Free American Health Care

California Hospitals' Unhealthy Dependence on Government

2012-01-30T13:09:00.000-08:00

While many Americans are eager for the U.S. Supreme Court this year to decide the constitutionality of President Barack Obama's health care overhaul, a federal judge in Los Angeles has just made a misguided decision that cuts right to the root of the government's role in controlling people's access to medical care, whether state legislators or federal judges have the power to decide how much to spend from the state treasury and health care providers' unhealthy and unsustainable dependency on government.

Read my entire op-ed on the case, at the Orange County Register.

Benjamin Rush Society Hosts Leadership Development Reception in New York City

2012-01-26T09:24:00.000-08:00

As I announced a few month's ago, I have taken on additional responsibilities as the Executive Director of the Benjamin Rush Society, a national society of medical students that has chapters across the country. The Society's mission statement is posted here.

Due to the initiative of Deroy Murdock, syndicated columnist and member of the Society's Board of Advisors, we hosted a Leadership Development Reception in New York City on January 19.

A report on the event (including a very amateur video) is posted at the Society's website.

I generally do not write about the Society's activities on this blog, or on my own Facebook or Twitter feed, which are dedicated to my policy research. Nevertheless, I'd like my readers to know that the Society is growing (and taking up more of my time).

The Society has its own Facebook page (here) and it's own Twitter feed (here). If you'd like to keep abreast of the Society's activities, please consider using those media. In a few days, I will also be setting up an e-newsletter that I anticipate will be published quarterly. Once that's up and running, I will let you know so that you can sign up for that if you prefer.

What Are the Costs and Benefits of Patents on Prescription Drugs?

2012-01-25T16:50:00.000-08:00

On January 23, the Wall Street Journal hosted an interesting debate between Josh Bloom, Phd, of the American Council on Science and Health, and Dr. Else Torreele of the Open Society Foundation. (The link is here, and was free when I last checked. If it disappears behind a wall, the citation is: Josh Bloom & Els Torreele, “Should patents on innovation be extended to encourage innovation?” Wall Street Journal, 1/23/2012.)

Dr. Bloom makes a classical case for patent protection as an effective legal mechanism to incentivize pharmaceutical R&D. And he goes a step further, proposing that more innovative medicines be awarded longer patent protection and less innovative ones shorter patent protection. (It’s an idea with which I’ve noodled, but never figured out how to define the dividing line.)

Dr. Torreele asserts that patents do not prompt innovation, and that the profit motive leads to misdirection of research in favor of profitable markets, thereby neglecting diseases of the developing world.

I vote for Dr. Bloom’s analysis. Read my entire column at Forbes.com: the Apothecary.

If Health Spending is Increasing Slower, Why Are Premiums Increasing Faster?

2012-01-25T11:36:00.000-08:00

The short answer: Blame Obamacare. For the detailed answer, please read this month's Health Policy Prescription here.

Competition in Health Insurance: What Should Government Do?

2012-01-13T17:08:00.000-08:00

A condensed version of my latest Health Policy Prescription, at John Goodman's Health Policy Blog.

Will Idaho Lose Medicaid Cash Unless It Sets Up A Health Benefit Exchange?

2012-01-06T21:22:00.000-08:00

That's the strange claim of Governor Butch Otter, facing massive resistance to his plan to impose an Obamacare Health Benefit Exchange in Idaho. An Idaho reporter called me for comment on the governor's curious claim that declining to establish an Exchange could result in Idaho losing 20 percentage points of its federal matching funds, which would be $300 million! The resulting article is posted here.

As a result of the reporter's persistent questioning, the governor's office downgraded the claim to a threat suggested during conference calls with federal bureaucrats.

Look folks, the whole notion is bunk. There is no connection whatsoever between a state's federal matching funds and whether it establishes a Health Benefits Exchange. No state should establish a Health Benefits Exchange - period, full stop. I have written a series of articles about exchanges, all available at this link.

I am blogging from a conference in Albuqerque that is sponsored by the Cato Institute. Tomorrow, I will be giving a presentation to state policy leaders explaining why they need to avoid, obstruct, and resist establishing Health Benefit Exchanges in their states. Fortunately, other experts, including Michael F. Cannon of the Cato Institute are here; and we all agree that the governor has no legitimate basis for his extreme claim.

Idahoans resisting Governor Otter's irrational urge to establish a Health Benefit Exchange are on the right track.

113,000 Californians to Lose Medicare Advantage Benefits

2011-12-28T16:57:00.000-08:00

A recent article discussing Obamacare's elimination of Medicare Advantage for entire communities in California quotes yours truly extensively. Read the entire article here.

Over Regulation Reduces Choice in Health Insurance: An Update

2011-12-28T13:26:00.000-08:00

Earlier this year, the Pacific Research Institute published a study demonstrating one way that Obamacare will dramatically reduce Americans’ choice of health insurance. By encouraging states to pass laws giving politicians control of health plans’ premiums, Obamacare creates incentives for politicians to impose populist limits that threaten health plans’ solvency.

Furthermore, common measurements and tools used to determine whether health insurance is “competitive” are deeply flawed, leading even well-intentioned regulators astray as they seek to control the cost of health insurance. This month's Health Policy Prescription incorporates new data to test whether the conclusions of the earlier study persist. It finds that they do.

Read the updated article here.

Lights Out Until December 28

2011-12-15T17:35:00.000-08:00

I am taking pre-Christmas vacation. Benjamin Rush Society national office, blogging, research, and general online presence is off until December 28.

Merry Christmas; and I look forward to picking up where I left off on December 28.

The CLASS Act: Time to Repeal It.

2011-12-08T13:38:00.000-08:00

I was recently interviewed for an article asking why won't Congress repeal the CLASS program, a part of Obamacare that the U.S. Secretary of Health & Human Services has dictated cannot proceed. The CLASS program was an unsound long-term care benefit that independent analysts had recognized as impossible since the beginning.

The CLASS program has only been killed because Congress, in an extremely rare example of probity, required the Secretary of HHS to determine that CLASS would be actuarially sound for 75 years. If Congress had required this of the rest of Obamacare, the whole thing would have been administratively rescinded at the same time

Read the entire article here.

Obamacare Will Drive Health Insurers Out of Business: Good or Bad Outcome?

2011-12-08T12:33:00.000-08:00

Over at Forbes.com, a liberal blogger has finally confessed the truth - Obamacare will lead to a government-monopoly, so-called "single-payer" system. It's led to a spirited response amongst my Forbes.com colleagues.

Read my contribution here.

Health Care Mingle Jingle in San Francisco, December 8

2011-12-07T19:14:00.000-08:00

I've been spending a lot of my time lately on a new project focusing on innovation in HIT (health information technology). My office is in San Francisco, so I'm in the right place.

I belong to the Health Technology Meet-Up Group, which is having a very interesting event in San Francisco on Thursday, December 8 - the "HealthCare Mingle Jingle".

Part conference, part holiday social, the Mingle Jingle is an all-day event with presentations by innovative, new, health IT firms, followed by a reception. If you can only make it to the reception, the organizer tells me that you are welcome.

The event is in the San Francisco Financial District. More information and details are at this link.

Can the PayPal Mafia Fix Health Care?

2011-11-18T12:32:00.000-08:00

Last week, the Health 2.0 venture Practice Fusion held its second annual Connect conference in San Francisco. Practice Fusion is an exciting business for a few reasons:

It provides a free electronic health record (EHR) to physicians and allied health providers.
It's completely independent of the "legacy" health-care business. (Competitors include stalwarts AllScripts and Cerner).
It's attracted investment from Peter Thiel's Founders Fund and similarly enterprising tech venture capitalists. It's now got $40 million of capital.
It's lead by a classically heroic entrepreneur: Ryan Howard ran the company on his own credit card for four years, nearly missing payroll, and was only saved by a legal payout related to a motorcycle accident).
It got Dr. Farshad Mostafari, MD, the National Coordinator of Health Information Technology, to give a speech (via Skype) praising private enterprise in Health IT. And he's an Obama appointee!

There's a lot to like about Practice Fusion. Read the entire article at Forbes.com's The Apothecary.

Health Spending & The "Supercommittee" Redux

2011-11-07T15:23:00.000-08:00

I wrote a shorter version of last month's Health Policy Prescription for John Goodman's Health Policy Blog. Read it here.

VC's & Rolodexes: Bad Metaphor

2011-11-04T09:32:00.000-07:00

This may not actually be blogworthy, but I've been doing some research on a project looking at the how venture-capital investment in biotech and medical devices is influenced by the regulatory environment and keep reading about how a good venture capitalist has a big, fat, thick Rolodex.
What kind of a metaphor is that?

I've met a few VCs in my day and none of them have a Rolodex - nor a manual typerwriter nor green eyeshades!

Time to change the metaphor!

Two New Articles Profile Benjamin Rush Society

2011-11-03T12:45:00.000-07:00

Readers know that I am now the Executive Director of the Benjamin Rush Society, a society of medical and pre-med students. Two recent articles have profiled the Society:

Avisk Roy of Forbes.com's The Apothecary blog asks whether the Society can change medical education - here.
Philanthropy Magazine's John J. Miller featured the Society in an article about the growth of student societies in professions heavily impacted by government - here.

Health Care in Texas Under Rick Perry

2011-11-03T11:49:00.000-07:00

The Fort Worth Star-Telegram carried my op-ed discussing Rick Perry's limited-government approach to health policy. Read it here.

Health Spending and the "Supercommittee"

2011-10-31T16:24:00.000-07:00

Less than a month remains before the Joint Select Committee on Deficit Reduction, popularly known as the Supercommittee, must submit a bill to Congress that will cut the deficit by at least $1.2 trillion in ten years. By design, everything is on the table.

While the Supercommittee is unlikely to achieve substantial cuts in federal health spending, it has the opportunity to take a historic step in uniting both Republicans and Democrats in reform that give Medicare (and, indirectly, Medicaid) patients, more control of their own health dollars.

Where do we find the room for compromise? Remarkably, it lies in President Obama's deficit-reduction proposal. Don't believe me? Read more in October's Health Policy Prescription.

Virginia Attorney-General Cuccinelli on Medical Malpractice

2011-10-31T14:05:00.000-07:00

In a compelling op-ed in the Washington Post, Virginia Attorney-General Ken Cuccinelli has challenged Republican U.S. Senators who have introduced a federal bill to limit medical-malpractice liability.

