The White House’s plan to lay all of the blame for the Obama administration’s recess appointment of Dr. Don Berwick on recalcitrant Republicans appears to have been upended by Democratic senator and Finance Committee chairman Max Baucus, who has criticized the Berwick recess appointment: “Senate confirmation of presidential appointees is an essential process prescribed by the constitution that serves as a check on executive power and protects . . . all Americans by ensuring that crucial questions are asked of the nominee — and answered.” 

This did not sit well with the Daily Kos’ Joan McCarter, who wrote that his comments demonstrate that “Max Baucus proves, yet again, that he’s a major obstacle to any improvement in our nation’s health-care system. Now he’s throwing a hissy fit over Obama’s recess appointment of Donald Berwick.” McCarter is wrong. Baucus’s comments are not about Baucus’s views on health care but his prerogatives as chairman of the relevant committee.

As someone who has gone through the confirmation process via Senator Baucus’s committee, I know that he takes the confirmation process seriously. I haven’t always agreed with some of his decisions, such as his opposition to well-qualified Bush appointees Kerry Weems and Dan Meron. Nevertheless, everyone who is confirmed after going through the Finance Committee process under Baucus knows that they have been thoroughly vetted. The Obama administration has now taken that opportunity away from Dr. Berwick.

As I wrote yesterday, there is nothing wrong with the president exercising his recess appointment power, as long as the nominee has had a hearing and responded to the queries in the Senate. But a recess without a hearing is extraordinary, and makes it seem as if the White House wanted Dr. Berwick to avoid the opportunities the confirmation process provides to elaborate on his views. Chairman Baucus is understandably frustrated by the loss of those opportunities.

Tuesday’s Washington Post included an article that shows how health-care reform may result in a contraceptive-coverage mandate on health insurers.

This article is interesting to pro-lifers for a couple of reasons. First, as is typical of the Post and most other mainstream media outlets, contraception supporters receive far more coverage than their opponents: The Post quotes or cites six people who support contraceptive coverage, while only quoting one person — Deirdre McQuade from the USCCB — who opposes the policy.

More importantly, this article nicely shows why the pro-life movement has good reasons to oppose health-care-reform legislation: The contraceptives that might be covered could include abortifacients. These abortifacients would be subsidized by federal tax dollars. Additionally, a contraceptive mandate could effectively invalidate several state laws requiring that minors have parental permission before purchasing contraceptives.

Finally, the decision about whether health plans will be required to cover contraceptives is not going to be made by elected officials, but instead by the federal Health Resources and Services Administration. Unfortunately, health-care reform removes a number of issues — including a number of issues pro-lifers care about — from the democratic process.

History shows that the pro-life movement almost always fares better when policy decisions are made by elected officials rather than through administrative or judicial fiat. The pro-life movement would do well to continue to support efforts to repeal the health-care-reform bill.

– Michael New is an assistant professor at the University of Alabama and a fellow at Witherspoon Instititute in Princeton, N.J.

The reason the health-care debate has been so polarizing is that there is a deep and fundamental divide over what should be done to fix the problems in American health care, especially with regard to rapidly rising costs.

On one side of the debate are those who advocate a decentralized, market-based reform program. Rep. Paul Ryan is among the leaders pushing for such a consumer-driven solution.

On the other side are what you might call the “governmentalists.” The governmentalists believe the way to “bend the cost-curve” is with a centralized, government-led effort to micromanage the entire $2.6 trillion health sector from Washington, D.C.

President Obama, his top aides, and his allies in Congress are all quite clearly health-care governmentalists. The evidence for this is on full display in the bill they jammed through the legislative process. It is filled to the brim with provisions that shift power and authority away from states, individuals, employers, and the private sector to the federal government.

The federal government is now the nationwide regulator of all private health insurance. Federal bureaucrats can pick and choose which insurers are allowed to sell to customers in government-managed “markets.” The federal government will determine what health benefits every citizen and legal resident must secure to avoid paying a punitive tax. The federal government will also decide the appropriate level of cost-sharing for government-certified insurance products.

The new law is also filled with provisions which the sponsors contend will slow cost growth with “delivery-system reform.” The federal government has been put in the driver’s seat of a sprawling effort to force doctors and hospitals to quite literally change how they care for patients and conform to the federal government’s view of what constitutes cost-effective medical practice. Medicare’s administrators will be using new authority to reward those who toe the government’s line and hit budget targets, and punish those who don’t. Government reimbursement will be used to prevent the introduction of medical technologies considered excessively costly.

Although President Obama is quite clearly a committed and enthusiastic health-care governmentalist, he has never admitted as much in public, nor is he ever likely to. He avoids engaging in direct debate over the merits of his position with the market-based reformers. Instead, he argues, as he did at the so-called “bipartisan summit” back in February, that there is no great disagreement over substance; it’s just that those dastardly Republicans are against progress on his watch.

In a way, it’s hard to blame him for ducking the fight. The entire governmentalist reform program is based on the assumption that the federal government has the capacity to nimbly manage the health sector and to cut out unnecessary spending without harming the quality of care. Let’s just say that’s a hard sell with most of the public. The federal government has been running public-insurance programs for almost half a century. The only way it has ever cut costs is with arbitrary, across-the-board price setting. These price controls cut reimbursement rates for all providers of services, without regard to what it will mean for patient care. That’s the norm in government-run systems around the world as well. And the end result is not more efficient health care. Artificial, government-set cost limits simply drive out willing suppliers of services, and eventually lead to access problems, queues, and government-driven rationing of care.

Truth be told, this is a debate President Obama has always known he couldn’t win, and so he never wanted to engage in it.

Which brings us to the administration’s recess appointment of Dr. Donald Berwick as administrator of the Centers for Medicare and Medicaid Services (CMS).

Unlike the president, Dr. Berwick hasn’t hidden his worldview.

The White House says Republicans were planning to obstruct the nomination. Republicans haven’t obstructed anything. All they did was signal an eagerness to engage in a spirited debate over Dr. Berwick’s vision for health-care cost control. The reason Dr. Berwick’s nomination hasn’t moved forward is because he hasn’t yet submitted responses to relatively routine questions posed by the Senate Finance Committee — questions that would have been asked of any nominee, from either party, given the same set of facts and circumstances.

