The Hubbub

Listing all Hubbub postings by date.

More Bad News
Grace-Marie Turner
Health Policy Matters, 05/14/10

It just keeps coming.

	
Challenges grow: Seven more states signed on this week to Florida's lawsuit challenging ObamaCare, bringing the total to 20. Significantly, the National Federation of Independent Business joined the suit today on behalf of its 350,000 members.

Members are outraged over the individual mandate, the 1099 reporting requirements, taxes that will drive up premium costs, and tax credits for small businesses that it says "will do little to make purchasing insurance more affordable for small firms."

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 that will raise health costs.
	
Jobs, anyone? As evidence, an analysis conducted by officials of the White Castle restaurant chain and released by House Republican Leader John Boehner said that just one provision of ObamaCare will effectively cut the chain's net income in half and reduce future jobs creation.

White Castle Vice President Jamie Richardson explained: "We've been working on this internally from a number of different perspectives. One that has [us] the most concerned is the $3,000 penalty that kicks in when an employee's portion of a premium exceeds 9.5% of household income ...

"In present form, this provision alone would lead to approximate increased costs equal to over 55% of what we earn annually in net income ... 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 as we know, $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.

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Agents under attack? I traveled to Salt Lake City this week for a speech to the annual meeting of the Utah Association of Health Underwriters, at the request of incoming president Rob Perry. I worry that insurance agents are in the sights of ObamaCare.

Agents and brokers are on the front lines of navigating between health insurers, business owners, patients and health professionals, and the value they bring to the health sector is highly under-appreciated. Most of their clients are small and medium-sized businesses, and the agents basically serve as external human resources departments for them. They work hard to find policies to meet companies' needs (and budgets), hold seminars to brief employees on the benefit plans, and serve as intermediaries to make sure claims are paid and even help employees find physicians and the best hospitals.

The new health law indirectly acknowledges the value of agents by creating a new profession called "Navigators" for the new state health exchanges. But they won't be paid through the commissions that agents earn today. Instead, the Navigators will get government "grants" to help people select policies. The Navigators will, of course, more likely be beholden to politicians for their jobs than their clients. And once someone has a problem with a claim, good luck in getting them to help.

I am painfully reminded of the quote from then First Lady Hillary Clinton in The Wall Street Journal on November 17, 1993, reporting on a town hall meeting about the Clinton health plan.

"As a health insurance agent, Lori Proctor was naturally curious about how the Clinton health-care plan would affect her job, [and] she put the question about her future directly to Hillary Rodham Clinton," the Journal reported.

And what was the First Lady's response? "I'm assuming anyone as obviously brilliant as you could find something else to market," she replied. Is this White House any less arrogant today?

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Predictions: So what do I think is going to happen with ObamaCare? Here's my scenario:

The health overhaul law will continue to be challenged on a number of fronts. Businesses, health care professionals, taxpayers, and virtually everyone affected by the law will learn more of the 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.

	
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.
	
States will assert their opposition and their rights. Indiana released a study this week showing that ObamaCare could cost the state an additional $3.6 billion over 10 years -- money Hoosiers don't have and don't want to spend on a federal takeover of the health sector.

Louisiana is the latest 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 challenging ObamaCare will give angry citizens a way to speak out.

And with 19 states so far telling Washington they won't serve as contractors to run its new high-risk pools, we see state resistance growing 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," as AEI's Tom Miller observes.

Many of the states that are going along so far are led by governors who will be long gone before the state faces the consequences of the short-sighted decisions they are making now to endorse ObamaCare, such as California Gov. Arnold Schwarzenegger. Governors elected this fall will have a much longer-term view and will likely be even more resistant to acting as servants to HHS.
	
Funding. There are 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 legislation.

Meanwhile, American business and the health sector have no choice but to continue 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.

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HSA news: We are expecting good news next week when America's Health Insurance Plans releases its annual estimates of the number of people enrolled in Health Savings Accounts and other consumer-directed health plans.

Companies understand the value of these plans that engage employees as partners in managing health care and health costs. They are a big reason that businesses have been able to hold health costs down over the last five years and continue to provide health benefits, as this chart depicts.


Click here to enlarge.
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. 

Patients as Partners in Preventive Care
Grace-Marie Turner
National Journal Expert Blogs: Health Care, May 12, 2010
Article available here and here.

