The Wonk Room

GOP Health Plan Would Allow For ‘Sweatshop Insurance’

Under the Republican health care alternative filed in the House, young and healthy individuals can purchase policies from insurers that don’t abide by local benefit or rate standards. The Republican bill allows the health insurer to choose a “primary state” “whose covered laws shall govern the health insurance issuer” and market policies to other states without adhering “to all of the consumer protection laws or restrictions on rate changes of the state.”

Over at MYDD, Bruce Webb, calls the provision, “Sweatshop Insurance.” “This bill goes far beyond that in stripping states of power over insurance rates and conditions,” he notes. It “explicitly expands the definition of ‘State’ to include not just D.C. and Puerto Rico, which makes some sense in context, but adds BY NAME the Virgin Islands, Guam, American Samoa and Jack Abramoff’s favorite client-the Northern Marianas home of the ‘Made in the USA’ Chinese-owned close to slave labor sweatshops.” From pages 121-122 of the bill:

As Webb goes on to explain, “companies can simply designate the Northern Marianas as the ‘primary State’ for their plan, or since it is closer the Virgin Islands and then have those governments be the sole regulator. And given the record of corruption in the N. Marianas and the willingness of various Caribbean and Atlantic Island nations to let themselves be used as off-shore banking and tax shelter entities you can bet Aetna and WellPoint are slavering at the prospect of ‘basing’ their plans out of a PO Box on some tropical nation.”

The Wonk Room tried to identify if any of the islands regulated individual insurance policies. We contacted several lobbying firm representing the N. Marianas but only reached Donna Christensen, the non-voting Delegate from the United States Virgin Islands to the United States House of Representatives. Her office did not know if the Virgin Islands had any consumer protections for policies sold in the individual market.

Republican Leaders Couldn’t Find Affordable Coverage Under Their Own Health Plan

The Congressional Budget Office has concluded that under the $61 billion Republican amendment to the House health care bill, the number of uninsured Americans would increase to 52 million by 2019, but deficits would decrease by $68 billion over the 2010–2019 period. The bill could slightly reduce premiums for Americans who purchase coverage independently.

Millions of Americans would remain uninsured and continue to pay higher premiums. In fact it’s unlikely that any of the members of the Republican House Leadership would be able to find affordable insurance under their own proposal, should they chose to give up their government-sponsored plans.

The six men and one woman in the Republican House leadership have an average age of 52 and, as a group, are more susceptible to cardiovascular disease, different cancers, high blood pressure, and host of other chronic diseases. The Republican health alternative would allow insurers to discriminate against these conditions and price the Republican leaders out of the market:

1. Leadership would not find coverage in the individual market:

Republicans hope to increase access to coverage in the individual market by giving individuals the opportunity to purchase insurance licensed in different states. But it’s unlikely that any of the House Republicans would be able to find an affordable coverage option. Insurers that sell policies in the individual market-place usually deny coverage to older Americans with pre-existing conditions or those at risk of developing chronic disease. In fact, over the last three years, “nearly three-quarters of people who tried to buy coverage in this market never actually purchased a plan, either because they could not find one that fit their needs or that they could afford, or because they were turned down due to a preexisting condition.”

2. Leadership would not find adequate coverage in high-risk pools:

When the Republican leaders are denied coverage in the individual market, they could apply for insurance in expanded state-based high risk pools, which typically provide very expensive coverage for the so-called “uninsurables.” But their legislation does not adequately fund these pools and would compel states to limit services, deny coverage for pre-existing conditions, and impose high cost sharing.

3. Leadership would not find stable coverage in association health plans:

If Republican leaders can’t purchase affordable coverage from state-run high risk pool, they could join an association-sponsored plan. Unfortunately, under their own legislation, associations are not required to provide a standard package of benefits and have an incentive to craft skimpy policies that attract healthier applicants.

The Republican legislation lowers costs for younger and healthier Americans by segregating risk pools and offering individuals who rarely use their health insurance cheaper premiums — so long as they remain healthy. The legislation doesn’t offer new choices or lower costs for the majority of the population.

Association Health Plans Have History Of Insolvency And Fraud — So Why Are Republicans Expanding Them?

Republicans have embraced health association plans as a way to help self-employed people and small businesses maximize affordability of coverage by using their leverage as a large group to negotiate lower premiums.

The Republicans’ alternative health care plan amends the Employee Retirement Income Security Act of 1974 — the federal legislation that governs employer-sponsored self-insured health policies — to allow the federal government to certify and regulate the solvency and adequacy of association plans. Under their legislation, small businesses can come together, by industry or trade, and form health plan through which they can purchase coverage for their employees.

But while the plans goals are laudable, in reality, associations could avoid covering sicker businesses by excluding certain key conditions from coverage and designing policies that only attract healthier applicants. According to the Republican bill, the association would not be required to offer a minimum benefits package and could set “contribution rates based on claims experience of the plan,” crowding employers whose employees actually use their insurance, out of coverage.

The “whole bill is set up to build fly-by-night associations. I run it for a couple of years, I shut it down,” Georgetown professor Karen Pollitz explained in a conversation with the Wonk Room. “I cover these 100 people this year. Next year, I have a different 100 members.” Indeed, between 2001 and 2003, four long-standing self-insured association health care plans became insolvent, “leaving $48 million in medical claims unpaid and 66,000 people and small businesses without insurance.” Health experts argue that association health care plans are governed by “licensing requirements that are often less stringent than those imposed on traditional insurers” and are “at far greater risk of becoming insolvent when claims suddenly or unexpectedly exceed their ability to pay them.”

The Republican legislation establishes new solvency and reserve requirements but it outsources any enforcement of self-insured or national association plans to the federal Department of Labor, “which lacks the tools, resources, and culture to protect businesses against fraud.” One report concluded that the “history of scams involving associations demonstrates that when the federal government has had sole oversight authority, fraud flourished with unscrupulous individuals leaving businesses and their workers without health coverage and with millions of dollars in unpaid medical bills.”

The legislation requires association health care plans to contribute to an ‘Association Health Plan Fund’ that would pay out outstanding claims in cases of insolvency, but leaves the federal government on the hook if the money in the fund runs out. “[I]f the Secretary determines that there is a reasonable expectation that” claims would “would not be satisfied by reason of termination of such coverage. The Secretary shall, to the extent provided in advance in appropriation Acts, pay such amounts so determined to the insurer designated by the Secretary,” the bill states on page 73.

Democrats’ House Health Care Bill Also Allows Insurers To Sell Policies Across State Lines

Republicans have long argued that allowing insurers to sell policies across state lines would provide Americans with greater choice of coverage. Under the Republican health care alternative filed yesterday in the House, young and healthy individuals can purchase policies from insurers that don’t abide by local benefit or rate standards. The Republican bill allows the health insurer to choose a “primary state” “whose covered laws shall govern the health insurance issuer” and market policies to other states without adhering “to all of the consumer protection laws or restrictions on rate changes of the state.” Insurance companies could choose a state with scarce regulations and sell policies that don’t provide adequate benefits and only attract the healthiest applicants.

