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Rep. Scott Tipton: Patients, not politics

Congressman Scott R. Tipton represents Colorado's 3rd congressional district.  

We must keep the promise to our senior citizens by protecting Medicare and Social Security.

Currently, Medicare is on an unsustainable path. If Washington fails to act, the Medicare Trustees — made up primarily of members of President Obama's cabinet — report that Medicare will be bankrupt by 2024.

I support a plan that ensures today's seniors and those a decade away from retiring receive all of their benefits in full, while strengthening and securing Medicare for future generations.

I have held town hall meetings focusing on Medicare and Social Security, visited dozens of senior centers, and formed a committee of local seniors from all backgrounds to gather thoughtful feedback and comments about Medicare.

The message of seniors in the Third District is clear: Any health care or budget solution should strengthen Medicare and secure it for future generations. I ensured that this was incorporated in the Republican Budget, which we passed in the House earlier this year. The Republican Budget keeps Medicare as it is for those 55 and older, while strengthening and sustaining the program for our children and grandchildren.

While the House has passed a plan, the Senate has failed to fulfill the promise to seniors for more than 850 days, refusing to pass a budget and put forward a plan to protect Medicare and Social Security.

The Republican Budget strengthens Medicare and increases affordability by targeting waste, fraud and abuse, which according to Medicare's chief actuary, costs as much as $150 billion each year. Our plan roots out the causes of waste, fraud and abuse, and fixes the problem.

Our plan expands access to care; giving future retirees the choice to select from competing health care plans that best meet their needs — offering the same options and choices as members of Congress.

When the president passed his health care plan last year, he said it would expand access and affordability to care. However, his plan missed this mark entirely.

The president's plan raided $500 billion from Medicare to fund his health care mandate at the expense of seniors. Not only did the president's plan fail to increase affordability, it restricts access to health care by empowering a board of 15 arbitrarily appointed bureaucrats to unilaterally decide when and how to cut Medicare funding.

Under the law, the president's appointees to the Independent Payment Advisory Board (IPAB) are guaranteed a six figure salary and terms longer than the president and members of Congress. This set-up ensures that those in charge of running what is essentially the president's “Medicare IRS” never personally feel the pain of the cuts they make.

There is no oversight from the courts, no appeals process, and no accountability for the 15 people in control of life-and-death decisions for hundreds of millions of Americans. They have the unilateral authority to decide what cuts should be made to Medicare, even to the extent of revising laws passed by Congress, without Congressional approval.

I'm concerned that IPAB will restrict patients' access to their doctors, and even make decisions that will limit access to important treatments and care. To add insult to injury, there is no requirement that the members of IPAB have medical backgrounds — placing decisions currently made between patients and their doctors in the hands of people with no health care experience.

Is this the future of American health care? Seniors in my district don't think so, and neither do I.

As we work to ensure that the promise to seniors is kept and that the future of Medicare is strong and secure, I will continue to fight to:

• protect seniors and those a decade from retirement, ensuring that they receive their promised benefits in full, • increase accountability, and eliminate waste, fraud and abuse,
• provide choice for beneficiaries so that they have the same choices as Members of Congress,
• eliminate IPAB and keep critical health care decisions between patients and doctors.

We have an opportunity to work together in Washington to strengthen Medicare. I encourage the Senate to take up the Republican Budget, deliver on the promise to seniors, and secure Medicare for future generations.

House Budget Committee Chair Paul Ryan: The Budget Control Act - a step forward but a long journey remains

Congressman Paul Ryan is the US Representative for Wisconsin's 1st congressional district.

The Budget Control Act takes an important step in the right direction by cutting $1.2 trillion in government spending over the next decade. Critically, it does this without resorting to Senator Reid’s gimmicks and without imposing the president’s preferred tax increases on American families and the struggling economy.

This bill is far from perfect. We still have a long way to go toward getting the key drivers of our debt — especially federal health-care spending — under control. But considering that House Republicans control only one-half of one-third of the federal government, I support this reasonable, responsible effort to cut government spending, avoid a default, and help create a better environment for job creation.

Keep reading at NRO's The Corner blog...

A safety net or a padded cell? A British take on universal healthcare and freedom

Henry Hill is a British Conservative and Unionist activist, and author of the blog Dilettante. 

Watching the battles between the Obama administration and the Republicans over Obamacare is a slightly surreal experience for a Brit. After all, over here the National Health Service is a national shibboleth, an apparently fundamental part of our British identity, and those who challenge it – such as Daniel Hannan – earn themselves something akin to pariah status amongst political polite society.

So warped is the discourse on health in Britain that our incoming Conservative government was compelled to ring fence NHS spending completely from the austerity drive, necessitating vital cuts in other sectors whilst dis-incentivizing healthcare efficiency. One can decry wasteful spending on a bloated bureaucratic class, but actually cutting it is politically impossible. Every increased NHS cost has to be referred to as an ‘investment’. Really, it isn’t the terms of the American debate about healthcare that puzzles the British: it’s the phenomenon of having a debate on the subject at all.

Yet the dialogue is so one-sided in Britain that the evidence filtering across the Atlantic is unlikely to be balanced. When it comes to healthcare the testimonies of most British politicians are akin to Soviet tractor statistics – it would be electoral suicide to other than burnish the halo of this last surviving relic of our post-war flirtation with a command economy. To try to redress the balance, below I examine some of the fundamental differences between British and American cultures regarding that paramount American virtue, freedom, and the cultural impact of the UK’s largely socialized medical system.

Since the trajectory of Obama’s healthcare policies has been in a “British direction,” if you will, American policymakers would do well to consider the cultural effects of those policies.

