RendellCare lobbyists push socialist pricing

The lobbyists charged with pushing RendellCare InsurePANow has fired off another missive advocating more of Rendell's health care agenda. They tout a bill that they proclaim will "make insurance companies work for you". Huh?

The legislation they are lobbying for imposes a modified "community rating" on all insurance providers. Community rating means that insurance companies can't charge different rates for different individuals. While this sounds good on the surface, what it means is that younger, healthier workers would pay higher premiums, while the old and sick may pay less.

In addition, insurance companies wouldn't be able to charge smokers more (which seems odd given the anti-smoking campaign of RendellCare), nor would they be able to offer discounts for "healthy behavior" - i.e. wellness or fitness programs.

Community ratings drive up the number of uninsured, and discourage younger, healthier customers from buying health insurance (even when health insurance is mandated, as in Massachusetts). Read more about community rating in the ALEC/CAHI State Legislator's Guide to Health Care.

The RendellCare lobbyists claim that community rating would "help small businesses" and protect us from the big bad insurance companies. But small businesses oppose community rating, and many insurance companies favor it (including many of the big carriers), as they simply shift their cost to some people more while charging others less.

Instead, here are some actual reforms that reduce the cost of health care for everyone - insured and uninsured, employer-provided and individual purchasers, young and old, sick and healthy, smokers and the physically fit.

(Note: I don't think I signed up for the InsurePANow email list, but I did sign up for the Rendell re-election list to follow campaign events, and I assume that InsurePANow got both the email list and Rendell's campaign manager in a package deal)

Governors health care plan assailed

Alison Hawkes in The Herald Standard on business groups responses to Governor Rendell's universal healthcare plan.

[Rendell healthcare spokeswoman] Kelchner said she can't understand why business trade associations are not on board. Businesses that don't provide health care coverage are raising health care costs for businesses that do. "That piece I don't understand," she said. "We're trying to help everyone in the long run."

To paraphrase V: It's not about what you are trying to do, it is about what you are doing.

Hopefully this will help her understand the problem with RendellCare:
State can't fix health insurance problems it created
Higher Taxes Won’t Cure Cancer
RendellCare Treats the Symptom Rather than the Cause
RomneyCare is greatly exceeding expected costs

And here are some ideas about what we should be doing instead:
Alternatives to RendellCare
Eliminating government mandates would lower cost of health insurance
How to Cure the Health Insurance Crisis

Further Reading:
The Cure: How Capitalism Can Save American Health Care
Healthy Competition: What's Holding Back Health Care and How to Free It

Semonizing on RendellCare

Morning Call article and Post-Gazette piece on the planned "CAP Sunday" and campaign to use sermons to promote RendellCare. (HT: GrassrootsPA)

I've written on Jesus and RendellCare before, both on confusing taxation and government programs with "healing the sick" and the all-too-frequent mislabling of government as "charity" (other commentaries on this theme here and here).

Personally, I don't care for lobbying from the pulpit, and would walk out of church if the sermon called on me to contact my legislator to support a policy proposal (even a policy I support). And while I understand that others believe their ministers should be calling for social and political activism, shouldn't that message be inspired by God, not by Governor Rendell's former campaign manager?

Cost of Rendell Care

Following, yesterday's defense of RendellCare (and attack on the Commonwealth Foundation) from the Democratic Party, I though it appropriate to examine the cost of RendellCare. As you know Rendell's propoganda claims we can save $7.6 Billion in health care - but almost all of that savings is if we eliminate (entirely) hospital aquired infections and error and if we end (entirely) emergency care for non-emergenices. Neither proposal would bear much cost, if any, for taxpayers.

However, the "Cover All Pennsylvanians" part of the Governor's Plan would create a new cost for taxpayer. The governor's outline claims we would spend (in taxes, hospital expenses, and insurance premiums) $1.4 billion for care of the uninsured; but fails to estimate how much "Cover All Pennsylvanians" (CAP) would cost. However, below is my own estimate I have assumed that all currently uninsured persons (according to the state's estimate) enroll in CAP, using the full employer premium and a $25 employee premium, all employers participate and avoid the "fair share" tax, we double the tax revenue from tobacco, and use all the tax revenue currently spent on reimbursing uncompensated care (which the Governor call for). The total: $2.4 billion. Not the kind of savings we are looking for.




Note: my estimates may be inaccurate, but I spent 30 minutes of my time to produce what the Governor's task force (will several months and a $1 million budget) could not.

PSL If you missed Matt Brouillette debate on the Bob Durgin Show yesterday, listen to The Box on Saturday for more on RendellCare.

