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Thursday, August 19, 2010


While some of the most dangerous rationing elements of Obamacare are not slated to occur until 2014, other provision are coming on line sooner – ones that may lead to the denial of treatment.

Earlier this week, the Department of Health and Human Services (HHS) announced that 45 states had applied for money set aside in the new health care law which they can use to set up or, in some cases strengthen existing laws surrounding “premium review.” Why should we be concerned?

One of the provisions of Obamacare that took effect immediately requires health insurance companies to file proposed premium increases and to justify (any yet to be defined) “unreasonable” increases to the government. The states are meant to be the first line of enforcement, with HHS acting as a fallback enforcer.

But how the term “unreasonable” is used may prove to be a dangerous thing. HHS Secretary Kathleen Sebelius told reporters in a conference call that officials are still crafting a definition of the term “unreasonable” with the assistance of industry and consumer advocates and other stakeholders.

That means that this fall, when nearly everyone enrols for next year’s benefits, any rate increases an insurer might need to make, must now be justified and be what HHS considers reasonable.

This ramped up review authority, (purported to be aimed at shielding the insured from being gouged by their insurers) is merely one of many tools built into Obamacare aimed at limiting what people can spend to save their own lives.

When the government limits by law what can be charged for health insurance, it limits what people are allowed to pay for medical treatment. While everyone would prefer to pay less – or nothing – for health care (as for anything else), government price controls in fact prevent access to lifesaving medical treatment that costs more to supply than the price set by the government.

Many states already review insurance increases. But now many states will receive money to beef up that effort, or to create new regulations to give them more power to reject premium increases. In other words the funding these 45 states will receive is merely the first round.

Most importantly, in 2014, under ObamaCare the states will actually become empowered to block insurers from participating in the state based “exchanges if they are judged to show a pattern of excessive or unjustified increases.”

Under this new authority, exchanges will be able, in effect, to limit the value of the insurance policies that Americans using the exchanges may purchase. Here’s how.

Not only will the exchanges be allowed to exclude policies when government authorities do not agree with the size of the premiums, they will also be able to look at any proposed increases plans charge that are outside the exchange . The states and ultimately HHS have the power to say that “particular health insurance issuers should be excluded from participation in the Exchange based on a pattern or practice of excessive or unjustified premium increases” [42 USCS § 300gg-94]

This will create a “chilling effect,” deterring insurers who hope to be able to compete within the exchange. Moreover, this innocuous little provision also says that “we will look at what insurers do in all their plans, not just ones in the Exchange.” This means that all insurers can be prevented from offering adequately funded plans to their regular customers if they have even one plan in that exchange. And the less money available for plans, the less care they will be able to provide.

As health insurance companies are squeezed more and more tightly each year by the declining “real” (that is, adjusted for health care inflation ) value of the premiums they take in, they will ration lifesaving medical treatment. Under a scheme of premium price controls, these day-to-day rationing decisions will have the most direct and visible impact on the lives – and deaths – of people with a poor “quality of life.”

This dangerous provision is one among many that we will continue to highlight as the rationing elements of Obamacare come online.

Thursday, August 12, 2010


Running ads featuring the beloved Andy Griffith, Obamacare advocates used Medicare’s recent 45th birthday to attempt to continue to sell the unbelievable claim that the massive cuts planned for Medicare will not hurt the program. In the ad, the veteran television star attempts to assure seniors they won’t lose benefits. But with the hundreds of billions of dollars in cuts facing the program, this assertion is almost laughable.

As it happened the Medicare Trustees report came out at the same time that the Obama administration is engaged in this major campaign to sell its health care “reform.” While the reports offers the assurance that Obamacare will add an additional 12 years of life onto the Medicare program, there is some very ominous information contained in “2010 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplemental Medical Insurance Trust Funds.”

By law, the Board of Trustees of Medicare is required to issue annual reports on the financial status of the Medicare Trust Funds. Those reports are required to contain a statement of actuarial opinion by the Chief Actuary. The Chief Actuary of CMS is responsible for providing accounting information and cost-projections to the Medicare Board of Trustees in order to assist them in assessing the financial health of the program.

While the report says that Medicare will save money and add years, there are major flaws – ones so major that in the first time in 45 years, we have what amounts to a dissenting opinion in the report. For the FIRST time in report history, Richard Foster, Medicare’s Chief Actuary, felt it necessary to release a detailed statement appended to the Trustees’ Report calling the assumptions “implausible” and “unreasonable.” [1]

The report makes assumptions that simply do not hold up under scrutiny. Pushing aside the notion that hundreds of billions on cuts have no effect on services under the Medicare program, the trustees make more predictions for the future.

For example, the trustees' report assumes Medicare physician fees will be cut by 30 percent over the next three years. We have seen this fiction play out year after year, something Foster calls "impossible."

Since the mid-1990’s, Medicare physicians were supposed to face serious yearly cuts to keep Medicare solvent. However, faced with political reality and the importance of paying doctors enough to participate in the Medicare program, Congress cobbled together expensive bills to find the money.

Basically, the big cuts never happen, which means that Medicare is quickly approaching insolvency. But now we are supposed to believe that under Obamacare, Congress will allow the devastating cuts to occur, driving countless physicians out of Medicare.

For another example, the trustees' report assumes that productivity in medical services will match productivity in the rest of the economy. However, in the very same breath we see the admission that “Most categories of health care providers have not been able to improve their productivity to the same extent as the economy at large.” [1]

For well over a decade, the National Right to Life Committee has argued this very point – but from a different perspective. NRLC points out that continually rising productivity in other sectors of the economy, such as agriculture, frees up resources that can be and are used to extend our lives and improve our health. So as the cost of goods falls, resources are freed up for healthcare, whose price is dropping in inflation-adjusted amount, but just not as rapidly as the price of goods. This does not mean there aren’t real cost problems associated with health care.

The first problem is that while the benefits of rising productivity are seen in rising real incomes for Americans, those income increases are not distributed equally. Those whose incomes have not increased--when adjusted for inflation--may truly face difficulties because of the rising nominal (meaning the current value of money) cost of health insurance. When health costs rise, and incomes do not rise as fast, this led to many of the uninsured.

Second, while the American economy as a whole can continually afford more and better health care (because of rising productivity in other sectors that frees up more and more resources for health care), the same is not true of government’s share of health care costs. For further description of this, see This ‘webinar’ will not only describe how the economy as a whole can afford health care, but how the cost of what people can afford could be used to address the government healthcare entitlements.

With this notion that somehow Medicare can increase in productivity (when there is no proof that health care can do this to the extent Obamacare assumes) along side the totally unrealistic conclusion that hundreds of billions in cuts somehow make Medicare stronger, the program is in real trouble.

[1] See Centers for Medicare and Medicaid Services, “2010 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplemental Medical Insurance Trust Funds,” August 5, 2010, at (August 10, 2010).