The Public Option Lives!

Co-blogger Mike was eerily prescient last summer when he wrote about the Public Option as it relates to Medicare Advantage plans:

"Medicare has not chosen to respond to its Medicare Advantage competition by improving its own product. Instead, Medicare chose to respond to its competition by using its power to kill its competitor, rather than compete with it.  That illustrates pretty well how governments tend to "compete" and we all need to keep this in mind when the "public option" idea again surfaces."

Indeed.

But what does that have to do with the price of tea in China?

Well, as Our Betters in DC© continue to "streamline" ObamaTax alternatives, they've (perhaps unwittingly) turned the spotlight once again to the Public Option, which for so long has been presumed dead.

So, what's the "Public Option," you may ask?

Well:

"The "Public Option" is a euphemism for Single Payer, the obvious end-game for the ObamaTax from the get-go.

And how do we know this?

"The administration still intends to control medical costs by ... a single payer mechanism"

That is, the government sets up its own health insurance racket scheme to "compete" with the private sector. Of course, the private sector is made up of commercial carriers that are enjoined from collaborating in a way that the government is not. The government, of course, has the lawful power of force, which it can use to ensure an unfair and insurmountable market advantage. Thus, the end of the private insurance business.

So, why bring this up now? The Public Option is dead, right?

Maybe so, maybe not:

"The BHP [Basic Health Program] system could appeal to states that would have liked to see Congress offer a government-run, "public option" health insurance throughout the country, in addition to or in place of the PPACA exchange system"

In fact, the power of the government's purse is so strong, there's no "maybe" about it. Seems to me that this alone dwarfs the current Halbig/King/Burwell kerfluffle: by definition, the Public Option is itself simply one big subsidy.

Sweet.

Health Care Town Hall - West Hartford CT, Sept 2. Part I

Here’s a summary of my notes from the Town Hall meeting on health care, hosted by Congressman John B. Larson, First District, Connecticut. The meeting took place in West Hartford Wednesday evening September 2. For background on this Town Hall, look in the comments section here. Also, there are presently 5 bills in Congress (3 in the House and 2 in the Senate). The discussion September 2 focused on one of the House Bills, HR3200.

This is Part 1 of 2 Parts. It summarizes some of the Q and A interaction in the Town Hall meeting. Part 2 contains my overall impressions and observations.

Each numbered item below includes a question posed to the Congressman, the Congressman’s answer, and where I have a comment it's [in brackets]. I haven't included all the questions that were asked.

1. Obama says we can keep our existing insurance if we like it. Is that just for 5 years?
--Larson simply answered "you can keep your insurance". He did not refer to the 5-year grace period at all. A voice from the back of the room shouted "Sir you are lying! I'm a physician and I've read the bill!" Larson's face got red, he raised his own voice to say "I have never lied to you" and moved on to the next question.

2. Will you pledge that you & your family will join the public option?
--Larson said that there is presently no public option, and that he is not in the federal employees' plan either.

[This was a confusing answer. He apparently has insurance thru his wife's employment. His answer stimulated a lot of crosstalk from the floor, the loudest ones asking if Larson read the bill. Larson responded by stating that he "had the bill read" one day to the Democratic Caucus for "5 1/2 hours" followed by a couple more hours of discussion. I think this is a whopper. This bill is complicated legalese and it's a real tough slog to read. Reading the whole Bill - 1,017 pages - in 5 1/2 hours, works out to less than 20 seconds per page. Is THAT all the attention HR3200 gets from our Congressman? I doubt the complete bill was actually "read" in the time frame Larson claimed. But clearly Larson wanted the audience to believe it was.]

7. Will this raise my taxes? Will it raise my insurance premiums?
--Larson said the Bill will cut Medicare waste and claimed that Medicare savings will help pay for the cost of the Bill. He also cited a RAND Corporation study that there would be $77 billion annual savings from health information technology.

[He didn't explain how Medicare might reduce "waste", he just said it would happen. He also failed to explain how HIT would save anything and I think left the impression that significant savings would come from reductions to HIT spending. Well, how much HIT spending is there, now?]

11. Why can't we just buy our insurance directly from an insurance company? Why does it have to go true an employer?
--Larson said "that would be single-payer"

[Many people shouted No it's not! - including me. Larson just moved on to the next question.]

15. Will drug prices go down?
--"What will make drug prices go down is when the government negotiates them down like VA"

18. In the current system private companies sell Medicare supplement insurance. Will that disappear in the new public option?
--Larson said no, they won't disappear

[btw he gave a very different answer regarding Medicare Advantage - see #19 below]

Larson also stated that the CBO projects "only about 10 million participants in the public option".

[A question no one asked: if there are 47 million uninsured, how does a public option that covers only 10 million in total solve the uninsured problem? My guess is that he would answer that HR3200 will subsidize the uninsured so they can buy insurance either thru the public option or private insurance. My response would then be "doesn't that mean government subsidy of the insurance companies? Isn't that exactly what he objects to in Medicare Advantage?]

