The Need for CBO Reform

The American health insurance system comes as a nasty shock to many British expatriates working and living in the United States. … Health insurance in America has its own vocabulary, its own culture, and the British have to learn the hard way.

Trying to explain the American health insurance system to friends and family in the UK is often futile.

They wince when you talk of friends who pay $11,000 a year for health insurance for themselves and their three kids. And to many Americans, $11,000 a year for a family health insurance plan is cheap.

Brits find it hard to believe that many Americans stay in a job they hate for 20 or 30 years mainly because it provides health insurance for them and their families.

That strikes Brits as a kind of serfdom in the “Land of the Free.”

Where Americans see “choice” in their private health insurance plans, Brits see wasted time and confusion. Where Americans say “I get to choose my doctor,” Brits ask “why on Earth would you want to choose a doctor?” Where Americans talk about “out-of-pocket,” “deductibles,” and “co-pays,” Brits say “what?” and get all of the above confused.

As millions of previously uninsured Americans sign up for different levels of health care under the Affordable Care Act, British expats are impressed at this development.

But many Brits remain confused and bewildered by the health insurance system in the United States – and appalled at the cost.

An informal survey of a dozen or so educated and successful Brits living and working in the United States found different levels of bamboozlement, resentment, and grim acceptance of the American healthcare system.

How else are Brits accustomed to the free National Health Service supposed to react to the new “marketplace” for health insurance? A “marketplace” for something as holy as health care?

The HealthCare.gov website advises there are five categories of marketplace health insurance plans: bronze, silver, gold, platinum – and a final category called “catastrophic.”

The Brit expat reaction to this array of choices is bafflement: What are we buying here? Health care or American Express cards?”

“Plans in these categories differ based on how you and the plan share the costs of your care,” says the HealthCare.gov site advice.

Then, just to reassure you, the site adds: “The categories have nothing to do with the amount of care you get.”

Confused? You will be.

Grace Brewer says she never thought she would be without health insurance at this stage of her life. “I’m a casualty of Obamacare,” says Brewer, 60, a self-employed chiropractor in the Kansas City, Kansas, area.

She wanted to keep the catastrophic health insurance plan she once had, which she says fit her needs. But under the Affordable Care Act, the government’s health care reform law, the plan was discontinued because it did not comply with the law’s requirements, and her bills doubled to more than $400 a month. “I wanted a minimal plan and I’m not allowed to have it,” she says. “That seems like an encroachment on my freedom.”

The Affordable Care Act requires everyone to buy insurance or pay a penalty. Government subsidies can reduce costs for low- and middle-income Americans and without them, many say they could not afford insurance. Americans qualify for subsidies if they are under the age of 65 and have an annual income of up to $46,680 as an individual, or up to $95,400 for a family of four.

Though Brewer could pay less for a plan if she were to accept a subsidy from the federal government, she refuses. “I want to pay my own way,” she says. “I will not take a handout.”

Her sentiment is unusual, but brokers say they do hear from clients who are eligible for subsidies – which are based on household income and not assets – but want no part of them. Health officials have been boasting that 6.6 million people have enrolled in health coverage through state or federal marketplaces created under the Affordable Care Act, but in sharp contrast stands a small group of Americans who say they want nothing to do with the plans, even if they would save money. Their reasons vary: Some are protesting Obamacare, while others simply feel it’s unethical to accept taxpayer dollars to pay for health insurance.

Utah Governor Gary Herbert (R) and North Carolina Governor Pat McCrory (R) have asked President Obama to allow them to include work requirements in their Medicaid programs. Work requirements were critical to the success of welfare reform in 1996, and would also change Medicaid from a dependency-trap to a true safety net. The best way to achieve it would be through legislation, not relying on executive action.

According to a new study released by the National Center for Policy Analysis, including Medicaid and the State Children’s Health Insurance Plan (CHIP) as part and parcel of reforming the safety net, instead of keeping health care in its own silo, would greatly improve the federal welfare state for both recipients and taxpayers. Fortunately, House Ways and Means Committee Chairman Paul Ryan has proposed reforms to the federal safety net that could include Medicaid and CHIP.

Mr. Ryan’s proposal, Expanding Opportunity in America, focuses on the Earned Income Tax Credit (EITC), housing and home-energy assistance, education assistance, food stamps (SNAP) and criminal sentencing reform. Ryan’s proposal hinges on the Opportunity Grant (OG). States would apply for OGs that would roll some or all of the federal spending on individuals and families in poverty into one lump sum for distribution to the states. States, civil society organizations and recipients themselves would all be responsible for transitioning recipients out of dependency and into self-reliance.

