Benemax

A little known Republican state senator from Massachusetts has won election to the U.S. Senate seat held for 47 years by Ted Kennedy. Scott Brown becomes the 41st Republican senator, denying Democrats their filibuster-proof 60 vote “super majority”.

But Brown’s victory isn’t just about numbers; it is a dramatic message to everyone in Washington that voters (even in dark blue states like Massachusetts) are VERY unhappy with the course of events in this country and will do almost anything to turn things around. And there’s already evidence that politicians are getting the message:

Senator Jim Webb (D-VA) made it clear this morning that he would not support any effort to rush health care reform through Congress prior to Scott Brown’s official seating. And none other than ultra-liberal congressman Barney Frank (D-MA) stated that Congress needs to “re-think” the direction of that reform. 

Today, there are three possible paths: (1) The Democrat leadership could still try to push the current bill(s) through Congress, ignoring the express will of the voters or (2) Congress could abandon health care reform legislation entirely or(3) Congress could come together on compromise, bi-partisan health care reform package that would increase the number of insureds, improve the health of all Americans, and bend the heath care cost curve.

Such a compromise might include the following:

(1) Insurance reform: no more medical underwriting, no more pre-exisiting condition limitations.

(2) Catastrophic mandate: All Americans would need to show that they had protection against the cost of hospitalization, surgery and diagnositc testing over $5,000/year.

(3) Subsidy: Expansion of Medicaid to help low income Americans afford the cost of health insurance.

(4) Incentive: Tax breaks for employers who invest in their employees’ health.

Democracy…a novel concept. Since ancient Athens the idea of popular rule has flickered on and off across the global political landscape. But the current Health Care Reform debate is a great advertisement for self-government: the American people are WAY AHEAD of their political leaders when it comes to understanding the current health care crisis and supporting policies that would actually make things better.

For example, recent Rassmussed polling shows:

(1) 74% favor rules that would prevent insurance carriers from denying coverage based on pre-exisiting conditions. This is the single reform that is most urgently needed…and the people overwhelmingly agree.

(2) 57% favor increased subsidies to help lower-income people buy health insurance.

(3) 57% favor tort reform, a key element in any possible solution but an element entirely absent from the bills currently pending in Congress.

(4) On the other hand, less than 50% of the people favor either the individual or the employer mandate.

(5) Finally, and most perceptively, only 24% think that people should be prohibited from buying low premium/high deductible health plans. Such a prohibition is a key feature in pending legislation but it enjoys almost no support among the American public.

All in all, what people are saying is that increased competition, more personal choice and responsibility, a stronger safety net and a level regulatory playing field are the keys to expanding coverage and holding down costs. We couldn’t have said it better ourselves!

On January 19, voters in Massachusetts will elect a new Senator to replace Ted Kennedy. It has been widely assumed that the Democratic nominee, Martha Coakley, a strong supporter of the pending Health Care Reform bills, would win easily and preserve the Democrats’ 60 vote “supermajority” in the Senate.

However, polling data released Wednesday by Rassmussen shows a very different picture. Republican Scott Brown is within 9 points of Coakley. Even more surprising, he is within 2 points of Coakley among those who say they are “certain to vote”.

This polling result, reportedly confirmed by the candidates’ own private polls, will release a torrent of campaign spending as Democrats and Republicans all across America rush to contribute to their candidates in this historic contest.

A win by Brown would rob the Democrats of their 60th vote and would probably doom the current Health Care Reform bills to defeat. Even a strong showing by Brown (withing 10 percentage points?) might send enough of a shock wave across the country to shake lose one or two of the wavering Democrat Senators…or a half dozen wavering Representatives in the House.

Yup, it’s official. The American people have just received a collective lump of coal in their stockings. The U.S. Senate has passed the $870,000,000,000 Health Care Reform bill.

While the bill contains some positive features (e.g. insurance underwriting reform and expanded assistance for low income Americans), the legislation is loaded with provisions that will drive up the cost and drive down the quality of health care in the U.S. As much as we do need right minded reform, this bill will almost certainly do much more harm than good.

Chief among the disturbing aspects of this bill is a provision that would limit health benefit plans to 4 cookie cutter options (so called “Platinum, Gold, Silver, Bronze”). This feature would severely limit competition and undermine all the creative plan design efforts that have been the focus of employer groups and consultants over the past several years.

Also disturbing is the new tax on insurance companies, drug companies and medical device manufacturers; the cost of this provision will be directly passed through to customers in the form of higher premiums.

