health insurance reform

GOP: Lack of Insurance Revokes Sanctity of Life

Leo Gerard — Tue, 07 Aug 2012 09:14:03 -0400

In the case of fetuses and rich people, Republicans insist on the sanctity of life. But in the case of destitute people, infants who imprudently choose working-poor parents and struggling young adults – basically all riffraff unable to afford health insurance – the GOP says there’s nothing sacred about their stinking lives.

Let ’em die. The uninsured should be left to rot. To the GOP, lack of insurance revokes sanctity of life. A GOP audience at a Republican presidential candidate debate clapped and cheered that morality. More recently, GOP leaders said insuring all Americans should not be the nation’s objective.

Instead, the Republican goal is guaranteeing Americans retain the freedom to forgo health insurance.

To the GOP, “freedom” to be uninsured is more important than public health, which could be endangered by an untreated, uninsured, modern-day Typhoid Mary. To Republicans, the “freedom” to be uninsured is more important than the horror of family members watching helplessly as a loved one who foolishly failed to get insurance slowly dies in agony from untreated bone cancer.

One percenters who are members of Republican presidential candidate Mitt Romney’s elite club of quarter billionaires can afford the risk of being uninsured. If they fall off a dancing horse, they can pay the medical bills out of pocket. But the non-rich can’t afford a trip to the emergency room. For them, being uninsured isn’t a freedom. It’s bankruptcy. It’s death.

No sane non-rich American wants the liberty to be uninsured.

Despite that, the GOP has repeatedly declared its intention to force the freedom to be uninsured down the throats of unwilling non-rich Americans. Last month, the Republican majority in the U.S. House of Representatives voted for the 33^rd time to repeal or defund ObamaCare. Republicans have tried incessantly in the past two years to kill the law that will soon increase the percentage of Americans covered by health insurance from 84 to 93. If the Republicans could just get Democrats in the Senate to approve that repeal – and President Obama to sign it – 30 million Americans would continue to be “free” to choose being uninsured.

The GOP may get that opportunity early next year. Their presidential nominee Mitt Romney has vowed that his top priority “day one, job one” in the White House will be repealing ObamaCare. No matter that it’s based on RomneyCare, which Romney signed while governor of Massachusetts; no matter that the U.S. Supreme Court upheld the constitutionality of ObamaCare; no matter that Republicans have no plan to cover the 30 million Americans who would lose the opportunity to be insured; no matter how many uninsured people would die as a result, repeal is Romney’s top national priority.

Let ’em die, Romney says. Sanctity-Schmanctity.

Similarly, six Republican governors – Rick Scott (Fla.); Rick Perry (Texas); Phil Bryant (Miss.); Nikki Haley (S.C.); Bobby Jindal (La.); and Terry Branstad (Iowa) – have announced they will refuse the ObamaCare Medicaid money that’s intended to extend insurance to the working poor – those who earn slightly too much to be covered by Medicaid now. The governors’ rejection of Medicaid expansion is expected to give at least 3 million Americans the “freedom” to continue being uninsured.

The governors said they would rebuff the money even though for the first three years, states don’t have to contribute a cent to the program. They’ll snub the money even though studies have shown expansion of Medicaid improves health and significantly reduces death.

Let ’em die, the GOP governors say. Sanctity-Schmanctity.

Last week, insurance companies that overcharged under the terms of ObamaCare returned $1.1 billion to policy holders and employers who buy coverage. ObamaCare, formally known as the Affordable Care Act, requires insurers, depending on their size, to spend between 80 and 85 percent of premium dollars on actual medical care. Insurers that pay too much for fancy penthouse offices and CEO perks must rebate policyholders. This is what Republicans want to deny Americans in exchange for the “freedom” to be uninsured.

The rebate checks went into the mail just one week after the nonpartisan Congressional Budget Office (CBO) reported – again – that ObamaCare will lower the nation’s budget deficit. That’s lower, as in reduce, diminish, decrease the deficit. In fact, the CBO reported that if Republicans had succeeded in getting the law repealed, that would have increased the deficit by $109 billion over nine years. Republicans want to give Americans higher deficits in exchange for the “freedom” to be uninsured.

That’s right. Republicans have voted 33 times to enlarge the deficit and take from Americans ObamaCare benefits they love – like coverage for young adults under their parents’ plans until age 26; payments to senior citizens to close the Medicare prescription donut hole; and prohibitions against insurers denying coverage to children with pre-existing conditions and against dropping policyholders when they get sick.

As Americans realize benefits from ObamaCare, the law increases in popularity. Despite the GOP’s massive two-year campaign to kill it, support for ObamaCare has grown steadily, so that now, nearly half the nation backs it.

Still, Americans don’t yet love ObamaCare the way citizens of Great Britain adore their National Health Service (NHS). In Great Britain, the half-century-old NHS is so treasured that it received a tribute in the opening ceremony to the Olympics in London. The NHS, like health care in other Western European countries, covers everyone.

That’s exactly what Republicans don’t want – a system that insures all Americans. Republican Mitch McConnell, the Senate minority leader, put it this way when asked how to extend coverage to the nation’s uninsured:

“Let me tell you what we’re not going to do. We’re not going to turn the American health care system into a Western European system.”

Nope. He’d rather let Americans die. Sanctity-Schmanctity.

Vote for Hope

Leo Gerard — Thu, 28 Oct 2010 09:30:27 -0400

The electorate is bitter and angry. It’s no wonder. Foreclosures rise while Wall Street bankers, whose recklessness caused this grave recession, grab million dollar bonuses. Unemployment is stuck at 9.5 percent, but corporations continue to ship jobs overseas.

The level of acrimony showed itself Monday in Lexington, Ky., when a group of men supporting Republican U.S. Senate candidate Rand Paul threw a woman backing Democrat Jack Conway to the ground and stomped on her head.

This is not the hope America voted for in the fall of 2008. Now another election is upon us. On Tuesday, voters can choose candidates capitalizing on bitterness, or they can return to hope and provide time for change to play out. Voters can stay the course with the President whose basic philosophy is a Biblical one – that we are all our brothers’ and sisters’ keepers. Or Americans can empower Republicans who believe it’s every man for himself, who espouse the view that a man’s success is his own, and, equally, each man is solely responsible for all of his setbacks.

