Wednesday, August 12, 2009

Debating the President’s Portsmouth Pitch (Final)

Finalizing the debate of Obama's town hall pitch in Portsmouth, NH earlier this week, Mr. Hennessey debates the issue of treatment in private versus government run health care, increasing deficits, increasing costs, AARP, and government control:

Debating the President’s Portsmouth Pitch

By Keith Hennessey, August 12, 2009

Here’s the President again at the Portsmouth, NH town hall on health care reform:

(In response to a gentleman’s question about Medicaid forcing him to take a generic equivalent for Lipitor):

THE PRESIDENT: "Now, I want to be absolutely clear here: There are going to be instances where if there is really strong scientific evidence that the generic and the brand name work just as well, and the brand name costs twice as much, that the taxpayer should try to get the best deal possible, as long as if it turns out that the generic doesn’t work as well, you’re able to get the brand name."

The proxy for the taxpayer is the government bureaucrat running the program. At least for this Medicaid patient, the President is in effect saying that, “if there is really strong scientific evidence” of medical equivalence, then a government official, on behalf of the taxpayer, should make the decision for you “to get the best deal possible.”

It’s hard to square this with his earlier statement that “This is not about putting the government in charge of your health insurance.”

Continuing with this same case, the President said:

"So the basic principle that we want to set up here is that — if you’re in private insurance, first of all, your private insurance can do whatever you want. If you’re under a government program, then it makes sense for us to make sure that we’re getting the best deal possible and not just giving drug makers or insurers more money than they should be getting. But ultimately, you’ve got to be able to get the best care based on what the doctor says.

And it sounds like that is eventually what happened. It may be that it wasn’t as efficient — it wasn’t as smooth as it should have been, but that result is actually a good one."

The questioner said “And I had to go through two different trials of other kinds of drugs before it was deemed that I was able to go back on the Lipitor through the New Hampshire Medicaid system.” The President responded, “It may be that it wasn’t as efficient – it wasn’t as smooth as it should have been, but the result is a good one.”

This man had to wait in a line. Earlier the President said about reform, “You will not be waiting in any lines,” and yet in this case, “The result is a good one.”

Here is the President speaking about health care reform at a town hall in Portsmouth, New Hampshire:

THE PRESIDENT: "And finally – this is important – we will require insurance companies to cover routine checkups and preventive care, like mammograms and colonoscopies …

(later) And I would like to see a mental health component as part of a package that people are covered under, under our plan."

In this case, “we” and “our plan” mean “the government.” I can’t see how he squares that with “This is not about putting the government in charge of your health insurance.” And yet the President is talking about the government mandating specific benefits.

Here again is the President speaking about health care in Portsmouth, New Hampshire:

THE PRESIDENT: "… because there’s no reason we shouldn’t be catching diseases like breast cancer and prostate cancer on the front end. That makes sense, it saves lives; it also saves money – and we need to save money in this health care system."

Here is the key sentence from CBO Director Dr. Douglas Elmendorf in a letter he sent to Rep. Nathan Deal ( last Friday:

CBO: "Although different types of preventive care have different effects on spending, the evidence suggests that for most preventive services, expanded utilization leads to higher, not lower, medical spending overall."

Dr. Elmendorf eloquently explains why:

CBO: "But when analyzing the effects of preventive care on total spending for health care, it is important to recognize that doctors do not know beforehand which patients are going to develop costly illnesses. To avert one case of acute illness, it is usually necessary to provide preventive care to many patients, most of whom would not have suffered that illness anyway. Even when the unit cost of a particular preventive service is low, costs can accumulate quickly when a large number of patients are treated preventively. Judging the overall effect on medical spending requires analysts to calculate not just the savings from the relatively few individuals who would avoid more expensive treatment later, but also the costs for the many who would make greater use of preventive care. As a result, preventive care can have the largest benefits relative to costs when it is targeted at people who are most likely to suffer from a particular medical problem; however, such targeting can be difficult because preventive services are generally provided to patients who have the potential to contract a given disease but have not yet shown symptoms of having it."

Finally, Dr. Elmendorf makes a key point (also on his blog

CBO: "Of course, just because a preventive service adds to total spending does not mean that it is a bad investment."

The President could have correctly said, “Preventive care saves lives. It increases spending, but I think it’s worth it.” He was incorrect when he said “It also saves money – and we need to save money in this health care system.”

Continuing with the series, here is the President talking about health care reform in Portsmouth, New Hampshire:

THE PRESIDENT: "And we will do this without adding to our deficit over the next decade, largely by cutting out the waste and insurance company giveaways in Medicare that aren’t making any of our seniors healthier.

(later) First of all, I said I won’t sign a bill that adds to the deficit or the national debt. Okay? So this will have to be paid for."

And yet:

•CBO says the House bill would increase federal deficits by $239 B over the next ten years.

•CBO says the House bill would increase the deficit in 2019 by $65 B, meaning the bill fails the President’s “10th year test.”

•CBO says the House bill would result in increasing deficits beyond 2019, because the new spending would grow faster than 8% per year, while the offsets would grow only about 5% per year.

The House bill would not just slow Medicare growth, but would also raise taxes on high-income individuals and small business owners.