This won’t be an article about health outcomes per se. Certain individuals continue to courageously challenge British assumptions about healthcare, with Hannan’s column and James Bartholomew’s excellent The Welfare State We’re In being but two examples, and these men make the arguments about the NHS’s inefficiency, failings and returns entirely incommensurate to its astronomical costs far better than I can in a short article such as this. Instead, I want to examine the impact the NHS has on individual freedom, and what the state and other agencies feel mandated or entitled to do with it. This article was sparked by this piece on Smitten by Britain, a “Britophile” American blog, which reports that the Royal College of Physicians is lobbying British lawmakers to ban smoking in cars. This one example is enough to demonstrate several of the deplorable side-effects of the impact of an NHS-style universal health system on political and civic life.

The most obvious impact becomes apparent when you consider what your car actually is. It is a personal space that is (usually) your private property, and access to it is at your discretion. Your home also fits this description. Your car is not a public space, and if the government can legislate to prescribe how you behave in your car (for reasons other than ensuring you drive safely) then it can prescribe your actions at home without any leap in logic. This is a prime example of how the area of your life that the government feels entitled to meddle with is constantly expanding, even in a society as over-scrutinized and over-managed as the UK.

Where does this sense of entitlement spring from? This expansion of governmental influence stems from the second consequence of universal health care on the British model: nearly every action anybody undertakes or choice they make comes with a bill for the taxpayer. Where once an individual could make a choice and bear responsibility for the consequences of that choice – for example, by eating a poor diet and paying higher insurance premiums – the state is now mandated to foot the bill for the consequences of poor decisions “free at the point of delivery”. When something is ‘free’, and especially if you think that it is ‘free’ because the money is being squeezed out of someone else through taxation, you are less likely to appreciate the healthcare you are receiving – the negative health impacts of your lifestyle choices or the actual price you’re paying in higher general taxation – and thus you’re much more likely to indulge in irresponsible behaviour. Moreover, because the government can cast irresponsible behaviour with what were once only personal consequences as a cost to taxpayers, the general population are more likely to be inclined to support prescriptive legislation if they think it will save them money.

Once the government has, in its munificence, removed the natural consequences that encourage responsible behaviour, it has to pay for the consequences of irresponsible behaviour (higher taxes for you), try to legislate new disincentives to replace the ones it has disposed of (punitive duty on alcohol and cigarettes, heavy restrictions on the marketing and sale of these products) and outright ban behaviour that costs the state money (smoking ban and, if one continues the logic, prohibition). In Britain, the worst part is that there is no escaping this. Even if you choose to pay substantially extra for private healthcare from the likes of Bupa, the state is still fundamentally liable for your wellbeing, you still pay all the taxes levied to pay for the NHS and your choices are still restricted or penalized.* The Conservative Party once campaigned on an ‘opt-out’ scheme for people with private healthcare, but dropped it after the 2005 election.

Nor is this behaviour confined to the government. The smoking in cars example above also demonstrates how once a prescriptive culture develops, it can extend beyond government and into third parties such as the Royal College of Physicians, effectively turning professional medical organisations into authoritarian lobbyists. Rather than simply getting you better, doctors can come to think it would be much simpler if they simply banned all the things that make you ill – which is true, if you can momentarily forget the frightening consequences of such logic. But where does it end? If too many idle hours in front of the computer or television increase our chances of falling ill, why not legislate limits on these activities or mandatory exercise? It sounds absurd, but it is entirely consistent with the logic being demonstrated by the RCP.

This paternalistic attitude can be seen even beyond organisations that have any formal link to the healthcare profession. Alongside the rise of no-win, no-fee legal practices, the idea that it is acceptable to prescribe behavior to avoid even the smallest of risks lies behind the mutation of health and safety – at its heart an entirely laudable doctrine designed to stop machine operators losing fingers or miners choking on gas pockets – into the grotesque edifice it is today. It might look like private companies are treating adults as children, but the government did it first.

The common thread running through all these examples is that once the government removes responsibility from people (or rather, agrees to foot the bill for their irresponsibility), people will have less reason to act responsibly. As the costs climb, and the bill comes to be presented as a collective burden on all of us, both the government and the people lose any incentive to let people manage their own lives and, over time, perhaps lose the belief that they ever could. The general public is saddled with more laws, more taxes and less freedom in exchange for a healthcare system that is a long, long way from being, in the words of innumerable British politicians, “the best in the world”.

 In Europe, we have always struck the balance between freedom and security differently to America. However, in the UK the political consensus surrounding the fundamental goodness of the NHS is so absolute, and the debate so muted and warped, that the general public can scarce imagine a market-based system being anything other than a cruel, social-Darwinist nightmare. Those voices that do oppose the NHS tend to argue on the basis of measurable results and medical outcomes, and often do so very well. Arguing against universal healthcare on the basis of individual freedom is extremely unlikely to work in Britain, but it is a warning worth making to Americans who cherish and tangibly enjoy their liberty-oriented culture.

Having tens of millions of American citizens without healthcare provision is wrong, but US lawmakers should be careful that they design a safety net to catch people when they fall, rather than a padded cell wherein they are confined and prevented from climbing at all.

*Incidentally, the fact that private healthcare only makes sense as a high-end product in the UK surely explains how ordinary British people came to think that private or semi-private health provision could never cater to them. 

The real problem with rising health care costs? Purely preventable diseases. Better health, not just better health care, is the challenge of our times.

Dr. Gratzer, a physician, is a senior fellow at the Manhattan Institute. Most recently, he is the author of Why Obama’s Government Takeover of Health Care Will Be a Disaster, part of the Encounter Books Broadsides series.

