Congressional Math and the Healthcare "Reconciliation" Bill

Only in Washington DC does spending $940 billion add up to a $100 billion savings.


By now many of you have seen the headlines discussing how the CBO has estimated that HR 3590 will "save" $100 billion off the deficit over the next 10 years. There has been a lot of dancing in the streets that somehow this is a wonderful thing.

Don't get me wrong -- I would very much like our federal deficit to be reduced....but there are just a few things that are bugging me about why this latest proclamation should be the reason our lawmakers should vote "yes"....

First, the CBO numbers are not final. They are preliminary...and based on a very optimistic assumption that the government will be able to gain greater cost savings and efficiencies on Medicare costs...More importantly, the CBO numbers do not take into account the House reconciliation bill which amends the original Senate bill -- which adds additional costs and increased taxes (some of the additional costs and taxes are mentioned in today's Reuters article.) 

Second, last time I checked, if you spent more than you saved...well then you haven't really saved. At least that's how it works with regards to my finances. HR 3590 will cost $940 billion (that's nearly a trillion folks) over the next 10 years -- and those are the Democrats estimates. That doesn't include the fact that the bill is expected to do NOTHING to reduce healthcare costs (check out my earlier blog post on this yesterday). Yup, all of this government regulation and we will still have escalating health care premiums, costs, etc.

Third, listen carefully to what the supporters of this legislation are saying now versus what they (and our President) said before. Initially, this legislation was supposed to be about reducing escalating healthcare costs. Reducing the deficit by $100 billion (while spending $940 billion - can anyone tell me the math on this one?) -- does not have anything to do with fixing what's wrong with our healthcare system. Passing this bill will not create increased competition (that would reduce health insurance premiums), it will not create job growth (outside of DC where we will have even more bureaucracy), and it will not reduce healthcare costs. In fact, it will have the exact opposite effect when you consider that the large taxes, fees and fines that will be imposed on health insurance companies, pharmaceutical companies, large health insurance plans, and companies (who do not provide insurance coverage) will ultimately trickle down to you and me in terms of higher costs and less jobs.

Fourth, lets not forget the additional costs that will be added onto the American taxpayer to "pass" this legislation...what I'm talking about is all the pork and "favors" that have been included in this bill to garner votes. The Democrats have made a big deal out of the fact that the reconciliation bill nixes the "Nebraska" provision -- but that was only one of many "provisions" that were added by the Senate to win votes.

That said, some people would have you believe that the reason to support this bill is that there is no other option. Nothing could be further from the truth. Several Republicans have proposed legislation that would not impose new taxes (thereby hindering economic growth) and would create market and tax incentives to encourage greater health care savings for individuals and families, as well as encouraging companies to provide health insurance coverage to their employees. HR 3400 creates a safety net for individuals with pre-existing conditions, allows for individuals to purchase health insurance across state lines (which would encourage more competitive pricing of plans) and allows for individuals and small businesses to pool resources together to achieve greater discounts on health insurance plans. Ironically this bill was introduced last summer (yup, before HR 3590). The reason you've probably never heard of it is because there was virtually NO MEDIA COVERAGE of the bill. I encourage you to check it out.

I urge you to call your congressman, congresswoman and Senators TODAY, TOMORROW and SUNDAY to tell them to vote NO, absolutely NO on HR 3590 and HR 4872. And please urge your friends and family to call as well!







Respectfully,



E.E. Wang Lukowski

A Tale of Two Bills

This is a tale of two bills -- two healthcare bills. 
One was 2,409 pages long HR 3590 (introduced November 2009)
One was 268 pages long HR 3400 (introduced July 2009)

HR 3590 proposed:

• Tax credits would be eligible for families and individuals whose household income was up to $40,000-$80,000 (for a family of four) who could not afford health insurance.
• Would tax large health insurance plans 40%, health insurance companies, pharmaceutical and medical supply companies
• Relies on as yet undertermined "cost savings" on Medicare to pay for costs of the plan.
• Would fine individuals who do not have insurance starting in 2014 ($750 or up to 2% of their income whatever is greater).
• Would have the federal government regulate any new plans and any changes to existing plans.
• Would provide a safety net for individuals with pre existing conditions
• Would require all states to have a health insurance exchange and would require all state plans to meet federal requirements.
• Would require all businesses with 50 or more employees to have health insurance or face a fine per employee.
• Included many other "pork" provisions to incentivize politicians to vote for the legislation.
• Does not spell out any details for actually reducing health care costs.
• Does not allow small businesses or individuals to pool their resources to reduce health program costs.
• Does not allow people to purchase health insurance across state lines which would increase competition.