Uninsured will grow under RendellCare

Pop quiz: The Rendell administration has estimated that 800,000 Pennsylvania adults are currently uninsured. If Governor Rendell's "Cover All Pennsylvanians" were implemented as designed - costing up to $1.4 billion - how far would the number of uninsured fall?

A: Between 100,000 and growth of 85,000.

How can this be? Aren't Governor Rendell and House Democrats promising to cover all Pennsylvanians?

1. Cover All Pennsylvanians (CAP)- Despite the dramatic increase in spending, CAP does not approach covering 800,000 persons. In 2007-08, Governor Rendell has estimated 106,000 new CAP enrollees, growing to about 370,000 in 2011-12 - less than half those currently uninsured.

2. Natural Increases in Uninsured - From 1999-2006, US Census data finds that the number of PA uninsured adults grew by an average of 6% annually (this in spite of, or because of, increases in those on government insurance programs). At this rate the number of uninsured will climb by 270,000 by 2011-12.

3. Crowd Out - Many of those covered under CAP will be either (a) those currently insured dropping private insurance to go onto CAP, (b) those losing private insurance for other reasons and joining CAP (e.g. changing jobs, divorce), or (c) those not currently counted in insurance data (e.g. under 18, new PA residents). One study puts the "Crowd Out" effect of SCHIP at 60%.
The chart below shows the amount of coverage under CAP, the costs, the anticipated natural increase in uninsured, and the net effect of CAP (both with Crowd Out and with none). The conclusion is the CAP will not reduce the absolute number of uninsured, or will only reduce it by a small fraction.



Now wait, you say (if you are a defender of RendellCare and paying close attention), CAP would reduce the number that would be uninsured were it not for RendellCare. True - but is it worth $1.4 billion annually?

Our answer - solutions such as allowing families to purchase lower cost insurance from out of state providers, offering tax credits for HSAs, reducing the number of mandates and allowing individuals to purchase basic insurance, making health care costs more transparent, etc (see proposals here and here) are more affordable and would do more to reduce the uninsured.

By reducing the costs of health care, these reforms would not only allow the currently uninsured to afford private insurance, but would reverse the trend of those losing or dropping private coverage (i.e. the "natural growth").

Politics and ideology stall health-care initiatives

I thought I'd comment on this Beaver County Times Editorial that decries "politics and ideology" for stopping health care initiatives like RendellCare. They are right, you know, ideology - i.e. the belief that RendellCare is bad medicine - stands in the way. How dare anyone think that free markets work better than socialized medicine. Damn you for your dissent.

To be fair, the editors do acknowledge that "there are definitely two sides to the health-care debate in Pennsylvania and the nation — whether it should be government-based or market-based" though their discussion of "major health-care initiatives" focuses solely on government based solutions, effectively ignoring market-based proposals.

The editorial also makes the typical blunder of claiming "everybody wants universal coverage." Ladies and Gentlemen, the Anti-Universal Coverage Club (manifesto here).

Rendell still pushing RendellCare

Within the last few weeks, three state health care proposals fundamentally similar to Governor Rendell's "Cover All Pennsylvanians" added to my "bad ideas pile"

• California legislators overwhelming rejected Arnold Schwarzenegger’s $15 billion health care proposal.
• An analysis of Dirigo Care in Maine finds that most of the few signing up were previously covered in private insurance.
• And in Massachusetts, costs are dramatically exceding expectations, and the Connector Authority is addressing the problem by capping premiums, cutting reimbursements to providers, and reducing consumer choices.

Unfortunately, Governor Rendell seems to be pulling his policy proposals from my bad ideas pile, as in his budget address he continued to call for immediate passage of RendellCare.

More evidence on the failure of RomneyCare

Michael Tanner blasts positive media coverage of a new report on Massachusetts health care, pointing out the many reasons why RomneyCare is a failure (from the same report). Tanner points out:

• "Less than half of Massachusetts’ uninsured population actually complied with the mandate."
• RomneyCare doesn't "cover all Massachusites" (lesson for backers of RendellCare?)
• Those signing up are those who get subsidies, "proving once again that if you give something away for free people will take it."
• Younger and healthier residents are violating the mandate, partly because community rating is driving up the cost of health coverage for them (another lesson for backers of RendellCare?)
• "The program is far exceeding its projected costs, with at least a 33% budget overrun in its first year. "

Warmed-Over RendellCare Includes a New Tax on Health Insurance

The Pennsylvania State House has been debating HB 1, which would expand the state's Adult Basic program, to make more individuals eligible for government health care. The Commonwealth Foundation has not said much about the bill, for a couple reasons:

1. It isn't going anywhere - the legislation couldn't pass in previous years, when Pennsylvania had a surplus. Now, with a deficit likely to exceed $3 billion, I see no way the legislature will pass a quasi-entitlement.
2. It isn't substantially different than previous editions, which we critiqued - the original "Cover All Pennsylvanians" (aka RendellCare 1.0), and last session's PA ABC.

