The Wonk Room

George Stephanopoulos’ Key To Health Reform: What’s The Best Way To Sacrifice The Public Option?

Now that the White House is “signaling publicly” that it’s “ready to take charge of the health care debate,” ABC’s George Stephanopoulos offers this dose of hardy centrist conventionalism:

Here are the five key sets of questions they have to confront, both in the Roosevelt Room and in their consultations with Congress:

1 – What is “death with dignity” for the public option? Is it better for the president to sacrifice it himself? Or convince Democratic leaders behind closed doors to come to him? Some will argue for taking the public option issue to the floor, passing it through the House and sacrificing it in conference – but once you’ve gone that far, it may be impossible for House Democrats to back down. So, giving it up on the front end in some fashion is likely the preferred option.

While the politics of the public option are obviously complex, the conventional Washington wisdom surrounding the process and means for achieving health reform is infuriating. Here, Stephanopoulos strategizes the different ways in which Democrats could abandon the President’s signature campaign issue, the most popular and one of the more important element of health care reform and the one “sliver” that has energized the President’s liberal base.

Stephanopoulos believes that rather than fight and defend good policy from the lies and smears of the right and find ways to push the option through, the administration should just give up and move to the center. After all, pleasing American “moderates” and conservatives, and of course the very actors — private health insurers — who have made reform so necessary in the first place, is the key to good politics.

This is Washington centrism at its finest and it mostly applies to Democrats.

Update From ABC's The Note:

WaPo Peddles Baseless Constitutional Attack on Health Reform

Perhaps inspired by Rep. Michelle Bachmann’s misinformed claims that the public option is unconstitutional, an op-ed in Saturday’s Washington Post makes the false claim that another key health reform provision is unconstitutional:

The Constitution assigns only limited, enumerated powers to Congress and none, including the power to regulate interstate commerce or to impose taxes, would support a federal mandate requiring anyone who is otherwise without health insurance to buy it. [...]

Significantly, in two key cases, United States v. Lopez (1995) and United States v. Morrison (2000), the Supreme Court specifically rejected the proposition that the commerce clause allowed Congress to regulate noneconomic activities merely because, through a chain of causal effects, they might have an economic impact. These decisions reflect judicial recognition that the commerce clause is not infinitely elastic and that, by enumerating its powers, the framers denied Congress the type of general police power that is freely exercised by the states.

For starters, the Post showed exceptionally poor judgment by choosing to publish the authors of this op-ed, right-wing attorneys David Rivkin and Lee Casey. The same duo labeled Amnesty International “un-American” after it criticized widespread human rights abuses at Guantanamo Bay, and they recently claimed that Bush-era DOJ memos authorizing the use of torture “prove we didn’t torture.”  Rivkin once claimed that President Bush had unilateral authority to use weapons of mass destruction on Russia. 

Saturday’s op-ed, however, is weak even even by Rivkin and Casey’s low standards.

In essence, the duo argue that Congress does not have the power to enact an individual mandate because such a mandate is “noneconomic” in nature.  Yet while they are correct that the Supreme Court has held Congress’ power to be more limited when it regulates outside of the economic sphere, their claim that insurance regulation is not “economic” is frankly absurd.

The provision Rivkin and Casey take aim at would require most uninsured Americans to buy a product — health insurance coverage — which pools thousands of people’s premiums together and pays those people’s medical costs as they become ill.  As Rivkin and Casey admit, the individual mandate would lower premiums nationwide by requiring more healthy individuals to buy into the system; while reducing the risk of catestrophic financial loss should a person who was previously uninsured experience catestrophic illness.  It is difficult to imagine a law which has a more obvious economic impact than a requirement that all Americans be insured.

Neither the Lopez nor the Morrison case, which Rivkin and Casey point to in their op-ed, support their claim that insurance reform is not economic in nature.  Lopez struck down a federal ban on guns in school zones; Morrison struck down a law providing federal remedies to the victims of violence against women.  Thus,  both cases involved activity that is far less economic in nature than the purchase of health insurance.  Neither carrying a gun nor committing an act of violence involve a sale, a market, or an exchange of something of value.  No employer hires workers simply to carry a gun into a schoolhouse; and there is little marketplace for cowardly acts of violence.

Simply put, Rivkin and Casey’s attack on health care reform has no basis in reality–and no grounding in the Constitution.  Even right-wing legal academics have dismissed it as entirely without merit.  Hopefully, next time these discredited attorneys submit a piece to the Washington Post, its editors will have the good sense to point them to a more appropriate publication.