According to Cuccinelli, the federal government has no business legislating medical-malpractice law. Too many Republicans are fair-weather federalists, happy to leave states in charge when states legislate "conservatively", but too willing to assert federal power when states are not moving in the right direction.

My colleagues and I made this argument in the Investors Business Daily back in 2010. (It is online here, but for subscribers only.) There is nothing preventing any state from passing proven medical-malpractice reforms, like those passed in Texas and elsewhere.

Medical malpractice is none of Congress' business. The good senators behind the bill in question should keep focused on improving healthcare by shrinking the federal role, not increasing it.

955 Pages of Rules to "Eliminate" Excessive Federal Health Regulations

2011-10-20T16:33:00.000-07:00

I kid you not. The U.S. Secretary of Health & Human Services, Kathleen Sebelius, has announced that "It’s time to cut the red tape. Our new proposals eliminate unnecessary and obsolete standards and free up resources so hospitals and doctors can focus on treating patients.”

And they've done this by issuing six new regulatory documents, ranging in length from just five pages up to 696 pages. The total number of pages in all six documents? 955!

If this is what reducing red tape looks like, I'd hate to see what they do when they decide they need more regulatory wrapping.

U.S. Senator David Vitter Must Decide Which Side of Big-Government Health Care He's On

2011-10-20T16:08:00.000-07:00

Earlier this month, U.S. Senator David Vitter (R-LA) ostentatiously accepted a petition with over 1.6 million signatures demanding the repeal of Obamacare. Good for him. But Senator Vitter is inconsistent in his response to big government in health care. When it comes to prescription drugs, he has frequently proposed legislation that expands the power of the federal government in questionable and irresponsible ways.

Read the entire column at National Review Online.

CLASS Act: An $86 Billion Puzzle

2011-10-19T12:36:00.000-07:00

In a late Friday “data dump,” the U.S. Secretary of Health & Human Services, Kathleen Sebelius, announced that the long-term-care program established under ObamaCare, the Community Living Assistance Services and Supports (CLASS) program, would not come into effect.

This humiliating reversal was expected. Late September, the U.S. Department of Health & Human Services turned the lights out at the CLASS offices and reassigned the staff. It has long been understood that CLASS was impossible.

Read the entire article at John Goodman's Health Policy Blog.

Radio Interview on Collapse of CLASS Long-Term-Care Program

2011-10-18T14:58:00.000-07:00

Here is the audio of a conversation I had with Mark Carbonero of KION-AM in Monterey County, California.

Prostate Cancer, Mammography, & Avastin: How to Choose?

2011-10-18T12:52:00.000-07:00

There is a flurry of reactions to a draft recommendation from the U.S. Preventive Services Task Force. Although not formally released, the USPSTF is now recommending against PSA tests for prostate cancer. The American Urological Association, on the other hand, continues to assert that the PSA test is appropriate preventive care. (Ann McDonald of Harvard Medical School’s publishing arm has a nice summary of the reaction to the news.) The USPSTF previously sparked controversy in 2009, when it bumped up the recommended age for mammography from 40 to 50 years of age.

What type of health system would best respond to constantly evolving information like this?

Read the entire column at John Goodman's Health Policy Blog.

Radio Interview with My Technology Lawyer

2011-10-13T12:19:00.000-07:00

I return to the My Technology Lawyer radio show on October 13 at 1 p.m. PDT/4 p.m. EDT. The show is broadcast live on the Internet and archived, too. Please follow this link to listen.

Topics include: Health reform and prices of health stocks, the forthcoming Supreme Court hearing on Obamacare, Obamacare's state-based exchanges, and alternative reforms once Obamacare is repealed.

What's Next? Mitt Romney As A Space Lizard Commanding An Alien Fleet?

2011-10-10T11:19:00.000-07:00

If your ears can handle the explosions, please have a look at Rick Perry's latest ad opposing Romneycare. By the end of it, I half expected Mitt Romney to peel off his human skin and stand revealed as a space lizard commanding the alien invasion of our mother planet. Let's hope that this ear-splitting ad motivates some people to investigate substantive criticism of Romneycare.

I stand with most conservative and libertarian analysts as an opponent of Romneycare. It's too expensive; has disrupted continuity of care; and did not substantively change the number of uninsured residents. We figured this out right at the beginning of the reform, which governor Romney signed in April 2006. Sally C. Pipes authored a detailed, critical analysis in November 2006, and a skim through the Pacific Research Institute's website reveals a series of articles by Ms. Pipes and myself confirming the negative outcomes of the reform.

Other leading critics of Romneycare include Grace-Marie Turner of The Galen Institute (here); Michael Tanner of The Cato Institute (here); Aaron Yelowitz and Michael F. Cannon of The Cato Institute (here); and Avok Roy of The Apothecary (here).

Whether governor Romney has learned enough from the failed Massachusetts reform (which he signed in the company of U.S. Senator Ted Kennedy) that voters can trust him to sign a simple, one-page bill to repeal Obamacare in its entirety as quickly as possible after his presidential inauguration is something for every voter to decide for himself.

Rick Perry and the other Republican presidential candidates are going to make it increasingly difficult for governor Romney to earn that trust. Governor Perry has acknowledged his error in attempting compulsory vaccination of schoolgirls against Human Papilloma Virus. It's past time for governor Romney to acknowlege his error in mandating Romneycare.

Lou Dobbs Show 4:35 EDT/1:35 PDT Today

2011-09-28T10:11:00.000-07:00

I will be a guest on Lou Dobbs' syndicated radio show today at 4:35 p.m. EDT/1:35 PDT. Please go to the show's website to find your local station. (If it's archived I'll link to that later.)

Rick Perry's Texas: It's Better to Create More Jobs Than More Medicaid Dependents

2011-09-22T17:37:00.000-07:00

As Texas governor Rick Perry makes a splash in the Republican presidential primaries, one place where people are looking for evidence of poor executive leadership is his record on health care. Fellow conservatives have focused on his 2007 executive order that girls entering grade 6 should receive a vaccine, Gardasil™, which protects against the Human Papilloma Virus (HPV).

A criticism that will likely carry more weight as the campaign develops is Perry’s record on Medicaid and the uninsured. We see this in an article written by Noam N. Levey in the Los Angeles Times, which declared that Texans’ access to health care is “withering” under Perry. As Levey notes, Texas has the highest rate of uninsured in the nation, over one quarter of the population. This is important, but not in the way Levey believes.

Read the entire article in this month's Health Policy Prescription here.

Two New Ventures Simplify Consumer-Driven Health Care

2011-09-22T17:34:00.000-07:00

A friend of mine who made a lot of money use to tease me when I (constantly) expressed shock at how simple so many successful business ideas are. “All great businesses are simple,” he said. Here are two in the healthcare space: Bloom Health and ZocDoc.
Although disrupting different parts of the value chain, the two ventures have some similarities. First, each just received a big chunk of capital. Bloom Health, initially funded by VCs in 2009, was taken over by WellPoint, Inc., and two other (non-profit) Blue Cross Blue Shield license-holders. ZocDoc just raised Series C funding from Goldman Sachs, having raised a total of $95 million.

Read the entire column at Forbes.com: The Apothecary here.

"Preparing for the Exchanges"? You Might as Well Prepare for the Unicorn Stampede

2011-09-22T13:16:00.000-07:00

What is the biggest waste of effort in American health care today?

I’d suggest it is the hustle and bustle to establish PPACA’s Health Benefits Exchanges. The health insurers’ trade association, AHIP, has an entire educational series on “preparing for exchanges.” The likelihood of exchanges being up and running by January 2014 is vanishingly close to zero. Indeed, they may not exist at all except in very few states – whether or not President Obama wins re-election.

Read the entire article at The Health Care Blog.

Benjamin Rush Society Events at Duke University & Hampden-Sydney College

2011-09-20T12:15:00.000-07:00

The Benjamin Rush Society, a national society of medical students of which I am Executive Director, will be hosting two events in the next few days. If you are in Durham, NC or Hampden-Sydney, VA, please join us on September 23 or September 26!

Duke University will be hosting Joe Coletti of State Policy Network on Friday, September 23 at 5 p.m. Mr. Coletti will sepak about the consequences of PPACA (Patient Protection and Afordable Care Act). Read more and RSVP here.

Hampden-Sydney College will be hosting Grace-Marie Turner of the Galen Institute on Monday, September 26 at 7 p.m. Ms. Turner will be presenting her new book, Why Obamacare Is Wrong for America. Read more and RSVP here.

What Should Rick Perry Say About Gardasil?

2011-09-15T11:44:00.000-07:00

The Republican presidential primaries have been temporarily hijacked by a single incident in Rick Perry’s decade-plus tenure as governor of Texas. Despite Michele Bachmann’s ludicrous claim that Gardasil causes mental retardation, let’s recall that not one single schoolgirl was vaccinated by the offensive executive order: The legislature overturned it long before the school year began.

Furthermore, the executive order did not comprise a mandate.

Like today’s Governor Perry, I agree that the vaccination should have required parental opting in, not parental opting out to avoid it. Obamacare, on the other hand, has a mandate to buy government-dictated health insurance: If it withstands legal challenges, you will not be able to turn it down by getting a note from your parents!

So what else can Governor Perry say about Gardasil?

First, he need not retreat from his position that Gardasil is good medicine. As Henry I. Miller writes, it has an outstanding reward/risk ratio. However, conservatives know that the greater threat in a democracy comes from politicians who intend to do good things to us, rather than those who intend to do bad things to us.

So, he needs to recant the executive order in toto, not just the opting-out provision. HPV may be described as an “epidemic” but it is not communicable in normal social situations. There was no emergency — hurricane, flood, or swine flu — that demanded immediate action. If Governor Perry really thought that the vaccinations would have been good policy, he should have found a sponsor in the legislature and had it debated and voted on there. He should tell us that the blow-back has reminded him of the importance of separation of powers in our democracy.

Finally, he should remind us (once again) of the Tenth Amendment. While Texas might have the power to implement such a policy, he should declare that he sees no such power delegated to any branch of the federal government. Thus, it is not a relevant topic for his presidential campaign.

(Cross-posted at National Review Online.)

Obamacare Exchanges Are Limping Into Oblivion

2011-09-14T15:02:00.000-07:00

Back on July 29, I wrote a blog entry explaining why I believe that any health insurance exchange, whether compliant with ObamaCare or not, is unlikely to thrive without huge subsidies. Recent days have brought forward new evidence that even the massively taxpayer-financed ObamaCare exchanges are facing even bigger problems than previously understood.

