The Hubbub

Listing all Hubbub postings by date.

A Snow Job on Seniors
Grace-Marie Turner
Townhall.com, 06/22/10

The White House and its allies have just begun a multi-million dollar public relations effort – funded in large part by taxpayers – to try to convince senior citizens that ObamaCare is good for them. But this attempted snow job obscures the harmful impact the new law will have on seniors. 

The White House isn’t telling seniors about ObamaCare’s $575 billion in cuts to Medicare that will make it harder and harder for them to find a doctor. Or that all seniors with a Medicare Part D prescription plan will be facing higher premiums in the coming years, according to the non-partisan Congressional Budget Office (CBO). 

The White House instead is spending taxpayer dollars to tell seniors about the $250 rebate check coming to those fully exposed to the Part D “doughnut hole.” What they neglect to mention is that fewer than one in ten people on Medicare actually will be receiving the checks. 

And the White House neglects to mention other ways seniors will be hurt by ObamaCare’s cuts. The president repeatedly pledged that, “If you like your plan, you will be able to keep it,” but experts in his own administration say otherwise. According to Medicare’s actuary, more than seven million seniors with Medicare Advantage plans will lose their current coverage because of cuts to these plans. And those who still have Medicare Advantage plans will have “less generous benefit packages” because of the cuts. 

Not surprisingly, cuts in Medicare will impact seniors’ access to care. Medicare’s actuaries estimate that about 15 percent of doctors and hospitals will become unprofitable because of ObamaCare, “possibly jeopardizing access to care for Medicare beneficiaries.” 

Meanwhile, the White House is trying to fool seniors into believing that these cuts will strengthen Medicare by extending its solvency. But many of the “savings” taken out of Medicare are spent elsewhere, leading the CBO to conclude that ObamaCare “would not enhance the ability of the government to pay for future Medicare benefits.” 

Congressional leaders could have avoided the current fight over the 21 percent cut in payments to doctors caring for Medicare patients by including the payment fix in their health overhaul bill. Instead, ObamaCare did nothing to help doctors, and now the cuts threaten seniors’ access to care as more doctors refuse to accept Medicare patients. 

Given ObamaCare’s harmful impact upon seniors, some might be surprised to know that the powerful seniors’ lobby AARP supported ObamaCare’s passage and aggressively lobbied for it. But while seniors are harmed by ObamaCare, the AARP – a multibillion-dollar special interest organization – did quite well. 

In fact, the AARP’s array of sweetheart deals would make even make Sen. Ben Nelson, father of the “Cornhusker Kickback,” and Sen. Mary Landrieu, mother of the “Louisiana Purchase,” blush with envy. 

A few examples: Last year, the AARP received $427 million in royalty fees for selling “Medigap” policies to seniors – more than it received from membership dues, grant revenues, and private contributions combined. Yet thanks to its own special deal, the AARP is exempted from the $60 billion tax ObamaCare imposes on insurance plans. 

Though the White House boasts that ObamaCare prohibits insurance companies from excluding coverage based upon pre-existing conditions, AARP is also exempted from this requirement. Thus, AARP and others selling Medigap policies can and will continue to impose coverage waiting periods on seniors. 

And while ObamaCare limits insurance executives’ compensation to $500,000 a year, AARP is conveniently exempted from the requirement. As a result, AARP can pay its CEO more than $1 million a year, just as it has in the past. 

Finally, ObamaCare requires Medicare Advantage plans to spend at least 85 percent of all premium dollars on medical claims – but again, it exempts AARP. AARP’s Medigap plans must only spend 65 percent on medical claims, ensuring that AARP can pocket more royalties at the expense of seniors’ care. 

The White House and allies such as the AARP are trying to use multi-million dollar public relations campaigns, presidential town hall meetings, misleading taxpayer-funded mailings to seniors and other efforts to fool seniors about ObamaCare. 

But the fact remains that millions of seniors will lose their current coverage and millions more will have trouble finding a doctor to see them – all because of ObamaCare. Seniors are too smart to believe the sugarcoated message and are rightfully angry over sweetheart deals that protect special interests at their expense. 

Bureaucratic Nightmare
Grace-Marie Turner
Health Policy Matters, 06/17/10

Indiana Gov. Mitch Daniels talked about the impact of ObamaCare on his state before a standing-room-only conference at AEI on Tuesday, and the outlook is not good.

He described "what this cannon looks like from the receiving end" and said his state is reeling from the expected costs -- as much as $3.6 billion in additional costs to comply with ObamaCare's mandates. "This is not a blessing or a boon to the states but a huge mandated tax at the state level," the governor said.

Indiana was one of about 20 states that opted to not serve as contractors to the federal government in setting up temporary high-risk pools. They saw the federal money running out long before the obligations did. And he said that Indiana is "going to think about it for a long time before we decide" whether or not to set up a new, federally designed health insurance purchasing exchange, set to begin in 2014.

"There is a very significant chance this is going to be a nightmare," he said. Daniels is a former director of the Office of Management and Budget and if anyone knows the inner workings of the federal government, he's the one. "It's easy to see one in four of our citizens in Indiana in the exchange system," he said, adding huge costs for taxpayer-subsidized health insurance and causing the cost of ObamaCare to soar.

Congress should have, instead, followed Indiana's lead in providing innovative approaches to covering the uninsured, such as its hugely popular Healthy Indiana Program, which he described in a Wall Street Journal commentary.