Bachmann: Health Care Reform Is Unconstitutional

Speaking on Fox News last night, right-wing Congresswoman Michele Bachmann (R-MN) claimed that health care reform is unconstitutional:

It is not within our power as members of Congress, it’s not within the enumerated powers of the Constitution, for us to design and create a national takeover of health care. Nor is it within our ability to be able to delegate that responsibility to the executive.

Watch it:

Bachmann, however, is wrong about both the contents of the health care plan and the requirements of the Constitution. There is nothing in any of the health care bills under consideration which resembles a “national takeover of health care.” Conservatives like to use this language when referring to the public health option. Like other insurers, the public option would collect premiums from people who choose to buy into it, and then spend those premiums to insure these participants.

Had Bachmann bothered to read Article I of the Constitution before going on Fox, she would have learned that Congress has the power to “lay and collect taxes, duties, imposts and excises” and to “provide for….the general welfare of the United States.” Rather than itemizing specific subject matters, such as health care, which Congress is allowed to spend money on, the framers chose instead to give Congress a broad mandate to spend money in ways that promote the “general welfare.”

It’s unclear what the basis is for Bachmann’s claim that the public option is an unconstitutional delegation of power to the Executive. There is a 74 year-old decision — decided by the same right-wing Supreme Court which believed most of the New Deal to be unconstitutional — which holds that Congress could not simply grant President Roosevelt nearly limitless authority to do whatever he wanted in order to prevent “unfair competition.” But no one has proposed giving President Obama similarly unchecked authority over health care. Rather, pages 116-128 of the House bill that Bachmann will vote on provide extremely detailed instructions explaining how the Executive Branch must manage a public health plan.

It’s important to note just how radical Bachmann’s theory of the Constitution is. If Congress does not have the power to create a modest public option which competes with private health plans in the marketplace, then it certainly does not have the authority to create Medicare. Similarly, Congress’ power to spend money to benefit the general welfare is the basis for Social Security, federal education funding, Medicaid, and veterans benefits such as the VA health system and the GI Bill. All of these programs would cease to exist in Michele Bachmann’s America.

Cross-posted on ThinkProgress.

AHIP Attempts to Portray Doctors as Villains

Our guest blogger is Emma Sandoe, Health Policy Intern at the Center for American Progress

In recent weeks, the Obama administration has refocused its campaign on current insurance market practices as the cause of rising costs.

Attempting to shift the blame to doctors’ fees, Karen Ignagni and America’s Health Insurance Plans (AHIP) released a report yesterday on out-of-network physician billing. “No politician has asked how much is being charged,” Ignagni said. HR 3200 requires disclosure on out-of-network costs, reduces overpayments, and changes Medicare payment rates to doctors and hospitals.

The study compared out-of-network billing rates to Medicare rates. Out-of-network physicians are free to charge non-negotiated, often times higher rates. The study attempts to show the arbitrary nature of procedure pricing or as Dr. Uwe Reinhardt calls it, “lunacy”:

“Some out-of-network providers are charging exorbitant prices – several hundred or even over a thousand percent of the Medicare reimbursement for the same service in the same area. Recent examples: … $40,000 for a total hip replacement when Medicare would have paid $1,558.”

While physician fees are a part of the cost problem, this study does not show the role of private insurers in the billing process and fails to address in-network private insurance billing rates, which make up over 90% of claims. Including these lower in-network rates would undoubtedly prove that a vast majority of billing rates are lower than the excessive out-of-network rates.

Moreover, the procedures by the insurance industry are not comparable across Medicare and private insurers. Procedures such as hip replacement, coronary bypass, and cataract surgery are more common in the +65 year old population and oftentimes involve more expensive conditions in younger patients.

Highlighting Medicare as a comparison is deliberative. Back on the offensive, AHIP is resorting to their previous cost shift argument that the government reimburses too low forcing insurers to pick up the cost.

Bush Holdovers At Civil Rights Commission Attack Health Reform

In a self-congratulatory “EXCLUSIVE,” the Washington Times reports that a letter from the United States Commission on Civil Rights “says some little-noticed provisions in the House health care bill are racially discriminatory, and it intends to ask President Obama and Congress to rewrite sections that factor in race when awarding billions in contracts, scholarships and grants,”  but this “exclusive” buries the lede.  In truth, the only real news in the Washington Times story is hidden in just one paragraph:

The commission approved the draft language by a vote of 4-2, with two abstentions. Two Republicans and two independents voted for it, two Democrats voted against it, and two Republicans abstained. The letter needs to be approved again before being sent.