Some have speculated that the White House chose to make the recess appointment because the answers to some of those questions might cause some problems for the nomination or the administration. Perhaps. But it seems more likely that the primary motivation for the recess appointment was to avoid a clear and transparent fight over the merits of the competing visions of health care reform. Dr. Berwick is an unvarnished governmentalist of the first order. The debate over his nomination would have been the perfect opportunity to present clearly to the public the consequences of handing over so much power in the health sector to the federal government.

The decision to bypass a confirmation fight may have avoided some short-term pain for the administration. But the long-term problem remains. The president jammed his health-care bill through Congress without a full debate and public consent. Voters don’t want the federal government put in charge of cost control, and yet that’s exactly what the new law will do. In time, that fact will become obvious to everyone. At which point, those who sponsored and passed this new reality into law will be held accountable for what they have done.

As one who generally believes that administrations should receive deference in their personnel selections, I found the recess appointment of Dr. Donald Berwick to be the administrator of the Centers for Medicare and Medicaid Services (CMS) disturbing. When the Obama administration came into office in January of 2009, it was no secret that an ambitious health-care overhaul was one of their top priorities. Once legislation of the magnitude they were planning passed, implementation of the new system became vital to making it work, and CMS, an enormously important agency with a budget larger than that of most countries, was going to be at the heart of that implementation process.

With this in mind, it was incumbent upon the administration to have a confirmed CMS administrator in place and ready to get started before any health-care legislation passed. The administration failed to do this. Instead, it waited until after the health-care bill passed in March to proceed. It waited in part because of fears that a confirmation battle would interfere with the health-care legislative battle, and in part because Dr. Berwick reportedly would only take the job if a health-care overhaul passed Congress.

Neither reason is satisfactory. If the White House feared that a controversial CMS pick would upset their legislative plans, it could have picked someone less controversial. If Dr. Berwick didn’t want the job until and unless a bill passed, the administration should have told him that the president, not the nominee, gets to pick the timing.

Once the administration made the unwise decision to wait until after a bill passed to select the CMS head, the die was cast for a difficult confirmation. Even in the best of circumstances, confirmation processes take four to six months, and so the administration was looking at having a CMS administrator already behind on the implementation front. In addition, waiting for after the bill to make an appointment raised suspicions that the nominee might be a controversial one, leading the press and Senate staff to dig a little deeper than they might ordinarily have done.

Still, the Senate Democrats have a large majority, and confirmations are not typically filibustered, so Dr. Berwick might very well have been confirmed at the end of the day if the administration had let the process run its course. In this case, however, the administration chose to circumvent the process by electing to recess appoint Dr. Berwick, even as, according to the New York Times, “senators were still waiting for Dr. Berwick to submit responses to some of their requests for information,” and before a committee hearing was even scheduled.

This is not the way things are supposed to work. An administration needs to put forward nominees in a timely way and let the Senate run its process, only resorting to a recess appointment if and when the process stalls.

The Bush administration’s last CMS administrator, Kerry Weems, a well-regarded HHS career official, was never confirmed by the Senate, and was made acting administrator only after Weems went through a long and public Senate hearing and had completed his paperwork and follow-up questions. Bush administration officials could never quite determine what, if anything, was wrong with Weems’s nomination, other than the fact that certain senators were determined not to confirm him. In Berwick’s case, in contrast, his contentious statements are a matter of record, which is all the more reason that he should have had an opportunity to present his case in a public forum.

In this instance, the administration failed at their end of the confirmation process, and in doing so failed both Dr. Berwick and CMS. As a recess appointee, Dr. Berwick will lack the stature of a confirmed head, potentially making his relations with both the CMS staff and Congress more difficult than they need to be. As for CMS, its streak of going without a confirmed head since 2006 continues. Now that this unfortunate circumstance of unconfirmed CMS heads has gone on in both Republican and Democratic administrations, the CMS position will likely remain a political hot potato for the foreseeable future, which is an outcome the Obama administration could have avoided.

– Tevi Troy is the former deputy secretary of Health and Human Services and a visiting senior fellow at the Hudson Institute.

As Grace-Marie Turner reports below, White House communications director Dan Pfeiffer announced that President Obama will take advantage of Congress’s brief Fourth of July break to make a recess appointment of Donald Berwick as administrator of the Centers for Medicare and Medicaid Services (CMS). Pfeiffer’s defense of this extraordinary action — that Republicans “were going to stall the nomination as long as they could, solely to score political points” — is laughable. Let me count the ways:

1. Using a recess appointment to avoid a Congressional hearing? Presidents Bush and Clinton used recess appointments, over the complaints of the opposition, to appoint nominees who were actually being stalled, by filibusters or Senate holds. No one was stalling Berwick’s nomination; instead, Senators were looking forward to airing out his views in a public setting. If Bush had done something like this (Democrats prevented him from appointing a CMS head from 2006-2009), we can be certain that many people would be up in arms.

2. We are not talking about some mid-level government functionary. The government funds half of all U.S. health expenditures — over $1 trillion. Hence, the policies of CMS affect the provision of health care for every American. Medicare and Medicaid dump costs onto individuals with private insurance; they subsidize certain types of procedures over others; they enact health-care standards that affect how all doctors must practice medicine. In addition, Berwick will be responsible for implementing most of the new provisions of Obamacare, including the $500 billion cut in Medicare Advantage. Using a recess appointment to place Berwick atop CMS is like using a recess appointment to put Elena Kagan on the Supreme Court.

3. If Republican obstruction is the problem, why not prove it on live television? The White House’s argument that a recess appointment is justified by GOP partisanship is self-evidently misleading. If Republican opposition to Berwick was simply partisan — that is, merely because he is an Obama appointment rather than on substantive grounds — that would be obvious by the kinds of questions they asked in Senate hearings. Indeed, the White House’s action is being taken to protect Democrats, some of whom won’t support Berwick, and don’t want to be forced to take an uncomfortable public vote months before an election.