Democratic leaders argue that the policy would allow health insurers to circumvent critical consumer regulations and further fragment risk pools. But a little-noticed provision on pages 202-206 of the House health care bill also allow insurers to sell policies across state lines. Section 309 says that states may form “Health Care Choice Compacts” to “facilitate the purchase of individual health insurance coverage across State lines.” But that’s where the similarities end.

While the Republican-backed proposal allows the insurance company to decide that it will be governed by the state with the scarcest regulations, the Manager’s Amendment to the House health care bill specifies that the states that form the compact can designate the “primary state,” not the insurer. The Democrats’ compacts would be subject to model guidelines developed by the Secretary of Health and Human Services (in consultation with the National Association of Insurance Commissioners) and would preserve the authority of all states to enforce local laws relating to market conduct, unfair trade practices, network adequacy, consumer protection standards, grievance and appeals, fair claims payment requirements, rate review, and fraud.

The insurer would be subject to the benefit mandate standards and rate regulations of a single primary state, but — unlike the Republican alternative — it would not be able to avoid local consumer protections and regulations. Still, some progressives fear that insurance companies will pressure compacts to chose the state with the lowest standards and that state governments would lack the resources to properly enforce local consumer protections.

The bill reported out of the Senate Finance Committee also permits states to form “health care choice compacts,” although the rules governing those compacts are still being developed by Senate staff working to produce a final Senate bill.

We Read the GOP Health Care Plan So You Don’t Have To

When the House released its 1,990 health care bill, Rep. Mike Pence (R-IN) criticized the legislation for including “the mandatory world ’shall’ in the bill 3,425 times.” Today, the Hill obtained the Republicans’ 230 page alternative, which the House leadership plans to offer as an amendment during floor debate.

The bill includes the word ’shall’ 378 times, but does very little to expand access or lower health care costs. In fact, while the House bill incorporated numerous Republican ideas and provisions, the Republican legislation is a message amendment that translates Republican rhetoric against the Democratic proposal into legislative language. “The purpose of this Act is to take meaningful steps to lower health care costs and increase access to health insurance coverage,” the bill states, “without (1) raising taxes; (2) cutting Medicare benefits for seniors; (3) adding to the national deficit; (4) intervening in the doctor-patient relationship; or (5) instituting a government takeover of health care.”

Below is a summary of the Republican plan. In short, the amendment shifts the costs and risks of insurance onto individuals and divides the market into low-cost plans for the healthy and high-cost insurance for the sick:

Access to coverage:

- Establishes high risk pools for sicker individuals: State are required to establish high risk pools for Americans who cannot purchase insurance in the individual market due to pre-existing conditions, but nothing in the legislation prohibits the state pools from excluding coverage for the very condition that makes an individual eligible in the first place (as they do today.) The bill abolishes waiting lists and specifies that the pools must provide at least two coverage options, one of which must be a high deductible plan with HSA. Premiums can be set at no higher than 150% of (state) average. The federal government will provide $15 billion in funding.

- Healthier Americans can purchase coverage on the individual market: For Americans moving from group to individual coverage, the legislation eliminates the HIPAA requirement of having creditable coverage in the past 18 months to receive individual insurance market insurance. Annual or life time spending caps are also eliminated. However, the bill will allow insures to deny coverage for pre-existing conditions and charge very different rates based on gender and age.

- Health insurers can sell policies across state lines: The insurer only has to follow the rules of the state it declares to be its “primary” state, not of secondary states in which it can also sell policies. As a result, all policies will have a ‘buyer beware’ label warning consumers that the plan is “not subject to all of the consumer protection laws or restrictions on rate changes of the state.”

- Businesses can form association health care plans: The legislation creates rules for governing association health plans, which will allow small businesses to come together, by industry or trade, and form health plan through which they can purchase coverage for their employees. Association health care plans have sole discretion in selecting specific items and services that can be included as benefits (i.e. no minimum guaranteed benefit package, or minimum costs etc). The plans are to be operated by Board of Trustees who appoint the actuary to determine financial status and viability.

- Young adults can stay on their parents’ coverage: Dependent adults can stay on their parents’ plan until they are at least 25, although the language would allow a plan to increase that age.

Lowering health care costs:

- Offers bonuses for states that lower premiums, number of uninsured: Establishes state innovation program grants to reward states for lowering the cost of their premiums. Includes bonus for reducing the number of uninsured.

- Establishes a plan finder website: States contract with private entities to create a health “plan finder” website which do not directly enroll individuals in insurance plans.

- Malpractice reform: Specifies that claims must be filed within three years, and caps non-economic damages at $250,000.

Miscellaneous:

- Enhances Health Savings Accounts: Enrollees can build their credit by contributing to their HSA and can use HSAs to pay for high deductible plan premiums. The bill extends the definition of a qualified medical expense.

- Employer wellness programs: Allows group and individual health plans to vary premiums and cost-sharing by up to 50% of value of benefits based on participation or lack of participation in a standards-based wellness program.

- Federal dollars can’t touch plans that offer abortion coverage: The bill does not allow federal funds to go to any insurance plan that offers abortion coverage. This means that a woman who wants to purchase a comprehensive health insurance plan would have to pay for the entire cost of the policy, even if she qualifies for subsidies and uses private premiums to pay for her abortion.

GOP Health Bill: Insurers Can Ignore ‘All Of the Consumer Protection Laws’ & ‘Restricitons On Rate Changes’

The new Republican health care plan expands “coverage” and “choice” by permitting health insurers to sell policies across state lines. Under the Republican proposal, the insurer can choose a ‘primary state’ “whose covered laws shall govern the health insurance issuer” and can change states “upon renewal of the policy.”

Page 129 requires a “health insurance issuer” to “provide the following notice” informing consumers in so-called ’secondary states’ that the policy is “not subject to all of the consumer protection laws or restrictions on rate changes of the state.”

Here is the notice, as it is described in the legislation:

The GOP is conceding the progressive argument. It is admitting that insurance companies would have little incentive to continue doing business under certain state rules which “require that companies issue coverage to all new customers and not set higher rates for people who are already sick.” Instead, companies could chose a state with scarce regulations and sell policies that don’t provide mental health parity, cancer screenings, or abide by regulations that limit the rates that can be charged to higher-cost consumers. This way, plans can attract the healthiest applicants and detract the sick.

After an insurer issues a policy to an individual, the GOP bill does prohibit the issuer from increasing the premiums assessed on the individual “based on a health status-related factor or change of a health status-related factor or the past or prospective claim experience of the insured individual.” However, the bill goes on to say that “Nothing in paragraph (1) shall be construed to prohibit a health insurance issuer from terminating or discontinuing coverage” or “from raising premium rates for all policy holders within a class based on claims experience.”

The Republican Leadership Health Plan: For The Healthy, While They’re Healthy »

The Republican leadership in the House has sent a health care bill to the Congressional Budget Office and the early details don’t look good:

- Insurers could circumvent state-based consumer protections by selling policies across state lines

- Health care costs could be reduced by less than 1/2 of one percentage point through malpractice reform

- Businesses with younger and healthy employees could band together and join association health care plans, while firms with older workforces wouldn’t have access to affordable coverage

- Individuals with chronic illnesses or pre-existing conditions could join very expensive and inefficient high risk pools

The Republican plan doesn’t “end insurance industry practices that discriminate against high-risk individuals or provide tax credits to help the uninsured purchase coverage.” It is designed for the healthy while they’re healthy.