Once upon a time, the Commission played an essential role in enacting landmark civil rights legislation, visiting communities ravaged by segregation and Jim Crow to document widespread discrimination.  Today, however, it is little more than a dumping ground for opponents of civil rights from right-wing policy shops.

Although only four of the Commission’s eight members are presidential appointees chosen by George W. Bush, three quarters of its membership is controlled by the far right.  Indeed, the Commission’s two “independent” members–both chosen by Republicans in Congress–may be its most ideologically conservative.  They include Todd Gaziano, director of the right-wing Heritage Foundation’s legal policy shop, and Gail Hariot, who co-chairs one of the right-wing Federalist Society’s practice groups and who spearheaded the effort to pass California’s Proposition 209, a far-reaching ban on race-conscious laws in California.

And Gaziano and Hariot are hardly the only representatives from the right-wing policy community.  The Commission’s Bush-appointed Vice-Chair is Abigail Thernstrom, a leading opponent of civil rights laws who is a “scholar” with the American Enterprise Institute, a former Senior Fellow with the Manhattan Institute, and who serves on the board of the Institute for Justice, a radical libertarian law firm.  The Commission’s Staff Director, it’s most senior full-time staffer, is Martin Dannenfelser, a former vice-president with the Family Research Council–a virulently anti-gay organization which once claimed that gay men and lesbians view “pedophiles as the ‘prophets’ of a new sexual order.”

So the Washington Times’ big “exclusive” is that senior staffers at right-wing think tanks oppose health care reform.  Maybe next week, they’ll notice that the sky is blue.

GOP Health Plan Is Modeled on Banking Deregulation

Apparently incapable of coming up with a single new idea, House Republicans plan to release a health plan today which is plagiarized almost entirely from the McCain-Palin health plan that voters soundly rejected last November.  Amazingly, the “new” GOP plan even lifts McCain’s widely-panned proposal to deregulate the health insurance industry in exactly the same way the banking industry was deregulated over the last several decades.  As McCain promised during the 2008 campaign:

I would also allow individuals to choose to purchase health insurance across state lines. . . .  Opening up the health insurance market to more vigorous nationwide competition, as we have done over the last decade in banking, would provide more choices of innovative products less burdened by the worst excesses of state-based regulation.

Here’s how this “new” plan works:  Once upon a time, banks were governed by something known as “usury laws,” state laws which prohibited lenders from charging excessive interest to homeowners and other borrowers.  In 1978, however, the Supreme Court held that banks are only required to follow the usury laws of the state where they are “located,” effectively immunizing banks from the interest rate caps in each of the other 49 states.

The result was a race to the bottom where states competed to enact the least protective usury laws in order to coax the banking industry into relocating within their borders.  Eventually, South Dakota “won” this race by repealing its usury laws altogether, and Citibank rewarded South Dakota by moving its lending offices to that state.  The rest of the industry soon followed suit, immunizing itself from interest rate caps altogether by locating in places like South Dakota.

At a time when Americans are terrified of being denied care because of a preexisting condition, or even having their health insurance provider pull coverage the minute they get sick, the McCain-Palin/House GOP health plan calls for health insurers to have even greater latitude to deny coverage; and it does so by fully adopting the banking model’s approach to state regulation.  If the House Republicans are successful in enacting their plan, a short list of laws that would effectively cease to exist includes:

• Women’s Health: 49 states and the District of Columbia require health plans to cover reconstructive surgery after breast cancer, mammograms, and maternity stays;
• Fair Appeals: 44 states and the District of Columbia allow patients to appeal denials of coverage to an external review board;
• Preexisting Conditions: 38 states and the District of Columbia restrict how far into the past a insurance company can “look-back” to determine whether a patient is disqualified because of a preexisting condition;
• Healthy Children: 31 states require health plans to cover well child care.

The choice is clear.  President Obama has promised to cut health care costs, expand coverage and eliminate discrimination against Americans with preexisting conditions.  Conservatives have a very different vision.  They think that insurers “don’t need to be ‘kept honest’ by the government,” and they plan to dismantle many of the existing laws which Americans rely on to ensure that their medical conditions are covered.  We have already seen the cost of bank deregulation on the nation’s economy; it is truly mind boggling that conservatives want to do the same thing to health care.

