Monday, May 11, 2009

Weekly Newsletter: May 11, 2009

A “Public” Plan by Any Other Name Is Still the Same

This week marks the release of the second of three intended white papers by Senate Finance Committee Chairman Baucus about his intended goals for health reform legislation—this one focused on expanding health coverage.  Press reports over the weekend indicated that the report would set out several possible approaches to constructing a “public option” health plan to compete with private insurance: a “single-payer” system open to all, a government-funded plan administered by an outside party, or state-designed insurance plans for individual states’ residents.

Some Members may believe the three plans represent a distinction without a difference, as any government-run plan is unlikely to remain at arm’s-length when many Democrats want to leverage the so-called “option” to create a single-payer system.  Just as Democrats claimed to establish a “level playing field” between government-run student lending and private lenders—only for President Obama to reverse course and propose the abolition of all private student lending—some Members may agree with CBO Director Elmendorf that it will be “extremely difficult” to design a government-run plan to “compete on a level playing field”—not least because Democrats will work to shift individuals from their current coverage on to the government-run plan.

Democrats Focus on Expanding Coverage—Not Saving Medicare

The release of Sen. Baucus’ plans on coverage coincides with the publication of the final volumes of President Obama’s budget submission—as well as the issuance of the annual Medicare trustees report.  Even as Sen. Baucus discusses significant expansions of government-run coverage, the Medicare trustees are likely to report a significant deterioration in the program’s trust funds.  However, in releasing his budget, President Obama proposed diverting hundreds of billions of dollars in proposed Medicare savings to pay for expanded coverage elsewhere—not to improve the solvency of a program facing increasing financial peril.  In addition, the President has yet to comply with the statutory requirement that he submit legislation to Congress addressing Medicare’s funding shortfalls—suggesting that his definition of “entitlement reform” consists largely of spending as much as $1.5 trillion to create a new government-run health plan.

Some Members may be concerned by the Democrat focus on creating new health care entitlements and its impact on the nation’s fiscal future.  The impact of any actions taken to slow the growth of health costs will not be known for several years—and Members may believe that new government health care bureaucracies will be far from an ideal place to save costs, except by denying patients needed life-saving treatments.  Therefore, some Members may believe that Democrat plans for health reform could well result in the scenario envisioned by Senate Budget Committee Chairman Conrad, who recently spoke of his fear “that we put in a boatload of additional money and don’t bend the cost curve…the worst possible outcome”—one that would jeopardize both today’s Medicare beneficiaries, and the future generations who will have to finance the country’s growing debts.

Clip of the Week: A License to Steal

Amidst Sen. Baucus’ focus on creating a new government-run health plan, the Senate Aging Committee held a hearing last Wednesday examining rampant fraud within current government-run health plans—namely, Medicare and Medicaid.  Witnesses testified about the many ways in which fraud and improper payments permeate government-run health care—from the Brooklyn dentist who billed Medicaid for 991 patient visits in the same day to South Florida home health claims billed for dates when hurricanes were hitting the Miami area.

Some Members may not be surprised by these reports, as Medicare and Medicaid have primarily focused on paying health claims—regardless of merit, or lack thereof—rather than serving as good stewards of taxpayer dollars.  While Democrats focus on Medicare’s purported low administrative costs relative to private health insurance, both Medicare and Medicaid have been designated “high-risk” programs by the Government Accountability Office for years—largely as a result of fraud estimated as in the tens of billions of dollars each year.  Some Members may therefore question how many additional taxpayer funds will be lost to fraud as a result of a government-run health plan that will lead to as many as 120 million individuals losing access to their current health coverage.

ABC News presented a report on the hearing, and Medicare fraud generally, which can be found here.