That said, there are a couple of important things to note about the funding schemes. The talking points on the legislation notes it will rely on "surplus monies" in the Health Care Provider Retention Account (as well as shortening the period before the state can take ownership of unclaimed property). Budget watchers would note that the HCPRA surplus could only fund the program for one year, and Gov. Rendell already has plans to use that pot of money to fill the current budget gap.

More importantly, the legislation includes a provision to charge a 2% gross receipts tax on insurance premiums. This appears to be a tax only on plans not currently being taxed, i.e. HMOs and some PPO plans (though that hasn't been entirely clear), but effect should be pretty clear: this will make health insurance more expensive.

If you are wondering, given all this, how HB 1 even got to the House floor, John Micek sums it up, noting that the House adopted new rules on June 1, and were able to go back to some of their old tricks, before the 2007 rules reforms.

PA House Rejects Real Health Care Reform

The Pennsylvania House passed an amendment (and is expected to pass the bill) that would enact the House Democrats' "Pennsylvania ABC," or as I call it, RendellCare 2.0, as it is similar to RendellCare 1.2, but with lower eligibility for subsidized insurance. (Ordinarily, I would post a link to our analysis of the new proposal, but it was only unveiled yesterday afternoon, and there is limited public information available on it, but here is an analysis of the earlier version.)

However, in doing so they rejected several real reforms of the health insurance market that would lower the cost of insurance (and health care) within the state. Among rejected amendment were proposals that would:

• Allow small businesses to purchases lower cost insurance offered in other states.
• Allow insurance companies to sell limited benefit, lower cost insurance to those who want such coverage.
• Offer health insurance rebates for those collecting unemployment benefits, but buying their own insurance.
• Reform medical malpractice liability and the MCare program.

House Democrats voted unanimously to reject these real reforms. Why? I guess they just don't care enough.

More on interstate insurance choice, basic coverage plans, and other needed reforms on the Affordable Health Care Agenda and in this recent commentary.

Rendell pushes health plan

Lancaster Intelligencer Journal article on RendellCare. After quoting my commentary on Rendell's misdiagnosis of the problem, the article then quotes Rendell saying: "'It’s important for the Legislature to suck it up and say no' to special-interest lobbyists, Rendell said."

Which special-interest lobbyists does Rendell want to say no to? At his press conference announcing RendellCare, he appeared with union leaders (Bill George of the AFL-CIO specifically), health insurance companies, and healthcare providers. He has also claimed that business leaders love his plan. So which "special interest" is left out? Oh yeah, he forgot the "special interest" known as the taxpayers.

Demint on Charity

Jim Demint gives some great remarks on why government cannot, and should not, force individuals to be more charitable and volunteer more.

More Reading on Charity and Government

• The Nanny-State Mentality
  
• Was Jesus a Libertarian?
• RendellCare: What Would Jesus Do?
• The Lesson of Ebenezer Scrooge
• Semonizing on RendellCare

Maine's Failed Health Reforms

Greg Scandlen weighs in on the failure of Maine's Dirigo Care program:

1. After 20 months of operation only 11,000 were enrolled in DirigoChoice (out of a total uninsured population of 136,000), and over two-thirds of these were already covered. 2. Of the small companies eligible to participate, only 2.5% actually did. 3. The financing scheme (a “savings offset payment”) is impossible to measure or implement. 4. Almost as many people (3,600) had disenrolled from the program as were newly insured by it.

Note that Dirigo Care is very similar to RendellCare, or as it should be called, "Cover Very Few Pennsylvanians"

Ode to RendellCare

Philadelphia Inquirer story on Rendell's health care plan, it is a pretty gushy story, with the Commonwealth Foundation providing the lone voice of reason.

Pat Toomey's editorial in the Inquirer and the Pittsburgh Tribune-Review second our analysis of Rendell care.

Wrong Prescription

Wall Street Journal on RendellCare.

Religion and Politics (and Health Care)

Rep. Scott Boyd offers a rebuttal to Governor Rendell's claims that Jesus want Christians to support his Cover All Pennsylvanians proposal.

Boyd instead calls for some free-market solutions to "heal the sick", that he and others in the House are pushing as an alternative to Rendell. There is a similar package in the Senate.

Rep. Boyd echoes my commentary on RendellCare and Jesus (though most of ideas I used were first outlined in this book, along with here and here, and a few passages from this Book).

PA Health Survey Results

The PA Department of Health released results on a survey of health (Behavioral Risk Factor Surveillance System). What does this tell us?

