Washington Policy Blog

Public Option by Another Name

The latest "compromise" in the Senate debate on health care reform is the expansion of Medicare to anyone 55 - 64 years of age and the potential expansion of Medicaid to anyone who makes less than 150% of the federal poverty level (FPL). These measures would take the place of the "public option" passed in the House bill.

This is like something right out of Alice in Wonderland, where up is down and in is out.

Medicare is a public option, where everyone over the age of 64 is essentially required to join and where all participants are locked into a government run and controlled health care program. It is estimated that 3-5 million people would be eligible for the proposed Medicare buy-in. These new enrollees would be people without current health insurance and would be high utilizers of health care.

At present, Medicare has an unfunded liability of $89 trillion according to the CMS trustees. Adding millions more people to the program will not bend the cost curve of health care down unless significant rationing takes place. For the first three years there will be a buy-in for the 55 - 64 year olds to defray costs, yet after 2013 the federal government would simply wrap all participants into the standard Medicare plan.

Likewise, Medicaid is a government controlled health care program for the poor, where states share the cost with the federal government - in other words, tax payers from all over the country. Medicaid is also one of the largest budget items for virtually every state and is a main cause of the huge financial deficit states are facing.

Expanding Medicare and Medicaid is simply a bold move to place more of the American public in government controlled health insurance programs without calling it a "public option".

Are the Uninsured Really Treated Differently After Major Trauma?

The Archives of Surgery recently a published a peer reviewed paper concluding that people without health insurance were more likely to die after major trauma than people with health insurance. The study looked at trauma deaths as recorded in the national trauma registry from 2002 through 2006 and included a total of almost 700,000 patients.

Overall mortality in the insured group was 4.7% with a breakdown of 3.3% for commercial insurance, 2.9% for managed care, 3.7% for Medicaid and as expected in the higher age range, 6.7% for Medicare. The uninsured had a 5.7% overall mortality rate.

The study was very well controlled for matching age, race, severity of trauma, and type of trauma (blunt vs penetrating). The authors concluded that having health insurance determines the likelihood of survival after major trauma.

The one glaring difference between the insured and uninsured groups was the incidence of penetrating injuries. The commercially insured and managed care groups had a 6% and 9% rate respectively with seniors in Medicare at 4%. The uninsured had a 24% rate. Most penetrating injuries are gun shot wounds and it can be argued that the chance of surviving a gun shot injury is much less than surviving blunt trauma which is usually in the form of an auto accident or a fall.

The implication of the paper is that providers treat patients in an emergency setting differently based on their insurance status. This is disingenuous and is absolutely insulting to the medical profession.

Speaker Pelosi Dodges Question on Fairness of Jail for People Who Don't Buy Health Insurance

House Speaker Nancy Pelosi (D-California) was in Seattle recently to talk about health care reform.  Since pending legislation imposes harsh penalties on people who don't buy health insurance, KOMO reporter Shomari Stone asked Speaker Pelosi if she thinks that's fair. In spite of repeated asks from Stone, Pelosi doesn't answer the question directly.  It appears KOMO chose not to air the footage but you can watch the exchange below.

I suppose the upside is that once in jail, your health care is free.

Small businesses rank top policy priorities

Small business owners, legislators, and policymakers from all over Washington gathered in SeaTac this past Tuesday to discuss the state's business climate at WPC's 2009 Statewide Small Business Conference. During several interactive issue breakout sessions, business owners suggested and discussed solutions to improve the climate for small businesses in Washington. This was the fourth statewide small business conference hosted by WPC since 2003.

The result is a list of priority solutions, selected by small business owners, for solving the major problems with the state's business climate. The top recommendations from each breakout session are below.

