Tag Archives: Senate Finance Committee

Some Federal Workers Can’t Afford Their “Model” Health Care Plan

Now that the Senate Finance Committee has driven a stake through the public option, there’s likely to be renewed talk about the Federal Employees Health Benefits program (FEHB). Throughout the contentious health care debate, the federal workers health plan has been often hailed as the model everyone can live with. It’s even been described by some as the basis for an alternative “public option,”  under which the unisured could either buy into the FEHB or, more likely, into a program modeled on it. Members of Congress just love to talk about offering Americans the “same health care” they themselves enjoy, and Obama has said much the same thing.

Too bad there really isn’t anything public at all about the FEHB, as I (and others) have written before. It’s simply a system that allows federal workers to sort through dozens of different private insurance plans, and pick one they want. (This supposed model for a public option doesn’t even include a public option itself.) Their employer, the government, then picks up the majority of the cost of the premiums, with the workers paying the rest. They have a wide range of choices among private plans and access to group rates, which is better than what a lot of Americans have. But like all private insurance, the FEHB’s offerings are expensive–so expensive that about 100,000 federal workers don’t participate because they can’t even afford their share of the premiums, which  average about 30 percent of the total cost.

Now the FEHB’s premiums–like everyone else’s–are getting a lot more expensive. As Joe Davidson reports today in the Washington Post:

Federal government employees can expect a big jump in their health-care costs in 2010, officials said Tuesday.

Employees enrolled in the Federal Employees Health Benefits Program will pay an average 8.8 percent more in health-care costs, according to figures released by the Office of Personnel Management….The increase compares with a 7.9 percent jump in 2009 and a 2.9 percent increase in 2008, according to the OPM.

The rates for FEHB Blue Cross Blue Shield, a popular choice because of its comprehensive coverage and wide choice of providers, will increase far more–15 percent for individuals, and 12 percent for families.

These rate hikes will likely present no problem for members of Congress, who earn $174,000 a year (and have expense accounts). But Davidson cites responses from unions representing rank-and-file federal workers:

“This is an enormous increase that erodes federal employees’ standard of living,” Colleen M. Kelley, president of the National Treasury Employees Union, said in a statement. “Affordable health care is essential in attracting and retaining a stable, high-quality workforce.”

The American Federation of Government Employees expressed “grave concern” at the news. “FEHBP is getting more and more unaffordable for more people,” said Jacqueline Simon, AFGE public policy director.

Most telling of all is the statement given to reporters by Nancy Kichak, an associate director of the U.S. Office of Personnel Management: “An 8.8 percent increase is not an increase that we feel comfortable with,” Kichak said. “It’s not one that we would like to see our enrollees bear, but unfortunately we’re a victim of the market.”

A “victim of the market.” Sounds like the same thing that’s wrong with the whole U.S. health care system (with the exception of original Medicare, which Congress could look to as a model for a public option, if only they had the political will). 

But as we know, in the market there are always winners as well as losers: Witness the jump in health insurance company stocks on Tuesday afternoon, following the Finance Committee’s defeat of two proposed public option amendments.

Congress’s $1.2 Million a Day Drug Habit

When it comes to securing their interests against even the flimsiest of threats, the drug-makers’ pockets appear bottomless. A look at last week’s Center for Responsive Politics report on the industry offers an awe-inspiring view of the druggies in action: To begin with, we’re not talking about a handful of lobbyists twisting the arms of members of Congress. Pharma had 1,814 flacks at work last year and 1,309 in the first 3 months of this year. That’s 12 percent of all the lobbyists in Washington. Last year alone the drug industry spent $234 million on lobbying. In the first three months of this year, it spent more than $66.5 million–$1.2 million a day. And that doesn’t include polling, advertising, and research. Among the top recipients of Pharma funds are several members of the Senate Finance Committee, including Chair Max Baucus, who have positioned themselves as a “coalition of the willing” dedicated to promoting a bipartisan middle ground on health care reform–in other words, minor changes that won’t seriously affect private sector profits.

And that’s just what we’re getting from Big Pharma, in the form of a phony “discount” program for Medicare recipients. As I wrote last week, the drug-makers are offering a 50 percent discount–on brand name drugs only–to old and disabled people when they fall into the Part D coverage gap known as the “donut hole.” Pharma’s purported “gift” to seniors, and to the health care reform effort, is actually a smart long-term business strategy, since it is likely to keep Medicare recipients hooked on brand name drugs, rather than switching to less costly generics when they reach the gap.