STUDY: Without Health Reform, Premiums Will Increase Over 70% In The Next Nine Years »

An America without health care reform is an America where families face spiraling health insurance premiums, businesses drop coverage and trim benefits, doctors are denied objective information about the treatments they provide, and millions of Americans live just one medical emergency away from bankruptcy.

Those who oppose health reform are choosing to maintain this status quo.

A new paper from the Center for American Progress, “America Without Health Reform,” points out that, absent reform, average premiums (the cost of health insurance to families and businesses) are projected to rise more than 70 percent from 2010-2018, according to the Congressional Budget Office.

Read it here.

This cost growth will have cascading effects across the economy as businesses trim benefits and workers lose their coverage.

According to researchers at Harvard University, a mere 20 percent increase in premiums costs 3.5 million workers their jobs, causes millions more to move from full-time to part-time work, and cuts the average income by approximately $1,700. CBO predicts that this 20 percent increase will occur over the next four years.

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New Doctors Coalition Adds Voices Of Physicians To Health Care Reform

Our guest blogger is Nikhil Wagle, MD, co-founder of Doctors for America.

As doctors, we see the effects of our broken health system on our patients every single day. We have seen what happens when our patients are denied the care they need, or when they lack access to preventive care, or when they cannot afford their medicines. Doctors know what’s wrong with our health care system — and have ideas about how to fix it. And yet, when it comes to health reform, doctors voices have not been heard.

Doctors for America is working to change that. We are a grassroots organization that seeks to engage physicians in healthcare reform and give them a voice. Our current membership includes over 11,000 physicians from all 50 states, with more and more members every day. Our goal is to convey the ideas and experiences of physicians to achieve healthcare reform based on four key pillars:

1) affordable coverage
2) expanded access to care
3) high quality care
4) practice environments that allow physicians to focus on patient care.

Incorporating the experiences and perspectives of individual physicians is critical to fashioning a solution to our current healthcare crisis. Right now, we’re in the midst of a nationwide campaign to make physicians’ voices heard on health reform: Voices of Physicians. Over the past two weeks, more than 1,000 physicians have added their names to a national map to share their concerns about the healthcare system. As lawmakers put together health reform legislation, it is imperative that they know physicians’ priorities for reform. Voices of Physicians allows physicians from all across the country – the individuals who see our broken healthcare system firsthand each and every day –- to tell Congress and the public what concerns us most about the current healthcare system, and what can be done to allow us to take better care of our patients.

At Doctors for America, we believe that physicians must continue to make our voices heard on critical issues in health reform. Over the next six weeks, we will launch a series of one-week campaigns, each focused on a specific issue of relevance to the health reform effort. The goal will be to educate physicians and the public about these issues and allow the opinions of physicians to be conveyed to Congress and the media. Together, we will continue to build a strong coalition of physicians and patient and professional organizations committed to health care reform.

Ask your doctor how he or she would fix our health care system — and tell them to add their voice to the map. And please visit us at www.drsforamerica.org for more information or to get involved.

Disgraced Hospital Administrator Rick Scott Takes Another Shot At Health Care Reform

Rick Scott, the disgraced and fraudulent former hospital administrator, is back on the air with a new ad attempting to block effective health care reform.

Watch it:

These ads attempt to conflate the current health care reform proposals before Congress with the government-run health care systems in other parts of the world. This is wrong.

Current reform proposals would let families keep their current doctor and insurance plan, let them choose a public insurance plan if they prefer, give doctors and patients better information to make healthy choices, bring down the costs that are burdening businesses and family budgets, and increase access to insurance for the 52 million Americans without coverage.

Since the beginning of the recession, over 730,000 workers have lost the insurance they once had through their jobs. In many, when they lose coverage, their spouses and children lose coverage also. People who have a history of medical conditions are turned away from private health insurance plans, or face higher co-pays and deductibles.

Rick Scott’s only answer to this spiraling crisis is to block reform and distort the solutions offered by others.

