The new health care bureaucracy

By CHARLES M. ARLINGHAUS

True health care reform will allow more options and more choices. The current plans in Washington create a central control that transfers authority from the people to the government and from the state to the federal government. Whether you believe in greater government spending or not, this is exactly the wrong approach.

Anytime Washington gets involved in any policy decision, Washington writes all the rules and tells everyone what to do. Health care is no exception. What started as a plan to find ways to cover people who don't have insurance transformed into thousands of pages of new regulations, mandates, prohibitions, oversight and general central control.

The federal government does not currently set mandates for health insurance; each state does to varying degrees. The new health care bills would transfer most of that authority to Washington. Washington will write the rules because Washington knows best.

Does Washington want to set up a few basic minimums that should be included? No. It wants to set up minimum coverage levels higher than many people's insurance today, maximum coverage levels, specific programs that every policy must include and a new administrative office to review and approve plan designs, plan changes and premium changes.

Generally, the more things a health insurance plan covers, the more expensive it is. Higher co-pays or deductibles will reduce the amount of financial risk and, therefore, the amount of the premium. More expensive plans will cover a higher percentage of "actuarial value," the amount you are expected to cost by statistical averages.

A high-deductible plan might make a lot of sense for a healthy young person, who will be covered against a catastrophe, but still have an affordable premium and, therefore, will buy insurance rather than avoiding it.

However, under the proposed reform, high deductibles are not allowed. New plans must cover at least 70 percent of value. You can keep the plan you have unless it's a budget plan. Budgets and cost-sharing are not going to be permitted. Never mind that most economists think that consumer involvement in costs is a good way to reduce the rate of premium increase.

On the other hand, while we want you to have insurance, we also don't want it to be too good. If your insurance coverage is too good, we're going to tax it. At the levels being considered in the Senate bill, New Hampshire state employees' coverage is about 25 percent too generous. In addition, about 25 percent of employers in New Hampshire give a benefit that the government thinks is too generous. Too nice to your workers? We'll tax that.

It's Goldilocks government at its best. We don't want plans that are too big or plans that are too small. Every plan needs to be just right.

Instead of Goldilocks making these judgments, we'll have a health choices commissioner. The commish will be assisted by the creation of more than 100 new bureaus and federal programs, including the Health Benefits Advisory Committee.

Our new health choices commissioner will have the authority to decide what falls into the just-right range of policy choices that are preapproved for you to choose.

Whether the final bill includes a government-run "public option" or not, the new regulations on private policies amount to more or less the same thing as the government actually running the plan. The "choices commissioner" will be able to approve or deny premiums, dictate coverage levels and "negotiate" prices. So the government will decide what coverage you can have, what it will cost and how much providers will get paid.

There are other ways to make changes in health care that don't involve a large new office in a concrete building in Washington making the rules for everyone in America.

Louis Brandeis believed that change could come from a single state serving as a laboratory of democracy to "try novel social and economic experiments without risk to the rest of the country." In theory, we could watch what happened in a state like Massachusetts and decide if it would work here.

The current proposals in Washington are the exact opposite of Brandeis' approach. A giant new bureaucracy won't allow different states to experiment with different things. Limiting plans to a narrow range of choices -- not too expensive, not too cheap -- eliminates any choices and innovation even in the design of individual plans. Centralized government planning with strict limits on thinking outside the government box does not traditionally lead to innovation.

Charles M. Arlinghaus is president of the Josiah Bartlett Center for Public Policy, a free-market think tank in Concord.

The Cost of Downshifting to Granite State Taxpayers

Tom DeRosa asked me to stop by for the NH GOP's weekly podcast. We discussed the cost of downshifting, from the Congress to state budgets, and from the state to local taxpayers.

Half done on health reform

David Broder's column in the Washington Post defines the conventional wisdom in Washington. He relaibly reflects what the Inside the Beltway crowd think about politics, and even he is acknowledging that the numbers used to justify the House-approved health care bill don't add up.

