GOP Liars on Health Costs

"Democrats' government-run plan will make health care more costly than ever," Ohio Representative John Boehner, the House Republican leader, told the Wall Street Journal last Friday. Two days later, on Meet the Press, Mitch McConnell (R-Kentucky), the Senate minority leader, said, "Pretty soon the doctors and the hospitals will all be working for the government."

Let's be clear. The Republicans are liars and hypocrites when it comes to controlling costs as part of health care reform. That's because they are in the pockets of the drug companies, the insurance lobby, the for-profit hospitals, and the American Medical Association. As a result, the GOP leaders in Congress have resisted efforts by the Democrats to limit what the drug and insurance corporations can charge.

President Obama and the Democratic leaders in Congress have twin goals of expanding insurance coverage and reducing per capita costs. They do not want to "socialize" health care, as the Republicans and their lunatic allies in the right-wing echo chamber (Limbaugh, Hannity, Beck, etc) keep repeating.

In fact, under the Democrats' plan, doctors and other providers, hospitals, drug companies and medical suppliers will remain private, as they are now. But it would add a "public option" -- through which the federal government would provide the insurance for those who don't get it from employers or can't afford private premiums -- similar to the current Medicare program for seniors.

The Republicans have been warning that the "public option" plan will be too costly, yet another example of wasteful "big government." But it is the Republicans who are working overtime to kill the Democrats' plans to keep a lid on medical costs.

As a highly-placed Congressional staffperson recently told me, the health industry lobbyists and their friends in Congress "will not allow us to tie the payment rates to providers to Medicare rates. That's where all the savings happen. Even more so if you mandate that all providers have to participate [in the public option plan] if they want to participate in Medicare."

Unfortunately, the drug, insurance, and hospitals' lobby groups have also rented a few centrist Democrats in the Senate -- including Max Baucus (Montana), Dianne Feinstein (Calif.), Kent Conrad (N.D.), Blanche Lincoln (Arkansas), Mary Landrieu (La.) and Kay Hagan (N.C.) -- who share their corporate benefactors' opposition to cost controls. Health care reformers, like MoveOn, SEIU, and Health Care for America Now, are mounting a grassroots campaign to push these centrists off the fence.

For the most part, the mainstream media have missed this story, failing to report how the health care lobby and conservative Republicans are the key political forces that oppose lean, efficient government. For example, in his article on the health care battle in Monday's New York Times, reporter John Harwood wrote that Democratic leaders in Congress "have lavished more attention on expanding coverage to the more than 45 million Americans now uninsured than on controlling medical costs." Cost control has gotten relatively short shrift so far," Harwood noted, in part because "Democrats bend naturally toward larger rather than smaller government services." Harwood makes it seem that the Democrats are Johnnys-Come-Lately to the cost-control issue, reacting to Republicans' crusade for streamlining health care costs.

We've been here before. In 2003 the drug companies and their trade associations deployed nearly 700 lobbyists to stamp out a proposal to permit the federal government to negotiate the cost of drugs for Medicare recipients. Instead, the Bush administration and the GOP-controlled Congress added a drug benefit to Medicare, but prohibited Medicare officials from negotiating prices with drug manufacturers. It also guaranteed that private insurance companies, not Medicare, administer the drug benefit program. This dramatically increased Medicare costs for taxpayers. Seniors, meanwhile, wound up paying much more in out-of-pocket expenses for prescription drugs.

The U.S. now spends about twice per capita on health care (about $8,000), and a much higher proportion of our GDP (17 percent), than Canada and many European nations. Despite this, we still have many people who lack insurance, one of the highest infant mortality rates and the shortest life expectancies. For many Americans who have health insurance, the cost of premiums and the cost for medicines and services not covered under their insurance plans is untenable. Medical expenses are the biggest cause of bankruptcy. Administrative costs consume about three to six times that of Western European nations and Canada.

The high cost of U.S. health care is due in large measure to the outrageous greed and costly inefficiencies of the insurance and drug industries. It is the insurance industry that requires so much paperwork that its bloated administrative costs push up the cost of premiums, compared with the much lower administrative costs of Medicare, the government-run insurance program for seniors. Likewise, the drug companies don't want a public option, which would expose how they inflate the cost of medicine that contributes to our expensive and inefficient health system. Drug prices in the U.S. are much higher than in Canada and other countries that regulate costs.

There are many ways to control health care costs, including putting more focus on preventive care, improving Americans' diet and exercise regimen, and improving how we deal with chronic diseases. But no plan to reduce costs will work without reigning in the huge profits and inefficiencies of the drug companies, insurance companies, and hospitals. To move further in that direction, President Obama has proposed legislation to give the Medicare Payment Advisory Commission (MedPAC) full discretion over Medicare reimbursement policy. MedPAC is comprised of medical and economic experts who advise Congress on Medicare reimbursements.

