BE AFRAID, BE VERY AFRAID: THE UNAFFORDABLE HEALTH CHOICES ACT OF 2009

I recently spent the better part of a Colorado summer Saturday reading the worst parts of something called The Affordable Health Choices Act of 2009. Purported to constitute health care reform, its thousand pages were introduced this past week by the chairmen of the three congressional House committees with jurisdiction over health policy. It is the single most egregious piece of health care legislation to cross my desk in four decades. Hillary Care (yes, I read that one too), nonsensical as it was, represented an order of magnitude more thought than this bill which is so blind to basic economics on so many levels that I marvel at the ability of the three chairmen, Speaker Pelosi, President Obama, and the AMA to praise it with straight faces.

You may have read mainstream news accounts of the CBO chairman’s pointed testimony that this bill will do nothing but drive up health costs. If that were its only problem, we might actually survive it, but buried in the bill’s bowels are the ingredients of a toxic brew that will kill jobs, turn much of the middle class into a new welfare class, lay waste to America’s private health insurance infrastructure, drive thousands of doctors and hospitals into bankruptcy and/or onto the public dole, and herd Americans like cattle into an unsustainable government-run public health insurance plan that will be forced into wholesale rationing of medical care.

The bill requires virtually all employers to offer minimum health benefit plans that far exceed anything most of them offer today, including comprehensive preventive benefits with no employee cost sharing. If that seems somehow reasonable to you, ponder this: the vast majority of preventive services cost more than they save. This mandate alone will drive insurance premiums up, not down as you repeatedly hear from our leaders (I know; this surprises a lot of people, but industry insiders have known it for decades—did you ever wonder why the once-dominant Health Maintenance Organizations with their ubiquitous and near-free preventive services never came close to preventing diseases that now account for 75% of total health expenditures?).

The bill also wipes out employee cost-sharing and consumer-focused provisions like coinsurance and high-deductible health plans (and apparently Health Savings Accounts) that have augured the immense potential for consumer-driven health care in recent years. And if the bill’s own massive benefit excesses aren’t enough, it piles them all on top of the additional trough of benefits mandated by the states—except apparently for the bill’s own public insurance plan. Completely lost is any concept of insurance as financial protection against the risks of unaffordable costs of necessary medical care.

Loyal readers already know that employers are not the real payers for their employees’ insurance—the employees themselves are. To pay the new premiums, taxes, and penalties imposed on them by the Health Choices Act, employers will be forced either to cut the take-home pay of their employees or to cut the number of employees. A provision in the bill discouraging the former will inevitably require the latter. How’s that for economic stimulus during a recession: bail out the failed giants while further burdening the only job-creation engine we’ve ever had—small businesses.

This unimaginably clueless bill creates a new public insurance plan, claiming it will operate on a level playing field with private payers and keep private insurers honest. In fact, the bill tilts the playing field so nearly vertical that no private insurer can conceivably compete with it for long. Not only will the public plan base its premiums on under-reported non-benefit costs, but two out of the three committee bills allow it to piggyback onto Medicare’s low provider reimbursement rates. This will keep public plan premiums artificially low while requiring America’s beleaguered doctors and hospitals to make up the difference with higher charges to the private plans (so much for President Obama’s pledge last month that the public plan will have to negotiate provider rates just like the private insurers).

Immediately mortally wounded by the bill will be America’s insurers that provide affordable, individual (non-employer) coverage to 18 million Americans. Employer-based insurers will be given a temporary grace period on benefit mandates before they too face the public reaper’s scythe. And the government’s new insurance exchange will now directly regulate and control private insurance premiums with legislated restrictions that will virtually forbid effective cost controls, member incentives, innovative care management, or reasonable returns on investment. As private insurers are forced to withdraw from the market—forcing more patients into the public plan’s Medicare reimbursement regime—expect to see thousands of doctors and hospitals facing bankruptcy. To avoid that, the government will have no choice but to increase provider reimbursements (or at least appear to), leaving one last avenue for cost containment—wholesale rationing of care per the Canadian and English models. I promise you won’t like it.

Despite the claim that the bill will require all Americans to buy health insurance (except for certain “conscience objectors”—I’m not making this up.), it’s guaranteed-issue provisions and hamstrung age-rating allowances will signal open season for millions of Americans to game the system by avoiding insurance when they’re healthy and then opting in for a few months to get treatment whenever medical conditions arise. It is just this “adverse selection” problem that is currently killing the Massachusetts “universal” health insurance program, leading its leadership to call for the imposition of, in effect, a statewide HMO for all residents, hospitals, and doctors.

