Category: Health care

In the health care debate, President Obama pleads with Americans to get the facts straight before making up their minds. But that’s easier said than done, and by his actions, I wonder if the president really believes this.

Here’s an example: A page at mybarackobama.com under the title “Setting the Record Straight” holds this prominent statement: “It seems like a new lie about health insurance reform crops up each day. These lies create fear and anger — and we’re seeing the results around the country. It’s time to work together to set the record straight and expose the special interests and partisan attack groups who deliberately spread these rumors and lies in a desperate attempt to preserve the status quo.”

A direct quote from the president shown on this page is “Where we do disagree, let’s disagree over things that are real, not these wild misrepresentations that bear no resemblance to anything that’s actually been proposed.”

So what are “things that are real,” Mr. President? Here’s some Wall Street Journal reporting (Fact-Checking the President on Health Insurance: His tales of abuse don’t stand scrutiny, September 14, 2009) that casts doubt on the president’s truthfulness. Referring to the president’s address to Congress earlier this month:

Later in his speech, the president used Alabama to buttress his call for a government insurer to enhance competition in health insurance. He asserted that 90% of the Alabama health-insurance market is controlled by one insurer, and that high market concentration “makes it easier for insurance companies to treat their customers badly — by cherry-picking the healthiest individuals and trying to drop the sickest; by overcharging small businesses who have no leverage; and by jacking up rates.”

In fact, the Birmingham News reported immediately following the speech that the state’s largest health insurer, the nonprofit Blue Cross and Blue Shield of Alabama, has about a 75% market share. A representative of the company indicated that its “profit” averaged only 0.6% of premiums the past decade, and that its administrative expense ratio is 7% of premiums, the fourth lowest among 39 Blue Cross and Blue Shield plans nationwide.

Similarly, a Dec. 31, 2007, report by the Alabama Department of Insurance indicates that the insurer’s ratio of medical-claim costs to premiums for the year was 92%, with an administrative expense ratio (including claims settlement expenses) of 7.5%. Its net income, including investment income, was equivalent to 2% of premiums in that year.

In addition to these consumer friendly numbers, a survey in Consumer Reports this month reported that Blue Cross and Blue Shield of Alabama ranked second nationally in customer satisfaction among 41 preferred provider organization health plans. The insurer’s apparent efficiency may explain its dominance, as opposed to a lack of competition — especially since there are no obvious barriers to entry or expansion in Alabama faced by large national health insurers such as United Healthcare and Aetna.

The president and the Birmingham News certainly have different views of the facts.

That speech also told two tales of patients allegedly abused by their private insurance companies. Congressional testimony, however, provided a different set of facts than what the president presented in his speech (Fact-checking the president on health insurance).

Advocates for more government control over health care, including President Obama, cite cases where people have been abused by private health insurance companies. We ought to be sure that these cases are real, and we need to be aware of the scope of the problem, before we assign weight to these arguments.

Wall Street Journal reporting (Fact-Checking the President on Health Insurance: His tales of abuse don’t stand scrutiny, September 14, 2009) provides some vitally important information in the health care debate.

As it turns out, the facts underlying two cases that President Obama cited in his address to Congress last week are quite different from what the president wants us to believe.

In one case, the president said this in his speech: “One man from Illinois lost his coverage in the middle of chemotherapy because his insurer found that he hadn’t reported gallstones that he didn’t even know about. They delayed his treatment, and he died because of it.”

Here’s the Wall Street Journal reporting on this same case: “Although the president has used this example previously, his conclusion is contradicted by the transcript of a June 16 hearing on industry practices before the Subcommittee of Oversight and Investigation of the House Committee on Energy and Commerce. The deceased’s sister testified that the insurer reinstated her brother’s coverage following intervention by the Illinois Attorney General’s Office. She testified that her brother received a prescribed stem-cell transplant within the desired three- to four-week ‘window of opportunity’ from ‘one of the most renowned doctors in the whole world on the specific routine,’ that the procedure ‘was extremely successful,’ and that ‘it extended his life nearly three and a half years.’”

In the second case, the president said this: “Another woman from Texas was about to get a double mastectomy when her insurance company canceled her policy because she forgot to declare a case of acne.”

The Journal reporting: “The woman’s testimony at the June 16 hearing confirms that her surgery was delayed several months. It also suggests that the dermatologist’s chart may have described her skin condition as precancerous, that the insurer also took issue with an apparent failure to disclose an earlier problem with an irregular heartbeat, and that she knowingly underreported her weight on the application.”

Did President Obama lie about these cases? Or is he simply misinformed, and if so, who is feeding him misinformation?

A second issue is the number of cases of rescission. That’s where an insurer cancels a policy, leading to stories like the two above. The number of cases identified by Congressional staff analysis is 20,000 over a five-year period. This may be evidence of a small problem that needs some gentle reform. A wholesale government intervention is not justified by these cases.

While doctors aren’t the only source of information we should use when considering health care reform, they are on the front lines of providing care, and so their insights are valuable.

Recently, Ronald Dworkin contributed An Anesthesiologist’s Take on Health-Care Reform to the Wall Street Journal. He makes some good observations on doctors in general, and on the special nature of anesthesiology.

Dr. Dworkin warns of a mistake liberals always make: that they can raise tax rates, and people will still earn as much as they did. With the higher tax rates, it’s hoped that revenue to the government soars.

Dworkin explains that “today’s upper-middle class professionals are very sensitive to marginal tax rates. To preserve ‘lifestyle’ and ‘quality time,’ they will work less.” So the higher tax revenues may not materialize. They’ll be working less, it should be noted, at the same time that demand for medical care may soar.

