One of my research interests is readability, and I get annoyed at the needlessly obscure way votes are described. For instance, on the Senate website, the Reid jobs bill is described as the "Motion to Concur in the House Amdt. to the Senate Amdt. to H.R. 2847 With an Amendment (No. 3310)" where HR 2847 is described as "a bill making appropriations for the Departments of Commerce and Justice, and Science, and Related Agencies for the fiscal year ending September 30, 2010, and for other purposes." Of course, legislators often use grandiose political spin in naming bills, e.g., last year's Democratic Party Stimulus Bill was called the "American Recovery and Reinvestment Act".
Just a word of caution here: the $15B measure needs to be reconciled with a House version which is 10 times bigger. It's quite possible that, at minimum, an upsized compromise measure may lose GOP and centrist Democrat support.
What was particularly interesting is noting the Republicans whom going with the 5 earlier ones, whom had voted for closure: Hatch (UT), Murkowski (AK), Burr (NC), Alexander (TN), Inhofe (OK) and LeMieux (FL). (At least a couple of these senators are facing reelection battles this fall; I strongly suspect they don't want to give Democratic opponents ammunition for voting "against jobs". Never mind the fact that this bill just won't do that...)
The Wellpoint/Anthem Blue Cross California Rate Increase Kerfuffle
The last thing conservatives needed as the health care "summit" approaches as the recent revelation that Anthem Blue Cross is going to hike INDIVIDUAL COVERAGE (vs. group coverage) plans an average of 25%, with some experiencing an increase of up to 39%, along with hints that policies are going to be subject to price adjustments on a more frequent basis; this follows on top of a similar increase the prior year. [The individual coverage market is roughly a tenth of the size.]
Duke Helfand of the LA Times gives an example of Dr. and Mrs. Martin Weiss, whom found their coverage going from $20K to $27K; ABC News gives examples of a family of 4 which has seen its monthly insurance go up by $300/month to almost $1200 and a single female lawyer whom now faces a premium of $9000, a 28% increase.
The Obama Administration, of course, is up in arms: if the general inflation rate is 3% or so, how can it possibly justify these kinds of numbers? It must be price gauging, right? It just proves we need a second level of regulation at the national level, right? Wrong.
The story isn't well-described in the news stories, so I'll need to reorganize some facts across sources. First of all, the level of health care inflation is significantly higher than general inflation--Anthem claims in California it runs between 10 to 15%. Second, California has state insurance regulators; although it does not specifically approve rate hikes in the individual cover market, California requires at least 70% of each premium dollar to be spent on health care expenditures (i.e., medical loss ratio). Anthem says that in the individual market claims experience does not affect premium and the cost differences in the individual coverage market in part reflects the fact healthier-risk individuals (e.g., younger people), given a tough economic environment, budget constraints and higher insurance costs, are opting out of the market, leaving major costs to be spread among a smaller number of (lower- or negative-margin) policyholders. Anthem's response to HHS Secretary Sebelius is that its individual coverage program ran at a loss last year, and it must price its products to cover its costs in an actuarially sound manner to remain a going concern. (Unlike the federal government, it can't continue to operate a business on massive deficits.) Anthem says that its proposed rate hikes have been independently verified by external auditors to ensure the announced rate increases do not result in a medical loss ratio below the 2006 statutory minimum 70%. (NOTE: California is investigating Anthem claims on the medical loss ratio mandate using its own independent auditors)
I am not in a position to verify Anthem's claims. I do know that Anthem is well-aware there is a supply/demand curve, and in a market without insurance mandates and increasing costs, you can expect attrition, particularly among healthier policyholders. I suspect that we're probably seeing some signs of a health care bubble: health care costs cannot continue to outpace income gains in the long run. What we do know is these costs are far higher than in other, less regulated states, and I suspect we need to look at some of the systemic issues discussed in prior posts, e.g., customers without a vested interest in managing costs, superfluous diagnostic tests associated with defensive medicine (e.g., need for medical malpractice tort reform), dysfunctional governmental policies (such zero or low wait periods, gold-plated benefit mandates, etc.), cost recovery from uninsured people, etc.
