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Obama Pulls Plug on Elderly End-of-Life Counseling

7:05 am in Executive Branch, Government, Legislature, Politics by Scarecrow

When you get to this point you are on your own as insurers pick your wallet. (photo: Pickersgill Reef via Flickr)

Proving once again that he may be the most cowardly President ever to occupy the White House, President Obama ordered the folks writing the regulations that would have compensated doctors for providing voluntary end-of-life counseling if requested by their patients to delete that regulation. From the New York Times:

The Obama administration, reversing course, will revise a Medicare regulation to delete references to end-of-life planning as part of the annual physical examinations covered under the new health care law, administration officials said Tuesday.

The move is an abrupt shift, coming just days after the new policy took effect on Jan. 1.

Many doctors and providers of hospice care had praised the regulation, which listed “advance care planning” as one of the services that could be offered in the “annual wellness visit” for Medicare beneficiaries.

The excuse the White House gave for this capitulation to the unscrupulous right wing propagandists — meaning every conservative columnist and political hack who ceaselessly misrepresented the rule — is incoherent, a clear sign of lack of principle and political courage. Notice it’s from another anonymous White House official.

An administration official, authorized by the White House to explain the mix-up, said Tuesday, “We realize that this should have been included in the proposed rule, so more people could have commented on it specifically.”

“We will amend the regulation to take out voluntary advance care planning,” the official said.

Worse, the White House blamed their reversal on Donald Berwick, the man Obama chose and the White House trumpeted to bring humane, rational administration to Medicare. “He didn’t tell us what he was doing,” the White House seems to be saying, “so it’s not our fault he did the right thing.” Pay attention, Liz Warren; watch your back.

Why should anyone ever believe this White House? Remember, this is from the same President Obama who just last month promised us “okay, I caved on extending tax breaks for the wealthiest this time, but gosh darn it, just wait until 2012, and I’ll be really tough.”

No, he won’t. He’s a coward and cannot be trusted to keep promises to the American people. When this man is done, the entire New Deal and dozens of humane, progressive principles and programs will have been compromised or crippled. He’s not a Democrat.

One term and out.

John Chandley

Marc Thiessen Rewrites History as GOP Plans Tanking the Economy Again

12:46 am in Economy, Government by Scarecrow

(image: twolf)

There have been a surprising number of stories, some ridiculous, wondering whether the predicted electoral slaughter will somehow induce a more Republican Congress festooned with Tea Bags and a chastened President Obama to work together in that wonderous fantasy land that exists only in the minds of David Broder fans.

The short answer, already screamed on the House floor by the likely next Speaker, John Boehner, is “hell no!”  And now his Senate counterpart, Mitch McConnell, has let slip the Republican’s most important goal for the next two years is “for President Obama to be a one term President.”  Message to America: screw you.

Sentient persons hardly needed such candor.  The GOP’s nihilist, nation-be-damned attitude has been obvious since at least January 2009.  And there’s no logical reason to expect the GOP’s Tea Party elements to behave more responsibly now that the GOP’s barely secret corporate funders recklessly handed them a pretend seat at the table. The dupes will demand their due, so accommodation with the black, socialist anti-Christ is out of the question.

Still, more cynical Republican operatives and propagandists recognize there is a danger in being blamed for the obstruction, government stalemate and resulting damage to the economy and recession victims.  It thus falls on the likes of propagandist Marc Thiessen, former Bush speechwriter, to invent a version of history that will deflect blame for the Republicans’ role in crippling the federal government and tanking the economy again.

And they will tank it again.  If you apply budget spending austerity and tax cuts to the wealthy to a stagnant economy with 15 million jobless, millions more in foreclosure and perverse wealth distribution,  you will get a worse recession with millions more unemployed, impoverished and foreclosed.

But the original stalemate, Thiessen insists, was President Obama’s fault. It began when Obama invited Congressional leaders to discuss ideas for a fiscal stimulus to revive the economy.   In Thiessen’s telling, Republicans brought constructive proposals based on tax cuts for everyone, including businesses, but they were rebuffed by Obama, who told them, “elections have consequences.”

Thiessen interprets that to mean Obama never had any intention of taking responsible Republican ideas, and his refusal to work with Republicans is why the bipartisan train got derailed.  Thiessen then fantasizes that if only Obama had offered to share power, say by letting the Republican have about half of the stimulus in tax cuts, then a compromise would have been struck; the Republicans would have supported the stimulus and shared honestly in the blame or credit for whatever results it produced.

Once again we are asked to fall into the black hole and squeeze through to the alternate universe on the other side.  Because if we remain on our side of reality, the rest of us will eventually recall that the stimulus bill was about 40 percent tax cuts, including Republican favored business tax breaks, a  fix for the Alternative Minimum Tax and further tax cuts for most Americans.   Had a President McCain or Bush proposed these (as Bush had), there would have been near unanimous Republican support.

You may also recall the White House insisted on the tax cuts even though Christine Romer was advising the new President that tax cuts were not nearly as useful in stimulating growth and jobs as spending.  Yet the President limited the proposed stimulus spending both to limit its size (arbitrarily, thanks, Larry, Rahm) and to allow more tax cuts, hoping to get Republican votes.  Both unilateral concessions to Republican orthodoxy were largely rejected, but they doomed the stimulus to be too small to fill the gap and poorly targeted.  The compromise may well cost Democrats the House and perhaps the Senate.  Well done, Rahm.

