"The Worst Bill Ever." That is the title the always calm and rational Wall Street Journal put on its editorial on November 1 about the government health care takeover bill that passed the House last week on virtually a party line vote, 220-215. But even this label doesn't fully communicate the outright assault on the American people involved in this legislation. The bill is a serious threat not only to your freedom and prosperity, but to your very life as well.
That is because at the heart of this bill is a cruel perversion. The bill labors mightily (though it actually fails) to expand insurance coverage to everyone (taking the most expensive route possible). But then it is devoted to taking away the very health care that you may need to save your life, or the life of a loved one.
Pelosi's Death Panels
The bill would create 118 new federal boards, bureaucracies, commissions, and programs, which as a group have the power to ration and deny you health care. These are the Pelosi death panels. They include the Health Choices Administration, the Health Benefits Advisory Committee, the Health Insurance Exchange, the Public Health Insurance Option, the Center for Comparative Effectiveness Research, the Comparative Effectiveness Research Commission, the Accountable Care Organization Pilot Program, the Community Based Medical Home Pilot Program, the Independent Patient Centered Medical Home Pilot Program, and many others.
One of the ways that health rationing would be carried out is through so-called "Comparative Effectiveness," where national health care bureaucracies will decide what health care treatments, procedures, therapies and drugs work best, and which don't. You would think that is what your doctor is for, using his medical knowledge and direct personal observation of your condition and health history to prescribe what is best for you. But liberal Democrats insist that faraway federal bureaucrats who don't know anything about you will know exactly what health care will work best, in all cases. The House bill says that the decisions of federal bureaucrats on comparative effectiveness "will be delivered to doctors electronically to guide their use of medical items and services," as Betsy McCaughey reports in the Wall Street Journal on November 7. If doctors don't take the hint, and use their own judgment as to your care instead, they will be penalized in their compensation under Pay for Performance.
That policy was explained in a June report from President Obama's Council of Economic Advisors (CEA), entitled "The Economic Case for Health Care Reform." That report says that 30% of health care in America is waste, and wise government bureaucrats are going to identify exactly whose health care is waste and cut it out. Another policy for accomplishing this is called "Cost Effectiveness," where wise government bureaucrats will decide whether your health care is worth the cost to society. The House health bill creates the bureaucracies with the power and authority to carry out these policies.
But it is far worse even than this. Through the Public Option, the Medicare cuts discussed below, and new rules and regulations imposed on compensation for doctors, hospitals, and other health providers more generally, the resources that sustain our highly advanced, sophisticated, cutting edge, high tech medical system will be sharply constricted. The incentives for investment in new innovations, advanced medical equipment, new miracle cure drugs, and first-rate hospital and clinic facilities will be decimated. Just when the rapid advancement of science and technology is opening up new vistas to counter disease, suffering, and death, self-congratulatory politicians and bureaucrats are stomping in and shutting it down.
In the future, when you or a loved one is struck with cancer, or heart disease, or your premature baby is struggling for life, the surgery, the machine, the pill that could have saved a life, will not be there. When the doctors come to tell you that there is nothing they can do, they are not going to explain whether that is due to medical science, or to politics and bureaucracy, and you will not know. But more and more likely over time, you will be a victim of the declining American standard of living imposed by ideological extremists, as reflected in part in the loss of the best health care possible.
Exactly to the contrary, our public policy should be focused on maximizing the advancement of health care in this new age of modern science by removing government burdens and barriers. We do need to control costs, but by introducing market incentives for patients, doctors and hospitals, so they can be in charge and make appropriate decisions, free of financially interested third party bureaucracies. It's called Patient Power, the true alternative to what Washington is doing now. Jim Pinkerton has been brilliantly making this case for months now on his Serious Medicine Strategy blog, though the argument goes all the way back to John Goodman's book, Patient Power.