He said that ObamaCare should not be called "reform" because it does virtually nothing to change the significant problems in our current system. He called, instead, for changes in tax law that would allow more individual choice, control, and competition.

Gov. Daniels gets it!

 

Economic naiveté: The Obama administration is once again showing its aggressiveness in stifling critics of its health overhaul plan and its naiveté about how business works with its attack on nHealth, the Richmond-based company we wrote about earlier that is folding as a result of ObamaCare.

The closure of this innovative health insurance company made big news. So of course it became a target, attacked because it was losing money anyway with the argument this couldn't have been as a result of ObamaCare.

And today, Politico writes that the "Now infamous Virginia-based firm nHealth, the firm that claimed to go under because of health reform (and was also losing millions), was submitting comment on the health law just weeks before it announced its close. Pulse unearthed an MLR regs comment, dated May 14, in which nHealth gave no indication it would go out of business two weeks later."

What?!

	
First, virtually all start-ups lose money! When I started working full-time at the Galen Institute 13 years ago, it was almost two years before I could take a regular paycheck. And I was our only full-time employee. That's the nature of the business. There are start-up costs, and revenues are invested back to grow the business in hopes of turning a profit in a few years.

nHealth lost $5.6 million in 2008, and $4 million in 2009, according to the company's financial statements. Its loss for the first quarter of 2010 was $966,472. That is progress.

CEO Paul Kitchen says that there were huge start-up costs, and all new revenues were invested back in the business: The company had to hire 50 employees before it made its first sale so it could show potential clients that it could provide the services they were contracting for.

The break-even point for nHealth would have been 5,000 lives covered. They were at 2,000 and growing when the investors pulled the plug last month.

"People in Washington don't realize how profound seemingly small changes are to businesses, especially start-ups like ours, in altering the climate for our products," Kitchen said.
	
Second, nHealth didn't know it was going out of business when it submitted comments to HHS about the Medical Loss Ratio (MLR) regs on May 14. Its investors made the decision at a later board meeting.

So here was this start-up company that could have been investing its time in getting more clients that instead had to stop and write up comments to a federal government rule that could well determine whether or not it could survive.

Both examples show a maddening lack of understanding of how the business world works and provide further evidence of why we should not have government bureaucrats in charge of our health sector.

 

Regulatory thicket: One of the biggest complaints businesses have in coping with RomneyCare in Massachusetts is the burden of paperwork and regulatory compliance it created. Now, we see the same thing happening with ObamaCare.

Allowing parents to keep their 26-year-old dependents on their health insurance at work is a bigger problem administratively than financially, according to AIS Health Reform Week. It writes that insurers "say they must adjust internal systems substantially to accommodate regulatory changes and handle the 'nuts and bolts' of reform."

And with new regs coming out several times a week, it's going to turn into a nightmare.

Take the regulatory thicket caused by the new "grandfathering" rules issued on Monday. It took the reg writers 121 pages to describe what companies can or cannot do to temporarily protect their plans from the feds. Here is an example from the regulations to the simple question of whether or not a company can increase co-payments for office visits:
Example 3. (i) Facts. On March 23, 2010, a grandfathered health plan has a copayment requirement of $30 per office visit for specialists. The plan is subsequently amended to increase the copayment requirement to $40. Within the 12-month period before the $40 copayment takes effect, the greatest value of the overall medical care component of the CPI-U (unadjusted) is 475. 

(ii) Conclusion. In this Example 3, the increase in the copayment from $30 to $40, expressed as a percentage, is 33.33% (40 - 30 = 10; 10 ÷ 30 = 0.3333; 0.3333 = 33.33%). Medical inflation (as defined in paragraph (g)(3)(i) of this section) from March 2010 is 0.2269 (475 - 387.142 = 87.858; 87.858 ÷ 387.142 = 0.2269). The maximum percentage increase permitted is 37.69% (0.2269 = 22.69%; 22.69% + 15% = 37.69%). Because 33.33% does not exceed 37.69%, the change in the copayment requirement at that time does not cause the plan to cease to be a grandfathered health plan.
Got that? See our Clip of the Week video for more on this issue.

A Bad Omen on ObamaCare: Fears About Health Reform’s Costs Are Coming True
Grace-Marie Turner
New York Daily News, 06/17/10

Shortly after President Obama signed the health overhaul law, several major corporations reported it would take a bite out of their future earnings. This group included AT&T, Caterpillar, John Deere, Verizon and several other large employers.

Convinced these businesses were cooking their books to cast the new law in a bad light, House Energy and Commerce Committee Chairman Henry Waxman (D-Calif.) promptly subpoenaed documents and demanded executives testify to defend their announcements. But after combing through 1,100 pages of corporate documents and e-mails, Waxman's staff canceled the hearing - and announced that "the companies acted properly and in accordance with accounting standards."

In other words, even though some lawmakers don't want to believe it, Obamacare is already proving costly to American businesses. And ironically, the new law could cause many workers to lose the health benefits they get through their jobs.

So what's driving up costs for America's employers? For starters, there's the new tax on retiree drug coverage.

When lawmakers created the Medicare drug benefit in 2003, they wanted to make sure that employers who already provided prescription drug coverage to their retirees didn't shift those costs to taxpayers. So Congress decided to reimburse these employers for 28% of the cost of their plans through a tax-free subsidy. This would be generous enough for employers to continue to provide the retiree coverage, but cheaper than having taxpayers foot the full bill.

