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Healthcare Tidbits On TigerTalk
Bob Jensen at Trinity University

Punitive Damage Caps Required Deletion of anAmendment to the Texas Constitution

Whether Obamacare Will Increase or Decrease Medical Costs in the Next Decade

Introduction

I promised to cease stirring up hornets nests on TigerTalk by ceasing to post anything political. I intend to abide by that promise in the future, but I take the recent TigerTalk messages of Professors Urbach and Becker to be personal insults of my integrity and scholarship. In both instances they accuse me of spamming TigerTalk with “one-sided” highly biased right-wing nut Obamacare falsehoods from unreliable sources. But they provide no specific examples or show why my sources were unreliable. Jennifer at least countered with a reference to some opposing research. Curtis was more specific when criticizing my unfortunate CNS tidbit.

Urback and Becker portray me as a one-sided and unscholarly right wing nut quoting unreliable sources that puts me in the same camp as commentators I absolutely despise and avoid --- Limbaugh, Beck, O’Reilly and Coulter. I also despise and avoid some left wing nuts like Ed Shultz on MSNBC. If Professors Urbach or Becker or any other faculty want to complain with more specific criticisms of unreliable sources, I hope they will do so privately so that I do not once again to broadcast my defense on TigerTalk. I watch very little television (aside from NetFlix movies), but between MSNBC and Fox the ratio is about 80:20 respectively.I most certainly am not a Fox nut and rarely visit the Fox Web site.

I do pledge to refrain from any TigerTalk messages on political issues and to cut way back on my strictly informational messages that usually deal with education technology. My goal will be to only announce new editions of Tidbits, New Bookmarks, and Fraud Updates. It should be noted that I made such a pledge upon retiring and have obviously violated that pledge --- but mostly with non-political tidbits. Now I will try to abide by the pledge.

In fairness, my scholarship is not one sided on any issue whether its academic in my specialties (accountancy, education technology, finance, fraud, and some areas of economics) or in my interest in some political topics. Each day I do visit the right-side Townhall, but I mostly seek out writers that do their homework like Michelle Malkin, Walter Williams, and John Stossel.

Each day I also visit left side blogs that I respect for doing their homework, particularly The Nation Magazine and Huffington Post. Weekly I visit some conservative sites like Reason Magazine and some progressive sites like The New Yorker and the MSNBC Websites of Chris Matthews and Keith Olbermann that are highly biased but seem to be backed up with interesting homework. Olbermann's countdown, however, most certainly has unbalanced coverage and mostly preaches to his choir.

Each day I also visit selected newspaper and news source Web sites, including the WSJ, NYT, Al Jazeera, Jerusalem Post, The Economist, and WaPo sites. These sites have biased editorials, but they are also filled with factual, non-editorial news that is interesting and seemingly unbiased. I also subscribe for hard copy to the WSJ, NYT, and The Economist plus other weekly magazines like Time and Newsweek. I also visit a lot of other sites and subscribe to various journals in my academic specialties.

The sharing of my many healthcare tidbits on TigerTalk has been minimal. Some the unshared tidbits are much more controversial and you will not find them in past TigerTalk messaging.

My first TigerTalk message on healthcare had a purpose and should not be deemed as an impulse. It quoted from “Repealing Erisa,” The Wall Street Journal, July 21, 2009 --- http://www.cs.trinity.edu/~rjensen/temp/JensenTigerTalk.htm#PPO
Trinity's current health care plan is a self-insurance PPO plan that is only administered by Aetna --- http://iraa.trinity.edu/iraa/x551.xml
I thought Trinity faculty and staff would be interested in the fact that a clause in pending Obamacare legislation virtually eliminates self insurance PPO plans.
Unless this clause is deleted in the final Obamacare legislation, Trinity will, in my viewpoint, have to drop its PPO self insurance and once again seek coverage from a private company such as Aetna or Prudential.
Background:
I worked in some very tense times under Mackenzie Brown on the Faculty Senate during a period of crisis in the Trinity Health Plan. A succession of insurance companies like Aetna dropped our coverage because claims losses exceeded negotiated premium revenues to those companies. President Calgaard saved the day by funding a PPO self insurance plan for Trinity. In an open faculty meeting Matt Stroud eventually put an end to most of the dissent about Trinity's Health Plan.
It should be of interest to Trinity faculty and staff if the clause that virtually eliminates PPO plans remains in the final Obamacare legislation.

My second healthcare message on TigerTalk was about Mitt Care in Massachusetts.
Several Trinity faculty and staff responded to PPO tidbit on TigerTalk about universal health care in Massachusetts (that was enacted in 2006 under the guidance of Governor Mitt Romney) which I will refer to here as MITT.
You can read my tidbit at --- http://www.cs.trinity.edu/~rjensen/temp/JensenTigerTalk.htm#MITT

My third health care message concerned a fact: about capping punitive damages:

· Section 2531, entitled “Medical Liability Alternatives,” establishes an incentive program for states to adopt and implement alternatives to medical liability litigation. [But]…… a state is not eligible for the incentive payments if that state puts a law on the books that limits attorneys’ fees or imposes caps on damages.

I thought this fact might be of interest since in to the Trinity community since Texas most assuredly will have to delete its 2003 constitutional amendment that caps attorneys' fees and punitive damages. It's important to note that the amendment does not cap actual damages. A Trinity professor wrote the following privately to me:

It is not true (under the revised Texas Constitution) that those who have been harmed by a physician’s malfeasance will not have their day in a Texas court. They will be able to claim real damages (economic - loss of income and medical costs) as well as punitive and pain and suffering damages – the difference is that some types of damages (non-economic) will be capped. What most of us don’t understand, is that the fear of these huge punitive damages causes physicians to practice defensive medicine – ordering more tests, ordering procedures just to make certain that they’re not missing anything. All these tests and procedures would be great and expected if they in themselves did not pose a risk to the patient, but many of them do. So, physicians must constantly balance their certainty of their diagnosis against the risk to the patient of additional tests. When we add huge punitive damages, we tip the scales in favor of more tests and procedures, which may, in fact, be more risky for the patient. And, in the end the burden for million dollar awards is borne by us all not just the physicians.