Health Care
1) Reform medical malpractice laws
2) Allow individuals and businesses to purchase health insurance across state lines
3) Focus on increasing the patient's role in health care decisions

Workers' Compensation Reform
1) End the state monopoly: WA should join 90% of the country and open the system to private competition
2) Provide a compromise and release option
3) Enact better, more aggressive claims management

Technology
1) Adopt a market-based approach to dealing with the Net Neutrality issue
2) Solicit and incorporate more small business input on the Net Neutrality issue
3) Exempt small businesses from the digital goods tax legislation

Environmental Regulations
1) Don't add or expand federal regulations to existing or new state regulations
2) Encourage market-based solutions for stormwater and other regulations
3) Simplify environmental regulations, make more objective and apply cost/benefit analyses

Unemployment Insurance Reform
1) Eliminate the liberal construction of cases
2) Freeze the voluntary quit option
3) Keep UI benefits the same over the next calendar year

Regulatory Reform
1) Sunset rules after a certain number of years
2) Support better legislative oversight and accountability of major agency rule-making
3) Put apprenticeship programs in Technical and Community colleges

Competitiveness Issues
1) Reduce the overall tax burden on businesses
2) Adopt an hourly wage rate for low-skill, new workers
3) Do not enact an employer gag rule

Tax Issues
1) Level the playing field with respect to gaming, cigarettes, etc.
2) Do not increase taxes
3) Continue with thorough performance audits of government agencies

Washington Policy Center will publish a detailed analysis of the conference results in a report prior to the 2010 Legislative Session.

Real Cost of Baucus Bill - $2 Trillion

The Congressional Budget Office (CBO) scored the Senate Financial Committee health care reform bill this week. Never mind the fact the bill is only a summary and is not in legislative language, which made the CBO disclaim the cost of an actual final bill.

Total cost is reported at $829 billion with $81 billion in savings over the first ten years. Unfortunately, as published in a Micheal Cannon report for CATO, the cost would be closer to $2 trillion over the first ten years. So why the difference?

First, the CBO omitted $75 billion in new federal spending and $33 billion in unfunded mandates on state governments. Second, the nonpartisan CBO assumed Congress would allow the "sustainable growth rate" cuts in Medicare provider reimbursement starting in 2012. Congress has never let this happen. And finally, the CBO omitted the cost of the individual and employer mandates which represent 60% of the cost of Massachusetts' health care reform.

Therefore, to do the math: $829b + $75b + $33b = $937 billion (which is 40% of some number).

40% x N = $937 billion    N = $937 billion divided by 0.4 = $2.34 trillion.

So the Baucus bill is not budget neutral, let alone a deficit reducer. Instead, it is a colossal budget breaker that has the potential of bankrupting this country in just the first decade of application.

New Policy Note Addresses Spokane's Community Bill of Rights Proposal

Washington Policy Center today released a Policy Note that dives into Spokane's Proposition 4 -- the Community Bill of Rights. Voters inside Spokane city limits will vote on whether to amend the city's charter to include several new or expanded "rights" for citizens.

These rights include:

• Residents have the right to a locally-based economy,
• Residents have the right to affordable preventative health care,
• Residents have the right to affordable and safe housing,
• Residents have the right to affordable and renewable energy,
• The natural environment has the right to exist and flourish,
• Residents have the right to determine the future of their neighborhoods, 
• Workers have the right to be paid the prevailing wage, and the right to work as apprentices, on certain construction projects,
• Workers have the right to employer neutrality when unionizing, and the right to constitutional protections within the workplace.

The Policy Note points out:

• The Community Bill of Rights will expand government entitlement programs, not individual rights,
• Taxpayers could be on the hook to pay for proposed programs that have no funding mechanism in place,
• The broad policy agenda is not affordable under the city's current budget,
• The measure will likely face scrutiny in courts under the state's "single subject law."

The Policy Note also highlights potential costs associated with some of the measure's mandates, such as mandating affordable, renewable energy and the potential cost of insuring affordable, preventative care for Spokane citizens.

Finally, we also point out that many of the rights enumerated in the Community Bill of Rights proposal contradict each other, such as heightened environmental regulations increasing the cost of affordable housing, which would also be required for the city to provide. The Community Bill of Rights would also strip businesses from possessing any legal rights if a citizen were to file claim against a business in violation of the rights laid out in this proposal.