Under Obamacare, that subsidy will be taxed. Over the next decade, according to the consulting firm Towers Watson, this will cost employers $14 billion.

In addition, the health overhaul law requires private employers to allow employees to add their 26-year-old "children" to their insurance for the policy year starting this September. This requirement will push up the cost of health insurance. Caterpillar alone estimates the mandate will raise its health insurance costs by $20 million each year.

The new law also imposes billions of dollars in new fees and excise taxes and prohibits many of the tools that insurance companies have used to keep costs down, like caps on coverage and co-payments on preventive care.

Without factoring in the new health overhaul, large companies had predicted that insurance costs would increase between 6.5% and 7% next year. Obamacare could send average health insurance cost increases for major employers into double-digit territory.

Indeed, it's no longer inconceivable that some large companies may decide to drop health insurance altogether as many may conclude it's cheaper and less risky to pay fines to the government than offer insurance to their workers.

Under the new law, every employer with more than 50 workers will be required to either offer health insurance or pay an annual penalty of $2,000 per full-time worker. If they offer coverage and it doesn't meet certain tests, they could face fines of $3,000 per worker.

Paying a penalty will be much less expensive than paying for insurance. Consider AT&T, a company that spends $2.4 billion a year on employee health coverage. If AT&T decided not to cover its workers, it would be on the hook for only $600 million in fines.

If employers stop offering health insurance, taxpayers will wind up picking up the cost of coverage for millions more Americans. The cost of Obamacare will skyrocket, as will our deficit and our taxes.

It's becoming clear that the health overhaul may well have disastrous consequences for the economy. Americans now realize this; a recent survey from Rasmussen Reports found that 58% of voters favor repeal of the new law. The American people opposed passage of Obamacare and the more they learn about it, the more their opposition grows.

Market-Based Reform Initiatives Are Key To Health Law Success
Grace-Marie Turner
Kaiser Health News, 06/17/10

Consumer-directed health plans have been useful in controlling the rise of health costs over the last several years, but the survival of these plans is threatened by the new health overhaul law.

Mercer’s latest National Survey of Employer-Sponsored Health Plans found that major employers held total health benefit cost increases per employee to 5.5 percent in 2009 – the lowest increase in a decade (see chart below). Participation in consumer-directed health plans, as well as health management programs, has been growing over the last few years as companies sought ways to successfully engage employees as partners in managing costs and care.


Source: Mercer's National Survey of Employer-Sponsored Health Plans; Bureau of Labor Statistics, Consumer Price Index, U.S. City Average of Annual Inflation (April to April) 1990-2009; Bureau of Labor Statistics, Seasonally Adjusted Data from the Current Employment Statistics Survey (April to April) 1990-2009.

Enrollment in consumer-directed plans grew to an estimated 23 million people in 2009, up from 18 million people in 2008—a 27% increase, according to an April report by the American Association of Preferred Provider Organizations.

Among the most notable is the growing adoption of Health Savings Accounts. Ten million Americans now are covered by HSA-qualified health plans, up from eight million last year, according to the latest survey by America's Health Insurance Plans. To open tax-free health savings accounts, people first must be enrolled in high-deductible health insurance plan.

Unfortunately, ObamaCare threatens to render these plans a thing of the past.  Until now, employers have had the flexibility to tailor benefit and cost structures to fit their budgets and corporate cultures, but the new health overhaul law will limit their options in the future.

Under the new law, the Department of Health and Human Services will make the ultimate ruling on HSAs when it decides how to calculate the actuarial value of the high-deductible health insurance policies that must accompany health savings accounts.  

The health law requires also that all insurance policies will be required to provide a minimum actuarial value of at least 60 percent for the benefits covered.  If HHS allows contributions by individuals and employers to health savings accounts to “count” as part of the actuarial value, then HSAs and other account-based plans would likely meet the test.  But if contributions are not included, the plans likely would not qualify, removing an important tool to hold health costs down.

HSAs couple a tax-favored savings account used to pay medical expenses with a high-deductible health plan that meets certain requirements for deductibles and out-of-pocket expense limits. Most cover preventive care services, such as routine medical exams, immunizations and well-baby visits, without requiring enrollees to first meet the deductible. The funds in the HSA are deposited tax free, interest earned is tax free, and the account is owned by the individual and may be rolled over from year to year.

The new AHIP study underscores the value of consumer-directed plans in achieving key goals of the health reform effort.  Here are some highlights of the AHIP survey of people enrolled in HSA-qualified health insurance:

	
Lower premiums: Monthly premiums for individuals aged 30 to 54 averaged $2,465 a year ($205 a month) and $5,335 for a family ($445 a month) – less than half the average costs of traditional plans.
	
Larger companies: The fastest growing market for HSA/HDHP products was large-group coverage, which rose by one-third, followed by small-group coverage, which grew by 22 percent. 
	
PPOs preferred:  Overall, preferred provider organizations (PPOs) were the most popular insurance type, with 88 percent of enrollees. They generally have access to negotiated discount arrangements with health care professionals when paying bills from their HSA accounts.
	
More consumer information: More than 90 percent of responding companies reported offering access to HSA account information, health education information, physician-specific information, and personal health records as consumer decision support tools for their members.
	