Rather than driving down costs by expanding access, Republicans are hoping to expand access by driving down costs. “Our substitute aims at driving down costs,” House Minority Leader John Boehner (R-OH) told reporters Monday. “If you drive down costs, you can expand access.” But press reports suggest that this proposal doesn’t include any of the things we know can reduce costs over time — creating incentives for better coordination of care (accountable care organizations, medical homes, reducing unnecessary readmissions, etc), investments in prevention and comparative effectiveness research, other system modernizations.

The Republican legislation even undermines the existing consensus surrounding cost control. In May, a group of doctors, hospitals, drug makers and insurance companies came together to present President Obama with a letter promising to reduce the growth rate in annual health spending by 1.5 percentage points a year over the next 10 years — lowering spending overall health care spending by $2 trillion (this represents a 20 percent reduction in projected growth) — in the context of comprehensive health care reform. The hospitals promised to contribute “some $155 billion in Medicare and Medicaid savings over the 10 years” if more patients enter the hospital system as a result of health care reform. The insurance industry has said they would adopt cost containment strategies and accept anyone who applies for coverage if everyone entered the risk people. But the Republican plan doesn’t invest in comprehensive reform that opens up the system to more people and begins to control skyrocketing health care costs. It only marginally lowers the costs of insurance for the healthy — while they’re healthy:

- Allowing insurers to sell policies across state lines: Allowing insurers to sell policies across state lines would allow companies to avoid state consumer-protection laws and solvency requirements. Insurance companies “would have little incentive to continue doing business” under certain state rules which “require that companies issue coverage to all new customers and not set higher rates for people who are already sick.” Companies will charter in states with scarce regulations, and will no longer have to provide mental health parity, cancer screenings, or abide by regulations that “limit the rates that can be charged to higher-cost consumers and that limit who can be excluded for a health plan.

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Top 10 Reasons Why Republicans Should Support The House Health Bill

This morning, Rep. Mike Pence (R-IN) characterized the entire House health care bill as a “government run insurance 2.0.” “I mean, what we are seeing here is, you know, government-run insurance, mandates for businesses, an enormous tax increase, most of which or at least half of which will be paid for by small business owners.” But Pence and the Republicans should actually read the bill before dismissing it. For while the party may oppose the bill’s provisions to tax the top 0.3% of Americans to fund reform or the new fees imposed on the pharmaceutical industry to help close the donut hole in Medicare Part D, on the whole, the 1,990 page bill is a fairly moderate proposal that incorporates numerous conservative policies.

Here are just 10 reasons for why Republicans should support the House health bill:

1. REPUBLICANS ASKED FOR – DEFICIT NEUTRAL BILL: “Do the American people believe that this almost 2,000 page bill won’t add to the deficit?” [Rep. Eric Cantor, 10/29/2009]

HOUSE BILL – DEFICIT NEUTRAL BILL: According to the Congressional Budget Office, the House bill costs $894 billion over 10 years and actually reduces the deficit by $30 billion and continues to reduce the deficit over the second 10 years.

2. REPUBLICANS ASKED FOR – REDUCE COSTS OVER LONG TERM: “Nevertheless, House Republicans recognize the need to lower health care costs.” [Rep. Mike Pence (R-IN), 9/9/09]

HOUSE BILL – REDUCES COSTS OVER LONG TERM: Encourages payment reforms that can help lower costs. Requires the Department of Health and Human Services to establish specific benchmarks for expansion of the Accountable Care Organization, Payment Bundling, and Medical Home pilot programs. The bill will also slow the rate of growth of the Medicare program from 6.6% annually to 5.3%.

3. REPUBLICANS ASKED FOR – POLICIES ACROSS STATE LINES: “Interstate competition allowing people to buy insurance across state lines.” [Sen. John Thune (R-SD), 9/8/2009]

HOUSE BILL – POLICIES ACROSS STATE LINES: Allows for the creation of State Health Insurance Compacts – permits states to enter into agreements to allow for the sale of insurance across state lines.

4. REPUBLICANS ASKED FOR – MEDICAL MALPRACTICE REFORM: “Why not bring about reasonable restrictions and limits on medical malpractice claims to end the era of defensive medicine?” [Rep. Mike Pence (R-IA), 9/9/2009]

HOUSE BILL – ENCOURAGES MALPRACTICE REFORM: The bill establishes a voluntary state incentives grant program to encourage states to implement “certificate of merit” and “early offer” alternatives to traditional medical malpractice litigation.

5. REPUBLICANS ASKED FOR – HIGH RISK POOLS: “Senator McCain has a proposal sometimes called high-risk pools at the state level…These are efforts I think we can have bipartisan agreement on and deal with the question of pre-existing conditions.” [Rep. Eric Cantor (R-VA), 9/10/2009]

HOUSE BILL – HIGH RISK POOLS: To fill the gap before the Exchange becomes available in 2013, the bill creates an insurance program with financial assistance for those uninsured for several months or denied policy due to preexisting conditions.

6. REPUBLICANS ASKED FOR – ALLOW YOUNG PEOPLE TO STAY ON PARENTS’ POLICIES: “Recognizes that not all high school and college graduates are able to find a job that offers health care coverage after graduation. By allowing dependents to remain on their parents’ health policies up to the age of 25, the number of uninsured Americans could be reduced by up to 7 million.” [Republican Health Solutions Group]

HOUSE BILL – ALLOW YOUNG PEOPLE TO STAY ON PARENTS’ POLICIES: The bill requires health plans to allow young people to remain on their parents’ insurance policy until they turn 27.

7. REPUBLICANS ASKED FOR – NO PUBLIC MONEY FOR ABORTION: “The American people will not stand for government-run insurance that uses taxpayer money to fund abortions in this country.” [Rep. Mike Pence (R-IN), 10/16/2009]

HOUSE BILL – NO PUBLIC MONEY FOR ABORTION: The bill prohibits abortion services from being made part of essential benefits package and prohibits federal funds from being used to pay for abortion (except in cases of rape, incest, and to save life of the woman).

8. REPUBLICANS ASKED FOR – PROTECT SMALL BUSINESSES: “Helps employers offer health care coverage to their workers by reducing their administrative costs through a new small business tax credit.” [Republican Health Solutions Group]

HOUSE BILL – PROTECTS SMALL BUSINESSES: The bill exempts 86% of businesses from the requirement to provide coverage. Businesses with payrolls below $500,000 are exempt while firms with payrolls between $500,000 and $750,000 would pay a graduated penalty. Small businesses would also receive a tax credit that helps cover 50% of their health care expenses.

9. REPUBLICANS ASKED FOR – PROMOTE JOB WELLNESS PROGRAMS: “Promotes prevention and wellness by giving employers and insurers greater flexibility to financially reward employees who seek to achieve or maintain a healthy weight, quit smoking, and manage chronic illnesses like diabetes.” [Republican Health Solutions Group]

HOUSE BILL – PROMOTE JOB WELLNESS PROGRAMS: The bill establishes a grant program to help small employers create or strengthen workplace wellness programs.