To thwart any meaningful cost controls, the insurance and drug lobbies are flooding Congress with campaign contributions. During the 2008 election cycle, the insurance industry contributed $36.4 million to candidates for Congress, according to the Center for Responsive Politics. Drug companies donated $12 million. Health professions added $73.1 million to campaign coffers and hospitals and nursing homes threw in another $18 million.

This American version of legalized bribery has escalated as the health reform battle heats up. The Washington Post recently reported that private insurance corporations, drug companies, hospitals, and their lobbyists spent more than $126 million on lobbying in the first quarter of this year -- equal to about $1.4 million a day. These health industry lobby groups also hired more than 350 former government staff members and retired members of Congress to lobby for them, including two former chiefs-of-staff for Sen. Max Baucus, chairman of the Senate Finance Committee, who is a key player in writing the health reform bill.

Most employers, workers, and consumers have a stake in America joining the rest of the economically affluent nations in having decent, affordable health insurance for all, one that limits costs and profiteering. Together, they add up to a much bigger political force that the lobby groups for drug companies, insurance corporations, for-profit hospitals, and the AMA.

It would be useful if the media went beyond the rhetoric over cost controls and looked at what the health industry lobbyists and their allies in Congress are actually doing in shaping the legislation. When it comes to controlling health costs, all the Republicans - and a handful of centrist Democrats -- talk the talk, but they don't walk the walk.

Peter Dreier is professor of politics, and director of the Urban & Environmental Policy Program, at Occidental College.

Comments

[hsr0601]

Aside from the savings created by the prevention and wellness program, medical IT, foreseeable potential stem cell effect, mental stress relief and massive job creation, ending subsidies for the private insurers and payment reform and so on could be enough to meet the goal of deficit-neutral.
Public school, public insurance policy, and public clean energy act are the natural parts of life in the free nations.

Thank You !

[S1m0n]

If the Obama plan really did inflate costs, the Republicans wouldn't be complaining, they'd be overjoyed. Those 'costs' are their funders' profits. The last thing these folks want is to bring these down.

[DeloresT]

Is it possible that neo-cons want to kill us off? It seems like it.They are against abortions, but when poor children are born, and their parents don't have access to medical care the Repubs don't give a darn. I can't decide if they want to "break" us or Obama

[ImmanuelGoldstein]

"Republicans are liars and hypocrites".... you pretty much could have stopped right there.

[S1m0n]

It's a foolish game they're playing. The status quo is still broken, so if the GOP convinces americans that a mixed system is too expensive, the other option isn't more status quo, it's a fully public system, much like others operating successfully next door in Canada and elsewhere worldwide. We know those work and we know they cost about half as much as the present system.

The Obama plan, in other words, is already the compromise position. It's entirely correct that this compromise drives up cost. The Republican party and their insurance industry buddies might dislike plan A, but they're going to loathe plan B. They'd be wise to be more careful in what they ask for.

[jmpurser]

From my point of view the Obama plan is a full on sell out to the Insurance Industry and it's STILL not enough of a sell out to suit the GOP.

I don't know what it will take to make them happy and I hope I never find out.

[giatny]

"Republicans that oppose lean, efficient government" WHAT??? No one opposes a lean efficient government. We just don't happen to have one. Medicare is projected to have a $20 TRILLION shortfall plus it loses more each year in fraud than private companies spend on administration. The rate of growth in health care costs has been significantly HIGHER in the government run plans, i.e. Medicaid and Medicare, than in the private sector. You should be thankful that some prefer to fight for reform that actually does offer affordable health care to all rather than to meet an absurd and arbitrary deadline.

[DocTwain]

It is literally impossible for a private insurance plan to offer coverage equal to the coverage provided by a single-payer plan at equal or lesser cost.

This is because private insurance companies consume on average 20 cents of every dollar they take in premiums on so-called "administrative costs" including (1) overhead counter-productive from the perspective of providing access to care; (2) marketing and lobbying; (3) bloated corporate executive remuneration; and above all, PROFIT. In contrast, Medicare consumes only 3% of every dollar it gets in administrative costs--and much of that 3% is caused by its having to administer BS private scams like Medicare Advantage. Canadian single-payer's administrative costs are 1%--in other words, 99 cents of every dollar the system takes in goes to buy actual care that people need.

Again, it is literally impossible for a for-profit insurance company to provide the same product as the government at a lower cost.

It is an undeniable fact that government can insure Americans better and more cheaply than private insurance companies.

The very nature of the for-profit cartel makes this inevitable.