Jennifer politely responded on TigerTalk that deleting the caps on attorney fees and punitive damages will probably not significantly increase the premiums paid by employers and employees for health care coverage. My subsequent investigations indicate that she's probably correct, although there could be a huge adverse impact on availability of certain types of specialists and the return to costly defensive medicine.

My extended reply to Jennifer, including an important quotation from The New York Times is shown at
http://www.cs.trinity.edu/~rjensen/temp/JensenTigerTalk.htm#Lawyers

My fourth Obamacare message contended middle class taxpayers will experience increases in deceptive "taxes" contrary to promises of President Obama.
I had no reason to post this Tidbit on TigerTalk and apologize that I posted a misleading tidbit from a CNS blog that was carelessly not aware was a right-wing rag that twisted some of the statements in a report from the Congressional Budget Office (CBO) to Senator Bayh. Instead of using the CNS quotation, I should've quoted directly from the CBO report.

The unfortunate TigerTalk Tidbit and the reply from Curtis is shown at
http://www.cs.trinity.edu/~rjensen/temp/JNew Page 1ensenTigerTalk.htm#Costs

I still stand by my original contention that President Obama and Congressional leaders are misleading the public about cost (taxes by any other name) increases in Obamacare rather than the lies about cost savings. The tidbit I should've used instead of the CNS tidbit is as follows:

"Gaming Healthcare," Editorial in The Nation, December 16, 2009 --- http://www.thenation.com/doc/20100104/editors

The promise of reform has always been that Americans can have better--and universal--healthcare at lower cost. If the public option and Medicare expansion are dropped, and if schemes to pay for the proposal with Medicare and Medicaid "cost containment" are retained, the Senate legislation will break that promise.

Obama and key Congressional leaders appear to be more determined to get a bill, any bill, than to enact fundamental reform. The president's failure even to mention the public option when he lobbied Senate Democrats empowered Joe Lieberman and others who were angling for its elimination. And Obama's failure to use his bully pulpit was matched by Reid's compromises and missteps. When the majority leader embraced rules that require sixty votes to act--rather than challenge the rules directly or via budget reconciliation procedures that allow a simple majority--he ceded authority to insurance-industry shills like Lieberman and Ben Nelson, who then blocked reform at every turn.

At this late yet critical stage, Congressional progressives must push back. Compromise is inevitable. The hard question is whether it opens the door to progress or closes it. In a Washington increasingly fixated on deficit reduction and entitlement cuts, a bill with neither a public option nor Medicare expansion could be disastrous.

As a conference committee sets out to merge House and Senate bills, progressives should declare that they will not back a bill that enriches insurers while raiding the treasury and squeezing existing federal programs. They should argue more aggressively than ever for real competition--ideally in the form of a public option but at least with Medicare expansion. That, after all, is what they promised Americans in 2008.

Continued in article

I apologize for stirring up a hornets’ nest on TigerTalk with my occasional tidbits on healthcare issues and debates. Firstly, I’m not an expert on this complicated topic, and therefore rely on tidbits from sources that are more authoritative. But the issue is so politically charged at the moment that I think my selective tidbits should no longer be forwarded to TigerTalk.

In my opinion, President Obama has helped to create hysteria in Congress by insisting that legislation, even nation-destroying legislation ,be rushed at breakneck speed without our legislators or our voters understanding the complexities of the Senate and House monsters that are on the table. I’m in favor of health care reform, and I do in fact favor a national health insurance plan that absorbs the private sector insurance systems into a government national plan.

Special interests on both sides of the table have written clauses into the House and Senate versions that legislators and voters have not had time to understand. The Congressional Budget Office, in turn, has been forced to make cost estimates based upon hurried and unrealistic assumptions.

My last Tigertalk tidbit on Obamacare is from Howard Dean who, as Chairman of the Democratic National Committee, was very effective in helping to not only get President Obama elected but to help push the landslide victories of Democrats in both the House and the Senate in 2008 ---
http://en.wikipedia.org/wiki/Howard_Dean

There has been no stronger advocate of health care reform than Howard Dean, MD. He’s consistently advocated health care reform since he became the very liberal Governor of Vermont.

On December 15, 2009 Howard Dean was given the microphone on the MSNBC Countdown (Keith Olbermann) prime time slot. Howard Dean loudly and effectively proclaimed that both the Senate and House should vote down the Obamacare monsters that are now on the table. Instead, he advocated that less rushed and more deliberate effort should be undertaken in 2010 to create a more reasoned package that does not allow special interests to dominate (or sneak into a bill) efforts by both parties of Congress to bring about health care reform that is truly reform.

I think Howard Dean is right on in the video at http://www.msnbc.msn.com/id/3036677/#34439255
Senator Wyden follows Dr. Dean in this video and, in my viewpoint, is entirely wrong. Dean is right on.

Perhaps emergency legislation for basic coverage of uninsured citizens should be passed as a stop-gap such that the issue of uninsured people does not create a rush once again to legislate a nation-destroying monster.

But we should not legislate monsters that special interests have wrought in the current House and Senate versions of Obamacare

I rest my case!
I do not intend to send any future messages to TigerTalk other than announcing new editions of my Tidbits, New Bookmarks, and Fraud Updates.

Bob Jensen
Chilled out on a very, very cold Friday well below zero.

PPO Self Insurance Tidbit

“Repealing Erisa,” The Wall Street Journal, July 21, 2009
http://online.wsj.com/article/SB10001424052970203946904574298661486528186.html#mod=djemEditorialPage

One by one, President Obama’s health-care promises are being exposed by the details of the actual legislation: Costs will explode, not fall; taxes will have to soar to pay for it; and now we are learning that you won’t be able to “keep your health-care plan” either.