Not just for the young: Fifty-two percent of all individual market enrollees -- including dependents covered under family plans -- were aged 40 or older so they clearly are not just for the young, as critics claim.

The charts below tell the story of success:



Indiana Gov. Mitch Daniels, a Republican, says providing the HSA option to state employees will save the state at least $20 million this year, and employees will save $8 million compared to their coworkers in traditional health plans.  More than 70% of Indiana’s 30,000 state employees have selected the HSA option. 

Gov. Daniels says that employees become more active participants in their health care, making smarter and more cost-effective decisions – visiting hospital emergency rooms 67% less often and using generic drugs more than those in conventional plans, for example.  An independent survey by Mercer found no evidence that HSA members are deferring needed treatment or preventive care.

Many companies, such as Whole Foods, offer another form of CDHC plan called Health Reimbursement Arrangements. HRAs give employers more flexibility in shaping their health benefit packages, including the ability to offer account-based plans and provide incentives for prevention and wellness activities. But, unlike HSAs, HRA account balances generally are not portable after employees leave the company.Both products are helping to make health insurance more affordable and are helping companies to lower health costs.

Competition works when consumers are engaged in getting better value for their health care dollars. Policymakers would be well-advised to make sure that these consumer-friendly plans remain as an option for both individuals and employers so they can continue to have these tools to engage employees as partners in managing health costs

Re-education Camp
Grace-Marie Turner
Health Policy Matters, 06/11/10

What a bizarre week it has been, with oil still gushing into the Gulf, growing global political and economic instability, and virtually no private-sector jobs being created in our still-struggling economy. And the president spends yet another week talking about health reform?!

Clearly, he knows this massively unpopular law is causing political trouble for Democrats or he wouldn't be trying so hard to re-educate the American people about what's in it. But the sugar-coated message about the early benefits just isn't selling.

About four million -- or less than 10 percent -- of seniors are expected to get $250 checks after hitting the doughnut hole in their Medicare drug plans. Yet all seniors are going to be facing the $575 billion in cuts to Medicare, leading to a loss of Medicare Advantage benefits and growing difficulty getting the care they need. It's an insult to believe seniors can be bought off with this one-time payoff.

	
The Wall Street Journal holds no punches in an editorial today, entitled "Farewell, Medicare Advantage" about the president's plan to re-sell ObamaCare -- backed by a $125 million campaign funded by labor unions and other interest groups:

"Seniors in particular should curb their enthusiasm. 'First and foremost,' President Obama told seniors on Tuesday in Wheaton, Maryland, 'what you need to know is that the guaranteed Medicare benefits that you've earned will not change, regardless of whether you receive them through Medicare or Medicare Advantage.' First and foremost, nothing about that sentence is true," the editors write.

"Advantage gives almost one of four seniors private insurance options, and Democrats are about to cut its funding by some $136 billion over the next decade even as health costs rise. The Congressional Budget Office says these cuts will cause enrollment to drop by 35%, the Administration's own Medicare actuaries predict 50%, and both outfits take for granted that benefits will also decline. The President knows this, so he and his fellow Democrats are gearing up to blame these cuts on ... insurers, rather than on their own policies," they write.
	
Early trouble in Vermont: Vermont is demanding that lower-income seniors return their $250 checks to the state because its state program already has covered their doughnut hole drug costs. This latest "benefit" of ObamaCare sets up brouhaha between the feds and the states, pitting money against politics. No doubt, similar battles will come as cash-strapped states look under every rock for money.

This is just one small example of the lack of coordination between the states and the federal government in writing the legislation and the incredible difficulties that it will present in implementation.

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Employer shock: Employer reps are in shock over a draft copy of regulations circulating in Washington that address the circumstances under which existing employer health insurance plans will be required to meet all the expensive and onerous new mandates in the health overhaul law. Most employers believed (hoped?) their plans would be grandfathered since the president promised people so very often that "if you like your health plan, you will be able to keep it."

Apparently not. The reg writers estimate that more than half of all employer plans will fail to meet the test. The mid-range assumption is that two-thirds of employees of small businesses, and half of those in large employer plans will lose their grandfathered status by 2013 and will then have to comply with all the new federal rules.

This is going to be very, very unpopular. Deloitte released a survey yesterday showing that 82% of those surveyed consider themselves "well" or "adequately" insured, and that virtually all of them (96%) are "very satisfied" or "somewhat satisfied" with their insurance company's performance. Since most Americans like the coverage they have, they are going to wonder what happened to the president's promise that they can keep their current coverage.

And the more that employers are forced to change their plans to comply with the federal edicts, the more likely they are to drop coverage altogether and opt for the much cheaper fine for not providing coverage.

These are the facts. This legislation will have serious adverse effects on our economy, our health sector, on patients, doctors, taxpayers, and the future of medical innovation -- with health insurance costs accelerating, job losses coming inside and outside the health sector, outrage over the coming federal health insurance mandates impacting individuals and business, medical infrastructure being swamped with 16 million more Medicaid patients, and doctors leaving practice or closing practices to Medicare patients.

We've been warning about the impact of ObamaCare. Economic reality, which seems hard for many on the left to grasp, will ultimately prevail.

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Physicians speak: Our friend, former AMA president Donald Palmisano reports from the American Medical Association annual meeting in Chicago about a survey in the June 10 issue of The New England Journal of Medicine showing only a slim minority of doctors -- just 13% -- agreed with the position the AMA took to endorse ObamaCare.

