses didn’t do as well as expected. For Pfizer, for instance, a big bet on a Lipitor follow-up went down in flames when the drug turned out to increase, not decrease, the death rate. But now Pfizer is betting big on a vaccine, called Prevnar, against the pneumococcus bacteria. After Lipitor loses patent protection, Prevnar may well be the company’s top seller.

SOURCE: Forbes


Bob Moffitt’s latest is here:

President Barack Obama wants the Joint Committee on Deficit Reduction (“super committee”) to kill market competition for prescription drug coverage chosen by workers and retirees in the Federal Employees Health Benefits Program (FEHBP). In the President’s sparsely worded proposal, the U.S. Office of Personnel Management (OPM), the agency that administers the FEHBP, would contract directly for pharmacy benefit management services on behalf of all federal workers, retirees, and their dependents.

The FEHBP currently offers decentralized consumer choice of a broad range of prescription drugs, but that would be replaced by a centralized government procurement program. Remarkably, the Administration dismisses private market negotiation between drug manufacturers and private health plans as a “fragmented purchasing strategy”; it claims government purchasing would “more efficiently leverage” the combined power of the program to “negotiate” a “better deal” for taxpayers and federal enrollees. In fact, the President’s policy guarantees the politicization of prescription drug coverage for federal workers, retirees, and their dependents – more than 8 million Americans.

While short on details, this is not a new idea. The Administration and the Democratic congressional leadership have offered a broadly similar proposal to end private market negotiation in the provision of prescription drug coverage in Medicare Part D. They would have the government “negotiate” directly with a single pharmacy benefit manager, on the questionable assumption that it would get a better price for prescriptions than private market competition. But the government does not “negotiate” drug prices; it fixes them.

SOURCE: The Heritage Foundation