19. Do you support dissolving Medicare Advantage to save money?
--Larson said yes, and the reasons he gave were that Medicare Advantage plans are "subsidized by the government" yet provide the "same benefits and no better health outcomes".

[Larson - and the President - ignore (a) MA plans provide extra benefits (vision, hearing, dental, home care, wellness, and others not included in original Medicare; (b) MA also provides other modern health services not available in original Medicare (case management, disease management programs, nurse hotlines) (c) MA participants have fewer out-of-pocket expenses than original Medicare participants - documented by CMS and the Kaiser Family Foundation, (d) CMS data show that fewer MA participants, compared with original Medicare participants, have reported delayed care, and fewer reported having trouble getting care - perhaps because more MA participants report a regular relationship with a physician. An old report in JAMA (Jan 15, 2003) found that MA participants outperformed original Medicare in five of the seven HEDIS quality measures for health care.

Larson also ignored the cost-shift from Medicare and Medicaid into the private sector which has been going on for more than FORTY YEARS.

It appeared to me that Larson substantially skirted important facts on this question.]

22. The President says a public option will keep insurance companies honest. Aren't state regulators doing this? Who will keep the public option honest?
--Larson's answer - "the people - you can vote us out of office"

[This answer strikes me as inane. Federal agencies are the nearest things to immortality on earth. And besides, when has a Congressional election ever resulted in the closure of a federal agency? Ever? Anyway, Larson's seat is very safe as are most Congressional seats. The answer might be acceptable in a 9th grade civics class but in the real world I think it falls flat. It comes across as condescending to the extent that Larson expects anyone is so naive to believe it, and cynical to the extent he does not care if anyone believes it but says it anyway because it's politically correct.]

25. National debt is $12 trillion going up another $9 trillion in the next 10 years. And CBO estimates that health care will increase the deficit.
--Larson said "this bill is paid for by savings and it's revenue neutral."

[Another whopper. CBO said exactly the reverse. According to CBO, House bill HR3200 would increase the federal budget by $239 billion in the first 10 years. What's more, when the Director of the CBO was asked point-blank if HR3200 would “bend the cost curve,” he responded “no.”]

26. Will there be interstate portability?
--"Yes".

[No explanation. I wonder whether most people understood the question or the answer.]

Part 2 is here.

What more could we ask?

[Welcome Industry Radar readers!]

I think there are 5 major deficiencies in all the reform proposals now in the House and Senate:

(1) none addresses the underlying problem. The underlying problem is not the cost of insurance. It’s the cost of medical care. These proposals contain zilch to reduce the cost of medical care. Why is that? The public should be asking.

(2) all bite off more than they can chew. About 15% of the population is uninsured. Why does it follow that 100% of the present system must be radically changed to effect reform for the 15%? That's what this administration seeks to do. Why is that? The public should be asking.

(3) the cost of the proposals is unreasonable. After the enormous commitment of TARP funds and after another enormous commitment of funds to the so-called economic “stimulus” and considering the enormous looming expenditures in cap & trade bills, the the federal deficits have ballooned by 2X’s to 3X’s with no end in sight. The public rightly fears that these trillions of federal spending will be followed by high taxation and inflation. But the government pretends there’s no problem. Why is that? The public should be asking.

(4) the financing doesn’t add up. The administration has repeatedly stated its proposed reforms are necessary to save our economy. The president stated that “our health care problem IS our deficit problem; nothing else comes close.” Yet the administration is proposing insurance reforms that would cost the government a trillion dollars. That’s running through Hell in gasoline pants. Even after assuming massive tax increases and Medicare cuts, CBO projects that the proposals will increase the federal deficits – and the farther out it projects results, the worse the deficits become. The administration ignores the CBO scoring. The administration is also asking us to believe that its proposals will pay for themselves; will not increase the deficit by an additional dime; and will be funded largely thru elimination of the same Medicare "waste and fraud" that every president since Johnson has pledged to eliminate. Why should anyone believe that? The public should be asking.

(5) a "public option" won’t help. There is no evidence or other reason to believe that a public option will not end up like Medicare: skimpy benefits, massive bureaucracy, rampant fraud, special new taxes - and broke. And it will drive out private plans by “competing” thru legislative fiat rather than by innovation that creates pressure for all the players to become better. That's no solution. Yet powerful factions within the administration insist the public option is essential. Why is that? The public should be asking.

It has become quite obvious that if the Congress had passed any of the current proposals “by the first of August” - as they were told to do - it would have been a serious mistake. And the Baucus proposal is even worse than anything that preceded it. Are the only birds that fly out of this administration turkeys? The public should be asking that question, too.

So what to do instead? I think physicians should be taking the lead in regard to reform of the medical delivery system, but I’m not hopeful they will - based on their passivity over the past 40 years. And it must be recognized that without a solution to the high, and increasing, cost of medical care, there can be no solution to the high and increasing cost of insurance.

As to insurance access, I think that the problems (apart from the underlying cost of medical care) are largely caused by too much government in the first place. Unfortunately, the current proposals attempt to solve these problems with still more government. Another strategy for running thru Hell in gasoline pants.