10. REPUBLICANS ASKED FOR – DELIVERY SYSTEM REFORM: “Uses new and innovative treatment programs to better coordinate care between health
care providers, ensuring that those with chronic disease receive the care they need and do not continue to fall through the cracks.” [Republican Health Solutions Group]

HOUSE BILL – DELIVERY SYSTEM REFORM: The bill requires the Department of Health and Human Services to establish specific benchmarks for the expansion of the Accountable Care Organization, Payment Bundling, and Medical Home pilot programs.

Yes, Under The Republican Plan, Don’t Get Sick

Last night, in a controversial speech on the House floor, Rep. Alan Grayson (D-FL) announced that the Republican alternative health care proposals would force sick Americans to “die quickly”:

It’s my duty and pride tonight to be able to announce exactly what the Republicans plan to do for health care in America… It’s a very simple plan. Here it is. The Republican health care plan for America: “don’t get sick.” If you have insurance don’t get sick, if you don’t have insurance, don’t get sick; if you’re sick, don’t get sick. Just don’t get sick. … If you do get sick America, the Republican health care plan is this: “die quickly.”

Watch it:

No Republican wants Americans to die, but the party’s efforts to stonewall meaningful health care reform perpetuate a status quo in which 45,000 Americans die every year because they lack health care coverage and thousands more see their policies canceled or denied by private insurers that are beholden to Wall Street’s profit expectations and not patient health.

Grayson intentionally over-stated his case. It’s not that Republicans want to kill people; it’s that their opposition to meaningful health care reform and their “free market” alternatives would further deregulate insurers and allow companies to continue pushing individuals into high deductible policies that don’t provide adequate coverage and actually harm Americans who can’t afford their medical bills:

“Don’t get sick.” Under the Republican alternatives, private insurers will deny coverage to Americans who suffer from chronic illnesses like cancers or asthma and lure healthier applicants into high deductible policies that provide limited coverage once they become sick.

“Die quickly.” If Americans in these policies do fall ill, they will go bankrupt paying off their medical bills and join the 78 percent of bankruptcy filers burdened by health care expenses who had health insurance but “still were overwhelmed by their medical debt.” Grayson is facetiously suggesting that Americans would be urged to skip the “bankruptcy” part, avoid being a financial burden on their family, and simply pass away.

In other words, the Republican alternatives harm Americans by placing our fate in the hands of the very same private for-profit corporations that have created the health care crisis in the first place.

Conservatives Now Calling For ‘Incremental’ Approach To Health Care Reform

Earlier this summer, guided by pollsters who argued that conservatives can’t oppose the idea of health care reform, Republicans proposed at least five comprehensive alternatives to the Democratic legislation. But now, in the context of the August town halls, conservatives are openly arguing that the nation does not need or cannot afford comprehensive health care reform.

Conservatives want to abandon the effort to reform the system this year. Instead, they’re proposing “incremental” reforms:

- Sen. John Thune (R-SD): And I think the — there are Republicans who would vote for reforms, insurance reforms and, you know, I think elements that would demonstrate more incremental change that actually do bend the cost curve down, as opposed to driving it up. [Conference call, 8/25/2009]

- Sen. Mike Enzi (R-WI): We do need to have health care reform,” Enzi said. “We do need to get it right. We need take the time to do it. I think the only way it will happen is we need to break it down into smaller parts than we have now and put it through one at a time. [Billings Gazette, 8/17/2009]

- Sen. Chuck Grassley (R-IA): If we start over again, you know, it’ll probably be more incremental, probably less controversial and maybe get done, but it still will take time to do that. [Conference call, 8/13/2009]

- Sen. Joe Lieberman (I-CT): There’s no reason we have to do it all now, but we do have to get started. [CNN, 8/23/2009]

- Sen. Richard Lugar (R-IN): I would advise the president that the — bringing up of the health care situation in the midst of recession…And therefore he ought to postpone the decision…For the moment, let’s clear the deck and try it again next year or in subsequent times. [CNN, 8/23/2009]

Yesterday’s revised deficit projections have given conservatives an additional argument for paring down existing legislation. Sen. Lamar Alexander (R-TN) issued a statement arguing that the higher projections were “a flashing red light for any health care proposal that doesn’t reduce the cost of health care for Americans and their government,” and Rep. Dave Camp (R-MI), the ranking Republican on the Ways and Means Committee, declared that “if the House Democrats’ unaffordable $1 trillion health care bill wasn’t dead before, it should be now.”

A smaller health reform package would do little to reduce health care costs and increase access to affordable health care coverage. In fact, health care costs are the long-term driving force in federal and state budgets and represent the single most important factor “influencing the Federal Government’s long-term fiscal balance.” Health care reform that begins to lower the curve of health care spending is “the single most important step we can take to put the Nation on firm fiscal footing.” Scaling down legislation, would not only fail to address the long term cost challenge, it “basically means gutting the benefits that would go to the working and middle class,” the New Republic’s Jonathan Cohn points out. “In other words,” Cohn says, “it would help fulfill the fear many of these voters already have and that opponents of reform have tried hard to stoke: That reform doesn’t have much to offer the typical middle-income American.” As the late Ted Kennedy observed in a recent article for Newsweek, “Incremental measures won’t suffice anymore. We need to succeed where Teddy Roosevelt and all others since have failed. The conditions now are better than ever.”

Republicans Introduce Another Health Care Alternative, What Was Wrong With The Other Four?

In today’s POLITICO, Rep. Tom Price (R-GA) celebrates the 44th anniversary of Medicare by arguing that “nothing has had a greater negative effect on the delivery of health care than the federal government’s intrusion into medicine through Medicare.” Price joins a long-line of Republicans who have historically opposed a program that has dramatically improved “the health of the elderly population,” increased “life expectancy,” and improved the financial security of millions of seniors.

A recent Commonwealth Fund study found that “compared to people with private insurance, Medicare enrollees have greater access to care [and] fewer problems with medical bills.” Their report adds that this finding is significant, considering that those Americans on Medicare represent a demographic that is more likely to be in poor health and to have lower incomes. Elderly Medicare beneficiaries also reported “greater overall satisfaction with their health coverage” and Medicare is so popular that most Americans support expanding its coverage to individuals aged 55 to 64.

But Price reaches deeper into the reactionary rhetoric of the 1960s, to argue that “the proposal before the House would hand over to Washington nearly every decision that should be made by patients and their physicians” before proposing yet another Republican alternative to the Democratic initiative. The new “Empower Patients First Act” is almost identical to the The Patient’s Choice Act, Commonsense Health Care Reform to Lower Costs and Increase Access and Quality at a Price Our Country Can Afford, Improving Health Care for All Americans Act and Health Care Freedom — which begs the question: What was wrong with the other four bills?

Like it’s predecessors, this legislation would break-up employer-based coverage, endanger the coverage of Americans with pre-existing conditions, and drive-up health care spending:

- “Creating tax incentives for consumers to purchase insurance on the individual market, encouraging states to assist consumers with pre-existing conditions”: This proposal breaks up the employer-pool by encouraging younger workers (who can find cheaper coverage in the individual market) to opt out of their current coverage and purchase insurance elsewhere. The departure of healthy workers from employer insurance pools would drive up average health costs for employer based plans and force workers to opt out entirely. This unravels employer health insurance for Americans who prefer it. Younger, healthier people could find cut-rate insurance on the individual market – as long as they stay young and healthy! Since the bill lacks any adequate consumer protections — like requiring insurers to offer coverage to Americans with pre-existing conditions — insurance companies operating in the unregulated individual market would continue rescinding or denying coverage and increasing premium rates.