This midterm election is about how those disparate Republican and Democratic values will play out in legislation. Do Americans want to live in a Republican country that blames individuals for their unemployment in an economy creating only one position for every five jobless workers? Or do Americans want a country that lives by the Democratic philosophy that government must aid, not blame, the unemployed, that it must give a hand up, not a slap in the face, to the suffering?

Hard as it is during troubled times, as difficult as it may feel after some legislative efforts have fallen short of important idealistic goals, let’s build a country of hope, one in which we help our fellow Americans.

That virtuous aim, of course, is the subject of ridicule. Here’s Sarah Palin mocking optimistic Americans at a Tea Bagger event in February, “How’s that hopey-changey thing working out for ya?”

But come out to vote for hope Tuesday anyway; stand up to the malevolent bullies.

What the bullies want is a country where workers are on their own: for health insurance, for income security in their old age, for surviving another Wall Street collapse. For everything.

Unemployment insurance is a good example. Over the past year, the GOP has scorned the jobless, calling them lazy freeloaders. Republicans repeatedly voted against extending unemployment benefits. From the GOP point of view, Wall Street’s crash didn’t cause the economic collapse and high unemployment. No, according to Republicans, each unemployed worker is responsible for his situation, and it’s not the role of government to intervene to help. That philosophy is behind Republican South Carolina Lt. Gov. Andre Bauer’s comment that the unemployed, like stray animals, should not be fed: “You are facilitating the problem if you give an animal or person ample food supply.”

Come out Tuesday and vote for hope, vote to aid the unemployed.

Wall Street reform is another example of Republican “on your own” philosophy. Before the stock market crash of 1929, the unregulated American financial system whipped the economy in wild boom and bust cycles. The frequent crashes and runs on banks were called panics. In Democrat Franklin Delano Roosevelt’s New Deal, Congress imposed rules on Wall Street and the banking industry. For the next sixty years the economy largely avoided panics. Then Congress lifted the regulations, and the crash of 2008 wrecked the economy. Former President Bush responded by proposing and orchestrating the Wall Street bailout. But his party vigorously opposed re-regulation to avoid another economic disaster. The GOP voted against the legislation restoring protections for the economy, investors and consumers. Republicans believe government has no business policing the free market or interceding for investors and consumers because individuals are solely to blame for everything that happens to them.

Come out Tuesday and vote for hope, vote to protect hardworking Americans against financial fraud and the machinations of powerful, multi-national financial firms.

Health insurance reform provides one of the clearest examples of Republican “on your own” philosophy. The GOP proposed that “reform” consist of granting individuals small tax breaks, about a quarter the cost of health insurance, while revoking breaks given companies that provide health coverage to workers. This, Republicans said, would “free” companies from providing insurance and “free” individuals to choose their own plans. It would have liberated individuals to negotiate coverage and claims payment with giant, sophisticated, lawyer-laden insurance corporations. If an individual got a bad deal, one that enabled the insurer to drop coverage when he got sick, deny coverage to his sick child or raise rates continuously, well, then, that would be the fault of the individual purchaser. Republicans have promised that if empowered, they will repeal the Democrats’ Patient Protection and Affordable Care Act.

Come out Tuesday and vote for hope, vote to support the health insurance reform law that uses the power of government regulation to shield policy holders from insurer abuses, that lowers costs and that enables nearly all Americans to obtain insurance.

Retirees should be “on their own” as well, Republicans believe. Some in the GOP even contend Social Security is unconstitutional. Others want to cut it or privatize it. What privatizing means is getting the government out of the business of collecting Social Security taxes to ensure that all workers receive benefits after retiring. Instead, Republicans want workers to be on their own to invest for their retirement. If there’s another market “panic” – which could happen if Republicans repeal Wall Street reform – and workers lose their “privatized” retirement savings in the crash, the GOP’s response would be that individuals must take responsibility – their loss is their fault.

Come out Tuesday and vote to keep America’s promise to provide basic income security to all elderly citizens. Vote to be your brothers’ and sisters’ keeper and for them to be yours. Vote for hope.

Republicans Don’t Trust Americans

Leo Gerard — Fri, 15 Oct 2010 12:24:16 -0400

Republican fund-raisers are treating Americans like little children, as if the GOP knows best and must shelter the youngsters from the truth.

It’s like when a kindergartner asks his father if mommy is coming home soon, and the widower replies that she’s on a long business trip. The parent is attempting to shield the child from the cruel truth, afraid the little one can’t handle it.

That’s what Republican campaign fund-raising groups are doing by concealing their donors from the public. The GOP does not trust Americans to handle the information. Republican operatives want to shield voters from knowing who is actually paying for GOP attack ads. The GOP fears the consequences if Americans know the truth – exactly which giant corporations and Wall Street banksters are funding vicious screeds against Democrats because those covert donors believe Republicans will deliver for big business.

The secret GOP benefactors are right about one thing: A Republican majority will work for the rich. In a study of income growth post WWII, Princeton political scientist Larry Bartels determined that earnings rose faster at all income levels under Democratic administrations, but especially for the middle class and the poor. Under Republican presidents, the wealthiest benefited the most, increasing income inequality.

After the conservative majority on the U.S. Supreme Court struck down decades of precedent in January in its Citizens United ruling, defining corporations as “persons” and permitting them to pour unlimited cash into political advertising, Democrats offered legislation to temper that newly-granted corporate power. Called the DISCLOSE Act – for Democracy Is Strengthened by Casting Light on Spending in Elections -- it would have required revelation of corporate donations.

Republicans wanted concealment of their corporate sources, however, and scuttled the DISCLOSE Act. This freed private political fund-raising groups to take as much money as they can from corporations while providing a cloak of anonymity.

The Republican and Democratic parties still must disclose donors, and unions like the United Steelworkers (USW), which get their political action committee contributions from American members, must provide detailed information on how much they spend, which candidates they support, and the names of people who supply in-kind services as well as the value of the services.

The story of health insurers’ disclosed contributions to political parties reveals why Republicans prefer to keep Americans in the dark about gifts to GOP private fund-raising groups.

Public reports show that last year, the health insurance industry split its donations between the two parties, but this year, after passage of health insurance reform, the contributions are running three to one for Republicans. The insurance corporations have made their demands clear to Republican beneficiaries. They want Republicans to retain in the law the financial windfalls for insurance corporations – that would be mandates that uninsured Americans get coverage and fines for those who don’t. And they want Republicans to delete aspects that will cost insurance companies – that would be benefits for Americans like requirements that insurers cover sick children and injunctions against dropping policy holders when they get sick.