Sally Pipes Touts Letter To The Editor As Proof Of Academic Credentials

Yesterday, during a Congressional hearing on health care reform, Rep. Bruce Braley (D-IA) challenged health care crisis denier Sally Pipes on her academic credentials. Pipes assured Braley that she was indeed a health care “scholar” who had been published in the peer-reviewed journal Health Affairs:

BRALEY: Have you published any peer reviewed treatises in a journal of economics on health care policy?
PIPES: Yes.

BRALEY: Can you give us some examples?

PIPES: I’ve done some things in Health Affairs over the past and –

BRALEY: But can you just identify the scholarly journal that’s a peer reviewed journal of economics?

PIPES: Well, Health Affairs is, I think. I don’t know whether you would say it is.

UNINDENTIFIED: It’s peer reviewed.

Listen:

Searching ‘Pipes’ in the author field of the Health Affairs website yields one result — a Letter to the Editor titled ‘Piping A Different Tune.’ In the letter, Pipes responds to what she describes as a “hostile” book review of Who Killed Health Care: America’s $2 Trillion Medical Problem–and the Consumer Driven Cure:

The author of the review responds to Pipes, highlighting her not-so-academic approach to policy: “Sally Pipes’ riposte to my review of Regina Herzlinger’s book, Who Killed Health Care, offers rhetoric and faith-based posturing but little evidence. Whilst it can be intellectual fun and politically advantageous to repeat the principles of bottom-up, makret oriented health care, the practice is usually inflationary, inefficient, and inequitable.”

Capping the Tax Exclusion for Employment-Based Health Coverage: Why Obama Is Not Going Back On His Word »

Yesterday, during an appearance on Fox News Sunday, Austan Goolsbee, a member of the White House Council of Economic Advisers refused to comment on whether the administration is seriously considering taxing health benefits to finance health care reform:

That is not in the President’s budget…it does not include this provision. This appears to be coming from the administration and representatives of the administration who went to Congress and said we are open to all ideas to pass health care reform…there are some people in Congress who are pushing for this, but that is not the President’s idea….he is open to all ideas. He said, let’s put all ideas on the table. That is not the president’s idea. It is not in his health care plan, it is not in his budget.

Watch it:

The press has argued that the “proposal is politically problematic for President Obama,” since it is similar to one he denounced in the presidential campaign as ‘the largest middle-class tax increase in history.” But in reality, the the consequences of Obama’s proposal are quite different.

The problem was never the tax exclusion itself. Rather, progressives were concerned about what would happen to individuals who lost their employer-sponsored health coverage once the tax code changed. McCain proposed replacing the employee deduction with a one-size-fits-all tax credit without reforming the health insurance market or expanding access to group coverage. Under his plan, Americans who lost their employer coverage would have had to fend for themselves in an unregulated individual health insurance market; Americans with pre-existing conditions would have joined the ranks of the uninsured.

Obama is using the measure as a means to finance comprehensive reform. Should someone lose their employer-based coverage, they will be able to purchase affordable insurance through a regulated exchange that cannot deny coverage to Americans with pre-existing conditions.

The theory behind capping the health exclusion rests on the assumption that the tax-preferred status of employment-based health coverage leads workers to over-insure and use more health care services than they otherwise would. Overuse of insurance drives up insurance premiums and makes coverage less affordable for lower-income workers. More »« Less

Obama’s Regional Health Care Summits: Keeping The Need For Reform Front And Center

President Obama prioritized health care reform during the campaign, held a listening tour during the transition, allocated an admirable $634 billion towards reforming the health care system in his budget, hosted a White House Health Summit, and is now holding a series of regional summits all across the country.

At yesterday’s forum in Dearborn, Michigan, for instance, representatives from insurance companies, labor unions, “workers and retirees; and nursing professors, among other stakeholders in the health care overhaul debate” agreed “on the need for health care reform” and urged the president to “emphasize preventive, wellness and primary care, and to better utilize health information technology.”

Here is one account from the Detroit Free Press:

Being insured doesn’t always mean you’ll get the help you want. At 22, Adrian Campbell-Montgomery said, she learned she had cervical cancer. Seemingly covered under her family’s General Motors employee insurance, she was rushed into surgery. Blue Cross Blue Shield of Michigan denied payment, saying the surgery was only recommended for women 26 and older. She was in graduate school, had a small child and was now $8,000 in debt. “When does it end?” she asked during the forum. “You have to stop denying people.”