It’s my belief that the two most helpful actions government could take to make medical insurance more accessible and less expensive are: (1) allow individuals to buy insurance across state lines and (2) equalize the taxes on insurance by reducing the taxes on individual medical policies. These actions would increase competition among insurers and reduce costs for individuals. The result would be many more people able to buy insurance.

And specifically for the uninsured, the remaining unspent economic stimulus funds - about $500 billion – could be used to finance insurance for the uninsured over the next 10 years.

This administration that claims to be open to possibilities is clearly ignoring these possibilities. Why is that? The public should be asking.

Deny, deny, deny

OK, we’ve seen this kind of thing before.

Believe it or not, the DENIAL problem is worse than you think.

It occurred to me today whilst buying gas, that when I pre-pay my $30 the pump always shuts off at exactly $30 – even if my tank isn’t full yet!

Exxon-Mobil DENIES me gas!

I’m telling you, this is how gas stations in Connecticut and all over America ROUTINELY DENY gas to motorists!

What’s worse, we are DENIED gas WHEN WE NEED IT MOST!

Righteous indignation! Outrage!! Snippiness!!!

This widespread DENIAL of gas shows that the country must have a public gasoline option.

This means GOVERNMENT-SUBSIDIZED gas stations where everyone is always GUARANTEED a FULL TANK for a FIXED PRICE.

The public-option gas stations will give the oil companies some COMPETITION - for a change.

Oh, I know, some crackpots will claim competition from a public option will be unfair and will drive the private gas stations and oil companies out of business.

But they're just crackpots. Besides, who needs the gasoline companies, anyway?

Don't believe those crackpots. Let your Congressional representative and your Senators know that you DEMAND a PUBLIC GASOLINE OPTION.

Chilling, but #TruthWillOut

We generally don't do partisan politics here at IB, but this particular example of (inadvertent?) truth-telling is important:

Biden tells crowd he wants to increase premiums and make sure that healthcare is 'not quality, but only affordable'... pic.twitter.com/fNhtcW7kxx

— Sean Hannity (@seanhannity) March 6, 2020

"[W]e’ll make sure it’s not quality, but only affordable”

And that, in a nutshell, is the whole premise of a "Public Option" (or any "universal care" scheme, really).

But what, exactly, is the problem with a Public Option?

"The "Public Option" is a euphemism for Single Payer, the obvious end-game for the ObamaTax from the get-go. And how do we know this?"The [Obama] administration still intends to control medical costs by ... a single payer mechanism"

And there you have it: full circle.

#Medicaid4All

[Hat Tip: Mr Jones]

Public Plan or Public Enemy?

One of the favored buzz words in the current debate of health care and how to fund it is the "Public Plan." Simply stated, this would be a gummint-run, alternative system to private insurers, much like some states already use for their employees. On its face, it seems beign enough: offering a government-sponsored plan in competition with "regular" insurers would force the latter toward ever more competitive price points, while maintaining our choice of physicians and level of care.

I recently had the pleasure of "sitting in" (virtually, of course) on a panel discussion of this topic sponsored by the Heritage and New America Foundations and the Lewin Group. The panelists included representatives from all three "think tanks:" Stuart Butler (Heritage's VP of Domestic & Economic Policies), Len Nichols (New America's Director of Health Policy) and Lewin's John Sheils (Senior VP). Julie Appleby, Senior Correspondent for Kaiser Health News, moderated.

In this first of a two-part post, I'll recap some of the points made by the various panelists; in Part 2, we'll take a look "under the hood" to see what this plan is really all about.

John Sheils took point, explaining that the whole Public Plan (PP) idea is modeled on Medicare [ed: which is itself set to implode in less than 10 years.] The plan sets payment rates for providers much as Medicare does. Mr Sheils believes that Medicare currently pays about 68% of what private insurers pay for hospital expenses, and about 81% of private insurance rates for physicians.

He went on to explain that, unlike commercial insurance plans, Medicare doesn't require pre-certification for various procedures. He also stated that private insurers' admin expenses currently top out at about 13.4% [ed: we've long since debunked this particular canard, but the nature of the call was such that I could only listen, not respond]. Mr Sheils than talked about projected pricing levels for the PP.

Mr Sheils then explained that there are really two scenarios of how a PP could be implemented: a) for individuals (including the self-employed) and small firms or b) for all employers. He then went on to explain how each of these might work out for providers, but never really addressed the conundrum of "price" vs "cost (a consistent IB theme).

We then heard from Len Nichols, who opened by expressing concern over imposing Medicare pricing on all providers and care. The fundamental problem, he said, was that Medicare generally pays below cost [ed: no kidding?!]. He then blurted out that "people don't trust private insurance," but failed to provide any evidence for this assertion. Mr Nichols then picked up on the various states' plans, which are based on ERISA, which allegedly provide a "level playing field" because they must compete based on payment. Unfortunately, he failed to address the underlying problem of cost control, but we'll discuss this in Part 2.

