Universal Health Insurance Coverage, new proposal

[Gone4Good]

HC costs in MA are going up.

I concede that point. But it is also irrelevant. Nobody is claiming that the proposed legislation, or any other plan, will cause health care costs to fall. So congratulations in winning a point against an argument no one is making.

 

[ziggy29]

I concede that point. But it is also irrelevant. Nobody is claiming that the proposed legislation, or any other plan, will cause health care costs to fall. So congratulations in winning a point against an argument no one is making.

Maybe so -- but the point is a valid one, and the point is that no significant overhaul is even worth undertaking, IMO, unless costs are controlled first. It does no good to ensure universal coverage if we continue to have unaffordable double-digit increases in health care costs year after year.

Cost control FIRST. That will give the "breathing room" to allow serious reforms, IMO. Anything that doesn't stop the runaway growth in cost is doomed to insolvency *very* quickly no matter how good it feels in the here and now.

 

[Gone4Good]

Maybe so -- but the point is a valid one, and the point is that no significant overhaul is even worth undertaking, IMO, unless costs are controlled first. It does no good to ensure universal coverage if we continue to have unaffordable double-digit increases in health care costs year after year.

Cost control FIRST. That will give the "breathing room" to allow serious reforms, IMO. Anything that doesn't stop the runaway growth in cost is doomed to insolvency *very* quickly no matter how good it feels in the here and now.

I agree. In a perfect world we'd all be able to come together on an optimal strategy to control costs. But, unfortunately, we live in a world where every effort to control costs is demagogued in the most horrific language. As a result of that demagoguery, the cost control initiatives have been watered down. Instead of big, impact-full proposals, we have smaller pilot programs and less ambitious measures. But they still exist. Meanwhile the status quo has nothing at all to offer on the cost control front.

Here's what the moderate/conservative commentator David Brooks said:

The authors have thrown in a million little ideas in an effort to reduce health care inflation. The fact is, nobody knows how to reduce cost growth within the current system. The authors of this bill are willing to try anything. You might even call this a Burkean approach. They are not fundamentally disrupting the status quo, but they are experimenting with dozens of gradual programs that might bend the cost curve.

If you’ve ever heard about it, it’s in there — improved insurance exchanges, payment innovations, an independent commission to cap Medicare payment rates, an innovation center, comparative effectiveness research. There’s at least a pilot program for every promising idea.

So cost control is a feature of the plan, and while it doesn't go as far as I would like, it does more than has ever been tried before in the U.S. And probably more than we can expect for another decade if this effort fails.

But after watching this debate for the past year, it's hard not to detect a bit of cynicism in the "control cost first" crowd. It seems like an effort to set the bar for acceptable reform at "politically impossible" while simultaneously doing everything imaginable to raise ever higher the political costs for serious health care reformers. If that is in fact what we are witnessing, then the right path forward is to "jam this bill through" along with the modest cost control initiatives it has and then work to expand the most promising of those initiatives in the years ahead.

I fear you offer a false choice. One between the current bill with some cost control measures and a non-existent, and likely politically impossible, alternative.

 

[travelover]

So if I understand correctly, you want to kill my grandmother.

 

[Texas Proud]

One of the problems I have with the CBO and the politicians etc... and the people who want to insure everybody...

They talk about the new bill 'saving' X number of dollars... well, that is just a lie... it takes a huge tax increase to get there... we can do that tax increase and NOT insure everybody... that will 'save' a lot more money than what they propose..

And even if you agree with them on their spin of 'savings'... that is the federal budget... they do not say how much total costs of healthcare will go down...

As an example... if I do not get any savings in my insurance... and have to pay more taxes... I am worse off no matter how much the gvmt saves...

The plan is mostly a universal coverage plan... with gvmt subsidies... not a 'fix' for health care costs...

 

[Gone4Good]

They talk about the new bill 'saving' X number of dollars... well, that is just a lie... it takes a huge tax increase to get there... we can do that tax increase and NOT insure everybody... that will 'save' a lot more money than what they propose..