Most recently, The New York Times reports that Republican state senators are blocking a bill that would allow the state to establish an exchange and claim federal handouts to get it up and running. (A few weeks previously, Kansas governor Brownback actually sent a $31.5 million federal ObamaCare grant back to D.C.).

If they can’t get an ObamaCare exchange up and running in New York, of all places, where the heck will they? Only 13 states have passed pro-exchange legislation (and some of these bills don’t do much more than establish study groups).

Republican state politicians are clearly hardening their stance against exchanges. It appears that they are no longer fooled by the argument that if they do not collaborate to establish state-based exchanges, the federal government will enter their state and do it for them. Recent close reading of the law has debunked this notion. As written, the Patient Protection and Affordable Care Act (PPACA) has (at least) two clauses that will prevent this from happening.

First, courtesy of Investors’ Business Daily’s David Hogberg and the Cato Institute’s Michael Cannon, we learn that federal exchanges will not be able to funnel the gusher of refundable tax credits to individuals who enroll in them.

The gist of the argument is that the law only allows state-established exchanges to funnel the tax credits. If a state fails to establish an exchange, and the federal government steps in, that exchange is not eligible for the tax credits.

Neither Hogberg nor Cannon cite it, but it appears that they are referring to section 1401 of PPACA (on page 110 of this version), which clearly refers to section 1311 (state-based exchanges) as eligible for the tax credits, and does not mention section 1321 (federal exchanges).

Please read the section yourself. I hate to play barrack-room lawyer, but I’m 80% to 90% sure that Hogberg and Cannon are right (although I do see some wriggle room, in that the government could argue that a section 1321 exchange is a type of section 1311 exchange, established because a state failed to establish one).

Second, as I noted in a recent article, states can also stop federal exchanges by threatening to pull the licenses of health insurers which intend to participate in them (p. 58 of this version). The law defines a “qualified health plan” as one that is “licensed and in good standing in each State…”, and only qualified health plans can participate in exchanges.

So, federal exchanges have a double whammy against them. States which resist exchanges need not fear that the federal government will step in and operate one for them.

Unfortunately, as Cannon notes, the IRS has recently written proposed regulations that violate the law by asserting that tax credits are available through federal exchanges. Hogberg’s article raises the question of who would have standing to sue the U.S. government to force it to stop funneling tax credits through federal exchanges, if the IRS executes the proposed rule.

My take? Any taxpayer should have standing!

(Cross-posted at John Goodman's Health Policy Blog.)

Graham Promoted To Additional Responsibilities

2011-09-13T12:50:00.000-07:00

I should explain why I'm not writing on a daily basis anymore. I trust I'll be able to get back to writing more frequently, but I have been given a new opportunity and additional responsibilities at Pacific Research Institute.

As well as continuing in my role as Director, Health Care Studies, I have been appointed Executive Director of the Benjamin Rish Society, a national society of medical students and physicians. The Benjamin Rush Society's website (which is soon to undergo significant renovation) expains its mission. The website is here.

These new duties will take up much of my time for the next few weeks. Nevertheless, the monthly Health Policy Prescriptions and periodic blog entries will continue.

Obamacare's Exchanges Are Well and Truly Dead on Arrival

2011-09-08T17:50:00.000-07:00

Yesterday, I sort of suggested that we could finally dispose of the matter of health insurance exchanges.

Well, today, courtesy of Investors' Business Daily's David Hogberg and the Cato Institute's Michael Cannon, we learn that federal exchanges will not be able to funnel the gusher of refundable tax credits to indviduals who enrol in them.

The gist of the argument is that the law only allows state-established exchanges to funnel the tax credits. If a state fails to establish an exchange, and the federal government steps in, that exchange is not eligible for the tax credits.

Neither Hogberg or Cannon cite it, but it appears that they are referring to section 1401 of PPACA (on page 110 of this version), which clearly refers to section 1311 (state-based exchanges) as eligible for the tax credits, and does not mention setion 1321 (federal exchanges).

Please read the section yourself. I hate to play barrack-room lawyer, but I'm 80% to 90% sure that Hogberg and Cannon are right (although I do see some wriggle room, in that the government could argue that a section 1321 exchange is a type of section 1311 exchange, established because a state failed to establish one).

As I noted in a recent article, states can also stop federal exchanges by threatening to pull the licences of health insurers which intend to participate in them, because the law only allows the federal government to allow state-licensed carriers to participate in federal exchanges.

So, federal exchanges have a double whammy against them. States which resist exchanges need not fear that the federal government will step in and operate one for them.

Unfortunately, as Cannon notes, the IRS has recently written proposed regulations that violate the law by asserting that tax credits are available through federal exchanges. Hogberg's article raises the question of who would have standing to sue the U.S. government to force it to stop funneling tax credits through federal exchanges, if the IRS executes the proposed rule.

My take? Any taxpayer should have standing!

Effectiveness of DTC Advertising

2011-09-08T16:58:00.000-07:00

It has been a while since I've written about physician-pharmaceutical industry relations or DTC (direct-to-consumer) advertising. My last major article, arguing that promotion and communications by pharmaceutical manufacturers is socially beneficial, is available at this link.

Many criticize the notion that advertising can have any value to patientss. But a new study by three marketing professors from European business schools shows that research into advertising effectiveness is important.

In their article, reported at this link, they conclude that advertising for breast cancer is too "gender salient". That is, it is too "pink". As a result women shirk from the ads, rather than learn from them.

Although the research appears to cover ads mostly sponsored by governments and charities, it nevertheless bears upon pharmaceutical companies' DTC advertising. As we (hopefully) enter an era of personalized medicine, we should also be entering an era of more personalized DTC advertising.

As these European professors have shown, pharmacological R&D must be accompanied by research into effective communications.

Health Insurers' In States' Crosshairs

2011-09-07T13:09:00.000-07:00

The Orange County Register published an op-ed by me, which describes the effects of states' emerging rules imposing political control of health-insurance premiums, which are prompted by Obamacare. The op-ed is at this link.

The column is based on a my study, which PRI recently published, available at this link.

Why Don't Health Insurance Exchanges Work?

2011-09-07T12:31:00.000-07:00

Health insurance exchanges! Can there possibly be anything more to say about them? I have previously triangulated around the issue of generic exchanges, and focused my analysis on the negative consequences of Obamacare-compliant exchanges.

Over time, I've become more skeptical about exchanges in general, and the most voal supporters of so-called "free-market" exchanges (such as Utah's) have actually influenced me towards this position. Their arguments really are not compelling.

Perhaps this will be my final word on exchanges. Please go to this link to read August's Health Policy Prescription, "Why Health Exchanges Don't Work".

Vacation Until September 6

2011-08-19T16:52:00.001-07:00

Hiking the glaciers of Montana until September 6. I look forward to blogging again when I return.

Independent Payment Advisory Board Op-Ed in San Francisco Chronicle

2011-08-19T11:32:00.001-07:00

My column critiquing IPAB came out today in SF Chronicle. It is gated until tomorrow, but I will be travelling so I thought I'd post it now. See http://tinyurl.com/3v9jczy.

Out of Pocket (Again)

2011-08-12T17:07:00.001-07:00

Travelling on business until next Thursday: Likelihood of blogging close to nil!

How Obamacare Threatens Health Plans' Solvency

2011-08-09T16:13:00.000-07:00

My column in Investors Business Daily is here.

Massachusetts: Consequences of Political Control of Health Premiums

2011-08-09T16:08:00.001-07:00

My column in the Worcester Telegram is here.

The Utah Health Exchange: A Retort to the Rebuttal

2011-08-09T14:51:00.000-07:00

Professor Norman Thurston of the Utah Department of Health has decided to rebut my criticism of the Utah Health Exchange. His article is posted at Forbes.com: The Apothecary.

Prof. Thurston repeatedly charges that I mischaracterize the Utah Health Exchange (UHE) and present false information.

Whether one believes that the very small numbers of beneficiaries currently enrolled in the exchange is inadequate or a promising start is a matter of opinion. However, the actual numbers that I cite come from the Utah Health Exchange itself.

Two specific charges demand repudiation. First, Prof. Thurston states that my March blog entry "laments the fact that the Exchange had not produced an annual report, which is simply not true." When my colleague Avik Roy asked Prof. Thurston for the report that was available in March 2011, he was directed to self-styled "Annual Reports" from the Governor's Office of Economic Development".

These are very interesting documents, but they are promotional material for the state's business development. They are not legally binding "annual reports" that present audited financial statements, which was my clear meaning in the March blog post.

Prof. Thurston also asserts that "no one at the Utah Health Exchange has been contacted ..... to get an explanation or clear up any questions." I spoke with Don Garlitz by phone on October 21, 2010. Mr. Garlitz is a member of the UHE's board of advisors and was named the UHE's "broker of the month" for March 2011. I have also communicated by phone or e-mail or in person with Catherine Du Pont, Associate General Counsel of the Utah Legislature, who was a key player in crafting the legislation enabling the Utah Health Exchange; and Cheryl Smith, formerly of the governor's office and currently with Leavitt Partners. Leavitt Partners is a consulting firm that specializes in advising clients how to establish exchanges. All three have been very helpful.

Nevertheless, I do not report phone calls or private e-mails as "facts," but wait for offical data to emerge. When the Utah Health Exchange finally started producing its "dashboard" with enrollment data, it appeared to confirm my growing suspicion: The UHE was an interesting experiment, but it was not succeeding.

So, I amended my previously (slightly) optimistic outlook in response to new data - which I think is a research analyst's responsible reaction! Prof. Thurston launched his rebuttal by criticising my goal of preventing the implementation of the Affordable Care Act (PPACA), which has nothing to do with the UHE.

This is hardly an intra-conservative squabble. The defeat of Obamacare, through Congressional repeal and/or being overturned as unconstitutional by the Supreme Court, is a generally agreed goal of conservatives.

That is why the newly installed majority in the House of Representatives passed a "clean" repeal bill in January 2011. This is why the Attorney-Generals of many states, including Utah, are asking the federal judiciary to declare Obamacare unconstitutional. This is why states have passed the Health Care Freedom of Choice Act either as a statute or constitutional amendment.

Prof. Thurston can rest assured that conservatives who oppose Obamacare are hardly "doing nothing," as he asserts!

While these challenges are underway, state collaboration with Obamacare threatens their success, for reasons that I have previously described.