But Thiessen’s revisionist history doesn’t end with that selective forgetting.  He also neglects to mention that Republicans never offered tax cuts as part of a Keynesian package of fiscal stimulus, because they never believed in Keynesian stimulus.  Boehner, McConnell  and friends told us that over and over.  Tax cuts were favored not because they were better stimulus but because they helped cripple government; whatever effect they might have on the economy was secondary, though part of Republican dogma holds that cutting taxes liberates businesses and entrepreneurs, the only sources they acknowledged for real jobs and economic growth.  Of course, this required they ignore the value of public investments and the hundreds of thousands of teachers, firemen, police and other state and local workers that would soon be laid off, because government jobs were not “real jobs.”

If Republicans understood and supported Keynesian stimulus, and cared about putting people back to work, they would have demanded a larger stimulus, instead of fanning deficit hysteria.  They would be demanding we augment Social Security payments, not cut, defer or privatize them.  And they would have realized that federal efforts to increase aggregate national demand would fail if federal spending was mostly offset by state and local budget contraction.  Preventing the states from becoming 50 Hoovers was essential to making the federal stimulus work as intended.  But Republicans opposed expanded aid to state budgets; even the supposed “moderates,” Snowe and Collins, demanded that aid to states be severely limited.

So there was never any hope that many Republicans would agree to a half and half stimulus package that contained hundreds of billions in new Democratic spending proposals, even though that admittedly ad hoc package of spending measures — especially those targeted at the unemployed — would do more to help the economy and create jobs than tax cuts.   When Democrats in the House bundled together their lists of spending priorities after eight years of Bush underfunding and neglect,  there was little chance Republicans would vote for them, no matter what tax cuts the stimulus contained.

Thiessen’s effort to deflect blame for past and future Republican obstruction must also ignore every subsequent effort Obama and Senate Democratic leaders  made to include them, usually over the objections of Democratic activists and liberal bloggers.  Long after it became clear Republicans would obstruct everything, Obama continued to dismay supporters and waste precious time with Senator Baucus’ Gang of Six, orchestrated by the White House in an effort to include Republicans on the Senate Finance Committee on the health reform bill.  The White House demanded a similar bipartisan effort, equally frustrating and pointless, on the financial reform bill, and the Administration supported Senators Kerry and Lindsey Graham’s doomed efforts to agree on an energy/climate bill.  All that history is now missing from the Thiessen/Republican version.

Despite Thiessen’s fictions,  the irony is that Obama didn’t follow through on what he reportedly said — that elections have consequences.  His greatest failure was not to understand what his own election meant — a convincing rejection of the Bush regime, and after the financial collapse, a long overdue repudiation of Reaganism and deregulation.  What was needed was recognition of  the dangers of handicapped, co-opted government in a world of powerful corporations.

Instead, Obama  took the view that the foundations were sound; they just needed better management, a little more oversight here, improved incentives there.  Leave the banks in charge.  Let BP and the oil companies do their thing.  Leave the private insurers in place, but put them in a Republican invented exchange, force everyone in, subsidize the premiums, and hope for the best.  Obamacare is RomneyCare, straight out of the Republican think tanks.

Instead of accepting the obvious mandate for more fundamentally reforming and replacing these discredited views while the harm they had done was most clearly in the public’s mind, he embraced them all.   Predictably, all those forces that wrecked the economy, mismanaged health care, poisoned the Gulf and threaten the climate are more powerful and  menacing than ever, Citizens United be praised, but Obama has discredited or abandoned many of the weapons we had to defend ourselves.  His failure will now hand government back to the powerful perps, and that’s inexcusable.

Republicans Reveal Their Plans to Make Americans Sicker, Poorer, Less Secure

9:04 am in Uncategorized by Scarecrow

I’m going to depart from the usual we-told-you-so polemic on the health care reform act. I’ve written my share of those, but no one should be silent as Republicans arrogantly and shamelessly announce their plans to dismantle and/or cripple even the most beneficial and promising aspects of the health and insurance reforms.

There are lots of things Congress could have done and might still do to fix the problems and improve the benefits of the law. Just google, e.g., "Firedoglake, Jon Walker, health reform." These measures would actually improve health care, expand and improve coverage, or reduce its costs. Further reforms would also confront the uncompetitive industry that forces Americans to pay 50 to 100 percent more to providers and drug makers than other nations for care that is at best no better and covers millions fewer of us, while enhancing coverage fairness and affordability.

But nothing, absolutely nothing the Republicans are proposing would improve health care in America. The essential public interest in better, more affordable health care, by which any proposal should be judged, is entirely missing from the Republican proposals. So reporters covering the Republican plans should demand to know why Americans should shoot themselves in the foot and pocketbook by putting these clowns back in charge.

Instead, virtually every one of their still vague proposals would leave Americans sicker, raise health care costs, reduce coverage, allow or encourage insurers to bilk consumers and further liberate anti-competitive health care providers to fix prices and collude, and keep charging far more than their European counterparts.