I don’t think there is any question that preventive care, wellness programs, and early diagnosis and treatment are valuable and that our system needs to move much more in this direction than in continuing to pay more and more to treat people after they become acutely ill.

Nonetheless, I am concerned that the health overhaul law will curtail many of these programs that are already showing positive results. The law will lead employers to focus more on following the rules set by Washington than in continuing to develop and enhance programs with demonstrated success in coordinated and integrated care, including prevention. Just tacking screening tests onto an insurance policy will not get us to the goal of a more efficient health sector that engages patients as partners in managing their health care.

Instead as John Goodman points out, Health Savings Accounts (HSAs) – and other consumer-driven plans – provide incentives for preventive care. They get people more involved in their health care, provide incentives for them to get the best value for their health care dollars, and encourage people to seek out information on quality and price.

Preventive care is most likely to save money and be successful when it is integrated into coordinated care programs that engage patients as partners in their health spending and health care. Smoking cessation medications are most successful if integrated into educational and support programs. Some companies provide diabetics with supplies and medications at no cost if they make monthly visits to care coordinators who can detect early signs of the progression of their illness. Treatment must go beyond providing the medicines to include treatment for secondary issues such as pain and cardiovascular disease in a system of care. Cholesterol-lowering drugs are most likely to be effective when they are combined with a program of diet and exercise. Many private employers and health plans provide incentives for this integrated, coordinated care.

Investments in preventive care are valuable and humane. They save lives and can enhance productivity by treating patients early so they can get back to their jobs and families. But even the Congressional Budget Office says, “[T]he evidence suggests that for most preventive services, expanded utilization leads to higher, not lower, medical spending overall … Researchers who have examined the effects of preventive care generally find that the added costs of widespread use of preventive services tend to exceed the savings from averted illness.”

The Amazing Carelessness Of ObamaCare
Grace-Marie Turner
Investor's Business Daily, 05/11/10
Article available here and here.

As more details emerge about the massive 2,700-page health overhaul law, even those who supported its passage are shocked by its sweeping implications and reach into every corner of our lives and society.

For example, small-business owners are telling members of Congress they are terrified about the risks the law presents to their ability to keep and hire workers — imperiling the nation's already fragile economic recovery.

Employers with more than 50 workers could face big penalties even if they are trying to do the right thing by offering health insurance to their workers. For example, they could be fined $2,000 per worker if they fail to follow Washington's rules in providing "affordable" coverage.

Companies are required to calculate whether their health plans meet Washington's affordability test by determining each employee's household income, not just what they are paying the worker. To say this presents a significant challenge is an understatement. But if employers fail, they could face fines of $100,000 or more.

Larger, publicly traded companies face additional costs. When lawmakers created the Medicare drug benefit in 2003, they wanted to make sure that employers who already were providing prescription drug coverage to their retirees didn't drop them and shift the cost to taxpayers. They offered a tax break that was generous enough for employers to continue to provide the retiree coverage but still cheaper than having taxpayers foot the full bill.

Thanks to the new health reform law, employers lose part of that subsidy. According to the consulting firm Towers Watson, this means that corporations will take a $14 billion hit to their earnings.

Companies big and small face tax hits, fines, and huge risks associated with the health overhaul law. And they will face an avalanche of new paperwork requirements as well.

The law requires businesses to file a so-called "1099" tax form for any purchase from an individual or business that totals more than $600 a year. It's a new effort to catch tax cheats.

In the past, companies were required to file these forms to individuals such as unincorporated consultants. Under the new legislation, however, they must file a report for every purchase over $600. Just imagine: Companies will now have to send tax forms to Staples for a year's worth of office supplies, or to airlines when they buy tickets!

Amazingly, the law is so careless that Congress jeopardized coverage for itself! It says members of Congress must join their constituents in getting insurance through the health insurance exchanges states are required to create.

The exchanges, though, won't be up and running until 2014. So what is Congress going to do until then? The administration's personnel office said it is basically going to ignore the law and continue to provide coverage.

States are at risk, too. Page 466 of the law says states are liable not just for paying for health benefits for Medicaid recipients but also for ensuring provision of "the care and services themselves."