However, none of this has to do with the UHE. I believe that the statutes which establish the UHE prevent it from becoming a PPACA-certified Health Benefits Exchange. In other words, I believe that the governor cannot apply for the federal government's approval as an Obamacare exchange without amendments to the legislation creating the UHE.

Utah's most recent health-related statute, H.B. 128, signed by governor Herbert on May 30, 2011, creates an 11-member Health System Reform Task Force. One of the Task Force's duties duties is to recommend "whether the state should develop an American Health Benefit Exchange under the federal Affordable Care Act..."

This language rejects the theory that the UHE, as currently constituted, is a potential Obamacare exchange.

I will not predict whether the Utah legislature will make the mistake of creating an Obamacare Health Benefits Exchange. However, the Governor's Office of Economic Development, in the latest "Annual Report" to which Prof. Thurston has directed our attention, predicts that enrollment in the UHE "could easily exceed 40,000 covered lives in 2011" (p. 25).

Well, we shall see. There is a move afoot to move the state's public employees into the UHE, but that wouln't really count, would it? They would not be voluntary enrollees. We would need to see over 36,000 more private employees join in less than five months for the UHE to hit the governor's target.

Or, for its advocates to decide to continue to describe it as a "beta-test."

Offline Until August 5

2011-08-01T16:58:00.001-07:00

I'll be travelling on business until August 5 and not blogging until I return.

Big Pharma’s Falling R&D Investment Helps Small Biotechs - 07/29/2011 - The Burrill Report

2011-08-01T14:40:00.000-07:00

BDO has a new report that examines Big Pharma's cuts to its R&D budget, and investigates the trade off between cutting internal R&D and filling the pipeline by doing deals with smaller firms.
(This is the subject of a research project that I hope to execute within the next year.)

Obamacare Threatens Solvency of Colorado's Health Insurers

2011-08-01T13:56:00.000-07:00

Obamacare encourages states to impose too much political power over health plans. My column in the Pueblo Chieftain is here.

Why Don't Health Exchanges Work?

2011-08-01T12:15:00.000-07:00

A previous entry reported and discussed the lackluster — basically non-existent — results of the Utah Health Exchange, and promised to explain why unsubsidized exchanges are unlikely to attract significant numbers of beneficiaries from the small-group market. The answer, I believe, is pretty straightforward: The administrative costs of operating an exchange plus the administrative costs to a small business of migrating to the exchange are almost certainly greater than the administrative costs of participating in the traditional small-group market (or taking account of other “work arounds” promoted by some insurance producers). Therefore, unless an exchange is subsidized from non-exchange sources (as per Obamacare), it will not attract many participants.

While straightforward, this conclusion is not necessarily intuitive.

Read the entire column (and comments) at John Goodman's Health Policy Blog.

A New Bargain for Drug Approvals - But for the Wrong Reason

2011-07-28T13:14:00.000-07:00

The Wall Street Journal recently ran an op-ed by Professors Michelle Boldrin and S. Joshua Swamidass that proposed "A New Bargain for Drug Approvals" (July 25). They recommended that the Food and Drug Administration allow new medicines to be used after they had been demonstrated "safe," but not necessarilly "efficacious." I liked the article, and agree that the reform which they recommend would be very beneficial. However, I have a philosophical problem with one of their reasons.

They have confused intellectual property (protected by patents) with regulating efficacy and safety of Rx via the FDA. There are all kinds of patented products that are not regulated by the FDA and have quick access to the market. (Just think of the recent auction of Nortel patents for which Google competed and lost. IT companies can roll out their patented products without delay.)

So, there is an error in the authors’ statement that “Today’s system for drug approvals is based on a social contract. We grant the drug companies lucrative profits through government-protected, 20-year monopolies on their discoveries. In return, the companies submit to a costly regulatory structure designed to ensure their drugs are safe and effective.”

First, “we” (by which they mean the government) do not grant one penny of profit via granting a patent. If the patent-holder cannot sell the product for a profit, no profit is forthcoming.

Second (and closely related), the patent does not grant a monopoly. Monopoly describes a market, not a product. The patent recognizes the patent-holder’s ownership of the intellectual property behind the product.

For example, there is a class of drugs called statins. They are very widely used for lowering cholesterol and rightly defined as “blockbusters.” The first successfull statin was lovastatin, patented by Merck and branded as Mevacor. However, Merck soon moved on to simvastatin, branded as Zocor.

This does not mean that Merck had a monopoly on cholesterol-lowering drugs. On the contrary, the profitability of these medicines prompted competition from other drug makers, which invented other statins with different therapeutic effects, giving people with high cholesterol, and their doctors, lots of choice.

Pfizer invented atorvastatin, branded as Lipitor, which outpaced Zocor. Zocor’s patent expired in 2006, and it is now available at generic prices. Lipitor is still patented in the U.S., but it will soon be available in generic versions.

It is almost certain that none of these statins would have been invented without effective patents. Monopoly stifles innovation. On the contrary, patents stimulate innovation.

(Also posted at John Goodman's Health Policy Blog.)

Why the Utah Health Exchange is No Model for Health Reform

2011-07-27T16:13:00.000-07:00

The Utah Health Exchange is the model some conservatives believe can be used to push back against Obamacare. Witness the Wall Street Journal (July 16) soundly rejecting regulatory guidance on what the Administration is now calling "Affordable Insurance Exchanges," but encouraging governors to get on the exchange bandwagon, in the hope they can build free-market exchanges that will blunt Obamacare's worst effects.

The evidence? "Utah built a pilot exchange on this model in 2009, though the results so far are mixed and the rules are still being fine-tuned." That calls for a closer look, but one can understand why Utah's exchange might be tempting. It was established by state government, not the feds. It consumes no subsidies, and it is voluntary.

The Exchange launched in August 2009, with 136 businesses enrolling their employees. By December 2009, however, only 13 groups remained. The reason for the initial failure was a classic death spiral of anti-selection. Because carriers had greater underwriting latitude outside the exchange than inside, firms with sicker employees gravitated to the exchange and those with healthier employees stayed out. Premiums spun upwards, out of control.

Legislative amendments passed in March 2010 forced carriers to use the same underwriting both inside and outside the exchange. The new rules took effect in September 2010 and the new exchange began coverage last January, having enrolled groups for a quarter of a year before the re-launch. In January 2011, the new Utah Health Exchange covered 41 businesses including 1,042 employees and dependents. At the end of June, according to a recently published update, the count was 112 businesses including 2,793 employees and dependents. By August, the exchange forecasts covering 157 employers including 4,059 lives.

One could say that enrolment grew by 289 percent in a year. But a full 100,000 of Utah's uninsured are employed by small businesses, according to the Utah Small Business Coalition. And according to the Utah Health Exchange's report, 16 percent of the businesses enrolled in the exchange did not previously offer coverage (or, the incidence of crowding out of traditional small-group coverage was 84 percent). Of the 4,059 covered lives in the exchange, 1,424 are employees and 2,635 dependents. We can reasonably conclude that 228 of the previously uninsured 100,000 employees of small businesses have received coverage through the exchange. Clearly, the exchange has had effectively zero impact on the uninsured employees of Utah's small businesses.

Utah has a population of 2.8 million, of which 1.1 million have full-time jobs, of which about 200,000 work in firms of fewer than 20 employees and 540,000 work in firms of fewer than 500 employees. The Utah Health Exchange defines small businesses as those with up to 50 employees. So, let's say about 300,000 Utahans work for such businesses. The exchange covers 1,424 of them, an utterly trivial proportion of the exchange's target market.

The results of the Utah Health Exchange are not "mixed" but basically non-existent. If a venture capitalist was funding the Exchange, it would certainly be shuttered on its first anniversary. Advocates of repealing Obamacare and replacing it with reforms that put the people, not the government, in charge of our health dollars should not be distracted by this sideshow. Instead, they need to demand wholesale tax reform, so individuals can use their own pre-tax dollars for health insurance that serves their own needs, not their employers.

(This article was also published in PRI's Capital Ideas series. Another version was earlier posted on John Goodman's Health Policy Blog, but I forgot to cross-post it here!)

80% of Employers Concerned About Health Reform’s Administrative Obligations; 30% Think Exchanges Will Offer Worse Coverage

2011-07-27T11:03:00.000-07:00

A new survey by Lockton, Inc.’s Health Reform Advisory Practice reports that 80 percent of respondents are concerned about federal health reform’s additional administrative obligations.

Read my entire article at Forbes.com: The Apothecary.

The U.S. Government Will Like the Express Scripts-Medco Takeover

2011-07-21T15:21:00.000-07:00

Medco traded at a ten percent discount to the deal terms all day Thursday, reflecting skepticism that the U.S. government will let the deal happen. I don't see why. The government favors concentration in the health sector.

Read my latest column at Forbes.com: The Apothecary.

PPACA's Raid on the Medicine Cabinet

2011-07-21T09:48:00.000-07:00

There has been a lot of discussion of the Independent Payments Advisory Board (IPAB) lately, including pretty heated testimony at the House of Representative Energy & Commerce committee in the last few days.

IPAB is the primary vehicle whereby the Paient Protection and Affordable Care Act (PPACA) will deny new medicines to Medicare beneficaries, in a futile attempt to contain costs.
The Washington Times ran my column on IPAB. Read the entire article here.

Health Benefit Exchanges: Regulations Versus Reality

2011-07-20T13:38:00.000-07:00

Although Ohio governor John Kasich apparently deludes himself into believing that he can take federal grant money to establish a Health Benefits Exchange, but then somehow design an exchange that does not comply with Obamacare's regulations, most other governors have a more realistic perspective.

That is why the U.S. Department of Health & Human Services' recent release of 347 pages of regulatory guidance on exchanges is both exasperating and probably futile. My analysis concludes that only about one third of Americans will be living in states that have imposed exchanges by the law's deadline.

Read the entire analysis in this month's Health Policy Prescription.

UnitedHealth Group's Earnings Call

2011-07-19T23:12:00.000-07:00

I participated in UnitedHealth Group's earnings call today. My conclusions:

Optum will continue to make well focused acquisitions;
UNH will continue to keep quiet about its lobbying efforts to shape the post-PPACA landscape;
Public budget crises will make the Medicaid managed-care business look much less attractive than it has been; and
UNH and (most) Wall Street analysts continue to ignore the likelihood of PPACA’s defeat, either through the Supreme Court or the election of a new president in 2012.

Read my entire column at Forbes.com: The Apothecary.

Are U.S. Doctors Overpaid?

2011-07-15T10:50:00.000-07:00

From Professor Christopher Conover at the American Enterprise Institute blog.

