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Putting the Brakes on Obamacare

If Republicans take control of one or both houses of Congress this fall, many will have been elected with a promise to “repeal and replace” ObamaCare. But what are their options, really? There likely will be an initial showdown, but President Obama will surely veto any challenge to the law, and it would be hard to imagine mustering the votes to overturn it.

Information is the key weapon. Republicans can use congressional hearings to explain what ObamaCare is doing to the economy and the health sector. Their strongest cases would be built around jobs, the cost of health care, and the rising deficit.

If evidence shows that looming mandates on employers are crippling job-creation, they should be repealed. If health costs are rising, as they inevitably will be, Congress needs to hold hearings to investigate the causes and explain why the offending taxes and regulations must be repealed.

Here are six key strategies that a Republican Congress could employ to put on the brakes:

• Defund it. House Republican Leader John Boehner of Ohio has vowed to choke off funding for implementation of the legislation, starting with parts that are especially egregious such as the “army of new IRS agents” needed to police compliance.

While Republicans could target the most damaging provisions of the legislation and tie their defunding measures to appropriations legislation that the president wants and needs to sign, they’d better be ready for battles. When former House Speaker Newt Gingrich lost a stand-down with President Clinton over closing down the government in 1996, it was widely seen as a setback for GOP efforts to scale back big government.

• Dismantle it. To focus committee action and floor votes, Republicans can look for provisions in the law that Democrats are on record as opposing. For example, Senate Budget Committee Chairman Kent Conrad (D., N.D.) has said that the new federal program to fund long-term care—the Community Living Assistance Services and Supports Act, or CLASS Act—is “a Ponzi scheme of the first order, the kind of thing that Bernie Madoff would have been proud of.” Mr. Conrad and five of his Democratic colleagues sent a letter to Senate Majority Leader Harry Reid (D., Nev.) before the legislation passed opposing the program and expressing “grave concerns” about its fiscal sustainability.

Other highly unpopular provisions include the requirement that all businesses must file 1099 forms with the IRS to report any purchases totaling more than $600 in a year. This is designed to raise about $17 billion over 10 years from tax cheats. Rep. Dan Lungren (R., Calif.) was the first to introduce legislation to repeal this gigantic paperwork burden. Many Democrats in vulnerable districts who voted for the health law are also anxious to repeal this provision, which the National Federation of Independent Business says will impact 40 million businesses.

• Delay it. Republicans can also vote to postpone cuts to the popular Medicare Advantage program, postpone mandates requiring that individuals and businesses purchase and provide health insurance, and delay imposition of the $500 billion in taxes required by the law. Mr. Obama wouldn’t likely sign such legislation, but the debate would shine a light on problems that haven’t received nearly enough attention.

• Disapprove regulations. The Congressional Review Act of 1996 (CRA) gives Congress the authority to overturn regulations issued by federal agencies if both houses approve, with a two-thirds majority needed to override a presidential veto. This would be difficult to pull off. But proposing a resolution of disapproval under the CRA gives Republicans a platform to express strong disagreement and bring attention to especially egregious rules.

The current congressional majority wants to gut the CRA, and the House passed a bill that would eliminate the requirement that federal agencies submit their rules to Congress before they can take effect. The Senate has not yet acted, but this measure should be on the Republicans’ watch list for the rest of the year.

• Direct oversight and investigation. Other aspects of ObamaCare are ripe for public hearings. For example, rules dictating how much insurance companies must spend on direct medical benefits are already hugely controversial—even before they have been issued. Businesses are also aghast at the narrow openings they have to protect their current health plans from onerous federal regulation. Republicans could summon many witnesses to testify about the impact of this regulatory straightjacket.

Congress also must keep a careful eye on the evolving cost estimates and deficits. Former Congressional Budget Office Director Douglas Holtz-Eakin estimates that the cost of the subsidies for private insurance could rise to $1.4 trillion —triple the $450 billion assumed by the current CBO. This is because the legislation creates strong incentives for businesses to drop coverage and dump their employees into federally subsidized insurance. Congress has a responsibility to protect taxpayers from what surely will be exploding costs.

Republicans also will want to call Donald Berwick, head of the powerful Centers for Medicare and Medicaid Services, to testify before Congress and detail his regulatory agenda for implementing the health-care law. He escaped that duty earlier this year when the White House avoided his Senate confirmation by giving him a controversial recess appointment.