Yet enough members of Congress were convinced by the AMA endorsement to vote Yes on the legislation to put the bill over the top.

The study, by Salomeh Keyhani, MD, MPH, from the James J. Peters Veterans Affairs Medical Center, and Alex Federman, MD, MPH, from the Mount Sinai School of Medicine in New York, surveyed more than 5,000 physicians and found that while the AMA was probably the most vocal doctors' group during the healthcare reform debate, it did not represent the majority of physicians' views during that contentious legislative process.

Wanna rethink that vote now?

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And you will want to check out the new ObamaCare Watch website. Our friend and colleague Jim Capretta writes: "We have launched this web site to set the record straight. ObamaCareWatch.org pulls together all of the best evidence and analysis about the legislation, as well as relevant news items and commentary, in an accessible and searchable format for anyone to use as they need to. Our aim is to provide Americans with the facts so that they can hold those who sponsored and passed ObamaCare accountable for what they have done."

And don't forget to also bookmark our HealthReformHub.org website for reports, updated many times daily, with all of the latest developments on the health policy front.

Consumerism in Europe
Grace-Marie Turner
Health Policy Matters, 06/04/10

How extraordinary it was in London and Paris last week to hear broad agreement about the value of consumer choice, competition, portability, and the essential role that private providers play in health care in Europe.

The world has turned upside down.

I was in Paris to speak at the first pan-European conference focusing on the issue of private hospitals, organized by the European Union of Private Hospitals and its president, Dr. Max Ponseille and vice-president, Alberta Sciachi. More than 400 people attended, including members of the EU parliament, former health ministers, and many corporate CEOs.

Throughout Europe, a network of private hospitals is growing. Government officials say private hospitals are essential in serving as a safety valve for public health systems to give people a way out of waiting lines that would be even longer without their services.

There was general agreement among almost everyone at the conference that private hospitals are essential in the mix of care. And many say the private hospitals make public hospitals better by providing competition.

How tragic, then, that the recently passed health overhaul law in the U.S. effectively prohibits new physician-owned private hospitals. Physician Hospitals of America has rightly filed suit challenging the law’s provisions.

John Bowis, former Minister of Health for the United Kingdom, spoke about the importance of allowing “patients to be partners in managing their care” and that “information is key to empowering patients.”

Clearly, Europeans have come to these conclusions based upon long experience with government-controlled, bureaucratically-run health systems. And yet, here we are in the U.S. going head first into “reforms” that will reduce the role of genuine competition and put more and more power and control over health care decisions in the hands of government bureaucrats.

And in London, I spoke at a luncheon briefing organized by the Stockholm Network and its energetic and competent CEO Helen Disney.

Even in Britain with its government-controlled health system, doctors have private practices. Doctors work under contract to treat patients in the National Health Service, but they also see patients who pay privately, often with private insurance they receive through their employers.

There is tremendous interest in the health overhaul law in the U.S. Here is the PowerPoint presentation I used during my opening keynote address in Paris -- which was translated in real time into four other languages -- to give them an overview.
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Casualty: A tragic early casualty of ObamaCare is a terrific new company run by Paul Kitchen in Richmond called nHealth. “The hotly debated healthcare reform bill signed into law in March has killed a local insurance company,” according to a Richmond BizSense news report.

nHealth offered HSA-qualified high deductible insurance combined with wellness and coordinated care programs, but the health overhaul law has made the two-year-old company’s business model unsustainable, denying clients a hugely popular health option and putting 50 employees out of work. Here’s the report:
According to nHealth CEO Paul Kitchen and Paul Nezi, one of the company’s original investors and former board members, regulatory changes the company believes are coming as a result of the legislation will require levels of capital beyond what nHealth’s business model can sustain.

“Despite a product that was gaining increasing acceptance among companies throughout the Commonwealth, the uncertainties in the regulatory climate coupled with new demands imposed by national healthcare reforms have made it challenging to sustain the level of sales required to remain viable over the long run,” Slabaugh said in the letter.

Founded in 2008, nHealth was built around a high deductible insurance plan model that utilized health savings accounts and kept costs down [by] making consumers more involved in their healthcare decisions.

nHealth was recognized in October 2008 by the Venture Forum as a promising company to watch and Nezi said the model was gaining acceptance in the market.

“Our results over the last couple of years prove the product does work,” Nezi said. “I believed and still believe in the product design or I wouldn’t have invested in the company.”

The letter to agent[s] stated nHealth has “ample capital to pay claims” for business on the books through the end of the year. It also said the company will continue to pay commissions on business “as long as it remains on nHealth’s books.”
What a sad day for nHealth, the tireless work of Paul and his team of entrepreneurs, and the clients who loved the product they offered.
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HHS to monitor recipes? Galen Institute founding board member John Hoff was a winner in the Politico Pulse contest on the “most overlooked health reform provision.” To quote the Pulse:
John Hoff, of the Galen Institute, found a choice paragraph in Section 4205. The provision, which requires chain restaurants and vending machines to provide nutrition notices, instructs the HHS Secretary to “consider standardization of recipes and methods of preparation, in reasonable variation in serving size and formula of menu items, space on menus and menu boards, inadvertent human error, training of food service workers, variations in ingredients...” Considering recipes? Sounds more like cooking class, less like health reform.
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America! On a bright note, I was at Ronald Reagan National Airport yesterday morning where there were an unusual number of uniformed military personnel. Inside security, a crowd had gathered at one of the US Airways gates, clearly awaiting someone special.