4. Berwick is an advocate of socialized, government-controlled health care. As we and others have documented, Berwick is “starry-eyed” about Britain’s National Health Service, in which government owns the insurers, the hospitals, and the doctors’ offices. He is a highly intelligent and articulate defender of that position. Liberals claim that Republicans are taking his views out of context. If that is true, why not give Berwick a public platform to explain himself? The answer is clear: Berwick would only generate more controversy if he aired his views in Congress. And we’re not talking “controversy” in the mountain-out-of-a-molehill sense: We’re talking about the basic philosophy of whether or not we should have a free or centrally-planned health care system. The American public and, more importantly, the American idea, are not on Berwick’s side.

President Obama is making a huge end-run around the American people with his recess appointment of Dr. Donald Berwick.

“This recess appointment is an insult to the American people,” said Sen. John Barrasso (R., Wyo.), a physician and leading Berwick opponent. “Dr. Berwick is a self professed supporter of rationing health care, and he won’t even have to explain his views to the American people in a hearing. Once again, President Obama has made a mockery of his pledge to be accountable and transparent.” Berwick will have authority over an agency with the largest single budget in the entire U.S. government and over implementation of the most sweeping legislative overhaul of our health sector ever — without so much as a congressional hearing!

Berwick will run the Centers for Medicare and Medicaid Services (CMS), giving him control of its $800 billion budget during the crucial months when thousands of pages of regulations will be written, determining how Obamacare will be run. The recess appointment lasts through the first session of the next Congress in 2011, after which Berwick will have to be renominated and would likely face even greater opposition, assuming Republicans make expected gains in the Senate.

The reason Berwick’s nomination was so highly controversial: numerous statements he has made professing his love for socialized medicine.

One of the President’s favorite arguments for Obamacare was that it would save money by insuring those who would otherwise get taxpayer-funded care from the emergency room. “Those of us with health insurance,” he said last September, “are also paying a hidden and growing tax for those without it—about $1,000 per year that pays for somebody else’s emergency room and charitable care.”

Unfortunately, the experience of Massachusetts appears to be disproving the President’s hypothesis. Last week, the Massachusetts Division of Health Care Finance and Policy reported that, despite the imposition of universal health insurance in that state in 2006, emergency room visits increased by 9 percent between 2004 and 2008, even after taking population increases into account.

The Boston Globe spoke with David Morales, the commissioner of the Division, who explained that the uninsured “are not really responsible for significant ER use,” echoing the findings of national and local studies. As John Goodman points out, “people with insurance consume twice as much health care as the uninsured, all other things equal.” If the number of doctors stays the same, but more and more people utilize health care resources, the supply of available doctors goes down.

Hence, it takes longer and longer to get an appointment to see a doctor, and people end up right back where they started: in the emergency room. As the Globe points out, “the growing use of emergency rooms has significant cost implications, because private insurers and government programs pay substantially more for a visit to the emergency room than for a doctor’s appointment.”

Massachusetts reminds us: Access to health insurance is not the same thing as access to health care.

On its front page, the White House website recently featured this one-sentence description of Obamacare:  “Health Reform as signed by the President will put American families and small businesses in control of their health care, instead of insurance companies.”

But in the interest of being entirely open and honest with the American people, the White House might want to consider a few subtle tweaks to that description to make it reflect the CBO analysis of what’s actually in the legislation — perhaps as follows:  “‘Health reform’ would limit the kinds of coverage that Americans families could purchase and would fine them if they don’t comply; would mandate the kinds of coverage that small businesses must offer and would fine them if they don’t comply; and would funnel $1.008 trillion in the overhaul’s real first decade (2014 to 2023) from American taxpayers, through the federal government, to insurance companies — jailing anyone who doesn’t comply.”

To be sure, this sentence is a bit longer than the other, but it’s important to get all of these small details right. And I’m sure that the White House wouldn’t inadvertently want to mislead anyone.

Obamacare is moving forward on two tracks. The one we hear most about is the glitzy and expensive public-relations show, with President Obama in the center ring tapping into the seemingly unlimited resources of the federal government to produce campaign-style propaganda to sell the massively unpopular health overhaul.

Track two is the regulatory process, where Obamacare is sinking its roots deeper and deeper into the bureaucracy and the health sector. This is below the radar of most Americans, but the implementation rules are beginning to frighten many industry groups that thought their seat at the table would inoculate them against the wrath of the regulators.

The Centers for Medicare and Medicaid Services just issued a 1,250-page proposed rule on Medicare payment policies for 2011. That follows a 121-page proposed rule limiting how companies can grandfather their employee health-insurance plans to avoid even more onerous federal mandates. The IRS has invited public comment on how to carry out the rules requiring businesses to report all vendor payments of more than $600 on 1099 forms. And the administration and insurance commissioners are wrangling over the definition of the “medical loss ratio,” which could put many insurance companies out of business if it is defined too narrowly.

While this avalanche of rules and regulations pours forth from the bureaucracy, the business community is rethinking its support for Obamacare. The Business Roundtable is going public with buyer’s remorse after helping to pass health-care reform: Business Roundtable chairman Ivan G. Seidenberg gave a speech to the National Press Club on concerns about the negative effects of current government policies, especially the debt and deficit.

The American people also are more focused than ever on the cost of this massive entitlement. Four out of five Americans say that the reckless spending of this Congress and administration is an “extremely serious” or “very serious” threat to the U.S.

A report out this week shows that we are right to be very, very afraid. The Congressional Budget Office has issued its long-term budget outlook, and it should send chills up everyone’s spine. Under the most realistic forecast of likely congressional actions, CBO says the nation’s debt will swiftly be pushed to “unsustainable levels.” And that takes into account “all the effects of the recently enacted health care legislation.” So much for health reform helping to reduce the deficit. In fact, Obamacare will cost many times the estimates that Congress tortured out of CBO.

Rep. Paul Ryan makes a credible and forceful case in a speech at the U.S. Chamber of Commerce, saying that the new entitlements created under Obamacare “will rival the size and liabilities of Medicare in the very near future.” Ryan, the ranking Republican on the House Budget Committee, will become ever more important going forward with his visionary “Roadmap for America’s Future.” It is a detailed plan to put the nation’s entitlement programs on a sustainable path, boost economic growth, lower taxes, and increase the income of working Americans.