The reality is that the House health bill, which the Administration praised to the rafters, will force drastic changes in almost all insurance coverage, including the employer plans that currently work best. About 177 million people—or 62% of those under age 65—get insurance today through their jobs, and while rising costs are a problem, according to every survey most employees are happy with the coverage. A major reason for this relative success is a 1974 federal law known by the acronym Erisa, or the Employee Retirement Income Security Act.

Erisa allows employers that self-insure—that is, those large enough to build their own risk pools and pay benefits directly—to offer uniform plans across state lines. This lets thousands of businesses avoid, for the most part, the costly federal and state regulations on covered treatments, pricing, rate setting and so on. It also gives them flexibility to design insurance to recruit and retain workers in a competitive labor market. Roughly 75% of employer-based coverage is governed by Erisa’s “freedom of purchase” rules.

Goodbye to all that. The House bill says that after a five-year grace period all Erisa insurance offerings will have to win government approval—both by the Department of Labor and a new “health choices commissioner” who will set federal standards for what is an acceptable health plan. This commissar—er, commissioner—can fine employers that don’t comply and even has “suspension of enrollment” powers for plans that he or she has vetoed, until “satisfied that the basis for such determination has been corrected and is not likely to recur.”

In other words, the insurance coverage of 132 million people—the product of enormously complex business and health-care decisions—will now be subject to bureaucratic nanomanagement. If employers don’t meet some still-to-be-defined minimum package, they’ll have to renegotiate thousands of contracts nationwide to Washington’s specifications. The political incentives will of course demand an ever-more generous “minimum” benefit and less cost-sharing, much as many states have driven up prices in the individual insurance market with mandates. Erisa’s pluralistic structure will gradually constrict toward a single national standard.

Yet a computer programming firm, say, and a grocery store chain have very different insurance needs, and in any case may not be able to afford the same kind and level of benefits. Innovation in insurance products will also be subject to political tampering. Likely casualties include the wellness initiatives that give workers financial incentives to take more responsibility for their own health, such as Safeway’s. Some politicians will claim that’s unfair. High-deductible plans with health savings accounts are also out of political favor, therefore certain to go overboard. If you have one of those and like it, too bad.

The new Erisa regime will be especially difficult to meet for businesses that operate with very slim profit margins or have large numbers of part-time or seasonal workers. They may simply “cash out” and surrender 8% of their payroll under the employer-mandate tax. A new analysis by the Lewin Group, prepared for the Heritage Foundation, finds that some 88.1 million people will be shifted out of private employer health insurance under the House bill. If those people preferred their prior plan, well, too bad again.

The largest employers—though not all—may clear the minimum bar, at least at first. But in addition to the “health choices” administrative burden, the cost of labor will rise because the House guts another key section of Erisa. Currently, lawsuits about employee benefits are barred under the law, allowing large employers to avoid the state tort lotteries in disputes over coverage. No longer. As a gratuity to the trial bar, Democrats will now subject businesses to these liabilities in the name of health “reform.”

So when Mr. Obama says that “If you like your health-care plan, you’ll be able to keep your health-care plan, period. No one will take it away, no matter what,” he’s wrong. Period. What he’s not telling the American people is that the government will so dramatically change the rules of the insurance market that employers will find it impossible to maintain their current coverage, and many will drop it altogether. The more we inspect the House bill, the more it looks to be one of the worst pieces of legislation ever introduced in Congress.

Mitt Care in Massachusetts

Several people responded with questions or comments about universal health care in Massachusetts (that was enacted in 2006 under the guidance of Governor Mitt Romney) which I will refer to here as MITT. Firstly I would like to note that danger lurks in comparing the MITT with any universal health care plan being proposed at the Federal level. Firstly, none of the 50 states has the power to simply print money to pay its bills, as is being done on a relatively small scale by the U.S. Treasury at the moment to pay for its excesses. Secondly, MITT is not universal in that it is restricted to low income residents of the state. Thirdly, MITT survives heavily on Federal subsidies, whereas nobody will subsidize any Federal health care plan from above, although a small number of wealthy people may one day make benevolent contributions toward universal health care. Thus far Bill Gates and Warren Buffett have been focused more on Africa's health issues such as TB and polio.

An excellent, albeit brief, summary of MITT is provided at http://en.wikipedia.org/wiki/Massachusetts_health_care_reform
Health coverage is very limited in scope and the number of insured has increased substantially. But many uninsured poor people still manage to slip through the cracks.

An enormous problem has been the shortage of primary care physicians such that those with newly-acquired MITT insurance cannot find a primary care doctor. Most specialists refuse to treat patients who are not referred to them by a primary care physician. Hence, there were and are long lines at Emergency Rooms both before and after MITT was enacted even though many in those lines have MITT coverage. The lines could be worse. MITT will not cover many costly procedures.

The MITT program is in deep financial stress at the moment and has had to make cuts in scope of coverage and in amounts paid to doctors and hospitals during the current economic crisis ---
http://liveshots.blogs.foxnews.com/2009/07/17/massachusetts-universal-health-care-cuts/
Hospitals complain that the promised coverage is far from sufficient to cover their costs. Some, including the huge Boston General Hospital, are now suing or plan to sue the State to recover some of their losses under MITT.

Under financial stress hospitals in Massachusetts have had to take huge budget cuts. Rather than spread those cuts across the board to all departments, some hospitals have decided to concentrate on dropping the most money-losing departments. You probably can guess the leading candidate for being eliminated --- the obstetrics department.

My neighbor down the road has a second home up here in the White Mountains. However, he still practices cardiology in a Boston suburb. He says that obstetrics departments are leading candidates for elimination, in large measure, because of the high cost of malpractice insurance covering obstetrics services.