A study released last year by Wolters Kluwer Health showed “clear evidence of a growing affinity for generics and a continual slide away from brands” since the institution of the Medicare prescription drug program. In 2007, the study found, generics accounted for 67 percent of the Part D market, up from 50 percent just three years earlier. “What’s most striking,” said a VP of the information services company, “is the fact that of those who discontinue their branded drug therapy in the coverage gap, only 6% return to them after leaving the gap.”

In other words, seniors keep taking the cheaper generics, even once the government starts picking up the bill again in the new calendar year. Since most Medicare recipients spend more time outside of the donut hole than in it, the drug-makers could actually see a big payoff from their discount program if it keeps a fair number of elders taking the brand name drugs, and keeps the government—and the taxpayers—funding them.

All this points to the fact that despite their protestations, the drug companies (and insurance companies) have no real objection to health care “reform,” as long as it happens on their terms. The Republican-penned Medicare prescription drug bill, for example, was a huge boon to both industries, opening up a mammoth new market for their products, with the government footing the bill. 

What the drug-makers want to avoid, then and now, is an end to what Dean Baker calls “their government-granted monopolies,” which allow them “to charge whatever they want. As a result, we pay nearly twice as much for our prescription drugs as people in countries like Canada and Germany.

By making voluntary “concessions,” the industry positions itself to combat any real change that might affect its profit margins. And with drug spending estimated to total $3.3 trillion over the next decade, $80 billion in discounts is a small price for Big Pharma to pay to preserve its stranglehold on the American health care system. And so is $1.2 million a day to preserve its friends in high places in the United States Congress.

How Health Care Reform Flew the Co-op (OR the Public Option That Isn’t, Part 2)

This week I’ve been writing about the destruction of all the best elements of health care reform in the name of political expediency. Most significant is the bait-and-switch that’s taking place on the “public option”–which was supposed to provide a government-run alternative to private health insurance plans. Through the handiwork of some Senate Democrats seeking bipartisan compromise, the public option is quickly devolving into something that really isn’t public at all.

The latest news on this subject comes via Ezra Klein’s Washington Post blog, which reported last night on the content of a new health care reform bill drafted by the Senate Finance Committee. After an earlier proposal from Ted Kennedy’s Health, Education, Labor and Pensions (HELP) Committee was widely attacked for its liberal ambitions and high price tag, the Finance Committee is floating a cheaper—and, of course, weaker—alternative. According to the highlights provided by Klein, subsidies for the poor have been reduced, Medicaid eligibility has been tightened, and “There’s no public plan mentioned anywhere in the document.”

What is in the Finance Committee’s draft, and slated for further discussion, is a scheme for health care “co-ops” that would pool individuals and businesses together into consumer co-operatives to purchase health insurance and services. (Kaiser Health News has profiled one existing co-op in Seattle.)  The idea was first proposed by North Dakota Democrat Kent Conrad, and supported by Finance Committee chair Max Baucus. Baucus has been talking out of both sides of his mouth on the public plan for some time, and seemed to quickly latch onto the co-op idea as means to having it both ways.

Speaking in Green Bay last Thursday, President Obama said: “If the private insurance companies have to compete with a public option, it will keep them honest and it will help keep their prices down.” On the same day, the New York Times reported:

Senator Max Baucus of Montana…said Thursday that the public plan could take the form of an insurance cooperative that would be owned and operated for the benefit of its members, but not run by the government.

“I am inclined, and I think the committee is inclined, toward a co-op,” Mr. Baucus said. “It’s not going to be public, we won’t call it public, but it will be tough enough to keep insurance companies’ feet to the fire.”…

By the time the Sunday morning news shows aired, HHS Secretary Kathleen Sibelius was speaking of co-ops as a road to bipartisan compromise—and with the advent of the draft bill from the Finance Committee, it seems like the fix is in. Especially with Ted Kennedy absent from the fight, this is all we are likely to get in the way of a “public option.”

