Facing the Abyss – H.R. 3200 and healthcare reform

Thursday, July 23, 2009


By Dr. William Harvey, M.D.
America's Right

It took the Continental Congress 5 years (1776-1781) to develop the Articles of Confederation governing the relationship between the states; after 6 years the Congress convened the Federal Convention (today known as the Constitutional Convention) ostensibly to propose amendments to the Articles of Confederation. The Constitutional Convention took 6 months to do its work, but the entire process of developing the Constitution, from the Annapolis Convention to the seating of the first Congress under the Constitution, took almost 3 years (1787-1791). The Founding Fathers knew that critical decisions, nation-altering decisions, deserve full public deliberation and care before being enacted.


Three similar approaches to healthcare legislation, two from the Senate Democrats and one from the House Democrats, were made public last week. President Obama announced publicly he’d like to have final healthcare reform legislation on his desk for signature before the August Congressional recess. As a nation, we’ve had the financial stimulus and the bailout bills rammed through Congress before anyone had a chance to read or evaluate them. Will we do the same with the most critical piece of legislation that has come before the Congress in at least 60 years, if not longer?

In the Senate, the Committee on Health, Education, Labor and Pensions (appropriately abbreviated “HELP”)developed their bill under Senator Baucus. This bill is as yet unnumbered but is titled “America’s Affordable Health Choices Act of 2009”. I can’t find the Senate version of the bill in either THOMAS, the official Congressional website for pending legislation, or in Govtrack.us, but it is posted on the Senate HELP Committee’s website in its submitted form, the committee mark-up (Ref. 5), and the Chairman’s mark-up form (Ref. 6).

Once the Senate HELP reported its bill out to the Senate, the basic bill (now identified as H.R. 3200) was introduced by Rep. John Dingell on July14 and ultimately referred to four other House Committees. It was reviewed and reported out of the House Energy and Commerce Committee to the full House on July 17. The vote was 26-22 along mostly party lines. (The full committee has 37 Democrat and 22 Republican members).

In short, both the House and the Senate have similar bills before each chamber, ready for debate and voting. Let’s look at the contents of H.R. 3200 to see the operational details of the Democrats’ healthcare plan.

H.R. 3200 is a svelte 1017 pages. The basic strategy is to leave the current multiple-provider / multiple-payor, employer-driven, insurance-based system intact but improve the system “by building on what works in today’s health care system, while repairing the aspects that are broken.” In fact, the bill, if passed in its current form, will, in a few short years, irretrievably destroy the current private healthcare system by removing the competitiveness of the private payer system and by creating a new generation of healthcare workers trained to believe that a government-run, government-financed system is the only choice.

The bill is organized as follows:

Division A (“Affordable Healthcare Choices”) establishes standards for health benefit plans (Title 1), defining the services that must be offered and ensuring access. Title 2 creates the Health Insurance Exchanges (also called gateways), defines the public health insurance option, and establishes subsidies for lower-income households. Title 3 requires employers to provide and individuals to obtain health insurance. Title 4 modifies the IRS code to establish penalties for companies and individuals who fail to comply. This Division essentially redefines the American healthcare system from both the individual and employer perspectives.

The Congressional Budget Office, in its formal review of the introduced version of this bill, indicated that (Refs. 1, 2):

Collectively, those provisions [of the bill] would yield a significant increase in the number of Americans with health insurance. By 2019, CBO and the staff of JCT estimate, the number of nonelderly people without health insurance would be reduced by about 37 million, leaving about 17 million nonelderly residents uninsured (nearly half of whom would be unauthorized immigrants). In total, CBO estimates that enacting those provisions would raise deficits by $1,042 billion over the 2010-2019 period.

Because of certain projected “revenue provisions” (like $583 bn in increased taxes on individuals and employers) and other “savings”, the net budget deficit in the CBO projections is smaller, on the order of $239 bn. This plan certainly does not meet the President’s goal of being revenue neutral.

The public health insurance “option” in Title 2 is perhaps the most worrisome aspect of the first division of this bill. In a New York Times editorial, Mankiw (Reference 4) examines how such an option would quickly drive pricing to the point where only the public option would remain. Many articles have mistakenly referred to this option as creating a government monopoly, but in fact, it would create a monopsony. A monopoly is a market situation where one seller has multiple buyers and can drive prices up; a monopsony is a market situation where one buyer has multiple sellers and can drive prices down.

Imagine a taxpayer-subsidized public option, which starts with the single largest patient pool (all Medicare, Medicaid, S-Chip, Defense Department and Department of Veterans’ Affairs beneficiaries and dependents; approaching 50% of the U.S. population). How hard would it be for such a behemoth to “negotiate” major discounts from all stakeholders in healthcare and then price undercut all private payors and other suppliers? Employers would clearly turn to such an option to reduce their (now government-mandated) healthcare expenses, and in a short period of time there would be only one plan: the public option. Government should not be in the business of competing with the private marketplace under any circumstances, but certainly not while subsidized with taxpayer funds.