• Delegate to the states. Congress should encourage states to press forward with their own innovative programs. For example, Gov. Mitch Daniels’s popular and fiscally responsible Healthy Indiana Plan expands coverage to the uninsured using a health savings account model. And the lightly regulated Utah Health Exchange provides a marketplace for individuals and small businesses to purchase affordable, portable health insurance. Both are threatened by ObamaCare. The more that states are marching forward with reform that suits the needs and pocketbooks of their citizens, the easier it will be for Congress to repeal ObamaCare and start over.

Americans intuitively understand that government can’t pay for huge new entitlement programs and the expansion of Medicaid with imagined cuts to Medicare, while still improving Medicare’s long-term solvency. They also know that job creation is flat and that employers’ fear of ever-rising health benefit costs is part of the problem. They need to hear the evidence that their fears are valid.

The real wallop of ObamaCare will come in 2014, when most of the spending begins and businesses and individuals are hit with intrusive and expensive mandates. The main job of Republicans, should they capture Congress, will be to slow down implementation of the law and explain to the American people the damage it will do—and already is doing—to our economy. If the White House changes hands in 2012, they can be ready to start with a clean slate and begin a step-by-step approach to sensible reform.

Britain Moves toward Doctor-Patient Control

Britain’s new coalition government is proposing a major transformation of its socialized health-care system to give doctors much more authority over decisions involving their patients’ care.

This most entrenched of government-run health systems is recognizing the importance of the doctor-patient relationship just as the United States is taking a sharp left turn toward more centralized government control over health care.

Is the world turning upside down?

The New York Times examines the plan “to shift control of England’s $160 billion annual health budget from a centralized bureaucracy to doctors at the local level,” calling it “the most radical reorganization of the National Health Service, as the system is called, since its inception in 1948.”

Currently, how and where patients are treated, and by whom, is largely determined by decisions made by 150 entities known as primary care trusts — all of which would be abolished under the plan, with some of those choices going to patients. It would also abolish many current government-set targets, like limits on how long patients have to wait for treatment.

Britain is trying to find a way to respond to the growing wave of consumerism sweeping Europe. Better-informed patients are demanding more control over health-care decisions and are increasingly fighting the authority of large, centralized bureaucracies to make decisions about their care.

Not surprisingly, the British government’s proposal is facing strong opposition from entrenched interests. “Many critics . . . doubt that general practitioners are the right people to decide how the health care budget should be spent,” the Times reports. One of these critics is David Furness of the Social Market Foundation, a London think tank. He calculates that the plan would make every general practitioner (GP) in London responsible for a $3.4 million budget. GPs would band together in regional consortia to buy services from hospitals and other providers.

“It’s like getting your waiter to manage a restaurant,” Furness said. “The government is saying that G.P.’s know what the patient wants, just the way a waiter knows what you want to eat. But a waiter isn’t necessarily any good at ordering stock, managing the premises, talking to the chef — why would they be? They’re waiters.”

He disparages doctors at his peril.

Under the proposed plan, hospitals would escape some of the bureaucratic micromanagement that binds them in red tape. They would become “foundation trusts” with much more independence, somewhat like charter schools in the U.S.

British health secretary Andrew Lansley is straightforward about the rationale for his proposal. His government’s white paper explains: “Liberating the N.H.S., and putting power in the hands of patients and clinicians, means we will be able to effect a radical simplification, and remove layers of management.”

Opponents are sounding alarms that the changes mean the terminally ill won’t get adequate care and that waiting times will be even longer for surgeries like knee and hip replacements.

There always is a risk with any government rationing system that more care will be provided to the healthy majority of patients who vote, leaving less for those who are older and sicker. But is it safer to give the relevant decision-making authority to doctors, or to bureaucrats and politicians? If there is less money for administrators, there will be more money for patients.

The labor unions and the bureaucrats are, of course, apoplectic about the loss of some of the bureaucratic jobs that have swallowed up most of the money from a tripling of the NHS budget since 1998.

Robin Durie, a senior lecturer in politics at the University of Exeter, wondered how the government would be able to “give patients more choice — a promise that seems to require a degree of administrative oversight — while cutting so many managers from the system?”

You can’t make this up. Britain’s coalition government is getting it right. Bureaucrats don’t deliver care; doctors do. Sixty-two years after the founding of the NHS, the British government recognizes it has no choice but to give doctors and patients more authority over health-care decisions.