Lawyers file cookie-cutter lawsuits against doctors, nurses, and hospitals for every defective baby irrespective of the facts in any given case. The reason is the tendency of sympathetic juries to make multimillion dollar awards to a mother of a defective baby irrespective of the facts in the case. Many juries feel that fat cat insurance companies owe it to the unlucky woman (and her lucky lawyers) who must nurture and raise a severely handicapped child. Juries make such awards even when the doctors, nurses, and hospitals performed perfectly under the circumstances. Paul Newman showed us how to love it when lawyers beat the medical system in favor of the "poor and powerless" in The Verdict --- http://www.youtube.com/watch?v=zVZFlBJftgg

But fat cat insurance companies adjust rates based upon financial risks. The rates became so high for obstetrics that across most of the U.S. (less so in states that cap punitive damages) thousands of gynecologists dropped the obstetrics part of their services. And under MITT in Massachusetts some strained hospitals dropped obstetrics services.

Health Care Reform Will Indeed Be Universal --- Tort Lawyers Are Fully Covered
This raises the whole issue of costs of malpractice insurance in the entire health system of the United States. Although a few states like Texas have managed to put some restraints on punitive damages, President Obama wants no such restraints placed on the tort system for virtually any legislation under his term of office. Obama is a lawyer, and he can attribute much of his political success to the financial and other support from tort law firms across the land. He owes them and most of our legislators are themselves lawyers. As a result there's virtually zero chance that any restraints will be placed upon the number of malpractice lawsuits and sizes of awards in any universal health care legislation. In fairness the U.S. Congress and some states years ago put some restraints on runaway malpractice claims --- http://www.redorbit.com/news/science/2593/house_passes_medical_malpractice_limits/
But in 2009 in Washington DC there is no sentiment for putting further malpractice insurance cost restraints into the forthcoming universal health care legislation.

In 2009 lawmakers in Washington DC are taking no lessons from malpractice stinginess in the Canadian National Health Plan. Perhaps stinginess is what comes with national health care plans that eliminated private insurance company fat cats.
"Why 98 percent of Canadian Medical Malpractice Victims Never Receive a Penny in Compensation," by John McKiggan ---
Click Here

My third health care message concerned a fact: about capping punitive damages

I thought this fact might be of interest since in to the Trinity community since Texas most assuredly will have to delete its recent amendment that caps attorneys' fees and punitive damages. It's important to note that the amendment does not cap actual damages. A Trinity professor wrote the following privately to me:

Jennifer politely responded on TigerTalk that deleting the caps on attorney fees and punitive damages will probably not significantly increase the premiums paid by employers and employees for health care coverage. My subsequent investigations indicate that she's probably correct, although there could be a huge adverse impact on availability of certain types of specialists.

As Medicare becomes more stingy and malpractice insurance costs soar for physicians, many Medicare patients will be turned away by their doctors, especially in states like Texas that for a short time have benefitted from reductions in the cost of physician malpractice insurance and a sudden expansion of medical services to seniors and disabled patients having Medicare coverage.

Years ago while we were still living in San Antonio, Texas my wife had two of her 12 spine surgeries performed by a surgeon from the South Texas Spinal Clinic. When it came time for next surgery her surgeon turned her away saying that the Clinic no longer accepted any Medicare patients (she was then covered under Medicare Disability Insurance). Purportedly the soaring costs, especially malpractice insurance, made complicated Medicare surgeries, on average, big money losers in for spinal surgeons. We subsequently moved to New Hampshire where Erika had two spine surgeries from Dr. Levi at the Concord Hospital. Erika later became so bent over that we afterwards sought out one of the very few specialists in the nation who can perform a "Pedicle Subtraction Osteotomity for Severe Fixed Sagittal Imbalance."
She went into a Boston hospital bent over like the Hunchback of Notre Dame and came out walking Marine-drill erect in 2007 (but with no relief from her chronic pain).

Out of curiosity in November 2009, I phoned the South Texas Spinal Clinic and discovered it once again is accepting Medicare patients even though Erika has no intention of returning to that Clinic. Ostensibly a major factor in deciding to once again take on Medicare patients is the decline in malpractice insurance costs due largely to a change in the Texas Constitution. Interestingly, decreases in malpractice insurance costs have been a major factor in increasing competition for physician specialists in Texas:

Four years after Texas voters approved a constitutional amendment limiting awards in medical malpractice lawsuits, doctors are responding as supporters predicted, arriving from all parts of the country to swell the ranks of specialists at Texas hospitals and bring professional health care to some long-underserved rural areas. “It was hard to believe at first; we thought it was a spike,” said Dr. Donald W. Patrick, executive director of the medical board and a neurosurgeon and lawyer. But Dr. Patrick said the trend — licenses up 18 percent since 2003, when the damage caps were enacted — has held, with an even sharper jump of 30 percent in the last fiscal year, compared with the year before.
Ralph Blumenthal, "More Doctors in Texas After Malpractice Caps," The New York Times, October 5, 2007 --- http://www.nytimes.com/2007/10/05/us/05doctors.html

The Congressional Budget Office Weighs In on ~~Accounting~~ (tax) Disasters of Senate's Pending Healthcare Legislation
Fact 3: The bill does not require employers to buy health insurance for their workers, and makes employers with 50 workers or more pay a fee of only $750 for each fulltime worker they do not insure if any of their workers get an insurance plan on the exchange using a federal subsidy.

"Senate Health Care Bill Would Force Some Middle Class Families to Pay $15,200 Yearly Insurance Fee, According to CBO Analysis Tuesday, December 15, 2009," By Terence P. Jeffrey, Editor-in-Chief, CNS News, December 15, 2009 ---
http://www.cnsnews.com/news/article/58533

Forget the public option. Even without it, the health care bill presented in the Senate by Majority Leader Harry Reid (D.-Nev.) would make some middle-class American families pay what amounts to a $15,200 annual federally-mandated insurance fee, according to facts revealed in analyses published by the Congressional Budget Office.

The fee would result from the facts that the bill requires individuals—but not employers—to purchase health insurance plans and that families that earn up to 400 percent of the federal poverty level would be given government subsidies to purchase insurance in government-regulated insurance exchanges while families earning more than 400 percent of the federal poverty level would be denied government subsidies.