True to this spirit of bipartisanship, the co-op scheme is a weak, tired, nearly meaningless idea that would represent no real alternative to business-as-usual in the health insurance industry. In the best-case scenario, which is far from guaranteed, the co-ops might have a less corporate governance structure than other insurers and receive federal subsidies for startup costs and more expansive coverage. In the worst case scenario, they would in effect be private insurance companies by another name. And at least some of the initial capital, in all likelihood, will come from the members. You can be sure all the Americans who are out of work and too poor to buy insurance people will appreciate that—and with the lower subsidies in the Finance Committee’s draft bill, most of them will still be on their own.

Much is being made of the fact that the co-ops would be non-profits. But really–so what? Almost half of Americans with private health insurance are currently covered by non-profit plans.  As a whole, they haven’t proven themselves much—if any—better or cheaper than the for-profit insurers, and they still fail to cover 50 million Americans.

The giant Kaiser Permanente is a non-profit. And while some of them have privatized, many of the Blue Cross-Blue Shields are still non-profits as well—and, in fact, got started as co-ops. Some of these non-profit insurers are well known for paying huge executive salaries and hoarding huge reserves, while charging the same high rates and offering the same rationed care as private plans—and enjoying tax exemption to boot. One report by the Consumers Union found the non-profit “Blues” stockpiling billions in cash even as they raised premiums and co-pays.

Supporters of the co-ops also insist that they will offer real competition to the private insurers, and bring down costs for their members by giving them bargaining power with health care providers. Tim Foley made short work of this claim in a post on Change.org:

Former Labor Secretary Robert Reich articulates well most people’s gut-reaction: “Nonprofit health-care cooperatives won’t have any real bargaining leverage to get lower prices because they’ll be too small and too numerous.” Conrad’s answer to that has been consistently to say, “But you know, one of the interesting things when we talk to experts, is that they say critical mass is probably around 500,000 members.” Let’s skip over the difficulties in finding half a million people for a co-op. Let’s just say that 500,000 non-profit customers doesn’t change the game. Know how I know? Because, as pointed out by Bob Laszewski, Conrad’s home state of North Dakota has 475,000 people enrolled in the not-for-profit North Dakota Blue Cross Blue Shield. That’s not just competition–it’s a monopoly, 60% of the market. Guess what? It hasn’t helped. Premiums jumped 74% in the past seven years.

In fact, as the State of the Division blog  points out, it’s conceivable that private, for profit companies could “get in the back door” of the co-op plan: What’s to stop a co-op from actually licensing itself out to a private insurance company–or hiring one to administer its fledging business? The publicly traded (and scandal-ridden) Wellpoint is currently the largest Blue Cross and Blue Shield licensee. (In an instance of true bipartisanship, Wellpoint’s Board of Directors includes the wife of Democratic Senator Evan Bayh, as well as George W. Bush’s uncle.)

Although the demise of a real public option will likely be blamed on Republican opposition, it’s moderate Democrats who came up with the phony co-op plan. This should hardly be surprising coming from Max Baucus, who, as the Montana Standard reported this week, has received more campaign money from health and insurance industry interests than any other member of Congress. But the so-called liberal Democrats–again, in the absence of Kennedy–also look likely to cave all too soon, along with the White House.

So much for “incremental” health care reform. At this rate, the increments will soon be so small that they’ll be invisible.

(Incidentally, Karl Marx toyed with the idea of cooperatives as a means to worker control of production, and Lenin supported them for a time as an incremental step in the transition to socialism. But things got out of hand, and what we got instead was the Russian Revolution.)

The Health Care Reform That Wasn’t

Confused about what’s happening with health care reform? Join the club. After months of buildup and debate, endless meetings and daily pronouncements, we’re still waiting some clear outline of a reform plan to emerge. Instead, the picture seems to get fuzzier with every passing day.

At the American Medical Association convention in Chicago this afternoon, the President called health care expenditures a “ticking time bomb” for the nation, and told eloquent stories of families, small businesses, and even doctors who are being crushed by these spiraling costs. The rest of his speech catalogued the most uncontroversial elements of any proposed reform–encouraging more preventative care, promoting “best practices,” eliminating waste, reducing junk food consumption, instituting electronic medical records. Who could possibly object to such things, other than perhaps the manufacturers of potato chips and Wite-out?