- “In order to provide coverage for Americans who have pre-existing conditions, the Republican plan proposes giving states incentives…to establish high-risk insurance pools”: Nationwide, high-risk pools cover fewer than 200,000 people. Often, enrollees face high premiums and are denied benefits for treatments related to their preexisting conditions— the very thing the plan will help. Because these pools will be full of only sick people, covering all high-risk Americans through these pools is likely to be prohibitively expensive. According to the Tax Policy Center, using high-risk pools “to prevent large losses in insurance coverage among the sick and needy could …[cost] on the order of $1 trillion over ten years given projected health care pay-costs.”

- “Republicans are also proposing to expand the individual market by creating pooling mechanisms such as association health plans and individual membership accounts”: In theory, Association Health Plans (AHP) are intended to implement a laudable goal: allow small employers to pool their risk nationally so they can get the same economies of scale and negotiating power as large employers. But in reality, Association health care arrangements would allow businesses with healthier employees to pool risk, while excluding firms with sicker employees.

- “Consumers would also be able to shop for insurance across state lines”: Allowing insurers to sell policies across state lines would allow companies to avoid state consumer-protection laws and solvency requirements. Insurance companies “would have little incentive to continue doing business” under certain state rules which “require that companies issue coverage to all new customers and not set higher rates for people who are already sick.” Companies will charter in states with scarce regulations, and will no longer have to provide mental health parity, cancer screenings, or abide by regulations that “limit the rates that can be charged to higher-cost consumers and that limit who can be excluded for a health plan.

- “The Republican plan also proposes reforming Medicaid and the State Children’s Health Insurance Program (SCHIP) by giving beneficiaries the option of getting a voucher to purchase private insurance”: Republicans would take some beneficiaries out of Medicare and CHIP and leave them in the hands of private insurers (in the individual market). But how would this swap control costs? Legislators had proposed “premium payment” support back in the 90s — that is, subsiding the purchase of private coverage — and analysts have concluded that the only way to control costs is to provide a “premium payment” that depreciates every successive year. In other words, the voucher may start at “100% of the Medicare benefits on average” in 2009, but it will diminish as health care costs increase. According an analysis by the National Academy of Social Insurance of the Breaux/Thomas premium support proposal, federal subsidies would not keep up with growing insurance premiums and could relegate “lower-income beneficiaries to lower-cost and possibly lower-quality plans.”

- “Our legislation is paid for. By requiring a 1 percent annual step-down in discretionary spending, plus other efficiencies”: The Republicans had proposed this “cost saving” measure in their alternative budget. As Pat Garofalo explained, an across the board cut would allow inflation to eat away at vital funding for programs like Head Start, Pell Grants and the entire public health infrastructure, and make cuts without any regard to merit.

- “The Republican plan also addresses the issue of medical liabilities that doctors face”: While medical malpractice reform is an important issue, malpractice costs represent only 0.46 percent of total health care expenditures. Republicans attempt to group the larger problem of practicing too much defensive medicine with liability reform, but as Kate Steadman explains, “the research that has been conducted indicates, for the most part, that defensive medicine has little effect overall and that states with tort reform only have slightly lower rates of spending than those without.” For instance, after Texas passed its landmark tort reform legislation in September 2003, the state continued to grapple with the highest uninsured rate in the nation. As the Houston Chronicle points out, “malpractice issues are a small scab on Texas’ ailing health care system. The cancer is the number of uninsured. Increasing the number of doctors and specialties only does so much good when many Texans can’t afford to make an appointment.”

House Republicans Confused About Their Health Care Alternative

As Republicans work to derail the President’s health care reform effort, they seem uncertain about their own health care agenda. After agreeing to “develop real solutions to improve our health care system” in February, pledging to “lead the effort to make health care work for Americans” in March, insisting that “no report or headline can take the place of a comprehensive plan” in June, and arguing that the Republican plan is “actually much more detailed than their [Democratic] plan has been” in July, Rep. Roy Blunt (R-MO), chair of the GOP Health Care Solutions Group, is unsure if Republicans want to fix health care through legislation.

Sens. Tom Coburn (R-OK) and Richard Burr (R-SC) introduced the Patients’ Choice Act during HELP Committee mark-up, but House Republicans have yet to rally behind a single alternative or offer any substantive details or legislative language. On Wednesday, Blunt said, “Our bill is never going to get to the floor, so why confuse the focus? We clearly have principles; we could have language, but why start diverting attention from this really bad piece of work they’ve got to whatever we’re offering right now?”

But today, Rep. Eric Cantor (R-VA), the Republican whip, suggested that Republicans would divert “attention” from the Democrats’ plan. “We have plenty of plans, we have a plan out there, we have legislation out there…we will have a bill, and we have bills”:

We will have a bill, and we have bills, I mean this is what I don’t understand about the question, we have bills there is a Republican plan out there …will it be in the form of an amendment, will it be in the form of a bill. I mean we have several bills out there, with pay-fors, with a vision and direction for where we need to go … We’ve got plenty of alternative bills out there, I mean this is where I think some of the confusion lies is that the Republican alternatives are numerous.

Watch a compilation:

Blunt and Cantor, who routinely misrepresent and fear-monger about the Democratic proposal, also blamed Democrats for their own failure to produce legislation, falsely suggesting that “the majority would not let us offer our ideas…we can’t bring our ideas forward if they won’t have the meetings to let us bring them forward.”

In lieu of detailed legislation or any meaningful proposal to pay for reform or lower overall health care spending, Republicans have offered glossy talking points and so-called “principles for reform.” While they claim to support the existing employer-based system of coverage and “allowing Americans to keep what they have,” a close examination of their half-baked proposals suggests that Republicans would only break-up employer-based coverage, endanger the coverage of Americans with pre-existing conditions, and drive-up health care spending.

GOP Health Solutions Group Admits They Have No Solutions For Crisis

Congress is working to pass comprehensive health reform legislation that builds on the employer-based health care system and lowers the growth of health care spending. But Republicans are trying to slow down the effort and mischaracterizing reform as a costly and ultimately ineffective endeavor that would expand government health care, take away Americans’ existing coverage, ration care, and contribute to run-away government spending.

Last month, Republicans promised to introduce their own health care alternative, but are now “suggesting no such bill will be introduced.” As Rep. Roy Blunt (R-MO), chairman of the GOP Health Solutions Group explained, “Our bill is never going to get to the floor, so why confuse the focus? We clearly have principles; we could have language, but why start diverting attention from this really bad piece of work they’ve got to whatever we’re offering right now?” But a close examination of the so-called principles in The Patient’s Choice Act, Commonsense Health Care Reform to Lower Costs and Increase Access and Quality at a Price Our Country Can Afford, Improving Health Care for All Americans Act, Health Care Freedom — suggest that Republicans would only break-up employer-based coverage, endanger the coverage of Americans with pre-existing conditions, and drive-up health care spending.

