Free Markets, Free People

Daily Archives: February 25, 2010

Health Care Summit review

I’ve been watching and/or listening to the health care summit today and it became fairly obvious from the opening bell that there wasn’t going to be much of anything worthwhile or substantive accomplished – not that I’m surprised.   5 hours into it, it has been mostly the exchange of talking points.  Right now I’m forced to listen to Henry Waxman give his. He’s claiming his version of the bill is the best and the Republican’s version sucks. Pretty much the way it has gone all day (Republicans have mostly said they want to start over with a clean sheet).  Every one of the Democrats are appealing to emotion via tragic anecdotes.

Tom Coburn made the most important point – any reform has to reconnect purchase and price.  Until that’s done, we’re not going to get the value that reconnection would bring.

Then there have been the CBO wars (each side claiming their side is supported by the agency), with Rep. Paul Ryan pointing out that the problem with the CBO numbers is that it doesn’t account for the double counting and that throws the curve in an upward trajectory. Ryan also pointed out that Democrats removed the “doc fix” from the bill and plan on passing it separately, but that removed around $300 billion from the HCR bill which should be included in the cost.

Republicans have argued for tort reform for medical malpractice. Democrats (Dick Durbin in particular) have argued against it. McCain used the Texas model to make the point for tort reform. Texas, which has instituted tort reform has seen malpractice premiums reduced by 27% and has had a net gain of 18,000 doctors – extrapolated nationally using direct savings (malpractice insurance premium cost) and indirect savings (reduction of the “defensive medicine” practiced by doctors) the amount saved could be in the $150 billion range.

Essentially each side is trying to support their point of view. If there’s any agreement it is that Medicare is full of fraud, out of control cost wise and needs to be fixed and that both sides want to fix the pre-existing systems.

As expected, President Obama sits quietly while the Democrats give their talking points and challenges Republicans as they deliver theirs.

Most amusingly, Joe Biden said this:

“I’m always reluctant after being here 37 years to tell people what the American people think. I think it requires a little bit of humility to be able to know what the American people think, and I don’t, I can’t swear I do. I know what I think. I think I know what they think. But I’m not sure what they think.

Then everyone, including Biden, spoke for “the American people”.

The one thing Obama said concerning reconciliation, in answer to a point made by John McCain, was that the “American people” really aren’t that interested in the process. Obviously he hasn’t seen the CNN/Gallup poll today which says they are interested and overwhelming reject it’s use.

Chris Dodd tells a story about a guy who privately put together a small business health care association in CT. Of course the point lost on him as he argues for the government to act is it was done privately.  Perhaps the government’s role ought to be enabling that. Rep. Joe Barton then made that point.

“Blinky” Pelosi is now wrapping it up with her usual attack on insurance companies and Republicans (except Tom Coburn for some reason) while still pitching the public option.  Yeah, negotiating at its finest.

The cable news networks covered most of the first part of the session but began bailing around 1pm, cutting in from time to time, but mostly going to discussion among their “experts”.

Bottom line – no bi-partisan attempt on either side to reach a compromise. And again, that’s fine.

After that, I think I’ll go watch some exciting curling.


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The war on health insurance companies is indicative of the government’s greed for power

The Democrats are bound and determined to demonize the private health insurance industry and use that demonization as a basis for further control by government.  Seizing on one insurance company’s rate increase in California as a reason for government intervention the House has passed a piece of legislation in the House to remove the industry’s anti-trust exemption.  That’ll teach ‘em (and by the way, the vote was 406-19 so a whole heck of a lot of Republicans have bought into this again).

The White House, of course, backs the bill claiming:

The repeal of the antitrust exemption in the McCarran-Ferguson Act as it applies to the health insurance industry would give American families and businesses, big and small, more control over their own health care choices by promoting greater insurance competition.

But will it do what the White House says it will do. Most likely not:

The Congressional Budget Office concludes that repeal “would have no significant effects on either the federal budget or the premiums that private insurers charged for health insurance.” University of Pennsylvania economist Scott Harrington says, “This is just barking up the wrong tree…It might sound good, but I can think of very few things …that would be less consequential for consumers of health insurance.” Professor Austin Frakt of Boston University notes, “Repeal of the exemption is popular, but like a lot of things done in anger, it isn’t particularly wise and won’t be very effective.”

In essence this is a political temper tantrum of the type where bad law is usually made. It’s not clear that this particular law will have negative effect, but it is apparently not going to do what the White House claims.  But it will accomplish one thing – increase the power of the federal government.

To understand that, a little background concerning the exemption might be informative:

In 1944, the Supreme Court overturned prior case law and held that the antitrust laws should apply to insurance.

Congress responded with the McCarran-Ferguson Act, which created a limited exemption from federal antitrust law for the “business of insurance.” To qualify for the exemption, each state had to engage in oversight of its insurance market. States responded by creating insurance commissioners and regulating insurer conduct.

The logic of the exemption was that prior to 1944, insurance had been regulated by the states anyway. No one felt any compelling need for intrusion by the federal government, or to allow private litigants to bring federal antitrust suits against insurers. In addition, insurers — particularly smaller insurers —can more accurately price risk if they can share information on their actuarial experience. The exemption created a safety zone for insurers to share information free from the threat of private antitrust suits.