But one thing for sure: Obama and Sebelius have no power over cost components, and artificially capping rates so insurers cannot meet costs simply means that companies will exit the market--resulting in a less competitive market. Price controls don't work.
The paradigm must shift. I suggest that the federal government consider reinsuring catastrophic costs and benefit limits, spreading the cost across the US economy. There are ways to do that, including an idea I posed in an earlier post, advocating a two-tier tax structure, including a small consumption tax across goods and services.
Tomorrow's "Health Care Summit" is a PR Stunt: GOP Must Watch Its Step
I have not read the administration's composite plan released Monday; what I've heard second-hand from news reports is that it does not include the much discussed public option (positive) and that the administration had responded to some of the more controversial deals in the Senate plan (e.g., the Cornhusker Kickback, Louisiana Purchase, and Gator-Aid, not to mention special treatment for unions facing so-called Cadillac taxes) by throwing money at the problems (negative) to make the deals universally applicable or define the problem away (e.g., raising the tax threshold for Cadillac plans).
Let us understand why Obama never really fleshed out his own health care plan, simply promoting general objectives; Obama no doubt drew a lesson from happened to Bush when he started off his second term pushing one of 3 panel recommendations to fix social security: a partial privatization of employee contributions. (The others were to patch the existing framework and to means-test benefit payments.) Bush, not unlike Clinton's unsuccessful attempt to reform health care, had a high-profile failure early in his term and never really recovered. So the Congressional Democratic leadership has manned the front lines of the debate, which has mostly kept Obama out of the line of fire, but then intra-party differences, especially between the House and the Senate, have put Obama in a difficult position, needing the ongoing support of both sides on other issues.
Democrats have been negotiating among themselves behind the scenes for months: are we supposed to treat a one day "summit" as anything more a PR stunt, designed to pretend that even more serious differences in approach can be bridged in a mere 6-hour gotcha moment in front of a nationally telecast audience?
Word has it that the Republicans have posted something like 17 different plans online to combat the lie that conservatives don't have ideas relevant on health care.
Here's a sample approach of what I might do if I was managing the Republican side of the summit tomorrow:
- Lower expectations from the summit. If the Democrats cannot reach a cohesive agreement over 8 months, what can we expect from a 6 hour session?
- Address Democratic threats of the Senate "nuclear option" (an unprecedented abuse of the budget reconciliation process to pass major policy) from the get-go to bypass bipartisan negotiations.
- Show good faith. Do NOT say "let's start at the very beginning". Explicitly acknowledge "good ideas" from the Democratic side, just as Obama has signaled some good GOP ideas, like health insurers operate across state lines and malpractice tort reform, including guaranteed issue and catastrophic health coverage. However, note that Obama's lip service to these good ideas has not resulted in their inclusion in a single piece of Democratic-sponsored legislation.
- Build on the Bipartisan Patient Protection Act, i.e., a Patient Bill of Rights.
- Offer catastrophic insurance/reinsurance on benefit caps. This explicitly addresses the bankruptcy issue. Costs beyond a certain level of out-of-pocket expenses (not to mention costs of "free" medical care from doctors and hospitals) could be funded by a low consumer tax on goods and services. NOTE: This is a workaround on the mandate issue.
- Explicate a fundamental set of principles. For instance: equal protection for health care tax benefits.
- Fix Medicare and Medicaid first.
- Advocate a staged approach to health care reform. Argue we cannot pass a comprehensive reform plan given a weak economy. Insist that we set priorities. Recommend a staged approach where we focus first on guaranteed issue mechanism and catastrophic costs.
- Suggest a bipartisan health insurance reform panel. If Obama believes that he can deal with the national debt with a bipartisan panel, why not on a consensus plan for health care reform?
- Consider an arms-length national high risk plan with decentralized management (e.g., a GSE with premiums an offset over state/regional averages, with means-tested premium credits.)
Quote of the Day
He who builds to every man's advice will have a crooked house. - Danish Proverb
Political Cartoon
IBD cartoonist Michael Ramirez implies that the real estate bubble is being followed by the
Musical Interval: Fire Songs
Bangles, "Eternal Flame"
John Parr, "St. Elmo's Fire (Man in Motion)"
Cheap Trick, "The Flame"
Johnny Cash, "Ring of Fire"