A family of four—two parents and two children—earning $88,200 would be at 400 percent of the poverty level this year, according to the U.S. Department of Health and Human Services. A family of four earning $88,201, therefore, would not be eligible for a federal subsidy to buy insurance under the Senate health-care bill. If the mother and father in such a family could not get employer-based health insurance—because their employers decided not to buy their workers insurance—the family would be required by law to purchase a policy with its own money that would cost an estimated $15,200 per year, according to the CBO.

The basic facts demonstrating that this would be the case if the Senate health care bill were to become law were presented in letters that the CBO sent to Sen. Harry Reid (D.-Nev.) on November 18 and to Sen. Evan Bayh (D.-Ind.) on November 30. The letters are available on the CBO Web site.

Here are the facts about what the Reid health care bill would mean for the finances of families that earn more than 400 percent of the poverty level and the CBO sources for those facts:

Fact 1: The bill requires all legal U.S. residents to buy health insurance beginning in 2014.

Fact 2: The bill provides subsidies to people making up to 400 percent of the poverty level to buy health insurance if their employer does not buy them insurance and as long as they agree to purchase a government-regulated insurance plan in the government-regulated insurance exchange.

Source: Page 4 of a Nov. 18 CBO letter to Sen. Reid states: “The legislation would take several steps designed to increase the number of legal U.S. residents who have health insurance. Starting in 2014, the legislation would establish a requirement for such residents to obtain insurance and would in many cases impose a financial penalty on people who did not do so. The bill also would establish new insurance exchanges and would subsidize the purchase of health insurance through those exchanges for individuals and families with income between 133 percent and 400 percent of the federal poverty level (FPL).”

Fact 3: The bill does not require employers to buy health insurance for their workers, and makes employers with 50 workers or more pay a fee of only $750 for each fulltime worker they do not insure if any of their workers get an insurance plan on the exchange using a federal subsidy.

Fact 4: Individuals who are offered insurance by their employer cannot buy insurance with a federal subsidy in the exchange.

Source: Page 7 of the Nov. 18 CBO letter to Sen. Reid says: “The legislation contains a number of other key provisions related to insurance coverage. Firms with more than 50 workers that did not offer coverage would have to pay a penalty of $750 for each full-time worker if any of their workers obtained subsidized coverage through the insurance exchanges; that dollar amount would be indexed. As a rule, fulltime workers who were offered coverage from their employer would not be eligible to obtain subsidies via the exchanges.”

Fact 5: By 2016, when the new health-care system created by the bill is fully operational, the average family insurance policy sold to people buying insurance individually, rather than through an employer, will cost $15,200 per year.

Source: Page 6 of a Nov. 30 CBO letter to Sen. Evan Bayh (D.-Ind.) says: “Average premiums per policy in the nongroup market in 2016 would be roughly $5,800 for single policies and $15,200 for family policies under the proposal.”

Fact 6: According to the analysis of the CBO and Joint Tax Committee, 32 million people will buy their insurance on their own rather than through an employer in 2016 under the Senate bill, and only 18 million of those people will get federal subsidies to buy their insurance, meaning 14 million will be required by the law to buy their own health insurance and will not be given any federal subsidy to do so.

Source: Page 24 of the Nov. 30 CBO letter to Sen. Bayh says: “Therefore, of the 32 million people who would have nongroup coverage in 2016 under the proposal (including those purchased inside and outside the exchanges), about 18 million, or 57 percent, would receive exchange subsidies.”

Common sense analysis: The CBO may be underestimating the number of Americans that would be forced under the Senate health care bill to buy health insurance plans without any help from an employer or the government—a group that will include middle-class families who are forced by the government to pay $15,200 for a health insurance plan out of their own pockets.

Why? The bill imposes a maximum fine of only $750 per worker on employers with more than 50 workers who do not buy insurance for their workers. Thus employers will face a choice: Pay the employer’s share of the insurance plans for their workers--including the employer's share for the typical $15,200 family insurance plan--or drop insurance for all their employees and pay a maximum fee of only a $750 per employee.

Under the bill, the financially rational decision for employers will be to drop their health insurance plans and pay the $750 fine. This decision will be reinforced by the fact that their employees making less than 400 percent of the poverty level will only qualify for a federal insurance subsidy if the employer does not offer the worker an insurance plan.

Left out in the cold will be workers who earn more than 400 percent of the poverty level and whose employers make the financially rational decision to drop their health insurance coverage. These workers will be required by federal law to buy health insurance, but will get no subsidy to do so. According to the estimate of the CBO, they will have to pay $15,200 for a family policy in 2016.

In effect, the Senate health care bill will impose a new $15,200 annual tax on all American families that make over 400 percent of the poverty level and whose employers decide not to purchase health insurance for their workers after the bill takes effect.

December 15, 2009 reply from Curtis Brown at Trinity University

I’m no expert on health care policy, but I’m very troubled by Bob’s recent posting. As in at least one of his other recent postings, he passes along an article from a right-wing web site, adding an inflammatory subject heading that is not supported by anything in the article he forwards. Meanwhile the article itself makes claims that are unsupported by the sources that it cites. (The “facts” listed in the article are mostly correct, but the inferences from them, the headline of the article, and the really wild final sentence find no justification there at all, as far as I can determine.) (By the way, Bob lists the author of the article as “Editor-in-Chief of CBS News,” making his source sound much more mainstream than it is: that should be CNS news, not CBS news.)

At least the article mentioned its sources, which are letters from the Congressional Budget Office to Senators Reid and Bayh. It doesn’t provide links, though, so I will. The letter to Bayh is at http://www.cbo.gov/ftpdocs/107xx/doc10781/11-30-Premiums.pdf, and the letter to Reid is at http://www.cbo.gov/ftpdocs/107xx/doc10731/Reid_letter_11_18_09.pdf. Having checked these sources, it appears to me that the article gives a wildly misleading picture of what they contain. Here are a few relevant points.

1. Bob’s subject heading is unsupported by anything in the article he forwards. Not even the author of the article, much less the CBO, appears to say anything about “accounting disasters.”