But despite the onerous rules and fear over the burgeoning debt, the White House thinks it is winning the PR battle. Kaiser Health has a new survey on public opinion about Obamacare. It says that those with “favorable views of the new law increased seven percentage points over the past month to 48 percent, compared to 41 percent who have ‘generally unfavorable’ views.” Reporters concluded this means that people are warming to Obamacare. But the biggest reason that the needle has moved is that a slightly larger percentage of people think the overhaul law is not going to affect them or their care.

But it will, of course, affect them . . . as health costs go up faster than they did before . . . as people start to find out that their employers are rethinking whether they can continue to offer health insurance . . . as seniors find it harder to find a doctor to see them . . . as the costs of the individual mandate start to sink in . . .

And the individual mandate is, by the way, the single most unpopular provision in Obamacare, with only 14 percent of those surveyed by Kaiser thinking this is a very good idea. How on earth can you impose a mandate on everyone to purchase very expensive health insurance with this level of public support? You can’t. This will have to be changed. The American people don’t want this. Freedom and liberty must prevail. Substance will triumph over PR every time.

Finally, some good news with the Massachusetts insurance price-control saga: An appeals board of attorneys from the state’s Division of Insurance has overturned Gov. Deval Patrick’s denial of Harvard Pilgrim Health Care’s requested rate increases. The Boston Globe reports that the “panel…found that rate increases Harvard Pilgrim initially sought in April are reasonable given what it must pay to hospitals and doctors.”

Insurers yesterday cheered the ruling, which bodes well for three other companies now before the appeals board with their own cases against capped rates.

“The decision shows what we have been saying all along,” said Lora Pellegrini, president of the Massachusetts Association of Health Plans, a trade group based in Boston. “The denial of carrier rates was inappropriate.”

The other insurers in the state can hold out hope that the appeals board will give them the same treatment, saving them several months of uncertainty and litigation.

Meanwhile, in Washington, it didn’t take long for the Obama administration to try Deval Patrick’s tactics on for size. Everyone knows that insurers across the country are going to have to raise premiums in order to account for all of the new mandates in the Affordable Care Act. But the president is trying to have his cake and eat it too, warning insurers that the government will not allow “unreasonable premium increases.” He would doubtless cheer on the implosion of the private health-insurance business, but consumers would not.

Both in Massachusetts and across the nation, genuine attempts at reducing the cost of health insurance will require a completely different approach to health-care reform: one that incentivizes patients to make prudent choices about health spending, and one that frees insurers from the mandates that prevent them from creating affordable insurance products.

Too many Republicans are formulating their health-care positions by melding a general free-market disposition with a split-the-difference political posture. These Republicans need to understand that the desire to repeal Obamacare is neither a temper-tantrum nor an ideological litmus test. Rather, as a policy matter, repeal is critical to the economic fortunes of tens of millions of Americans, for whom affordable health insurance is increasingly out of reach.

– Avik Roy is an equity research analyst at Monness, Crespi, Hardt & Co., and blogs on healthcare policy at the Apothecary.

House Minority Leader John Boehner (R., Ohio) and House Minority Whip Eric Cantor (R., Va.) have signed on to the two discharge petitions authored by Wally Herger (R., Calif.) and Steve King (R., Iowa). The former’s petition would attempt to repeal the Patient Protection and Affordable Care Act in full, while King’s would repeal parts of the law.

As a matter of procedure, a majority of the House (218 members) must sign on to the discharge petitions in order to force a vote. While this may be a difficult task to accomplish now, it is important that the debate on health-care reform be kept alive between now and the November elections. Now is not the time for apathy. If the Republicans take control of one or both houses of Congress this fall and the presidency in 2012, it would set the stage for repeal in 2013 — well before most of the benefits commence in 2014. As we know from history, it is very difficult to take something away from people, even if they don’t like it, once it becomes entrenched.

Obamacare was signed into law on March 23 without a single Republican vote. And, more important, the polls showed that prior to passage, 56 percent of Americans were against it. Three months after passage, according to several polls, that percentage has not changed; 56 percent of Americans support repeal of the legislation. The goal of everyone is affordable, accessible, quality care for all. The American people know that this legislation will not accomplish those goals and that their taxes will increase substantially, deficits will rise, and, ultimately, care will be denied. This is the largest entitlement program since the Great Society and will end up costing well in excess of the $938 billion over ten years that the president keeps telling us.

Now is the time to develop a roadmap to reform that will lead to universal coverage and lower costs. Some ideas for inclusion in the roadmap are ones that would empower doctors and patients rather than increasing the role of government from the 50 percent of the health sector that is now in government’s hands. A few examples include changing the federal tax code so that individuals get the same tax break to purchase insurance as those who get it from their employers, encouraging states to reduce costly mandates that drive up the cost of insurance, and states’ introducing tort-reform legislation in order to reduce the incidence of defensive medicine. It is encouraging that House members such as Boehner, Cantor, King, and Herger realize the importance of turning back this draconian legislation and bringing solutions that would work for all Americans.

– Sally C. Pipes is president and CEO of the Pacific Research Institute. Her book The Truth About Obamacare (Regnery Publishing) will be released in August.

Republican leaders John Boehner and Eric Cantor are going to be signing disharge petitions on measures by Steve King and Wally Herger that would repeal parts or all of the Democrats’ health-care bill. The petitions are procedural maneuvers that would force votes that have no chance of passing in the Congress, but remain important for two reasons. First, now that the passed law has proven to be no more popular than the proposed legislation, the petitions will put Democratic members on the record once again in favor of what is and will likely continue to be an unpopular law. In addition, a number of Republican members have noted to me that Democrats are tired of talking about health care and desperate to drive the topic out of the conversation.  Unfortunately for them, these petitions will keep the health bill on the table, and force Democrats to defend it, even as the American people learn in greater detail why they don’t like what’s in it.