Here’s still more from the President in the Portsmouth, New Hampshire town hall on health care reform:

THE PRESIDENT: "We have the AARP on board because they know this is a good deal for our seniors.

(later) AARP would not be endorsing a bill if it was undermining Medicare, okay?"

After the town hall, AARP issued a statement including the following sentence:

AARP: "While the President was correct that AARP will not endorse a health care reform bill that would reduce Medicare benefits, indications that we have endorsed any of the major health care reform bills currently under consideration in Congress are inaccurate."

A political observation: With this statement AARP embarrassed the President. It is a huge deal for a left-leaning interest group like AARP to directly and immediately contradict the President on his top policy priority. I infer that AARP’s leadership is more afraid of their members attacking them for perceived support of these bills than they are of infuriating the President and his staff.

Here is the President talking about health care reform in Portsmouth, New Hampshire:

THE PRESIDENT: "[If we do nothing] our deficit will continue to grow because Medicare and Medicaid are on an unsustainable path. Medicare is slated to go into the red in about eight to 10 years."

This statement is true. But the President and his budget director have lowered their bar to say only that health care reform must not increase the deficit, not that it must reduce the deficit. If legislation “cuts” Medicare spending and turns right around and re-spends those funds to create a new rapidly growing health care entitlement, then the underlying deficit problem is unresolved. The legislation being developed in both the House and the Senate just barely meets this condition.

The President’s budget director argues that other reforms in legislation will “bend the cost curve down.” The nonpartisan Congressional Budget Office disagrees, and says the House bill will increase long-term budget deficits relative to current law.

Here is still more from the President’s health care town hall in Portsmouth, New Hampshire:

THE PRESIDENT: "And so I do think it’s important for particularly seniors who currently receive Medicare to understand that if we’re able to get something right like Medicare, then there should be a little more confidence that maybe the government can have a role — not the dominant role, but a role — in making sure the people are treated fairly when it comes to insurance."

But Medicare is fiscally unsustainable. The President already said that earlier in the discussion. So Medicare is not a successful model for a new system, because we can’t afford it.

Here’s more from the President’s health care reform town hall in Portsmouth, New Hampshire:

THE PRESIDENT: "We also want to make sure that everybody has some options. So there’s been talk about this public option. This is where a lot of the idea of government takeover of health care comes from."

The President is correct that “a lot of the idea of government takeover of health care comes from” the public option. Many of the critics are missing that, even if the public option drops out of legislation, other provisions in these bills will effectively put insurance under government control, even while it is offered by private firms.

Part 11
Here are two Presidential answers to different questions. The contrast is instructive:

THE PRESIDENT: "And I do think that having a public option as part of that would keep the insurance companies honest, because if they’ve got a public plan out there that they’ve got to compete against, as long as it’s not being subsidized by taxpayers, then that will give you some sense of what — sort of a good bargain for what basic health care would be."

"… We do think that systems like Medicare are very inefficient right now, but it has nothing to do at the moment with issues of benefits. The inefficiencies all come from things like paying $177 billion to insurance companies in subsidies for something called Medicare Advantage that is not competitively bid, so insurance companies basically get a $177 billion of taxpayer money to provide services that Medicare already provides. And it’s no better — it doesn’t result in better health care for seniors."

On the one hand, the new public option would “keep the insurance companies honest” and be something “that they’ve got to compete against.” On the other hand, where that competition exists today in Medicare, he argues the government should cut payments to private plans that are competing with the Medicare “public option.” This is one reason I fear the public option. A future President could easily make the arguments that President Obama made Tuesday about Medicare Advantage plans, and seek to tilt the playing field toward the public option.

We continue debating the President’s health care pitch at the Portsmouth town hall:

THE PRESIDENT: "Another way of putting this is right now insurance companies are rationing care. They are basically telling you what’s covered and what’s not. They’re telling you: We’ll cover this drug, but we won’t cover that drug; you can have this procedure, or, you can’t have that procedure. So why is it that people would prefer having insurance companies make those decisions, rather than medical experts and doctors figuring out what are good deals for care and providing that information to you as a consumer and your doctor so you can make the decisions?"

The quote takes on a whole new meaning if you insert a legislative detail that the President omitted. I’ll put it in brackets:

"So why is it that people would prefer having insurance companies make those decisions, rather than medical experts and doctors [chosen by the government] figuring out what are good deals for care and providing that information to you as a consumer and your doctor so you can make the decisions?"

In a world of limited resources, we cannot just make decisions about medical care based on whether an additional treatment provides a medical benefit. Someone must instead decide whether that benefit is worth the cost. The third MRI on the sprained wrist may provide more up-to-date and useful information, but the benefit is probably small compared to the additional cost. Someone must have authority to decide whether additional care is “worth it.” That person must control the dollars. Ultimately, the health policy debate comes down to the question: Who should make the cost/benefit decision? The pending legislation would move some of those decisions from insurers to the government.

I think it’s a mistake to have government make more cost-benefit decisions on our behalf in part because people are different. The President is talking about government policymakers (who would also happen to be medical professionals) making determinations about “what are good deals for care.” But cost-benefit tradeoffs depend on the particular medical conditions, situation, and preferences of the individual. I would like more of these decisions to be pushed away from insurers to individuals and families, rather than to people chosen by the government to make those tradeoffs for us.

Other post in this series: