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Health Freedom Watch
August 2009


Does the Leading Health-Reform Bill Increase Competition and Choice, or Lead to Government Takeover of Healthcare?

Proponents of nationalizing healthcare claim the leading House health-reform bill (H.R. 3200) would increase competition and choice.  However, a close examination of key provisions leads one to seriously doubt those claims.  Instead, it’s clear that some people—such as those who opt for catastrophic only coverage—would lose that current option since it wouldn’t qualify as “acceptable” coverage under the proposed bill.  Overall the bill would nationalize health insurance and consumers’ options would be determined by a panel of medical experts (finalized by federal regulations).  Take a look at the following key provisions to see how they would affect competition and choice. 

Health-Exchange Commissioner to Oversee More than $700 Billion, without Abiding by Federal Acquisition Regulations 

A Health Choices Commissioner appointed by the President would establish and operate a new federal health-insurance exchange.1 The Commissioner would establish standards for, accept bids from, and negotiate and enter into contracts with qualified insurance companies.2 Over $700 billion federal dollars (over 10 years) would be funneled into the exchanges with the Commissioner’s approval.3 However, the Federal Acquisition Regulations (to promote competition and keep contractors ethical) would NOT apply to contracts between the Commissioner and insurance companies offering plans in the exchange.4 The Commissioner would allow states to create their own exchanges but only one per state.5 The new system would effectively prohibit catastrophic plans with deductibles higher than $5,000 for an individual and $10,000 for a family.6 All qualified plans would have to comply with standards for electronic financial and medical information.7 Moreover, state-mandated benefits (coverage beyond the essential benefits package) could only continue if states reimburse the Commissioner for continuing their regulatory regimes.8 Finally, the Commissioner “shall collect data for purposes of carrying out the Commissioner’s duties, including for purposes of promoting quality and value…and may share such data with the Secretary of Health and Human Services.”9

Feds Decide What’s Covered in “Acceptable” Health Plans

All told, the federal government would have the final say in determining which benefits are included in “qualified” health plans (including essential, enhanced and premium plans).10 Public input would be allowed but with no guarantee it would be incorporated. The Surgeon General would chair a newly established “Health Benefits Advisory Committee” of up to 27 medical and other experts.11 The Committee would make recommendations to the Secretary of Health and Human Services who would decide whether to propose adopting the standards. The Secretary would then publish the Committee’s recommendations (in the Federal Register) and post them online.12 However, the Secretary cannot adopt any benefit standards that are inconsistent with the coverage decisions outlined in Sections 122 and 123(b)(5) of H.R. 3200.13 Such benefits include those that are “in accordance with generally accepted standards of medical or other appropriate clinical or professional practice…” and are listed on pages 26-30 of the bill.14 When all is said and done, Americans will have a choice of plans covering benefits approved by the federal government, not states or the free market.

Impact on Alternative Medicine Patients

Consider how these provisions would affect individuals using alternative medicine.  If alternative treatments aren’t covered under qualified plans, those currently paying out-of-pocket for alternative medicine (combined with catastrophic coverage) would now have to pay for an “acceptable” comprehensive plan plus pay out of pocket for non-covered alternative treatments. Wouldn’t this increase their costs without increasing their choices of covered benefits?

The Institute for Health Freedom hopes you’ll examine these provisions carefully and share these concerns with policymakers, the White House, media, and your family and friends. 

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Will Individuals’ Advance Directives Be Included in Medical Orders Resulting from End-of-Life Counseling?

If you haven’t read the provision in the House Tri-Committee health-reform bill (H.R. 3200) that’s created so much controversy, you might be wondering: What’s the big deal about government payment for voluntary end-of-life counseling?  Wouldn’t it simply help clarify seniors’ wishes regarding end-of-life treatment during their final days? 

On the surface the provision sounds benign.  Upon close examination, however, Section 1233 of the bill titled “Advance Care Planning Consultation” raises a red flag and here’s why:  Under the provision, Medicare would pay physicians, nurse practitioners and physician’s assistants for conducting end-of-life counseling sessions and the sessions “may” result in “actionable” medical orders regarding end-of-life treatment.15 The provision goes on to say that the medical orders “may” incorporate any advance directive executed by the individual.16

That’s no way to guarantee patients’ advanced directives will be honored! 

Legally speaking, there’s a huge difference between “may” and “shall.”  Thus to ensure patients are not inadvertently influenced by Medicare-paid experts, any law purporting to uphold patients’ wishes should make it very clear that individuals’ advanced directives “shall” be incorporated into any actionable medical orders.  

Not surprisingly, Iowa Senator Charles Grassley recently noted at a public meeting in his home state, “…I don’t have any problem with things like living wills.  But they ought to be done within the family” the Wall Street Journal reported.17

Moreover, it’s worth noting that anyone who’s worked in hospitals knows that you don’t need end-of-life medical “orders” to sustain life, but rather to end it.  In the United States, hospitalized patients are given life-sustaining measures unless otherwise indicated.  For example, patients would be given life-saving treatment unless there’s an order that says “Do Not Resuscitate” (or other such directives). 

So while there has been much debate about the intent of the end-of-life counseling sessions, as written the provision fails to state clearly that individuals’ advance directives SHALL be incorporated into actionable medical orders. In a free society, individuals and their families should have the final say regarding end-of-life decisions.

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Medicare Trustees’ Report Projects Hospital Insurance Bankruptcy by 2017

Medicare is not adequately financed over the next decade, according to the most recent Medicare Trustees’ report (May 2009).  The report notes that Medicare’s hospital insurance (HI) expenditures are projected to nearly double by 2017 (from $235.6 billion in 2008 to $403.1 billion in 2017).  At the same time, HI trust-fund assets are projected to be exhausted in 2017.  The trustees note, “The financial outlook for the Medicare program continues to raise serious concerns.  Total Medicare expenditures were $468 billion in 2008 and are expected to increase in future years at a faster pace than either workers’ earnings or the economy overall.”18 

Is it wise to add a $1 trillion health-reform plan to a budget deficit that is soon to face greater challenges with upcoming Medicare shortfalls?  If history is any indication, the answer is no. 