But, as many sympathetic voices have been telling them: Unless you find more realistic ways of paying for the promises included in the bill, you are simply setting up the public for more frustration -- and yourselves for a political backlash.

At least a dozen health and budget experts have filled the Web and the airwaves with warnings that the House bill simply postpones the cost controls needed to finance the vast expansion of insurance coverage and Medicaid benefits envisaged by its sponsors.

Health Care Reform Hits Home

New Hampshire Public Radio tackles health care reform this morning on "The Exchange".

Guests

* Ned Helms, director of the New Hampshire Institute for Health Policy and Practice at the University of New Hampshire
* Charlie Arlinghaus, president of the Josiah Bartlett Center for Public Policy

"The Exchange" airs from 9am to 10am, and reairs at 8pm.

A Red Ink Trainwreck

Cato's Dan Mitchell has the rare ability to translate arcane policy into plain English. His latest video tackles how the Pelosi health care bill will bust the budget.

Hattip: Powerline

Too little focus on health costs

BIA President Jim Roche writes in the Concord Monitor on the need to examine the costs of the health care bills making their way through Congress.

It's remarkable, therefore, that health care reform under consideration by our congressional delegation in our nation's capitol seems very likely to add to health care costs, not reduce them. What happened to "bending the cost curve" and eventually lowering it?

Pick your source - the Congressional Budget Office, the Lewin Group, the Centers for Medicaid and Medicare Services, and others - they conclude that health care reform legislation under consideration will, incredibly, increase costs, not lower them.

Lots of attention is being paid to expanding government programs like Medicaid, or creating new ones like a "public option" insurance plan, to cover more uninsured and underinsured individuals. Unfortunately, the federal government's long track record of grossly under-funding health care providers for their cost of caring for individuals in existing government programs like Medicaid and Medicare makes many employers understandably concerned about expanding them or creating new ones.

More under-funding from the federal government means more cost-shifting to the business community in the form of higher health insurance premiums. How is this reform?

WMUR tackles downshifting in Health Care Bill

WMUR's Josh McElveen reports on opposition to the Pelosi Health Care Bill because of its reliance on state budgets to pay for many of its mandates.

The question of what it could cost states has piqued Gov. John Lynch's interest. He spoke with House Speaker Nancy Pelosi about his concerns last week.

Analysts said they believe governors will play a major role in health care reform before anything is passed.

"There's little question that the current bill does cost-shift to the states," said Charlie Arlinghaus of the Josiah Bartlett Center for Public Policy. "The question is how much. So, I think you are going to see some pressure to try and eliminate some of that cost shifting."

Video at the link.

If you put the bill online, people might read it

And Nancy Pelosi absolutely doesn't want anyone, especially Congress, reading the House health care bill before they vote on it.

Speaker Nancy Pelosi's office tells THE WEEKLY STANDARD that the speaker will not allow the final language of the health care to be posted online for 72 hours before bringing the bill to a vote on the House floor, despite her September 24 statement that she was "absolutely" committed to doing so.

House members are still negotiating important issues in the bill--whether it will provide taxpayer-funding for abortions, for example. Pelosi is pushing for a Saturday House vote, and a number of big changes will be introduced, likely less than 24 hours before the vote takes place (if in fact it does). The Rules Committee hasn't yet released its resolution, or rule, that must be passed before the bill can move from committee to the floor. The rule will set the terms of debate and determine what amendments are in order.

Instead of a public option, give the public options

In the Boston Globe, Jeff Jacoby shares three ideas to make health insurance more accessible and affordable.

Tear down the barriers to buying insurance across state lines.

Under federal law, states are permitted to regulate “the business of insurance’’ as they see fit, and most have seen fit to allow the sale only of insurance policies licensed by their own insurance commissions. As a consequence, there is no competitive national market for health insurance; there are 50 state markets instead, most of which are dominated by a handful of insurers. This, says Michael Cannon of the Cato Institute, is the “original sin’’ of health insurance regulation.