Wendell Potter, a former executive at Cigna Corp., one of the nation’s largest health insurance corporations, told Noam N. Levey of the Chicago Tribune:

“The industry would love to have a Republican Congress. They were very, very successful during the years of Republican domination in Washington.”

Voters need to know that insurance corporations overwhelmingly favor Republicans and what the industry expects to get from the GOP. But Americans will not know how much money insurers and other corporations give to shadowy Republican fund-raising groups and what those donors demand.

A New York Times investigation provided some insight into one GOP shadow group, the American Future Fund. It has spent $6 million so far on ads attacking Democrats in 13 states. The Times discovered that Bruce Rastetter, CEO of Hawkeye Energy Holdings, one of the nation’s largest corn-based ethanol companies, provided the seed money for American Future Fund. The Times determined that American Future Fund money is funding ads to defeat Democrats who sit on legislative committees that directly affect the ethanol industry and agricultural subsidies.

Two other secretive Republican groups, American Crossroads GPS and the so-called U.S. Chamber of Commerce, plan to spend $145 million to crush Democrats while concealing their funding sources from Americans.

American Crossroads GPS, brainchild of Republican operative Karl Rove, plans to spend $70 million. Mel Sembler, a shopping mall magnate, told the New York Times that wealthy donors have given the GPS group six and seven-figure checks, and Republicans said one donor, who they refused to name, gave several million dollars. Sembler told the Times why clandestine giving is so attractive to corporations:

“They want to be able to be helpful but not be seen by the public as taking sides.”

What they don’t want to be seen doing is lining their pockets by buying Republican politicians. Neither do the Republican beneficiaries.

Like GPS, the so-called U.S. Chamber of Commerce is an elephant-sized player in the secretive Republican support game. It has spent $25 million on more than 8,000 ads slamming Democrats and backing corporate Republican candidates. It plans to spend $50 million more.

Oddly, the commerce group calls itself the U.S. Chamber while admitting foreign firms and soliciting funds from corporations in places like Bahrain, India and Singapore whose interests may conflict with those of American companies and American citizens. An investigation by Think Progress, a project of the non-partisan Center for American Progress Action Fund, revealed that the so-called U.S. Chamber has accepted at least $885,000 from 84 foreign firms, money that it placed in the same account from which it draws funds to sponsor ads attacking Democratic candidates.

The so-called U.S. Chamber denied that it illegally co-mingles money it gets from foreign corporations with funds it uses to attack Democrats. When Think Progress and others asked the so-called U.S. Chamber to divulge the account’s firewall to the public, the so-called U.S. Chamber responded by repeating its assurance that it does nothing wrong and asserting, “We are not obligated to discuss our internal procedures.”

Basically, the so-called U.S. Chamber is saying, “trust us,” to the American public. On the other hand, the “U.S. Chamber” and groups like American Crossroads GPS don’t trust the American public to know their donor lists. What they don’t trust is that Americans will do what the GOP wants on Nov. 2 if Republicans’ corporate donors are exposed.

The USW challenges the “U.S. Chamber” and GOP funding groups like American Crossroads GPS to show their trust in the American people by disclosing their donors.

Republican Pledge: A Rotten Egg for the Middle Class

Leo Gerard — Fri, 24 Sep 2010 10:05:51 -0400

When Herbert Hoover ran for president in 1928, the Republican party promised his victory would assure the prosperity of “a chicken in every pot.” This week, Republicans proffered a similar pledge to America.

Hoover won, and in 1929, after a decade of GOP rule in Washington, Republicans did deliver something foul to Americans. It wasn’t the much-anticipated cooking hen. It was the Great Depression.

Now in the Great Recession, also delivered during a GOP presidency, Republicans have presented a new promise. They pledged to withdraw all unspent Recovery Act money to prevent it from employing even one more worker; kill health care reform to stop 30 million Americans from getting affordable insurance; slash $100 billion from federal programs protecting the middle class; preserve tax cuts for the rich and cut government regulation -- like oversight of Gulf-oil-gusher-BP and contaminated-egg-producers Jack and Peter DeCoster.

This time, the GOP downsized the “chicken in every pot” promise. Instead they’re pledging a salmonella-poisoned egg.

In 1932, Americans wisely rejected re-electing Republican Hoover, who is regarded as one of the nation’s most inept leaders, and chose instead Democrat Franklin Delano Roosevelt, revered as one of the best. This fall, it’s crucial that Americans choose sagely again, selecting Democrats intent on reforming Washington and protecting the nation’s middle class.

Eight years of Republican rule in Washington climaxed with the worst recession since the Great Depression. Since that downturn officially began in December of 2007, poverty, unemployment and foreclosures have risen while middle class income and health insurance coverage have fallen.

The poverty rate increased to the worst level in 16 years, with 3.7 million people slipping from the middle class to the ranks of the poor in 2009. One in seven Americans now is impoverished. More than 8 million workers have lost their jobs, and 2.3 million families have lost their homes to foreclosure. Nearly one in four mortgage holders is under water, meaning they owe more on their house than it’s worth. Also, last year, the number of uninsured Americans rose by 4.4 million to 50.7 million -- 16.7% of the population. It was the largest annual increase since the government began collecting comparable data in 1987.

By contrast, on Wall Street, where unrestrained and unregulated bankster recklessness caused the recession, happy days are here again. The banks that taxpayers bailed out have resumed paying million-dollar salaries and bonuses. The nation’s top 25 hedge-fund managers each took home an average of $1 billion (BILLION) last year. Those hedgers are among the nation’s richest 1 percent, those whose take home pay grew so fast between 1979 and the start of the recession in 2007 that nearly 39 percent of all income growth went to that tiny number of super-wealthy. Only 36 percent went to the bottom 90 percent of the nation’s population.

Democrats, keenly aware of the diverging experiences of the nation’s sucker-punched workers and its well-heeled elite, have worked to aid the beleaguered middle. They passed the $787 billion American Recovery and Reinvestment Act, which the Congressional Budget Office estimated created between 1.4 million and 3.3 million jobs by July.

Democrats reformed health insurance so that children with pre-existing conditions can’t be denied insurance; senior citizens won’t have to pay for “donut hole” medications; young adults up to age 26 may remain on their parents’ plans, and insurance companies can no longer choose doctors or place lifetime limits on coverage or drop the sick. On top of all that, the Democrats’ reform will lower federal deficits by $138 billion.