Those five words mean that states must guarantee that Medicaid recipients are seen by a doctor. Alan Levine, Louisiana's health secretary, says this "leaves every state vulnerable to a new wave of lawsuits any time someone cannot access a service." He says the added cost would be incalculable.

How could all this have happened?

The Senate bill never was meant to be final law. It was designed to get 60 votes out of the Senate, and then lawmakers would work with the House to draft a cleaner bill. But once Scott Brown won Massachusetts' special Senate election and the Democrats lost their filibuster-proof majority, they couldn't get another vote out of the Senate. So the only way to get a bill to the president's desk was to have the House pass the Senate bill as is.

Not surprisingly, as Americans learn more about the legislation, their opposition grows. A recent poll from Indiana University shows that 58% of Americans want the law repealed. Only 12% in a recent FOX News poll said they believed the law should be implemented as is.

As more problems emerge, even supporters of the measure could come to realize that it imposes huge new taxes, provides benefits to relatively few, cuts existing services, and imposes expensive mandates on virtually everyone. This law is growing more unpopular by the day, and for good reason.

Obamacare Means Millions Could Lose Coverage
Grace-Marie Turner
National Review Online: Critical Condition, 05/10/10
Article available here and here.

Major companies are beginning to recognize the extraordinary risk of continuing to provide health benefits for their workers under Obamacare.

"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, which reviewed internal company documents.

These company reports are the canary in the coal mine warning politicians, businesses, and consumers of the huge upheaval that will be created by Obamacare. No one can afford this new law, especially taxpayers who will foot a much bigger bill for coverage if companies opt out.

The revelations came as a by-product of House Energy and Commerce chairman Henry Waxman's ill-fated demand that companies explain why they had embarrassed the administration by announcing big earnings reductions in response to the new law. Waxman was furious at publicly-traded companies for having the audacity to follow SEC rules and report the prospective earnings reductions that would result from losing part of a tax break for providing retiree health benefits.

He demanded documents from four major employers — AT&T, Verizon, Caterpillar and Deere — explaining what the bill would do to their health costs. He got 1,100 pages and quickly cancelled the hearing where the companies were slated to testify. Clearly Democrats did not want the full story to come out.

The new law will require every employer with more than 50 workers to either offer health insurance or pay an annual penalty of $2,000 per full-time worker — a fine that is much cheaper than the price of the ultra-expensive plans that will be required under the law. Even employers who offer health insurance are at risk of penalties if the premiums they charge exceed 9.5% of an employee’s household income (a figure that will be extraordinarily difficult for employers to ascertain).

"AT&T revealed that it spends $2.4 billion a year on coverage for its almost 300,000 active employees, a number that would fall to $600 million if AT&T stopped providing health care coverage and paid the penalty option instead," Fortune reported.

The potential costs to the companies of the fines, penalties, mandates, and exposure to risk under Obamacare are great, and many other employers will conclude it will be a lot cheaper to pay the fines than to continue to provide health insurance.

The findings send fear into the hearts of working Americans who have been promised over and over that if they like their current coverage, they can keep their insurance. But because neither the White House nor the leaders in Congress seem to understand the power of incentives, they have passed a law that gives companies every incentive to drop coverage.

If this happens, the costs of the health-overhaul law would skyrocket as tens of millions of Americans lose their job-based plans and instead get taxpayer-subsidized coverage in the publicly operated state exchanges or Medicaid. The Congressional Budget Office based its analysis on the assumption that the great majority of people with job-based coverage would keep it under the new law.

The statist solution would be to mandate that businesses provide health insurance for their workers or raise the penalty so it is at least as high as the cost of insurance. But if Republicans take control of one or both houses of Congress this November, that would not happen.

The only real solution will be to repeal Obamacare and take a step-by-step approach to sensible reform that does not radically disrupt the system.

Early Warning Signs
Grace-Marie Turner
Health Policy Matters, 05/07/10
Article available here.

Fortune magazine has a blockbuster report out this week that shows major companies are beginning to recognize the extraordinary risk of continuing to provide health benefits for their workers under ObamaCare.

It reports that "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."

If this happens -- and there is every incentive for companies to do this -- the costs of the health overhaul law would skyrocket, and tens of millions of Americans would lose their job-based plans and be forced to get coverage in the publicly operated state exchanges due to begin in 2014. This will send fear into the hearts of working Americans who have been promised over and over that if they like their current coverage, they can keep their insurance.