The complex plan — which would affect only England — will need legislative approval to be enacted, but we should expect some version of it to pass, because it reflects a growing awakening in Europe to the importance of consumer control and choice.

For example, during a conference in Paris in late May, organized by the European Union of Private Hospitals, there was broad agreement about the value of consumer choice, competition, and portability in health care, and about the essential role that private providers play in European health care. More than 400 people attended the conference, including members of the European Union parliament, former health ministers, and many corporate CEOs.

John Bowis, former U.K. minister of health, spoke about the importance of allowing “patients to be partners in managing their care,” and stressed that “information is key to empowering patients.”

Throughout Europe, a network of private hospitals is growing. Government officials say private hospitals serve as a safety valve for public health systems; they allow people to escape waiting lines that would be even longer without their services. Many believe the private hospitals make public hospitals better by providing competition. How tragic, then, that the recently passed health-overhaul law in the U.S. effectively prohibits new physician-owned private hospitals from opening. Physician Hospitals of America has rightly filed suit, challenging these provisions.

Clearly, Europeans have come to these conclusions based upon long experience with government-controlled, bureaucratically run health systems. Such systems don’t work, especially with something as personal as health care. And yet, the U.S. has adopted “reforms” that will reduce genuine competition and put more control over health-care decisions in the hands of government bureaucrats.

We should also note that President Obama has bypassed the constitutionally required Senate confirmation process to put Dr. Don Berwick — who is in love with Britain’s socialized health-care system — in charge of implementing key parts of his health-overhaul law. When Berwick appears at some point before a congressional committee, members might want to ask him what he thinks about Britain’s move to give doctors and patients, not bureaucrats, more authority over health-care decisions.

As Rep. Paul Ryan (R., Wis.) said at a recent Galen Institute conference, Obamacare “will not stand.” The political system, the courts, or the American people — and probably all three — will get us back on the right path.

Doctors Flee Medicare

The exodus of doctors from Medicare and likely from private practice altogether – is accelerating.

The signs are undeniable: A 2008 poll by an independent Medicare commission found that 28% of seniors had trouble finding a primary care doctor, up from 24% the year before.

In Texas, only 38% of primary-care doctors will take new Medicare patients. The Mayo Clinic is opting out of Medicare in several locations because the low payment rates don’t allow the organization to provide the quality care its culture demands.

One financial planner reported that well over half of his physician clients have asked him to restructure their finances so they can retire in 2013 – the year before the main provisions of the new health overhaul law take effect.

Doctors are on the front lines of ObamaCare’s changes. The legislation requires more than $500 billion in cuts to Medicare to fund new entitlement spending, including a 21% cut in physician payments. Congress just postponed the cut until December, but in January, it will be 30%. Every delay adds tens of billions of dollars to the cost of a permanent fix.

A recent poll conducted by the American Osteopathic Association found only about 40% of physicians say they will be able to continue seeing their current Medicare patients if the cuts occur. Medicare payments barely cover their costs now, and many foresee losing money on every patient they treat.

Doctors also fear the barrage of new rules and regulation. They must invest in federally approved information technologies to get paid by the government. More paperwork – with resulting clerical expenses – will be required to prove they are following government performance standards that many disparage as “cookbook medicine,” robbing them of their ability to tailor care to individual patient needs.

Add to these pressures the 70-million baby boomers about to hit Medicare age, swelling demand for services at the time many doctors are preparing to leave. The American Association of Medical Colleges projects a shortage of 150,000 physicians in the United States by 2025. People will wait longer and travel further for appointments, and they will go to emergency rooms more, costing the system still more.

The $250 million promised by the Obama administration to boost medical training will barely make a dent in the need. Ironically, the health overhaul law didn’t increase the number of residency slots so new doctors can have a place to train.

But the immediate problem is more physicians are dropping Medicare now.

Dr. Juliette Madrigal-Dersch, an internist in Marble Falls, Texas, has left Medicare altogether, joining 13% of her colleagues.

Her patients pay cash, and neither she nor her patients can claim payment from Medicare for her services.

“The reason I opted out is because the reimbursement rates were low, the amount of paperwork was exceptionally high, and the fees – even if you made an innocent error – could be up to $10,000 per incident,” she told American Medical News. “Why would you sign up for something that would guarantee to pay you less over time when you’re expected to work harder? We want to be able to spend our time caring for patients instead of assigning codes to them and filling out paperwork.”