Maybe not exactly a lie, but probably confusing.

If the legislation is enacted the government will spend more money than they otherwise would. Some of that is being paid for by cutting funding to Medicare Advantage (so no net increase in spending, just a shift). And the balance will come from higher taxes.

So yes, the deficit reduction claim is based on higher taxes offsetting higher spending.

But the $600B cost savings estimate linked above is a reduction in medical costs versus what we would spend without the legislation. This estimate is debatable, of course. The CBO doesn't project as much savings because they simply can't model many of the initiatives that are in the bill with any confidence.

 

[ls99]

Maybe not exactly a lie, but probably confusing.

If the legislation is enacted the government will spend more money than they otherwise would. Some of that is being paid for by cutting funding to Medicare Advantage (so no net increase in spending, just a shift). And the balance will come from higher taxes.

So yes, the deficit reduction claim is based on higher taxes offsetting higher spending.

But the $600B cost savings estimate linked above is a reduction in medical costs versus what we would spend without the legislation. This estimate is debatable, of course. The CBO doesn't project as much savings because they simply can't model many of the initiatives that are in the bill with any confidence.

The best explanation I've seen yet as to why the health care bill must be defeated.

The feds have no money to spend except what is confiscated in the form of taxes.

 

[Gone4Good]

The feds have no money to spend except what is confiscated in the form of taxes.

Abolish the Federal Government!!!!

 

[Texas Proud]

Maybe not exactly a lie, but probably confusing.

If the legislation is enacted the government will spend more money than they otherwise would. Some of that is being paid for by cutting funding to Medicare Advantage (so no net increase in spending, just a shift). And the balance will come from higher taxes.

So yes, the deficit reduction claim is based on higher taxes offsetting higher spending.

But the $600B cost savings estimate linked above is a reduction in medical costs versus what we would spend without the legislation. This estimate is debatable, of course. The CBO doesn't project as much savings because they simply can't model many of the initiatives that are in the bill with any confidence.

I guess you did not understand my point... just because the government 'saves' money does not mean 'we' will save money.... ('we' meaning everybody in total...)

I have not seen a projection showing the cost of health care as a percent of GDP will be going down... if it is not, then there is no savings no matter what is done... it is just shifting who is paying for health care..


The problem is the total cost of health care for America is to high... just paying for more people to have health insurance is not fixing the total costs... either the cost structure must change, or the amount of service we get must change. Doing what is proposed is just moving around the deck chairs on the Titanic...

 

[Gone4Good]

I guess you did not understand my point...

I have not seen a projection showing the cost of health care as a percent of GDP will be going down... if it is not, then there is no savings no matter what is done... it is just shifting who is paying for health care..

I think I did understand . . .

But the $600B cost savings estimate linked above is a reduction in medical costs versus what we [as a nation] would spend without the legislation.

That $600B is an estimate of how much less the country, in total, will spend because of the cost saving initiatives in the current legislation. Not shifted from one person to another, but lower total outlays.

 

[samclem]

But the $600B cost savings estimate linked above is a reduction in medical costs versus what we would spend without the legislation. This estimate is debatable, of course.

Some use the word "ludicrous" instead of "debatable."
- The $600B includes cuts to Medicare that Congress has already steadfastly refused to make for many consecutive years (via the "doctor fix). To include it now as cost savings is laughable. ("No, this time we really mean it! )
- It includes lots of projected savings to be gained by reducing Medicare and Medicaid waste. This highlights the incompetence of government to administer this entire project. If there's a lot of waste in government Medicare, Medicaid, and the VA system, then no new special legislation should be required to fix that--they should do it tomorrow, in fact it should have been done decades ago. Instead of being ashamed of the waste in the portion of the medical system the government already runs, proponents tell us (without any hint of irony) that this handy ballast is really a source we can leverage so the government can do more things incompetently. Amazing.
- Now the legislators favoring the "reform" have decided that student loans are somehow related to health care, and are converting some of that program to be government-run and citing the cost savings as attributable to health care reform (since it will be in the same bill). I expect next that the federal school lunch program will be cut 25% and the savings dumped into the bin, thereby reducing the red-ink of the bill and also cutting childhood obesity. A win-win for the nation's health!