HR 3400 included provisions for:

• Providing tax incentives and credits to all individuals, families and small businesses for acquiring health coverage. This included allowing individuals and families to apply the tax credits directly to premium payments.
• Does not reduce Medicare benefits.
• Does not try to get  the biggest and most wasteful organization in the US (the US government) to run another wasteful industry (health insurance companies).
• Small businesses would be financially incentivized through tax credits and breaks to provide group health coverage and auto-enrollment to their employees.  HR 3400 also would allow individuals and small businesses to  pool with other small businesses/groups to achieve greater discounts. Individuals could also join group associations that provide health insurance.
• Providing a safety net and coverage for individuals with pre-existing conditions.
• Allowing individuals to shop for coverage across state lines, thereby increasing competition in health insurance premiums.
• Providing financial incentives for wellness.
• Increasing liability protections for health practitioners and those volunteering to provide health care to reduce the number of frivilous lawsuits that lead to increasing the cost of health care.
• Increasing transparency on health coverage options and health care providers through public information portals.
• Financial incentives to reduce physician shortages through loan forgiveness and other tax incentives.

Many of the good things in 3590 are also in 3400...3400 does not try to get the government to control costs (something which it has a horrible record of actually accomplishing) but tries to incentivize the private sector and using the fundamental rules of capitalism to reduce healthcare costs. Will taxing "cadillac plans", pharmaceutical companies and insurance companies actually result in lower costs for the average working American? Let's face it -- when big companies are taxed -- we, individual citizens, are the ones who ultimately end up footing the bill -- in higher insurance premiums, higher medical prescription costs, etc.

Let's not forget also the costs to the American people that the Democrat leadership -- in their desperate bid to get votes -- will have given away in the form of "pork" and other favors included in the HR 3590 legislation.

This bill is wrong for many reasons but here are just a few:

• It does not reduce healthcare costs and may likely lead to increased health care costs. Check out: Christian Science Monitor's article on this issue.  Keep in mind that what the Democrats are saying is that this health care bill will reduce the government deficit (projected -- and based on what reality and what assumptions?)...nothing has been said about actually reducing healthcare costs - a significant change from what our President said was his goal before.
• It will dis-incentivize the formation or growth of new businesses/job growth at a time when Americans need jobs (so we can pay for healthcare and all the other pork Congress is passing).
• It does nothing to stop frivilous medical malpractice lawsuits.
• The process by which it is being "passed." Check out this article from Open Congress. This little used parliamentary procedure would allow Democrats to say they didn't actually "vote" for a bill that nearly 2/3 of the country is opposed to but still pass it.

Please call your Congresswoman/man and Senators today -- tell them you do not support passing HR 3590.

President Obama's Budget Proposal and the Truth About GDP and TARP...

"But families across the country are tightening their belts and making tough decisions. The federal government should do the same. So tonight, I'm proposing specific steps to pay for the trillion dollars that it took to rescue the economy last year." -- President Obama, State of the Union Speech, January 27, 2010

Nice words. But where's the beef? In less than a week, President Obama has forgotten his promise of having the federal government control its spending.  Instead he has proposed a $3.8 trillion budget that will create a more than $8 trilllion deficit over the next ten years (that's after we save $1 trillion -- a savings that will only be achieved after ten years).

I don't know where you come from, but last time I checked an $8 trillion deficit does not add up to "saving money" or "controlling spending." For more budget analysis, check out the following:

http://www.usatoday.com/news/washington/2010-02-01-budget-analysis_N.htm?csp=hf
http://moneymorning.com/2010/02/02/obama-budget-deficit/

In other (virtually unreported by mainstream media) news, despite all the hype regarding our fourth quarter GDP growth, many economists are saying the numbers just don't add up...and warning that more tough times could be ahead.
http://moneymorning.com/2010/01/30/us-gdp-3/

Finally, is TARP working? According to the Special Inspector General of the TARP program...uh maybe not.
http://www.housingwire.com/2010/02/01/sigtarp-warns-of-second-housing-bubble/

From September 25, 2009: More Facts vs. Fiction on Healthcare

Here is another article from the LA Times this week about the accounting “sleight of hands” being done with regards to the healthcare legislation.


Is it only ironic to me that the same government who has under-projected costs and overspent on just about EVERYTHING…is now saying that they know how to control and solve the issue of healthcare spending?

http://www.latimes.com/news/nationworld/nation/la-na-health-costs22-2009sep22,0,1852429.story

From September 10, 2009: Healthcare or Health Cost?

Dear friends,


As I’m sure you’re aware, there is considerable debate right now on healthcare reform and Congress is currently debating over more than 1000 pages of proposed legislation (HR 3200).