In rightly championing the American people’s clear desire for the repeal of Obamacare, some Republicans are reportedly concerned that voters will ask them, “So, does this mean you’d allow insurers to continue denying coverage to people with preexisting conditions?” But Republicans should welcome this question — which, if they’re ready for it, is a hanging curveball they should knock out of the park.

GOP lawmakers can immediately provide much-needed help for the uninsured who have preexisting conditions by providing full funding for state-run high-risk pools (preferably in combination with offering long-overdue tax-breaks for the uninsured, as Ross Douthat advocates). Obamacare would address the problem of covering those with expensive preexisting conditions by mandating that insurers offer them coverage in the regular market, at artificially low rates.

For four simple reasons, which Republicans can successfully communicate to voters, the high-risk-pool approach makes colossally more sense:

1. High-risk pools wouldn’t invite government control of our entire health-care system; Obamacare would. Such pools offer a sensible solution to a particular problem without overhauling the rest of our health-care system in the process. Unlike Obamacare, they wouldn’t jeopardize the preexisting insurance of millions, consolidate power and money in Washington to an unprecedented degree, or compromise Americans’ liberty.

2. High-risk pools wouldn’t raise everyone else’s premiums; Obamacare would. People with expensive preexisting conditions are, by definition, more expensive to cover. If insurers are forced to charge such customers premiums that don’t reflect the actual cost of insuring them — as they would be under Obamacare — then they’ll pass along those costs to everyone else through higher premiums for all. If the government subsequently prohibits insurers from raising premiums for everyone, then insurers would either go out of business or ration care.

3. High-risk pools would cost under $20 billion a year; Obamacare would cost over $200 billion a year. As Jim Capretta and Tom Miller observe in greater detail in a recently published National Affairs piece, state-run high-risk pools can provide effective and affordable coverage. Depending on whether the number of uninsured with preexisting conditions is actually closer to 2.5 million, as I have estimated in my Small Bill proposal, or closer to 4 million, the high end of Capretta’s and Miller’s estimate, the annual costs would range from approximately $10 billion to $15-20 billion. That’s a lot of money compared to nearly anything else, but it’s a pittance compared to Obamacare. From 2018 onward, according to the CBO, Obamacare’s annual cost would be over $200 billion.

4. Obamacare’s approach would likely decimate the private insurance market. Not only would Obamacare cost more than ten times as much money as high-risk pools, but its approach would likely cause a “death spiral”: The rising cost of premiums (see #2) would lead many younger and healthier people to drop their coverage (knowing they could pick it back up as necessary, under the new rules) and pay the comparatively low fine that Obamacare would impose on them for not carrying insurance. This would make the remaining mix of people in the pool less healthy, and premiums would rise further in response; more healthy people would then drop out; premiums would rise even further; and so on.

After the government has put this chain of events into motion, private insurance would become less and less affordable, and eventually the government would come to the “rescue” with a government-run “public option” — which would mean even more expense and even greater government control.

On the whole, in offering a solution to the problem of making coverage available to those who are uninsured and have expensive preexisting conditions, the choice between state-run high-risk pools and federal Obamacare mandates could hardly be clearer: For over $200 billion a year, we could have higher premiums, less liberty, and — most likely – a decimated private insurance market. Or, for under $20 billion a year, we could solve a pressing human problem without subjecting ourselves to any of these disadvantages.

Repeal, anyone?

The Commonwealth Fund has produced yet another headline-grabbing survey, this one putting the United States dead last in its ranking of seven countries’ health systems. Besides the U.S. and Canada, other countries surveyed were Australia, Germany, the Netherlands, New Zealand, and the United Kingdom.

Even USA Today is reporting what health-policy analysts have known for a long time: Physicians are increasingly unwilling to see Medicare beneficiaries. One would think that a political party committed to repealing Obamacare would use this opportunity to help Americans understand that the government cannot “guarantee” access to health care.

Unfortunately not: Last week, Republican Senators caved in to yet another short-term Medicare “doc fix” that kicks the can down the road until the end of November. Without the so-called “doc fix”, Medicare reimbursements to physicians would have dropped by a fifth as of June 1, as I wrote earlier.

Last Friday’s unanimous Senate vote in favor of “fixing” the fee schedule for a few more months was followed last night by a 417–1 vote in the House. (The lone opposing vote was cast by the very liberal Democrat George Miller.)

What do Republicans think they have achieved by pretending that they have “fixed” the fee schedule? Doctors are fleeing Medicare in droves even with these short-term fixes in place. So, by continuing to share joint ownership of unreformed Medicare with Democrats, Republicans lose (once again) an opportunity to differentiate themselves on health-care reform between now and November.

Perhaps it was necessary for the Senate Republican leadership to carve the “doc fix” out of the horrible “jobs bill” to ensure that the same Republican Senators who voted for the previous “jobs bill” in February did not vote for this month’s budget-buster. Fair enough, but when Senator Reid abandoned the bigger bill on Thursday evening, and Speaker Pelosi brought the stand-alone “doc fix” to the House floor, the House Republicans could at least not have voted for the darned thing.

If Republicans had proposed to junk the entire fee schedule and replace it with a voucher that would liberate patients and doctors to determine how much each medical service is worth, they would have had four months to market this idea to voters, who are quickly learning that Medicare beneficiaries are already facing increasingly limited access to care.

Consider a Medicare voucher for physicians’ services a Beta test for a more universal tax credit, like the one proposed by Senator McCain in his presidential campaign. This is not an easy political lift, to be sure. But if Republicans can’t even do this for Medicare, how the heck are they going to repeal Obamacare and replace it with real reform?

House Speaker Nancy Pelosi guaranteed in March that passage of the health-care-reform bill would “almost immediately” create 400,000 jobs. Three months have passed since the president signed it into law. Not only has zero real job growth occurred, the first health-care-reform casualties — businesses and their employees — have begun to appear. For single moms trying to find jobs, however, the real pain is on the way.

The law will place new penalties on businesses that provide inadequate health-care benefits for their employees — “inadequate” meaning that an employee is eligible for federal subsidies. Employers who offer coverage will pay $3,000 for each employee who receives a subsidy, with the total penalty capped at $2,000 times the total number of employees minus 30 (the penalty for employers who don’t offer coverage). Companies with fewer than 50 employees are exempt.