Ryan is looking back to the success of the 1996 welfare reform, signed by a reluctant President Clinton after a successful campaign by House Speaker Newt Gingrich. Ten years after the reform, it was widely recognized as a significant success, even by the mainstream media. Medicaid, unfortunately, was never reformed in 1996.

One reason your insurance premiums have skyrocketed during the past year is that Obamacare requires all health plans to provide “free” annual wellness visits and 15 associated preventive services for which they cannot charge the patient a copayment. According to a key architect of [the Patient Protection and Affordable Care Act (PPACA)], however, “the annual physical exam is basically worthless.” Dr. Ezekiel Emanuel, last heard from claiming that he wants to die at 75 in order to avoid becoming a burden on society, writes in the New York Times that “screening healthy people who have no complaints is a pretty ineffective way to improve people’s health.”

The good doctor says he’ll forego his annual exam pursuant to a desire to “make the world a better place.” But, as with his professed willingness to depart this vale of tears after three-quarters of a century, he makes it clear that all men and women of good will should follow his example “to ensure there is no doctor shortage as more Americans get health insurance.” This is where the rubber glove hits the road. Emanuel wants you to voluntarily give up a much-ballyhooed feature of Obamacare for which the “reform” law itself compels you to pay via new taxes and inflated health insurance premiums.

This is entirely consistent with Dr. Emanuel’s unique code of ethics. He is, for example, a long-time proponent of medical rationing for the elderly. Consequently, he probably doesn’t experience much cognitive dissonance when suggesting that, in order to forestall the physician shortage caused by a program he helped design, right-minded people should forego a “benefit” they were coerced to purchase. For him, this call for you to restrict your consumption of medical care is just another expression of his passion for rationing. The only thing new here is the exhortation for you to impose it on yourself.

All of which raises a question: If annual physicals are worthless, why did Dr. Emanuel and his accomplices build them into PPACA?

The American health care system may finally be catching up to the rest of the 21st-century economy, in which convenience is not only expected, but demanded – and massive retailers are driving the change.

Patients suffering everyday complaints like chest colds or ankle sprains have long faced the lamentable choice between waiting days to see their family doctors or enduring time-sucking, unpleasant and expensive visits to hospital emergency rooms, especially at night and on weekends when physicians typically aren’t open for business. It’s one of the most annoying aspects of the way medical care is provided in the United States.

Big chains like CVS, Walgreens, and Walmart are stepping in to try to correct this market failure. These and other retailers are opening hundreds of new walk-in clinics, staffed by medical professionals such as nurse practitioners and physician assistants. They’re betting that Americans craving speed, convenience and easy-to-understand prices will be willing to break their habit of expecting a doctor to handle all of their medical issues.

“People are demanding health care to react similarly to other service industries, where people have a need and they want it relatively easy,” said Nancy Gagliano, a primary care physician and chief medical officer for CVS Health’s MinuteClinic. “The traditional health care system really is not adequate to support the need.”

Although still vastly outnumbered by doctors’ offices and hospitals, retail clinics are spreading rapidly: There currently are almost 1,900 across the U.S., up more than sevenfold since 2007, according to data compiled by Merchant Medicine, a consulting firm that tracks the sector.

Potentially life-saving drugs spend years undergoing [Food and Drug Administration (FDA)] review, limiting ill patients’ ability to access what might be miracle treatments. In a new report, Lindsay Boyd of the Beacon Center of Tennessee explains what FDA regulation has done to drug access.

The [FDA] was created in 1938. While the agency could require drug safety testing before drugs could get on the market, it wasn’t until 1962 that its power over the drug market became even more significant. That year, new federal laws required FDA drug testing for efficacy, and the agency – and expenses – exploded in size. According to Boyd:

• In 1951, there were just 1,000 staffers working for the FDA. Twenty years later, the agency had 6,500 employees.

• It now costs from $500 million to a whopping $2 billion to get a drug to market.

• There is less drug development today than there was in 1962.

Since 1970, patients have had to wait more than 10 years for new, and potentially life-saving, drugs.

According to Boyd, 40 percent of the increase in American life expectancy is owed to the development of new drugs from 1986 to 2000. However, more could be done: the FDA approval process is incredibly slow, requiring several stages of review:

• Phase I of FDA approval consists of safety trials, costing an average of $15.2 million and generally taking 22 months.

• Phase II evaluates safety and dosage, costing companies $23.4 million and taking an average of 26 months.

• Phase III involves drug testing on a larger group of individuals to gather more data on safety and efficacy. Not only does it cost a staggering $86.5 million on average and take 30 months, but it can still take up to two years before the drug is available to patients.