Medicare’s Impact on National Health Spending 

It’s important for Americans to realize that when Medicare was being debated (it was signed into law in 1965), business and taxpayer groups were concerned that spending might grow out of control.19 However, single-payer advocates assured them that seniors could easily be covered with only a small increase in payroll taxes.20

The federal government’s lead actuary in 1965 projected the hospital program (Medicare Part A) would grow to $9 billion by 1990.  It ended up costing more than $66 billion that year! Even after adjusting for inflation and other factors, the cost of Medicare Part A was 165 percent higher than the official government estimate, according to the actuary who produced them. (In unadjusted dollars actual costs were 639 percent above estimates.)21

Some argue that costs grew so much because of unexpected increases in seniors’ life expectancy.  But that claim overlooks the significant fact that average life expectancy had been increasing in the United States long before Medicare was enacted in 1965.  In fact, average life expectancy in the United States increased from 47.3 years to 69.7 years between 1900 and 1960.22 It’s important to note that life expectancy was low in the early 1900s primarily because of high infant mortality rates, making the overall life expectancy rate appear low.  However, in the early 1900s, those who reached age 60 typically lived another ten years or more.23 The bottom line is that life expectancy for seniors had been increasing nearly every decade for 65 years (1900 to 1965) prior to the enactment of Medicare. Thus, we can't attribute the increases in seniors' life expectancy to Medicare. It’s time for America’s policymakers to tackle the forthcoming Medicare crisis once and for all, especially before considering adding another $1 trillion healthcare program to the nation’s unfunded long-term obligations.

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1. See Section 141 “Health Choices Administration; Health Choices Commissioner” and Section 142 “Duties and Authority of Commissioner” (pp. 41-42) of “America’s Affordable Health Choices Act of 2009,” H.R. 3200.

2. See Section 201 “Establishment of Health Insurance Exchange; Outline of Duties; Definitions” (p. 72) of “America’s Affordable Health Choices Act of 2009,” H.R. 3200.

3. Congressional Budget Office, Analysis of America’s Affordable Health Choices Act of 2009, July 14, 2009.

4. See Section 204 “Contracts for the Offering of Exchange-Participating Health Benefits Plans” (p. 89) of “America’s Affordable Health Choices Act of 2009,” H.R. 3200.

5. See Section 208 “Optional Operation of State-Based Health Insurance Exchanges” (p. 113) of “America’s Affordable Health Choices Act of 2009,” H.R. 3200.

6. See Section 122 “Essential Benefits Package Defined” (p. 29) of “America’s Affordable Health Choices Act of 2009,” H.R. 3200.

7. See Section 163 “Administrative Simplification” (pp. 57-65) of “America’s Affordable Health Choices Act of 2009,” H.R. 3200.

8. See Section 203 “Benefits Package Levels” (p. 87) of “America’s Affordable Health Choices Act of 2009,” H.R. 3200.

9. See Section 142 “Duties and Authority of Commissioner” (p. 43) of “America’s Affordable Health Choices Act of 2009,” H.R. 3200.

10. See Section 123 “Health Benefits Advisory Committee” and Section 124 “Process for Adoption of Recommendations; Adoption of Benefit Standards” (pp. 30-37) of “America’s Affordable Health Choices Act of 2009,” H.R. 3200.

11. See Section 123 “Health Benefits Advisory Committee” (pp. 30-35) of “America’s Affordable Health Choices Act of 2009,” H.R. 3200.

12. See Section 123 “Health Benefits Advisory Committee” (pp. 30-35) of “America’s Affordable Health Choices Act of 2009,” H.R. 3200.

13. See Section 124 “Process for Adoption of Recommendations; Adoption of Benefit Standards” (p. 37) of “America’s Affordable Health Choices Act of 2009,” H.R. 3200. 

14. See Section 122 “Essential Benefits Package Defined” (p. 26-30) of “America’s Affordable Health Choices Act of 2009,” H.R. 3200.

15. See Section 1233 “Advance Planning Consultation” (pp. 424-434) of “America’s Affordable Health Choices Act of 2009,” H.R. 3200.

16. See Section 1233 “Advance Planning Consultation” (p. 430) of “America’s Affordable Health Choices Act of 2009,” H.R. 3200.

17. “End-of-Life Provision Loses Favor,” Wall Street Journal, August 13, 2009.

18. 2009 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds, May 12, 2009.

19. “Federal Health Estimates – 300% Wrong,” Nation’s Business (Chamber of Commerce), November 1964.

20. Medicare’s Midlife Crisis, by Sue A. Blevins, published by the Cato Institute, 2001.

21. "How Bad Were the Original Actuarial Estimates for Medicare's Hospital Insurance Program?" by Robert J. Myers, The Actuary, February 1994.

22. U.S. Department of Commerce, Bureau of the Census, Historical Statistics of the United States: Colonial Times to 1970, Bicentennial Edition, Part 1 (Washington: Government Printing Office, 1975), p. 55.

23. U.S. Department of Commerce, Bureau of the Census, Historical Statistics of the United States: Colonial Times to 1970, Bicentennial Edition, Part 1 (Washington: Government Printing Office, 1975), pp. 56-57.

Health Freedom Watch is published by the Insitute for Health Freedom. Editor: Sue Blevins; Assistant Editor: Deborah Grady. Copyright 2009 Institute for Health Freedom.