It turned out that the festivities were to welcome 40 World War II veterans who were flying to Washington from Kansas City for their first visit to the World War II memorial. Several hundred people -- mostly other travelers like me -- gathered around the gate for a wonderful and spontaneous welcoming ceremony.

An honor guard of servicemen and women had held a small welcoming ceremony on the tarmac, and back in the terminal, someone was playing patriotic and military tunes as we all clapped and cheered the veterans as they arrived at the gate.

The veterans all were in their 80s and 90s, some in wheelchairs. How moving it was to see the young, uniformed personnel guiding them in. One person held a sign that said: “If you can read this in English, thank a veteran.”

These are truly heroes, every one of them. And the citizens that cheered them knew that and were anxious to say hello and shake their hands.

My father was a veteran of WWII, and here is a link to his diary as a B-17 pilot flying out of North Africa early in the war. I thought about him and how very much this little ceremony would have meant to him. What a great country this is.

Government moves into the doctor's office
Grace-Marie Turner
San Francisco Chronicle, 05/25/10
Article available here and here.

President Obama is attempting to calm fears about his new health overhaul law, saying at a recent town hall meeting in Iowa that his plan "isn't a government takeover of our health care system" and if Americans "like their doctor, they'll be keeping their doctor."

That remains to be seen. A growing number of physicians who have studied the new law believe it will lead to significant government intrusion into medical decisions, and many warn they will close their practices before they will let that happen. Many Californians may find it is more difficult to find a doctor to see them than before the overhaul law was enacted.

A March survey of physicians by The Medicus Firm found that as many as a third of the nation's practicing physicians say they may close their practices and get out of the medical business entirely as a result of the health overhaul law.

Before the March vote, a Sacramento doctor wrote in the Sacramento Bee, "I can sadly predict that if this bill becomes law, in a few years it is likely many private practices will close. I would likely be forced to consider leaving my hometown and home state. Practicing here, I bear the burden of being in a high-tax state that is unfriendly to employers like me, with more regulation and lower payments than many other regions of the country."

Some of the nation's best doctors are warning they may end their careers. Dr. Dave Janda of Ypsilanti, Mich., is a nationally recognized sports injury prevention pioneer and author of a best-selling book that has been featured on Oprah and other media outlets. One of his studies on recreational injuries has saved $2 billion a year in health care costs and has lead to the prevention of 1.7 million people being injured in the United States each year. He recently told a local news outlet that he'd have no choice but to quit medicine once the health reform legislation kicks in.

And he is not alone. The expansion of coverage in the bill means that another 1.7 million people in California will be covered through MediCal, California's version of Medicaid, the public insurance plan for the poor funded jointly by the federal and state governments.

While MediCal recipients technically have a very generous benefits package, experience shows many have a hard time securing an appointment with an actual doctor. According to a recent survey by the California Health Care Foundation, only about half of the state's physicians are willing to take new MediCal patients.

But adding 1.7 million more patients to California's MediCal rolls without increasing the physician supply will make it even more difficult for the poor to find a physician.

Why are doctors turning away so many of these patients? Because they simply can't afford to treat them. For some office visits, MediCal reimburses physicians only $13. Thus, MediCal reimburses most physicians at less than their costs of treating patients so they lose money on every visit. In fact, California suffers from some of the lowest Medicaid reimbursement rates in the nation.

The health overhaul legislation tries to fix this by requiring some physicians treating Medicaid patients to be paid at the somewhat higher Medicare rates for two years. But the increased reimbursements go only to primary care doctors and won't help with patient access to medical specialists.

The new law will have implications for those with private insurance as well. Already, underpayments by Medicaid have made private health insurance more expensive because the payment rates still are generally lower than the cost of treating patients.

Doctors and hospitals have to compensate for the losses they take by charging the privately insured more.

As a result of this cost-shifting, the privately insured pay about $1,500 more for their insurance each year than they would if government programs reimbursed providers adequately. Adding millions to Medicaid will only exacerbate such cost-shifting and drive the cost of private insurance even higher.

With its estimated $19 billion budget shortfall, California's political leaders are understandably worried about how they'll pay for all these new enrollees, provide services and keep health costs under control. Officials should tread cautiously as many of their past efforts to rein in Medicaid spending have had negative consequences for patients and taxpayers alike.

For example, many states, including California, have limited doctors' ability to prescribe medicines, often forcing them to start by prescribing the cheapest drugs even when physicians know these older drugs won't work as well.

States may save money on prescription drugs in the short run, but other health spending increases as patients require more office visits and other medicines to treat side effects of the government-prescribed medicine -- even incurring hospital or emergency room costs that could have been avoided.

By passing health reform, lawmakers have reserved a permanent place for themselves at the doctor's office. That's bad news for patients, because government meddling in health care has proven very costly -- both medically and financially.

Soaring ObamaCare Costs Break the Bank
Grace-Marie Turner
Lexington Herald-Leader, Sacramento Bee, Pittsburgh Tribune-Review and dozens of other newspapers, websites and blogs around the country
Article available here.