Now, Democrats are fighting to preserve income tax cuts for the middle class while eliminating breaks for the rich. The Democrats would continue to lower by $1,132 a year the taxes of median wage earners, those with incomes of about $50,000 a year. Under the Democrats’ plan, the super rich – those taking home more than $1 million a year -- would still get a tax cut of $6,349 – six times that of the middle class. But Democrats would have the super rich pay $97,651 in taxes a year that they now pocket.

Democrats think the rich have an obligation to pay those taxes. To get where they are, in the top one percent income bracket, they’ve used tax-subsidized public services at significantly higher rates than the other 99 percent of Americans. That includes services such as roads and airports, civil courts, the U.S. patent office, the U.S. Department of Commerce and professional licensing, regulation and inspection departments.

Republicans don’t agree. They believe the middle class should pay so the rich can continue getting breaks. The GOP believes it is fine to give tax cuts to the rich that will cost nearly $1 trillion over 10 years, but not pay for them. Conversely, Republicans have refused to extend unemployment insurance for the middle class jobless unless that’s paid for. The GOP believes it’s appropriate to continue tax breaks for multi-national corporations that ship jobs overseas but it’s not to extend aid to the middle class unemployed to pay for health insurance.

In their Pledge to America, Republicans promise to take care of the rich. They said they’d change Washington by decimating the very regulation that protects middle class workers and their families and by cutting off money that is providing jobs to the unemployed. The GOP pledges to undermine middle class America.

It might be called a turkey, but even that would inflate its value. It’s a rotten egg hurled at middle America.

Corruption of Senate Healthcare Bill Revealed, Using Middle-School Math

Michael Lemke — Thu, 04 Feb 2010 18:58:37 -0500

The shocking corruption of the Senate health care bill revealed, using just two facts (helpfully supplied by the Senate itself) and a little middle-school math

On Christmas Eve, the Senate passed its long-awaited health care reform bill. This post proves the colossal stupidity and corruption of the so-called “Patient Protection and Affordable Care Act”—using only two facts (helpfully supplied by the Senate itself) and a little middle-school math.

Part I: The Core of the Stupidity: Two Little Facts

Let’s get right to it. Section 2718 of the Senate bill provides that

Health insurance companies will be required to report publicly the percentage of total premium revenue that is expended on clinical services, and quality rather than administrative costs. Health insurance companies will be required to refund each enrollee by the amount by which premium revenue expended by the health insurer for non-claims costs exceeds 20 percent in the group market and 25 percent in the individual market. The requirement to provide a refund expires on December 31, 2013, but the requirement to report percentages continues.[1]

The Senate document in which this summary appears presents Section 2718 as a good idea for ordinary Americans—the summary is included under the heading “Bringing Down the Cost of Healthcare Coverage.” But what does this provision really mean?

“Refunds” to patients sound good at first, but what the Senate is really saying here is that the Senate bill requires private insurers to spend only 75 to 80 percent of every premium dollar on actual health care. OK, so what does that mean?

Let’s put it another way: the Senate bill authorizes private insurers to consume 20 to 25 percent of every premium dollar on administrative costs.

But according to the Senate’s own data, ordinary Medicare's administrative costs are only 2%.[2] In other words, if we simply opened ordinary Medicare to uninsured Americans, 98 cents of every Medicare dollar would buy actual health care.

Believe it or not, the two little facts given above—that 20 to 25% figure, and that 2%— are enough to prove, without any other information, the colossal stupidity and shocking corruption of the so-called “Patient Protection and Affordable Care Act.”

Part II: A Few Simple Definitions.

Before we get started, let’s make sure we know what we are talking about. Let’s define some basic terms, so that everyone can understand the argument.

Obviously, the Real Product of the health care sector is health care. Just as obviously, Real Product is good. Rational “buyers” (individuals, taxpayers, or businesses[3]) want to buy as much Real Product (actual health care) as possible at the lowest possible total cost.

Let’s define the Production Cost of a given amount of health care as the price that the producer (the doctor or hospital) charges an “insurer” or “payer” in order to provide that amount of Real Product (i.e., health care) to the “buyer” (i.e., the patient).

And let’s define the Administrative Cost of a given amount of health care as the price that the “insurer” or “payer” charges for providing the service that it provides—i.e., “payer” service—that is, collecting funds from the “buyer” and writing a check to pay the provider to provide that amount of Real Product to the “buyer.”

Note that the “insurer” or “payer” adds no value to the real health care product and doesn’t contribute to its production or quality in any way.[4] All the “insurer” or “payer” does that is of any use to the “buyer” or “patient” is to collect buyers’ money and write checks to buy Real Product from providers. Thus, every dollar that the “insurer” consumes in Administrative Cost represents one less dollar of Real Product that the “buyer” can afford to buy.[5] In other words, Administrative cost is bad. Very bad.

Just a few more definitions. First, the Total Cost of a given amount of health care is the sum of the Production Cost and the Administrative Cost (that is, the actual amount that the “buyer” or “patient” must spend to acquire the Real Product, health care, via the “payer” or “insurer”). And just as obviously, the goal of a rational buyer is to make Total Cost as low as possible, by minimizing Administrative Cost, so as to be able to buy as much Real Product as possible, at the lowest possible cost.

Let’s define the Medicare Cost of a given amount of health care as the Total Cost to buy that amount of health care through ordinary Medicare.

And let’s define the Private Insurer Cost of a given amount of health care as the Total Cost to buy that amount of health care through private insurers under the Senate plan.

So far, so good. Already you are probably beginning to draw some conclusions of your own (especially if you have reviewed the facts in Part I). But don’t jump to conclusions—if your middle-school math is a little rusty, you may be in for a bit of a shock.

Let’s add one last definition. Let’s say that the Administrative Cost Wedge of an “insurer” or “payer” is its Administrative Cost expressed as a percentage of Production Cost. This is a very important concept which the next section explains in detail.

Part III: Mind-Blowing Secrets of the Senate Revealed, Using Middle-School Math

Obviously, a smart buyer who wants to buy as much Real Product (actual health care) as possible [6] should figure out the Administrative Cost Wedge of each potential “insurer,” so as to be able to predict how much that insurer’s “money collection and check-writing service” will increase the Total Cost of Real Product. But how do we figure out this Cost Wedge under the Senate bill? For that we need our middle-school math.