This is the fifth and final in an exclusive, five-part series by Dr. Gratzer on why the debate over Obamacare is just beginning, what a Republican strategy should look like over the next two years, and what real health reform in America should consist of. To get up to speed, read parts one, two, three, and four.

The discussion in Washington has focused now for almost two years on health care – how to regulate it, reform it, and pay for it. That discussion has been captivating if narrow. The President focused on bending the cost curve, bringing coverage to millions, and making insurance companies more accountable. Here’s what didn’t make that bold list: addressing rising obesity rates, helping Americans live longer, or reducing morbidity. The March 23 signing speech, for the record, didn’t promise better health. The myopia has been bipartisan. Critics attacked his ideas because they could empower government bureaucrats and grow future deficits; Republican proposals never talked about improving health outcomes either.

We live in an era of medical miracles: childhood leukemia, once a death sentence, is now curable; polio is confined to the history books; death by cardiovascular disease has dropped by two thirds in the last sixty years. Yet, for all the medical science, Americans are profoundly unhealthy. America doesn’t have an obesity problem. It has a bad health problem – and obesity is just one aspect of that. 1 in 4 adults is obese; 1 in 5 smoke; 1 in 3 don’t take the medications prescribed by their physicians.

We need to focus on health, not just health care. The fix will be real only when individual Americans have more of an economic incentive to take care of their own health, and less incentive to shift the high cost of their own irresponsible health-care decisions to others within their insurance pool. American health care and health insurance must promote better health, and not just promote better health care. The fastest, cheapest and most effective way to treat preventable diseases is to prevent them in the first place.

It’s important for Republicans and moderate Democrats to understand what liberal Democrats refuse to acknowledge. Namely, the great new driver of rising health care costs isn’t exciting American technology. It’s not the high cost of drugs, although this certainly contributes. No, the fastest rising pressure on health care costs that can be controlled is the rising cost of entirely preventable diseases to the system.

Look at health care as a health system, and not as a sick care system, and we are increasingly our own worst enemy when it comes to health risks and diseases. Smoking, obesity, binge drinking, drug use and preventable cancers are collectively killing the American health consumer faster than many of the unpreventable headline diseases of the last century. Estimates price the cost of obesity to the American health care system at $167 billion this year – and that figure is certain to rise as obesity rates skyrocket across America.

A new liberal ideology is emerging to explain away this spike in preventable diseases as something that Americans are helpless to prevent. Worse, millions of Americans are not getting the message that their behavior is killing them: a recent study published in the Archive of Internal Medicine found that 8% of Americans in a test group had “body size misperception” – meaning, they wrongly believed that their own medically unhealthy weight levels were actually healthy and normal. The vast majority of obese Americans in the study, incidentally, saw no reason to lose weight. Sometimes blindly and sometimes carelessly, Americans are choosing self-gratification and self-destruction every day. And everyone paying into government and private insurance systems shares in the ultimate economic price.

Americans should be free to be as gluttonous as they choose to be. But should everyone be equally free to expect subsidies for the consequences of those self-destructive choices? America’s leaders should be free to call attention to those consequences, to encourage people to make better choices, and to reform policies accordingly. And make no mistake: the national obesity epidemic has consequences. The average American is now too fat to fight a war, too fat to be a productive employee, and fat enough to be a net burden on the American taxpayer over their lifetimes.

It’s time for Republican leaders to be bold enough to lead Americans in the other, healthier direction. It’s time to lead Americans in a personal, voluntary effort to be as healthy and fit as Americans were in previous generations – or at least, as healthy as most Americans were. All that’s needed is a return to 1960s portion sizes, calorie counts and levels of exercise. National sacrifice isn’t needed to save billions and save lives; all that’s needed is a bout of national moderation.

Shifting from a sick care agenda to a health care agenda will take time. But short of actually wiping out Medicare and Medicaid, it’s the only strategy that will save real health care dollars in the long run 

An obvious place to start is with obesity in the youngest generations, since the costs of that epidemic will be with us longer than for the elderly. Since millions of American children now pick their values up from schools, classmates, and corner stores, a little government leadership within the budget system may be important in the form of better school lunches, attacking inner city ‘food deserts,’ or promoting fitness in schools where physical activity has been slashed to a minimum in recent decades.

With this strategy, Republicans have a chance to carve up ObamaCare, yet replace it with a positive, health-centred plan instead. It’s a strategy the President’s allies will find it hard to criticize. It’s a free-market strategy Republicans can rally around. And most important, it’s a strategy that can actually deliver real savings and healthier lifestyles to the ordinary American health consumer.

Paul Revere: Let's think bigger and take on Medicare reforms while we're repealing and replacing Obamacare

Paul Revere is in his 20s, and is concerned about the impact of the growing national debt on his generation. Not much younger than when his namesake made his historic ride, he works in the wake of a tea party to warn his fellow patriots of impending doom - unless they exercise the courage to act now. He will be posting regularly at ConservativeHome on spending issues to encourage his fellow patriots to find that courage.

Now that the repeal-and-replace Obamacare debate is under way, we should turn our eyes to America’s entitlement problem so that the two discussions can run side-by-side. We will never tackle our deficit crisis as aggressively as we need to if we don’t get more serious than most congressional members seem willing to be about entitlement reform.

We should be pursuing both health care reform (e.g., taking on Obamacare) at the same time we are tackling Medicare dysfunctions, guided by common principles such as eliminating waste, lowering costs through competition in a marketplace, and ending special interests in health care.