Americans consistently said controlling health costs was their top priority for health reform. But Washington didn't listen, and independent experts now say the new health law actually will drive up the cost of health care and insurance premiums.

Federal and state governments as well as businesses, consumers and taxpayers are finding they cannot afford this massive and unpopular health overhaul law.

The Congressional Budget Office recently issued a revised estimate showing the law will cost $115 billion more than it projected the week before it was enacted. That puts the CBO's initial price tag at $1 trillion, still a conservative estimate that is based upon unrealistically high assumptions about cuts in Medicare spending and unrealistically low assumptions about the cost of the new law.

Further, the CBO says that preventive care and pilot projects designed to modernize care delivery, while important, are unlikely to reduce costs and may actually increase health spending.

A report by the Obama administration's own actuary, issued a month after Congress passed the reform legislation, showed it will increase federal health spending by $311 billion over the next decade and likely much more.

The chief actuary for the administration's Centers for Medicare and Medicaid Services, Richard Foster, also predicts higher health insurance premiums for individuals and businesses.

One reason is the billions of dollars in new fees and excise taxes the law imposes that Foster says will "generally be passed through to health consumers in the form of higher drug and devices prices and higher premiums." These include more than $20 billion in taxes on medical devices, $60 billion in taxes on health plans, and $27 billion in taxes on prescription drug companies.

Foster's report also highlights the shaky financial footing of the new long-term care insurance program - the CLASS Act, which Sen. Kent Conrad, D-N.D., has described as "a Ponzi scheme of the first order." Foster says the program faces "a significant risk of failure" and finds the program will result "in a net federal cost in the long-term."

The CBO estimates that individuals and businesses also will face at least $120 billion in fines and penalties for failing to comply with the law's new health insurance mandates. And it says families purchasing health insurance in the individual market will pay $2,100 a year more for coverage by 2016 than they would had the measure not passed.

States also fear a flood of red ink. Indiana has released a study showing that the health overhaul law could cost the state an additional $3.6 billion over 10 years - money that Hoosiers don't want to spend for a law that polls show they strongly oppose.

And major companies also face tax hits, fines and huge risks. Large, publicly traded companies have issued reports showing reduced earnings as a result of tax changes. Experts with the consulting firm Towers Watson calculate it will mean a $14 billion hit to their earnings because the law takes away part of a subsidy that encourages them to provide drug coverage to retirees.

These companies also are beginning to recognize the extraordinary risk of continuing to provide health benefits for their workers.

"Many companies are examining a course that was heretofore unthinkable, dumping the health care coverage they provide to their workers in exchange for paying penalty fees to the government," according to Fortune magazine that reviewed internal company documents.

If employers drop health insurance, taxpayers will wind up picking up the costs of coverage for millions more Americans. And an analysis conducted by officials of the White Castle restaurant chain said that just one provision will effectively cut the chain's net income in half and reduce future jobs creation.

These company reports are the canary in the coal mine warning politicians, businesses and consumers of the dangers ahead. They are sounding alarm bells that the health care reform legislation is unpopular for a reason: It will break the bank for taxpayers, consumers and American businesses.

Good News!
Grace-Marie Turner
Health Policy Matters, 05/19/10

Ten million Americans now are covered by HSA-qualified health plans, according to a survey released today by America's Health Insurance Plans (AHIP).

This is an increase from eight million last year and six million in 2008. These are people enrolled in high-deductible health insurance plans that qualify them to open tax-free Health Savings Accounts (HSA/HDHP).

Clearly the solid growth shows the popularity of the HSA/HDHPs and their continuing appeal, even during a health reform debate that has gone in completely the opposite direction.

Some highlights of the AHIP survey:

	
Monthly premiums for individuals aged 30 to 54 averaged $2,465 a year ($205 a month) and $5,335 for a family ($445 a month).
	
Fifty-two percent of all individual market enrollees -- including dependents covered under family plans -- were aged 40 or older.
	
Overall, preferred provider organizations (PPOs) were the most popular insurance type, with 88 percent of enrollees. They generally have access to negotiated discount arrangements with health care professionals, even when paying bills from their HSA accounts.
	
More than 90 percent of responding companies reported offering access to HSA account information, health education information, physician-specific information, and personal health records as consumer decision support tools for their members.
	
The fastest growing market for HSA/HDHP products was large-group coverage, which rose by one-third, followed by small-group coverage, which grew by 22 percent.
	
HSA/HDHPs accounted for 11 percent of all new health insurance purchases in January 2010.

The charts tell the story of success:


Click here to enlarge.


Click here to enlarge.

HSA guru Roy Ramthun says the survey is the largest of its kind but may still not include some self-funded companies that use non-carrier-based payment administrators who may not be AHIP members.

The survey does not answer the question regarding how many HSA "accounts" exist, only how many have qualifying insurance. Or how many people are enrolled in HSA-sister plans, Health Reimbursement Arrangements. This number would bring the totals of those enrolled in consumer-directed plans much, much higher. More to come on that ...

What's going to happen to HSAs under ObamaCare? Roy has a white paper explaining. While they don't take a direct hit in ObamaCare, I personally am very worried that the kind of health insurance we will be required to have will be so comprehensive that HSA-qualifying policies wouldn't satisfy the individual mandate.

This is a battle well worth fighting.