 

[Texas Proud]

That $600B is an estimate of how much less the country, in total, will spend because of the cost saving initiatives in the current legislation. Not shifted from one person to another, but lower total outlays.

Can you show me this?

The CBO scores a bill based on the cost to the government, not the nation... so I am dubious that they are saying total costs for the nation will go down $600B...

But I could be wrong...

 

[Gone4Good]

Can you show me this?

The CBO scores a bill based on the cost to the government, not the nation... so I am dubious that they are saying total costs for the nation will go down $600B...

But I could be wrong...

It's not the CBO projection. It's from a Harvard Economist, David Cutler.

 

[samclem]

Can you show me this?

The CBO scores a bill based on the cost to the government, not the nation... so I am dubious that they are saying total costs for the nation will go down $600B...

But I could be wrong...

I think you are right. The $600 Billion figure comes from Mr Cutler's own secret sauce calculations, not from the CBO

But even the CBO numbers, though technically accurate, are meaningful only after one understands the assumptions the CBO is forced to use, and after reading all the footnotes.
From this CNN/Fortune article:
-- The bill would force the Treasury to borrow 40 cents of every dollar in new spending the bill requires.
-- The bill counts on new taxes to help reduce its annual impact on the deficit. But, those new taxes can't, by law, be used to pay for the massive new health spending required by the bill--the money can only go into their respective "trust funds" (Medicare and SS). The major new revenue sources:
--- Fees for the government's LTC insurance plan (the CLASS Act). The CBO is counting these fees as revenue now, even though they are to be used to pay LTC costs down the road. Further, they are insufficient to even accomplish this--"The American Academy of Actuaries warns that the program will be insolvent by 2021. The HHS actuaries conclude that it faces "significant risk of failure."
So, all we're doing is creating another future morass of spending, like SS and Medicare. But, since in the first years the tax payments exceed the liabilities, the CBO has to say that it reduces the deficit in those early years.

Hence, using the CBO report, the administration is, in effect, touting the $70 billion the CLASS Act raises between 2010 and 2019 as money that's available to spend on subsidies for premiums and coverage for the uninsured.

Does anybody think this is honest accounting?
--- Higher Medicare and SS taxes (due to the tax on"Cadillac" health insurance plans, which is anticipated to cause companies to reduce the value of these benefits and increase pay, which is subject to Medicare and SS taxes. So--more money.). By law, all of the funds raised through these taxes must go back into the Medicare and SS "trust funds," none can be used to pay for the huge spending required by this bill. The money to pay for that will come from increased federal borrowing. The CBO does not include the interest for this borrowing in their computations.

-- The bill drastically understates costs. Example (emphasis added):

A law dating from 1987 sets strict limits on total physician payments for Medicare. The main mechanism for restraining costs is a formula that lowers the fees Medicare pays for everything from angioplasties to checkups. But since 2002, Congress has been postponing those cuts and allowing modest increases in reimbursements instead. The official budget assumes that Congress made the cuts every year, and hence starts with a far lower spending number. But that's fiction. Each year, Congress passes what it calls the "Doc Fix," which today requires spending about $25 billion a year more than the budget projects. The House included the "Doc Fix" in the bill it presented in July, but not the Senate. And now it's reappeared -- but in a different piece of legislation. The administration estimates that the Doc Fix will cost $371 billion over 10 years. Yet the CBO doesn't talk about that cost when it comes to health care -- because it can't. It's not in the bill it's scoring.

Okay, so what's the real bottom line?