Grassley Unsure Health Care Reform Will Pass the Senate Finance Committee

In an interview with Kaiser Health News yesterday, Senator Charles Grassley expressed concern that health reform legislation would not pass out of the Senate Finance Committee when members reconvene after the August recess. The Iowa senator is the ranking Republican in the Senate Finance Committee, the only committee that has yet to pass health care legislation on to its respective floor.

Senator Grassley has seen a real shift in voter sentiment in just the past month. Constituents at his town hall meetings have been extremely vocal about the costs and the consequences of the proposed legislation. They do not want another trillion dollar government program and are worried about loosing the amount and quality of their own health care.

All three House committees overseeing health care legislation, as well as the Senate Health, Education, Labor, and Pension Committee, have passed out bills with votes strictly along party lines. The sole remaining committee is Senate Finance. Without bipartisan support in this committee, health care reform will either die, or will be pushed by Democrats only. It would be monumental to have major legislation like health care reform passed without bipartisan support.

Is the "Public" Option Gone?

Yesterday multiple members of the Administration, including the President, began to distance themselves from the "public" health plan option. They have been loosing the debate over the issue of the public plan destroying the private health insurance market. Consequently, attention seems to be shifting away from the public option to...the co-op plan.

Although no one is exactly sure what a co-op would look like, the idea is that a group of providers would solicit membership for health care on a state or regional basis. Funding would come from member dues with majority contributions from the government. These would NOT function like energy or food co-ops, however. Instead, a health care co-op would be another form of insurance with pricing and benefits set by the federal government.

So, in point of fact, a co-op would functionally be the same as a government "option" health insurance program. It would set rates less than private insurance companies and the end result would be a transfer of patients to the public plan (because costs are less) and the demise of private health insurance in this country.

The language may have changed, but the health reform debate is still based on government-run vs patient controlled health care.

Running On Empty

"The problem with socialism is that eventually you run out of other people's money." -Margaret Thatcher

This is a helpful phrase to keep in mind when thinking about the pending health care reform proposals being considered in Congress. John Mackey, CEO and founder of Whole Foods Market, had a nice article in The Wall Street Journal on the reality of the financial conundrum we find ourselves in as a country as we consider a serious overhaul of our health care system. He offers up eight things we can do to improve health care in the U.S. without adding to the deficit in this August 11th article.

1. Remove the legal obstacles that slow the creation of high-deductible health insurance plans and health savings accounts (HSAs)

2. Equalize the tax laws so that employer-provided health insurance and individually owned health insurance have the same tax benefits

3. Repeal all state laws which prevent insurance companies from competing across state lines

4. Repeal government mandates regarding what insurance companies must cover

5. Enact tort reform to end the ruinous lawsuits that force doctors to pay insurance costs of hundreds of thousands of dollars per year

6. Make costs transparent so that consumers understand what health-care treatments cost

7. Enact Medicare reform

8. Revise tax forms to make it easier for individuals to make a voluntary, tax deductible donation to help the millions of people who have no insurance and aren't covered by Medicare, Medicaid or the State Children's Health Insurance Program

Laffer Study

Last week Arthur Laffer and two associates published an economic analysis of Congress' proposed health care reform legislation. Dr. Laffer is a noted economist and has been actively involved with national fiscal issues since the mid-1970's.

As background, the authors describe an economic "wedge", which is the difference between provider costs and consumer costs of any service or product. They applied this wedge concept to the common proposals in the House and Senate bills now under consideration in Washington, D.C.

What they found was:

*  the health care wedge would increase

*  there would be no discernible benefit and approximately 30 million people would still be uninsured

*  in the next 10 years 

      - health care inflation would increase by 5%

      - the cost of health care would increase by 9%

      - economic growth in the country would decrease by 5%

The things that would decrease the health care wedge - and are not in the legislation at present: 

*  promoting high deductible health insurance

*  leveraging Health Savings Accounts

*  tort reform

*  meaningful Medicaid and Medicare reform

The Laffer Study adds to the growing list of economic research that clearly shows the unsound fiscal policy of the proposed health care reform legislation.