Finally, we heard from Stuart Butler, who began by asking how each model would likely play out over time. He was particularly concerned over what he called "the down the road,"and wondered if government should manage health care. He said that the PPO option supposedly leveled the playing field, but that it is inherently unstable.

Mr Butler then turned to what he felt was a classic case of "bait-and-switch:" the Feds "wall of separation between the market and the Public Option couldn't hold," that Congress would eventually intervene [ed: cf: mortgages, cars], and that there's an inherent and insurmountable conflict of interest because, as he put it, "the government assumes the roles of both umpire and team manager."

He expressed further concern that what the electorate heard wasn't really what was said: that if one is already insured, for example, that wouldn't change. Of course that's not true, but we often hear what we want to hear. He also said that cost-shifting would increase the costs of private insurance [ed: something we've documented here at IB as regards Medicare]. He feared that the government would "cheat" later, and asked if the public was ready for a health system run by the same folks who brought us the Post Office, the DMV and the IRS. His greatest concern was that once we open the doors to congressional "oversight" there would be no "level playing field" as they required more and more benefits at lower and lower costs. He also dismissed the notion that one could argue that state and federal are comparable: no states are as powerful as the Feds. He argued that the Public Plan would control costs by controlling how much is paid.

In Part 2, we dissect what was said, and explain why the PP option isn't really about choice at all, but simply another name for government-run health care.

[Hat Tip: Elizabeth Carpenter]

Public Optiony Number 1

No private company "wants" competition. But the public should want companies to compete, because that forces them to innovate and to bring us more useful products at the least possible cost. If a company is not competitive it must improve, or go out of business. That is how competition among private companies serves the entire public. And that is why it is sound public policy to oblige companies to compete.

But it’s not sound public policy for the government to compete directly with private companies. Private companies cannot "compete" with government because government sets the rules that private companies must follow. Governments tend to “compete” by setting rules that drive its competitors out of business – and governments do not have to “improve” to do this. That leaves the entire public with a static, government standard of service rather than the constant improvements brought by competitive private companies. So in this game, the government “wins” even when providing poor service, and the public loses. Imagine the KC Royals vs. the Yankees - and all the umpires and league officials play for the Royals. Not hard to figure out that even the Royals with lesser talent, win most of the time in that game.

Besides, whether some alleged lack of competition among insurance companies is the primary reason for high medical premiums is not at all clear. If the companies are the source of high premiums, why have life insurance premiums dropped so much over the past 20 years? Answer: insurance companies are not the reason medical premiums are high. Medical premiums are high – and rising – because medical cost is high – and rising. Medical cost, not insurance companies, is the problem.

For these reasons, I think the public option promises what it cannot deliver – improvements to the insurance markets through federal "competition". And it does not get at the more fundamental reason insurance is expensive in the first place – that being the cost of medical care.

Flying the (Not So) Friendly Skies

One of the primary reasons that we don't already have a nationalized health care system is the so-called "Public Option." For it or agin, it is a deal-breaker. Include it, and moderates and those right-of-center balk. Exclude it, and those on the left scream bloody murder. The current ploy seems to be a variation on bait-and-switch: exclude it from the bill, then add it back in during reconciliation. That, of course, has its own perils.

But would the Public Option really be all that bad? Isn't it possible to have "a little bit o'gummint" in the game, to keep the insurance carriers honest?

You be the judge:



[Hat Tip: Hot Air]

Called. It.

The mask slips:

"For-profit health insurance is on some level morally offensive ... I consider it a deceptively sneaky way to get the health care system both of us really want."

So says Noam Scheiber, senior editor at The New Republic. And what, exactly, do he and Mr Moore "want?"

Ah, glad you asked:

"In wonk terms, progressives are likely to get their beloved public option one way or another, and probably not too far in the future."

The "Public Option" is a euphemism for Single Payer, the obvious end-game for the ObamaTax from the get-go.

And how do we know this?

Well, our own Mike Feehan called it over 4 years ago:

"The administration still intends to control medical costs by ... a single payer mechanism"

Now if I could only convince him to get me those pesky winning lottery numbers...

[Hat Tip: FoIB Holly R]

Nose + Face (Some Assembly Required)

On the one hand, this would seem to be good news for proponents of the status quo:

"A health care reform plan without government-run insurance is "D.O.A.," says one left-wing grassroots organizer up in arms about the possibility the Obama administration could abandon its efforts to build a "public option."

As we've repeatedly shown, the so-called "Public Option" was never a good or viable idea, although the recent rumors of its demise are, um, exaggerated. Nevertheless, the sooner that monstrosity is off the table, the sooner we can begin to look for meaningful, realistic and sustainable solutions.

Which is why I, for one, am quite puzzled at the left's seeming to throw in the towel on health care reform (or, as it's evolved, health insurance reform). If it's PO or nothing, and PO gets thrown under the bus, then who's going to be supporting a major overhaul? The right? Maybe, but I thought this was supposed to be a bipartisan effort. And if it is defeated, it's obviously not going to be at the hands of the Republicans (the minority party in the House, and facing a filibuster-proof Senate).