Stability may not be an option. The risks to the companies of the fines, penalties, mandates, and exposure to risk under ObamaCare are just too great.

The companies' revelations came as a by-product of an ill-fated demand from Energy and Commerce Chairman Henry Waxman, who was furious at them for having the audacity to follow SEC rules and report the earnings losses they would suffer as a result of just one provision of ObamaCare (the loss of part of a tax break for providing retiree health benefits).

Rep. Waxman demanded every document from the four companies he subpoenaed that discussed what the bill would do to their health costs. He got 1,100 pages and quickly cancelled the hearing where the companies were slated to testify. Clearly Democrats did not want the full story to come out.

But now it has. The documents show the companies analyzed the impact of the law on their businesses -- as any responsible company must do -- and the conclusions are undeniable: It would be a lot cheaper to pay the fines for not providing coverage than to continue to provide health insurance, especially the ultra-expensive plans that will be required under the law.

"AT&T revealed that it spends $2.4 billion a year on coverage for its almost 300,000 active employees, a number that would fall to $600 million if AT&T stopped providing health care coverage and paid the penalty option instead," Fortune reported.

This process has done a great service to the country. These reports are the canary in the coal mine warning politicians, businesses, and consumers of the huge risk and upheaval that will be created by ObamaCare. No one can afford this new law, especially taxpayers who will foot a much bigger bill for coverage if companies opt out.

And if Republicans should take control of one or both houses of Congress this November, I have a bridge to sell to anyone who expects them to increase the mandate penalty to equal the cost of coverage. It won't happen. This law must be changed.

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Why ObamaCare is failing: Speaking of opting out, 19 states decided to let the Feds come in to run the new health risk pools I wrote about in my Wall Street Journal piece last week. And now we learn that 41 states have filed various challenges against ObamaCare. They simply are not going to stand for being treated like contractors and tax collectors for the federal government to implement a law that most say they cannot afford and that many say will subject their residents to unconstitutional mandates.

My husband and I had the privilege of attending the AEI Annual Dinner last evening and Gen. David Petraeus was the keynote speaker. What an elegant and beautifully organized speech he gave that has relevance for the health debate as well as the restructuring of the Army under his command.

Here's the essence of his speech (which, to his credit, I remember without taking a note): 1) Start with a Big Idea and get the idea right; 2) Communicate the plan up and down and across, but mostly down so those required to participate understand it; 3) Implement the plan carefully and with attention to the vision as well as detail; 4) Learn from the process to inject these lessons into the next phase of the operation.

ObamaCare doesn't meet Petraeus' test: The Big Idea was wrong because it made far too many changes with a careless disregard for the unintended consequences (see above). On communication, the White House and congressional leaders failed because they are ignoring how smart the American people are in actually understanding this unpopular plan. Implementation is getting more difficult by the day, both because it is such a poorly written bill and because those in charge of implementation, including states and businesses, are balking. And we have yet to see if they learn any lessons from this fiasco.

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Obama's fiery rhetoric: Columnist Mort Kondracke has a very insightful piece in today's CQ Politics. He examines the dichotomy between President Obama's fiery and at times reckless rhetoric blasting business and industry, right after he sidles up to them when he needs their help in passing his legislative agenda. "You almost suspect that the administration and its leader are bipolar," Kondracke writes.

After wooing and cajoling health sector companies to support his health overhaul plan, even convincing them to spend hundreds of millions of dollars on ads to promote it, he and his aides now are on the attack. HHS Secretary Sebelius said she expects to be in "hand-to-hand combat" with the insurance companies as she tries to rule how they operate.

In one moment, Obama criticizes the "vilification and over-the-top rhetoric [that] closes the door to the possibility of compromise," and in the next, he and his staff make unfounded and inflammatory accusations against business, scoring political points while denying facts.

Kondracke concludes that Obama is "a liberal without the slightest idea of how private enterprises create wealth -- and [is] deeply suspicious of their practitioners." I believe that is right. Obama simply has no idea of the risk, the incredibly hard work, and the forces of competition that create the genius of the marketplace.

"But he knows that unifying rhetoric is what the country wants to hear. So, one day it's one thing. Another day, it's another. If this is right, it won't stop and it's very sad."

Sadly true.