Finally, the bill severely cuts Medicare funding, threatens provider reimbursement levels and imposes all sorts of new bureaucratic regulations on the practice of medicine. At a time when 30 million new insureds are scheduled to be added to the insurance roles, Congress is determined to make the practice of medicine more difficult and therefore less attractive to “the best and the brightest” in our country.

You don’t need to be an expert to understand where this bill will take us. Newly insured Americans will increase the demand for services at the same time that new regulations and wage cuts will reduce the supply of those services. More demand + less supply = skyrocketting prices.

But the battle is far from over. The Senate bill needs to be reconciled with the House bill. There will be one more vote in both chambers, probably sometime in January, before this bill becomes law. A shift of just a handful of votes in either chamber would turn the tide.

Consulting firm Oliver Wyman was recently contracted by Blue Cross Blue Shield to evaluate the impact on premiums of the Patient Protection and Affordable Care Act (PPACA), the Senate’s version of Health Care Reform legislation.

According to Oliver Wyman’s study, small group premiums will increase 20% by the 5th year of Health Care Reform. This 20% is IN ADDITION to “normal” annual increases due to so-called trend (medical inflation, increased utilzation, aging population, etc…)!

To estimate the real world impact of this change, just take a look at your current premiums for single and family coverage; now add $100/month to the single premium and $250/month to the family premium. How will you (or your business) afford that increase?

So not surprisingly, Oliver Wyman also concludes that fewer small employers will offier health benefit plans if reform legistlation passes in its current form. Almost 3 million members, now insured by small employers, would lose coverage over the next 5 years. That is in spite of the tax credits and other provisions designed to encourage employers to offer health benefits to their employees.

There are many provisions in PPACA that contribute to this projected cost increase: the inclusion of sicker people in the insurance pool, the potential for “adverse selection” (as young, healthy people opt to go without insurance…until they need it), increased taxes on insurance companies, drug companies and medical devise manufacturers, and mandated minimum benefits to name a few.

Let’s look just at this last item. The Senate bill requires all health insurance plans to have an actuarial value of 0.6 or higher. Today 32% of individuals and 9% of small employers have insurance plans with an acturarial value of less that 0.6. (This does not necessarily mean that these folks have inferior benefits; in many cases their insured benefits are supplemented by various self-funded, equity account arragnements.)

In addition, PPACA exhaustively defines what it considers to be “essential benefits” and mandates that those benefits be included in all insurance plans going forward. Many employer sponsored plans lack one or more of these “essential” provisions. The cost of including ALL federally defined “essential” benefits in ALL employer sponsored plans will alone raise the cost of those plans by more than 5%!

No doubt the goals of Health Care Reform are lofty: universal coverage, richer benefits, etc. But if these reforms make even basic insurance unaffordable…or if they soak up all our discretionay income so that our quality of life deteriorates sharply…who will have gained?

Readers of this blog may have noticed that postings have been a bit thin of late. That is because (1) the House has passed its Health Care Reform bill and is on hold now for the Senate and (2) the official Senate bill changes daily, sometime hourly. Reacting to each twist or turn would be a waste of time. Now, however, the provisions of the Senate bill are beginning to take shape and it’s time to do some analysis.

Most of us hoped that the legislative process would result in an on-going improvement in the bills’ provisions. We thought that debate, ammendment and compromise would winnow out the bad ideas anad bring new good ideas to the forefront. The opposite has happened!

 The bills keep growing in length (2,000 pages at last count, up from 800 at the beginning), the provisions are becoming ever more convoluted and arcane and the worst ideas seem to be winning out over their better rivals.

Case in point: earlier we had a great debate (followed closely in this blog) over the idea of creating a “public option” (government run) health plan to compete with private insurance companies. There was something to be said for both sides. But now, a “compromise” has emerged and part of that compromise is a provision that would permit people between the ages of 55 and 64 to buy into Medicare. What’s wrong with that?

Just everything! First, Medicare does not provide the comprehensive coverage most Americans want. As a result, most seniors also purchase a “Medigap” policy to pay for all the things Medicare won’t.

Second, the Congressional Budget Office (CBO) projects that the premium for single coverage would be $600/month. How is that a good deal? It’s almost double what the average single pays for health coverage now.

Third, because this plan is part of Medicare, health care providers will be paid at Medicare rates…that’s 20% to 30% below market rates. So the physicians are being asked to subsidize this product for the benefit of the 55 to 64 year old community. That subsidy is what allows the cost to be as low as $600/month. Without the subsidy…

Fourth, this is the same Medicare program that we’ve been told may go bankrupt in 10 years. It’s a bit like evacuating the passangers from the Titanic onto a ship that is already going down.