And here’s the key part: These subsidies are contingent not only on the health benefits the employer offers, but also on the total income of the employee’s household relative to the poverty level. The math is simple. Low-income employees, especially those who are their households’ sole income-earners and/or have children, are more likely to qualify for federal subsidies, and thus more likely to bring with them a $3,000 penalty. Given the choice, whom will employers hire: a single person — or even better, a married person whose spouse works — or a single mom raising two or three kids?

It would be easy to dismiss this analysis as more right-wing claptrap, except the liberal Center for Budget Policies and Priorities came to the same conclusion.

The great jobs creator of Nancy Pelosi, the great plan to free Americans from worries about “health care,” will have the effect of furthering and prolonging unemployment and poverty.

– Eric Novack is chairman of both Arizonans For Health Care Freedom and the U.S. Health Freedom Coalition.

President Obama’s speech today seemed designed to reassure us that all is well with the new health-care law, from both the implementation and the policy perspective.

Unfortunately, all is not as well as he is making things out to be. On the implementation side, as I wrote last week, the administration is facing a host of serious logistical challenges, and has already missed a series of early implementation deadlines.

The policy side, however, is more important, and it is becoming increasingly clear, even to the White House, that the new bill is likely to drive premiums upward. According to to an AP story this morning, the White House is worried that “escalating premiums will force more people drop their policies before the law is fully implemented.” Administration officials are right to be concerned, but they are also making the problem worse, as the president announced a series of regulations that will exacerbate insurance costs.

This piece in The Hill sketches out the details of some of the announced changes, namely bans on lifetime limits, pre-existing-condition exclusions, and policy rescissions. The fact sheet provided by the White House in advance of the speech acknowledges that these limitations drive up premium costs, but tries to minimize the impact of each particular requirement. In the speech, President Obama warned that insurance companies should not see the new law as “an excuse” to increase prices, but the reality is that they may not have any other choice.

The problem is compounded by the fact that these changes are coming in an environment in which premiums are already headed upward, as a recent study by the Kaiser Family Foundation shows. According to the study, 77 percent of insurance holders in the individual market reported premium increases from their current or previous insurer. The new law, unsurprisingly, is making things worse. As the story notes, “Insurers have warned that some of the immediate effects of the law — such as barring them from rejecting children under 19 for coverage and allowing some young adults to stay on their parents’ policies until age 26 — could add to premium inflation in the short term.”

Many people are willing to accept higher costs in exchange for limitations on some of the insurance companies’ most noisome practices. But we do need to get costs under control somehow. The administration has promised that expanding coverage to all will drive costs down, yet a new study by John Cogan, Glenn Hubbard, and Daniel Kessler has just shown that the Massachusetts plan, on which the administration based the new federal law, has led to premium increases in employer-sponsored plans on the order of 6 percent. We remain faced with these twin problems of significant cost hikes and implementation hiccups, and today’s speech did little or nothing to fix either problem.

The editors of National Review and NRO have consistently called for the repeal of Obamacare, and established Republican politicians claim to be onside. But when push comes to shove, those Republicans have been unwilling to expose the entire political-medical complex to sunshine, which is a prerequisite for repeal.

Witness last Friday’s unanimous passage in the U.S. Senate of a standalone so-called “doc fix” for Medicare Part B. This “doc fix” kicks the can down the road until the end of November.

But, hey, it doesn’t increase the deficit! Big deal.

As I recently wrote, Congress can never really fix the “doc fix” because politicians cannot correct a centralized, Soviet-style method of calculating physicians’ fees. The best that they could do is simply to eliminate it entirely. So, there is no reason for Senate Republicans to crow about their collaboration with the majority to pull the “doc fix” out of the more comprehensive “extenders” bill in a last-ditch attempt to prevent the Centers for Medicare & Medicaid Services from ordering physicians’ reimbursements to be cut by over one fifth starting this week.

First, two thirds ($4.2 billion) of the $6.5 billion increase in physician reimbursements will come out of Medicare payments to hospitals, by forcing them to bundle together all inpatient and outpatient claims incurred within three days of admission. I’m sure that appears somewhat byzantine to most readers — and it should. The Senate proposes simply to take money allocated from one Soviet-style, price-fixed part of the health sector and transfer it to another. The hospitals will soon be lobbying for their “fix,” as this new policy sinks its teeth into them.

Second, the balance of the money comes from a hike in corporate-tax revenues — the effect of a change in pension-fund accounting that will allow corporations to reduce their contributions and therefore have more taxable income. (This, of course, ignores the fact that corporate pensions are hardly ship-shape, and even the Pension Benefit Guaranty Corporation’s solvency is questionable, as George P. Shultz and John B. Shoven discuss in a book I reviewed a while back.)

Senate Republicans are correct that their most recent in a series of never-ending short-term “doc fixes” doesn’t increase the deficit, but that’s only because of a tax hike and a raid on hospitals. It doesn’t reduce the role of government in medicine, and it’s hardly a good warm-up for the main event of repealing Obamacare.

The Darmouth Atlas of Health Care, as NRO readers may recall, has been a source of significant recent controversy, due to a skeptical front-page article published in the New York Times on June 3. Elliott Fisher and Jonathan Skinner of Dartmouth penned two rebuttals to the Times piece, in which they pointed out some of its factual and analytical errors. But the Dartmouth duo failed to address concerns about the key question underlying their research: Is government capable of efficiently micromanaging medical practice?

Yesterday, Times reporters Reed Abelson and Gardiner Harris posted online a 3,000-word, 7-footnote response to the Dartmouth rebuttals. If anything, the reporters’ new piece is even harsher than their original one. It certainly makes for some interesting reading.

The Times reporters acknowledge that the Dartmouth researchers have conducted some cost-of-living adjustments in their academic research, but point out that such research is either absent from, or de-emphasized on, their public website:

The distinction between the atlas, as it is available on the Dartmouth Web site, and other published work by the Dartmouth researchers is important. In the academic sphere, the Dartmouth researchers often use careful statistical adjustments and nuanced language to qualify their findings. But on the Dartmouth Atlas Web site and in the halls of Congress where the atlas maps have become popular, there is little of that care, leading to conclusions and hospital and regional rankings that can present a misleading picture.