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Crazy, immoral US health care: Don't miss our Clip of the Week today. The physician tapped to run the Centers for Medicare and Medicaid Services, Dr. Donald Berwick, gives a big wet kiss to the British National Health Service. "I am a romantic about the NHS; I love it," he says. "All I need to do to rediscover the romance is to look at the health care of my own country," which he calls "crazy" and "immoral."

A hat tip to Bob Goldberg of the Center for Medicine in the Public Interest for his article in The American Spectator about Berwick's 2008 speech on the 60th anniversary of the NHS.

Berwick has a reputation as a man strongly committed to coordinated care and delivery system reform. But he will fit right in to an administration that is hostile to the marketplace.

He talks of the "darkness of private enterprise," his distrust of market forces, the importance of redistribution, and the inestimable value of placing "politicians between the people served and the people serving them." And yet he implores the NHS to "put the patient at the center for everything that you do." How would that work, exactly?

We are in big trouble as Dr. Berwick will be in charge of administering big chunks of ObamaCare. Some of these quotes might be useful to bring up during his confirmation hearings.

Medicare Report Shows ObamaCare’s Harmful Budgetary Impact
Grace-Marie Turner
Townhall.com, 05/06/10
Article available here and here.

Many Americans wondered why Congress was in such a rush to take the final vote on ObamaCare at midnight on a Sunday night when most of its major programs don’t begin until 2014. It’s now clear that Democratic leaders feared their members might balk if they saw the objective analysis that was being prepared showing the overhaul law’s true costs.

Their concerns were validated when a respected, non-partisan analyst issued a report one month after the law was enacted. The chief actuary for Medicare, Richard Foster, found that under ObamaCare, health spending and health costs will rise, businesses and families will face higher premiums, millions of people will lose their current coverage, and seniors will have trouble accessing care.

The analysis by the administration’s own actuary confirms why a majority of Americans opposed the legislation and why House Republicans want Foster to testify about his findings.

Foster’s analysis already has had an impact on decisions regarding one of the first programs launched under ObamaCare – the new temporary high-risk pools for the uninsured. Congress allocated $5 billion to fund the pools until 2014 when enrollees would be transferred into new health insurance exchanges.

But Foster found that the $5 billion “would be expended during the first 1 to 3 calendar years of operation.” That means states could have to fill the funding void. Nineteen states told HHS Secretary Kathleen Sebelius, “No thanks” when she asked if they planned to run these new programs.

The states don’t want to be responsible for the added cost of the federal high-risk program and wisely chose to protect their taxpayers from yet another unfunded liability. As a result, HHS will now be responsible for creating and operating risk programs in these 19 states.

They wisely told Sebelius who is in charge and that they will not be subservient to Washington.

Now that Foster’s report is out, the White House spin can’t hide the fact that ObamaCare is an abject failure at achieving its number one goal: reducing health care costs. Foster’s analysis estimates that total national health spending will increase by $311 billion as a result of ObamaCare, thereby bending the cost curve up.

He also predicts higher health insurance premiums for individuals and businesses because billions of dollars in new fees and excise taxes will “generally be passed through to health consumers in the form of higher drug and devices prices and higher premiums."

Foster warns that the cost of the health overhaul law may be much greater than advertised. It relies on more than $500 billion in Medicare cuts to help pay for the new entitlement spending. But these cuts “may not be fully achievable” because “Medicare productivity adjustments could become unsustainable even within the next ten years,” Foster wrote. Given Congress’s inability to address Medicare’s exploding costs thus far, Foster’s skepticism is justified.

The report also highlights the shaky financial footing of the new long-term care insurance program – the CLASS Act, which Sen. Kent Conrad (D-ND) has described as “a Ponzi scheme of the first order.” Foster agrees the program faces “a significant risk of failure,” resulting in “a very serious risk that the problem of adverse selection will make the CLASS program unsustainable.” At a time of ballooning deficits and record debt, he finds the program will result “in a net Federal cost in the long-term.”

Concerned you’ll be kicked off your health insurance plans due to ObamaCare? Foster’s report shows that millions of Americans will suffer just this fate. He estimates that 14 million people will lose their employer coverage by 2019 as smaller employers terminate their plans and as workers who currently have employer plans enroll in taxpayer-subsidized coverage.