Here is a list of where we could be most aggressive:

• Institute Mayo/Dartmouth Atlas-style payment reform to Medicare. Approximately one-third of Medicare (nearly $150 billion) is inefficiently or fraudulently spent, and much of that is due to the payment system Medicare uses. Currently, doctor reimbursements encourage a higher quantity of care as opposed to a higher quality of care. Incentivizing doctors to follow up with patients post-visit; look at alternatives besides specialized surgeries and operations; and to work with a team of doctors instead of one doctor who may not have the breadth of knowledge necessary to deal with a patient’s health issues will not only save money but also increase the quality of each patient’s medical experience. There are certain weaknesses to this approach, particularly how it puts government officials in charge of how medicine is practiced. Since Medicare is already a government-run program and is not going to be eliminated anytime soon, however, we might as well put those government officials toward a more effective practice of medicine.

• Institute medical tort reform. States such as Mississippi, Arizona and Texas have enacted tort reforms in recent years, and it has been a boon to the states. While tort reform is certainly not the be-all end-all of our medical costs in this country, it will have a measurable impact. The New America Foundation’s Shannon Brownlee, in her 2007 book Overtreated: How Overspecialization is Hurting America, says tort reform would only save about one percent on annual costs, and a CBO estimate said tort reform would save $5 billion per year in Medicare, but I suspect those estimates are low. A 2010 Health Affairs symposium on tort reform, for example, had various estimates on the impact of medical tort reform, eventually averaging out at $55 billion in savings per year— equivalent to 2.5% of all health care spending in America. Other estimates in this 2009 article critical of conservative support for tort reform range from $20 billion to $60 billion annually, and 1.5% of annual health care costs in America. This is real money.

• The Washington Examiner’s Tim Carney wrote a column in early 2010 entitled “Down with the health insurers.” I could not agree more. Rather than work in a market dictated by customers, prices and competition, the health insurance industry works in a market dictated by government mandates, special favors and an exemption from monopoly laws created after World War II. Related, the insurance industry is allowed oligopolistic control of individual state health care costs and coverage, since a proper interstate market of health insurance does not exist due again to special favors from the federal government. This must end, and market-based competition must again thrive.

• Change both the existing and the health care law-based employer exclusion tax laws. Currently, the individual health care market is paid for with post-tax dollars, while the employer-based health care market is paid for with pre-tax dollars. This gives the latter an advantage in costs and affordability. The health care law has begun to change this, but in the wrong direction. Instead of giving the individual insurance market the same freedom as the employer-based market (thus increasing the number of insured persons, as well as lowering their tax burden, always a bonus to struggling families), it gave the employer-based market the same disadvantage, as well as the associated expenses, of the individual market. Companies such as Caterpillar immediately stated they would lose tens of millions of dollars due to the change, and thus would have to drop coverage. As of the writing of this book, Caterpillar, McDonald’s and over 200 other large companies have received exemptions from certain components of the health care law for the employer exchange and other cost-related reasons. Once again, a law that increases the size of government gives advantages to certain well-connected compatriots.

• Set GAO on Medicare fraud. $60 billion a year in Medicare is wasted through fraud alone. It’s time to stop wasting so much of the taxpayer’s income on frivolous and inefficient (as well as criminal) spending.

• Repeal the new health care law. $500 billion in taxes over 10 years is not the way to pay for health care reform, and neither is an insurance mandate giving health insurance companies more power than ever before.

• Immediately begin phasing Medicare into a state-run program, which is where all social programs belong anyway. States are more efficient and more accountable than the federal government.

• States may choose to end Medicare in the long run, something I support. However, federalism would allow each state to experiment with their individual Medicare programs and do what is best for their respective citizens.

• Use the savings from the aforementioned reforms to make the ever-more-expensive “Doc Fix” deficit-neutral. To push off reform of the “Doc Fix” is to continue to play games with Medicare recipients and their patients.

Over the years, liberals have correctly argued that rising health care costs inhibit coverage for many Americans. Similarly, the moderate Democrats key to passage of the health care law in 2010 said the insurance mandate would be a requirement when eliminating discrimination on the basis of pre-existing conditions. These left-of-center individuals are completely right…and thus undercut their own support for the health care law.

The Affordable Care Act was supposed to reform Medicare and the larger American health care system for the better. Instead of focusing on costs, though, it focused on coverage. This is the same thing Massachusetts did…and cost has skyrocketed. This is the liberal dream, however - equality of outcome, otherwise known as universal coverage.

As a conservative, I would get rid of the ACA in its entirety and start revamping health care with what I have described above. Pre-existing conditions or not, if costs drop 30% coverage will be more affordable than it is now and will be under the ACA. Cost is the main concern because a) it is the government’s job to provide for the maximum amount of freedom— in the case of health care, to provide universal opportunity for coverage; and b) equality of opportunity, a far better goal for society than equality of outcome, would be better served by lowering costs enough so that Americans can get coverage on their own terms, not on the terms of the government.

As it currently stands, Medicare both underpays compared to the private sector by nearly 30% (thus making private insurance more expensive) and provides for immoral controls over individual citizens. If the American people really want quality health care with greater coverage, they should work to maximize freedom and cost-efficiency, not government control and cooked books.

Dr. David Gratzer on the future of Obamacare, Republican resistance, and reforming American health care - Part 2

Dr. Gratzer, a physician, is a senior fellow at the Manhattan Institute. Most recently, he is the author of Why Obama’s Government Takeover of Health Care Will Be a Disaster, part of the Encounter Books Broadsides series.