We are not proponents of the status quo; the current system needs work, beginning with identifying the real culprits: the cost of health care and so many mandated benefits. If the left is going to pick up its ball and go home to sulk, we're more than up to the challenge of crafting sustainable, reasonable reform.

On Trojan Horses and "The Public Option"

There are those who would caution that one shouldn't believe everything a politician says, and I agree with that. On the other hand, one would be wise to believe some of the things they say, such as the claim by the Party in Power© that the so-called "Public Option" is, in fact, the first play towards a single-payer, government-run health care system.

Now, who would dare make such an outrageous claim? Well, if you don't believe us, how about President Obama, Rep Barney Frank and Rep Jan Schakowsky:

[Hat Tip: Reader Tom T]

The "Public Option" Lives

It's that time of year when the airwaves are flooded with zombies and other assorted monsters. So it should come as no surprise that the long-thought-dead Public Option has been given new life under the ObamaTax:

"The [Obamastration] will soon take on a new role as the sponsor of at least two nationwide health insurance plans to be operated under contract with the federal government and offered to consumers in every state."

After all, who needs an Exchange when we can just cut out the middleman and go directly ro government-run health insurance? These plans will "compete" with commercial insurers, but it's not exactly a level playing field: how can private companies compete with the Federal leviathan?

The simple answer is: they can't.

It's an expansion of the Federal Employees' health plan, which has worked so well in reining in health care and insurance costs. Since these plans will be subject to regs from at least three different agencies, good luck resolving claims or other issues. Which then brings us to the role of the National Association of Insurance Commissioners (NAIC). That august body "expressed alarm at the prospect of a double standard." I'm sure the Feds will get right on that.

It's interesting timing, as well, since President Obama has decided to discontinue vital health care services for our veterans. Is there a message in this?

Methinks you already know the answer to that.

HHS Shecantbeserious vs The Truth

Having lost in a court of law, HHS Secretary Shecantbeserious (and her attorney) has taken the case to the court of public opinion. To wit, an op-ed in today's Washington Post, wherein she repeated the oft-used - and completely erroneous - conflation of auto and health insurance:

"Imagine what would happen if everyone waited to buy car insurance until after they got in an accident. Premiums would skyrocket, coverage would be unaffordable, and responsible drivers would be priced out of the market."

Let's recast this, shall we?

"Imagine what would happen if everyone waited to buy [health] insurance until after they got [sick]. Premiums would skyrocket, coverage would be unaffordable, and responsible [citizens] would be priced out of the market."

D'unh!

How come no one's clamoring for a law that mandates coverage for wiper blades, or that requires insurers to charge the same rate for careful drivers and those with multiple DUI's?

More importantly, there's just no comparison between the term "driver" and "citizen." That is, one need only buy car insurance if one operates a vehicle on public roads. Take the bus? Insurance not required. Ride a bike? Insurance not required. Drive the '66 Blazer on your farm? Insurance not required.

Breathe the air? Insurance required, according to Shecantbeserious and her fuzzy-minded minions.

And there's this: in most (all?) states, one isn't actually required to buy insurance even if one does drive on the public roads. One has the option to post a "bond" as proof of financial responsibility. So why isn't this an option for the purchase of health care? Seems to me, fair's fair: if you want to conflate the two, then do it right: offer the option to post a bond and allow insurers to charge appropriately for the risk.

And, of course, drop this (evil) individual mandate nonsense.

MassCare Coming Up Short

Over the years, we've chronicled the various pitfalls of RomneyCare (aka MassCare). Long on promises, short on delivering on those promises, it's a glimpse into the (possible) future of how a national health care system would fare. Now, though, the fit has really hit the shan:

"Six community hospitals, squeezed by the economic downturn and the Massachusetts budget crunch, are set to file a lawsuit in Suffolk Superior Court this morning seeking millions of dollars from the state for unpaid health care services."

Hospitals are generally taking major hits as their reimbursement rates continue to fall. In this case, the Bay State's much-touted health care initiative has left them reeling with lower reimbursements and unpaid bills. Of course, that's a direct result of the program's own struggles to control costs.

Adding fuel to the fire is the fact that the half-dozen plaintiffs are among those truly at the bottom of the rung:

"[H]ealth care providers known as “disproportionate share hospitals,’’ institutions at which at least 63 percent of patients ... are covered by public insurance plans such as Medicaid or Medicare."

That last is important: "covered by public insurance plans." It doesn't seem much of a leap to substitute "public insurance plans" with "Public Option," and a whole new can of worms becomes accessible. Whom do the hospitals sue when it's the Feds?

RELATED: Over at Ace of Spades, an intriguing discussion of health care as "supply side" driven. This insight is worth more than a passing thought:

"In the US system, there is a theoretically unlimited amount of health care available, you just have to be willing to pay for it.

You've just the nailed the fatal flaw of the Democrat's health care reform; it isn't reform at all, it's simply more regulation ... real reform would involved increasing the supply of doctors, medicines, and hospitals. ObamaCare does just the opposite, it focuses entirely on demand." [italics in original]

Definitely food for thought.