For seniors, Foster estimates that more than seven million will lose their current Medicare Advantage plans and that the “new provisions will … result in less generous benefit packages.” Recipients on traditional Medicare also will have trouble accessing care: Fifteen percent of all hospitals, nursing homes and other providers treating Medicare recipients could be operating at a loss by 2019 and “possibly jeopardize access to care for beneficiaries.”

He also warns that there simply is not enough capacity in the system, especially at government payment rates, to provide actual medical care for the newly insured: “The additional demand for health services could be difficult to meet initially with existing health provider resources and could lead to price increases, cost-shifting, and/or changes in providers’ willingness to treat patients with low-reimbursement health coverage.”

Unfortunately, the White House and congressional leaders are unlikely to address the damaging findings in Foster’s analysis. When Americans begin to feel the impact, they will see there was independent evidence of the false promises proponents made to gain votes to enact this unpopular legislation.

Foster's Report Validates Fears
Grace-Marie Turner
National Journal, 05/03/10
Article available here and here.

Medicare Actuary Rick Foster is a respected, non-partisan analyst, and his report on the health overhaul law is a big deal because it shows that many of the promises made by the law’s proponents will be broken. Foster shows that businesses and families will face higher premiums, millions of people will lose their current coverage, seniors will have difficulty accessing care, and health spending will increase.

His analysis gives credence to the fears that led the majority of the American people to oppose passage of the law.

Foster’s analysis already is having an impact on decisions regarding implementation of the new temporary high-risk pools created by the health overhaul law. The law allocated $5 billion for the pools until 2014 when enrollees would be transferred into the new health insurance exchanges.

Foster estimates that the $5 billion “would be expended during the first 1 to 3 calendar years of operation.” That means states could be left to fill the funding void. At least 15 states have told HHS Secretary Sebelius they don’t want to be responsible for the added cost of the high-risk program and that they have a fiduciary responsibility to protect taxpayers in their states from yet another unfunded liability. The federal government is obligated by law to run the programs if the states decide they don’t want to contract to implement them.

Foster’s analysis also shows the new law falls far short in bending the health spending curve downward, as promised. He says that total national health spending will increase by $311 billion as a result of PPACA, thereby bending the curve up.

In fact, Foster warns that the cost of the health overhaul law may be much greater than advertised. It relies on more than $500 billion in Medicare cuts to help pay for the new spending. But these cuts “may not be fully achievable” because "Medicare productivity adjustments could become unsustainable even within the next ten years."

The report also highlights the shaky financial footing of the new long-term care insurance program – the CLASS Act. Foster says it will face "a significant risk of failure," resulting in "a very serious risk that the problem of adverse selection will make the CLASS program unsustainable." At a time of ballooning deficits and record debt, he finds the program will result “in a net Federal cost in the long-term.”

Foster’s report also shows that millions will be forced off their current plans due to the new law. He says about 14 million people will lose their employer coverage by 2019 as smaller employers terminate their plans and as workers who currently have employer plans enroll in taxpayer subsidized coverage. He warns, “The additional demand for health services could be difficult to meet initially with existing health provider resources and could lead to price increases, cost-shifting, and/or changes in providers’ willingness to treat patients with low-reimbursement health coverage.”

For seniors, Foster estimates that more than seven million will lose their current Medicare Advantage plans and that the “new provisions will … result in less generous benefit packages.” Recipients on traditional Medicare also will have trouble accessing care: Fifteen percent of all hospitals, nursing homes, and other providers treating Medicare recipients could be operating at a loss by 2019 and “possibly jeopardize access to care for beneficiaries.”

Foster’s report did not calculate the overall economic impact of many of the tax hikes the new law imposes, such as higher taxes on higher-incomes or on medical devices, pharmaceuticals, and health plans, or the dislocations to the job market as a result of the mandates and penalties on employers. But his report does point out that billions of dollars in new fees and excise taxes will “generally be passed through to health consumers in the form of higher drug and devices prices and higher premiums."

When Americans begin to feel the impact, they will see there was independent evidence of the false promises proponents made to gain votes to enact this unpopular legislation.

Obamacare’s Paperwork Deluge
Grace-Marie Turner
National Review Online: Critical Condition, 05/02/10
Article available here and here.

