Monday, July 27, 2009

Health Care Reform and the Already Insured

Here is a great New York Times editorial, analyzing the effects of the health care reform plans currently under debate in Congress on those of us who already have health insurance:
Health Care Reform and You

Published: July 25, 2009

The health care reform bills moving through Congress look as though they would do a good job of providing coverage for millions of uninsured Americans. But what would they do for the far greater number of people who already have insurance? As President Obama noted in his news conference last week, many of them are wondering: “What’s in this for me? How does my family stand to benefit from health insurance reform?”

Many crucial decisions on coverage and financing have yet to be made, but the general direction of the legislation is clear enough to make some educated guesses about the likely winners and losers.


The House bill and a similar bill in the Senate would require virtually all Americans to carry health insurance with specified minimum benefits or pay a penalty. They would require all but the smallest businesses to provide and subsidize insurance that meets minimum standards for their workers or pay a fee for failing to do so.

The reforms would help the poorest of the uninsured by expanding Medicaid. Some middle-class Americans — earning up to three or four times the poverty level, or $66,000 to $88,000 for a family of four —would get subsidies to help them buy coverage through new health insurance exchanges, national or state, which would offer a menu of policies from different companies.


Many insured people need help almost as much as the uninsured. Premiums and out-of-pocket spending for health care have been rising far faster than wages. Millions of people are “underinsured” — their policies don’t come close to covering their medical bills. Many postpone medical care or don’t fill prescriptions because they can’t afford to pay their share of the costs. And many declare personal bankruptcy because they are unable to pay big medical debts.

The reform effort should help ease the burdens of many of them, some more quickly than others. The legislation seems almost certain to include a new marketplace, the so-called health insurance exchange. Since there will be tens of millions of new subscribers, virtually all major insurers are expected to offer policies through an exchange. To participate, these companies would have to agree to provide a specified level of benefits, and they would set premiums at rates more comparable to group rates for big employers than to the exorbitant rates typically charged for individual coverage.

Under the House bill, the exchanges would start operating in 2013. They would be open initially to people who lack any insurance; to the 13 million people who have bought individual policies from insurance companies, which often charge them high rates for relatively skimpy coverage; and to employees of small businesses, who often pay high rates for their group policies, especially if a few of their co-workers have run up high medical bills. By the third year, larger businesses might be allowed to shift their workers to an exchange. All told, the Congressional Budget Office estimates that 36 million people would be covered by policies purchased on an exchange by 2019.


As part of health reform, all insurance companies would be more tightly regulated. For Americans who are never quite certain that their policies will come through for them when needed, that is very good news.

The House bill, for example, would require that all new policies sold on or off the exchanges must offer yet-to-be-determined “essential benefits.” It would prohibit those policies from excluding or charging higher rates to people with pre-existing conditions and would bar the companies from rescinding policies after people come down with a serious illness. It would also prohibit insurers from setting annual or lifetime limits on what a policy would pay. All this would kick in immediately for all new policies. These rules would start in 2013 for policies purchased on the exchange, and, after a grace period, would apply to employer-provided plans as well.


Current estimates suggest that it would cost in the neighborhood of $1 trillion over 10 years to extend coverage to tens of millions of uninsured Americans. Under current plans, half or more of that would be covered by reducing payments to providers within the giant Medicare program, but the rest would require new taxes or revenue sources.

If President Obama and House Democratic leaders have their way, the entire tax burden would be dropped on families earning more than $250,000 or $350,000 or $1 million a year, depending on who’s talking. There is strong opposition in the Senate, and it seems likely that at least some burden would fall on the less wealthy.

Many Americans reflexively reject the idea of any new taxes — especially to pay for others’ health insurance. They should remember that if this reform effort fails, there is little hope of reining in the relentless rise of health care costs. That means their own premiums and out-of-pocket medical expenses will continue to soar faster than their wages. And they will end up paying higher taxes anyway, to cover a swelling federal deficit driven by escalating Medicare and Medicaid costs.


Healthy young people who might prefer not to buy insurance at all will probably be forced to by a federal mandate. That is all to the good. When such people get into a bad accident or contract a serious illness, they often can’t pay the cost of their care, and the rest of us bear their burden. Moreover, conscripting healthy people into the insured pool would help reduce the premiums for sicker people.