Get ready for some sticker shock. A hasty person might leap to the conclusion that because ordinary Medicare consumes in Administrative Cost 2% of every dollar it receives from “buyers,” Medicare’s Administrative Cost Wedge must be 2%.

Similarly, a non-math-major might assume that because private insurers under the Senate bill would consume in Administrative Cost 20 to 25% of every premium dollar, that the Administrative Cost Wedge of private insurers must be 20 to 25%—and that therefore, if we want to figure out the Private Insurer Cost (i.e., the Total Cost to buy a given amount of health care using a Private Insurer under the Senate plan), we simply need to add 20 to 25% to the Production Cost.

These assumptions are completely and utterly wrong. Surprised? Here’s why.

Suppose (for simplicity’s sake) that the Production Cost of the amount of Real Product that we want to buy is $100. In order to figure out the Medicare Cost for that amount of Real Product, we need to solve the following middle-school equation:

0.98 x M = 100.

Thus we find that M, Medicare Cost, is not $102.00, but $102.0408. OK—; so far so good. To figure out the range for Private Insurer Cost, we need to solve two equations:

0.80 x P1 = 100 and 0.75 x P2 = 100.

Solving them, we find that the Private Insurer Cost to buy $100 of Real Product is not $120.00 to $125.00, as a non-math major might guess, but $125.00 to $133.3333. [7]

Thus, Medicare’s Administrative Cost to buy $100 of healthcare is $2.04, and Private Insurers’ Cost to buy $100 of healthcare ranges between $25.00 and $33.33. [8] Put differently, ordinary Medicare adds 2.04% to the Total Cost of Real Product, whereas Private Insurers under the Senate plan increase the Total Cost of Real Product by 25 to 33.33%.

As it happens, we have just solved for the Administrative Cost Wedge of the available “payers” or “insurers.” Ordinary Medicare’s Administrative Cost Wedge is 2.04%; and Private Insurers’ Administrative Cost Wedge under the Senate bill is 25 to 33.33%.

Quite a contrast in “Administrative Cost Wedge,” isn’t it? But hold your horses! There’s more to this than you might think, as the next section will show.

Part IV. Read This Section and Make Naked Senators Weep!

Okay, we’ve done some Einstein-level math here and need a break. Let’s work with words again for a few paragraphs. Obviously, a smart buyer who wants to buy as much Real Product as possible at the lowest possible Total Cost should pick the “insurer” with the smallest possible Administrative Cost Wedge. But how do we compare “insurers”?

A few more definitions might come in handy. So let’s define the Real Cost of a given amount of healthcare as the lowest possible Total Cost at which a smart “buyer” can buy that amount of Real Product. (In other words, Real Cost is the sum of (1) the Production Cost of the provider and (2) the Administrative Cost of the least expensive “insurer.”)

And (just for the heck of it, since logic apparently isn’t in fashion in the Senate) let’s define any portion of Total Cost for a particular insurer that exceeds Real Cost as Waste.

Given the “insurers” or “payers” under consideration here, we can conclude that
1. the Real Cost of healthcare = the Medicare Cost of healthcare, [9] and
2. the Private Insurer Cost of healthcare = the Medicare Cost of healthcare + Waste.

But how much Waste? Let’s try one more definition: the Administrative Cost Wedge Differential[10] is the difference between (1) the Administrative Cost Wedge of a particular “insurer” and (2) the lowest available Administrative Cost Wedge (i.e., the Administrative Cost Wedge of the least expensive “payer” or “insurer”).

Now obviously, if our Senate really wants to “reduce the cost of coverage,” it should cut out Waste entirely. If for some reason [11] our senators have drafted a bill that does not buy “money-collection-and-check-writing” (i.e., “payer”) service from the least expensive “insurer,” but instead buys it from insurers who create staggering Waste, something’s seriously wrong in Washington. So let’s define any amount of Total Cost exceeding Real Cost as Graft, and rename the Cost Wedge Differential the Graft Wedge.

Obviously, applying the equation for the Differential given above, the Graft Wedge for ordinary Medicare is zero [12]; therefore, insuring the uninsured under Medicare would create zero Waste and zero Graft. But the Graft Wedge for Private Insurers ranges between 22.96% (solving for 25% - 2.04%) and 31.29% (solving for 33.33% - 2.04%).[13]

In other words, using private insurers to insure the uninsured (instead of opening Medicare to all Americans) wastes between 22.96 and 31.29% of every health care dollar in completely unjustifiable graft.[14]

In still other words, 23 to 31 cents of every health dollar (given the amount of real work that goes into producing the Real Product) is a heck of a lot to ask buyers, not for the service of writing checks (“payer” service), but for nothing—yes, nothing!—at all.[15] For let’s be very clear: there is no value added in the Graft Wedge. The Graft Wedge just represents colossally stupid waste—and shocking corruption. [16]

Part V: Let’s Draw Those Conclusions: Shocking Stupidity and Corruption of the Senate Health Care Reform Bill Stunningly Revealed.

So our Corporate Democratic Senators called their health care “reform” bill the “the Patient Protection and Affordable Health Care Act”—but it is really quite the opposite.

This is actually the “Screw the Patients and Increase the Cost of Healthcare by 23 to 31%, For Absolutely No Good Reason At All Act.”

It should be obvious by now that this bill does not protect patients. The only “protection” here is for private insurers. Compelling ordinary Americans to pay private insurers between 22.96% and 31.29% of every dollar in sheer graft, for no service or product, but merely to let patients have access to health care they could buy a heck of a lot more cheaply through Medicare, counts for “protection money” in my book.

But the problem is not just that Private Insurer Graft represents a huge amount of patients’ money lost. It also represents huge amounts of health care lost.

Suppose that the amount of health care we need to buy is actually $100 billion.
Medicare Cost would be $102.04 billion. Private Insurer Cost would range between $125 billion and $133.33 billion. In other words, Private Insurers would consume between $22.96 billion and $31.29 billion in Graft. But that Graft money, if instead plowed into Medicare, would buy between $22.5 billion (i.e., 0.98 x $22.96 billion) and $30.66 billion (i.e., 0.98 x $31.29 billion) of additional Real Product (i.e., health care).