A problem with Medicare is its low reimbursement rate to doctors, often less than the cost of providing services. Dworkin also explains, referring to anesthesiology: “In no medical specialty is the spread between the Medicare rates and private insurance rates greater. … According to one of the health-care bills in Congress, H.R. 3200, the public option would reduce reimbursement for anesthesia by over 50%.”

Dworkin warns that these low reimbursement rates will cause anesthesiologists to leave the field, leading to reduced care and more deaths. Obstetrics, he says, will be impacted first: “At the very least, pregnant women will be waiting a lot longer for epidurals. But more pain on the labor floor is only the beginning. If hospitals delay the administration of anesthesia because Congress skimped, needless deaths will certainly result.”

Some of the comments left to this article are informative. One: “Just another greedy doctor trying to scare people like some kind of clumsy Glenn Beck. The doc is afraid that the gilded age of over-sized paychecks is coming to an end. The truth is, you really do not need a new Mercedes Benz every year.” One person replied “I’ll take a smart, greedy doctor over a dumb, altruistic one any day.”

Another person reminded us that “Mr. Obama’s wife earned more than many doctors working as vp of community relations for a Chicago hospital.”

Mrs. Obama’s job, which paid over $300,000, may be one reason why health care costs are so high. Evidently it wasn’t all that important of a job, as in January the Chicago Daily Observer reported a story with the headline Michelle Obama’s job eliminated.

Speaking to a joint session of Congress and the American people, President Barack Obama laid out his latest vision for health care reform.

The President said that he doesn’t want a radical shift. Instead, he wants to build on what works, and fix what doesn’t. He criticized those who use scare tactics that split people into unyielding idealogical camps.

The time for bickering is over, he said. Now is the season for action.

President Obama outlined three goals. The first is security and stability for those who have insurance, the second is to provide insurance for those who don’t have it, and the third is to slow the growth of costs.

First, for those with insurance, including Medicare, Medicaid, and VA, nothing in this plan will require a change of coverage or doctors. Nothing, he repeated, requires you to change what you have.

Also, insurance companies can’t deny coverage for pre-existing conditions, or drop coverage when people get sick. There will be no caps on coverage for a year or lifetime. There will be a limit on out-of-pocket expenses. At no extra charge, companies must cover exams like mammograms and colonoscopies.

Second, for those without health insurance, he proposes to offer quality, affordable, choices. “You’ll be able to get coverage.” An insurance exchange, established and run by government, will let consumers shop for insurance at competitive rates. Insurance companies get to compete for millions of customers, which will cut prices.

Tax credits will provide subsidy for those who still can’t afford insurance premiums. This will take effect in four years. Meantime, the government will immediately offer low-cost coverage.

What about those who still don’t want coverage? Some companies may refuse to give coverage to their workers. This costs the rest of us money. So, individuals will be required to carry basic coverage. Also, businesses will be required to provide health care coverage, or to help their employees pay for it. Most small companies will be exempt, but large companies that can afford this will have to pay.

The President said that misinformation has been spread, and this has made Americans nervous. He debunked the bogus claims spread by those want to kill reform, such as panels with power to kill off senior citizens. This charge is a lie, plain and simple, he said, to a standing ovation from Democrats.

He said this plan will not insure illegal immigrants. No federal dollars will be used to fund abortions, and federal conscience laws will remain in place.

What about those who criticize what they term a government takeover of health care? The President said his guiding principle is that consumers do better when there is choice and competition. He doesn’t want to put insurance companies out of business, he just wants to hold them accountable. A not-for-profit public option in the insurance exchange would provide this accountability. No one would be forced to choose it, as it would be available only for those who don’t have insurance.

This public insurance option would have to be self-sufficient, but by avoiding costs, it could provide a good deal for consumers.

The President insisted that this won’t result in a government takeover of health care, and that he won’t back down from providing a choice to those who can’t find insurance.

He added that no bureaucrat, government or otherwise, will get between you and the care you need.

Finally, he asked how to pay for this plan. He said that he will not sign a plan that adds to the deficit, now or in the future. To show he is serious, he said that spending cuts will be forced if savings don’t materialize.

The source of payment for this plan is savings.

The President gave a slight nod to tort reform, and directed Secretary of Health and Human Services Kathleen Sebelius to look into demonstration projects on this matter.

Analysis

The biggest criticism of the President’s plan is that coverage can be increased — in terms of the number of insured, the generosity of benefits, and ability to get insurance — without increasing costs. This goal of rooting out waste and inefficiency is elusive. Politicians at all levels claim to want to get rid of it, but little progress is ever made.

The President refuses to recognize that employer-provided health insurance is a problem. He wants to create a co-op so that there will be a vigorous market for insurance. This market could be created very quickly, without government oversight, by simply ending the present system of employer-provided insurance.

The President’s claim that illegal immigrants will not be covered can’t be believed. Illegals are not supposed to be able to work in America, and we don’t have the national will to vigorously enforce that law.

His claim that he doesn’t want a government takeover of health care isn’t believable, either. Aspects of the plan such as the public option are the first step to the end of a private market in health insurance.

The idea that there will be a mandate for everyone to be insured is a characteristic of the Swiss system, and it seems to work for them.

I believe the President is mistaken in his belief that tort reform would provide only modest savings, saying that “defensive medicine may be contributing to unnecessary costs.” Directing Secretary of Health and Human Services Kathleen Sebelius to look into seeing if malpractice reform could help is not likely to produce results. She is, after all, the former lobbyist for the Kansas Trial Lawyers Association.

Related on this site: Fact-checking the president on health insurance and In health care debate, can we trust the president?

The complete text of the President’s speech is at Obama’s Health Care Speech to Congress.