Their main finding was:

30 percent of adults [in PA] (ages 18-64) making less than $15,000 annually and 25 percent of adults (ages 18-64) with less than a high school education had no health insurance, compared to only 3 percent of adults making more than $75,000 annually and only 6 percent of adults (ages 18-64) with a college degree;

From which the Secretary of Health (note: appointed by Rendell) concludes:

This type of information supports the need for health care reform, including Governor Rendell’s ‘Cover All Pennsylvanians’ initiative to make affordable basic health insurance available to everyone in the state

FALSE! This finding completely undermines the push for RendellCare, which seeks to expand government run and subsidized health coverage to higher income families. But this survey find that it is very low income families - who are already eligible for Medicaid - that are unisured. Why? Probably because Medicaid sucks.

This survey also finds that:

70 percent of men and 54 percent of women were overweight, but only 55 percent of overweight men were trying to lose weight, compared to 75 percent of overweight women.

I have come to the conclusion that this is simply because the federal definition of "overweight" is just wrong. For instance, for a man of my height (5' 10") "normal" weight is 128 to 173, "overweight" is 174-208, and "obese" is 209 and above.

Based on this definition, I am obese. So is Steeler's running back Willie Parker. I always thought his nickname was "Fast Willie Parker" not "Fat Willie Parker".

Did Governor Rendell fix Medical Malpractice?

Not to impugn John Graham's post on StateHouseCall, saying "Gov. Rendell Has One Health Reform Half Right," but we think Pennsylvania gets less than a thumbs up on medical malpractice reform (See Evening Bulletin article, "Critics Dispute Rendell's Assertion Malpractice Crisis Has Come To End") .

Governor Rendell continues to oppose several tort reforms proposed by PA House Republicans and supported by the state NFIB, the PA Chamber, and the Politically Active Physicians Association, and his massive "Prescription for Pennsylvania" (aka RendellCare) makes no mention of tort reform.

In 2005, Governor Rendell vetoed the "Fair Share Act", which would have amended joint and several liability so that no defendant could be held responsible for a great share of damages awarded than their share of liability. He had supported this reform in his 2002 campaign.

Governor Rendell touts the reduced payments from MCare as part of the reason why the Med-Mal "crisis" is over. This ignores the fact that MCare was created in 2002 as a "temporary solution" to the Med-Mal insurance costs- but has been extended year after year as no real solution has been enacted (in fact, we argue that the MCare fund serves to stave off any real solution).

Pennsylvania continues to have among the highest costs for medical malpractice insurance, and studies indicate that doctors continue to leave Pennsylvania for other states.

On the other hand, Govenor Rendell has said he is open to "other ideas", including a proposal by State Sen. Mike Folmer - which includes many of the free-market reforms championed by the Commonwealth Foundation and other members of the Health Care Freedom Coalition.

We'll be generous and give Gov. Rendell credit for being "25% right".

RendellCare!

AP story on Rendell's health care proposals, including universal health care ("Cover All Pennsylvanians"). For more details, go to the Governor's Health Care Reform site.

FYI, several months ago, a young soothsayer predicted that the Governor's "Cover All Kids" proposal would be "the first step toward a universal, government monopoly of health coverage for all residents, not just children."

Look for more on our take of the Governor's proposals in the coming days.

"Stupid Hicks" Oppose Big Government

I wasn't going to post anything on Barack Obama's comments about people "clinging" to guns and religion, until Philadelphia Daily News columnist John Baer offered his Obama can do no wrong defense.

Baer contends that:

1. He (Baer) is a small town guy at heart, because he enjoys the music of John Mellencamp, and wasn't offended by Obama's comments (I won't debate him on that).
2. Many people are frustrated with government - particularly the pay, benefits, abuses of power, etc (I concur).
3. People often express their frustration by illogical policy stances (I don't disagree).
4. Issues like the "defense of marriage amendment", gun rights, abortion, and religious freedom are meaningless.
5. Anyone who doesn't support Obama's agenda is naive. (Obviously, I take issue with the latter two points.)

Essentially Baer - like Governor Rendell when he declared "Jesus would support my health care plan" - is calling on "small town folk" to stop being Conservative, to support gay marriage, abortion, gun control (though it is Philadelphia Democrats who seem "bitter" and "cling" to guns as an issue), and above all, fixing health care.

Of course, when Baer says "fixing" health care, he means support RendellCare (or Obama/Hillary's plan). He, and others, argue that the debate is between "fixing health care" and not. He pretends the debate over how to fix health care does not exist, or that Rendell/Obamacare might make things.

Though I think those of us "bitter" and frustrated with government have a better plan.