Hope and Change: Presidential Vision Edition

And so The Won has (finally!) decided to share with us, the unwashed masses [ed: hey, speak for yourself! I took a shower this week] his grand vision for health care (and/or insurance) "reform." Which is nice, after all, since he's spent the past 9 months deferring the design of this "plan" to his congressional colleagues.

Who, despite a clear majority in the House and a fillibuster-proof Senate for most of that time, still couldn't manage to solve this particular "crisis." But I digress.

Since congressional rocket surgeons couldn't agree on a plan, it finally devolved to our President to pause from voting "present" long enough to put down in writing what he has envisioned. The problem, of course, is that he has a nearly insurmaountable obstacle: he promised a plan that would cut costs, increase both efficiency and choice, and which would not break the budget.

I'm reminded of an old axiom: "You can have it fast, you can have it cheap, you can have it good. Pick any two." And it appears that he's decided that the one to be left out is the so-called Public Option:

"(A)lthough House leaders have said their members will demand the inclusion of a public insurance option, Obama has no plans to insist on it himself, the officials said."

Of course, just because The Won doesn't "insist" on this boondoggle doesn't mean that it's dead in the water. In fact, the Congress could (and probably would) simply add it back in during the "reconciliation" process (where the House and Senate versions are stitched together to make one law). The point, though, is that our Health Care Czar-in-Chief is finally deigning to share with us what he'd like to see. How that will go is anybody's guess, but at least we'll have a better idea of how far he's willing to go to cripple our health care system.

UPDATE, OTB Edition: The Politico article mentions that The Won will be giving "a major speech as soon as next week;" perhaps, as so often with this administration, a prime-time version (which costs the networks revenue and turns away viewers). In anticipation of that event, here's a little poll:

pollcode.com free polls

Since the President has already thrown tonsillectomies and ampututations under the bus, which medical procedure do you think he'll call out next?

Hip replacement Botoxification Heart cath Dialysis Lasik

MVNHS© - Ouch!

Such is the (potential) future of American health care:

"Tens of thousands with chronic back pain will be forced to live in agony after a decision to slash the number of painkilling injections issued on the NHS."

British doc's are warning that a recent decision by the MVNHS© (Much Vaunted National Health System) that patients whose back pain has no discernible cause will be denied much-needed pain meds. Of course, in keeping with the British mandate of tossing the elderly under the tram, this edict is expected to affect seniors first. And since most live on fixed incomes, the $830 cost of a single injection is likely to be a real pain in the...well, you know.

Of course, the Law of Unintended Consequences also makes a cameo:

"(T)he British Pain Society, which represents specialists in the field, has written to NICE calling for the guidelines to be withdrawn after its members warned that they would lead to many patients having to undergo unnecessary and high-risk spinal surgery."

That's because - at least so far - such surgeries are covered by "The System,"and therefore more attractive than continuing to live a life of pain.

But the Brits aren't the only ones feeling the tender foot of government-sponsored health care rationing on the backs of their necks:

"In Britain, France, Switzerland and elsewhere, public health systems have become political punching bags for opposition parties, costs have skyrocketed and in some cases, patients have needlessly suffered and died."

Ooops.

Or, as the French would say, "quelle surpise!"

That European health care would become a political soccerball is, of course, to be expected. We see that here, and people are, after all, people. What is surprising, however, is how many Americans want to emulate the "success" of such a system here, at the expense of our own mostly successful experience.

The challenge is that, unless one has a realistic plan to rein in health care costs, the financing of that care (i.e. insurance) becomes problematic:

"A World Health Organization survey in 2000 found that France had the world's best health system. But that has come at a high price; health budgets have been in the red since 1988.

In 1996, France introduced targets for health insurance spending. But a decade later, the deficit had doubled to 49 billion euros ($69 billion)."

A not unexpected development, especially for folks who've been paying attention. Or, to put it another way:

"I would warn Americans that once the government gets its nose into health care, it's hard to stop the dangerous effects later," said Valentin Petkantchin, of the Institut Economique Molinari in France. He said many private providers have been pushed out, forcing a dependence on an overstretched public system."

Such, for example, has been the experience in Tennessee:

"A government-run health insurance plan is enacted on the promise of increasing competition and bringing down costs, but over the years, as more people leave their private insurance to take the “public option,” the cost to operate the government plan skyrockets."

Sound familiar?

We last blogged on TennCare two years ago, and noted then that the program was in deep financial straits:

"The Tennessee government initially offered a generous benefits package. Predictably, costs skyrocketed because patients had no incentives to spend prudently. In response, the government attempted to control costs by slashing payments to doctors and hospitals."

Of course, it's only gotten worse:

"Tennessee is in the process of cutting about 150,000 people from the TennCare program after a reevaluation of enrollee eligibility to participate in the state-run insurance program."

Of course, when it's a national plan, eligibility becomes more, um, interesting . And the issue of costs becomes even more pronounced. Tennessee Representative Marsha Blackburn was a mere state senator when TennCare came into being; she recalls that "supporters of the Tennessee program said it would save money, [but] it wound up eating 38 percent of the state’s budget." One wonders if CongressCritters wouldn't consider that 38% as a feature, not a bug.