Obama’s approach serves a political purpose. Public opinion polls already indicate that the public supports comprehensive health care reform. But this kind of outreach weeds out the personal stories of insurance company malfeasance and hardships of families facing rising health care costs, and ultimately provide the administration with the same kind of emotional narrative about the need for reform that the Right often finds in the waiting lines of Canada or Great Britain.

It’s political, but it’s smart. These regional summits keep the issue in the local news — long after the national media has moved on to exploring the root cause of Anna Nicole Smith’s death — familiarize the public with progressive proposals, and allow the President and Congressional Democrats to shroud themselves in the flag of public opinion once the health care debate really heats up this summer.

For more on the White House’s regional health summits, click here.

Eugene Robinson: I Don’t Know If We Need To Invest In Health Care, ‘I’m Not An Expert In Health Care’ »

Yesterday, Sens. Judd Gregg (R-NH) and Kent Conrad (D-ND) questioned Treasury Secretary Timothy Geithner about why the administration wanted invest new money into an already bloated health care care system. This morning, when Joe Scarborough asked Washington Post columnist Eugene “not an expert in health care” Robinson how President Obama’s proposed $634 billion investment would reduce health care costs, Robinson admitted that he didn’t know:

SCARBOROUGH: Where does it go? That’s my question. Retool how? I’m not being pushy. I just keep hearing “We gotta spend that money.” What do we spend it on?

ROBINSON: Well, you know. Hopefully more than computerized electronic medical records, which I don’t think should cost as much as the administration says it should cost. You know, I don’t know. I’m not an expert in health care. I’m not.

Watch it:

Robinson may not be a health care expert, but it doesn’t take a masters in health policy to push back against pundits and policymakers who argue that investing in the system won’t lower costs or improve health outcomes.

For one, half of the money in Obama’s $634 billion health care fund actually comes from re-investing money already in the health care system, just as Gregg, Conrad and Scarborough suggest. But most reform advocates also believe that to really lower health care costs and improve health quality, $634 billion is a good start, but it’s certainly not enough. One must first invest in the system to see long-term cost savings:

- Expanding Access To Contain Costs: Expanding coverage to the 45.7 million uninsured and treading their chronic conditions won’t come cheap, but it’s necessary if we want to manage chronic diseases and offer preventive services that will treat conditions before they develop into costly medical emergencies. By extending coverage to all, you can achieve efficiencies and end cost shifting.

- Investing In Preventive Measures To Contain Costs: While the United States spent $132 billion in 2002 treating Americans with diabetes, just $70 billion went to the prevention of all diseases. It can be difficult to quantify the possible savings from expanded prevention efforts, but experts estimate that just ensuring that every child receives every routine vaccination could reduce direct and indirect health care costs by up to $40 billion over time.

- Investing In Information On Effective Treatments To Contain Costs: Today, Americans are likely to receive the appropriate care just half of the time, and approximately one-third of individuals seeking care are likely to experience a medical error such as a medication mistake or the wrong lab results. Improving quality could help save lives and contain costs. Estimates of savings go as high as 150,000 lives and $100 billion every year.

- Using Health IT To Contain Costs: Fewer than 25 percent of hospitals, and fewer than 20 percent of doctor’s offices, employ health information technology systems. Estimates vary, and real-life experience is limited, but one group of researchers finds that implementing health IT would result in mean annual savings of $40 billion over a 15-year period.

Recently, PhRMA, SEIU, the U.S. Chamber of Commerce, AARP, Aetna, AFL-CIO, and AHIP signed a letter urging Congress to suspend pay-go rules when considering health care reform: “While the cost savings from improving the efficiency and quality of health care will be significant, many of the anticipated savings will be realized in the long term, and may thus not be evident in a ten year budget window…Requiring spending or revenue offsets for the entire cost of health reform within a ten year budget window, as required under a traditional pay-as-you-go rule, will significantly reduce the likelihood of enacting legislation to achieve essential reforms for long-term savings.”

Transcript: More »« Less

Health Care Crisis Deniers Underscore Shortcomings Of CBO

In today’s Wall Street Journal, health care crisis denier Sally Pipes writes, “the assertion that the costs of providing health insurance cripples American corporations in the global economy is simply wrong.” At first glance, Pipes’ argument sounds manufactured.

We’re all familiar with the numbers. General Motors spends $71 per worker per hour on health care, while Toyota spends only $47. Health care costs add $1,525 to the price of every GM vehicle, and the company spent $5.2 billion on health care benefits in 2004. It spends more on health care than on steel, and Starbucks pays more for benefits than coffee beans.