As the New York Times Robert Pear reports, the Republicans are following a scripted plan to highlight their "repeal" proposal by September 23, when several of the reform bills benefits take effect:

In general, insurers will be required to offer coverage to children with pre-existing conditions; will have to allow many young adults to stay on their parents’ policies up to age 26; cannot impose lifetime limits on coverage of “essential health benefits”; and cannot charge co-payments for recommended preventive services.

So Pear and colleagues summarize a dozen or so Republican proposals handed out by Republican sources, but Pear doesn’t assess whether the proposals would help or hurt health care in America, though the Times editorial board has previously done so.

The Act has unpopular features, particularly its mandate to purchase insurance and its various taxes to help cover the costs of expanded coverage. But Republicans propose outright repeals of these features without offering any measures to solve the associated problems: how do you get universal health care at an affordable cost and then fairly allocate those costs? As was true throughout the health reform debate, they have nothing to offer that makes any sense — and it was a strategic blunder for President Obama to insist they did. We will now pay for that blunder in Republican attacks on the worthwhile reforms. Yet those attacks are nothing less than an assault on acceptable health care for millions of Americans

– The Republicans say they want "choice" and "competition," but they don’t propose the choice of a public option or the possibility of Medicare for all, and they do nothing to solve the anti-competitive features of the American health care system.

– They want to keep the more popular insurance reforms that outlaw discrimination and inhumane coverage denials, but they would cripple the regulatory and pricing mechanisms that encourage and enforce those reforms; one might as well equate profit-driven insurers with the tooth fairy.

– They want to withhold funding for Medicaid expansion, one of several promising features that could help millions of currently uninsured Americans; but they offer nothing to help these people or help states pay for the resulting problems. They would leave the states either stranded and bankrupt or unable to provide essential care for their own citizens.

– They want lower costs, but instead of empowering the Federal Trade Commission and the new Medicare Advisory entity to go after anti-competitive drug and provider pricing, they would further cripple or repeal the Advisory entity altogether.

– Some of them would repeal penalties on employers for not providing insurance to their employees (but President Snowe implies the penalties are too low to induce compliance), but then they’d strangle the revenues to help subsidize coverage offered by small businesses. They do nothing to slow down the inexorable trend of businesses transferring costs to employees or dumping coverage altogether. Employees would be left increasingly on their own, with no affordable options.

– They claim to be against fraud and waste, but they would cripple or disband the entity authorized to compile data on what treatments/drugs work and which are a waste of money or worse.

. . . and on and on.

This is not a health plan for America as a whole or even for individual citizens. It does nothing to improve health care in America or make it more affordable, or even require insurers to improve health-related economic security. With the number of uninsured Americans now over 50 million, poverty at record levels, and states strangling under Republican anti-tax initiatives and obstruction of federal economic relief, the Republican plans would make things even worse. So this is not about health care, it’s just another particularly vicious and inhumane version of drowning government, and more important, its citizens, in the bathtub:

“They’ll get not one dime from us,” the House Republican leader, John A. Boehner of Ohio, told The Cincinnati Enquirer recently. “Not a dime. There is no fixing this.”

That is the cry of a privileged elite, protecting his class, and telling the rest of the country, "hell no!"

Congressman Alan Grayson was only partly right when he said the Republican health care plan is "don’t get sick; and if you do, die quickly." The Republicans’ shameless proposals would force more sick Americans to die slowly and broke.

Steny Hoyer on Deficit Reduction: Does He Want to Be House Minority Leader?

11:27 am in Uncategorized by Scarecrow

On Tuesday, Steny Hoyer (D. Md), the House Majority Leader, gave what was billed as in important speech on the economy and the federal budget. After reading this speech, I now understand why recent polls show Americans increasingly disillusioned by the Democrats’ increasingly indifferent economic stewardship.

Recent polls show the Democrats trailing Republicans in generic Congressional preferences at a time when Republican statements and behavior are increasingly insane, dishonest and destructive, not to mention the pandering to racism and even armed insurrection. So I don’t think Americans are turned off to Democrats because the Republicans have a better message, let alone better policies — in fact they don’t seem to have coherent policies at all.

Congressional Democrats have to work really hard for Americans to view them as a worse choice than Republicans. I’m not about to lay this solely on Hoyer’s House; on many issues, the House has been way ahead of the dysfunctional Senate, and I think Nancy Pelosi and lieutenants deserve some credit for that. But while the Republicans and their media friends have repeatedly lied about and maliciously demonized everything Obama and a Democratic Congress have done, I don’t believe the majority of Americans truly believe all that nonsense. So if those aren’t the reasons for the Democrats’ fall from favor, they might want to consider what they’re actually saying and delivering to voters.

The most recent polls tell us Americans are far more concerned about the economy and jobs than deficits — an entirely sensible view — but somehow, that simple message isn’t getting through to Congress. It’s been clear for a year that we needed another stimulus bill, or a "jobs bill" and massive federal support for devastated state budgets to avoid slashing Medicaid and laying off hundreds of thousands of teachers and other public servants. The Republican answer, delivered by their moral spokesman Rand Paul, is that these people deserve to be layed off, while safety-net measures only encourage laziness. But far too many Democrats — none of whom deserve to be reelected — have voted as if they believe this evil notion. So why should Americans contribute to the DSCC and DCCC to fund these clowns? No one should give these incumbent protection rackets a dime if allegiance to fundamental Democratic principles is not a requirement.

