Health reform’s hidden costs - Placing states and citizens at a huge risk - Attacking the American Spirit

Governors across the country have begun screaming at Congress, “Hold on a minute. Time out on this health care reform thing.”

Truth has begun to set in, that as a result of federal health care reform, every state faces a plethora of unfunded mandates that will drown them in dilemmas and red ink. Once it passes (or, if) the hidden costs of federal health reform will immediately become clearer. As a result, states and local governments will increasingly find it impossible to fund their most vital services – education, police, fire, water, energy, roads and bridges.

Governors have warned for years that the cost of Medicaid threatens their state budgets. They had hoped Congress would fix the problem, not exacerbate it. Congress, instead, has been showing it is deaf to governors and to citizens.

But the increased billions to be spent on Medicaid is just the tip of the iceberg.

This is a partial list of the increased cost and loss of state revenue faced by states, and their residents. I am certain you can add many thoughts to these.

1. By raising Medicaid eligibility to 133 percent of the Federal Poverty Level, millions more Americans will qualify for the program. The federal government will pay this cost for a period of time, but eventually, states will be forced to spend more on Medicaid, not less. Nebraska Gov. Dave Heineman says this will cost his state $2.5 billion. Other governors are making the same case.

2. Every current state-level health care and insurance statute, rule, and regulation will have to undergo scrutiny to ensure it complies with new federal law. When changes are required, they will be subject to statutorily-required bureaucratic and legislative review at a cost that the best economists could never predict. This effort will take bureaucrats away from their assigned tasks, meaning current programs will suffer; or states will hire more bureaucrats to fulfill their mission.

3. While everything is under review and being rewritten, state programs will be in limbo. Federal law will require states to conform to new mandates for which there will be no guidelines. States will spin their bureaucratic wheels while trying to conform to vapor regulations, and face the potential of lost federal revenue for non-compliance.

4. Today, even before adding millions more to the Medicaid roles, 40 percent of practicing physicians refuse to accept Medicaid patients. This results from low Medicaid reimbursements (and yet, even at this, Medicaid bleeds money from states’ Medicaid program cost). So much for access to health care. States will be forced to step in, but no one knows how or the cost of solving this unintended result.

5. Attorneys, accountants, and benefit consultants will make a fortune as they advise employers on the overwhelming changes – and penalties – associated with new federal law. Employers will be forced to divert funds to compliance, even if they choose to drop the health insurance benefit. (Depending on which version of reform that might pass, employers could be faced with new mandated insurance benefit costs.) Productive capital, that otherwise would be invested in expansion and increased employment, would be spent on compliance. This will cost state and federal treasuries billions of dollars in lost tax revenue.

6. Individuals, faced with the mandate to purchase insurance, will be forced to divert income from self-initiated purchases to insurance premiums. The reduction in purchasing power will further depress the moribund economy, and ripple out to the economy’s edges. Some experts predict that individual health insurance premium cost will double in the next 10 years as a result of federal reform. That money must be diverted from other spending, savings, or debt reduction.

7. States would lose tax revenue, as the increased cost of health care would reduce business profits and individual net income. Sales and income tax revenues would plunge, as more money is diverted to federally-mandated health insurance cost.

8. The cost of apprehending and prosecuting violators of the insurance mandate would add billions to the IRS’ enforcement budget, as well as expanding the cost of federal law enforcement and federal courts. This will rob necessary programs of their revenues, and will drive taxes upward. Every dollar spent on taxes will be diverted from the productive economy.

Perhaps the most serious unknown cost of federal health care oversight is the loss of what we used to call the American Spirit. This is the idea that individuals are free to pursue their own destinies, with government kept as far-removed from daily lives as possible. The American Spirit celebrates life, rather than regulates it. The American Spirit is a spirit of individualism and even nonconformance, not communalism and compliance.

The hidden costs of federal health care reform are incalculable, not too mention incomprehensible. This is a bad idea that grows worse each day. Now that leftwing activists are realizing it, too, it’s time for a pause…a long pause.

The 220-215 Health Reform Vote - What's Next?

Everyone will have an opinion about the November 7 vote in the US House. Mine looks ahead to the remaining hurdles. Take heart. This is a long way from finished.

Senate and Conference Committee

HR 3962, passed by an embarrassingly slim five-vote margin, now moves to the U.S. Senate. Many national talking heads and elected officials are saying it is already dead there. We shall see. Frankly, I never believed the Democrats could pass it out of the House, given the rancor over abortion, immigration, resistance from seniors and the like.

The AARP may have sacrificed its future by backing this bill. The same is true of the American Medical Association. These groups are facing incredible hostility from their own members.

Let’s assume, however, that the Senate actually passes a bill. Its version, and that of the House, must be identical in every aspect. This includes the words, the provisions, the organization, even the punctuation. Given the mood of the Senate, if they pass anything, it will be significantly different from the House version.