But while Pipes’ argument is counterintuitive, it’s not entirely wrong. At least not according to the Congressional Budget Office (CBO), the agency responsible for scoring Congressional proposals. Last week, while testifying before the Senate Finance Committee, CBO director Douglas Elmendorf explained that “for employers, health care is merely a part of total compensation“:

Although U.S. employers may appear to pay most of the costs of their workers’ health insurance, economists generally agree that workers ultimately bear those costs. That is, when firms provide health insurance, wages and other forms of compensation are lower (by a corresponding amount) than they otherwise would be. As a result, the costs of providing health insurance to their workers are not a competitive disadvantage for U.S.-based firms.

But this doesn’t tell the whole story. Health care costs are soaring faster than inflation, and instead of cutting worker’s wages, businesses are struggling to keep up with costs and are scaling back coverage. The National Federation of Independent Businesses reports that “58 percent of all small-business owners” are having a “hard time keeping up with the cost of health care.”

Consequently, “in 2010, 49% of employers will reduce their health benefit plan offerings. Forty percent of employers will increase adoption on consumer-driven health plans and two-thirds of employers will move more costs to employees.

Meanwhile, the business groups are clamoring for health reform, arguing that they can’t sustain growing health care costs:

- NFIB: NFIB agrees that the current growth in healthcare costs is unsustainable for the government and for small businesses alike.

- Business Roundtable: Rising health care costs affect all American workers, employers and the government. Rising costs impact job creation, diminish the nation’s competitiveness and reduce Americans’ ability to save for retirement

- Chamber of Commerce: A healthy workforce is the backbone of a strong economy, but spiraling health care costs curb the competitiveness of U.S. businesses and constrain tight family budgets.

The CBO’s analysis, while economically and theoretically sound, is completely divorced from reality. While wages may pay for health care costs in the long run, workers won’t accept smaller paychecks every time premiums increase. As Sen. Max Baucus (D-MT) pointed out at the hearing with Elmendorf, when considering the costs and consequences of health care reform proposals, Congress should not be “in the old situation where whatever CBO says is God.” “In my judgment you’re not God,” he said.

Right-Wing Goes After Sebelius’ Pro-Choice Record

Right-wing fringe groups are trying to turn a debate about health care reform into a culture war. They’ve launched a campaign against HHS designee Gov. Kathleen Sebelius (D-KS), arguing that her appointment “is a threat to the health and well-being of our country“:

- She has had a close personal and financial association with the nation’s most infamous abortion doctor, George Tiller, who specializes in late-term abortions.” [Family Research Council]

- Sebelius honored Tiller and his entire abortion clinic staff at the Governor’s mansion in April 2007. Tiller has contributed thousands of dollars to Sebelius and to her PAC. [The Liberty Council]

- With Obama’s appointment of Gov. Sebelius to the Department of Health and Human Services, he might as well be appointing George Tiller. [Operation Rescue]

- Sebelius, governor of Kansas – the late-term abortion capital of the world – is a threat to the health and well-being of our country and her appointment must be stopped. [American Life League]

While Sebelius vetoed legislation that would have allowed a woman’s relatives to sue an abortion provider, and bills that violated women’s privacy, she has “worked to reduce the number of abortions by supporting expanded prenatal care and adoption incentives.” As Catholics United points out, “the governor has had disagreements over public policy with leaders in her Church. Yet their disagreement has never been over the morality of abortion, but over what prudential policy is best in dealing with abortion in Kansas.”

Indeed, abortion rates declined 10 percent during Sebelius’ first three years as governor and Americans United for Life has even ranked Kansas as the 14th best state for Defending Life in 2009. As for her George Tiller connections, those too are overstated. Tiller and his staff won a dinner with Sebelius “in a fund raising auction.” Sebelius “has not taken financial contributions from Tiller as a gubernatorial candidate or as governor” and even appointed the Attorney General who is looking into allegations that Tiller did not properly fill out abortion paperwork.

None of this is an issue, and it shouldn’t be a big concern during confirmation. It’s just a fund raising tactic for the Right.