Considering that our nation’s political leaders are contemplating spending at least $4 trillion of our (and probably at least 2 future generations worth of) taxpayer money to fund their reform, I thought it might be worthwhile to consider some of the facts (and not the rhetoric) around this debate. Below are some links you might find helpful:

Fact checks on Obama’s speech:
http://blog.heritage.org/2009/09/10/obama-speech-fact-check/
http://news.yahoo.com/s/ap/20090910/ap_on_go_pr_wh/us_health_care_fact_check

Rand Corporation’s thoughts on Senator Baucus’ proposed “coops” (for those of you who don’t know, Rand is a think tank that studies everything from healthcare to war game theory):
http://www.rand.org/commentary/2009/08/19/WP.html

As one of my friends put it (she works at Rand and voted for Obama) – if Obama really wants to reduce healthcare costs, he would encourage everyone to smoke or eat at McDonalds everyday – because unhealthy people are actually cheaper in the long run than healthy people (since healthy people live longer).

Links to the actual text of the bills being proposed (which most of our elected representatives have admitted to not having fully read):
www.opencongress.org/bill/111-h3200/show (you can actually vote here on whether you support or oppose the bill)
http://energycommerce.house.gov/Press_111/20090714/aahca.pdf

There is no link yet for Senator Baucus’ bill – it will not be introduced until next week.

My thoughts

First, I should probably say that I believe that everyone should have access to healthcare. And in our country, it is a misnomer to say that NOT everyone has access to healthcare. In fact, we all – and everyone in this country, citizen or not – have access to healthcare already; if you can be transported to an emergency room, you can get healthcare regardless of your finances. In fact, we have the best and leading healthcare facilities in the world – which is why a lot of people from outside the US come here).

The problem, as our president has pointed out, is how to solve the issue of rising healthcare costs. The problem is that most politicians (and the news media) confuse the ideas of healthcare access and costs with health insurance. What’s worse is the fact that these same politicians seem to think that all our current problems will be solved by creating a solution to health insurance (which they call healthcare reform).

Now don’t get me wrong…I am no great (or even a small) lover of insurance companies; I love them about as much as I love politicians. But I do not think they are the only bad guys here and I have yet to see any empirical evidence that supports the idea that if we introduce a government option or a coop option that this will in fact reduce healthcare costs or insurance premiums. In fact, there is no empirical evidence whatsoever that any of the programs being proposed will in fact do what the politicians say they will. (I mean, let’s consider how incredibly successful Medicare has been. It is a government-run health care option that has done nothing to reduce rising/escalating health care costs – but it has reduced the quality of care many seniors receive and it has resulted in over-testing.)

I do not profess to have a be-all solution to rising healthcare costs and how we can get everyone an insurance card (because apparently once you have one, it will make you healthy and if everyone has one, we will create economic growth…. if you believe the pundits. ;-p) But I do believe the following:

· Increased competition and public disclosure on pricing and performance would result in more competitively priced and better products/services – whether its hospitals, insurers, etc. For example, many states require that an insurer maintain an office(s) in the state in which they provide coverage – limiting the number of providers consumers have access to. What would happen if…. consumers knew how much it would cost them to get a service at a hospital or from a doctor before they went there or if we knew how effective the hospital or doctor was (# of complaints, average experience of providers at a location)? Or if when looking at healthcare insurance coverage, we could see what % of claims an insurer denied?

· Reforming tort law would reduce the number of ridiculous medical malpractice lawsuits that are filed every year – and reduce health providers’ overhead and malpractice insurance costs.

· We should not get rid of health savings plans nor should we require that people have health insurance. In some cases, it just doesn’t make sense. For example, when I was 30, I was told that to continue the coverage I had with my former employer, I would need to pay $430+ a month (Yes that is more than $5000 a year; under my employer, I paid ~$1300 a year of the cost). Yet, my annual healthcare costs were less than $1500 (that’s including dental) had I paid out of pocket. The reality is that health insurance is not really insurance in many cases – it is a managed care program – one in which you likely overpay for services in your youth and may or may not underpay as you get older. (I mean, your auto insurance doesn’t have a co-pay for oil changes and smog checks does it?) (I won’t go into detail on this…but if you ever want to have a glass of wine with me and talk about it, let me know!)

· Health insurance, health care costs and health savings plans should be tax deductible or not counted as part of your taxable income. (That would be one way to encourage people to get health insurance!)

· I also believe that if you have health insurance that your health insurer should cover everything that they promised to cover at the start of your relationship. I’m not sure that spending $4 trillion in taxpayer money to develop ANOTHER insurance option is the way to do that. Maybe having better oversight and more accountability and transparency would.

· Finally, I think that reforming health care will do very little to solve the much bigger problems we have right now. Healthcare reform means very little (and actually will be a further TAX on our resources) if our economy is in the tank/is not growing and people are out of work; it will not solve the auto industry or banking industry crisis; it will not make our education system better; it will not better prepare us for a green economy or solve climate change; and it will definitely not make government more efficient, less intrusive and less wasteful.