The more we delve into the details of the monstrous health-overhaul law, the more shocked and appalled we become. The latest outrage is a new requirement that would bury small business in a tsunami of paperwork that has virtually nothing to do with health care.

Here’s an example of how it works: The Galen Institute is required to file a Form 1099 for payments to independent contractors to whom we pay more than $600 in a year. Basically, this applies to the several consultants who provide valuable services to us. It’s a hassle to file these forms, but manageable.

But the law now will require us to file a 1099 with the IRS for every business transaction totaling more than $600 — everyone from Staples to United Airlines to FedEx to the catering business that brings in box lunches for our conferences.

Congressional staffers looked into every corner of the tax code to find money to pay for their $2.5 trillion expansion of government control over our health sector, and they found this change that would raise $17 billion over ten years by catching some new tax cheats. But imagine what the compliance costs will be for millions of businesses in America!

Rep. Dan Lungren (R., Calif.) has come to the rescue with a beautifully simple bill (HR 5141) that repeals this ridiculous provision. He has found at least 34 co-sponsors since he introduced the bill on Monday.

In his “Dear Colleague” letter, Representative Lungren said that, unless this is repealed, small business owners will face an onerous tax-reporting burden, and it will discourage companies from dealing with small businesses: “Businesses will think twice before purchasing goods and services from smaller companies. . . . It will be easier to rely on a single large supplier.”

“Small businesses are the economic engine of our nation, creating 65% of new job growth. Imposing yet another tax burden on them is bad medicine for Americans.” The National Federation of Independent Business has endorsed the legislation.

This 1099 rule is just one example of the avalanche of changes in the health-care law that show Washington’s complete disregard for its impact on private-sector America.

The law is so complex that even the federal government is not complying! Last week, we reported that the office that administers health benefits for federal workers is basically ignoring the law and plans to keep its program operating as is, even though the Congressional Research Service seriously questions the legality of doing so.

And now this: HHS was required to publish on its website by last Friday a list of all of the authorities provided to the secretary under the health-care law (Sec. 1552). But what Secretary Sebelius’s office did was basically cut and paste the table of contents from the act onto the HHS site.

Remember Nancy Pelosi saying they had to pass the bill to find out what was in it? Well, now it’s passed, and HHS either doesn’t know or is unwilling to write down the full list of “authorities” given its secretary, because of how long and sweeping the list will be.

If Congress and the administration aren’t going to comply with the law, how do they expect everyone else to?

The president keeps talking about the “mess” of an economy he inherited. What about the “mess” he has created with his health-care law?

States Face Their First ObamaCare Test
Grace-Marie Turner
Wall Street Journal, 04/29/10
Article available here and here.

States have until tomorrow to let Washington know if they plan to participate in one of the first government programs to be launched under ObamaCare—new high-risk pools for the uninsured. The question states should be asking is: Why would we participate?

The high-risk program is essentially insurance for individuals who have pre-existing conditions and are expensive to insure. The new health law allocates $5 billion for insuring them until 2014 when enrollees would be transferred to new health-insurance exchanges. But Richard Foster, chief actuary of the Centers for Medicare and Medicaid Services, reported last week that the high-risk program will run out of money next year or in 2012. Therefore, if states sign up for the program, they'll end up shouldering the burden for about two years after it runs out of federal money. 

This will be a heavy lift considering the other costs ObamaCare is foisting onto states, one of which is the expansion of Medicaid, a joint federal-state program originally designed to cover low-income Americans. Under ObamaCare, Medicaid will be expanded to cover 84 million people by 2019, up from about 50 million today, putting pressure on states' budgets.

Georgia, Nebraska and other states have already taken a pass. The federal government will likely set up these risk pools without their participation. In a letter to federal Health and Human Services Secretary Kathleen Sebelius, Georgia's insurance commissioner John W. Oxendine said he feared the high-risk pools would "ultimately become the financial responsibility of Georgians in the form of an unfunded mandate." Kansas, Ms. Sebelius's home state, among many others, is considering opting out as well. 

In addition to the cost, states are worried about the strings attached to the program. In a conference call with state officials last week, HHS officials weren't able to answer specific questions about federal mandates that will be placed on participating states. That's discomforting because HHS will draft the program's rules only after states decide whether to sign up. 