Meanwhile, the speech offered only the vaguest clues as to how Obama proposes to resolve the most contentious—and important—issues in any possible reform plan. The best insight into this ongoing state of irresolution came after a meeting last Wednesday at the White House, where the President called together a group of senators from both parties to hash out their differences. The Associated Press reported:

A senior Republican who recently criticized Obama also sounded positive. “The president, I thought, was very flexible except on one thing, and that was getting it done,” said Sen. Chuck Grassley, R-Iowa. “When the president is flexible on controversial things … I think that that’s good news.”

Given all this “flexibility,” the senators at the meeting—Grassley and Max Baucus (D-Mont.), ranking members of the all-important Senate Finance Committee, plus HELP Committee leaders Mike Enzi (R-Wy.) and Chris Dodd (D-CT), who has stepped up in Ted Kennedy’s absence—agreed they could bring a bill to the Senate floor in July.

In other words, expediency has replaced essence when it comes to the Obama administration’s position on health care reform, and strategy has replaced substance. What matters is not so much what kind of health care system we end up with, as long as we end up with something that looks like reform—preferably, before the end of Obama’s first year in office. What this is, of course, is the perfect formula for a health care reform that is uncontroversial, weak, and expensive.

What is shaping up here is a replay of the credit card legislation: Under a propaganda blitz heralding sweeping reform, we get legislation that reins in some of the very worst abuses, while making no significant change at all to the underlying flawed system. So, for example, we may see insurance companies required to provide coverage in spite of pre-existing conditions–something Obama referred to in his AMA speech, with moving references to his mother’s own battle with cancer. We might see what the President today called “more efficient purchasing of prescription drugs,” which presumably means more power to haggle with Big Pharma over drug costs, as well as speeding up approval of generics. We will see health care providers given incentives for more cost-effectiv–and, we can hope, better–treatment. These things are not meaningless, and they will provide a modicum of help to some struggling Americans. But they do virtually nothing to strike at the basic American system of health care for profit. And at the same time, they offer only a fraction of the savings a single-payer system could offer.

With no clear vision emanating from the White House and no bottom line, everything is up for grabs when it comes to the details of this tepid reform. It’s no wonder, then, that new balls keep coming out of left field every day. As Obama prepared for his AMA speech, the Washington scuttlebutt was that he would seek to reduce costs by accepting limitations on malpractice suits. In the speech, the President said he was “not advocating caps on malpractice awards,” but wanted to “explore a range of ideas” to reduce the malpractice threat. The New York Times reported this morning:

In closed-door talks, Mr. Obama has been making the case that reducing malpractice lawsuits—a goal of many doctors and Republicans—can help drive down health care costs, and should be considered as part of any health care overhaul, according to lawmakers of both parties, as well as A.M.A. officials.

It is a position that could hurt Mr. Obama with the left wing of his party and with trial lawyers who are major donors to Democratic campaigns. But one Democrat close to the president said Mr. Obama, who wants health legislation to have broad support, views addressing medical liability issues as a “credibility builder”—in effect, a bargaining chip that might keep doctors and, more important, Republicans, at the negotiating table.

It’s in this same spirit of seeking “broad support” that the so-called public option–a government-run alternative to private insurance, which could at least have begun to show up the insurance companies for the bloodsucking middlemen they really are–seems to be dying a slow and painful death. In fact, it looks more and more like the public plan may have all along been a straw man, set up only to be knocked down. On the one hand, it has served as a temporary panacea to single-payer advocates and other critics of medicine-for-profit, including important Democratic constituencies like labor unions. On the other hand, it is now a major bargaining chip, or “credibility builder”–something that the administration can give up, in what looks like a generous concession to its opponents.

TOMORROW ON UNSILENT GENERATION: What the not-so-public “public option” could look like.

Not Enough Cops to Silence Single-Payer Advocates

James McGee, who blogs at The Amazing Maze of U.S. Health Care (and who, as a health plan administrator, knows his way around the maze better than most people), has compiled an assortment of videos showing the protesters at the Senate Finance Committee’s hearing on health care reform. Check them out here.

The protestors were, of course, decrying the fact that the 15-person witness list at what was billed as “A Roundtable Discussion on Expanding Health Care Coverage” included representatives from think tanks, business groups, labor unions, insurance companies, health care providers, but not a single person supporting a single-payer public health care system.