This is the second in an exclusive, five-part series by Dr. Gratzer on why the debate over Obamacare is just beginning, what a Republican strategy should look like over the next two years, and what real health reform in America should consist of.

Part 1 appeared here yesterday. Parts 3 through 5 in Dr. Gratzer’s series will appear here at ConservativeHome next week.

The conventional wisdom last March was that passage of Obamacare would soon yield support, both in and out of Washington. That prediction was premature, as yesterday’s vote to repeal the law in the House of Representatives showed.

The legislation’s future is troubled for three reasons, all of which need to be understood as Republicans craft an alternative.

Unpopularity

Long before the signing ceremony, Obamacare’s popularity sank. It’s never recovered.

Just before the election, the New York Times-CBS poll put repeal leading among likely voters, 47% to 43%. Other polls have yielded similar results. The Real Clear Politics average of all polling shows support for the law at 40.9% – and opposition at 50.6%. Exit polling seems to roughly mirror these results. More importantly, Obamacare hurt where it mattered: in the 92 most-competitive districts that matter for controlling the House, a Wall Street Journal-NBC News poll found that 55% of voters favor the candidate who wants to repeal Obamacare vs. 42% for the pro-Obamacare candidate with opposition most intense among key voting blocks (independents and seniors).

And, moving forward, it seems unlikely that Americans will warm to Patient Protection and Affordable Care Act. After six months, the first of the reforms phased in. While some will be mildly popular with sections of the American people – parents, for instance, will like the raising of the age for eligibility to 26 – many of these changes seem too modest to make much of an impact. The list of preventative services – widely touted by the Administration – includes the promise of free aspirins to Americans at risk for cardiac events. Let’s put that in perspective: the promise will save some elderly Americans a few pennies a day.

With the prospect of cost overruns and bureaucratized health care, the public support is unlikely to shift dramatically. And unpopular legislation is likely to be revised or repealed legislation.

State resistance

Though the Patient Protection and Affordable Care Act envisions a robust role for the federal government – some 159 committees, agencies and grant programs will be created including, ironically, a committee for administrative simplification – much of the actual implementation falls to the states. Indeed, some of the most important aspects of the legislation will depend on decisions made in Albany, Des Moines, Juneau, Montpelier, Salem and the other state capitals, rather than Washington, D.C. On that list: the administration for the expansion of Medicaid and the state-based health insurance exchanges.

As former Senate Majority Leader Tom Daschle noted last year: “I’m concerned about implementation. We’re electing 37 governors in this cycle. Those governors are going to have a lot to say with regard to the enthusiasm and the success of implementation.”

To date, many state governments have been cool to the idea of Obamacare, with more than two dozen involved in some type of legal action. While some of this may be attributed to election year posturing, the reality is that the legislation remains profoundly unpopular in some states. Washington has a fall-back position: if, say, Virginia chooses not to create a health-insurance exchange, Virginians could still potentially enroll in a federal exchange.

Still, by making the reforms state-based (if Washington-directed), the complexity invites delays. It’s one reason that, according to a review by the Congressional Research Service, the Administration failed to meet 7 of 22 legislated requirements by September 23.

And there is a further problem: practicality. At present, the legislation strives to be relatively cost neutral to the states but there still are the added costs of administration. Moving forward, with Medicaid rolls growing, Washington should absorb the costs for years to come. But, still, it could leave states on the hook for – as an example – Medicaid eligible people who never signed up, but would be forced when the individual mandate phases in.

In a few years, the biggest criticism of Obamacare may not be defined by partisanship but geography, as state governments rebel against higher costs – and a full implementation of this legislation.

Budget busting

When he launched his campaign for sweeping health reforms, President Obama put health-care costs at the top of his list of priorities. In a February 2009 budget message, the Administration listed eight principles to guide reform. The first, second and last principles directly addressed health care costs. To make his austerity message stick, President Obama threatened to veto any health bill that did not reduce ten-year projected deficits – a threat he never voiced to protect other stated goals of health reform, like universal coverage.

The final enabling legislation was scored as “saving” $143 billion – but the reconciliation bill included unrelated provisions from the federal student loan program. The Patient Protection and Affordable Care Act’s ‘health-only’ provisions scored just $124 billion in net projected savings by 2019.

If that result seems promising, consider a few of the warnings the CBO added to its estimates throughout the debate:

• Despite projected savings within both ten and twenty-year windows, “those estimates are all subject to substantial uncertainty.” (November 5, 2009 Estimate Letter)
• Reviewing the proposed new Community Living insurance plan, “(t)hese estimated effects of the CLASS proposals are subject to considerable uncertainty...” (November 25, 2009 Estimate Letter)
• Assumptions of longer term deficit benefits after the tenth year “reflect an assumption that the provisions of the reconciliation proposal and H.R. 3590 are enacted and remain unchanged throughout the next two decades, which is often not the case for major legislation.” (March 20, 2010 Estimate Letter) 

In May 2010, the CBO reported that an additional $115 billion would be needed to implement the bill.

Roughly half of the plan’s costs are funded with new taxes or other revenue measures. Almost three-quarters of the final $455 billion in Medicare savings targets were to come from crude – and easily reversed – cuts to Medicare fee-for-service payments. Here, then, is the bottom line: it’s unlikely that, even in the optimistic scenarios used by the CBO, this legislation would come in as a deficit reducer. And the history of big health-care legislation is to come in over budget. In 1965, for example, the House Ways and Means Committee estimated that the hospital insurance portion of the Medicare, would cost about $9 billion annually by 1990; actual spending that year was $67 billion.