Conservatives And Insurance Industry Team Up To Oppose Obama’s Cuts To Medicare Advantage

Most interest groups embraced Obama’s decision to lay the groundwork for comprehensive health care reform by allocating $634 billion over 10 years towards a special health care fund. The insurance industry and its conservative Congressional allies, however, objected to Obama’s proposal to seed the fund (at least in part) by cutting over payments to Medicare Advantage (via Kaiser Daily Health Report):

- Health, Education, Labor and Pensions Committee ranking member Mike Enzi (R-WY): “The president said repeatedly during his campaign that Americans who like the health insurance they have would keep their existing plans in his administration,” adding, “His budget proposal undercuts that promise.”

- America’s Health Insurance Plans President Karen Ignagni: “Unfortunately, this proposal would force seniors enrolled in Medicare Advantage to fund a disproportionate share of the costs to reform the health care system,” adding, “A cut of this scale would jeopardize the health security of more than 10 million seniors enrolled in Medicare Advantage and would turn back the clock on innovative payment incentives to improve the quality of care that patients receive.”

Obama’s campaigned to re-establish parity between traditional Medicare fee-for-service and Medicare Advantage plans, and for good reason. When lawmakers approved the Medicare Modernization Act, they offered an extra subsidy to Medicare Advantage plans (MA). The deal was this: Medicare would pay about 13 to 17 percent more for beneficiaries enrolled in MA Plans, and the plans would, in turn, use the increased payments to offer more benefits, reduce beneficiary cost sharing, and “expand into geographic areas where previously plan options had been very limited.”

It was supposed to be a win-win, or so proponents of MA argued. But in recent months, a trickle of government reports and independent estimates have dampened the rationale for subsidizing MA plans. The extra federal dollars don’t improve health outcomes. They pad insurers’ bottom lines, raise costs for beneficiaries in the traditional Medicare program, squeeze both Medicare and the federal budget, and drain resources from more productive uses.

Three studies published in Health Affairs, concluded that private plans “have increased the cost and complexity of the program without any evidence of improving care” and a Government Accountability Office (GAO) report found that Medicare Advantage Private-Fee-For-Service Plans (PFFS) — which are responsible for nearly half of the recent growth in MA enrollment — have exposed beneficiaries to serious financial risks. At least two different GAO reports released just in June and December also concluded private plans participating in Medicare Advantage earned greater profits and spent less on benefits.

So for the insurance groups, this is really a problem of diminishing profits. Obama wants to open up the process to competitive bidding that rewards efficiency and truly focuses on quality care. The insurance companies want to hold on to the government subsidy without really investing in preventive care, care-coordination or better care for patients.

In other words, if these plans really could provide care that is based on quality and not quantity then a competitive bidding process should compliment business models that help seniors navigate a complicated system, rather than drive them to fear monger about reforms.

Baucus To Economists On Scoring Health Reform: ‘In My Judgment, You’re Not God’

Today’s Senate Finance Committee hearing underlined one of the more important lessons from President Clinton’s failed effort to reform the health care system: when pushing through your plan, don’t let economists be the messengers for reform.

A high Congressional Budget Office score sunk Clinton’s reform plan, and today’s Democrats are trying to challenge the importance of “the number.”

Henry Aaron, a senior economics fellow at the Brookings Institution, has noted that “it’s not infrequent to hear people say it doesn’t make any difference what it really costs. It only matters what CBO says it costs.” But health care, of course, is about more than just numbers. It’s about securing the health of the nation, and real reform will require an upfront investment that doesn’t make for a balanced budget sheet in the short term.

The Congressional Budget Office has admitted as much. It uses a limited amount of evidence to score changes, without really examining the interactions of separate policies (for which there is little evidence) and as Sen. Pat Roberts (R-KS) suggested, insofar as the CBO “tries to predict people’s reactions to our policy changes, it’s almost impossible.”

Consider this interesting exchange between Sen. Max Baucus (D-MT) and Congressional Budget Office director Douglas Elmendorf:

BAUCUS: We’re not in the old situation where whatever CBO says is God. In my judgment you’re not God. My judgment is that the press — there’s a whole new era and, um, you might be Moses, but not God. But I do believe that there are several different intellectually honest pathways to get from here to there. It’s not just one automatic. And so it mean we gotta be ever more creative to find intellectually honest pathways to get the savings we’re going to have to have [inaudible] politically to get health care reform.

Listen to the exchange:

Paul Begala made a very similar argument during the Families USA health care conference, urging Obama to ignore traditional economic caution. In fact, reforming health care on an economic tight rope, is like deciding to respond to a terror attack by first determining if you can fund it. In both cases, there are other factors one must consider.