For example, some prominent academics, despite their familiarity with the Dartmouth work, were unaware, until told by The Times, that the popular regional maps and hospital rankings published on the Dartmouth Atlas Web site were not adjusted to reflect the price and cost-of-living differences around the country.

Abelson and Harris go on to document evidence that, among other things: (1) Dartmouth’s Fisher exaggerated the strength of the Atlas’ evidence in Congressional testimony; (2) other methodological problems exist with the Atlas; (3) the Dartmouth group has made wild claims about the amount of money government can save by adopting their recommendations.

That the Atlas has methodological problems is undeniable. That there is waste in the medical system is also undeniable. While I’ll be interested to see how the Dartmouth researchers and sympathetic bloggers respond to the latest salvo from the Times, I’m really hoping they’ll one day answer the important question: Why will more government involvement lead to less waste?

— Avik Roy is an equity research analyst at Monness, Crespi, Hardt & Co., and blogs on health-care policy at The Apothecary.

One provision in last year’s stimulus bill gave “enhanced” funding to the states to cover Medicaid expenses. Another was a boon to state-run public-education budgets.

These payments were presented as a way to help states out of a jam, not as a permanent new source of funding. Secretary of Education Arne Duncan even warned schools and states not to use the stimulus funds in a way that, as the New York Times wrote, would lead to “dislocations” when they dried up.

But frighteningly, most state budgets are worse off today than they were 16 months ago. And many states have assumed that the funding will be extended. According to the National Conference of State Legislatures, at least 29 state legislatures have passed budgets assuming the federal government will pony up another $25.5 billion.

Sure enough, “with a sense of urgency,” President Obama requested an additional $50 billion bailout package last week. With two failed Senate votes this week, however, the package’s fate is far from certain. A failure to pass a new stimulus would add a $1.5 billion hole in the already gaping California budget deficit. Pennsylvania anticipated about $850 million, Massachusetts $700 million, Georgia $370 million, and New York $1.1 billion.

It seems that the “one time” cash infusion merely allowed many state legislatures to put off difficult budget decisions. And if the federal government throws more money at the states, it will merely put off the day of reckoning further. When that day comes, we will see an epic, and endless, battle for scarce funds between two stalwart Democrat constituencies: public-education advocates and public-health-care proponents, including hospitals.
 

Once of the most overlooked aspects of the health-care debate has been the degree to which the Obama administration has utterly failed to win political independents over to its notion of health-care “reform.”

By insisting on “comprehensive” health-care legislation and ramming it through without a single Republican vote, rather than following the customary legislative process of advancing more targeted legislation and passing it through a process of negotiation and compromise, President Obama and the Democratic Congress managed to produce a health-care law that Americans in the center of the political spectrum dislike even more than most Americans do. And by overwhelming margins, these political centrists now want that law to be repealed.

Over the past five weeks, independents have favored the repeal of Obamacare by an average margin of 64 to 31 percent, according to Rasmussen’s poll. That 33-point margin is 10 points greater even than the 23-point margin in favor of repeal among voters as a whole (59 to 36 percent). Among independents who feel “strongly,” the margin is 50 to 22 percent. When half of all independents “strongly” favor anything, they are likely to get it — or somebody is likely to get it — especially when fewer than a quarter of them strongly oppose it.

Not only do independents favor repeal by a margin of better than 2-to-1 over a five-week span, but younger voters favor repeal as well — also by a greater margin than voters as a whole. Over the past five weeks, voters under age 30 have favored repeal by an average margin of 60 to 35 percent, with voters in their 30s favoring repeal by 64 to 32 percent.

Why focus just on Rasmussen? Because not only does that poll solely target likely voters and ask the question in a straightforward way (“Do you strongly favor, somewhat favor, somewhat oppose or strongly oppose a proposal to repeal the health-care bill?”), but — to the best of my knowledge — no other poll in the past five weeks has asked Americans whether they want repeal or not. Pollster.com lists five polls over that span that have asked about Obamacare (with all of them showing that Americans dislike it), but Rasmussen is the only one that has explicitly asked about repeal.

The long and short of this is that the Democrats are walking into an electoral buzzsaw. Furthermore, such polling should give Republicans the courage to advance a one-sentence repeal bill. Sure, Obamacare can’t be sent packing until the voters have first sent its namesake packing (which would require the Republicans to put forward a charismatic and articulate candidate), but such a proposal would initiate the repeal process.

By advancing such a one-sentence bill, the GOP would show that it’s serious about repeal, and independents would likely reward those members (of either party) who share this seriousness about getting rid of the legislative abomination of our time — while punishing those who don’t.

Is there any limit to single-payer fanaticism? Today’s New York Times suggests not.

Donald G. McNeil Jr. appears to be a reporter who believes that any nation can achieve “universal” coverage if the government exercises enough willpower. His example for the United States? Rwanda, for Pete’s sake: “A dirt-poor nation, with a health plan.” Sure, women give birth in clinics with dirt floors, and there are only three cardiologists and one neurosurgeon in this land of almost 10 million people. Nevertheless, according to a local doctor approvingly quoted by McNeil:

Rwanda can offer the United States one lesson about health insurance: “Solidarity — you cannot feel happy as a society if you don’t organize yourself so that people won’t die of poverty.”

And you don’t only get these calls for “solidarity” from countries whose citizens slaughtered a million or so of their fellows a few years ago — even single-payer advocates in developed, otherwise-free countries with “universal” health care find things to admire in third-world health systems. Carolyn Bennett, MD, a Canadian Member of Parliament, has spent years encouraging Canada to adopt the best features of Cuban health care.

I’ve often cautioned fellow conservatives not to go overboard in describing single-payer systems with terms normally used for North Korean labor camps. Maybe I’m too complacent. After all, the director-general of the World Health Organization recently complimented the Hermit Kingdom on its low rate of obesity.

The U.S. Senate enraged organized medicine by leaving town for Memorial Day without plastering another “fix” onto the broken Medicare Part B payment system. If the Senate doesn’t pass a “fix” by June 15, Medicare will start squeezing their paychecks by one fifth.