If the Senate passes a bill, it will be sent to a conference committee. The conference committee includes members of the House and Senate. If the conference committee can somehow pass a bill out, it still faces immense opposition.

The conference committee reconciled bill is sent back to the House and Senate for consideration. Imagine if the conference committee bill retains abortion coverage. Or does not contain the government option. Imagine that the employer mandate falls off the table in the conference report, or strong immigration verification language is added. Conference committees often report out bills that look very little like that which Congress had already passed.

The next step is a House and a Senate vote. No amendments are allowed. They must vote it up or down. Will Pelosi be able to hold onto 218 votes? Will Reid be able to get a conference bill passed?

Bottom line. You must redouble your pressure on the U.S. Senate. Your groups must come out swinging. Your neighbors, co-workers, and friends must be alerted. There is no time to waste.

This may seem self-serving, but now is the time to load up with FACTS: Not Fiction booklets, and give them to everyone you know. Here’s the link: http://tinyurl.com/yex2eab

Never, never, ever give up.

Demonizing insurance companies

President Obama and Congress changed their strategy in the last several days. They no longer campaign for health care reform, it is now health insurance reform. (Sidebar: Obama rightfully rails at the out of control cost of Medicare and Medicaid as threats to the national economy, but sees as his priority, reforming the private health insurance market. Strange logic.)

Health insurance policies are contracts. Contracts are supposed to be enforced by governments.

Health insurance policies are, to my understanding, filed with and approved by government agencies.

Health insurance policies are subject to the political gamesmanship of state legislatures and are, therefore, politically-negotiated and approved contracts.

Health insurance companies must collect enough premium to pay the bills of those with whom it contracts (people who own the insurance policies) and the physicians, hospitals, and other providers whose services are used by those people who own insurance contracts. If they do not collect enough premium, they will go out of business. Yes, they must also cover their administrative expenses, but only at levels allowed by the laws passed by elected officials.

Health insurance is held hostage to some extent by economic forces, of course, but within the constraints allowed by the political process (in the case of health insurance, usually driven by ideological populism and the cancerous desire to be re-elected rather than pass good laws).

Since health insurance is, by this logic, already controlled by the political process, and since our tax dollars already support in part or whole, health care services for 103 million people, plus government employees, why has Obama and Congress made the insurance companies public enemy number one? I believe they should admit they have met the enemy, and the enemy stares them in the face each morning.

A health care system driven by politics, rather than economics and individual moral responsibility, will always need demons – and the insurance companies are catching it.

Governments should establish the basis of an enforceable contract, and then enforce them, not demonize them.

Venture capitalism and health care

Just a rambling thought, but wish for responses from you learned folks.

Venture capitalism is under attack from zealous Congressional and SEC pinheads who believe they can best manage individual lives and money. See the WSJ today. Why should we care?

The Bio-Pump, the world’s largest selling hear assist blood pump, was developed with high risk investment money. This little device has saved millions of lives. Its inventors, Dr. Harold Kletshcka and Edson Rafferty, created this device to save lives. Never once did they consult with insurance companies to make sure it would be a covered benefit, nor did they seek permission from the federal government to build it. On the contrary, FDC laws regarding medical devices that went into effect in 1976 impacted its progress, and a false SEC lawsuit in the early 1970s nearly drove them out of business. (See To Change the Heart of Man – www.tochangetheheartofman.com).

Now here is my question. Should venture capitalists invest only in new medical devices that they predetermine will be covered by health insurance, or that they predetermine the federal government will approve? And should new laws regulating venture capitalists require that they prove beforehand that their chances of earning a ROI are without risk, or at least low risk? And if all this happened, would it serve to advance the efficacy and value of health care or defeat it?

As you evaluate health care reform, you must, must look at the threads running through all new policies that are under consideration. The impact of further centralization of all aspects of commerce, whether directly related to health care or not, will prove deadly in the long run.

Our moral obligation re: health care

A national health reform leader made the argument to me today that we have a moral obligation to provide health care to all Americans. I asked him to define “all” Americans to clarify his position, and am awaiting his answer.

1. Do we have a moral obligation to provide health care to all Americans?
2. Do we have a moral obligation to provide all forms of health care to all Americans, or do some people have the right to use services not financially available to others?
3. Is there a place at which the public's (i.e. government's) moral obligation ends, and government must decide to cease offering it?

Perhaps you might say it depends on what the meaning of “we” is. Is “we” all U.S. residents or just those here legally - or just citizens?

And if we have this obligation, should this care be delivered and/or paid for by governments, private insurances, charities, and/or personal service?

This is a tough question. How it is answered will have a profound impact on health care reform.

It is not so different from questions about our moral obligation to provide food, shelter, and clothing for everyone. We already provide food stamps, WIC, Section 8 housing, vouchers for necessities, at taxpayer expense. It is likely that during the 1960s, we asked and answered the moral question that yes, every American has a right to these essentials, even if it cost taxpayers some of their livelihood.
Help me think this through.