How the math adds up
So how much must the government borrow to pay for reform? That's the true measure of future deficits. Let's start with the CBO's "deficit reduction" estimate of $118 billion.
First, we'll subtract the Doc Fix of $371 billion, which Obama does not pay for and must be borrowed. That wipes out all of the theoretical decline in the deficit and leaves a shortfall of $253 billion.
Then we'll subtract the tax revenues that are owed for entitlements, and therefore excluded from paying for the bill: $70 billion from the CLASS Act, $52 billion for Social Security, and $113 billion for Medicare. That subtotal: $235 billion.
So the full amount that must be borrowed by 2019 is $488 billion. (That's 39% of the total cost, composed of the $875 billion official estimate plus the Doc Fix of $371 billion, for a total of $1.25 trillion.) Add in interest, which is excluded from the official CBO cost, and the total amount approaches $600 billion. So the U.S. will need to borrow an additional $600 billion to pay for a new medical system -- one that won't be up and running until 2014.
Only by using the crazy math of health care can a bill both "lower deficits" and enormously raise debt. America's struggling households know what real deficit reduction looks like, and this isn't it.

This bill would not reduce the federal deficit. It certainly will vastly increase the national debt. And there's no way that it will decrease US spending on health care.

 

[Gone4Good]

Okay, so what's the real bottom line?

Wow, talk about funny accounting.

The "Doc Fix" (which accounts for 2/3 of the presumed $600B hole) is part of the status quo. This isn't something that springs into being as a result of health care legislation and won't go away if the legislation fails. All you're saying is that current budget estimates are understated by the amount of the doc fix (which I agree with) but that understatement has nothing to do with health care legislation.

 

[Gone4Good]

Meanwhile, the current legislation looks an awful lot like something samclem once said "would work"

Here's what I think would work to let everyone obtain care and keep things affordable. It's not what I think the country should do, but it is better than the alternative I believe we are headed for.

1) Mandatory Coverage: Everyone must buy a policy.
2) Government vouchers based on need. (Just as food stamps do for nutrition)
3) Private policies of four or five standardized types. A limited number of policy types greatly enhances price competition. Label them A-E and require that the insurers call them by that label.
4) No underwriting: If an insurer elects to sell a particular type of policy, the insurer must accept all applicants. Differences in price arr allowed based on geographic area. But--citizens can change policy types only once every 5 years (reducing the "hey-I've got a bad disease, I'm gonna go with the Cadillac policy now" syndrome)
5) All policies (of the 4 or 5 types) would cover preventative care that serves to reduce medical costs overall (Pap smears, immunizations, prenatal care, annual checkups, etc). Policies would differ by the co-pay amounts, private vs semi-private rooms, types of perscription drugs covered, degree of "doughnut-hole" that the insured would cover largely on his own, etc). All policies would feature catastrophic coverage based on the insured's household income--maybe all medical costs over 30% of income would be covered.
6) A government-run clearinghouse with with medical/consumer information. Provides info on customer satisfaction with various insurers by policy types, information on outcomes by procedures for various hospitals/centers, average out-of-pocket costs incurred by consumers in each state for each type of insurance, etc). This helps promote consumer knowledge and informed decisionmaking.
7) Individual purchase of medical care is allowed. Unlike some countries which prohibit individual purchase of medical care, it would be allowed in the US. In addition, if you want to purchase an additional medical policy to cover cosmetic surgery, experimental treatments, nursing home care, daily electroshock therapy, in-home aromatherapy, accupuncture, etc, that would be okay, too

There. The market helps provide cost controls (especially by giving consumers a stake in reducing their use of medical care and in picking insurers with the lowest costs). Provides consumers with feedback on medical care so they can make an informed choice. The "Cadillac" plans would be expensive because they cover a lot and because of adverse selection (that's the policy type the sickest people would choose), so people would be "incented" to select plans with higher co-pays, which helps drive down costs. Everyone gets the cost-effective preventative care provided in a cost-effective way, everyone is protected against catastrophic medical costs, the free market is preserved, medical costs are de-coupled from employment (which would be good for our economy as a whole), and the very poor pay nothing for their care (due to vouchers). And, if you want to take some risk by self-insuring to a larger degree, you are allowed to do it.