The 19% the cartel sucks up is pure graft. Eliminating that graft would save $350 billion a year, which we could use to insure all 47 million uninsured.

http://www.pnhp.org

What don't you understand about these basic facts?

[S1m0n]

Don't forget sales commissions when adding up health insurance overhead.

[vanmungo]

Mr. Dreier has drunk the Obama/HCAN "public option" Kool-Aid. He claims that in the Dems' public-option proposal, "the federal government would provide the insurance for those who don't get it from employers or can't afford private premiums -- similar to the current Medicare program for seniors." This is sheer fantasy.

The mainstream Democrats' public option proposal is nothing like Medicare.

Unlike Medicare--this "public option" it could not accept government funding (after the initial infusion), and so would have to be self-susta­ining—henc­e it is not really “public.” Unlike Medicare, it would charge premiums and impose deductibles, so it will not be an option for tens of millions of people.

Moreover, it would likely be saddled with the oldest, sickest, and thus most expensive cohort, and would have to offer higher fees than Medicare--so no cost savings, none of the cost efficiencies of a single risk pool; it would be competing with 1,300 private HMO risk pools, which would aggressively market the youngest, healthiest, and thus cheapest and most profitable cohort.

This Democratic farce has only one true beneficiary: the HMOs, which will retain their dysfunctional chokehold on this system.

For more information on the only real health-care reform with a proven record of cost control and universal coverage--nonprofit single-payer Medicare for all (curiously ignored by the author!)--see the following Web sites:

www.pnhp.org
www.singlepayeraction.org
http://www.healthcare-now.org
http://www­.1payer.ne­t/
http:// www.guaranteedhealthcare.org/

[jmpurser]

Yep. The "public option" is neither public nor an option for those on it. It's there solely to ensure that there's no viable option to private insurance companies.

[power1]

This legislation does nothing to address costs as the CBO said it will increase the deficity by $238 billion over the next ten years. I'm sorry but I believe the Republicans more than the Democrats on this issue.

[PPatt]

Could you be more specific abouat fence-straddling centrist such as Diane Feinstein? Perhaps in a follow-up blog? Please do name names, tell circumstances, and provide references. Links to grassroots organizations who are applying pressure, presumably via publicity, would also be appreciated.

Thanks for the blog!

[SeriousBlack]

"It would be useful if the media went beyond the rhetoric over cost controls and looked at what the health industry lobbyists and their allies in Congress in Congress are actually doing."

With today's media? Good luck with that.

[talkinhedz]

Since when did the Goverenment EVER Control Costs or Lower them?
We need Tort Reform, and a way to give the uninsured..whoever that might be..vouchers..or something along that line..with experation dates,then.as Needed they can reapply. Anything that requiers effort will be valued more. I used to sell Life and Health policies..­surprising how many people would not change their health/eating and smoking habits to save money on the policy...many would just refuse coveage due to the cost associated with their moral hazard to themselves.
I say.under the poverty level, and Catastroph­ic,.vouche­rs, the majority..they have a choice..pay now..or pay later..

..leave My health Insurance alone.

[PPatt]

Actually they did pretty darn good on medicare where administrative costs run at 3%, something private drug plans have not been able to match. Naturally, the drugs our aging parents order are much more expensive due to Medicare Part "D", a conservative initiative that worked out great for drug companies but awful for those in need.

With conservatives campaigning against cost controls it is kind of hard to talk as if it were government that had the problem. Come to think of it those conservatives are part of government...and people who we should help exit the government. We really can't afford them.

[LeftRight]

Ummm.... How about Medicare, which spends three percent of their dollars on administration and overhead, compared to private insurance which spends on average, ELEVEN TIMES THAT, or about one third!?!?!­?!?!?!?!?!­?!?!?

You want more examples?? Police, Fire, Military, schools, mail delivery, toll roads, free roads, Air Traffic Control, and the list goes on and on and on and on.

[wandering girl]

oh, is someone making you change YOUR health insurance?

you're lucky you have one. why don't you want others to, as well?

[triton11]

You say the Republicans are liars and hypocrites? Perhaps our president is leading by example-he might be the biggest hypocrite of all when he says a medical liability cap is off the table in his healthcare reform (One of many rewards and payola to his fellow attorneys for getting him elected). Never mind defensive medicine is a direct result of medical litigation and the huge awards that go to lawyers who viciously sue hard-working physicians "on patients behalf" and then reap up to %40 of the monetary award. A reasonable liability cap would lower malpractice insurance substantially and more importantly reduce millions of dollars in unnecessary tests.

[BarryS]

if all of these litigation cases yielded zero for the patient, it would hardly dent the obsene profits made by the insurance companies. in fact, it is not clear it would pay theur chief executives' salaries. this is a red herring.