But the left-wing extremists currently in complete control of Washington have no understanding of any of this. They are wedded, emotionally and religiously, to outdated ideological crusades of 100 years ago. This is a time of great challenge for the American people, like World War II, the Civil War, or the Revolutionary War. If you are not involved in the solution, then you are not only letting down America, but your family, and yourself.
One confusion arising from the House bill is that its provisions are phased in over several years. Over the first 10 years of full operation, the House bill actually cuts Medicare by $800 billion, as scored by CBO. The cuts for Medicare Advantage plans will be close to $200 billion, and despite President Obama's phony shtick that if you like your health plan you can keep it, the Administration itself estimates that 8 million seniors will lose their Medicare Advantage plan as a result, 73% of those with such plans.
This is the beginning of health care rationing for seniors, as the payments to their doctors and hospitals for the care that currently maintains their health will be slashed back. In addition, as Betsy McCaughey explains in the Journal, the House bill
moves Medicare from a fee-for-service payment system, in which patients choose which doctors to see and doctors are paid for each service they provide, toward what's called a "medical home." The medical home is this decade's version of HMO restrictions on care. A primary care provider manages access to costly specialists and diagnostic tests for a flat monthly fee. The bill specifies that patients may have to settle for a nurse practitioner rather than a physician as the primary care provider. Medical homes begin with demonstration projects, but… HHS…is authorized to "disseminate this approach rapidly on a national basis."
What this means is that your doctor is paid a flat monthly fee for your care, and referring you to a specialist or for a diagnostic test effectively comes out of his pocket. So if you need an MRI or a CT scan to see if you have cancer, or to check if that pain in your chest is due to clogged arteries, or if you need to see a specialist to treat cancer or heart disease, the doctor has a financial interest to delay or deny it. Financially, if you are actually this sick, he will be better off if you die sooner rather than later. That is the result of the perverted, inverse incentives the House health bill creates for medical providers.
But the Obama Administration has already started the rationing for seniors on Medicare. The recently adopted Medicare payment rules for next year impose an 11% overall cut on cardiology and a 19% cut on radiation oncology (cancer treatment). Payments for basic tools and treatments for heart disease, such as stress tests and catherization, are slashed by 42% and 24% respectively. Payments for diagnostic imaging services like MRIs and CT scans that help identify cancer early are cut by 24%. Payments for antitumor radiation therapy will be cut by 44%.
AARP shamefully provides cover for this attack on the health care of seniors. That is in part because it has always been a liberal/left front group, like ACORN and SEIU, and it is standing up for its left-wing political allies. But it's also because AARP doesn't sell a Medicare Advantage plan, and it wants to drive out the competition to its overly costly Medigap plans.
Soaring Health Costs
The socialized medicine policies adopted in the House health bill will at the same time cause soaring health costs and health insurance premiums. The House bill provides that you or your employer will be forced to buy the health insurance plan specified by the government, regardless of what you want. This will include all of the politically correct benefits no matter how expensive, such as drug rehab, mental health, maternity benefits even if you are over 50, male, or gay. Coverage for abortion too will ultimately be required with politics involved in the decision, no matter what they say now. Many people today are wisely saving a lot of money with high annual deductibles, paying for routine expenses out of pocket. (Does your car insurance pay for oil changes and new tires?) Forget about that under the House bill.
The House bill further adds costly new regulations on health insurance, such as guaranteed issue, which requires coverage for all new applicants regardless of how sick they already are, and community rating, which requires the same premiums for new applicants regardless of health condition. This regulation is like requiring fire insurance companies to insure new applicants whose houses are already on fire, charging them no more than anyone else. Such regulations have caused health insurance premiums to soar even in the context of broader health reform, as we have seen in Massachusetts.
But health insurance premiums will also rise because of increased cost shifting to private insurance from the Medicare cuts, and from the Public Option. The House bill would also radically increase incentives to demand more health care, with the government paying for everything or paying for health insurance to pay for everything. It would also radically reduce the incentives to supply health care by clamping down more and more on payments to doctors, hospitals and other health providers for their services, as discussed above. Increasing demand while reducing supply will produce skyrocketing health costs, which will further increase health insurance premiums.