Thus, at a time of record deficits, with the public increasingly edgy about cost overruns, full implementation would likely require massive new spending. That’s not likely to happen – regardless of who controls Congress beyond 2012.

Dr. David Gratzer on the future of Obamacare, Republican resistance, and reforming American health care - Part 1

Dr. Gratzer, a physician, is a senior fellow at the Manhattan Institute. Most recently, he is the author of Why Obama’s Government Takeover of Health Care Will Be a Disaster, part of the Encounter Books Broadsides series.

In the coming hours, the U.S. House of Representatives will vote to repeal the Patient Protection and Affordable Care Act, commonly referred to as ObamaCare. With a large Republican majority, that vote is likely to succeed. But the Senate will not even consider the motion, and it will thus be more symbolic than practical.

Today, ConservativeHome launches an exclusive five-part series by Dr. David Gratzer. In the series, he will explain why the debate over Obamacare is just beginning, what a Republican strategy for the next two years should look like, and what real health care reform in American should consist of.

What a difference 10 months has made. In March, President Obama signed the Patient Protection and Affordable Care Act into law, and it seemed like the accomplishment of a generation. Presidential historian Robert Dallek wrote in the Wall Street Journal that it was a “minor miracle.” Now, less than a year later, it seems like a millstone hanging around the electoral prospects of Democrats.

Back in the spring, the mood was, of course, very different. “We are a nation that faces its challenges and accepts its responsibilities. We are a nation that does what is hard. What is necessary. What is right. Here, in this country, we shape our destiny.” President Obama spoke those sweeping words at the East Room signing ceremony that would end the legislative drive that had begun before Inauguration. Moments before, he had signed the bill into law, using 22 pens.

If his words seemed august but solemn, the mood in the White House was unusually festive. After the ceremony, staffers opened bottles of champagne and partied into the night.

ObamaCare, as his package of reforms became known, had a challenging birth, with a near death experience when a little known Massachusetts state representative won an unlikely special election, depriving the Democrats of their filibuster-proof majority in the Senate. With resolve, clever legislative tactics, and a bit of luck, President Obama signed into law health-care reforms that would be compared to the Great Society programs of Medicare and Medicaid. In some ways, that comparison underrates the Patient Protection and Affordable Care Act. Remember: Medicare sought only to cover the elderly and Medicaid was a narrow add-on at its creation.

This legislation would redefine Medicaid, expanding its rolls by potentially tens of millions of people in a decade; it would change the type and cost of coverage of millions with its highly regulated (but well subsidized) health-insurance exchanges; and, perhaps most significantly, with regulations covering medical loss ratios, it would literally change the way all health-insurance companies conduct business.

On March 23, the President evoked the memory of Theodore Roosevelt and the first promise of universal coverage in 1912. But the President’s plan was far greater, seeking a re-engineering of a sixth of the national economy. The March conventional wisdom that most – if not all – of the reforms would be implemented. President Clinton said at the time: “The minute the president signs the health care reform bill, approval will go up, because Americans are inherently optimistic.” Medicare, Medicaid, S-CHIP – all these gigantic health-care programs offered good precedent.

For the record, I agreed. On March 24, I sounded practically Clintonian in a short blog: “Let’s be clear, for all the hot talk about repeal and sweeping Republican victories in the fall, much of this legislation is here to stay. Sunday was a game changer.”

Ten months have now passed and that verdict seems far from clear. Even before the ballots were counted in the Congressional elections, President Clinton himself changed his mind and said back in September with unusual brevity: “I was wrong.”

With implementation phased in over the next decade, with so many decisions on regulations and interpretations to be made in the coming years, full implementation seems unrealistic. Yet, despite the strong Republican showing in early November and the promises of repeal, the legislation was passed into law and GOP votes in Congress would fall far short of the numbers needed to overturn a presidential veto. 2010 marks simply the end of the beginning, not the beginning of the end.

In the series of posts that will follow this one, I will consider three reasons why the full implementation of ObamaCare is far from inevitable. Then, I’ll describe ideas for bettering the legislation, and ultimately reforming American health care. And I’ll keep an eye on the prize: improving our health, not just our health care.

Obamacare's Medicaid mess adds to the challenge for Republicans

Mason Herron is a freelance political writer living in New York City and a contributor to FrumForum. 

When the Obama administration and Congressional Democrats began to sketch out their vision of health care reform, they began the process with two seemingly contradictory goals in mind: forcibly expanding the number of individuals with access to health insurance while reducing the federal deficit.

The primary pillar behind this plan was the individual mandate, which would force healthy people to pay—typically out of their own pocket—for insurance, which would increase overall participation in the health insurance market, resulting in reduced costs. However, the bill also needed to offer a means for low-income individuals to access care.

To achieve that goal, the administration and Congress decided to expand eligibility for the federal-state funded Medicaid program up to 133% of the poverty level. The result of this will be an overall increase in the number of Medicaid eligible individuals of about 16 million.

Such a dramatic expansion has costs. Realizing the need to keep the health care bill deficit neutral, Democrats decided to transfer significant proportions of the cost behind Medicaid expansion to the states. Although the Patient Protection and Affordable Care Act (PPACA) stipulates that the federal government pay 100% of the cost for all new Medicaid enrollees not previously eligible for the program, the number of “enrollees not previously eligible for Medicaid” is only an estimated three to six million people. As a result, states will be responsible for funding coverage for ten to thirteen million new enrollees at today’s rates of matching federal funding (between 50%-76%, depending on the state).