Generally, these alternatives claim to expand access by giving Americans a tax credit to purchase health care coverage outside of the employer based system and control health care spending by capping awards for malpractice claims, and eliminating “waste, fraud, and abuse” from the system:

The Unraveling of Employer-Based Coverage:

Breaks-up employer pools, doesn’t offer viable alternative.

The Patient’s Choice Act eliminates the exclusion and taxes the full value of an individual’s employer-sponsored coverage. The other alternatives don’t specify how they would treat the exclusion. Still, all of these proposals break up the employer-pool by encouraging younger workers to opt out of their current coverage and purchase insurance elsewhere. The departure of healthy workers from employer insurance pools would drive up average health costs, forcing more workers to opt out entirely. This unravels employer health insurance for Americans who prefer it.

Endanger The Coverage Of Americans With Pre-Existing Conditions:

After losing employer-based coverage, Americans will have no place to go.

All four Republican plans would offer Americans a tax credit varying from $2,000 – $2,290 per individual and $5,000 – $5,700 for families. Uninsured Americans or those who opt out of their employer-sponsored coverage could either purchase insurance through voluntary state based exchanges, associations, high risk pools or across state lines (presumably in the individual market). Unfortunately, none of these options provide viable alternatives for the 56 million non-elderly Americans struggling with diseases like cancer and diabetes who are now covered through their jobs. Under the Republican plans, insurance companies could still “cherry pick” only those individuals for coverage who do not have costly health conditions.

Voluntary exchanges are not adequate:

If a state fails to establish an Exchange, then Americans will be left at the mercy of the individual market — which the alternatives do not explicitly regulate. Plans in the individual insurance market cost less but also cover less, and provide inadequate safeguards against insurers who refuse to cover patients with pre-existing illnesses, deny coverage outright, or engage in other discriminatory practices. As Elizabeth Edwards points out, “nine out of every ten people seeking individual coverage on the private insurance market never got it. Insurers will disqualify you for just taking certain medicines because of the possibility of future costs…and insurers make it a practice to deny coverage to individuals in high risk occupations, such as firefighting, lumber work, telecom installation, and pretty much anything more risky than working in an office.”

Association health care plans drive-up costs, exclude Americans with pre-existing conditions:

In theory, Association Health Plans (AHP) are intended to implement a laudable goal: allow small employers to pool their risk nationally so they can get the same economies of scale and negotiating power as large employers. But in reality, Association health care arrangements would allow businesses with healthier to pool risk, while excluding firms with sicker employees.

A Congressional Budget Office study estimates that “4 out of 5 small businesses and their workers would see their premiums increase. CBO based this estimate on its assumption that AHPs could save money and encourage small businesses to join only by avoiding current state benefit mandates and by selecting out healthier groups and individuals. Those left behind in the state-regulated market would be less healthy and more in need of comprehensive coverage, creating an adverse selection risk spiral that would drive up the cost of coverage.”

High-Risk Pools provide costly and inadequate coverage:

The Health Care Freedom plan proposes to cover people denied insurance though “high-risk pools.” Nationwide, high-risk pools cover fewer than 200,000 people. Often, enrollees face high premiums and are denied benefits for treatments related to their preexisting conditions— the very thing DeMint thinks the plan will help. Because these pools will be full of only sick people, covering all high-risk Americans through these pools is likely to be prohibitively expensive. According to the Tax Policy Center, using high-risk pools “to prevent large losses in insurance coverage among the sick and needy could …[cost] on the order of $1 trillion over ten years given projected health care pay-costs.”

Purchasing plans across state lines drives up costs:

The Health Care Freedom Act claims to expand coverage by allowing Americans to purchase coverage across state lines. But DeMint’s plan would undermine the patient safeguards that do exist under many law by letting insurers to sell across state lines and avoid state consumer-protection laws and solvency requirements. Specifically, under DeMint’s plan, insurance companies “would have little incentive to continue doing business” under certain state rules which “require that companies issue coverage to all new customers and not set higher rates for people who are already sick.” Companies will charter in states with scarce regulations, and will no longer have to provide mental health parity, cancer screenings, or abide by regulations that “limit the rates that can be charged to higher-cost consumers and that limit who can be excluded for a health plan.

Fail To Control Skyrocketing Health Care Costs:

No mechanism to control skyrocketing health care costs.

Only the Patients Choice Act specifies that it would pay for its expansion of coverage with the money from the tax exclusion. DeMint laughably finances the Health Care Freedom Act by “rescinding billions in Wall Street bailouts.” But since the government has already distributed the great majority of the funds, DeMint would not have enough money to finance significant reform. For instance, experts estimate that the TARP fund has only $63 billion left that is still uncommitted.

All of the plans rely on malpractice reform, promoting prevention and wellness, and eliminating waste, fraud, and abuse as a way to reduce long-term spending. These savings are not likely to be scored by the Congressional Budget Office and would have little effect outside of the context of comprehensive reform that covers every American. The proposal of tort reform, for instance, addresses only 0.46 percent of total health care expenditures.

Republicans Stall Health Mark-Up By Offering Inadequate Alternative Plan

During yesterday’s mark-up of the HELP committee’s legislation, Sens. Tom Coburn (R-OK) and Richard Burr (R-NC) re-introduced their Patients’ Choice Act proposal as an alternative to the Kennedy bill. Coburn, who is also actively promoting the plan on his Twitter account, introduced the 4-week-old proposal as a deficit neutral solution that would offer every American affordable coverage without disrupting the employer-based system.

Using Sen. John McCain’s (R-AZ) health care plan as a foundation, the Patients’ Choice Act would tax the full value of employer health benefits, issue refundable tax credits ($2,290 per individual or $5,710 per family), and expand the use of Health Savings Accounts. States are encouraged to “establish rational and reasonable consumer protections” by forming State Health Insurance Exchanges to give Americans a choice of “different” private “health insurance policies” and issue standard benefits, offering “coverage to any individual regardless of age or health.”

Watch a compilation of the discussion:

Coburn and Burr were making a two-part argument: (1) since the plan still allows employers to deduct health care benefits, they won’t have any new incentives to drop coverage. The employee can use the tax credit to pay for the new taxes (once the exclusion is lifted) and her/his contribution (2) in the event that the employer drops coverage, an employee would be able to combine the extra increase in pay with the tax credit and purchase health insurance coverage in the voluntary state-run Exchange.

But most of these assumptions don’t hold up to close scrutiny:

- Small to medium sized employers would likely drop coverage: Equalizing the tax treatment of employer and individual plans entices healthy workers to buy cheaper but less substantive insurance in the Exchange — should one be available — or the individual health insurance market. The departure of healthy workers from employer insurance pools would drive up average health costs, forcing more workers to opt out entirely. The entire employer health insurance system could unravel, ending this as an option for Americans who prefer it.

- Why would states voluntarily establish an Exchange? Coburn argues that an Exchange would lower health care costs and lead to greater investment in chronic care management and preventive care. And while offering comprehensive coverage through an Exchange would likely save money in the long term, most state governments have little capital to invest in establishing the new system (they are also required to balance the budget every year). If the lure of potential savings is so great, why haven’t states already established Exchanges?