Many specialists say they can’t opt out because the majority of their patients are on Medicare, and they are trapped – until they can retire or find another job.

The solution? Putting doctors and patients, not government bureaucrats, in charge of medical decisions. Congress must restructure Medicare to allow seniors more choice and control over their health spending, including allowing them to continue to join private plans with incentives for doctors to provide more efficient care, and to get paid enough to continue seeing patients.

The Obama Health Law is Not Entitlement Reform

n 2009, President Barack Obama said “Health care reform is entitlement reform.” He promised to “bend the cost-curve” with changes that would painlessly cut costs through government-led changes in the “delivery system.” Now, the president’s vision for reform has been enacted into law. But it falls far short of what was promised.

Please join us for a briefing about an important new paper produced for the Galen Institute by Medicare and budget expert Jim Capretta. Rep. Paul Ryan will lead off the session, Capretta will provide an overview of his paper, and budget experts Doug Holtz-Eakin and Gene Steuerle will discuss.

Capretta will explain that instead of solving our entitlement and budget problems, ObamaCare will make them worse because it is based on the flawed assumption that the federal government has the capacity to manage the nation’s complex health care arrangements more efficiently. Capretta will argue that only market-based reforms for major health care entitlements will improve the productivity of the health sector, and thus ease pressures without harming care. Please join us for this important event.

Thursday, July 15, 10:30am – 12:00pm EDT

210 Cannon House Office Building, Washington, DC

There is no fee for this event, but we ask that you register to attend. Please contact Sterling Meyers at 703-299-9550 to RSVP

High-deductible Plans Threatened by New Regulations

More employers are adding high-deductible plans to the mix of health plans they offer or using them to replace their traditional plans. Yet some insurers who offer high-deductible plans say the health overhaul law is imposing new regulations that will make it harder for them to operate, according to Kaiser Health Digest.

Earlier this month, nHealth of Richmond announced that it was shutting its doors, saying its business model couldn’t be sustained under rules that will require insurers to spend 80 to 85% of the amount they collect in premiums on clinical services and quality measures, or give customers a rebate. “In my view, this was the first shoe to drop, and I’m wondering if there will be others,” says Roy Ramthun, president of HSA Consulting Services and former adviser to President George W. Bush on the rollout of HSAs. Ramthun says he’s also concerned that the high-deductible plans might have trouble complying with regulations that will be set for health plans sold on the exchanges in 2014.

Medicaid Long-Term Care: The Ticking Time Bomb

The convergence of an aging population, growing fiscal pressures and health care reform’s mandate for increased access to care will have far-reaching consequences for state-administered Medicaid long-term care (LTC) programs, according to Deloitte’s Center for Health Solutions. This paper (PDF) examines the Medicaid expenditures for LTC, in both institutional and community-based settings. If the current trend continues as demonstrated in this paper’s base model, more than 35% of a state’s budget will be needed for Medicaid by 2030, of which half will be for LTC services. The paper also examines how the health overhaul law’s mandate for increased access will worsen Medicaid’s expenditure trend. While the law states that new Medicaid enrollees will be subsidized through 100% federal funds from 2014 to 2016, state budget deficits are projected to be more than $350 billion between 2010 and 2011, a dangerous fiscal scenario for which there is no short-term solution.

Market-based Initiatives are Key to Reform’s Success

Consumer-directed health plans have been useful in controlling the rise of health costs over the last several years, but the survival of these plans is threatened by the new health overhaul law.

Mercer’s latest National Survey of Employer-Sponsored Health Plans found that major employers held total health benefit cost increases per employee to 5.5% in 2009 – the lowest increase in a decade. Participation in consumer-directed health plans, as well as health management programs, has been growing over the last few years as companies sought ways to successfully engage employees as partners in managing costs and care.

Unfortunately, ObamaCare threatens to render these plans a thing of the past.  Until now, employers have had the flexibility to tailor benefit and cost structures to fit their budgets and corporate cultures, but the new health overhaul law will limit their options in the future.

Continue reading at Kaiser Health News.

Five Lessons from Massachusetts

The best guide to how President Obama’s historic health care legislation will reshape the nation’s medical marketplace and fiscal future is the pioneering model in Massachusetts, Shawn Tully writes in Fortune.