I’ve always known that doctors have a lower ROI on education than MBAs, for example, but I did not know it went all the way back to 1990, and (presumably) a good number of years before that. A related question that might be one way to address the question of the high share of health spending in GDP in the U.S. versus other countries might be to look at the cross-section of ROIs for different professions, rather than the longitudinal (time-period) ROI within the U.S.

To put it another way: The labor value of professionals is very difficult to measure. Many physician specialties (especially GPs) are limited in their ability to increase productivity. However, because the U.S. has been (until the last few years) more economically free than most other developed countries in Europe, Canada, Australia, etc., managerial professionals have been able to increase their productivity relatively faster in the U.S. than those countries.

Ergo, we may observe that the ROI gap between medicine and other professionals has increased faster in the U.S. than other countries. Nevertheless, if it is driven by productivity, professor Baumol’s insight leads us to conclude that physician pay in the U.S. must become increasingly higher than physician pay in other developed countries to compensate, thereby contributing to the higher share of GDP on health spending.

Big Government and Health-Care Stocks: A Happy Marriage?

2011-07-13T10:56:00.000-07:00

What with the underwhelming market response to my previous article discussing the effect of the 2010 federal Patient Protection and Affordable Care Act (PPACA) on health insurers, I was pretty astonished (and relieved) to see Citigroup equity strategist Tobias Levkovich state many of the concerns which have occupied me.

Please read my latest column at Forbes.com's The Apothecary.

Bust or Bailout? The Future of Private Health Plans Under Obamacare: With A Focus on Massachusetts & Colorado

2011-07-06T11:46:00.000-07:00

San Francisco (June 30, 2011) -- A new research study released by the Pacific Research Institute (PRI), a California-based free-market think tank, shows how ObamaCare threatens the solvency of private health plans, which will significantly reduce consumer choice and increase costs. The ultimate result will likely be either a massive taxpayer bailout of private health plans or continued momentum toward a single-payer government-monopoly system.

Bust or Bailout? The Future of Private Health Plans Under Obamacare was authored by PRI director of Health Care Studies, John R. Graham. Noting that the 1996 federal Health Insurance Portability & Accountability Act (HIPAA) also lead to consolidation of health plans, Graham concludes that “Repealing ObamaCare and replacing it with reforms that put the American people, instead of government, in charge of health dollars, is the recommended way to avoid either outcome. ”

Graham examines the recent history of Massachusetts, where a 2006 law created an unprecedented level of government control over insurance premiums. In 2010, the state’s Insurance Commissioner mandated a rollback of insurance premiums. However, because the 2006 reform increased health costs, this resulted in increasing losses and looming insolvency. Graham’s analysis concludes that Massachusetts’ largest health plan is likely to be insolvent by 2015 or 2016, in the absence of reform.

Replicating this analysis for Colorado, where one large health plan has already announced plans to leave the state, Graham’s analysis demonstrates a “cascade” of insolvency, whereby only five of the ten largest plans in 2009 will be operating in 2017.

According to Mr. Graham, “The current solvency of health insurers is well regulated and responsibly monitored, but ObamaCare injects awkward incentives into the regulation of health plans. ”

Through the distribution of federal grants to states, ObamaCare encourages states to enact laws to increase their Insurance Departments’ power to dictate imprudent, artificially low premiums. Mr. Graham reports, “There is no evidence that such power reduces the growth of premiums below those observed in states where Insurance Departments have no such power. But it does give perverse incentives to politicians to blame private health plans, rather than government interference, for increasing health costs. ”

Graham adds that his estimates are likely conservative: “ObamaCare introduces numerous critical uncertainties – ranging from the establishment of Accountable Care Organizations (ACOs) to Health Benefits Exchanges -- that make it difficult to estimate future medical costs accurately. ObamaCare, consequently, will be much more disruptive to health insurance than the Administration has advertised. ”

To learn more about Bust or Bailout? The Future of Private Health Plans Under Obamacare, visit our website http://pacificresearch.org or download it here. To arrange an interview with author John R. Graham, please contact PRI’s press office at (415) 955-6145 or ldannerbeck@pacificresearch.org.

Read the entire study here.

Capped Federal Matching Funds: Washington State's Bipartisan Medicaid Reform

2011-07-05T18:19:00.000-07:00

It’s a short law with big potential: SB 5596, signed by governor Christine Gregoire at the end of May, is only three pages long. Nevertheless it puts Washington State on a path to Medicaid solvency and sets an example for California and the nation.

Remarkably, the law, sponsored by conservative Republican senator, Linda Evans Parlette, passed with unanimous support in the state Senate and Assembly. Needless to say, the state’s Democratic legislators and liberal governor took some political risks in endorsing it. But we have to be careful in describing what SB 5596 achieves.

In a June 4 column in the Wall Street Journal, Nansen Malin of Americans for Prosperity described the reform as a Medicaid “block grant. ” A few days later, governor Gregoire wrote a letter denouncing this description. According to Gregoire, SB 5596 does not even mention “block grants” but seeks instead “greater flexibility from the federal government by focusing on effecting purchasing and treatment,” through a waiver from Medicaid’s default regulation and funding.

The term “block grant” appears anathema to Democrats. This may be simple guilt by association. Block grants have been proposed by Republicans for years, most recently by U.S. Senators Tom Coburn (R–OK) and Richard Burr (R–NC). A more accurate term for the Washington reform would be “capped federal matching funds.” It is a significant step in the right direction.

State spending on Medicaid is out of control because Medicaid’s traditional funding formula incentivizes the political class to overspend. For every dollar a state politician spends on Medicaid, the federal government pitches in at least one dollar – or even more, as a result of the misnamed “stimulus” of 2009 – via the Federal Medical Assistance Percentage (FMAP).

The federal government actually rewards states for making more residents dependent on Medicaid. Being a wealthy state, Washington should receive an FMAP of 50 percent. However, the federal so-called “stimulus” of 2009 increased FMAP to 58.23 percent for this year. That is, for every dollar Washington spends on the state’s Medicaid program, the federal government also spends $1.17.

A block grant would eliminate this formula entirely, and simply grant federal Medicaid money to the states based on the number of eligible beneficiaries every year. Capped matching funds are a middle ground. The federal government still transfers money based on state spending, but the total amount is capped over a multi–year period.

This approach is probably somewhat less effective than block grants. However, it has one overwhelming advantage: It now exists in two states, and enjoys massive bipartisan support, as demonstrated by the vote tally in Olympia.

The other state benefitting from this arrangement is Rhode Island, which received a waiver on the last day of the Bush administration that capped its total (state and federal) Medicaid spending at $12.075 billion through 2013. At the current rate, it looks like the actual spending will be about $9.3 billion – with no evidence of reduced access to care.

Washington’s simple three–page bill authorizes the state to apply to the federal government for a waiver by October 1. Unlike the legislation, the waiver will be dozens, perhaps hundreds of pages long, and may describe too much bureaucracy and regulation. Nevertheless, it is likely to be approved by Secretary Sebelius, who would be unlikely to dismiss such an overwhelmingly popular bill signed by a liberal Democratic ally. And it will save Washington taxpayers billions of dollars in the years to come.

In the long run, advocates of individual choice and fiscal responsibility in health care should certainly continue to advocate universal block grants for Medicaid. However, it would be irresponsible to ignore the beneficial alternative of capped federal matching funds – a reform with wind in its sails. If Democrats and Republicans in Congress agreed to break the longstanding logjam on Medicaid reform by negotiating a national cap for federal matching funds, many states – both red and blue – would cheer and benefit.

(This article is also available in PRI's Capital Ideas series: here, and as a column in the San Francisco Examiner, here.)

Leavitt: Most States Won't Have Exchanges by Deadline

2011-06-29T13:10:00.000-07:00

Former U.S. Secretary of Health & Human Services Mike Leavitt has announced that most states will not have Health Benefits Exchanges up and running by January 2014, when PPACA requires that they be covering patients who will have lost their employer-based benefits.

My readers have known this since April 8 (see here). If you want to know how health reform is really working out, I encourage you to register for updates via one of the links at the left masthead.

Jim Bohannon Interview

2011-06-29T09:46:00.000-07:00

I had the privilege of a full hour on the Jim Bohannon Show last night. We spoke about the Medicaid crisis facing the country, and how to reform this out of control program. Listen to the audio here.

Medicaid Reform - Clinton Style!

2011-06-22T16:48:00.000-07:00

Medicaid reformers should adopt the model of successful welfare reform, as signed by President Clinton. Read my column in the Buffalo Daily News here.

Federal Health Reform and Stock-Market Returns of Health Insurers

2011-06-17T16:40:00.000-07:00

I was amazed to see how well the for-profit health insurers did during the build up, passage, and rollout of the new law. Read the entire article here.

Path Dependency in Medicare Reform

2011-06-17T16:07:00.000-07:00

I first learned about path dependency when studying physics — but it surely applies to public policy, too. Despite the scholarly disputations about health reform, what drives most voters are not questions about the solvency of Medicare or beneficiaries’ access to care, but fear of change. Arguments will not change this fact: People change when the pain of not changing becomes greater than the pain of changing, but not before.

This can be the only explanation for the majority of respondents to polls (described here) which ask the foolish question whether “Medicare should remain as it is today” versus Paul Ryan’s proposed reform.

Read the entire blog entry at John Goodman's Health Policy Blog.

Connecticut's New, Ineffective Law Politicizing Premiums

2011-06-15T15:31:00.000-07:00

Last week, an overwhelming majority of Connecticut legislators passed a bill, SB-11, that would give the executive branch the power to decide whether health plans should be allowed to increase their premiums at rates that keep pace with medical costs. Health plans may be a politically attractive target, but giving politicians the power to approve premiums causes other problems – and doesn’t even hold down rate increases.

Health plans are largely pass-throughs, paying medical claims from providers whose charges have been rocketing skyward. Read the entire article at Forbes.com: The Apothecary.

The Grim Reality of Medicare Reform

2011-06-15T13:45:00.000-07:00

As one of the first conservatives to criticize Paul Ryan’s Medicare reform, I was pretty excited to read Andrew McCarthy’s spirited attack against the very existence of Medicare. According to McCarthy, it’s a wholesale scam, and he doesn’t mind telling everyone because he’s neither running for office nor responsible for getting anyone else elected.

