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Musings on Health Care Legislation

Rick Roeder       December 25, 2009

Sadness. Frustration. Anger. A lot of embarrassment. Does anybody else have the same emotions to the Senate's December 20 late-night dance to get to 60 votes on a critical measure to push health care reform one giant step closer to fruition? My reaction is not ideology-based as I truly have a degree of uncertainty as to how America should best proceed.


A bill with ground-breaking social ramifications is best passed with support from legislators on both sides of the aisles opined CNN's David Gergen. He is spot on! Unlike the landmark passages of Social Security and Medicare, the Senate voted right down party lines with plenty of bitterness and rancor that will not soon dissipate.

Simply, this vote looked like a political power play to prevent a significant political defeat for the Obama administration --. a page directly out of the Karl Rove playbook. A year ago, one would have expected liberal Democrats to embrace a significant health care bill. However, many liberals are upset with the compromise bill that eliminated “public option” and targeted abortion issues. Dr. Howard Dean was so disillusioned with the compromises made to get the latest incarnation of the bill through the Senate that he advocated for the bill's defeat last week.

Our country has many great people who are being let down by a political system that has become thoroughly corrupted by significant financial interests. The Senate's latest fiasco is not the exception but the general rule during the past decade. It is clear that one of the possible solutions is to restructure the way that political campaigns are financed if our elected representatives can not start focusing on the “greater good.”


The bill does not address most of the fundamental issues that have helped explode our health care costs to a staggering 17% of Gross Domestic Product.

It is crystal clear that focusing on wellness is not stressed nearly enough in the bill. Instead, the retention of a traditional, premium-based, fee-for-service model is continued. In the past, the system has incented non-HMO providers to profit from illness instead of wellness. For example, it is much more profitable for doctors to be paid for a gastric bypass surgery than it is to have meaningful programs to help somebody lose 50 pounds.The current bill not only does not successfully “bend the curve of health care costs,” it appears to hardly breathe on the curve.

Shame on the Democrats for again caving in to trial lawyers. While there should be no “free pass” for medical malfeasance, unlimited liability is very costly and gets passed along to all of us in terms of significantly increased costs. One study indicated that 25% of all tests requested by doctors are “defensive” in nature.

Shame on the Republicans for protecting the insurance industry. Even if Howard Dean's claim that 27% of every insurance premium dollar is not used for benefits is slightly inflated, there does not appear to be a credible attempt to create new administrative efficiencies. One of the big arguments for “public option” was that it was intended to create a more competitive environment that would ultimately help keep costs down for those not electing the public option. Even though the Senate jettisoned public option, bear in mind that the House version did not. There are 60 House Democrats who are on record as saying any reform without a public option is unacceptable. The negotiations on a compromise bill ought to produce fireworks!

Also, there is not a sufficiently good reason to keep the long-standing link between employment and insurance availability. The current bill allows a mechanism for most of the uninsured to get insurance through insurance exchanges, subsidies and tax credits. For small businesses, the administrative burden of being involved in the health care promise is high and, with these proposed changes, unnecessary.


The cost savings touted by the bill are dishonest. This is the second time in recent years (the government actuary was muzzled during Medicare Part D deliberations) that unbiased actuarial analysis in the health arena would have produced widely divergent numbers from the suspect numbers supplied by Congressional staff. The purported savings touted by the administration looks at projected revenues and expenses over the next decade. That sounds reasonable until you realize that you are comparing 6-7 years of new benefits, which begin no earlier than 2013, to 10 years of revenue increases. If a longer period of comparison were selected, the impact of a 3-4 “head start” of increased revenues compared to the start of increased benefits would rightfully be diminished. This analysis is as misleading as saying that Social Security is in good actuarial shape just because current year Social Security taxes exceed current year payouts.

There are other assumptions in the cost savings that many scoff at. For example, there is an assumption that there will be hundreds of millions of reductions in payments to physicians. There are many complications in effectively being able to enforce such assumed reductions. For example, primary care physicians who refer “too often” to more expensive specialists, will have financial consequences. What bureaucracy will effectively determine what “too often” is? The dealmakers behind health care reform are reportedly already contemplating undoing such reductions in future legislation, both as a sop to the medical community and acknowledgement of the fact that the some of the proposed bureaucratic watch dogging is an administrative nightmare.