In other words, if we use ordinary Medicare instead of private insurers to insure the uninsured, we can save $22.96 billion to $31.29 billion dollars for every $100 billion of healthcare we buy; or again: when we use Medicare instead of private insurers to buy health care, we can buy 22.5% to 30.66% more health care for the same price.[17]

So why do our Senators want us to pay wasteful private insurers a 22.96%-to-31.29% Graft Wedge, for no value, product, good, or service in exchange—unjustifiably and perversely increasing the cost of health care by 22.96 to 31.29%?

Seriously—what are we supposed to think when in the worst recession in over 70 years, with 10% unemployment [18] and deficits of over a trillion dollars a year, Corporate Democrats like Max Baucus and Ben Nelson in the Senate, given a voter mandate to find a way to “protect patients” and make health care “affordable” for Americans, come up with an outrageous scheme like that?

And what are we supposed to think of a President who does not educate us in this math?

Well, there you have it.

The Stupidity and Corruption of the Senate bill has been proven as promised—using only two facts, helpfully provided by the Senate itself—and a little middle-school math.

Obviously, the real Corruption here is in the Congress. And just as obviously, the real Stupidity is in the American people, if we let Congress force us to buy private insurance for the uninsured under its corrupt “Protection Money” Act, instead of opening ordinary Medicare to all Americans.

We need Improved Medicare for All. [19]

If Corporate Democrats don’t wake up to the basic math in “healthcare reform,” they sure as hell aren’t going to like the math of the next elections!

__________
END NOTES

[1] “The Patient Protection and Affordable Care Act as Passed: Section‐by‐Section Analysis,” U.S. Senate, January 26, 2009 at http://dpc.senate.gov/healthreformbill/healthbill49.pdf.

[2] Paul Krugman, “Administrative Costs,” July 6, 2009, New York Times, http://krugman.blogs.nytimes.com/2009/07/06/administrative-costs/.), citing a study by Jacob Hacker at http://institute.ourfuture.org/files/Jacob_Hacker_Public_Plan_Choice.pdf, itself citing a Congressional Budget Office report at http://www.cbo.gov/ftpdocs/76xx/doc7697/12-08-Medicare.pdf.

[3] In reality, of course, “businesses” are not truly “buyers” of healthcare. The real “buyers” of “employer” insurance are workers and taxpayers. (The workers have contracted for the health insurance in lieu of other compensation, and the taxpayers subsidize purchase of healthcare for workers, by not charging employers income tax on money spent to buy employee healthcare, and not charging workers income tax on income accepted in the form of health insurance.)

[4] That is why alarmist talk about a “government takeover” of healthcare is nonsense. The reality is that Medicare is simply a mechanism for collecting money and writing checks to pay private-sector doctors and hospitals for providing the real product—healthcare—to patients. In this regard, Medicare is precisely the same as private insurers, with the notable difference that it is the purpose of Medicare to charge as little as possible for providing that check-writing service—while it is the purpose of private insurers to charge as much as possible for providing the same service.

[5] Thus, any increase in administrative cost over the minimal possible value is 100% dead loss for the “buyer,” adding no value, and in fact depriving the buyer of a corresponding amount of actual product.

[6] i.e., a buyer who wants to “protect” patients and make health care “affordable”

[7] Yes, this is really how the universe works. If you don’t get it, go visit your 7th-grade math teacher.

[8] I think we can all safely agree that $33.33 is a pretty stiff charge to write a $100 check.

[9] Because Medicare is the least expensive insurer with the lowest Administrative Cost Wedge, providing the lowest possible Total Cost (i.e., the “Real Cost”).

[10] We can also define the Administrative Cost Wedge Differential as Dead Loss to the “buyer,” because it is the amount of the insurer’s Administrative Cost Wedge that represents pure Waste (i.e., it does not even provide the service of collecting money and writing checks; it in fact provides nothing at all).

[11] (such as fat campaign donations and the promise of revolving-door payoffs)

[12] Because Medicare is by far the least expensive insurer, with by far the lowest Administrative Cost Wedge—so that the lowest possible Total Cost for the product (i.e., the “Real Cost”) is Medicare Cost.

[13] Again, if you are having trouble with this, check in with your middle-school math teacher. It really is true.

[14] The reality, of course, is that all individuals who currently pay for private insurance directly, and all workers and taxpayers who buy “employee” health insurance through employers, are already paying a similar Graft Wedge to these inefficient private insurers. Image the vast cost savings if we opened Medicare to employers—i.e., if we gave “employers” (i.e., workers and taxpayers) the right to buy ordinary Medicare for employees—paying only the Real Cost of healthcare—instead of forcing them to pay private insurers a massive cost wedge for no reason at all!

[15] The Graft Wedge, for example, does not even buy the service of collecting money and writing checks, because it represents Private Insurer Cost in excess of the Real Cost of healthcare (i.e., the Total Cost of using Medicare to pay for health care—including its total Administrative Cost for the service of collecting money and writing checks.)

[16] In actuality, Medicare is (in theory at least) able to negotiate better prices with providers than Private Insurers, in part because (if permitted to use it) it has greater bargaining leverage because of monopsony buying power—and in part because working with ordinary Medicare instead of thousands of private insurer plans reduces providers’ own billing costs. The reality is that a “single payer” is by far the most efficient way of collecting money and writing checks to pay providers for their product. (If individual “buyers” were the “payers” for health care, for example, doctors and hospitals would have to vastly expand their billing departments as they struggled to collect bills from 300 million individual payers—adding substantially to production cost.)

[17] See, e.g., “State Jobless Rates on the Rise,” January 22, 2010. http://money.cnn.com/2010/01/22/news/economy/state_unemployment.

[18] Improved Medicare for all would save Americans $400 billion a year in graft—more than four times the amount needed to insure all of the uninsured using ordinary Medicare. For more information about Improved Medicare for All, go to the Physicians for a National Health Program, at http://www.pnhp.org.

Where Health Reform Stands: Senate vs. House

Jason Rosenbaum — Mon, 21 Dec 2009 18:52:17 -0500

Last month, history was made. The House of Representatives passed a health care bill that gave the American people what they want.

In poll after poll, people wanted most of all to have the choice of a public health insurance option, to keep their health care benefits untaxed, and to have affordable health care both at work and out of it. The House bill came incredibly close to those goals. It was truly history-making.