2. The headline of the article is extremely misleading. “According to CBO Analysis” implies that the CBO actually makes the assertion that the bill “would force some middle class families to pay [a] $15,200 yearly insurance fee.” But the CBO says nothing of the sort; this an inference the author of the article makes from pieces drawn from several different places in the letters. Let’s see whether it’s a reasonable inference.

3. First of all, the $15,200 figure is the estimated average cost of a nongroup premium under the proposed legislation. It doesn’t follow that anyone will be forced to pay this amount, even if they have to buy their own insurance and they don’t receive a subsidy, since presumably one could buy a premium with lesser coverage for a lesser amount. (As I note below, the coverage of the average policy is predicted to be significantly better than under current law.)

4. The CBO estimates that the cost of the average nongroup premium compared to the projected cost under current law, for the same coverage, would go down between 7 and 10 percent (letter to Bayh, p. 5).

5. The CBO also estimates that the average policy would have significantly better coverage than would be the case under current law. Other things being equal, this would push the cost of the average nongroup premium up by 27 to 30 percent. The net change in the cost of a premium is estimated to be +10 to +13% (letter to Bayh, p. 5), and to increase by less than that for the average nongroup purchaser who is not subsidized (letter to Bayh, p. 7). But presumably getting improved coverage will be voluntary. If your employer is paying, or you’re being subsidized, you might want better coverage. On the other hand, if you are paying for your own premium, you might not want increased coverage. If you elected to keep the same coverage, and if you would be paying for your own policy regardless of whether or not the bill is passed, then your costs would apparently (on average) go down by the 7 to 10 percent I mentioned in point 4.

6. From the points I’ve made so far, it appears as though, if you would purchase your own policy regardless of whether the law is changed or not, and you elected the same coverage either way, you would be better off under the proposed legislation. (On the other hand, if you wanted improved coverage, you could probably get substantially better coverage for a very modest increase in price.) However, what if you wouldn’t have to buy your own policy under current law, but you would need to under the proposed legislation? The article strongly implies that there will be many people who don’t currently buy their own policies but who would be forced to under the proposed legislation. Is this supported by the CBO analysis? No, quite the contrary. According to the letter to Reid, p. 9, "relative to currently projected levels, the number of people purchasing individual coverage outside the exchanges would decline by about 5 million." That’s right: the CBO estimates that you are less likely to have to buy your own nongroup policy under the proposed legislation than you are under current law. Many people who currently have to buy their own nongroup insurance will be able to buy group insurance on the “exchanges.”

7. Forget all the above for a moment, and pretend that everything the article says is correct. How badly should I feel for the (mythical) people who will supposedly be “forced to” pay about $15,000 a year for insurance? According to the article itself, to be in this category a family of four would need an income of $88,200 or more. (Those with lower incomes will be subsidized, and those who receive subsidies and are in the nongroup market would see their costs go down by 56-59% -- letter to Bayh, p. 5.) After paying for their health insurance, they would have only about $73,000 for the rest of their expenses for the year. Even if this happened, it’s hard to see it completely ruining anyone’s life. Contrast that with the fact that the CBO says that by 2019 “the number of nonelderly people who are uninsured would be reduced by 31 million” (letter to Reid, p. 8).

This will literally save lives. A relatively conservative estimate of the number of lives lost in 2006 due to a lack of health care coverage is 22,000 (Urban Institute, using methodology developed by the Institute of Medicine: http://www.urban.org/publications/411588.html). A Harvard Medical School study puts the number at more like 45,000 per year (http://prescriptions.blogs.nytimes.com/2009/09/17/harvard-medical-study-links-lack-of-insurance-to-45000-us-deaths-a-year/?scp=2&sq=harvard&st=cse). Providing coverage to tens of millions of additional people literally has the potential to save tens of thousands of lives a year. When worrying about whether families with incomes of $88,000 or more might have to pay a little more for insurance, a worry which doesn’t seem to be supported by the CBO analysis anyway, we should set that against the benefits that the bill would make possible.

Curtis

Jensen Comment
I’ve always had highest respect for Curtis, and most of his recent points were well taken (by me). I do wish he’d asked for clarification on some matters before posting his reply (which he has done in the distant past, especially regarding a tidbit years ago on Reed College’s reasons for not participating in media ranking surveys such as US News surveys that get Trinity highest honors).

What I really meant by “accounting disaster” in the latest health care tidbit is failing to recognize a huge tax on the middle class and failing to call it for what it is --- a huge tax. But I don’t want to elaborate more on that now.

I should've quoted directly from the CBO Report:

That difference in unsubsidized premiums is the net effect of three changes:

• Average premiums would be 27 percent to 30 percent higher because a greater amount of coverage would be obtained. In particular, the average insurance policy in this market would cover a substantially larger share of enrollees’ costs for health care (on average) and a slightly wider range of benefits. Those expansions would reflect both the minimum level of coverage (and related requirements) specified in the proposal and people’s decisions to purchase more extensive coverage in response to the structure of subsidies.

• Average premiums would be 7 percent to 10 percent lower because of a net reduction in costs that insurers incurred to deliver the same amount of insurance coverage to the same group of enrollees. Most of that net reduction would stem from the changes in the rules governing the nongroup market.

• Average premiums would be 7 percent to 10 percent lower because of a shift in the types of people obtaining coverage. Most of that change would stem from an influx of enrollees with below-average spending for health care, who would purchase coverage because of the new subsidies to be provided and the individual mandate to be imposed.3

Average premiums per policy in the nongroup market in 2016 would be roughly $5,800 for single policies and $15,200 for family policies under the proposal, compared with roughly $5,500 for single policies and $13,100 for family policies under current law.4

Those figures indicate what enrollees would pay, on average, not accounting for the new federal subsidies. The majority of nongroup enrollees (about 57 percent) would receive subsidies via the new insurance exchanges, and those subsidies, on average, would cover nearly two-thirds of the total premium, CBO and JCT

And I should've quoted the Editorial Staff of The Nation Magazine:

"Gaming Healthcare," Editorial in The Nation, December 16, 2009 --- http://www.thenation.com/doc/20100104/editors

The promise of reform has always been that Americans can have better--and universal--healthcare at lower cost. If the public option and Medicare expansion are dropped, and if schemes to pay for the proposal with Medicare and Medicaid "cost containment" are retained, the Senate legislation will break that promise.