McCarran-Ferguson still left insurers subject to state regulatory oversight and federal antitrust scrutiny for matters that don’t involve “the business of insurance.” Contrary to Sen. Reid’s claim, the federal government already scrutinizes mergers for anticompetitive consequences, and has brought several challenges.

The point of the exemption was to actually help make the industry more competitive. Sharing “actuarial experience” will now be an anti-trust violation. Additionally, private litigants will now be able to bring federal anti-trust suits against insurers – if this passes the Senate.

So when the White House continues, saying:

The repeal also will outlaw existing, anti-competitive health insurance practices like price fixing, bid rigging, and market allocation that drive up costs for all Americans. Health insurance reform should be built on a strong commitment to competition in all health care markets, including health insurance.

It’s describing what was formerly considered to be “the business of insurance.” Now it is “price fixing” and “bid rigging”. And most disingenuous of all is the claim it will spur competition.

So what will this do?

Insurers fear that losing the exemption would force them to deal with an additional (federal) regulator and expose them to private federal antitrust suits. State insurance commissioners also want to keep the exemption, because they prefer to remain the dominant regulator. On the other hand, federal antitrust authorities want to scrap the exemption because they don’t like exemptions — although they don’t seem to be claiming that repeal would result in greater competition.

Then the point of the bill is to increase what? Federal regulation. More federal control of the private health insurance industry that states have always regulated. This isn’t about competition, “bid rigging” or “price fixing”. This is about gathering more power at the federal level.

The excuse is this “greedy” insurance company in California (btw, the health insurance industry’s profit margin is 35th among all industries at 2.2%) that is raising premiums.

But what most don’t seem to understand is there are different types of greed. And one of them is a greed for power. That greed has been on display for years, and intensely so for the last year, within the federal government. This bill is nothing more than another manifestation of that greed.


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Is Senate Health Care Reform bill dead? And does Obama have a fallback plan? (Update)

It is looking more and more like the support for passing the pending Senate Democratic version of the health care bill just isn’t there – among Democrats. Deaths and recent resignations in the House, as well as pro-life Democrats, make getting the required number of votes to pass that legislation – unchanged as necessary – virtually impossible. Unless the House passes that legislation Democratic members of the Senate are saying the process is dead. Even Sen. Robert Byrd has gotten into the act addressing Democratic Senate colleagues by letter and warning against changing filibuster rules in order to advance their legislative priorities

That leaves us with today’s scheduled televised health care summit.  What’s its purpose?  My contention has been it’s a bit of political theater to convince the public that the Republicans are the problem (both generally and specifically).  But it also appears a bit of political reality is beginning to settle on the White House. The Wall Street Journal reports that Obama may introduce the idea of a vastly scaled back plan if he determines that the present plan isn’t going to make it. Given the difficulty outlined above of passing what is presently pending in Congress, this may be the result of the summit – a new and much smaller approach to passing something called “health care reform”. Says the WSJ:

It would do that by requiring insurance companies to allow people up to 26 years old to stay on their parents’ health plans, and by modestly expanding two federal-state health programs, Medicaid and the Children’s Health Insurance Program, one person said. The cost to the federal government would be about one-fourth the price tag for the broader effort, which the White House has said would cost about $950 billion over 10 years.

If, in fact, that’s the plan, then it is hardly what anyone would call “reform”. SCHIP (the Children’s Health Insurance Program) has already been expanded – it was one of the first bills Obama signed. Additionally, the expansion of Medicaid won’t please state who mostly pay for the program. Lastly, such a bill would do nothing to address the 800 pound gorilla in the room – what is necessary to bring costs in the federal programs (Medicare, Medicaid and SCHIP) under control. That is where the problem is to be found – not in private insurance. It also leaves those things the GOP and the right want where they our now – left out.

If that’s the result of today’s summit, it will be considered by all sides to be a failure. It will obviously be spun by the usual suspects in the administration as a rousing success. However, what has to be kept in mind is even this would have to pass through Congress and that’s not at all a sure thing anymore with the election of Scott Brown, breaking the filibuster proof majority formerly enjoyed by the Democrats.

It’ll be interesting to see how this summit turns out today. Reviewing the list of those invited, I don’t expect much in the way of compromise or bi-partisanship. And that’s fine with me.

UPDATE: Gallup weighs in with a poll about the health care summit and the mood of the public:

Americans are skeptical that lawmakers will agree on a new healthcare bill at Thursday’s bipartisan health care summit in Washington, D.C. If an agreement is not reached, Americans by a 49% to 42% margin oppose rather than favor Congress passing a health care bill similar to the one proposed by President Obama and Democrats in the House and Senate. By a larger 52% to 39% margin, Americans also oppose the Democrats in the Senate using a reconciliation procedure to avoid a possible Republican filibuster and pass a bill by a simple majority vote.

I agree the skepticism is warranted. 49% of independents oppose passage with 24% strongly opposing it in that poll (only 8% strongly favor it). Also note the overwhelming margin concerning the use of reconciliation. Again, looking at independents, 53% oppose it with 25% strongly opposing it (only 9% strongly favor it). I believe that could be deemed “fair warning” to Democrats.


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