Early this morning, the Senate took its first step towards passing a health care bill. While the Senate bill includes significant reforms, it looks small in comparison with the House. And progressives are, as Richard Kirsch, our National Campaign Director said, "Very, very angry and disappointed."

Shortly, the two bills will head into conference. In the next few days, we'll elaborate on what exactly needs to be fixed in the Senate bill and how it's better in the House bill, but for now, the key differences can can be broken down into two areas:

1. Make health care affordable

Low and middle income families must be able to afford health insurance if they do not get it through work, and employers must be asked to provide good health coverage for their employees so health care is affordable at work.

The House bill asks employers to pitch in, and is much more affordable for lower-income people who don't get coverage through work. The Senate bill lets employers off the hook, increasing the cost to employees for health coverage, though it is more affordable for middle-income people who don't get coverage through work.

Also, the House bill finances reform with a surtax on the richest families - those making over $1 million per year. The Senate bill finances reform by taxing middle-class health care benefits, which will only increase cost or decrease coverage for millions.

The final bill should ask employers to pitch in and share responsibility for full and part-time workers, and should make health care affordable for all incomes. And t he final bill should get rid of this tax on health benefits, something President Obama ran against. Instead, the wealthiest in society who can afford to help should be asked to pitch in their fair share to pay for reform.

2. Hold insurance companies accountable

Insurance companies must be held accountable with strong regulations and consumer protections, and we must be given the choice of a national public health insurance option available on day one. The House bill gives us that choice.

One area we've seen the Senate bill improve upon since dropping the public option is improved insurance regulations such as the Patient's Bill of Rights. But the House bill is still stronger in many aspects. The final bill needs tough regulations and real choices, to give the American people what they want and need.

♦ ♦ ♦

In all of these areas (except some aspects of affordability, to be elaborated upon in the next few days), the House bill does a better job than the Senate bill of standing up for what the American people want and need. Speaker Pelosi has a document on the differences between the bills that's worth checking out, which lays things out along similar lines.

This process isn't over, not by a long shot. This what we'll be fighting for in conference. (And yes, there will be a conference.)

Over the last few weeks, progressives have been shocked and demoralized by the way the debate in Washington has played out. But we can't stop fighting, and we can't stop pressuring our leaders in Congress and the White House to do what's right.

A good bill, like the House bill, that does right by Americans can still be delivered to the Oval Office. Congress and the President have a choice: They can give us that good bill, or they can leave us disappointed and angry. A message to them: Choose wisely.

Protecting Health Insurance's "Driver Of Profitability"

Eran Lillestrand — Wed, 16 Dec 2009 09:04:36 -0500

Demand For Health Insurance Transparency

Isaiah J. Poole — Tue, 08 Dec 2009 22:38:03 -0500

Rep. Rosa DeLauro, D-Conn., joins Institute for America’s Future health care project director Diane Archer, Georgetown University research professor Karen Pollitz and Consumers Union senior policy analyst Bill Vaughan in urging insurance companies to disclose information about the prices they charge and the care they cover that they are now keeping secret.

You Should Know What Your Insurance Premium Actually Buys

Isaiah J. Poole — Tue, 08 Dec 2009 15:25:22 -0500

Imagine that you're choosing between two health insurance plans. One has a $15 co-pay for doctor visits and says it covers hospital charges up to 80 percent of "reasonable and customary" charges. The second has a $20 co-pay and covers only 75 percent of "reasonable and customary" hospital charges. The first plan is clearly the better deal, right?

Not necessarily. Do you know how each company defines "reasonable and customary" and how different those definitions are between the two plans? Suppose Plan A rejects twice the expense claims filed by patients and their doctors as Plan B? In that scenario, the more certain 75 percent of Plan B, with you paying the remaining 25 percent, becomes a lot cheaper than the 80 percent advertised by Plan A that in reality leaves you paying 40 percent of a bill when you expected to pay only 20 percent.

But consumers don't get to know that kind of information up front, because insurance companies won't reveal it.

AUDIO: NEWS CALL

Hear Rep. Rosa DeLauro, D-Conn., Institute for America’s Future health care project director Diane Archer, Georgetown University research professor Karen Pollitz and Consumers Union senior policy analyst Bill Vaughan explain their effort to get the Senate to break the veil of secrecy insurance companies place over the the prices they charge and the care they cover.

Making that type of information public and easily accessible is the goal of health reform leaders trying to get insurance industry transparency language that has already been approved by the House included in the Senate's health care bill.

"Under the status quo, health insurance is essentially a black box," said Rep. Rosa DeLauro, D-Conn., in a call with reporters today organized by the Institute for America's Future. "The fact is that countless Americans buy coverage that they thought was comprehensive, only to realize that it has gaps once they get sick."

A letter to Senate Majority Leader Harry Reid signed by 30 health-care experts said:

Today, health insurers deem a considerable amount of information about the prices they charge and the care they cover business trade secrets. The unavailability of this data makes it particularly difficult for professionals, let alone individuals, to compare health insurance plans or to understand how well competition is working in the health insurance market. Lack of data makes it hard to identify and address fraudulent insurer behavior and difficult for Congress to address emerging issues in health insurance markets post reform.

What DeLauro and her supporters would like to see is publicly available information for insurance company policies that would be comparable to the nutrition information available on food labels, with industry-standard terms that are consistently applied by each company so that customers can make apples-to-apples comparisons of various policies.

That level of disclosure and consistency would also enable state and federal regulators to do a better job of policing insurance companies.

Sen. Jay Rockefeller, D-W. Va., brought attention to this issue in November when he blasted Cigna for failing to properly account for $5 billion in premiums paid by group insurance purchasers in 2008. The insurance industry says that that it pays out 87 cents of every premium dollar on medical claims, but a Senate Commerce Committee analysis says the actual figure can be as low as 66 cents of every dollar.

That figure, however, varies widely depending on the kind of policy you have and from where you get it. If you work for a small company and are getting insurance through that company, you are most likely getting a worse deal than if you were working for a large company. You are also more likely to get less for your money with a policy from one of the country's largest insurers.

Unlocking the secrets of what the insurance industry calls the "medical loss ratio"—the percentage of premiums paid out in claims—would give consumers a powerful way of using the market to put some discipline on prices. But as much as conservatives like to talk about empowering health care consumers by giving them more information, conservatives in Congress have not taken up this particular fight. When it comes to health care reform, DeLauro said, "I don't believe there is anything that will satisfy them." Especially if it means stepping on the toes of the health insurance industry.