When it comes to almost any other product or service, Americans would find a ban on interstate commerce and competition intolerable: Imagine being told that you could buy a car only if it was manufactured in your state. Consumers in the market for a mortgage are free to do business with an out-of-state lender; those in the market for health insurance should be equally free to do business with an out-of-state insurer.

Another perspective on the Pelosi Health Care Bill

Here's a look at the most commonly used words in the 1,990 page Affordable Health Care for America Act, as introduced by House Speaker Nancy Pelosi this week.




Thanks to Steven Allen Adams at the West Virginia Examiner for the source document, and Lynn Walsh at the Buckeye Institute for the idea.

Pelosi vs. NH: Wrecking the state budget

The Union Leader argues that the new health care bill unveiled this week by House Speaker Nancy Pelosi would be bad for New Hampshire.

Under Pelosi's bill, families earning up to 150 percent of the poverty level are to be covered by Medicaid! That huge increase would have a disastrous effect on New Hampshire's budget.

This bill ought to draw an automatic "no" vote from Reps. Carol Shea-Porter and Paul Hodes. It would explode the already out-of-balance New Hampshire state budget and almost certainly result in a state income or sales tax. But Shea-Porter was on the stage with Nancy Pelosi, beaming with delight, when the speaker unveiled the plan. Maybe Hodes and Sen. Jeanne Shaheen will have more sense than to support this budget buster.

Weekend Reading: Affordable Health Care for America Act

Here's the entire 1,990 page House Health Care Bill, courtest of our friends at West Virginia Watchdog.

Affordable Health Care for America Act

The True Costs of ObamaCare

The Washington Post takes on the crippling costs of ObamaCare as a pair of columnists write that the plan costs much more and delivers much less than it promises.

Robert Samuelson

The promise of the public plan is a mirage. Its political brilliance is to use free-market rhetoric (more "choice" and "competition") to expand government power. But why would a plan tied to Medicare control health spending, when Medicare hasn't? From 1970 to 2007, Medicare spending per beneficiary rose 9.2 percent annually compared to the 10.4 percent of private insurers -- and the small difference partly reflects cost shifting. Congress periodically improves Medicare benefits, and there's a limit to how much squeezing reimbursement rates can check costs. Doctors and hospitals already complain that low payments limit services or discourage physicians from taking Medicare patients.

Fred Hiatt

The claim merits skepticism. If, as advocates sometimes argue, a public plan operates without favoritism, it will be simply one more entrant in the marketplace. Like other companies, it will have marketing and administrative costs. In some markets served by few private plans, it could offer a useful alternative. But it won't radically reduce costs.

If, as advocates argue at other times, the point is to insure sick people whom private companies, despite all regulatory efforts, find ways to shun, the public plan could offer a valuable safety net. But that wouldn't save money.

And if, as seems likeliest -- and as House legislation mandates -- the plan uses government power to demand lower prices from hospitals and drug companies, those providers may lower quality or seek to make up the difference from private payers. Private companies would have to raise their rates, so more people would choose the public plan, so private rates would rise further -- and we could end up with only the public option and no competition at all. Single-payer national health insurance may be the best outcome, but we should get there after an honest debate, not through the back door.

Harry Reid trying to hide cost of ObamaCare

Jack Kelly reports at Real Clear Politics on the machinations of Senate Majority Leader Harry Reid to hide the true cost of the ObamaCare health care reform, and last week's vote in the Senate to prevent such a massive fraud from happening.

There was a problem with this gimmick, though. Mr. Baucus proposed to save money in Medicare by gutting the Medicare Advantage program, in which 23 percent of seniors are enrolled, and by slashing the payments doctors and hospitals receive for treating Medicare patients.

Medicare currently reimburses doctors only 94 cents for each dollar of health-care services provided. To slash payments another 21.5 percent, as Mr. Baucus proposed, would not be popular with doctors. And if payments were slashed, many doctors who now treat Medicare patients would stop seeing them, which would not be popular with Medicare patients.