Sure, I’ll admit I had the urge to jump up and down and pump my fists in the air. But then I read Henry Olsen’s warning about alienating blue-collar voters, and I decided that while McCarthy’s scorched-earth approach may be the right one for the conservative patriot to adopt when challenged by al-Quaeda or the Taliban, it might not be quite the thing for dealing with the median American voter, who desperately clings to the increasingly exposed false promise of Medicare.

I think we have a bigger problem than has yet been recognized. Read the rest of this article at National Review Online.

State Implementation of Federal Health Reform: Panel Presentation

2011-06-09T09:42:00.000-07:00

Here is the video of the panel presentation by me and Christie Herrera of the American Legislative Exchange Council in Seattle a couple of days ago. We were speaking at the 9th Annual Health Care Conference, produced by the Washington Policy Center.

Medicaid is easier to fix than entitlement programs | Anonymous | Op Eds | San Francisco Examiner

2011-06-09T09:25:00.000-07:00

My column on Senator Coburn's Medicaid reform bill, at the San Francisco Examiner.

9th Annual Health Care Conference: State Implementation of Federal Health Care Reform | Washington Policy Center

2011-06-06T20:24:00.000-07:00

Speaking in Seattle Tuesday morning. If you're here please join us: 9th Annual Health Care Conference: State Implementation of Federal Health Care Reform Washington Policy Center

Will There Be Health Benefit Exchanges By 2014?

2011-06-02T16:56:00.000-07:00

Despite advice from most free-market analysis, some Republican governors are executing the Patient Protection and Affordable Care Act (PPACA) by establishing Health Benefits Exchanges. These governors dislike PPACA, but they believe that exchanges can be vehicles for more choice than the federal law anticipates.

But I think that the real news is how much difficulty states that want to implement PPACA as fast as possible are having. Read the entire article at John Goodman's Health Policy Blog.

A Pfizer Break Up? Maybe Not Such A Great Idea

2011-06-01T15:18:00.000-07:00

My second column at Forbes.com's The Apothecary blog discusses whether breaking up Pfizer (like almost everyone on Wall Street wants to do) is really such a good idea.

Read it here.

Why Medicaid Should Be Easier to Fix Than Entitlements

2011-06-01T14:05:00.000-07:00

Congress remains gridlocked on many important issues but not every politician is afraid to challenge the unsustainable growth of Medicaid. Consider S. 1031, by U.S. Senator Tom Coburn.

This measure would increase local control over Medicaid spending and improve the incentives that have led politicians to trap ever more low-income citizens in poverty and the poor access to care that characterizes this top-heavy system.

Medicaid is often described as an “entitlement,” but that is wrongheaded. Medicaid is welfare, targeted at low-income Americans. And Medicaid should be easier to fix, politically, than two other troublesome programs.

The politicians who invented Social Security and Medicare asserted that these programs would be funded by payroll taxes in order to foster the illusion of entitlement. We pay for the benefits in our working years, and the benefits arrive after we’ve retired. It’s all nonsense of course.

The taxes we pay do not go into accounts that belong to us. Rather, they pay current retirees and fund other government programs. Nevertheless, it is exceedingly difficult to convince people of the truth that we have not paid for our Social Security or Medicare. But Medicaid spending, to which nobody is “entitled,” is now greater than Medicare spending.

This has occurred because Medicaid's funding formula incentivizes the political class to overspend. For every dollar a state politician spends on Medicaid, the federal government pitches in at least one dollar – or even more, as a result of the misnamed “stimulus” of 2009 – via the Federal Medical Assistance Percentage (FMAP). The federal government actually rewards states for making more residents dependent on Medicaid.

S.1031 would transform the federal government’s funding for Medicaid, but it would transform it into a “capped allotment.” This was the model of the successful welfare reform of 1996, which reformed Aid to Families with Dependent Children (AFDC) into Temporary Assistance to Needy Families (TANF).

The number of average monthly recipients dropped from more than 12 million in 1996 to fewer than 4 million in 2008 – and low-income Americans faced better incentives to seek productive work. We have recently experienced a successful example of a reform in this direction.

Rhode Island received a waiver on the last day of the Bush administration that capped its total (state and federal) Medicaid spending at $12.075 billion through 2013. At the current rate, it looks like the actual spending will be about $9.3 billion – with no evidence of reduced access to care. And Rhode Island’s waiver preserved the flawed FMAP.

Coburn’s S.1031 introduces even better incentives, from which all states and taxpayers will benefit. It gives states more control over their program dollars to get rid of waste, fraud, and abuse. It encourages states to make Medicaid providers accountable to the neediest patients in their communities, instead of remote federal bureaucracies. Finally, it will protect taxpayers from politicians’ worst impulses to spend unaccountably.

It is generally recognized that TANF, which passed with bipartisan support, produced positive outcomes. It is long past time to introduce similar reforms to Medicaid. The current stalemate on the debt limit should not prevent Congress from taking up S.1031 at the earliest convenience.

(This article is also available in PRI's Capital Ideas series, here.)

Ryan's Medicare Reform: More, Please

2011-05-26T11:14:00.000-07:00

A few months ago, News Corporation launched a new publication, The Daily, which is designed specially for the iPad. Regrettably, I don't have an iPad, but the editor ran my column anyway. It's about Paul Ryan's and the House Republicans' Medicare reforms (and especially timely in the wake of Republican defeat in the Congressional special election in New York a couple of days ago).

Now, I can fantasize that everyone whom I see playing with his or her iPad is reading my column. If you don't have an iPad, you can read it here.

Will Kathy Hochul Vote to Repeal Obamacare?

2011-05-25T15:13:00.000-07:00

The surprise victory of the Democratic candidate in NY-26’s special election yesterday teaches a curious lesson: Seniors who rose up against Obamacare’s Medicare cuts at town-hall meetings in the summer of 2009 appear to have risen up against Paul Ryan’s Medicare plan in the spring of 2011.

Or maybe they didn’t. Read the entire post at National Review Online.

If Air Travel Worked Like Health Care

2011-05-20T14:38:00.000-07:00

This may be the best health-care video ever! By Jonathan Rauch of National Journal.

Comparative-Effectiveness Research: How Many Lives Will It Cost?

2011-05-19T13:08:00.000-07:00

I write a lot over at John Goodman's Health Policy Blog. For every original post, I also write about half a dozen comments on others' posts. I don't usually share the latter here.

However, I was interested to see Dr. Goodman's take on a new paper published by the Center for Medicines in the Public Interest, an outfit which is often tagged as simply a mouthpiece for Big Pharma. Here's what I wrote:

Yes, I certainly appreciated the last “dig” and I shake my head at the irony of PhRMA funding research designed to push back key elements of a law for which PhRMA lobbied and invested. I doubt that Obamacare would have passed without PhRMA’s support. If PhRMA had resisted Obamacare, the threat of Comparative-Effectiveness Research (CER) would not be nearly as great as it is today.

But that is water under the bridge. IMHO, Vernon & Goldberg have written a very good paper. Deriving a point estimate from one factor in a function that has many factors is obviously risky, but they have used scholarly sources appropriately. And they are obviously trying to have an impact on public policy so they communicated their findings in such a way as to generate as much “heat” as possible.

Isn’t that why we are in think tanks and not academic departments at universities? So that our research has impact in the real world and not just in articles in scholarly journals that few read?

If we are going to challenge people solely based on where they get their funding, without considering the work, then we must logically accept only research by amateur gentlemen who do if for free! I don’t think anyone fits that bill.

Even if we think the point estimate derived by Vernon & Goldberg is overconfident, it complements a principle that we champion: CER cannot be effectively achieved by a centralized bureaucracy. CER can only be effective when millions of patients, prescribers, scientists, and entrepreneurs are trying new medicines free of central control.

Governors Declining Health Benefit Exchanges

2011-05-18T12:45:00.000-07:00

I was interviewed in a story for Health Care News about states whose governors are declining to implement Obamacare Health Benefits Exchanges. Read it online here.

Massachusetts En Route to Single-Payer Health Care

2011-05-18T11:08:00.000-07:00

Mitt Romney has thorwn himself in front of a buzzsaw with his continuing defense of his 2006 health reform in Massachusetts. The other day, the Wall Street Journal editorial board sharply criticized Mr. Romney's approach. In a letter by yours truly that the WSJ published today, I noted another problem with the Massachusetts reform: It amplified political incentives that have put the solvency of Bay State health plans at risk. Read the letter here.

For non-subscribers, the text is copied below:

Your editorial's criticism of Mitt Romney's 2006 Massachusetts health law is correct in that taxes, costs and political interference in medical decisions have all gone up while access to medical care has deteriorated ("Obama's Running Mate," May 12). The Massachusetts law also jeopardizes the very solvency of private health plans in the Bay State.

Because it was politically intolerable to allow premiums to rise in line with the costs of RomneyCare, the state's insurance commissioner denied 235 of 276 rate increases in April 2010. For a short time, no new policies were offered and plans suffered significant losses. The next month, Blue Cross Blue Shield of Massachusetts, the state's largest carrier, announced a $55 million provision for anticipated losses in the second quarter alone. Of the 12 largest carriers, five were already operating at a loss. At this point, even if the state allows Blue Cross Blue Shield of Massachusetts to increase rates in line with medical costs, my analysis concludes that the carrier will become insolvent somewhere around 2017.

Gov. Romney did not give Massachusetts "universal" private health coverage. He put it on a glide-path to a single-payer, government-monopoly health system.

Who Is The Republican Health Care Candidate?

2011-05-17T14:24:00.000-07:00

The Wall Street Journal and most NRO writers have pretty much written off both Mitt Romney and Newt Gingrich as acceptable Republican presidential candidates because of perceived weaknesses on health care. Health care has become the third rail of American politics — just not the way we used to understand it.

Until recently, a Republican could churn out crowd-pleasing sound bites about fixing health care but never put the pedal to the metal by investing political capital in a serious proposal for reform. Republicans understood that when the talk turned to health care, Democrats won the debate and Republicans lost. It was just a fact of life. Not anymore.

As Romney and Gingrich bind their wounds, I’m sure that they are more surprised than anybody at the hostile response their recent comments have drawn. After all, it is true that trace elements of the “individual mandate” can be found in conservative policy proposals from the days of yore. Our friends at the Heritage Foundation considered such a mandate in the 1990s, but have long since rejected it. And the quality and quantity of the Heritage Foundation’s current research on health policy, which unambiguously rejects every part of Obamacare in favor individual choice and fiscal responsibility, leaves no room for excuses that there are no conservative alternatives to mandates and tax hikes.