Snidely Whiplash, CLU

We must admit to being a bit worried when House Speaker Nancy "Botox Nan" Pelosi identified us as "the villains in this" debate, literally "carpet bombing" our clients and fellow citizens (with, one supposes, boxes of expired policy forms). After all, it's not every day that one of the most prominent figures in Washington calls your industry evil. On the other hand, we were hopeful that this little contretemps would blow over, and that the American Public© wouldn't notice our satanic inclinations.

Alas and alack, this was not to be. This morning's email brought this missive from Nieman Watchdog:

"The public option, unlike single payer, cannot recapture the $400 billion in administrative waste that private insurers generate in their drive to fight claims, deny care and screen out the sick."

Dang, are they onto us already?

I quickly called my masters, er, um, associates at some of the major carriers to confirm these numbers. Interestingly, every single one has a specific line-item in their budget for such things as "unsupportable but routine claims denials," "indefensible policy recissions," and one even had an item called "pre-screens: a great way to decline the sickies."

As one might imagine, I was appalled and/or relieved. The bad news is that none of the carriers had budgeted more than a token amount to these worthy efforts. The numbers are, of course, a matter of public record (every carrier files an annual report to their stockholders and state insurance departments). According to my research, it appears that most are spending less than $1,000 a year on these efforts, although one, which will remain nameless, is on track to spend upwards of $1,100 this year alone.

Still, this is a far, far cry from the "$400 billion" that the Nieman folks are alleging. Unfortunately, neither the email nor the author of the ingenious study provided any citations to back up the assertion that such a large sum is, indeed, being expended in this great cause.

'Tis a pity.

Oy Canada? Private vs Public Options

By definition, the Canadian health care system is a "Public Option;" private plans are outlawed (something to which we may look forward). But all is not well for the Canadian system:

As we've reported numerous times, the Canadian system is wonderful, until you actually need care. Then it's still free, but inaccessible. The LA Times tells the story of a 72 year old Canadian woman with chronic hip pain, who would have had to wait for a year and a half for surgery (after waiting a year for the diagnosis in the first place). Rather than live with the pain, she popped over to Montana (yes, Montana!) for the surgery, which set her back some $50,000 (the story doesn't indicate if this was real or Canadian money). Of course she wasn't thrilled with that, but it sure beat living with the pain.

But some Canadian doc's, loathe to seeing those health care dollars and cents fleeing south of the border, are trying something to discourage such excursions:

"Hoping to capitalize on patients who might otherwise go to the U.S. for speedier care, a network of technically illegal private clinics and surgical centers has sprung up in British Columbia, echoing a trend in Quebec. In October, the courts will be asked to decide whether the budding system should be sanctioned."

"Technically illegal." Interesting word choice; doesn't that just mean "illegal?" So the doc's are breaking the law in order to treat their patients in an appropriate time-frame, and they're willing to risk potential jail time (or at least substantial fines) to do so. Sounds like market forces at work.

Unfortunately, these physicians are somewhat naive:

"You cannot force a citizen in a free and democratic society to simply wait for healthcare, and outlaw their ability to extricate themselves from a wait list."

So opines Dr Brian Day, who runs one such clinic. He obviously hasn't heard of our Senator Max Baucus, who thinks it's perfectly peachy to arrest folks who choose to go uninsured. I'm sure the Honorable Senator would have no problem throwing offending physicians into the hoosegow, as well.

Still, as we see a shrinking Canadian system (shortfalls are causing even more delays and fewer tests), perhaps our own political class will take note. As unlikely as that may seem, consider this: public support for grandiose "reform" is at a record low, and heading south fast. It's still possible that we may avoid the tragic fate of our Neighbors to the North©.

D'ya rilly not know how a public plan would "compete" ?

[Welcome Wizbang readers!]

If anyone is uncertain how a public insurance plan option will actually "compete" with private insurers, all one needs to do is look at how Medicare "competes" with private Medicare Advantage plans.

Seniors have a choice to enroll in "original Medicare" or any Medicare Advantage plan available in their area. Medicare Advantage plans are available in most parts of the U.S.

Clearly, these private Medicare Advantage plans are competing with Medicare for membership. So – how’s that been going?

As of March 2009, Kaiser Family Foundation estimated total Medicare Advantage enrollment was about 10 million seniors. That’s 22% of the total Medicare-eligible population of 45 million – about one out of five. Wait, there’s more: since 2003, the enrollment in Medicare Advantage plans has doubled. Sounds like the private companies are doing a great job competing with Medicare, right? Wait, there's more.

President Obama announced before his Inauguration his intention to eliminate Medicare Advantage plans. Obama said:

"We’ve got to eliminate programs that don’t work, and I’ll give you an example . . . We are spending a lot of money subsidizing the insurance companies around something called Medicare Advantage, a program that gives them subsidies to accept Medicare recipients but doesn’t necessarily make people on Medicare healthier."