Less clear is what financial burden middle-income Americans would bear when forced to buy coverage. There are concerns that the subsidies ultimately approved by Congress might not be generous enough.


The main gain for these people is greater security. If they got laid off or chose to leave their jobs, they would no longer be faced with the exorbitant costs of individually bought insurance but could buy new policies through the insurance exchanges at affordable rates.

President Obama has also pledged that if you like your current insurance you can keep it.

Right now employers are free to change or even drop your coverage at any time. Under likely reforms, they would remain free to do so, provided they paid a penalty to help offset the cost for their workers who would then buy coverage through an exchange. Under the House reform bill, all employers would eventually be allowed to enroll their workers in insurance exchanges that would offer an array of policies to choose from, including a public plan whose premiums would almost certainly be lower than those of competing private plans.

Some employers might well conclude that it is a better deal — for them or for you — to subsidize your coverage on the exchange rather than in your current plan. If so, you might end up with better or cheaper coverage. You would probably also have a wider choice of plans, since most employers offer only one or two options.


Two factors could help drive down the premiums for those who are insured. In the short-term, if reform manages to cover most of the uninsured, that should greatly reduce the amount of charity care delivered by hospitals and eliminate the need for the hospitals to shift such costs to patients who have private insurance. One oft-cited study estimates that cost-shifting to cover care for the uninsured adds about $1,000 to a family’s annual insurance premiums; other experts think it may be a few hundred dollars. In theory, eliminating most charity care should help hold down or even reduce the premiums charged for private insurance. When, if ever, that might happen is unclear.

In the long run, if reform efforts slow the growth of health care costs, then the increase in insurance costs should ease as well. And if the new health insurance exchanges — and possibly a new public plan — inject more competition into markets that are often dominated by one or two big private insurance companies, that, too, could help bring down premiums. But these are big question marks, and the effects seem distant.


Critics have raised the specter that health care will be “rationed” to save money. The truth is that health care is already rationed. No insurance, public or private, covers everything at any cost. That will not change any time soon.

It is true that the long-term goal of health reform is to get rid of the fee-for-service system in which patients often get very expensive care but not necessarily the best care. Virtually all experts blame the system for runaway health care costs because it pays doctors and hospitals for each service they perform, thus providing a financial incentive to order excessive tests or treatments, some of which harm the patients.

An earlier wave of managed care plans concentrated on reining in costs and aroused a backlash among angry beneficiaries who were denied the care they wanted. The most expensive treatment is not always the best treatment. The reform bills call for research and pilot programs to find ways to both control costs and improve patients’ care.

The bills would alter payment incentives in Medicare to reduce needless readmissions to hospitals. They would promote comparative effectiveness research to determine which treatments are best but would not force doctors to use them. And they call for pilot programs in Medicare to test the best ways for doctors to manage and coordinate a patient’s total care.

Any changes in the organization of care would take time to percolate from Medicare throughout the health care system. They are unlikely to affect most people in the immediate future.


People over 65 are already covered by Medicare and would seem to have little to gain. But many of the chronically ill elderly who use lots of drugs could save significant money. The drug industry has already agreed to provide 50 percent discounts on brand-name drugs to Medicare beneficiaries who have reached the so-called “doughnut hole” where they must pay the full cost of their medicines. The House reform bill would gradually phase out the doughnut hole entirely, thus making it less likely that beneficiaries will stop taking their drugs once they have to pay the whole cost.

Not everyone in Medicare will be happy. The prospective losers are likely to include many people enrolled in the private plans that participate in Medicare, known as Medicare Advantage plans. They are heavily subsidized, and to pay for reform, Congress is likely to reduce or do away with those subsidies. If so, many of these plans are apt to charge their clients more for their current policies or offer them fewer benefits. The subsidies are hard to justify when the care could be delivered more cheaply in traditional Medicare, and the subsidies force up the premiums for the beneficiaries in traditional Medicare to cover their cost.

Reformers are planning to finance universal coverage in large part by saving money in the traditional Medicare program, raising the question of whether all beneficiaries will face a reduction in benefits. President Obama insisted that benefits won’t be reduced, they’ll simply be delivered in more efficient ways, like better coordination of care, elimination of duplicate tests and reliance on treatments known to work best.

The AARP, the main lobby for older Americans, has praised the emerging bills and thrown its weight behind the cause. All of this suggests to us that the great majority of Americans — those with insurance and those without — would benefit from health care reform.