On the other hand, when I look at Gingrich’s campaign website’s section on health care, I see nothing inexcusable. He champions repealing Obamacare and lists ten reforms, all of which one can find in the publications of one conservative think tank or another. (I don’t find all ten convincing, but while I don’t think it’s Congress’ job to pass a law on medical-malpractice liability, for example, it wouldn’t be the end of the Tenth Amendment either.)

So, how did one unfortunate interview on a Sunday TV show do so much damage to the launch of his campaign? I think it’s a matter of trust. Repealing Obamacare is not something Republicans can waffle on in the slightest. And attacking the congressional caucus that voted for Medicare reform is very close to attacking their vote for repeal.

We cannot afford a “national conversation” on repealing Obamacare. Every day that it persists is another day that doctors, hospitals, pharmaceutical firms, health insurers, medical-device manufacturers, and all the other concerns in the health sector invest more time and energy “implementing” its harmful provisions. Every day that goes by is another day in which those interests dig themselves deeper into the new status quo, making Obamacare harder to defeat.

Every single Republican presidential candidate will promise to repeal Obamacare; that’s the price of a ticket to the dance. But between election night on November 6, 2012, and the inauguration on January 20, 2013, there will be plenty of opportunities for the president-elect to find excuses for delaying repeal in favor of a “national conversation.” After all, that’s what many business interests will want.

And conservative voters know it, too. Campaign bromides won’t work this time. The winning Republican candidate will have to prove beyond any shadow of a doubt that he (or she) will immediately sign the one-page repeal bill that will be the first legislation to land on the president’s desk after the inauguration. There can be no risk of dithering in favor of a “national conversation.”

I don’t know what a candidate can say to prove that he (or she) will do this. But now I know what he cannot say.

(Crossposted at National Review Online.)

A Pfizer Break Up? That Would Be Something

2011-05-17T11:56:00.000-07:00

I have been afforded the great privilege of a perch at Forbes Online from which to communicate my perspective on events where health policy and healthcare finance intersect. Avik Roy, an equity research analyst at Monness, Crespi, Hardt & Co. in New York City, has invited me to collaborate with him on his blog, The Apothecary, which has been hosted by Forbes for a few months.

What I intend to contribute at The Apothecary is somewhat different than what you'll read in my other media, because I'll be bringing financial analysis to bear on the healthcare space (although not ignoring what the politicians and bureaucrats are doing, of course. Any healthcare enterprise's success will depend largely on government action.)

Many Wall Street analysts have been after Pfizer, Inc., to restructure and refocus for years. Under new CEO, Ian Reid, they think they've finally got someone whom they believe can get the job done. But others think that Big Pharma should grow by acquisitions, instead of shrinking by spinning off divisions. How credible is it that Mr. Reid will take the latter course? Read my entire blog entry here.

Mission Impossible: Medicare's Independent Payment Advisory Board

2011-05-17T11:35:00.000-07:00

Thos of you who can read 1,500 words will have already read the longer version of this in the recent Health Policy Prescription. But for thos who prefer a slightly shorter version of my analysis of Obamacare's Independent Payment Advisory Board (IPAB), the new agency that will decide whether granny gets a "blue pill" or a "red pill," please see this blog post over at John Goodman's Health Policy Blog.

Can I Deduct Obamacare On My Taxes?

2011-05-16T10:08:00.000-07:00

Here's a column I wrote in Sunday's Washington Examiner describing the benefits of individual ownership of health insurance:

Can I deduct Obamacare on my taxes? The Examiner Op Eds Washington Examiner

Mission Impossible: Medicare's Independent Payment Advisory Board

2011-05-13T10:44:00.000-07:00

The Independent Payment Advisory Board (IPAB) is a new bureaucracy established by Obamacare that will limit Medicare beneficiaries’ access to certain medical goods and services—especially new prescription drugs.

Key Points:

• IPAB puts Medicare beneficiaries’ access to prescription drugs and certain other medical goods and services under control of a board of 15 presidential appointees, while leaving decisions about other medical goods and services under control of Congress.

• IPAB will be called upon to cut much more Medicare spending than officially estimated, because physicians and hospitals are highly likely to succeed in restoring the cuts that Obamacare imposes upon them.

• IPAB could deny Medicare beneficiaries access to every innovative prescription drug introduced every year, but still have little effect on Medicare spending.
• As long as Congress exerts political control over Medicare beneficiaries’ access to medical care, all treatments and providers should be treated equally, which implies that IPAB should be abolished.

Read this month's Health Policy Prescription here.

Obamacrats Play Chicken Little — Again

2011-05-11T16:11:00.000-07:00

The Obamacrats published a "research brief" attempting to prove that the flood of uninsured people in emergency rooms is driving the health crisis. It upset me because the author appears to be skilled at crunching numbers and I hate it when those skill are abused for political gain. Anyway, the Obamacrats keep trafficking this myth because it feeds the line that we need "universal" coverage to control health costs.

Well, I printed it out and was planning to write about it, but Michael Cannon of the CATO Institute beat be to the punch. Read his analysis at the folliwing link: HHS Plays Chicken Little — Again.

Politicians Cannot Control Health Costs

2011-05-09T09:31:00.000-07:00

My column in the Orange County Register, opposing California legislation that would give politicians the power to review health-insurance premiums, is here. It argues that politicians cannot control health costs; that rate-review laws are ineffective; and that the experience of Massachusetts demonstrates that giving politicians' this power in the age of Obamacare is incredibly risky.

Shooting the Messenger: California’s Proposal to Control Health Plans’ Rate Increases

2011-05-04T11:47:00.000-07:00

California legislators are considering a bill, AB 52, that would give the executive branch the power to decide whether health plans should be allowed to increase their premiums at rates that keep pace with medical costs. Health plans may be a politically attractive target, but giving politicians the power to approve premiums causes other problems — and doesn't even hold down rate increases.

Only a year ago, California passed SB1163, which gave the Insurance Commissioner and the Department of Managed Care the power to police premiums and browbeat health plans that submitted increases politicians believed were unjustified. However, it stopped short of giving them the power to roll back premium increases. AB 52 would give them such power but this entails a problem.

Health plans are largely pass-throughs, paying medical claims from providers whose charges have been rocketing skyward. A recent analysis of daily inpatient charges for California hospitals revealed that payments from private health plans increased from $1,954 in 2000 to $5,061 in 2009 — 159 percent — in a period during which consumer prices increased by only 25 percent, nationwide. The charge for a normal (non-Caesarian) childbirth went up from $3,805 to $6,424 — 69 percent.

There is little or no evidence that prior approval of premium increases has protected consumers from unreasonable rate hikes. I have examined data on premiums and premium-review laws for small-group premiums in 43 states in 2006 and 2008. Nineteen states were “file & use,” which means that health plans must submit premium increases to the insurance commissioner, but he has no power to reject them. Twenty states required prior approvals of rate changes by the insurance department, and four were unregulated.

There does not appear to be any connection between prior approval and a lower change in rates from 2006 to 2008, nor the absolute value of rates in 2008. The average increase over the period was 8 percent for both file & use states and states requiring prior approval. The highest increase in the file & use states was 27 percent (in Virginia) and the highest in the states which required prior approval was 25 percent (in neighboring Maryland). Of the 45 states for which premiums were available for 2008, the average rate in 2008 was very slightly lower in file & use states ($345 per month) versus states with prior approval ($351).

Data for the much smaller individual market is available for 29 states in 2007 and 2009. Of the 22 of the states that legislated prior approval of rate increases, four allowed file & use, and three were unregulated. In this case, the states with prior approval had an average increase of 6 percent, versus 13 percent for the file & use states. However, there is no statistical power to this comparison: The highest increase in the four file & use states was 13 percent (in Texas) versus 29 percent in New York, the state requiring prior approval that experienced the highest increase.

On the other hand, aggressive rate review can threaten the solvency of health plans. In 2006 Massachusetts deployed a heavily subsidized insurance exchange (like the Obamacare-compliant one recently established in California), alongside a mandate that residents possess health insurance. The Massachusetts plan is widely, and accurately, described as a forerunner to Obamacare.

Using the power his California counterparts might soon enjoy, the state's Insurance Commissioner refused 235 of 274 (86 percent) requested rate hikes for April 2010, and demanded that plans rebate premiums that had already been paid. But medical costs in Massachusetts increased faster after the new regulations than before. Massachusetts' health plans are hemorrhaging cash, and a senior regulator has described the mess as a “train wreck.” Unless the Insurance Commissioner allows Massachusetts health plans to raise premiums in line with medical costs, insolvency will loom within a few years. What then? Another taxpayer bailout?

The notion that politicians can control health costs is a conceit of the ruling class. Health costs will only decline when patients, not politicians, control more of our health spending directly. This cannot happen until Obamacare is repealed. Until that happy day, Californians should reject politicians' campaign to control insurance premiums.

(This article was also published in PRI's Capital Ideas series.)

Another Voice on Obamacare Exchanges

2011-05-03T11:54:00.000-07:00

Some opponents of Obamacare have suggested that states should establish Health Benefits Exchanges because they can provide a "firebreak" against federal regulations. According to Twila Brase of the Citizens' Council for Health Freedom, this is impossible. Her article makes a compelling read: Here.

Cold & Allergy Meds by Prescription Only? A Recipe for Higher Costs and Violent Crime

2011-05-03T09:20:00.000-07:00

Sometimes we face problems to which there are no great - or even good - solutions. One of those is the abuse of cold and allergy medicines by people who buy them as inputs to methamphetamine. A few years ago, Oregon attempted an apparently reasonable solution to this problem, buy making pharmacies dispense many of these medicines by prescription only.

Now, California legislators are seeking to replicate this law. Unfortunately, the harmful consequences to legitimate patients of making these drugs available by prescription only are pretty clear: It adds cost and hassle to acquiring necessary medicines. The benefits to society - reducing criminal production and abuse of methamphetamine - are far less clear. The prescription-only rule will likely drive the vile business into the hands of even worse criminals than control it now.

Read the rest of my column in the Sacramento Business Journal (subscription only).

Canada Still Working Towards Universal Health Care

2011-05-02T16:47:00.000-07:00

You probably didn’t notice, but Canada is having a federal election today. It’s a big deal up there — and the number one issue is — you’ll never guess — health care! It’s eleven percentage points more critical than jobs and the economy.

Read the entire post at John Goodman's Health Policy Blog.