Steny Hoyer’s speech shows why he is a major part of that problem.

Hoyer opens his speech to Third Way (not essentially different from the other two ways) by crediting a Gallup poll that suggested Americans "fear" the US debt almost as much as they fear terrorism. Hoyer thus begins his discussion of US deficits by assuming these two overly hyped and irrational fears should be the basis for US economic policy.

Rotten tomatoes should have begun flying in Hoyer’s direction at that point, but he continued to repeat all of the Republican/Peterson gibberish about how the US deficits lead inexorably to "a stagnant economy, a hobbled government, and a weak national defense," even though later in his speech he gives credit to the stimulus for proving that none of that is true.

More than ever, it’s possible to imagine a government with nothing left to spend on educating our children, on securing our borders, on conducting groundbreaking research.

This is complete nonsense, reinforcing Republican talking points and the billionaire Peterson’s propaganda. But to justify Obama’s "Fiscal Responsibility" ("cat food") Commission, you have to buy the lie that the US "has nothing left" to spend on what the country actually needs unless we take drastic measures to reduce US budget deficits.

To be sure, Hoyer repeats the Administration line that economic recovery should come first and deficit reduction only later, after recovery is assured. But then he abandons that by the end by calling for further budget cuts next year, even though no one is projecting rapid growth or major improvements in unemployment in 2011 or even 2012.

He defends the ARRA (stimulus) and notes correctly that economic growth would be slower and unemployment higher if we hadn’t passed the stimulus. But Hoyer apparently can’t extract from that now proven cause/effect the obvious lesson that until the recovery is solid and unemployment is brought back closer to full employment, we should be doing more stimulus spending, a lot more. We should just stop feeding the irrational "fears" that our childrens’ future will be murdered in their beds by the terrifying national debt.

Hoyer could have ended his speech here, apologizing for the fact he doesn’t understand what he just said and is thus unqualified to be a leader of the Democratic Party. But he didn’t, and it gets worse.

Ever the ideal Beltway "centrist," a euphymism for not being able to articulate a coherent idea of his own, Hoyer tells us that we have to solve the budget deficit problem with a balanced approach that includes both spending cuts and taxes.

But on the revenue/taxes side, he offers no ideas; apparently the Leader is unwilling to identify a single feature or stratum of America’s economy that warrants higher taxes. Instead, his statements about whether to extend or end the Bush tax cuts, either for the wealthy or the middle class, are so couched that the hapless Washington Post’s editors and reporter made two tries to explain them and failed both times. (Do we need the Washington Post?)

On spending cuts, however, Hoyer can’t wait to tell us that entitlements should be cut, because everyone should be part of the "shared sacrifice" essential for fairness. Fairness, of course, would suggest redressing the egregious redistribution of wealth towards the wealthiest 5-10 percent or so, but Hoyer doesn’t mention that. Unwilling in a speech about "balance" and "fairness" to suggest higher taxes on the wealthy and privileged or the end of subsidies for industries that are strangling America, he suggests Social Security and Medicare benefits take a hit, while blaming the choice on the cat food commission. Here’s what Hoyer thinks is a profile in courage:

It isn’t possible to debate and pass a realistic, long-term budget until we’ve considered the bipartisan commission’s deficit-reduction plan, which is expected in December. I believe that Congress must take up and vote on that plan.

“To share sacrifices fairly, and to be politically viable, the commission’s proposal can only have one form: an agreement that cuts spending and raises revenue when the economy recovers.

“On the spending side, we could and should consider a higher retirement age, or one pegged to lifespan; more progressive Social Security and Medicare benefits; and a stronger safety net for the Americans who need it most. We also need the in-depth scrutiny of defense spending that Secretary Gates has demanded.

So, the Democratic House Majority Leader signals to the cat food commission that some form of benefit cuts to older people (or young people not yet worried about becoming old) would be just fine, and he doesn’t suggest how those could be "balanced" by higher taxes. He merely adds, "raising revenue is part of the solution too," and then wanders off in revisionist history.

You’d think a leader of the Democratic Party would start by saying there is no deficit crisis now, that government spending to boost demand and save jobs now is absolutely a good thing and necessary, and that if it weren’t happening, there would be much more unemployment, slower growth and larger private debt. You don’t need a degree in economics to get that borrowing at 2-3 percent interest to save a teacher’s job is better than having a layed-off teacher hang on by maxing out their credit card debt paying 25 percent.

A leader would tell us that any "structural" long-run deficit issue is primarily a function of paying too much money for health care, which is NOT the same thing as excessive entitlement benefits. And a leader would explain that the problem isn’t too many people on Medicare/Medicaid, or people living longer, or providing more worthwhile health care than beneficiaries deserve.

A Democratic leader would explain very clearly that the problem is that the United States pays drug makers, doctors, hospitals and other providers far more money — up to twice as much — than other countries pay for equal or better health care.