Remember that one of the centerpieces of the bill is coverage for those that had been excluded due to preexisting conditions. This is a very high cost group. Is the cost of covering this group and a significant number of the other 45 million currently uninsured going to be cost neutral? Undoubtedly not! The idea that a 40% excise tax on the “Cadillac” portion of benefit coverage (identified as providing value of at least $23,000 annually for family coverage and $8,500 for individual coverage) Medicare reductions, and Medicaid reductions will provide enough offsetting revenues is a pipedream.

Three weeks ago, an actuarial analysis, commissioned by Blue Cross/Blue Shield, was completed by Oliver Wyman, Inc. regarding provisions of the Patient Protection and Affordable Care Act. They concluded that there would be a 54% increase in premiums, excluding any potential impact of medical inflation, five years after implementation.

Barring some efficiencies in administration and vastly increased focus on wellness, it would have been refreshing for the administration to admit that there would very likely be some cost increases. Other independent actuarial analysis indicates that the added cost will be north of a trillion dollars over the next decade.


The horse trading to get the 58th, 59th and 60th votes of Senators Lieberman, Sanders and Nelson was embarrassing on many levels. It is insane that the states of Vermont and Nebraska would get different Medicaid treatment than any of the other 48 states. Equally inequitable is how Floridians would be able to keep their Medicare Advantage coverage while residents of other states cannot. I wish the deal makers would have had enough pride to do their deal making in a less brazen manner. Think about the horrible precedent set for future legislation. A pragmatic legislator will have lots of incentive to wait until the 12th hour to support a bill if they can get some local pork as a payoff for a vote. This was such a travesty that I am embarrassed that I did not put this under my “Anger” paragraph!

Instead of adequately analyzing and addressing major revenue sources, the bill targeted some relatively small revenue sources. For example, plastic surgeons in Hollywood, Boca Raton and Palm Springs were dancing in the aisles, even if few others are happy about the bill. The proposed 5% tax on cosmetic surgery was axed from the last Senate bill. Fans of skinny women with unnatural “tops” also applauded.

The lobby for plastic surgeons is obviously stronger than tanning salons. How else to explain why these salons will have to pay a 10% tax for their services. I wondered if this was a ploy by the Fort Lauderdale Chamber of Commerce to encourage folks to get their tans the old fashioned way.

Meanwhile, the likes of Carl, Jr. can advertise their triple-decker, double cheese cholesterol burgers without the burden of any new tax. Nor does the bill provide any individual disincentive for the obese to keep chowing away on unhealthy foods. America's health costs, relating to our obesity epidemic, are very large and need to be addressed. This bill did not touch this sensitive subject. We tax the heck out of cigarettes and it would decrease our nation's health bill if we did the same to certain foods and beverages.


America is in a fast changing 21st century global economy and we are competing at a significant disadvantage. Relatively speaking, we spend about twice as much as most European countries on health services and much more than double when compared to the emerging economic powers in China and India. In addition to all the current bill's warts, this bill does little to make us more globally competitive.

How would I proceed? First, it is important to recognize that few, even amongst Democrats, seem to fully embrace the bills' current provisions. I am reminded of one of the lyrics from the song that noted songwriter John D. Loudermilk penned, “Tobacco Road”, a song made famous by The Nashville Teens during the 1964 British Invasion. Loudermilk so despised Tobacco Road that he wanted to “blow it up and start over again.” I would suggest the same course for health care reform. The best solution, in my opinion, is to build around a dual foundation of wellness programs and high deductible, catastrophic coverage for everybody.

P.S. As for Loudermilk, the Durham-born songwriter would have to admit that North Carolina has prospered and evolved nicely since he penned “Tobacco Road.”. With thought, appropriate analysis and a diminishment of political posturing, so too can health care reform.

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