So everyone loses! Less benefit, higher premiums, lower compensation for health care providers and more stress on an already strained Medicare program. The perfect solution…if you live inside the Beltway!

It is not uncommon to hear America described as “two nations”. Michael Harrington did it in 1960 and John Edwards campaigned on it in 2004 and again in 2008. But the two nations we’re talking about are quite different. On our map, one nation is inside the Washington Beltway and headquartered on Pennsylvania Avenue; and the other nation? Well, that’s everyplace else.

On Saturday, 60 Senators voted to move along a Health Care Reform bill that many of them believe Amercians want. But once you get 1,000 yards away from the Capitol Mall, everyone knows different.

Consider the latest Rasmussen poll, arguably the most reliable and respected of all the national polls. According to the latest results 38% of Americans support the bills being debated in Congress while 56% oppose them. Compare this to the last time Americans supported the Health Care Reform initiatives: 51% to 46% right after the President’s speach in September. But since September 15th, Americans have consistently opposed the reform legislation; average result:  44% in favor, 50%  opposed.

The most recent poll, taken while the Senate was debating its Saturday vote, shows a significant shift, 6% to be exact, to “nay” side. Clearly, the more Americans find out about these bills and the closer they come to passage, the less they like what they see.

If there is a further shift of 6% in the same direction, the nation will be 2:1 against these bills! But wait…that’s already happened. The latest poll also shows that right now 43% of Americans are strongly opposed to the bills while only 21% are strongly in favor of them. In other words, among folks with strong opinions on the subject, the nays already lead the nays by 2:1.

Imagine if Congress actually represented the American people! Instead of advancing the bill by a vote of 60 to 39, the Senate would have killed the bill by a vote of 33 to 66. 

By the time of the final vote, Reid and Pellosi will likely be asking Congress to vote for legislation that is strongly opposed by the majority of Americans and strongly supported by less than 20%.  We are indeed two nations: a nation of people and a nation of politicians.

If you haven’t done so already (and if you have strong opinions about Health Care Reform), NOW is the time to contact your Congressman. The House is expected to vote on the Pelosi Health Care Reform bill on Saturday…this Saturday! A mere handful of votes will decide the issue.

Opposition to “Omaba Care” (as the so-called “public option” has come to be called) continues to spread and intensify. The latest polling puts it 42% “aye” and 58% “nay”…and yet it looks as though Congress may ignore the will of the American people and pass its bill anyway.

For a sample of the popular mood, consider excerpts from a piece that recently appeared in The Chicago Tribune…right in the President’s home town:

“If Medicare were a bank, federal regulators would be closing its doors, selling its operations and sacking its managers. Thanks to soaring costs, the program is fast running out of money — even though it pays such low fees that many doctors refuse to take Medicare patients. Meanwhile, Medicare fraud costs taxpayers some $60 billion a year, according to a report by CBS’ “60 Minutes,” making it among the most profitable fields for felons…

“So what do congressional Democrats propose to do? Offer government-run health insurance to everyone else. But deploying a version of Medicare to repair the status quo is like using a brick to improve a window.”

During the last 10 days or so, we have been told that public opinion is swinging back from opposition to Health Care Reform to something closer to an even split. As a result, reform supporters in Congress have been emboldened to push for the more radical versions reform and to predict their passage.

Clearly, the only thing standing between us and a national health care system is politicians’ fear of the American public. It is also clear that assessments of public opinion depend on how questions are framed and what information is provided before asking each question. This raises a question: if some people are supporting Health Care Reform because they believe it will solve the problem of the uninsured and lower of cost of coverage without iincreasing taxes, how will they react later when they find out that these things are not in fact true?

That said, let’s look at what Americans are really telling pollsters. Start with Gallup who does not limit polls to likely voters: Gallup finds that 49% of the public thinks that the cost of their own health care will go up under any of the reform proposals; only 22% think it will go down. These same people believe 2 to 1 that the quality of their care will go down and that their coverage in general will get worse.

It is certainly true that the median American will pay more money and receive lower quality care under Health Care Reform. The third proposition is more uncertain. The bills before Congress mandate relatively high levels of benefits which could increase the level of coverage for the median insured. On the other hand, however, many and perhaps most employers will dumb down coverage to the minimum level to avoid huge price increases; that in turn could reduce the amount of coverage Americans enjoy.

Finally, let’s turn to Rasmussen who limits polliing to “likely voters”: Rasmussen reports that 49% think doing absolutely nothing is better than passing ANY of the current bills; only 39% think that ANY of the current bills are better than the status quo.