A leader faced with incessant lying from the opposition and confusion/complicity from the media would repeat, over an over, that our "long-run budget deficit" problem in Medicare is about what we pay providers and what we pay them to do. To get at that problem, we have to confront not benefits to old people but payments to providers.

We have to take on conflicts of interest, concentrated markets, anti-competitive patents and non-compete agreements, anti-consumer exclusivity protections for drug monopolies excluding generics, special deals with PhRMA and corporate hospitals, automatic "doc fixes" and on and on.

But of course, Steny Hoyer can’t admit any of these truths, because the Democratic Congress bought into "long-run structural deficits" when it and the Administration bought some meaningless campaign contributions with special deals for health care providers and PhRMA. It argued for "bending the curve" but then gave away the largest structural deficit solutions when it took Medicare for all off the table, and when it killed the public option and its ability to force insurers to compete and providers to bargain against a Medicare option. It gave the drug makers multi-year monopoly pricing and shielded them from Medicare negotiations and foreign competition.

Sorry, Steny; you may look half-way sane compared to the idiotic and nihilist Republicans, but the American people are smart enough to figure out you gave away the game — and their money. And now you have the nerve to lecture us on why we need to wait for the cat food commission to give you the political cover to cut Social Security and Medicare benefits? But hey, it’s only for young people who aren’t paying attention.

In aiming to be only slightly less destructive of the middle class than Republicans, Steny Hoyer is running for Minority Leader. I think he’s earned it, but it’s the country that will pay the price.

John Chandley

Update: David Dayen, Ben Nelson and Republicans block jobs bill again

Brad DeLong says Krugman is always right: Against the super-asinine, the gods themselves contend in vain
Dean Baker, The Myth of "Wealthier Seniors" and Cutting Social Security and Medicare

Ezra Klein, US Health Care system: Still bad

Good for Matthew Yglesias for explaining the facts to the Washington Post

The Hill, Steny Hoyer speech to Third Way

HuffPost/Arthur Delaney, Unemployment: Outlook Grim for Jobs Bill

FDL News/David Dayen, Progressive groups mounting challenge to Peterson, Social Security cuts

Dick Durbin blasts Republicans for blocking unemployment extension bill.

NYT, Debate over industry role in educating doctors

Politico/Poll/Barhgava and Gould, Tired Americans want government help

Massachusetts Health Insurance “Market” Just Failed, And There’s Worse to Come

11:36 am in Uncategorized by Scarecrow

Jon Walker writes about the decision of private health insurers in Massachusetts to withhold offers for new plans in the state’s Health insurance "Connector." That follows the Boston Globe report of a decision by Massachusett’s insurance regulator to deny most of the requests by insurers to raise their insurance premiums.

Jon traces the problem to the absence of a public option, which could guarantee consumers an alternative/safety net if the private insurers withhold their products. He also faults the ability of private insurers to sell insurance outside the exchange/Connector. I think he’s right, but there’s an even more fundamental problem at work here, and it reminds me of what happened in California’s electricity market.

The short version is that Massachusetts appears to be inadvertently fostering an artificial shortage in health insurance. And they’re doing it for the same reasons that California authorities inadvertently created or exacerbated artificial shortages in electricity that repeatedly caused blackouts during the 2000-2001 crisis.

We’ve seen this before, and unless Massachusett’s Governor and regulators are smarter than California’s Governor and Public Utility Commission, this is not going to turn out well. So what’s going on?

One way to think about this is to ask how the Massachusetts Connector, its health insurance exchange and the model for the exchanges in the national health bill, is supposed to work. The academics who sold this concept to Republican Governor Romney and the Democratic Legislature convinced officials that private health insurers would charge reasonable prices if they were forced to compete in a transparent "market" by offering more or less uniform products whose quality and features were ensured by regulatory oversight. In other words, the competition itself would lead to efficient prices.

On top of this, state insurance regulators would retain some limited authority to review premiums charged by the insurers. But that implies that the scheme’s creators weren’t convinced the market would produce fair prices. They’d have to be limited by regulation.

When the State’s regulators disallowed almost all of the insurers’ proposed premium increases for the Connector/insurance exchange, the State was effectively saying, "the exchange market doesn’t work, and we can’t rely on the consumers shopping on the exchange market to drive prices down to reasonable/fair/efficient levels." In short, the entire premise of the "market structure" just collapsed.

But if the flawed insurance market can’t produce efficient prices, then by definition we’re in a regulatory cost-of-service paradigm. There is a whole body of literature and a hundred years or experience explaining how you regulate utility rates.

The essential principle is a "regulatory bargain," in which the service provider — the utility — is obligated to serve (think guaranteed issue in the insurance sector), but the regulator has an equally important obligation to set rates at levels that will allow the utility/service provider to recover all of its prudently incurred costs plus a reasonable opportunity to earn a reasonable rate of return of/on capital. The profits from these rates have to be sufficient to allow a reasonably managed firm to attract sufficient capital to continue meeting the provider’s obligation to serve.

In this regulatory framework, when Massachusetts authorities rejected the insurers’ proposed premium increases, the insurers translated that to mean the State had broken the regulatory bargain. In their view, the regulators were not allowing them to pass on rapidly rising health care costs and were thus forcing the firms to do business while losing money. In essence, they’re saying, "we cannot stay in business by operating at a loss, so we will withdraw from the market."