Readers of this column know I have been saying as much for months. But now comes expert confirmation in a study from WellPoint, which provides transparent insight from its own health insurance files and experience. Their study shows that health insurance premiums for the young and healthy will triple in some states! Average middle class families will see their premiums more than double. A previous study from Price Waterhouse showed quite similar results. These studies didn't even take into account all of the factors above.
Democrats and their allies have responded with name-calling and libel, with no substantive response. If they pass a final bill without a public option, when premiums do rise as a result for all of the above reasons, they will be back arguing this shows the Republicans were wrong about not needing competition from a public plan. You can't argue with religion.
By the way, the profits of the 10 largest health insurance companies last year totaled $8 billion, combined. That is less than one half of one percent of total health costs. It's not an issue, except for socialists.
Soaring Taxes and Deficits
House Speaker Nancy Pelosi claims that the House bill is deficit neutral. But that is based on a 21.5% cut next year in payments to doctors under Medicare included in the bill. That is so ridiculous that even the Democrats don't believe in it. So in a separate bill they propose to restore $250 billion of those cuts, adding that entire amount to the deficit! So how can the House bill really be considered deficit neutral, based on a huge cut so ridiculous the Democrats themselves immediately reverse it in another bill? Has our government ever been this brazenly dishonest?
Over the first full 10 years of operation, CBO estimates that the bill will cost $1.8 trillion, not the $829 billion claimed by Speaker Pelosi, actually misrepresenting the CBO score. The actual costs counting all spending increases, which haven't been scored by CBO yet, will be $2.4 trillion to $3 trillion. The bill costs so much because with an overwhelming entitlement crisis already looming, the House bill insists on massively expanding Medicaid, adding 18 million more people, and adopting a new middle class entitlement providing subsidies to buy health insurance for those making up to $96,000 a year for a family of four in 2016.
The $700 billion in tax increases, plus the Medicare cuts, won't be enough to cover all those costs, adding hundreds of billions to the deficit. In particular, the bill relies on an income tax surcharge adding 5.4% to the top income tax rate. Along with the Obama tax rate increases already planned for 2011, the top marginal federal tax rate will soar to almost 48% from 35% today. Counting state income taxes, the average top income tax rate in America would climb to about 52%. The top U.S. income tax rate would then be higher than in France, Germany, Canada, and 23 other countries in the OECD. In five states dominated by Democrats, California, New York, New Jersey, Hawaii, and Oregon, the total top tax rate would be higher than in socialist Sweden. That top tax rate increase won't raise nearly the $460 billion CBO now projects because of its uncounted, counterproductive economic effects.
But the total spending and resulting deficits will be far higher than even this. CBO assumes that only 30 million will qualify for the middle class entitlement subsidies, with 162 million in employer provided coverage not eligible for the subsidies as a result. But with employers who drop their coverage subject to an 8% payroll tax, and less for small businesses, many will have an incentive to do precisely that, especially since the workers can then get the government subsidies. If your payroll averages $40,000, then 8% is only $3200 per worker, likely much less than the cost of current coverage. This could more than double the projected cost over the first full 10 years, as millions more lose their employer coverage and become eligible for the subsidies.
Finally, remember President Obama's ironclad election year promise not to raise taxes on anyone making less than $250,000 per year, in any form, which won him election? Under the House bill, which President Obama has now endorsed, workers who don't buy insurance will have to pay an income tax penalty equal to 2.5% of income, including those in the bottom 50% of income earners who don't pay any income tax now. If they do buy the mandated insurance, then they will bear costs for the premiums of 1.5% to 12% of income for those making less than $250,000. That is effectively a whole new payroll tax on workers.
President Obama, however, says this is not a tax. But, then, President Obama says lots of things we've learned we cannot believe in.
Mr. Ferrara is the author of "The Obama Health Plan: Rationing, Higher Taxes, and Lower Quality Care," published by the Heartland Institute.
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