What states already know should give them pause. By law, premiums in the new pools can cost no more than insurance for people in a state's standard nongroup insurance market. Most existing state high-risk pools charge 125% to 200% of standard rates because patients in those pools are by definition more expensive to insure. The new health law says that the federal government will set what states must pay doctors and hospitals for patients in the pools, and that the pools must cover all pre-existing conditions from day one. Right now, most states allow some waiting periods before covering pre-existing conditions to control costs. Washington will also determine which medical benefits must be provided. 

Georgia calculated that, under these provisions, the high-risk program would cost more than the $177 million the federal government is expected to allocate for its program. 

But what's most disconcerting is that the program will likely disturb the careful balance that some 35 states have struck in setting up their own high-risk pools. The federal high-risk pools would operate alongside existing state pools. States will be required to maintain funding for their pools, even while the federal government signs up new uninsured people for its program. The federal program will have more generous benefits and lower premiums than most state-funded high-risk programs, even though state officials say people in the new federal program are likely to be less needy than those enrolled in existing state risk pools. 

The White House says high-risk pools were a Republican idea. But GOP leaders called for allocating $25 billion over 10 years (instead of $5 billion over three-and-a-half years) and would have given states far greater latitude in setting the rules.

If more states opt not to join the federal program, Congress will have to acknowledge that there has been a public repudiation of the federal program. That could create pressure to give states what they want—block grants to increase their existing high-risk pools or, for states that don't have them, money to set up new ones. Deciding whether to sign up for the high-risk program is an important early test for states to tell Washington who is in charge. 

Obamacare Already Ailing
Orange County Register, 04/25/10
Article available here.

Less than a month old, Obamacare already is loaded into an ambulance on its way to the ER.

The first crisis for the health care overhaul plan is a shortage of doctors. “At current graduation and training rates, the nation could face a shortage of as many as 150,000 doctors in the next 15 years, according to the Association of American Medical Colleges,” the Wall Street Journal reported April 12. Most in demand will be primary-care physicians, who “have a larger role under the new law, coordinating care for each patient.”

Currently, of 954,000 doctors in the United States, 352,908 are primary-care physicians. The medical-school association estimates that another 45,000 primary-care physicians will be needed by 2020. Yet from 2002-07 the number of students studying for that role has declined by more than 25 percent.

“The doctor shortage is just going to get much worse,” Gracie-Marie Turner told us; she's president of the Galen Institute, a free-market medical policy think tank in Alexandria, Va. “I keep hearing chilling descriptions from doctors of how they retired early because they're scared to death of Obamacare. America isn't willing to turn out enough primary-care physicians who are willing to work 80-hour weeks.”

She said, “Massachusetts already has seen patients who don't have access to doctors” since it passed a precursor to Obamacare in 2006 under then-Gov. Mitt Romney. “Mittcare,” as it's called, like Obamacare, mandated medical insurance for everyone, with those not signing up hit with a special fine/fee/tax.

Ms. Turner said another part of Obamacare already infecting the country is red tape. Every business, even small ones, must send a 1099 form to the IRS for any transaction of $600 or more. The law requires the reporting so companies don't try to get out of paying the new medical levies.

That's just one line in a 2,400-page bill. No wonder Obamacare requires 16,500 more IRS agents, some of whom might otherwise have gone to medical school.

The red-tape nightmare gets even worse. Ms. Turner pointed out that the original Medicare bill was 137 pages in 1965. Today, after 45 years, it has metastasized into more than 100,000 pages – 730 times as big. Obamacare starts at 2,400 pages.

State budgets also are being hit hard. Bloomberg.com reported March 23, “For California, with a $20 billion budget deficit, the extra load will cost at least an additional $2 billion to $3 billion annually, said [Toby] Douglas, chief deputy director for California's health care programs.”

Furthermore, Obamacare's “taxes are going to cripple the economy,” Ms. Turner said. An April 14 report by the Heritage Foundation, “Obamacare: Impact on Taxpayers,” found: “These tax hikes will slow economic growth, reduce employment, and suppress wages. Further, in an act reminiscent of George H. W. Bush breaking his ‘no new taxes' pledge in 1991, the tax hikes in [Obamacare] will raise taxes on middle-income families in direct violation of President Obama's oft-stated pledge not to do so.”

The tax hikes total $503 billion from 2010-20.

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