Consumer Power Report #417
According to Aaron Blake at the Washington Post, the administration’s Obamacare victory lap looks more like a false start.
Democrats have been claiming a turning point in the battle over Obamacare for the better part of the last month. … President Obama even took something of a victory lap, declaring the debate over his signature health-care law over. When it comes to the American people, though, there has been basically zero rallying effect. And in fact, they still expect Obamacare to do significantly more harm than good – in about the same proportions as before.
As we have noted, a new Washington Post-ABC News poll shows approval of the law and of Obama’s implementation of it have dropped after a momentary boost. Americans disapprove of the law overall 48–44 and disapprove of Obama’s implementation 57–37. What’s perhaps more telling is that, despite the rare good news of the past few weeks, their perceptions of the law remain basically as-is – that is, pretty dim. To wit: Americans say 50–41 that the implementation of the law has been worse than they expected rather than better. They say 44–24 that the health-care system is getting worse rather than getting better as a result of Obamacare. They say 29–14 that the quality of care is getting worse rather than better. They say 47–8 that their health-care costs are increasing due to the law rather than decreasing. They say 58–11 that the overall cost of health care in the United States is increasing rather than decreasing.
Almost all of these numbers are basically unchanged from in recent months. The one exception would be a slight uptick in the percentage of people who say the law is making things better (from 19 percent in December to 24 percent today). But even with that, the law’s long-term prognosis – (ahem) so to speak – hasn’t changed, with Americans still seeing it as more expensive than it needs to be for both themselves and the country. And nearly twice as many still say the law is making things worse rather than making things better.
The NBC/Wall Street Journal poll this week replicates those findings. In this context, how should opponents of Obamacare think about talking about the law? We saw an example of how not to approach the challenge when the Spokesman-Review published a story this weekend with a headline claiming House Republican leader Cathy McMorris-Rodgers says Obamacare is likely to stay. McMorris-Rodgers’ office blasted the depiction of her comments that way – you’ll note the only actual quote in the story is “we need to look at reforming the exchanges,” which isn’t necessarily a good or bad thing to say, but doesn’t justify the headline. But even if the piece is inaccurate, it provides us with a handy object lesson about how not to talk about Obamacare.
What McMorris-Rodgers, or any Republican, is really saying when she says Obamacare is unlikely to be repealed: She’s saying Republicans are unlikely to beat Hillary Clinton in 2016. Why? Well, every single Republican presidential candidate in 2016 will be in favor of repealing Obamacare. Every single one will have a proposal, from the bullet point to the massive white paper, for replacing Obamacare. Every single one will be insistent in response to the skepticism of their debate questioners that the law will be rolled back under their watch by any means necessary. And should one of them win, Obamacare’s rollback will be the first legislative item on the agenda. Even if Democrats retain control of the Senate, Republicans will attempt to dismantle the law.
The only realistic way this is not the case, of course, is if 1) Hillary Clinton becomes the next president of the United States. (That’s it – that’s the list.)
Now, it may be that it is also McMorris-Rodgers’ opinion that this is likely to come to pass – she’s certainly not alone in that opinion! – in which case she might as well say that, too.
Of course repeal of Obamacare will be challenging. There are a host of things in the Democratic and Republican agendas that are unlikely to come to pass. For McMorris-Rodgers’ party, it is also unlikely that the tax code will ever be dramatically reformed; that Paul Ryan’s Medicare reform will ever pass; that Social Security will be privatized; or that the balanced budget amendment to the Constitution will ever pass. Yet all these things are in their platform. Should they be removed because making them happen is difficult, politically?
Politicians who run on repealing Obamacare who say they don’t anticipate being able to repeal Obamacare are essentially saying “we expect to lose,” which seems a pretty silly thing for an elected politician to be saying. You don’t get a lot of “we expect to lose” from underdog sports teams headed into a big game, even if they do. If you expect to lose, then you might as well throw in the towel and skip the game – or, in this case, stop working on public policy or electoral politics. You should particularly stop working on Republican alternatives to Obamacare, as it is a waste of time given the inevitable future election of Hillary Clinton and a Democratic Senate.
I realize some people are of a different mind on this topic – here, Avik Roy makes the case that Republicans should be making the case for reforming, not repealing, Obamacare. But I disagree. It’s clear at this point that Obamacare has consistently been the most reviled federal domestic policy in ages among voters; that a not-insignificant number of those enrolled in it are doing so not gladly, but because they have been forced against their will to be dependent on it; and that we have no idea what Obamacare will do to the marketplace – and people’s lives – over the coming years. If the trendlines continue on price and access and disruption, Obamacare’s negatives will continue to outweigh its positives, and the political feasibility of undoing it really depends only on the outcome of the 2016 election.
If you think losing to Hillary Clinton is inevitable, of course, it’s a moot point. But then, if you think after eight years of Barack Obama the country isn’t capable of putting an Obamacare opponent in the White House, proposing any politically challenging free market policy changes would be a moot point, too.