Of course, regulators disagree; they claim that lower premiums would be sufficient to recover costs, and costs don’t appear to be rising as fast as proposed premium increases. In a large state, such regulatory decisions usually take months to consider and document, after combing the utility’s books and extensive contested hearings. It’s not clear that happened here.

But of course, the designers of the health insurance market never assumed that all suppliers might react to a negative decision by withholding supply and creating a shortage. They expected the market to drive prices down to marginal costs, but it didn’t. Now what?

In California, when the Governor and PUC failed to understand this problem, that convinced lots of electricity suppliers to withhold power from the market, causing artificial shortages. The State dug in its heels, the market collapsed, and the lights went out because many suppliers refused to operate without being paid. [Different generators were withholding for different reasons, some legitimate, some not.]

Eventually, two of the largest utilities in the world were driven into insolvency/bankruptcy, along with several independent power companies. The state took over power contracting for the bankrupt utilities, and it spent almost 10 years trying to get out of the terrible contracts they negotiated. But ratepayers still had to pick up the tab when the smoke cleared.

And what happened to Governor Gray Davis? He got Terminated.

So good luck to Massachusetts officials. If your market doesn’t work to set reasonable prices, then you need to acknowledge that and start thinking like serious regulators; you’re going to have to get a lot deeper into cost-of-service regulation than you ever imagined.

And setting rates is more than making consumers happy; you also have to allow premiums that keep the insurers from withholding service or withdrawing completely. Welcome to cost-of-service regulation of essential public services.

Rasmussen Poll: Whom Do You Trust with Health Care?

10:19 am in Uncategorized by Scarecrow

According to a recent Rasmussen poll, people trust Republicans more than they trust Democrats on the health care issue.

Voters now trust Republicans more than Democrats on nine out of 10 key issues regularly tracked by Rasmussen Reports, but the gap between the two parties has grown narrower on several of them.

Following the passage of the health care bill, 53% now say they trust Republicans on the issue of health care. Thirty-seven percent (37%) place their trust in Democrats. A month earlier, the two parties were essentially even on the health care issue.

These results are consistent with the finding that 54% of voters want the health care bill repealed. Rasmussen Reports is tracking support for repeal on a weekly basis.

So if you’re following the logic, it goes something like this:

1. Democrats take on a hugely complex public issue that the public thinks is important.

2. Republicans adopt Frank Luntz’ total opposition strategy to blatantly lie about the proposal, mischaracterize the features and demonize the Democrats and Obama as granny killers.

3. Fox runs the Republican talking points non-stop.

4. The reform bill becomes unpopular in general, though some individual measures remain highly popular.

5. The Democrats first support the popular provisions, then abandon them, in order to get zero Republican votes, but that’s okay with the White House and Congressional leadership.

6. The Republicans never budge from their lies, misrepresentations and total opposition.

7. The Democrats pass an unpopular bill, but claim after the fact it’s based on Republican ideas.

8. Republicans promise to repeal the bill, even though it contains their ideas and they know they can’t/won’t repeal them, and they challenge it’s constitutionality, even though the challenge is bogus.

9. Americans tell Rasmussen they support Republicans more than Democrats on health reform.

10. Conclusion: Fox and Luntz win, and the Texas School Board gets to write the history.

Eventually, there won’t be anyone left who finds this strange or disturbing.

On the other hand . . . LA Times poll says Californians support the health reform law

AT&T Complains About Losing Corporate Welfare that Raises Drug Prices

8:23 am in Uncategorized by Scarecrow

The NYT Business page reports that AT&T, Caterpillar, Deere & Company and many other large corporations are complaining that the new health reform law will strip them of a large tax subsidy. They want the provision repealed so they can keep their lucrative subsidy.

An association representing 300 large corporations urged President Obama and Congress on Monday to repeal a provision of the health care overhaul that prompted AT&T, Caterpillar and other companies to announce substantial charges for the current quarter.

The association, the American Benefits Council, said the provision — which reduces the tax deductions for companies with drug coverage for their retired employees — would deal a significant blow to corporate profits and would discourage companies from hiring more workers.

AT&T announced last week that it was taking a $1 billion charge because of the provision. Deere & Company announced a $150 million charge, Caterpillar a $100 million charge, and 3M a $90 million charge.

Many companies said they were taking these charges now, before the current quarter ended, to comply with accounting rules. But some corporate critics asserted that the companies’ rapid response to the health legislation was aimed at pressing the administration to repeal the provision.

So what’s going on here? The Time’s Steven Greenhouse does a good job explaining how the tax subsidy came about:

When Congress and President George W. Bush enacted a prescription drug plan for seniors in 2003, the legislation encouraged companies to continue providing prescription coverage to retirees, instead of shifting retirees to Medicare Part D, by having the government give those companies large subsidies for each retiree — and also allowing them to deduct those subsidies from their income taxes.

Under the health care overhaul, the federal government will continue providing those subsidies — amounting to 28 percent of a drug plan’s costs — but companies will lose the tax break.