Division B modifies Medicare, Medicaid and S-CHIP to align and operate more smoothly in the new healthcare landscape. It provides consistency of services in rural areas, establishes quality standards, and impacts the education of medical trainees within Medicare, although, as we’ll see in a moment, the entire medical educational system will be revamped eventually, under the direction of the Federal government.


Division C continues the Public Health aspects started in the American Recovery and Reinvestment Act of 2009 (“The Stimulus Bill”). Here, a complete revamping of the Primary Care, Nursing and Public Health workforces is implemented. As in the UK and other countries with a government-run healthcare system the government will take over the training of most healthcare workers in the US through a series of scholarship, loan or other support programs which will require either a period of National Service (Public Health Workforce Corps, section 3401) or some method for loan repayment (section 340N). These programs will include training for diversity (section 2241) as well as “cultural and linguistic competency training for health care professionals (section 2251). Section 2301 expands the prevention and wellness research initially authorized in (you guessed it!) the Stimulus Bill. Section 2002 creates a protected “slush fund”, under the title Public Health Investment Fund, starting with $5 bn in annual funding in fiscal 2010 and growing to $12.7 bn annually in fiscal 2017. This fund is to be used to carry out “activities under designated public health provisions”. These funds “shall not be taken into account for purposes of any budget enforcement procedures… of the Balanced Budget and Emergency Deficit Control Act and budget resolutions for fiscal years during which appropriations are made from the Fund”, meaning they are “off the books” for deficit reporting and reduction.

Here again, the Federal Government is stepping well beyond any passive role as a provider of financial support for medical education to provide staffing for the nation’s need. Instead, during a long period of public service to repay loans, the nation’s healthcare workers are being given non-medical, political indoctrination on what the proper social and societal views should be towards the provision of healthcare in a free-market based constitutional republic. If this bill is left in its current form, within one generation, there will be no way to modify any aspect of this approach to healthcare; both the private payer infrastructure and the required workforce will be utterly destroyed.

Perhaps most insidious is the last provision of Division C of this bill. I’ll simply quote it in full:

Subtitle E—States Failing To Adhere to Certain Employment Obligations
SEC. 2541. LIMITATION ON FEDERAL FUNDS.
A State is eligible for Federal funds under the provisions of the Public Health Service Act (42 U.S.C. 201 et seq.) only if the State—
(1) agrees to be subject in its capacity as an employer to each obligation under division A of this Act and the amendments made by such division applicable to persons in their capacity as an employer;
and
(2) assures that all political subdivisions in the State will do the same.

In short, the Federal government here demands that in order to have medical staff and receive funding for health care facilities and other resources each state must impose on itself and on its local governments all the obligations the Federal government is placing on employers. Any semblance of the original relationship intended by the Founding Fathers between the powers of the Federal government and the states is utterly lacking. This is the clear imposition of the will of the Federal government on the states.

Every American is impacted by healthcare reform. Not sometime in the future but immediately. This bill will change your care, your taxes and the nature of your relationship to your doctor (or your next doctor, if many physicians elect to retire early once they sense the direction of this change). More importantly, it will be an irreversible step in the relationship of the Federal government, the states, and the people. Read the parts of this bill that worry you … and contact your Congressional representatives. Senator Enzi has certainly provided his thoughts (Ref. 3) and polls are beginning to show the American people are not as dazzled by President Obama’s rhetoric as they were in January. Let your Congressmen (and women) know how you feel. Politically there is nothing more important than this bill right now. Let’s not let the “dog days of summer” allow something this critical to just sneak by. Nothing less than the future of America is at stake.


REFERENCES
1. CBO to Rep. J Dingell, letter dated July 17. Preliminary analysis of HR 3200.
2. CBO, Director’s Blog: Preliminary Analysis of the House Democrats’ Health Reform Proposal.
3. Enzi: HELP Democrats’ Bill a Prescription for Failure. Press Release; July 15, 2009 (pdf)
4. Mankiw, N. Gregory: The Pitfalls of the Public Option. NY Times; June 28, 2009
5. Senate HELP Committee: Markup of H.R. 3200 (“America’s Affordable Health Choices Act of 2009’’).
6. Senate HELP Committee: Chairman’s Markup of H.R. 3200 (“America’s Affordable Health Choices Act of 2009’)’. (pdf)
7. Singer, Peter: Why We Must Ration Health Care. NY Times Magazine, July 19, 2009

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William Harvey is a physician with extensive experience in drug research and development. He began as an academic researcher but has been a pharmaceutical executive in the global development arena for almost two decades. His current position involves the strategic use of comparative effectiveness research to speed drug development and to educate healthcare stakeholders: government, payors, prescribers, and patients. He lives in the greater Philadelphia area.
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