But is it true that Medicare Advantage plans "don’t work"? No. It's not true. If they didn’t work 10 MILLION people would not have voluntarily enrolled. If they didn’t work the enrollment would not have DOUBLED in the past 5 years. Medicare Advantage plans work just fine.

Well then, is it true that the government "subsidizes" private Medicare Advantage policies? No. It's not true. It pays premiums to the insurance companies that it would otherwise have paid to itself. That is not a "subsidy".

Well, then, what is really going on?

Here it is: the private plans are beating Medicare fair and square, and the new administration doesn't like that one bit. Why? Because it shows that a single-payer plan might not be needed, and might not be such a good idea anyway. So Obama decided to change the rules – NOT to make Medicare more competitive – but to eliminate its competition. And that is EXACTLY how the government can be expected to act to protect its public health insurance option against private companies.

The Continuing Rise of Medicare Advantage

Last week, the economist Austin Frakt said in the NY Times that “Today, 30 percent of Medicare beneficiaries are enrolled in a Medicare Advantage plan, more than at any time in history. In some states, like Hawaii and Minnesota, about half of Medicare beneficiaries are in such plans. This is despite the fact that government payments to plans were cut by the Affordable Care Act. They’re down eight percentage points from their peak in 2009, as measured relative to the cost of traditional Medicare coverage.”

None of this is news.  Back in January the Aetna CEO said the same thing and we commented on it:

CMS pays private insurers to take over the risk for each senior who enrolls for Medicare Advantage.  At one time, the average CMS payment was 114% of the cost for traditional Medicare enrollees. These higher payments were partly because of risk-adjusters in the CMS payment formula – and partly because Medicare Advantage provides better coverage than traditional Medicare.  However – and this is important information – Bertolini said the average government payment to Medicare Advantage insurers is now down to 106%, and is “headed to zero.”  

In other words, private Medicare Advantage insurers believe they have figured out how to provide better benefits and better service than traditional Medicare, for the SAME cost. That's big.

It's big because it would bring good news all around: CMS will shed even more traditional Medicare risk – and cost – thus reducing its financial strain; private insurers will pick up even more Medicare Advantage enrollment on a profitable basis even when paid the same as the cost of traditional Medicare; the taxpayers will benefit if there is reduced need for higher taxes to support traditional Medicare; and seniors who prefer Medicare Advantage over traditional Medicare will still have that highly popular option available to them.

Frakt continues, “One answer is that baby boomers, who are just entering Medicare-eligibility age, are more accustomed to the types of insurance Medicare Advantage offers, such as H.M.O.s”

Bertolini also said that back in January.   Today's employees are increasingly willing to sign up for Medicare Advantage when they reach age 65, because they have had years in which to become familiar with managed care.  I think that means enrollment growth in Medicare Advantage is likely to accelerate over the next few years; an accelerating trend would of course be compounded as more “boomers” retire.

Frakt continues “Another answer is that prior generations of retirees may have been more likely to have had coverage from former employers that wrap around traditional Medicare, filling in its gaps. This coverage has become less common as employer-sponsored retirement benefits have eroded generally.”

Frakt is correct about the withering of employer-based retiree coverage but I disagree that is a reason more of us are specifically choosing Medicare Advantage. 

I'm enrolled in a Medicare Advantage policy.  I did not enroll because my former employer ended retiree coverage; I enrolled in it because Medicare Advantage is a better deal for me then traditional Medicare.  Even today, without employer-sponsored coverage, retirees can purchase government-approved Medicare Supplement policies that fill in the traditional Medicare "gaps."  Yet retirees increasingly prefer Medicare Advantage over traditional Medicare with Supplements.  Frakt does not explain this preference. 

I think the answer is: because Medicare Advantage offers much better coverage; is a simpler arrangement; is easier to use; is thus a better value; and thus a smarter buy.

Besides, Frakt’s use of the term “gaps” glosses over the size and seriousness of the very real inadequacies in original Medicare.  Those inadequacies have been called "gaps" for a long time; Frakt is not the first to use the term, nor will he be the last.  But calling these inadequacies "gaps" is akin to calling the Obamacare Exchange systems debacle "glitches." The term makes Medicare's inadequacies sound small, even trivial. Truth is, the inadequacies are serious, not small.

Calling them "gaps" amounts to deception by vocabulary.  

So it seems to me if the decline of employer-sponsored supplemental plans is any factor at all in the growth of Medicare Advantage, it's only because such decline has for the first time exposed the serious inadequacies in original Medicare to a significant number of retirees.   Those inadequacies are the issue.  And we retirees are noticing.

FWIW. there’s an additional factor:  more and more people – not just retirees - are also noticing the federales have done little or nothing to improve the traditional Medicare product.  Medicare has not chosen to respond to its Medicare Advantage competition by improving its own product. Instead, Medicare chose to respond to its competition by using its power to kill its competitor, rather than compete with it.  That illustrates pretty well how governments tend to "compete" and we all need to keep this in mind when the "public option" idea again surfaces.