But the story might also have asked how this tax subsidy works. If AT&T’s employee health plans pay out $10,000,000 to cover drug costs, AT&T gets to deduct that from taxable income. No problem there. But using the subsidy, AT&T also gets to deduct an extra 28 percent, reducing it’s taxes still further.

Now think about the incentives. If you’re AT&T and you had a choice between a drug plan with mostly brand name drugs that would cost you $10 million, and a drug plan with more generics that cost you only $5 million, you’d choose the more expensive $10 million plan, because you get to add 28 percent (paid by taxpayers) to the higher total and then reduce your taxes correspondingly.

In other words, the Bush/Congressional "fix" for Medicare Part D was a scheme to give large corporations a massive tax subsidy that went straight to their profits, along with a strong incentive to purchase the most expensive drugs and thus drive up drug prices. The higher the firms’ drug bills, the larger their profits. How big a tax scam was this?

AT&T announced last week that it was taking a $1 billion charge because of the provision. Deere & Company announced a $150 million charge, Caterpillar a $100 million charge, and 3M a $90 million charge.

And you can bet the name-brand drugsters loved this too; consumers, not so much. Since this likely kept drug prices higher, then even AT&T’s employees could be hurt to the extent of any co-pays. Employees of firms that didn’t get the tax subsidies would likely pay more because the scheme would tend to sustain or drive up drug prices for more expensive drugs.

The provision AT&T and its big business friends want to preserve is basically a corporate welfare scam, a license to large corporations to print money and increase profits by buying too many, too expensive drugs.

This one promises to become a litmus test to identify Congressional lovers of corporate welfare queens. Any Congressperson or Senator who bites on this one should be shamed and banned from ever complaining again about rising health care costs or government deficits.

Update: First, a commenter points out an accounting error, which renders the point about incentives wrong. Second, at Think Progress’ Wonk Room, Igor Volsky describes the original subsidy as "about $1,300 per retiree per year," which is different from the NYT description of a percentage (28%), but still leave the double dip feature.

Udate II: It appears the 28% is correct. From one business source:

Under the Medicare Prescription Drug, Improvement & Modernization Act of 2003, employers that provide prescription drug coverage for retirees are eligible to receive a tax-free contribution from the government equal to 28 percent of the employers annual drug costs between $250 and $5,000 per beneficiary. To qualify for the subsidy, employers must prove that their prescription drug benefit is at least actuarially equivalent to the benefit that retirees receive from Medicare Part D (the component of Medicare through which prescription drug benefits will be offered).

Health Care Cost Reform Rediscovers an Old Progressive Idea

12:25 pm in Uncategorized by Scarecrow

Ezra Klein has an interesting post — a "sad commentary" he says, noting that the recently signed health reform bill had to resort to an mechanism largely independent of Congress to help control costs in Medicare. It’s called the Independent Payment Advisory Board (IPAB).

The IPAB is a 15-person, full-time board composed of health-care experts and stakeholders. Members need to be confirmed by the Senate and will serve six-year terms, with one possible reappointment. But the important thing isn’t who serves. It’s how they vote. Or, as the case may be, don’t vote.

If Congress approves the board’s recommendations and the president signs them, they go into effect. If Congress does not vote on the board’s recommendations, they still go into effect. If Congress votes against the board’s recommendations but the president vetoes and Congress can’t find the two-thirds necessary to overturn the veto, the recommendations go into effect. It’s only if Congress votes them down and the president agrees that the recommendations die. “I believe this commission is the largest yielding of sovereignty from the Congress since the creation of the Federal Reserve,” says Peter Orszag, who’s been one of the idea’s most enthusiastic supporters.

The board will propose packages of reforms that bring Medicare in line with certain spending targets. Those reforms won’t increase cost sharing or taxes and they won’t change eligibility or benefits. Instead, they’re reforms of what Medicare pays for and how it pays for it.

Ezra is glad this provision survived, but he laments that Congress had to resort to it. I agree this is an important, worthwhile feature, but I don’t agree that we should lament the necessity of Congress passing off this responsibility to an independent Board. There’s nothing "sad" or "weird" about legislatures using this approach.

A hundred years ago, progressives and market proponents both realized that if you have monopolies or near-monopolies providing essential public services, like electricity, you can’t allow them to charge monopoly prices or limit supply. So it made sense to control the monopolists power and put the rate-making authority in an expert regulatory commission that was relatively independent of undue political influence. So we created institutions called Public Utilities Commissions (or public service commissions, utility regulatory boards, and so on). In California, the state constitution even placed the PUC in San Francisco, which in 1900 was a day away from those corrupt legislators in Sacramento.

Progressives thought this a good idea because someone responsible for protecting consumers and promoting the public interest should make sure the rates utilities charged were just and reasonable. But "just and reasonable" also meant that utilities were entitled to recover all costs reasonably incurred by the utility in providing universal service and meeting the regulated standards of service, and whatever those costs were, consumers should pay them. Hence the twin pillars of the "regulatory bargain" of utility regulation.

The independence notion arose because rates had to be set administratively, since a competitive market would NOT work. You wouldn’t want economically powerful utilities using their influence over legislators to set rates and limit service to rip off consumers. And once upon a time, legislators even understood it might be helpful to politicians to have these independent agencies taking the hit for raising rates when rising costs required that.