I understand the doctors are upset. But the plain truth is that Congress will never “fix” the payment schedule. Congress attempts to control costs via the Sustainable Growth Rate (SGR), a method instituted in 1997. Physicians cannot stand the SGR because it attempts to limit spending on their services according to growth in real GDP. (The method’s most recent iteration, in all its glory, is described here.) Because medical costs have been increasing faster than GDP, the SGR is pretty much guaranteed to reduce docs’ fees every year it is in place.

However, physicians have successfully lobbied for short-term “fixes” since the SGR started to bite almost a decade ago. Congress has put in the “fix” nine times in nine years. Unfortunately, every time it “fixes” the schedule, the gap between what the SGR calculates fees to be and where Congress actually sets them grows wider.

Physicians, of course, would like a permanent “fix” based on increasing fees based on the Medicare Economic Index (MEI), a measurement of inflation of medical costs. Unfortunately, this will never happen, for two reasons. First, having the government establish fees for physicians that are based on physicians’ costs is an obvious recipe for fiscal disaster, because a “cost plus” mechanism would create even more incentives to drive up costs. Second, really “fixing” the fees would force Congress to tell the truth about the future costs of Medicare, which it is unwilling to do. Congress proved this during the passage of Obamacare.

Earlier this week, the Associated Press obtained explosive internal e-mails from Robert Dynan, Deputy Commission for Financial Analysis at the Massachusetts Division of Insurance. The e-mails were drafted in reaction to the April 1 news — which Dynan only learned about by reading the papers — that state insurance commissioner Joseph Murphy was imposing price controls on Massachusetts health insurers. Drynan writes that Murphy’s action “has the potential for catastrophic consequences including irreversible damage to our non-profit health care system.”

In an e-mail sent to colleagues on April 6, Dynan expresses his fear that insurers will go bankrupt as a result of Murphy’s decision:

The rates, by design, have no actuarial support. This action was taken against my objections and without including me in the conversation, but this does not relieve us of the burden of monitoring solvency. Indeed, our job of monitoring solvency just got exponentially more difficult and exponentially more important. There most likely will be a train wreck (or perhaps several train wrecks).

On April 30, Dynan sent a detailed assessment to Murphy, outlining 13 key concerns, which I summarize here:

1. If an HMO goes insolvent, the non-profit hospitals will be forced to eat millions of dollars in un-reimbursed claims, “potentially jeopardizing their financial condition.”
2. Most HMOs “showed less than stellar results” in 2009, and lack the “excess capital” to sustain further losses. “I can guarantee you that there are very few regulators in the United States who would disagree with me.”
3. The Massachusetts insurance market is mostly non-profit; non-profit plans have narrower profit margins and are therefore more likely to fail. “If they were to fail, the void may be filled by for-profit insurers.”
4. Some HMOs in the state, for whatever reason, undercharged for health insurance in 2009; these insurers will be especially hurt by a second year of losses. “Over time, consumers and employers will take advantage of this price inefficiency and will…swamp them with further losses.”
5. The rate caps will not affect any other practices in the health care system. “Hospitals do not seem inclined to tear up valid contracts with the HMO’s in order to give them relief.”
6. There is a “serious potential for brokers and insureds to game the system…A rational person would cancel their old policy and take out a new policy at the artificially low rate…it could be very damaging to the 2010 business plans.”
7. If the HMOs succeed in overturning the price controls in court, “employees run the risk of a retroactive bill from their employer for health insurance back to April 1.”
8. Three insurers are already under formal state oversight due to insolvency risks, and more such situations are likely due to the price caps. “This has the potential for a ‘run on the bank’ for the [insurers in question].”
9. All insurance companies, including HMOs, “are still recovering from a very difficult investment climate,” leading to further concerns about their solvency.
10. “The HMO’s cannot be legally required to sustain these losses in the merged market forever.” HMOs will exit the market, leaving Massachusetts residents without access to insurance.
11. Some hospitals will be hit disproportionately if an insurer goes bankrupt, “depending on the level of business with the insolvent HMO. Also, the Commonwealth’s General Fund is in no condition to assist in a bailout.”
12. A Massachusetts resident who incurs health expenses out-of-state, if his insurer goes bankrupt, will be personally liable for those expenses. The out-of-state hospital “will demand payment from the Massachusetts resident, who may only recover cents on the dollar [from his bankrupt insurer].”
13. An epidemic of insurer bankruptcies could lead to a loss of accreditation with the National Association of Insurance Commissioners, which “would not be helpful to the many life and property and casualty companies that call Massachusetts home.”

Murphy, Dynan’s boss, did not take too kindly to these objections. “Negative and conclusory statements about the effect of the Divison’s actions on insurers and the market are unprofessional and counterproductive.” Dynan half-heartedly apologized in a written letter dated June 4, saying “I should have been more careful in the selection of words I used to express my private opinion.”

On June 9, both the Boston Globe and the Boston Herald ran stories about the dust-up. Dynan could not be reached for comment and appears to have been muzzled. “Murphy said Dynan was either on vacation or on a state-mandated furlough,” reported the Herald.

– Avik Roy is an equity research analyst at Monness, Crespi, Hardt & Co., and blogs on healthcare policy at the Apothecary.

What an unbelievable hypocrite. The ineffable Gail Collins, occupier not of Middle East real estate but instead a regular slot on the NY Times op-ed page, complains today about Meg Whitman, Carly Fiorina, and Michael Bloomberg — respectively, a Republican, a Republican, and a RINO — attempting to buy public office. Did she ever make this argument about any of the Kennedys or their children or cousins? Or about Jon Corzine? Or John Edwards? She goes on to slam corporations — that is, individuals freely associating with one another — for exercising their free-speech rights, abetted by that evil Supreme Court. 

In CollinsLand, neither rich Republicans nor corporations actually have the right to use their resources to influence voters. Only Democrats and unions have that right.

Can Collins really be this unaware of her biases? Or is this the result of living in an echo chamber?

– Benjamin Zycher is a senior fellow at the Pacific Research Institute.