- What if a state doesn’t establish an Exchange? If a state fails to establish an Exchange, then Americans will be left at the mercy of the individual market — which the act does not explicitly regulate. Plans in the individual insurance market cost less but also cover less, and provide inadequate safeguards against insurers who refuse to cover patients with pre-existing illnesses, deny coverage outright, or engage in other discriminatory practices. As Elizabeth Edwards points out, “nine out of every ten people seeking individual coverage on the private insurance market never got it. Insurers will disqualify you for just taking certain medicines because of the possibility of future costs…and insurers make it a practice to deny coverage to individuals in high risk occupations, such as firefighting, lumber work, telecom installation, and pretty much anything more risky than working in an office.”

- Will any reduction in offering coverage translate into significantly higher wages, equal to the coverage costs being dropped? While most economists believe that employers will eventually transfer the value of health benefits into higher wages, the increase won’t be immediate. If the Patients’ Rights Act does not mandate the transfer, some employers may voluntarily increase wages, but most won’t have an incentive to fully make up the difference.

- How are the tax credits indexed? If a state establishes an adequate Exchange and the employer transfers the full value of the health benefit into higher wages, the proposal’s tax credit may assist a limited number of families who currently lack health insurance. But will the growth of the credit keep up with medical costs? While such details are unavailable, both Coburn and Burr enthusiastically supported McCain’s tax-credit proposal and presumably endorsed his indexing mechanism. McCain indexed the growth of his initial tax credit to inflation, not premiums. Since premiums grow at a higher rate than inflation, McCain’s proposal would have imposed an estimated $3.6 trillion tax increase on workers.

On the whole, the Patients’ Choice Act fails to guarantee adequate, affordable and accessible coverage and it does does little, if anything, to control health care costs. Americans who can find coverage through a state-based health insurance Exchange would be guaranteed coverage — insurers would not be able to exclude individuals with pre-existing conditions — but it’s unclear that they would be able to afford it. While a summary of the bill includes European-style “non-profit independent board ” that “would penalize insurance companies that cherry pick healthy patients while rewarding companies that seek patients with pre-existing conditions,” the bill does nothing to prevent higher prices based on sex, age, occupation, or medical condition. To finance these higher prices, Americans can rely on the meager tax credits they’ve stashed away in a Health Savings Account.

GOP Health Working Group Unveils New Health Care Plan Talking Points

The Republicans are introducing yet another alternative to the Democrats’ health care plan. This leadership-backed proposal — developed by Rep. Roy Blunt’s (R-MO) ‘working solutions’ health care group — rhetorically compliments earlier alternatives but offers little in the way of solutions. The Republicans have issued a set of talking points, not a comprehensive reform proposal.

Rather than focusing on reducing the growth of health care costs and extending coverage to every single American, for instance, Republicans are proposing implementing comprehensive “medical liability reform” — the total cost of malpractice constitutes just 0.46 percent of total health care expenditures — eliminating “waste fraud and abuse,” providing “new refundable and advanceable tax credits,” and improving health savings accounts.

The focus is messaging, not policy. During multiple appearances on MSNBC for instance, Rep. Dave Camp (R-MI) framed the Republican alternative as “an American plan,” implying that the Democrats are proposing an anti-American plan or perhaps an Italian health care reform plan. Pressed for details of the Republican proposal, Camp could only offer “we are going to try to incentivize people to go into the health insurance market and get coverage.”

Also on MSNBC, Rep. Eric Cantor (R-VA) attempted to co-opt the President’s language by insisting that the Republican alternative would provide Americans with greater choice. Pressed by the Nation’s Katrina vanden Heuvel on how he can oppose giving Americans the choice of a government health care plan while receiving health care from the government, Cantor demurred.

Watch a compilation:

On the whole, the plan does very little to cover the uninsured, protect individuals from predatory insurance practices or extend coverage to more Americans. The draft “encourages states to use new and existing programs to guarantee all Americans, regardless of pre-exising conditions or past illnesses, have access to affordable coverage” and helps Americans eligible for employer-based plans to enroll in coverage.

Given the dearth of ideas, it’s no surprise that “the public doesn’t exactly have a tremendous amount of confidence in Republican leaders on the issue.” According to a new Gallup poll, only “34% are confident that GOP leaders Congress will make the right decisions about health care reform — less than the insurance companies (35%) or the pharmaceutical companies (40%).”

If Frank Luntz’s Memo Were A Bill

In an effort to have something to talk about over the Memorial Day recess, so-called Republican party moderates Reps. Mark Kirk (R-IL) and Charlie Dent (R-PA) have unveiled legislation protecting Americans from the deficiencies of foreign health care systems:

By enacting the Medical Rights Act, Congress will ensure Americans keep the choice, quality and access currently denied citizens of the U.K. and Canada (Canadian law actually bans patients from paying for care themselves, even if denied care).

This is the consequence of taking Frank Luntz’s memo too seriously. Luntz uses straw-man arguments against British and Canadian health care to attack the Democrats’ proposal and Kirk and Dent are targeting their legislation against a non-existent proposal. Consider some of this language:

- In addition, this section prevents the federal government from regulating the hiring practices of organizations that provide health care, such as hospitals, clinics, and the like.

- This section prohibits the federal government from regulating privately supported medicine, legally protecting the doctor-patient relationship against federal controls or rationing for care not paid for by the federal government.

- This section also protects the rights of patients to buy health insurance, or make any other arrangements to pay for their own health care.

Luntz writes that “it’s not enough to just say what you’re against. You have to tell them what you’re for.” If your only goal is to stay ‘on message’ and to convince your constituents that you are in fact an advocate of (or against) something (even if that something isn’t real), then this is what you produce. Of course, if your constituents are literate they’ll just laugh at you.

GOP Health Care Plan: Medicare Is Run With ‘The Incompetence Of Katrina’

The main thrust of the Republican health care bill is an argument against greater government spending on health care. By completely repealing the employer-tax exclusion for health care benefits, they’re redistributing money already in the system and giving it to Americans in the form of refundable tax credits.

The argument is this: after the employer exclusion is repealed, employers will convert the money they spend on your health care benefits into higher wages and you’ll be able to use that increase and the ($2,290 per individual or $5,710 per family) refundable tax credit to purchase health care coverage in the new State Health Insurance Exchanges or the existing individual market.

Since everyone would have “universal access” to coverage, greater government involvement in health care would be counterproductive. Government rots the system, and Americans know this, they argue:

In solving our health care crisis, Americans already know that government will not work…Patients should be able to choose from a variety of private insurance plans. The Federal government would run a health care system — or a public plan option — with the compassion of the IRS, the efficiency of the post office, and the incompetence of Katrina.

Therefore, greater government involvement must not only be avoided, but existing government involvement should be phased out. Low-income families with dependent children should shift out of Medicaid and into “higher quality private plans through direct assistance that will be coupled with a tax credit.” Medicare Advantage — the program that contracts with private insurers — should be “reformed” and possibly expanded.