Taking Stock of Exchanges: Bigger is Better

Timothy Stoltzfus Jost — Tue, 27 Oct 2009 15:53:13 -0400

This fact sheet is a summary of a paper entitled "Taking Stock of Exchanges: Bigger is Better." Read the full report.

The different health reform bills pending in Congress represent quite different understandings of what a health insurance exchange is, what it does, how it is organized and how it functions. These differences are likely to affect significantly the extent to which the exchanges accomplish their goals and avoid the problems that have afflicted earlier attempts at creating and operating exchanges.

The exchanges should operate at the federal level, as the House health care reform bill, America's Affordable Health Choices Act of 2009, or HR 3200, provides.

The health reform legislation is federal law addressing problems with access to health care and rapidly rising health care costs that are national in scope.
Congress is creating exchanges under federal law that will be carrying out functions specified by federal law, administering federal premium subsidies, and initially receiving federal start-up funds.
As we have learned from our experience with Medicaid, HIPAA, and other programs, state implementation of a federal program under federal supervision is at best awkward.
It is difficult for the federal government to regulate a co-sovereign, especially when large sums of money are flowing through the states, as would be true with the premium subsidies, creating a tempting pool for the states to use for their own purposes.
The federal government cannot under our constitutional system “commandeer” state government for its regulatory purposes. To secure state cooperation in implementing a federal program, it must either use the carrot of federal funds (as with Medicaid) or the stick of a threat of a federal fallback program in states that refuse to implement a mandated program themselves.
The three biggest “exchanges” in the country are run by the federal government–the Federal Employee Health Benefits Program, the Medicare Advantage program, and the Medicare Part D drug program. The federal government has also long been primarily responsible under ERISA for regulating employee benefit plans, the largest source of health insurance in the country.
The Finance bill establishes national private plans, which logically should be regulated by a national exchange.

Congress should minimize adverse selection. Insurers should be allowed to sell their products only through the exchange, as HR 3200 provides for individual policies, and Congress should limit premium and affordability subsidies to the exchange as all the bills do.

This avoids the problem of agents and brokers steering their customers away from the exchange when they can make higher commissions for sales outside of the exchange.
It also creates a larger exchange risk pool.

To the extent insurers can sell their products outside the exchange, insurers in and outside the exchange should be required to play by the same rules, as they are under HR 3200 and the Senate Finance bill.

Do not allow less generous plans to exist outside the exchange, as the HELP bill does.
Though it is hard to see how it can be enforced, require all individuals in and out of the exchange to be treated as being in a single risk pool and all small groups in and out of the exchange also to be treated as a single risk pool, as the Senate bills both do.
Require insurers to charge the same price for plans sold both in and out of the exchange, as the Senate Finance bill does.

Insurers that attract good risks should be required through risk adjustment to compensate insurers who end up with bad risks to reduce incentive to risk select.

The Senate bills provide for risk reallocation both in and out of the exchange and thus could make a substantial contribution to addressing this problem. The Senate Finance bill probably does the best job of bringing uniformity in and out of the exchange, but its risk adjustment mechanism is hard to follow. The risk reallocation approach of the HELP bill is much more straightforward.
HR 3200 only provides for risk adjustment within the exchange and so will do little to protect exchanges from adverse selection.
Risk reallocation requires a great deal of data to be done successfully. The mechanism for it working outside the exchange is not clear since, for example, premiums outside the exchange are paid directly to the insurer.
The best solution is for all individuals and small groups eligible for insurance through the exchange to have to purchase through the exchange, as HR 3200 requires with the individual market. If not, some combination of uniform benefits, single risk pools, uniform prices, and risk reallocation in and out of the exchange may work.

Exchanges should make insurance plans more standard and more transparent, thus enabling consumers to make more informed choices and promoting head-to-head competition among plans.

All of the bills do a reasonably good job with standardizing plans.

All require plans sold within the exchange to cover essential benefits, limit cost-sharing (albeit at very high levels), exclude (or limit) annual or lifetime limits, and provide an opportunity for appealing coverage decisions.
Each bill also standardizes and specifies tiers of coverage defined by actuarial value (in effect, levels of cost-sharing) into which plans must fit. This should also facilitate comparison of plans by purchasers.
HR 3200 and the Finance bill standardize plans both inside and outside of the exchange, permitting consumers to also consider the benefits of purchasing within the exchange or going outside of it.
All bills also include provisions that should make plan coverage more transparent, requiring the disclosure of information about premiums, cost-sharing, network providers, benefits, and other issues of concern to consumers.
The Finance Committee provisions offer by far the most detailed and creative approach to transparency, including rating plans for cost and quality and price, describing each insurance plan using standard defined terms in a four-page summary, and providing model scenarios describing coverage and cost-sharing for particular medical conditions.

Exchanges create large purchasing pools within the nongroup and small group markets, which should offer some efficiencies and should reduce administrative costs, making health insurance more affordable and accessible.

Exchanges also cost money and must create efficiencies in the purchase of insurance if they are to save money over all.
- The Senate bills provide for surcharges on insurance premiums to fund exchanges. HR 3200 would fund the exchanges from the excise taxes received from individuals or employers who fail to comply with coverage mandates and would cost less because it would involve one federal agency and not 50 state agencies.
- As long as the exchange has only a small market share it is unlikely to achieve significant administrative cost savings because insurers are likely to continue to carry on their current functions, largely duplicating exchange functions.
One federal exchange should help reduce overall costs far more than 50 separate state exchanges.
The rating reforms in the bills generally should reduce underwriting costs, both in and out of the exchange.
Enrollment in health plans through the exchange could reduce the cost to health plans of enrolling members.
Information transmitted through the exchange could reduce marketing costs.
The exchange should reduce brokerage commissions, which consume from 2 to 8 percent of the premiums of group plans and a much higher percentage of premiums in the nongroup market. Eliminating their commissions could result in substantial cost reductions for the health care system overall.
- Brokers would seem to be completely redundant with the exchange in the nongroup market and for individual employees who enroll in insurance through the exchange.
- Both the Blue Dog amendments to HR 3200 and the Senate Finance bill retain brokerage commissions, although the Finance bill would regulate them.
- Brokers’ fees should at least be regulated, recognizing that brokers in fact no longer play a useful role once the exchange is established. The Finance Committee bill contains this possibility.