— Benjamin Domenech
IN THIS ISSUE:
WHY THE UNINSURED ARE SITTING OUT OBAMACARE
With Obamacare’s first enrollment period finally in the books, two new surveys out this morning offer new insight into why the still-uninsured decided to remain on the sidelines this year. Hint: It has a lot to do with cost.
This newest monthly Kaiser Health Tracking poll, which has provided some of the most reliable data on the public’s opinion interaction with the Affordable Care Act over the past four years, finds that nearly 4 in 10 uninsured adults cited affordability as their main reason for skipping health insurance coverage. Twenty-two percent cited employment reasons (they were unemployed or couldn’t get coverage through their job), while another 11 percent said they missed the deadline and 9 percent said they just didn’t want insurance.
And how much of a motivator is Obamacare’s individual mandate? When Kaiser asked people about the requirement to have insurance, it didn’t change their affordability calculation much – 36 percent cited affordability as their main reason for staying uninsured.
Interestingly, about half (45 percent) of the uninsured said they thought they would have to pay the individual mandate penalty this year, though actual enforcement of the mandate will likely be light this year. Further, the population of people who’d trigger the mandate is likely much smaller – the Congressional Budget Office previously projected just 2 percent of the total population, or 6 million people, would have to pay the mandate penalty in 2016.
SOURCE: Washington Post
OBAMACARE: THE NUMBER ONE THING AMERICANS WOULD UNDO
Recent polling conducted by McLaughlin & Associates for the 2017 Project asked Americans, “If you could undo one thing that President Obama has done as president, what would it be?” The choices that the poll provided were “overregulation of the economy,” “high deficit spending,” “tax increases,” “the economic stimulus package,” and “Obamacare.” And the winner, by a wide margin, was Obamacare.
In all, 7 percent of respondents listed the “economic stimulus” as the thing they’d most like to undo, 7 percent listed overregulation of the economy, 10 percent listed tax increases, 18 percent listed high deficit spending, and 32 percent listed Obamacare. In other words, more people listed Obamacare than any two other answers combined. (Eleven percent said they wouldn’t undo anything Obama has done; 9 percent said they’d undo “something else,” and 6 percent said they didn’t know.) The poll included 37 percent Democrats and 32 percent Republicans …
The poll’s respondents also said they thought Obamacare “should be repealed and replaced with a conservative alternative that aims to lower health costs and help people get insurance” (44 percent), rather than having Obamacare “remain the law of land, either in its current form or in amended form” (32 percent), or “repeal[ing it] but not replac[ing it] with an alternative” (16 percent). With such a conservative alternative – in other words, one that deals with both costs and coverage – in play, respondents favored repeal by a tally of nearly 2-to-1: 60 to 32 percent.
SOURCE: The Weekly Standard
HOW TO AVOID THE FAUXBAMACARE TRAP
Instead of holding an up-or-down vote on some 2,000-page omnibus bill, take up a series of single-issue bills, and deliberately and thoughtfully consider each one, with plenty of time for careful review, debate, and amendment.
To put a cork in the Democrats’ mouth, Republicans should include in each bill a contingent effective date, along the following lines: “This bill shall take effect upon the enactment of the full repeal of the Affordable Care Act, or on January 21, 2017, whichever is sooner.”
This formulation would enable opponents to navigate the treacherous waters between “reform health care” and “fix Obamacare.” It effectively makes the reform contingent on the election of a Republican successor to Obama, who would presumably be in a position to sign a full repeal, and thus subtly acknowledges the reality of Obama’s veto pen while clearly reaffirming the Republican commitment to full repeal. It also takes away the Democratic talking points about “no Republican plan” and “just another repeal vote.”
GOP leaders should not wait to move until after the election, or until they’ve found consensus among their members on some big package of compromise reforms. Such a consensus may not be attainable. Even if it is, the result is likely to be underwhelming in its totality, overwhelming in its density, confusing in its complexity, and embarrassingly laden with hidden K Street handouts.
SOURCE: The Federalist
HEALTH CARE SPENDING SPIKES TO 34-YEAR HIGH:
With millions of Americans gaining coverage through President Obama’s health care law, health care spending spiked by a staggering 9.9 percent in the first quarter of 2014 – the fastest rate since 1980 – according to data released Wednesday by the Bureau of Economic Analysis.
Obamacare was pitched as a plan to reduce health care spending, and formally titled the “Patient Protection and Affordable Care Act.” In 2009, Obama called the status quo – in which health care spending was accelerating toward becoming one-fifth of the economy – “unsustainable.”
For several years, Obama and his allies had been crediting a slowdown in the rate of growth for health care to payment reforms imposed by the law. But other analysts predicted that spending would pick up as the economy improved and people started loosening the family purse strings.
As I reported earlier this month, there were already signs of growing health care spending in the fourth quarter of 2013, when it jumped 5.6 percent, which had been the fastest clip since 2004.