Even the British National Health Service allows people who can afford it to opt out and buy private health insurance and to be treated by doctors and hospitals outside the socialized system. But the Affordable Health Choices Act forbids even that with a nasty triple whammy. First, insurers will not be allowed to sell any individual coverage outside the Orwellian walls of the government’s monopoly health insurance exchange. Second, employers that can’t afford to offer such inflated coverage to their employees will be required to pay an eight percent fee that their employees cannot use to defray their costs of individual coverage through the exchange—this is money that effectively comes out of employees’ pockets to help pay the government’s inflated bill to extend welfare relief to families making up to $88,000 per year. Third, any individual not buying the massively rich government-mandated insurance will be charged an excise tax by the IRS (although clever consumers may view this as a cheap option allowing them to buy health insurance only when they’re sick—as in Massachusetts).

Left out of the bill are any incentives for people not to smoke, become obese, abuse alcohol, or to control their cholesterol, blood sugar, and hypertension. Instead, it requires those who pursue healthy lifestyles to subsidize those who don’t. And it misplaces the financial incentives to control such individual misbehavior on America’s health care providers, most of whom will actually encounter their noncompliant, fat, drunk, smoking patients—if they show up at all—for less than an hour every year.

If  I appear to be in high dudgeon, thanks for noticing. Now send a message (and maybe this one too) to your congressperson (https://writerep.house.gov/writerep/welcome.shtml) demanding that this mockery of a bill die a quick, unlamented death. And while you’re at it, check to see if he/she is one of the committee members who voted for it last week. If so, send a campaign contribution to someone—anyone—who runs against him/her next year.

The real tragedy of this bill is that its sponsors assume there is no solution for our dysfunctional health care system other than total government control of it—itself a triumph of hope over experience. In fact, there is an alternative that hews to American values of individual rights and self determination that can allow everyone to have affordable health insurance and necessary medical care with twice the quality at half the cost. It’s called the American Choice Health Plan, but that’s a story for calmer times.

This entry was posted in Government vs Markets, Health Costs, Health Insurance, Health Reform Goals, Medical Quality, Myths and Bad Ideas, Prevention, The Health Care Crisis and tagged , , , , , . Bookmark the permalink.

26 Responses to BE AFRAID, BE VERY AFRAID: THE UNAFFORDABLE HEALTH CHOICES ACT OF 2009

  1. GIL ACHESON says:

    Gawd, Steve! I so wish you had a thousand voices! Okay, a million or two!

    Good work!!!

    Gil

  2. Dr. Bob Browne says:

    Steve, well written (especially for someone who lacked the benefits of a University of Michigan education!). What is the AMA thinking!? This bill is a disaster. Will pass this on to my local Indiana Defenders of Liberty group. Bob

  3. Robert M. Johnston, M. D. says:

    Very well stated analysis of the incredible proposals of the Democrat Congress!

    It is important to note, however, that we may all be suffering from the delusion that the Democrats are actually interested in helping our country and our people. Steve’s Analysis points out the adverse social and economic consequences of this huge bill, leaving us with the impression that the Democrats must be stupid not to recognize these things.

    They (the marxist Democrats in control) are dumb like a fox!

    They are not motivated to save the uninsured, or to create a better system of health care, let alone actually do something to promote health!

    They are motivated to CONTROL you and me and the entire US economy!!!!

    That is the only explanation that is consistent with what they have proposed in the “stimulus” bill, the budget resolution and now the “health care bill”. The sooner we recognize that this is not about health or health care or the economy or job creation, the sooner we can deal with these statist zealots on the right terms and in the right fashion.

  4. Steve!

    You should be on every national talk show telling this story..but as you know, the media works for the house..so we must spread this among the people, word of mouth.

    Thanks man,

    Dennis

  5. sherri Koelbel says:

    Steve,
    You are “spot on” and I appreciate your passion. Buz and I are incredulous
    at the unfolding of this horror. How did the AMA and the Hospitals agree to Obama’s plan?

    “Chicago-style” threatening and thuggery by the administration. Extortion is what it is…

  6. Dr. Bob Browne says:

    On reflection there are only two possible conclusions. One, that the Democrats are stupid, don’t understand basic economics or health care, and really believe this is a viable plan. Or two, they totally agree with Steve’s assessment and it inevitably gets them to where they really want to go but don’t dare to propose, total government controlled health care. No rational being would believe the former, so I agree that they are dumb like a fox. The trouble is that Obama’s arguments are so simple and seductive (“Health care for all”, “Eliminate the waste”, “Put a check on the greedy health insurance plans and Pharma companies, “Make employers pay”, “The government has shown it can do it better”) The public doesn’t want complex economic arguments, it wants sound bites that will resonate with them. I am going to call on Steve to help me put together those sound bites. Maybe its “10 things everyone should know about the Obama Plan”. I would propose that it is not just Steve on National TV, but each of us with groups in our states that can turn this thing. Thelma and Louise, you ain’t seen nothing yet!. Bob

  7. Dan says:

    Steve,
    Yours is the most comprehensive and sensible analysis of this terrible bill which I have seen. The writers of this behemoth must be smoking something stronger than anything available on the street! We should all be insulted to think that our elected “representatives” would even dare to foist something this terrible on the American public. It says a lot about the mentality of Mr. Obama and his democratic allies in congress. How in the world did these Communists get elected? Surely, they won’t get away with it!