Obama and key Congressional leaders appear to be more determined to get a bill, any bill, than to enact fundamental reform. The president's failure even to mention the public option when he lobbied Senate Democrats empowered Joe Lieberman and others who were angling for its elimination. And Obama's failure to use his bully pulpit was matched by Reid's compromises and missteps. When the majority leader embraced rules that require sixty votes to act--rather than challenge the rules directly or via budget reconciliation procedures that allow a simple majority--he ceded authority to insurance-industry shills like Lieberman and Ben Nelson, who then blocked reform at every turn.

At this late yet critical stage, Congressional progressives must push back. Compromise is inevitable. The hard question is whether it opens the door to progress or closes it. In a Washington increasingly fixated on deficit reduction and entitlement cuts, a bill with neither a public option nor Medicare expansion could be disastrous.

As a conference committee sets out to merge House and Senate bills, progressives should declare that they will not back a bill that enriches insurers while raiding the treasury and squeezing existing federal programs. They should argue more aggressively than ever for real competition--ideally in the form of a public option but at least with Medicare expansion. That, after all, is what they promised Americans in 2008.

Continued in article

There has been no stronger advocate of health care reform than Howard Dean, MD. He’s consistently advocated health care reform since he became the very liberal Governor of Vermont.

I think Howard Dean is right on in the video at http://www.msnbc.msn.com/id/3036677/#34439255
Senator Wyden follows Dr. Dean in this video and, in my viewpoint, is entirely wrong. Dean is right on.

But we should not legislate monsters that special interests have wrought in the current House and Senate versions of Obamacare

"Employer Health Care Mandates: Taxing Low-Income Workers to Pay for Health Care," by James Sherk and Robert A. Book, The Heritage Foundation, July 21, 2009 --- http://www.heritage.org/Research/HealthCare/wm2552.cfm
(Admittedly a conservative foundation but in my opinion a reputable and scholarly foundation)

Congressional advocates of the latest health care reform proposal claim that it will not cost ordinary Americans more--the costs will be borne by "the rich" and by employers. After all, both the House and the Senate versions require employers who do not provide health benefits to pay higher taxes.

But the Congressional Budget Office (CBO) recently reported what economists have long known: Regardless of who is formally required to pay, the burden of these taxes and costs will ultimately fall primarily on employees through lower wages. An employer mandate does not give workers without health insurance something for nothing but rather forces them to purchase it out of their wages whether they like it or not--and no matter how low those wages are. Congressional rhetoric to the contrary, much of the burden of paying for an employer mandate will fall on ordinary Americans, and lower-income workers will be hit the hardest.

Employer Mandates

Both the House and Senate drafts of health care reform include so-called "employer mandates" or "pay or play" provisions. These mandates require employers to pay higher taxes if (a) they do not offer health insurance, or (b) they offer it but have employees who decline it and instead use the government system.

The Senate version requires employers to pay $750 a year for each full-time employee without health coverage. The House version goes further, requiring most employers who do not provide health benefits (or whose employees decline it) to pay a penalty of 8 percent of their payroll. It has even been proposed that employers whose employees enroll in Medicaid may be required to pay this tax.

The ostensible purpose of such a tax penalty is to discourage employers from dropping workers onto the taxpayer-subsidized government plan. The tax will pay a portion of the public's costs when employees use the new government system instead of employer-sponsored insurance. However, the actual result will be lower pay and job losses, especially for low-income workers.

Costs Paid by Employees, Not Employers

Advocates of an employer mandate claim that employers and "the rich" will bear the burden of health coverage. However, the CBO recently reported that ordinary workers--not their employers--will ultimately bear the full cost of any reforms that make health insurance more expensive for employers.[1]

Although workers do not physically write a check for their health benefits, their employers write a smaller check to them every payday. Workers pay for health benefits through lower wages. As the CBO explains:

Although employers directly pay most of the costs of their workers' health insurance, the available evidence indicates that active workers--as a group--ultimately bear those costs. Employers' payments for health insurance are one form of compensation, along with wages, pension contributions, and other benefits. Firms decide how much labor to employ on the basis of the total cost of compensation and choose the composition of that compensation on the basis of what their workers generally prefer. Employers who offer to pay for health insurance thus pay less in wages and other forms of compensation than they otherwise would, keeping total compensation about the same. ...

[I]f employers who did not offer insurance were required to pay a fee, employees' wages and other forms of compensation would generally decline by the amount of that fee from what they would otherwise have been.[2]

Employers do not have limitless funds to dole out according to their own generosity. They must pay for all benefits and wages out of revenue received from customers; therefore they must decide how many employees to hire, and what to pay, based on the total cost of having that employee (and that employee's productivity). It does not matter from the employer's point of view how compensation is divided between wages, benefits, and payroll or other taxes.

If Congress makes health coverage more expensive for employers, or requires new payroll taxes, employers will be forced to cut wages to make up the difference. Even if the law stated (as the House bill does[3]) that employers could not cut pay directly to make up for the cost of health care, they will ultimately, somehow have to do just that.

For example, they could give smaller raises (too small to keep pace with inflation), less frequent promotions, lower starting pay to new employees, and/or wage cuts due to "the recession" until their total costs of employing a worker had fallen by nearly the same amount as the employer mandate imposed by Congress.[4]

No Free Lunch

An employer mandate does not give workers without health coverage a "free lunch": They will not be able to keep their current wages and benefits and have health care added to it at their employers' expense. Instead, the proposed laws would effectively force them to purchase health insurance and therefore spend less on other goods. Some workers will prefer this arrangement, but many others will not. In essence, the Congress would be telling the poor: "If you now have to choose between food and health insurance, you no longer have that choice--from now on you have to buy the health insurance."