Typically, we wouldn’t expect all ten to thirteen million of these individuals to enroll in Medicaid. Yet, with the individual mandate due to kick in at the beginning of 2014, it’s likely that most of them will. To study the potential fiscal consequences that this influx of enrollees might have, a Congressional Research Report estimated cost increases in Texas of $27 billion through 2023, $3.6 billion in Indiana through 2020, $1.2 billion in Florida by 2019, and $1.1 billion in North Dakota through 2020.

These figures are especially onerous in a time where state budgets are already facing a large number of entitlement expenditures. Today, twenty-four states already predict budget shortfalls for FY 2013. Many states will see budget deficits further skyrocket in 2014 as they become obligated to fulfill Medicaid coverage mandates.

Furthermore, there is also concern that the level and quality of care for Medicaid enrollees—already painfully inadequate—could deteriorate even further. Today, doctors who choose to treat Medicaid patients receive reimbursements equal to between only 40 and 80 percent of Medicare rates. Because both these reimbursement rates are already far below private insurance rates, doctors often have minimal incentive to treat Medicaid patients, thereby limiting treatment access for Medicaid beneficiaries. In addition, with a significant increase in the supply of Medicaid patients, there’s likely to be an overall shortage of doctors.

Facing these problems, some states have started to discuss whether to drop Medicaid entirely—a decision that would have catastrophic results for countless low-income individuals who would instantly lose access to coverage. This, of course, would signal a tremendous step backward away from the goal of universal coverage.

Worse, however, is that the decision to eliminate Medicaid programs could have tremendous effects on the total cost of the health care bill and the federal deficit. Should states choose to stop participating in Medicaid, those previously covered by Medicaid would need to become participants in the new health care insurance exchanges in order to receive coverage. Because they are low-income, they would be eligible to receive federally funded subsidies in order to participate in the exchange.

In order to prevent such a significant collapse of our current health care system, Republicans need to step forward and offer a remedy to mitigate the effects that Medicaid expansion might cause.

One option would be to eliminate the expansion altogether, or at the very least suspend it. Critics would argue that Republicans were targeting low-income individuals, but it’s clear that the unintended consequences of Medicaid expansion could have far worse consequences, not only for low-income individuals who could lose their state’s Medicaid program, but also for the country’s health care system as a whole.

Another option would be to reduce eligibility levels, scaling them down from 133% of the poverty line down to 100%, while increasing the rate of reimbursement by the federal government. This move would also add to the cost of the health care bill, but it would remove a significant burden from the states, which are limited in their ability to raise revenue or borrow money.

Ultimately, Congress must find some sort of solution—otherwise, the state budget crisis could get significantly worse over the next few years. Republicans, as part of their goal of altering Obamacare, should make Medicaid expansion a primary focus.

Fiscal austerity and deficit reduction will be good for middle American wages and jobs

Piotr Brzezinski is a freelance writer and former Conservative Party policy analyst.

As employment hits 9.8%, it’s easy for Republicans simply to blame Obama for the suffering on Main Street. But let’s not forget that even the go-go years weren’t great for middle America: Inflation-adjusted median weekly wages for both college and high school graduates fell from 2000 to 2009 (respectively from $1,030 to $1,025 and $629 to $626). How Republicans manage to bolster middle class earnings while simultaneously tackling America’s unprecedented fiscal crisis will be critical to the country’s future.

Wage stagnation for most Americans set in long before the Great Recession –median household income fell by 4% in the decade up to 2008. Of course, these problems shouldn’t be overstated – Americans are living healthier, longer lives – but the fact is that even in the boom years most people were suffering from economic stagnation, masked (for some) by rising housing prices.

Given America’s ballooning debt – set to increase by 42% over the next few years – it’s easy to see that more government spending isn’t the answer. The government expanded massively under both Presidents Bush and Obama without benefiting middle America’s earnings, and, even if we wanted to go on spending, international bond markets won’t support it.

The risk, however, is that these deficits will give rise to future taxes that compound the middle class pain. The costs of debt interest, social security and healthcare alone will consume an estimated 20% of GDP by 2030. Taxing higher income workers can raise some revenue, but squeezing the rich will hit diminishing returns long before covering the deficit, leaving the middle class will be next in line. So spending reductions hold the key to shielding Middle America’s earnings from the cost of reducing the deficit.

The single most important thing Republicans can do for both wage stagnation and deficit reduction is cutting healthcare costs. Skyrocketing employer costs have held down wages by diverting money from workers to the healthcare sector, but reversing this process requires more than just the repealing unpopular elements of Obamacare. Yes, ending the tax penalty for individually owned health insurance and reducing state barriers to entry should help reduce costs by promoting a competitive national healthcare market. But reducing Medicare reimbursement rates – which will cascade throughout the healthcare system as many private payments are pegged to Medicare – and raising copayments will also be necessary to manage demand and get costs down.

And fiscal consolidation will require addressing the cost of other entitlements like Social Security and state pensions. This could come from a move toward defined contribution-based systems, direct benefit cuts, and an increase in the minimum retirement age.

Of course, a serious approach to deficit cutting will also demand discretionary spending cuts – eliminating earmarks, reducing corporate tax subsidies, shrinking and privatising government services, and cutting defence spending. But these are less important than entitlement changes; although discretionary spending gets most of the media coverage, entitlements form the bulk of future burdens.

It makes for a politically unpalatable agenda but, unfortunately, there’s no painless alternative. And, indeed, these reforms will place some pressure on middle America, but it can be minimized by focusing on the ‘cost-free’ elements of entitlement reform, like encouraging Medicare competition and raising the retirement age. And it’s less painful than the alternative: raising taxes.