    Thanks so very much for your great analysis.
    Dan

  8. Coach Chris says:

    I think the problem is they don’t care and they know it will bankrupt America. The people listening to the news bites aren’t going to bother to read the darn thing. Those that think they pay too much will believe this will save them money. Middle-Class will be buried.

  9. Marty says:

    I keep listening to these multi-guest wars on cnn and fox (why I dunno) but this single post sums it all up for me in a language I can understand why Obama’s plan is just not going to cut it.

  10. V Degenhart says:

    Excellent analysis. Some things this bill also left out was medical liability reform, relief from anti-trust, relaxation of Stark laws.

    It is estimated that defensive medicine wastes as much as $100 billion/year. That is not to mention the unconscionable windfalls certain tort attorneys suck out of the system. Hundreds of millions of dollars are wasted each year on medical liability insurance. Health courts are a better idea. Immunity would be best, but America just won’t do that. Doctors should be judged by state medical boards, not lay juries. If they have committed malpractice, take their license, require remedial training, etc. The present tort system does none of that.

  11. patrick Little says:

    I can tell from the title of the book that we agree on this. The real solution lies with Health Savings Accounts.
    Keep up the good work.

    POL

  12. JACK TAYLOR says:

    Steve, great analysis. From an old friend from Arcadia.

  13. ELH obsessed says:

    Great comments! Your blog is really helping me to understand how health care is effecting us!

  14. Anonymous says:

    Steve,

    Thanks for the venomous negativity.

  15. Robert M. Johnston, M. D. says:

    In an effort to keep my previous remark on target and sufficiently brief, I did not add the remark above that Health Savings Accounts are, indeed, the solution.

    With H.S.A.’s we improve individual choice, control risk, take the government and insurance companies out of micromanaging the small decisions, improve the fiduciary relationship between providers and patients (the doctor is not an agent of the insurance company), and stabilize insurance cost obligations of providers. It can even solve the poor uninsured problem with government funded vouchers (giving the poor the same choices as others).

    A high deductible insurance policy for every one of the 12,000,000 poor uninsured (not counting the 12,000,000 illegal aliens, or the 9,000,000 who are between jobs, or the 13,000,000 who can afford, but choose not to buy insurance), would cost (at $200/month/person) only $28,000,000 per year. Chump change to the Obama crowd!

    The legislation is in place, the tax law is in place, and the Democrat socialists won’t have any part of it, because it dis-empowers them and their union collaborators.

  16. Steve, Thanks for the summary. As a primary care internest in office practice for 34 years, I am covinced that the proposed legislation would be a disaster. I support Physicians for Reform (www.PhysiciansForReform.org) which to me is the most reasonable approach and wouldn’t cost nearly as much as what the congress is considering. It favors the use of HSA’s backed by major medical insurance and meaningful tort reform. Thanks again for your review.
    John DuBose

  17. lou monter says:

    Good Work Steve

    I concur with much of what you have said. Here is part of my solution http://healthyprotocols.com/2_health_care.htm

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  23. John Torrent MD says:

    When people ask me, as a family physician, what I think of health care reform, I refer them to your website, which expresses my views exactly. More Americans need to know the truth about health care in this country, by looking at this website. Thanks!

  24. Dan says:

    It’s unfortunate to me that nobody on the Democratic side can get away with describing health reform for what it really is – redistribution of wealth. Not that I think that is a bad thing (I am an LBJ/Great Society progressive), but most Americans do.

    That’s too bad – I happen to think that redistribution of wealth is one of the most important functions of government, and something only government can do. We have massive chasms between the rich and poor in this country, and only government can close the gap.

    I don’t think the reform bill is disruptive ENOUGH to the American health non-system. I want to turn it completely on its head so that everything costs less. Imagine Medicare for all. If there are no private insurers to shift the costs to, then the costs will just go down: they HAVE TO.

    Just look at the medical costs in Canada, the UK, France, etc. – all vastly lower than they are here.

    Of course the best way to finance this is through highly progressive taxation. The problem with Medicare is not that it’s a bad idea, but that our taxes are too low.

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