An examination of the Massachusetts health plan yields five important lessons that show the dangers ahead for the Obama health care blueprint: 1) The Massachusetts plan does not control costs; 2) Community rating, guaranteed issue and mandated benefits swell costs; 3) Huge subsidies for low-to-medium earners could prove extremely expensive; 4) The exchanges reward people for working less and earning less; 5) The generous plans and added mandates give employers an incentive to drop health insurance.

Fears About Health Reform’s Costs Are Coming True

Shortly after President Obama signed the health overhaul law, several major corporations reported it would take a bite out of their future earnings. This group included AT&T, Caterpillar, John Deere, Verizon and several other large employers.

Convinced these businesses were cooking their books to cast the new law in a bad light, House Energy and Commerce Committee Chairman Henry Waxman (D-Calif.) promptly subpoenaed documents and demanded executives testify to defend their announcements. But after combing through 1,100 pages of corporate documents and e-mails, Waxman’s staff canceled the hearing – and announced that “the companies acted properly and in accordance with accounting standards.”

In other words, even though some lawmakers don’t want to believe it, Obamacare is already proving costly to American businesses. And ironically, the new law could cause many workers to lose the health benefits they get through their jobs. (more…)

ObamaCare Breaks the Bank

Americans consistently said controlling health costs was their top priority for health reform. But Washington didn’t listen. Independent experts now say the new health law actually will drive up the cost of health care and insurance premiums.

Federal and state governments as well as businesses, consumers and taxpayers are finding they cannot afford this massive and unpopular health overhaul law.

The Congressional Budget Office recently issued a revised estimate showing the law will cost $115 billion more than it projected the week before it was enacted. That puts the CBO’s initial price tag at $1 trillion — still a conservative estimate that is based upon unrealistically high assumptions about cuts in Medicare spending and unrealistically low assumptions about the cost of the new law.

Further, the CBO says that preventive care and pilot projects designed to modernize care delivery, while important, are unlikely to reduce costs and may actually increase health spending.

A report by the Obama administration’s own actuary, issued a month after Congress passed the reform legislation, showed it will increase federal health spending by $311 billion over the next decade and likely much more.

The chief actuary for the administration’s Centers for Medicare and Medicaid Services, Richard Foster, also predicts higher health insurance premiums for individuals and businesses.

One reason is the billions of dollars in new fees and excise taxes the law imposes that Foster says will “generally be passed through to health consumers in the form of higher drug and devices prices and higher premiums.”

These include:

• more than $20 billion in taxes on medical devices

• $60 billion in taxes on health plans

• and $27 billion in taxes on prescription drug companies.

Foster’s report also highlights the shaky financial footing of the new long-term care insurance program — the CLASS Act, which Sen. Kent Conrad, D-N.D., has described as “a Ponzi scheme of the first order.”

Foster says the program faces “a significant risk of failure” and finds the program will result “in a net federal cost in the long term.”

The CBO estimates that individuals and businesses also will face at least $120 billion in fines and penalties for failing to comply with the law’s new health insurance mandates. And it says families purchasing health insurance in the individual market will pay $2,100 a year more for coverage by 2016 than they would had the measure not passed.

States also fear a flood of red ink.

Indiana has released a study showing that the health overhaul law could cost the state an additional $3.6 billion over 10 years — money that Hoosiers don’t want to spend for a law that polls show they strongly oppose.

And major companies also face tax hits, fines and huge risks.

Large, publicly traded companies have issued reports showing reduced earnings as a result of tax changes. Experts with the consulting firm Towers Watson calculate it will mean a $14 billion hit to their earnings because the law takes away part of a subsidy that encourages them to provide drug coverage to retirees.

These companies also are beginning to recognize the extraordinary risk of continuing to provide health benefits for their workers.

“Many companies are examining a course that was heretofore unthinkable, dumping the health care coverage they provide to their workers in exchange for paying penalty fees to the government,” according to Fortune magazine that reviewed internal company documents.

If employers drop health insurance, taxpayers will wind up picking up the costs of coverage for millions more Americans. And an analysis conducted by officials of the White Castle restaurant chain said that just one provision will effectively cut the chain’s net income in half and reduce future jobs creation.

These company reports are the canary in the coal mine warning politicians, businesses and consumers of the dangers ahead.

They are sounding alarm bells that the health care reform legislation is unpopular for a reason:

It will break the bank for taxpayers, consumers and American businesses.