As protestors were escorted from the room by capitol cops, the response from the committee’s chair,  Montana Democrat Max Baucus, a leading member of what purports to be the party of the people, was the amusing quip, “We need more police.” As Amy Goodman notes today, the line is becoming a rallying cry for the single-payer movement, and those arrested at the hearing are calling themselves the Baucus 13.

McGee also points out that instead of debating about whether health care reform should include a “public option,” we ought to be asking why it needs to include any private options, since they’ve been shown to provide lower quality health care at much higher cost.

Why the Senate Is Asking the Wrong Questions About Tom Daschle’s Finances–and Why Obama’s Lobbyist Pledge Doesn’t Mean Much

As the Senate Finance Committee continues to review HHS nominee Tom Daschle’s financial records, and Daschle himself apologizes for “the errors that required me to amend my tax returns,” what isn’t commanding attention seems far more significant than what is.

There are plenty of things in Daschle’s financial history that ought to  alarm everyone involved a lot more than a car and driver he forgot to report to the IRS. Apparently, however, neither the Committee nor the White House are much bothered by the riches Daschle has quite legally reaped from private health care companies–a fact that in itself reveals the inherent weaknesses in Obama’s ban on former lobbyists serving in government.

Massachusetts Senator John Kerry was one of several leading Democrats who defended Daschle on the Sunday morning news shows. Kerry declared that Daschle’s tax issues were an “innocent mistake” that would not affect his ability to perform his job “one iota.”

Yes, it’s probably true that being driven around in a Cadillac and not paying taxes on it won’t compromise Daschle’s ability or independence as HHS secretary or “health czar.”  The same cannot be said about all the income that Daschle did report to the IRS. As described by the New York Times:

As a politician, Mr. Daschle often struck a populist note, but his financial disclosure report shows that in the last two years, he received $2.1 million from a law firm, Alston & Bird; $2 million in consulting fees from a private equity firm run by a major Democratic fundraiser, Leo Hindery Jr. (which provided him with the car and driver); and at least $220,000 for speeches to health care, pharmaceutical and insurance companies. He also received nearly $100,000 from health-related companies affected by federal regulation.

Mr. Obama has instituted rules requiring former lobbyists in his administration to pledge not to deal with former clients, though he has made exceptions for two nominees, one at the Pentagon and one at the health agency. As a strategic adviser to companies, Mr. Daschle did not have to register as a lobbyist, and is not technically covered by those rules.

“He’s never lobbied, therefore he’s not in violation of the pledge,” Mr. Gibbs said. “The president is comfortable with Senator Daschle’s variety of experiences and backgrounds. It’s why he believes he’s best suited to the efforts to reform our health care system.”

In fact, InterMedia Advisors, the private equity firm that provided him with the car and driver, is one of the few sources of  Dascle’s income that had nothing at all to do with the health care industry (though it does own a few questionable properties, including the magazines Guns & Ammo, Handgun, and Shooting Times–all of them acquired while Daschle was chairman.)

When Daschle was first nominated, the Times described his role at Alston & Bird, which “represents dozens…of pharmaceutical companies, health care providers, and trade groups for nurses and nursing homes”:

Although not a registered lobbyist, Mr. Daschle, a South Dakota Democrat who was party leader in the Senate, provides strategic advice to the firm’s clients about how to influence government policy or actions. The firm’s Web site declares, “Our health care legislative and policy team has the significant advantage of including two former U.S. Senate majority leaders–Senators Bob Dole and Tom Daschle–both resident in our Washington office and champions of many health care issues in their Senate Finance Committee and leadership roles.”

As examples of the firm’s achievements the Web site lists matters involving Medicare and Medicaid reimbursements, approvals of federally regulated drugs and medical products, fraud investigations, medical waste disposal, privacy and other compliance issues.

Daschle, of course, is no different from hundreds of other high-stature elected officials who use their political influence to provide what Alston & Bird calls “significant advantage” to private corporations dealing with the federal government. Few of them ever become registered lobbyists–so few would be disqualified by Obama’s pledge.

The future of health care reform depends largely on the Democrats’ ability to stand up to the drug companies and insurance companies who drive up costs and drive down access and benefits. As HHS secretary and health czar, Tom Daschle will lead this reform effort. Personally, I’m less concerned about his tax-free car rides than I am about his work on behalf of the very industries he must now reign in for the public good.