More importantly, the combination of fiscal consolidation and deficit reduction can break the logjam of wage stagnation. It will promote economic growth by addressing the real uncertainty over future taxes hanging over business investment – until the government cuts spending potential investors won’t believe politicians’ “no new taxes” promises. And, by alleviating healthcare cost pressure, getting the deficit under control will help ensure that wages take a greater share of future employer spending.

Furthermore, boosting GDP growth will, on its own, reduce the burden of America’s debts. Regulatory reforms – rolling back everything from absurd state-based licensing restrictions to over-zealous safety and environmental laws – can complement spending cuts by making America more competitive. Without productivity increases, global competition will keep downward pressure on American wages.

Ultimately, America’s politicians face a series of very difficult challenges over the coming decade. Fiscal austerity can play a critical role in restoring the American economy as an engine of growth for middle America; the risk, however, is that spending cuts will be seen as a threat to the middle class – taking away small goodies – and instead the US will get an ineffectual mixture of tax rises and Know-Nothing nativism. So both for their electoral chances and for the prospects of healthy fiscal consolidation, let’s hope that conservatives can put together a program that cuts the deficit while addressing wage stagnation. 

Republicans risk alienating the elderly and poor by pursuing a conflicted strategy on drug importation

Roger Bate is the Legatum Fellow in Global Prosperity at the American Enterprise Institute. His papers are available at his scholar page. This is the second of a series of articles Bate is writing on drug issues the GOP should be paying attention to in 2011.

Americans pay more--often a lot more—for drugs than Canadians and Europeans. That is unfair, but wholesale importation of drugs from these locations isn’t the answer.

Come January, the new blood of Republican Congressional members will want to tackle the many problems with US healthcare. High-priced drugs is a big concern of voters, even if it's overlooked in the bigger debates about health insurance and health spending.

When it comes to drug prices, on solution congressional leaders discussed in 2010 was legalizing the importation of cheaper drugs from places such as Canada and the European Union, where governments restrict drug prices. US pharmaceutical companies oppose such wholesale importation, as do most Republicans. But there are nuances to the issue, of which newbie congressman and their staff should be aware, before they dismiss all discussions of importation.

Plans to allow importation would certainly lower drug costs, but the negative impact on research and new product development might be significant, since most drugs are developed by small and large US-based drug companies. The reason for this is the unusual nature of drug development. Most of the costs of drug development are upfront, sometimes estimated at a billion dollars, which means that normal marginal cost pricing of drugs is inefficient.  It is far better to tier the pricing based primarily on income - in other words it is both efficient and equitable that richer people pay more for their drugs.

To a certain extent Europeans and Canadians (and numerous other countries) free ride by not paying their fair share.  The best solution would be for these other nations to reverse policy and allow competition, rather than government dictat, to set prices. But while these nations free ride, should Americans continue to foot most of the research and development bill? Probably, since the benefits of new products accrue to Americans often before other nations. This is especially hard to swallow for congressional leaders whose states border Canada, where some of their elderly buy their meds from over the border.     

Drug pricing and importation is an important debate and one that should continue, especially if it can help drive better policies in Europe. But some of those opposed to importation know the debate is never entirely won and that at some stage importation may be allowed. So they are always looking for new reasons to block importation, and one way is to scare people.  

Are imported drugs dangerous?

There are certainly numerous examples of dangerous imports, from contaminated Chinese drugs to counterfeiters selling bogus pills over the net. But according to my research team's work, internet-sourced drugs are probably a lot safer than you think. In fact, with the exception of fake Viagra with packaging from China, which not only didn't have the right active ingredient but could have contained a lethal one, none of the five brands from 70 web pharmacies we assessed failed basic quality testing (our original study of 55 online pharmacies was published in the peer-reviewed scientific literature and can be accessed here).

It is important for Republicans to appreciate that their constituents know European and Canadian imports are, by and large. well-made products. After all, while surveys indicate that Americans are concerned about Internet drug quality, millions buy online and have done so for years. This market is already more than $12 billion a year. For the elderly and isolated in particular, convenience and low cost outweigh the potential harm of using web pharmacies.

Certainly, there are still risks to buying drugs this way. The World Health Organization reports that drugs from Web sites that conceal their physical address are counterfeit in more than 50 percent of cases. And indeed, the few drug failures in our analysis came from Web sites lacking a physical address. Our research suggests that even non-approved Web sites (those breaking U.S. law by not requiring prescriptions and importing drugs) that at least have a physical address will deliver decent-quality brand drugs--albeit illegally. Your best bet is to go to the independent credentialing agency www.pharmacychecker.com and look at their approved list of web pharmacies before deciding. 

Contrary to what one might expect, we also found that price was no indicator of quality. Drugs from India, which were marked up 20-fold from their local retail price, passed basic quality tests, as did those from Europe. 

It's true our sample size is still fairly small. But if replicated by further studies, the conclusion is clear: though there remains a clear risk to buying cheaper drugs over the Internet, as long as the requested drug brand is delivered and the web site has a physical address, with staff contactable by phone, the risk is really pretty small.

Such a conclusion undermines the fear-based argument being used to oppose importation.

Republicans should stick with the economic arguments against (wholesale) importation. They must appreciate the nuance of opposing importation of drugs, which undermines efficient and equitable tiered pricing of drugs, but acknowledge that US patients pay higher prices, and the uninsured or underinsured often cannot afford them. To punish the desperate is immoral and surely loses future voters. All Republican leaders need to do is decriminalize personal importation of drugs for up to 90 days supply, but continue to deny insurance reimbursement of such purchases. That way they do not fatally undermine tiered pricing on which future drug development depends, but assist the poorest voters in their constituencies.