To fix this problem, Sen. Debbie Stabenow, D-Mich., proposed to block the Medicare reimbursement cuts for 10 years. The logical thing to do would have been to offer the Stabenow proposal as an amendment to the Baucus bill. But if that were done, the cost of the Baucus bill would rise by $247 billion over 10 years, according to the CBO. Democrats could no longer claim it was deficit neutral.

13 Democrats joined the entire Republican caucus to reject Reid's cowardly attempt to fool the public on the real costs of the bill. If the Senate wants to spend well over a trillion dollars over the next ten years to take over the health care industry, at least they can have the decency to be honest about it.

Costly silence: Lynch needs to speak up

The Union Leader calls on Governor Lynch to stand up against health care legislation that would expand the state's liability under Medicare, and put that burden on New Hampshire taxpayers.

Though some other governors immediately and loudly opposed this expansion as a state budget-buster, Gov. John Lynch has been largely silent. Last week he quietly expressed "concern" about the issue. That's not going to cut it.

As a popular Democratic governor, Lynch's opposition would carry special weight in Washington. He should initiate a bold campaign to fight this entitlement expansion, which would ruin our state budget. Enlisting other moderate Democratic governors would help, but he should do it alone if others won't buck their party.

Obama's NH tax hike: 'Reform' could bankrupt state

The Union Leader looks at the cost to New Hampshire taxpayers of health care reform:

The House bill both Reps. Carol Shea-Porter and Paul Hodes voted for would dramatically expand Medicaid to cover people earning as much as 133 percent of the federal poverty level. Under current state rules, New Hampshire covers parents of Medicaid-eligible children only if their income is less than 63 percent of the federal poverty level. The House bill would more than double the family income level at which New Hampshire would have to provide Medicaid services.

The federal government does not pay 100 percent of Medicaid costs. New Hampshire picks up half the tab. Thus, the House bill would explode state Medicaid costs.

Trust Fund for Municipal Health Care?

Tom Fahey writes in his "Under the State House Dome" column about a new approach to funding health care benefits for municipal workers.

A commission working on the problem of funding health benefits for retired public sector workers agreed on a solution last week. The plan calls for a new system of trust funds that would provide retired teachers, firefighters, police and municipal workers with a health care subsidy.

The current system is broken badly, especially for teachers. Funding for a subsidy for retired teachers was so low that the Legislature cut off eligibility this year.

The new retiree medical trusts would be fed by contributions from both workers and their employers at rates agreed to in local contract negotiations.

Estimates are it will take four years before enough money builds up in the trust to provide a benefit. Trustees of each work group's fund would set benefit levels, based on its finances.

Fahey also writes extensively on the layoffs across state government.

Study: NH business health tab would top $215m

John DiStaso reports in the Union Leader on the New Hampshire businesses would end up paying $215 to $229 million to implement the health care bill passed by the House of Representatives.

J. Scott Moody and Dr. Wendy P. Warcholik, writing for Republican activist Fred Tausch's grassroots STEWARD group, conclude that H.R. 3200 contains "hidden penalties for New Hampshire businesses" that will hurt their ability to compete for jobs in an international market.

They criticize the bill's so-called "play-or-pay" mandate and its provision to impose three new marginal brackets to the federal income tax to partially pay for health care reform.

"In the long run," say the authors, "this will discourage job creation in New Hampshire and reduce access to quality health care."

Shouldn't "Reform" make the problem better?

If one of the principal rationals for passing health care "reform" is to curb the rise in health insurance premiums, shouldn't the bill actually make them lower, not higher? Powerline reports on Price Waterhouse Cooper's study that has the lines for the Senate Finance Committee's bill going in the wrong direction.

TGIFriedman- Medicine

Let's see if Milton Friedman's take on medicine from his landmark "Free to Choose" series has any lessons for us today.