So independent regulatory commissions and boards have been doing this for a century. There’s nothing new here.

The only reason some may find this strange is because they still think of our health care system as some type of competitive market, capable of fairly allocating care and setting sustainable prices through efficient competition. That’s nuts.

Large segments of the system no longer function within a competitive market framework, if they ever did. When you see the system in terms of quasi-utilities providing necessary public services in a non-competitive framework, then relying on something like an IPAB, and not Congress, makes sense. And the only way the IPAB can do a decent job is to recognize the essentially regulatory paradigm it’s in.

(h/t to DeLong.) I agree we shouldn’t explain this to the current Supreme Court (or the Texas School Board, for that matter).

Paul Ryan Blasts Obamacare, Calls for Government Takeover of Health Insurance

9:54 am in Uncategorized by Scarecrow

Today’s New York Times hands over a portion of its op-ed page to Representative Paul Ryan (R. Wisc) to explain what Republicans would do to replace the Obamacare, a.k.a., Armageddon and the end of American democracy as we know it. Answer: Ryan wants a government takeover of health insurance.

In Fix Health Reform, Then Repeal It, Ryan tells us the linchpin of reform is to repeal the tax exclusion for employer-based health benefits, and thus dismantle the employer-based private insurance market and replace it with individual markets.

I helped write a plan that would replace the bias in the tax code with universal tax credits so that all Americans have the resources to purchase portable, affordable coverage that best suits their needs, with additional support provided for those with lower incomes. All these ideas, though, were dismissed early on, as they didn’t fit with the government-driven plan favored by the majority. But going forward it’s important that we reconsider this regressive tax issue.

Then, when helping Americans with pre-existing conditions obtain coverage, we should focus on innovative state-based solutions, including robust high-risk pools, reinsurance markets and risk-adjustment mechanisms. I intend to continue advancing true patient-centered reforms like attaching tax benefits to the individual rather than the job, breaking down barriers to interstate competition, and promoting transparency and consumer-friendly coverage options.

We should ensure that health care decisions are made by patients and their doctors, not by bureaucrats, whether at an insurance company or a government agency. By inviting market forces into health care, we can encourage a system where doctors, insurers and hospitals compete against one another for the business of informed consumers.

So think about what he’s saying. The Republicans would effectively dismantle the mostly unregulated employer-based insurance markets and replace them with a scheme in which private insurers (never mind consumers) would be entirely dependent on federal tax credits and subsidies. If that sounds like a radical, government dominated version of Romneycare Obamacare, that’s because it is.

These now government-subsidized insurers would then compete for your business. I assume Ryan wouldn’t, Chinese-style, abolish the Google/Yahoo, so folks could search for insurance bargains over the internet and compare prices and coverage. Government watchdogs would police for false and misleading advertising, bait and switch tactics and phony insurers, as they always have. We’ll call that an "exchange."

What about those "innovative solutions" to the pre-existing conditions problem? Ryan’s solution is a mix of government mandates and regulations to create risk pools and a government-mandated and government-administered risk adjustment mechanism — again, all features of Romney/Obama/Ryan care. Or does he assume Wellpoint will voluntarily hand over to Kaiser Permanente any excess profits Wellpoint extracted from discriminatory underwriting practices?

Even sillier is Ryan’s claim he’d somehow put health care decisions in the hands of you and your doctor, "not by bureaucrats, whether at an insurance company or a government agency." So, how do you make sure that insurers don’t drive those decisions? Why, it’s via government regulations taking away insurers’ discretion on underwriting — so that insurers have to cover you and they can’t charge me more than they charge you, or you more than your spouse or us old coots much more than our kids. On planet earth, we call these ideas guarantee issue, community rating and ratios, and private market insurers don’t do these things without strong government regulation.

So watch out for that Republican health care plan. It’s a massive government takeover of health care.

And don’t forget, Paul Ryan is considered one the leading intellectual lights of the Republican Party. "And then darkness fell upon the land."

Health Insurers: “We’re Shocked, Shocked to Learn the Bill Benefits Us”

3:12 pm in Uncategorized by Scarecrow

Who could have predicted? Now that the mandate to purchase private health insurance is the law of the land, America’s health insurers have decided it’s okay to reveal, well, uh, they really liked the bill’s basic structure all along.

Suzy Khimm from Mother Jones gets the story:

The industry’s main trade group, America’s Health Insurance Plans, has announced that it will join Enroll America, a new non-profit devoted to registering those people who will newly qualify for insurance subsidies or Medicaid under the law.

After spending massive sums in an attempt to defeat the bill, why are insurers suddenly eager to help the reforms succeed? "It’s good business for them," says Families USA’s Ron Pollack, who is heading up the Enroll America effort. “All of them will benefit from a business plan standpoint to extend coverage."


In truth, the Democratic reforms were never as punishing to the insurance industry as AHIP (or the Democrats themselves) made them out to be. The government-run public option—private insurers’ biggest bugbear—never made it into the final bill. Neither did the repeal of the anti-trust exemption for the industry. The excise tax on high-cost insurance plans got scaled back significantly in the reconciliation fixes.

I’m shocked, shocked.

"Your gambling winnings, sir"

"Thank you, very much."