It's a nice plan sam, maybe you could come full circle and support it.

 

[ERD50]

Wow, talk about funny accounting.

The "Doc Fix" (which accounts for 2/3 of the presumed $600B hole) is part of the status quo. This isn't something that springs into being as a result of health care legislation and won't go away if the legislation fails.

Then it isn't going away if health care legislation passes either. So why count it as part of the 'savings'?

-ERD50

 

[ERD50]

Meanwhile, the current legislation looks an awful lot like something samclem once said "would work"

I didn't see anything about special deals for Nebraska ( and a dozen or so other special deals) in samclem's plan.

At any rate, samclem said: 'It's not what I think the country should do, but it is better than the alternative I believe we are headed for.'.


-ERD50

 

[Gone4Good]

Then it isn't going away if health care legislation passes either. So why count it as part of the 'savings'?

-ERD50

It's not part of savings. Nor is it part of its cost. It simply isn't included at all, which is appropriate because it is a cost that pre-dates the current legislation. Samclem's post says as much. Including it as a "cost" to new legislation makes as much sense as including costs associated with the Iraq war, or existing Medicare obligations.

But what opponents want to do is take this existing cost and apply it to the new legislation to make it seem more expensive than it is.

 

[Gone4Good]

I didn't see anything about special deals for Nebraska ( and a dozen or so other special deals) in samclem's plan.

Then I'm sure he supports the work the House is doing to strip that out (via reconciliation, if needs be).

At any rate, samclem said: 'It's not what I think the country should do, but it is better than the alternative I believe we are headed for.'.

Yup he sure did. And it sounds an awful lot like something someone says about any compromise. This isn't the legislation I would have written either, but its better than the alternative.

One is left to wonder though, if it were so awful and so deserving of defeat 12 months ago, why would he put it out there as a plan that "would work". The answer, if I may, is that 12 months ago he was afraid single payer might be the plan and was willing to accept this as a "better alternative". But now that single payer is off the table, this compromise is no longer good enough. He wants further compromise to the compromise . . . that, by the way, is what's required these days to garner a "bi-partisan" solution (keep conceding your position until the opposition gets everything they want).

The answer to that, of course, is not to keep conceding to ever-changing demands. But to create a compromise that has just enough support so that it can be "rammed through".

 

[samclem]

It's not part of savings.

Well--the CBO included savings to be had from reduced Medicare payments to doctors (since that's what the new legislation claims will be done). Except that there is current legislation that is supposed to do the same thing, and for 8 years Congress has chosen not to make these cuts. Everyone knows they won't be made in the future. So, including them as future cost savings is just not realistic. What would be realistic (and honest) is to build the cost of the "Doc Fix" into the pending legislation rather than put it elsewhere.

Originally Posted by Gone4Good
The answer, if I may, is that 12 months ago he was afraid single payer might be the plan and was willing to accept this as a "better alternative". But now that single payer is off the table, this compromise is no longer good enough.

Your point is well taken. Single payer is worse than even the presently proposed legislation.
But I disagree that the "plan" I outlined bears any resemblance to the present legislation (any more than a piano resembles a calliope).