States with the highest percentage of HSA/HDHP enrollees were: Vermont (13.8 percent); Minnesota (9.2 percent); Colorado (9.2 percent); Arkansas (8.2 percent); Indiana (8.1 percent); and Ohio (8.0 percent).

States with the highest levels of HSA/HDHP enrollment were: California (1,018,000); Ohio (651,000); Florida (639,000); Texas (637,000); Illinois (575,000); and Minnesota (361,000).

As a refresher, AHIP explains: "Health savings account plans give consumers incentives to manage their own health care costs by coupling a tax-favored savings account used to pay medical expenses with a high-deductible health plan (HDHP) that meets certain requirements for deductibles and out-of-pocket expense limits.

"Most HDHPs cover preventive care services (e.g., routine medical exams, immunizations, well-baby visits) without requiring enrollees to first meet the deductible. The funds in the HSA are deposited tax free, interest is tax free, and the account is owned by the individual and may be rolled over from year to year."

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Making it right: A reader wrote last week that she was dismayed about the title of our last newsletter, "More Bad News," saying conservatives have had far too much bad news and don't want to hear any more.

And she was exactly right.

The title should have said "More bad news for ObamaCare" because it chronicled more of the inevitable parade of adverse consequences of legislation that is unworkable and unaffordable. Hopefully today's headline makes up for it. We do listen.

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Off to Europe: We will skip an issue of Health Policy Matters next week as I will be in Europe for speeches and meetings. I will be in London speaking at a forum sponsored by the Stockholm Network and then in Paris presenting at a conference sponsored by the European Union of Private Hospitals. (Yes, that's right.) They are interested to learn more about our health overhaul law. I will report back when I return.

Obamacare Takes More Blows
Grace-Marie Turner
National Review Online: Critical Condition, 05/17/10
The bad news for Obamacare just keeps coming. The Democrats who enacted the massive health-overhaul law thought they could rewrite the rules of how our economy works, but their arrogance is coming face to face with reality: Jobs are in jeopardy, as employers examine the impact of Obamacare; the cost of the legislation is already rising; and more states have joined a lawsuit challenging the health-care law and Washington’s growing power.

Jobs: An analysis conducted by officials of the White Castle restaurant chain and released by House Republican Leader John Boehner says that just one provision of Obamacare will effectively cut the chain’s net income in half and reduce future job creation.

White Castle vice president Jamie Richardson explained that the provision that has the company “most concerned is the $3,000 penalty that kicks in when an employee’s portion of a premium exceeds 9.5 percent of household income.”

He explained that “this provision alone would lead to approximate increased costs equal to over 55 percent of what we earn annually in net income.” He added: “Effectively cutting our net income in half would have [a] devastating impact on the business — cutting future expansion and more job creation at least in half. Sadly, it makes it difficult to justify growing where jobs are needed most — in lower income areas.”

Higher costs: The Congressional Budget Office updated its estimates of the cost of Obamacare by $115 billion this week, bringing the total estimate to $1 trillion and wiping out promises that the law would lower the deficit. And $1 trillion already is a fictional number based upon unrealistically high assumptions about spending cuts to Medicare and unrealistically low assumptions about the cost of the program.

Lawsuits: Seven more states have joined Florida’s lawsuit challenging Obamacare, bringing the total to 20. Significantly, the National Federation of Independent Business joined the suit Friday on behalf of its 350,000 members.

Small-business owners are outraged over the individual mandate, the 1099 reporting requirements, taxes that will drive up premium costs, and tax credits that will do little to make purchasing insurance more affordable for small firms.

The lawsuits will continue to make their way through the courts. The more judges see the opposition grow, the more seriously they will consider the challenges. Others are likely to join the suit as people begin to see the harm to businesses, large and small, across the country and the impact of new taxes, fees, and regulations on health-care costs.

States are doing detailed analysis of the budget impact of Obamacare. Indiana released a study showing that law could cost the state an additional $3.6 billion over ten years — money Hoosiers don’t have and don’t want to spend on a federal takeover of the health sector. And Louisiana has become the latest state to pass legislation saying that the federal government cannot tell its citizens they must purchase health insurance. Other ballot initiatives, constitutional amendments, and state legislation this year give citizens a way to challenge Obamacare.

And with 19 states so far telling Washington they won’t serve as contractors to run its new high-risk pools, there is growing state resistance to Washington’s plans to force them to “take the blame for anything that goes wrong, handle any unfunded hidden implementation costs, and fall into line as branch offices for HHS,” health expert Tom Miller observes.

Many of the states going along with Obamacare are led by governors who will be gone before having to face the consequences of their short-sighted decision, such as California governor Arnold Schwarzenegger. Governors elected this fall will have a much longer-term view and will likely be even more resistant to acting as servants of HHS.

Funding: There will be two federal elections before the most onerous parts of Obamacare take effect in 2014. If one or the other house of Congress should change hands in November, it will be very difficult for President Obama to get approval for funding for this hugely unpopular law. That will slow implementation and give voters a chance to speak out in 2012 about the future of the law.

Businesses, health-care professionals, taxpayers, and virtually everyone affected will learn more details about its impact. Health costs and outrage will grow. People are seeing through the sugarcoating to the core of the legislation and its damaging impact on our health sector and economy. But in the meantime, American business and the health sector have no choice but to press on and comply with the new law, restructuring around the volumes of yet-to-be-written regulations telling them how the law will work and how they must be subservient to Washington’s growing power.