Ryan Republican Medicare Reforms: What They Are, What They're Not, What They Might Become

2011-04-26T10:35:00.000-07:00

The Medicare proposal in U.S. Congressman Paul Ryan's budget plan, Path to Prosperity, is superior to the status quo, or anything proposed by President Obama. However, it is somewhat vaguer - and might differ significantly - from the high standard for reform that Ryan set himself last year, in Roadmap for America's Future.

Read this month's Health Policy Prescription here, or as a column at Newt Gingrich's Health Reform Report.

Rhode Island's Medicaid Waiver's Big Influence

2011-04-25T11:20:00.000-07:00

The Providence Journal ran a column by me that explained how Rhode Island's Medicaid waiver - which capped federal matching funds in exchange for giving more flexibility to the state, is succeeding and sets an example for the nation. Read it here.

(It is based on an article that PRI published earlier this month, here.)

BayBio2011 Conference!

2011-04-19T18:20:00.000-07:00

Every once in a while, they let me out of my policy-wonky cage and let me mix with real entrepreneurs - the ones who make the world work. Wednesday will be one of those times.

It's been a while since I've focused on medical innovation, so imagine my surprise when I was graciously invited to participate in the BayBio2011 conference. I'll be there Wednesday and (hopefully) Thursday, too. I'll be tweeting madly, so please follow #baybio2011.

Overturning the Individual Mandate in Court Does Not End Obamacare

2011-04-18T09:51:00.000-07:00

In the Orange County Register, I make the case that an individual mandate and penalty, as instituted by Obamacare, are not really different than the status quo, whereby the government subsidises employer-monopoly health benefits. Read it here, and please don't be spooked by the math!

To The Board of the California Health Benefits Exchange: An Apology and A Correction

2011-04-15T14:15:00.000-07:00

On April 8, I published an entry that described Obamacare Health Benefit Exchanges as "flailing and failing."

Well, yours truly was also flailing and failing.

In the entry (now corrected), I described the California Health Benefits Exchange as having provided post-administration "jobs" for two of former governor Schwarzenegger's senior staff, who had been fitted with "golden parachutes" by the former governor. They've since been joined by two directors, making four of the full complement of five.

I had the good fortune to meet with Kim Belshé, one of the targets of my wrongheaded attack, this afternoon. Ms. Belshé informed me that the board positions are unpaid, a fact I should have discovered before writing my inaccurate entry. And she did it with a grace and courtesy far greater that I would have mustered if I had been in her situation.

Mortified, I assured her that I would correct the record. It was an inexcusibly lazy mistake. I apologize to the members of the Board of the California Health Benefits Exchange: Ms. Kim Belshé, Ms. Susan Kennedy, Secretary Diana Dooley, and Mr. Paul Fearer.

The only positive thing about this shameful episode is that I was able to apologize to Ms. Belshé in person.

I also apologize to my readers for misinforming you, and promise to do better in future.

Colorado Republicans for Obamacare?

2011-04-14T10:30:00.000-07:00

Colorado’s Health Benefits Exchange legislation, which would implement Obamacare in the state, was “mortally wounded,” but is being brought back to life by none other than the Republican majority leader in the state house of representatives, Amy Stephens, according to the Denver Post’s Tim Hoover.

Exchanges are the vehicles through which the gusher of cash from Obamacare’s tax hikes will be laundered into subsidies to favored health plans, payments to vendors and consultants, and salaried jobs for political appointees.

To be sure, this is not what the conservative Stephens thought she was doing. The bill was rolling happily along a couple of weeks ago, when the state’s liberty groups caught wind of it and convinced Stephens to “test” whether or not this was actually an Obamacare-enabling exchange, by offering an amendment that the exchange could only start up if the state got a waiver from Obamacare. Needless to say, the legislation failed the test, and the bill’s supporters pulled it in order to get to work on Stephens.

Its supporters included a powerful group of business interests such as the Denver Metro Chamber of Commerce and the National Federation of Independent Business. Sure, the NFIB is party to the Florida-led lawsuit to overturn Obamacare, but they’re not going to let that prevent them from straddling both sides of the fence.

These business groups probably think that the state’s current political make-up — Democratic governor and Senate majority, and a one-seat Republican majority in the House of Representatives — represents the GOP’s high-water mark for the next few political cycles. They (and Stephens) believe they can blunt the worst effects of the Obamacare exchange if Republicans have some input into the bill.

This is wishful thinking. Section 1311(k) of PPACA states: “An Exchange may not establish rules that conflict with or prevent the application of regulations promulgated by the Secretary under this subtitle.” If Obamacare is not repealed by 2014, Kathleen Sebelius, the U.S. Secretary of Heath & Human Services, will ramp up a regulatory bureaucracy that will quickly breach Colorado’s legislative defenses. After all, she who has the gold makes the rules. Every penny of subsidies that the exchange will launder will be federal. The idea that Colorado will have the ability to resist federal directives once the subsidies start flowing is surely unrealistic. Soon after 2014, there will be no effective difference between state-based and federal Obamacare exchanges.

Reinforcing this wishful thinking is an irrational fear: that if they don’t craft legislation, Gov. John Hickenlooper will implement Obamacare through executive order. Maybe he will, but so what? Collaboration confuses the commitment to repeal. Surely it is far better that the governor be forced to implement Obamacare unilaterally — as best he can — under strict oversight from anti-Obamacare House committees of jurisdiction.

Republican state politicians in Florida, Texas, Georgia, Louisiana, and other states have killed exchanges because they do not want to see President Obama campaigning on Obamacare’s faux flexibility and responsiveness — as would have been demonstrated by bipartisan state legislation to implement it.

It’s not too late for Majority Leader Stephens to make the same decision for Colorado.

(Crossposted at National Review Online.)

Obamacare Exchanges: Flailing & Failing

2011-04-08T16:08:00.000-07:00

(This post has been corrected from its initial version, with an apology. Please see here.)

The most disappointing news on the Obamacare front these days is that at least two Republican governors cannot wait to implement Obamacare in their states. Apparently, one Republican state senator in Oklahoma has finally decided to prevent an Obamacare exchange bill from reaching Gov. Mary Fallin for signature. Fair enough, but how did it get this far in the first place?

In Virginia, Gov. Bob McDonnell has forced amendments to prevent health plans participating in his state’s Obamacare exchange from covering abortions — at least, that’s what he thinks he’s done. In fact, U.S. Secretary of Health & Human Services Kathleen Sebelius will decide whether Virginia’s health plans will cover abortions, because she’s the one who will certify the exchange — or not. Because 100 percent of Obamacare’s subsidies to individuals in the exchanges come from the federal government, Sebelius’s whims will decide the rules governing the cash flows. Virginia will simply be stuck with paying salaries to the bureaucrats and fees to the vendors and consultants who operate the exchange.

What is motivating these Republicans? They have surely fallen for the talking point that if they don’t implement a state-based exchange, the federal government will rush in and impose one on them. Oh, really? Is that what they’ve seen in Florida, where Gov. Rick Scott has gone so far as to send back the initial federal grant that his predecessor wheedled out of Secretary Sebelius?

In fact, the U.S. Department of Health & Human Services has shown zero will or ability to establish exchanges in states that resist Obamacare, and that is hardly going to change. Despite the Obamacrats’ brave talk that they will keep regulating despite the looming government shutdown, congressional Republicans’ commitment to defunding Obamacare only means that Secretary Sebelius’s ability to implement Obamacare will decrease in 2011 and 2012.

And it’s not like they achieved much in 2010 except to churn out thousands of pages of regulations and immediately issue waivers exempting their friends from those very regulations. And their friends’ performance has been equally underwhelming.

Look at California, the first state to establish an Obamacare exchange, signed by former Governor Schwarzenegger last September 30. Governor Brown’s secretary of health and human services wants California to be the “lead car” in imposing Obamacare. Governor Schwarzenegger’s former policy adviser Herb Schultz is now Secretary Sebelius’s director for the region covering California, so state and federal Obamacrats are surely moving together swiftly to implement health reform.

Or maybe not. Although it’s existed for over half a year, the California exchange’s board of directors has never had a meeting. Its only achievements so far are to have provided unpaid board slots for Kim Belshé (Schwarzenegger’s secretary of health and human services), and Susan Kennedy (his chief of staff), and two others. (Advocates hope that the board's fifth slot will be rounded out with a Latino or person of color.)

California’s Obamacare exchange’s has little to show for its half year existence. The Obamacrats can’t even get an exchange operating in the state which is the most committed to Obamacare. They’re sure not going to do it in a state that resists them.

(Crossposted at National Review Online.)

Ryan's Medicare Reform Falls Short

2011-04-08T15:45:00.000-07:00

A slightly different version of my analysis of the other day, at John Goodman's Health Policy Blog.

ObamaCare Exchange Will Hurt New Hampshire

2011-04-08T13:51:00.000-07:00

I'm not sure that I know what the Executive Council of New Hampshire is, but I'm disappointed that they took federal money to start working on an Obamacare Health Benefits Exchange. One of the Executive Councillors, Christopher T. Sununu, has written a column opposing an ObamaCare exchange.

Read it here. It expresses my views almost exactly.

Obamacare Health Benefit Exchange?

2011-04-08T10:28:00.000-07:00

Actually, this is a painting by George Tooker called Government Bureau, from 1956. But I think we'll have to retitle it unless we defeat Obamacare before the exchanges are up and running in 2014.

Romneycare's Popularity Plummets

2011-04-07T15:27:00.000-07:00

Grace-Marie Turner speaks for many in expressing frustration with Mitt Romney’s inability to let go of his failed Massachusetts health-care “reform.” President Obama himself has frequently asserted that Obamacare is partly based on the so-called conservative ideas encompassed in Romneycare. New polling results from the Bay State might make the president rethink this approach, and give Romney more confidence to admit his error.

A recent poll from Suffolk University and WHDH-TV reports that 49 percent of respondents do not believe Romneycare has helped, while only 38 percent believe that it is working. Fifty-four percent said that Romney’s signing the law likely hurt his presidential chances, while only 22 percent believed that it helped.

This is a pretty dramatic shift. A July 2008 poll, conducted two years after the law was signed, showed 69 percent favoring the law and only 22 percent opposed. A year later, another survey reported similar results.

In contrast, Obamacare has never cracked 50 percent in the polls. If Romneycare can fall from over two-thirds support two years after its passage to under 50 percent less than five years after it, it suggests that we have not yet begun to see the depths of unpopularity that Obamacare can plumb.

(Crossposted from National Review Online.)