Element by element:
1. (Mandatory coverage): This plan does little to mandate coverage. The penalties are so low that individuals would be foolish to buy coverage in advance if guaranteed issue is in place. On another note: It will be interesting to see if the SCOTUS finds this unconstitutional. If so, I hope we'll do the honest thing and amend the constitution. Under the present environment, I'm afraid Congressman Slaughter will be asked to come up with a workaround whereby Cub Scout Pack 734 can accomplish the same thing via secret ballot.
2. (Government vouchers based on need). I suppose this is only a tiny matter of degree. The huge transfer payments under the proposed legislation are nowhere near what I'd envisioned. The whole concept of a market only works if customers/patients have some of their own skin in the game. The Senate plan gives subsidies to families with incomes well into the middle class (family of 4 with incomes over $88,000). Only when most people are paying a considerable amount of their own money for insurance will they demand inexpensive policies.
3. (Standardized types of private insurance). Nothing like this in the presently proposed legislation.
4. (Elimination of underwriting): Yep, that's here. But, without effective "teeth" in the individual mandate to buy insurance, this becomes a liability rather than an asset.
5. (Coverage of preventative care): Yes, it's in the Senate plan. But there's no market-based mechanism to halt the expansion of mandates (gender reassignment, unlimited fertility treatments, etc, etc) that has plagued many State plans. Again, this happens only when people can buy their own policies and must do it with mostly their own money. Then they'll tell their legislators to quit with the add-ons.
6. (Govt clearinghouse for medical treatment result info): It does sound like there's some of this in there, along with worrying early indications that the government will be using the findings to deny coverage. Again--the intent is to allow the market to work, not to introduce more top-down "we'll tell you what's best" action.
7. (Individual purchase of care still allowed): I haven't heard of any new proposed restrictions in this area. If the government would free up the private market by allowing Medicare providers to charge non-Medicare patients whatever the two agree upon, that would be a step in the right direction. I don't think that's in the Senate plan.

Eliminate the Cornhusker kickback from the present legislation? Why? Leave it there as a testament to a disgusting process. In my book, Senator Nelson has done more to highlight the integrity deficit characterizing the whole mess than any other individual. Removing it is like removing the warning signs from around the open cesspool in order to clean things up.

 

[ERD50]

Then it isn't going away if health care legislation passes either. So why count it as part of the 'savings'?

-ERD50

It's not part of savings. Nor is it part of its cost. It simply isn't included at all, which is appropriate because it is a cost that pre-dates the current legislation. Samclem's post says as much. Including it as a "cost" to new legislation makes as much sense as including costs associated with the Iraq war, or existing Medicare obligations.

But what opponents want to do is take this existing cost and apply it to the new legislation to make it seem more expensive than it is.

I guess it depends on what the basis is for comparison. But earlier, you said (bold mine):

That $600B is an estimate of how much less the country, in total, will spend because of the cost saving initiatives in the current legislation.

The "Doc Fix" increases spending every year. So if they don't count that as a cost, it underestimates costs compared to real life. It sounds like the mere act of submitting it to the CBO creates a 'savings' that does not exist in real life, since they cannot count the "Doc Fix" as it is not part of the legislation.

OTOH, if these 'savings' are strictly calculated by deltas from specific programs (which may be what you meant by the 'because of cost savings'), that *might* be different. But the "tax us now" and "don't provide all the benefits for 4 years" is certainly a dishonest way to present the numbers. Couple that with "we need to pass this NOW to help people", and I think that is one of many reasons why people who learn a bit about the bill are so skeptical. Multiply that by 1000x when Speaker Pelosi tells us “But we have to pass the bill so that you can find out what is in it, away from the fog of the controversy."

Yep, we don't want to address any of that pesky 'controversy' when Congress is trying to pass a bill that affects every US citizen.


-ERD50

 

[samclem]

That $600B is an estimate of how much less the country, in total, will spend because of the cost saving initiatives in the current legislation. Not shifted from one person to another, but lower total outlays.

Somebody should pass this news about overall cost savings to the Centers for Medicare & Medicaid Services (which, of course, is part of President Obama's executive branch and unlikely to be understating the costs of this plan). In January they wrote about the Senate plan (Link to coverage of their report):

"Overall national health expenditures under this bill would increase by an estimated total of $222 billion (0.6 percent) during calendar years 2010-2019."

 

[haha]

Chances of passage are looking strong.

Intrade Prediction Markets

 

[samclem]

Chances of passage are looking strong.

Intrade Prediction Markets

At least a random group of people think so. Meanwhile, another Democratic congressman (John Adler) formerly in the "undecided" column has indicated he won't support this thing.

There's no doubt this will be very close.