Wage Cuts for Low-Income Workers

These wage reductions will most seriously affect low-income workers. Most higher-income earners already have health benefits and so will not experience any wage cuts as long as their health insurance meets the new federal requirements.

The employer mandate's burden would primarily fall on lower-income and less-skilled workers who do not currently have health coverage. The House version would force these workers to take the equivalent of an 8 percent pay cut--amounting to $1,600 a year for a full-time worker earning $10 an hour.

Job Losses for Low-Income Workers

On July 24, the federal minimum wage will rise to $7.25 an hour. Employers cannot legally take the full cost of the employer mandate penalty out of the paychecks of anyone earning close to this minimum. Thus, paying $7.25 an hour plus the health care tax will make unskilled workers even more expensive to hire. So, as the CBO points out, their employers will respond by laying them off or hiring fewer of them in the first place:

[A] play-or-pay provision would reduce the hiring of low-wage workers, whose wages could not fall by the full cost of health insurance or a substantial play-or-pay fee if they were close to the minimum wage.[5]

Health care reform is supposed to help vulnerable workers. But the House's approach to health care reform will cost many of them their jobs.

Tax Increases on Ordinary Workers

President Obama promised not to raise taxes on workers earning less than $250,000 a year, and supporters of an employer mandate claim that they will not make low- and middle-income workers bear the burden of paying for it. The focus on the surcharge on those earning over a million dollars a year reinforces this impression.

However, low-income workers will bear much of the cost, paying higher taxes indirectly through reduced wages. The House bill imposes what is effectively an 8 percent surtax that applies only to workers who do not already have health insurance, most of whom are already in the lower-income strata and can least afford to pay higher taxes.

James Sherk is Bradley Fellow in Labor Policy and Robert A. Book, Ph.D., is Senior Research Fellow in Health Economics in the Center for Data Analysis at The Heritage Foundation.

"Testing, Testing: The health-care bill has no master plan for curbing costs. Is that a bad thing?" by Atul Gawande, The New Yorker, December 14, 2009 ---
http://www.newyorker.com/reporting/2009/12/14/091214fa_fact_gawande

At the current rate of increase, the cost of family insurance will reach twenty-seven thousand dollars or more in a decade, taking more than a fifth of every dollar that people earn. Businesses will see their health-coverage expenses rise from ten per cent of total labor costs to seventeen per cent. Health-care spending will essentially devour all our future wage increases and economic growth. State budget costs for health care will more than double, and Medicare will run out of money in just eight years. The cost problem, people have come to realize, threatens not just our prosperity but our solvency.

So what does the reform package do about it? Turn to page 621 of the Senate version, the section entitled “Transforming the Health Care Delivery System,” and start reading. Does the bill end medicine’s destructive piecemeal payment system? Does it replace paying for quantity with paying for quality? Does it institute nationwide structural changes that curb costs and raise quality? It does not. Instead, what it offers is . . . pilot programs.

Continued in article

"The Problem is Cost of Care: Understanding America's dysfunctional health care system," by Michael Munger, Reason Magazine, December 10, 2009 --- http://reason.com/archives/2009/12/10/the-problem-is-cost-of-care

"20 Questions About Obamacare," The Wall Street Journal, December 11, 2009 ---
http://online.wsj.com/article/SB10001424052748703514404574587981316751944.html#mod=djemEditorialPage

It's hard to imagine a better illustration of the panic and recklessness stringing ObamaCare along in the Senate than the putative deal that Harry Reid announced this week. The Majority Leader is claiming that a Medicare "buy-in" for people from ages 55 to 64 has overcome the liberal-moderate impasse over the "public option." But if anything, this gambit is an even faster road to government-run health care.

The public option—an insurance program open to everyone, financed by taxpayers and run like Medicare—is intended as a veiled substitute for "single-payer" Canada-style insurance. Under the cover of "choice" and "competition," the entitlement would quickly squeeze out private insurance as people gravitated to "free" coverage and the government held down costs via price controls the way Medicare does now.

Mr. Reid's buy-in simply cuts out the middle man. Why go to the trouble of creating a new plan like Medicare when Medicare itself is already handy? A buy-in is an old chestnut of single-payer advocate Pete Stark, and it's the political strategy liberals have tried since the Great Society: Ratchet down the enrollment age for Medicare, boost the income limits to qualify for Medicaid, and soon health care for the entire middle class becomes a taxpayer commitment.

In the case of Medicare, this means expanding a program that is already going broke. Medicare reimburses doctors and hospitals at rates 70% to 80% below those of private insurers, which means below the actual treatment costs in many cities and regions. Providers either eat these losses—about half of U.S. hospitals are running a deficit or close to it—or they raise prices for private payers. This cost-shifting isn't dollar for dollar, but all empirical research shows that it adds tens of billions of dollars to consumer health bills, and this will accelerate if several million new patients are added to Medicare. That means higher prices for health insurance.

Adverse selection will also be a big problem, as the people who choose to join will inevitably be higher risk or in poorer health. Mr. Reid hasn't released any details on his plan, if they even exist, but would the sub-65 uninsured who join Medicare be subsidized? If so, in what sense is this one-hand-subsidizes-the-other taxpayer self-dealing a "buy-in"? It sounds simply like a huge Medicare expansion, especially if employers decide to drop coverage for anyone older than 55.

As for costs, how does adding new beneficiaries square with Democratic promises that they will cut Medicare spending on paper by two percentage points a year for the next two decades—just as the baby boomers retire and health costs continue to climb?

This last-minute, back-room ploy shows again that Democrats are simply winging it as they rush to pass something—anything—that can get 60 votes by Christmas. President Obama praised the proposal as "a creative new framework," while Finance Chairman Max Baucus told the Washington Post, "If there's 60 Senators who can reach agreement, I'm for it." Now there's a model standard to use for reordering 17% of the U.S. economy.

The latest polls show public support for the Senate plan falling into the mid-30%-range. The remaining supporters must not be paying attention.