But the 9.9 percent jump came in the quarter from January through March, which was the first three months in which individuals who gaining coverage through the law were able to use it. That was the fastest rate recorded since health care spending grew at a 10 percent rate in the third quarter of 1980.
The data released on Wednesday, as part of the government’s report on gross domestic product, is preliminary and subject to revision in the coming months.
SOURCE: Washington Examiner
THE SAVINGS AND BENEFITS OF REFORMING THE FDA
Without a doubt, one of the most important American regulatory bodies is the FDA. As the agency charged with ensuring the safety of everything from the protein shake you drank after the gym to the ibuprofen you take the next day because you forgot to stretch, its responsibilities affect every American every day of their lives.
With such a broad mandate, of course, come enormous challenges. Unless you’re Amazon, Apple, or Google, doing “everything” is tough. And when you have over 300 million heterogeneous shareholders, it’s impossible to make everyone happy all the time. So what’s a government agency to do? For the most part, the FDA’s dominant strategy is to be as risk-averse as possible, setting what are sometimes unrealistically high bars for drug approval. This isn’t a very controversial view – when approved drugs save lives, the agency gets no credit; but when nasty side effects start killing, the FDA takes much of the heat. No one blames the FDA for deaths that would have been prevented with a more streamlined approval process.
Thus, we’ve reached a point where we have an agency operating at less-than-peak efficiency. The typical drug approval costs between $1.2 and $1.3 billion. And while estimates vary, effective patent life for approved drugs tends to fall at around 10 or 11 years – just about half of total patent life. Much of the high cost and shortened patent life is due to significant, and often unpredictable, drug development times. FDA clinical trials tend to eat up a significant share of patent life and drug development cost, with Phase III trials – the largest and most expensive – capturing the lion’s share. This means that drugs needed to treat the diseases of the 21st century – which are often highly personalized and targeted – take much longer to develop, cost much more, and may not make it to the patients who need them.
SOURCE: Forbes
DOCTORS GET MILLIONS FROM MEDICARE AFTER LOSING LICENSES
The first time cardiologist Robert Graor lost his Ohio license to practice medicine was in 1995, after he was convicted of 10 felony theft counts for embezzling more than $1 million from the Cleveland Clinic and sentenced to three years in jail.
The second time was in 2003, after he’d won back the license following his release from prison. This time, the Ohio Board of Medicine found he repeatedly misrepresented his credentials over a two-decade period and permanently barred him from practicing medicine.
That didn’t stop Graor from participating in Medicare, the government’s health insurance program for the elderly and disabled. In 2012, Medicare paid $660,005 for him to treat patients in New Mexico, which gave him a license to practice in 1998. Graor declined to comment.
At least seven doctors who’d lost a medical license because of misconduct collected a total of $6.5 million from Medicare in 2012, according to federal data. The list includes doctors accused of gross malpractice, a brutal sexual assault and violating prescription drug laws. Their continued participation in the $604 billion program reflects what some members of Congress and others call a permissive approach that lets providers with questionable backgrounds keep billing taxpayers. All the doctors notified Medicare of the loss of their licenses, records show.
SOURCE: Bloomberg
THE DOWNSIDE OF BIG BIOTECH MERGERS
Pfizer’s $100 billion offer for rival AstraZeneca is proof that big drug makers are once again seeking out big mergers. It’s a way for them to gain market leverage as governments clamp down on health-care spending. But the more interesting story – and one Big Pharma could learn from – is the bull market in young, lean biotech companies and their initial public offerings.
More than 40 biotech companies went public in 2013, with another 30 IPOs in the first four months of this year. A total of $5.3 billion has been raised over that time, according to BioCentury’s BCIQ database. It’s from this capital that a sector nonexistent three decades ago now counts about 400 public companies with a collective market capitalization of almost $700 billion. The biggest winners have become mammoth companies in their own right, worth many billions of dollars.
The lesson for more established companies like Pfizer comes from how the biotechs have used the capital markets to advance new drugs. History tells us that their original ideas often don’t pan out. But companies ultimately succeed because they’re able to keep top research teams intact and learn from early setbacks. They pivot from dead ends to taking new, more-productive paths. Most of all, they’re able to continue to tap capital in the public markets to finance operations through early scientific stumbles while pursuing the long-term research necessary to develop pioneering drugs like Genentech’s Herceptin, which cuts in half the risk that a particularly aggressive form of breast cancer will recur after surgery.
But when rival pharmaceutical companies like Pfizer and AstraZeneca merge, it is often research and development teams that get trimmed, along with more mundane overhead costs. Lost scientific productivity is often a casualty of the cost-cutting. Research teams get broken up. Scientists reassigned. Others quit when they’re forced to move.
SOURCE: Wall Street Journal
Benjamin Domenech is the founder and publisher of The Federalist and a senior fellow at The Heartland Institute.