But today, the Commonwealth Fund released a new survey indicating that “elderly Medicare beneficiaries reported greater overall satisfaction with their health coverage, better access to care, and fewer problems paying medical bills than people covered by employer-sponsored plans.” “The findings bolster the argument that offering a public insurance plan similar to Medicare to the under-65 population has the potential to improve access and reduce costs,” the organization concluded:

- Medicare beneficiaries report easier access to physicians. Ten percent of Medicare beneficiaries’ physicians did not accept their insurance, compared with 17 percent of respondents with employer-sponsored plans.

- Medicare beneficiaries are less likely to report not getting needed services. Twelve percent of elderly Medicare beneficiaries reported going without care, such as prescribed medications or recommended tests, because of cost restraints. Of individuals with employer-based plans, 26 percent reported experiencing these cost/access issues.

- Medicare beneficiaries are sicker and poorer but report fewer medical bill problems.

Medicare beneficiaries were less likely to report a medical bill problem than those covered by employer plans.

Within our hybrid public-private system of coverage, public plans compliment private insurers — providing services to vulnerable populations more efficiently. Today, talk of “government-takeover” conjures up images of health care rationing in Great Britain or Canada. If, however, Democrats are able to shift the frame of reference to an expansion and improvement of Medicare, then they may very well win this debate.

Questions For Paul Ryan About The Patients’ Choice Act

Rep. Paul Ryan (R-WI) released a new Republican health care plan (The Patients’ Choice Act) that’s fraught with questions and contradictions.

We pose the following queries:

- Are the State Health Insurance Exchanges voluntary? The two-page summary notes that “The Patient’s Choice Act of 2009 would encourage states to establish rational and reasonable consumer protections.” The more detailed summary says, “The Patients’ Choice Act would ensure that the federal government partners with states to create State Health Insurance Exchanges.”

- Is the GOP embracing European-style health care boards? To control premiums the report suggests “a model that works in several European countries.” The “independent board” would “penalize insurance companies that cherry pick healthy patients while rewarding companies that seek patients with pre-existing conditions.” How would this ensure affordability?

- Are the tax credits adequate? The tax credit for families is $5,700, far below the average $12,300 that families are paying today. More importantly, how will the tax credits grow over time? Will they keep up with skyrocketing health care costs?

- What happens to the individual health insurance market? The plan establishes State Health Insurance Exchanges outside of the existing individual market. How will the individual market be regulated? Will insurers be able to offer standard benefit packages within the State Health Insurance Exchange and more porous policies in the individual market?

Republicans Unveil Alternative Health Care Plan

Today, Rep. Paul Ryan (R-WI) and Sen. Tom Coburn (R-OK) unveil the Patient Choice Act, their alternative to President Obama’s health care reform initiative. Using Sen. John McCain’s (R-AZ) health care plan as a foundation, the new plan proposes taxing the full value of employer health benefits, issuing (inadequate) refundable tax credits — of $2,290 per individual or $5,710 per family — and expanding the use of Health Savings Accounts. (DOWNLOAD A SUMMARY OF THE PLAN HERE AND HERE)

States are encouraged to “establish rational and reasonable consumer protections” by forming State Health Insurance Exchanges to give Americans a choice of “different” private “health insurance policies” and issue standard benefits, offering “coverage to any individual regardless of age or health.”

The plan privatizes the health care system without controlling health care spending. Employers will react to the elimination of the tax exclusion by dropping some Americans from their employer-sponsored health plans and the Republicans build an inadequate safety net to catch the newly uninsured. Americans will have the option of purchasing coverage in the new State Health Insurance Exchanges, should the state choose to establish it. But here, the same problems that plagued McCain’s health care plan are also evident in this proposal. The Republicans protect private health insurer’s monopoly over coverage, but provide no safety net or affordability measures.

Americans can choose a private health insurance plan from the State Health Insurance Exchanges, but that doesn’t mean they’ll be able to afford it. The Republican proposal allows private plans to charge sicker Americans higher rates for coverage. While they include European-style “non-profit independent board ” that “would penalize insurance companies that cherry pick healthy patients while rewarding companies that seek patients with pre-existing conditions,” they do nothing to prevent higher prices based on sex, age, occupation, or medical condition. To finance these higher prices, Americans can rely on the meager tax credits or money they’ve stashed away in a Health Savings Account.

All in all, the plan is dead on arrival. The idea here is to strengthen the private insurer’s monopoly over coverage while doing very little to lower overall health care spending. It’s an alternative steeped in reactionary ideology and political purpose, not a viable solution to the health care crisis.

Deconstructing Frank Luntz’s Obstructionist Health Care Reform Memo

GOP wordsmith Frank Luntz has authored a new messaging memo defining the Republican rhetoric on health care reform (READ FULL MEMO HERE). The memo is titled “The Language of Health Care 2009″ and it lays out the argument for “stopping the Washington takeover” of health care.” But if fully implemented it may very well stop health care reform:

This document is based on polling results and Instant Response dial sessions conducted in April 2009. It captures not just what Americans want to see but exactly what they want to hear. The Words That Work boxes that follow are already being used by a few Congressional and Senatorial Republicans. From today forward, they should be used by everyone.

Luntz warns that “if the dynamic becomes ‘President Obama is on the side of reform and Republicans are against it,’ then the battle is lost and every word in this document is useless.’” The trouble is, it already is useless. Because rather than challenging the tenets of American reform proposals, Luntz establishes a straw man argument against a non-existent health plan.

Buried amongst the usual rhetoric about government-run health care is Luntz’s predictable contradiction: he instructs Republicans to “be vocally and passionately on the side of REFORM” but then urges GOP lawmakers to misrepresent and obstruct any real chance of passing comprehensive legislation.

“Humanize your approach,” but argue that health care reform “will result in delayed and potentially even denied treatment, procedures and/or medications.” “Acknowledge the crisis” but ask your constituents “would you rather… ‘pay the costs you pay today for the quality of care you currently receive,’ OR ‘Pay less for your care, but potentially have to wait weeks for tests and months for treatments you need.”

In other words, say there is a crisis but then argue that health care reform would lead to “the government setting standards of care,” government “rationing care,” and would “put the Washington bureaucrats in charge of health care.” “This plays into more favorable Republican territory by protecting individual care while downplays the need for a comprehensive national plan,” the memo states.

Readers are also instructed to conflate Obama’s fairly moderate hybrid approach to reform (i.e. building on the current private/public system of delivering health care) with “denial horror stories from Canada & Co.”

Focus on timeliness — “the plan put forward by the Democrats will deny people treatments they need and make them wait to get the treatments they are allowed to receive” — and argue that Republicans will provide “in a word, more: ‘more access to more treatments and more doctors…with less interference from insurance companies and Washington politicians and special interests.’”

But that’s the major problem with Luntz’s memo: it tries to obstruct health reform by ignoring what Obama is actually offering. Instead, Luntz is attacking an easy extreme — what he wishes the Democrats were proposing — and pretending that the Republicans actually have some kind of health care solution (the memo instructs Republicans to focus on targeting waste, fraud and abuse).

So it’s up to the administration to define health care reform as a way to lower health care costs through competition, expand coverage to all Americans and give everyone a choice of health care providers and health insurers. If the Democrats do this successfully, then Republicans will look like the bureaucratic obstructionists that they warn the public about.

READ FULL MEMO HERE