Sunday, July 19, 2009


Here are links to various news stories from the past week:

Bill Moyers' interview with former insurance company executive Wendell Potter (a real eye-opener).

Here's a conundrum from the inspector general's report on Bush/Cheney era spying programs--Did the threat assessments drive the surveillance program, or, Alice-in-Wonderland like, was it the other way around?

Here's a review of Andrew Bacevich's latest book, The Limits of American Empire.

Obama increases pressure on Congress re health care legislation.

Keynes and the Efficient Markets Hypothesis.

The Daily Show on Palin resignation (I hadn't seen this before--it's hilarious).

Not wanting to be left out of the meltdown on the right, wingnut bloggers --never mind; see for yourself.

Sen. Jeff Sessions (R., Ala.) catches hoof-and-mouth disease at the Sotomayor hearings.

The House of Representatives release of its version of the health care reform bill.

Here's a chart showing an international comparison of unemployment benefits.

Eric Martin on Obama's Afghanistan conundrum.

Eric Martin, contra Peter Bergen, agrees that historical analogies shed little light on the situation in Afghanistan.

Ben Stein seems to have problems with ethics.

The GOP presented a confusing chart on the floor of Congress Friday, supposedly illustrating that the Obama health care plan is complicated. No fooling... Here I thought a bill reforming interactions between doctors, hospitals, insurance companies, patients, labs, etc., making up a significant portion of the economy was going to fit on the back of a bubble gum wrapper. In response, The New Republic's Jonathan Cohn offers his own chart--of the system we have now.

Ezra Klein interviews conservative economist Bruce Bartlett on taxes and health care reform.

Conservatives, says Kevin Drum, are trapped by their own ideology on health care.

An article in Parameters, the U.S. Army War College Quarterly, argues that tying defense spending to GDP is a bad idea.

Wingnut blogger predictions about Iraq in 2003 didn't turn out very well.

The myth of conservative judicial restraint.

Matthew Yglesias on economic recovery based on recapitalization via profits.

He illustrates with a chart showing the percentage of total income earned by the top 1% of the population, 1913-2008.

The mechanism proposed to keep costs down in the health care reform bill.

Intellectual irresponsibility test (wingnut bloggers jump off cliff, chapter ???).

Fasten your seatbelts for a jobless recovery.

Yoo on Yoo.

Help for one time homeowners.

Buchanan being Buchanan.

Jon Stewart on Goldman.

Saturday, July 18, 2009

More Health Care Reform Events--Brooklyn

As you likely know, the next three weeks or so are a crucial time for health care reform. President Obama has made it clear that he would like to see a final bill brought to a vote before the August recess. This week, the House of Representatives and the Senate HELP committee put forward health care legislation, and the Senate Finance Committee is expected to produce a bill in the coming days. Therefore, it is critical that we, and Democrats in other states, reach out to our legislators and urge them to move forward with health care reform.

To that end, grassroots organizers in Brooklyn have organized a number of local canvasses and phone banks this weekend in support of health care reform. Below are some times and locations for events, or, as always, feel free to organize one of your own.

Like during the election, you also have the option to phone bank from home using .

We hope to see you out at a canvass or phone bank this weekend!

Saturday, July 18th

Fort Greene
Canvass at the Brooklyn Flea
12 to 3
176 Lafayette (b/w Clermont & Vanderbilt)
RSVP here:

Park Slope
Canvass at the Grand Army Plaza Farmer's Market
10:30 to 12:30
Grand Army Plaza
RSVP here:

Carroll Gardens
Canvass at Carroll Park
1:30 to 3:30
Carroll Park
RSVP here:

Carroll Gardens
Phone Bank
11 to 1
Contact organizer for details
RSVP here:

Phone Bank
12 to 1
Contact organizer for details
RSVP here:

Sunday, July 19th

Phone bank
12 to
Help Community Learning Center
1821 Nostrand Ave
RSVP here:

Friday, July 17, 2009

Health Care Reform Phone Banking--Final Push!

Come phonebank for health care reform!

Our postcards, calls and meetings have made a tremendous difference in New York. With a few exceptions, most Reps and Senators are now solidly on board for reform in our state. Now, it's time to take our grassroots action national. Join us for phonebanks across the city to call Obama volunteers in battleground states of Florida, Montana and Arkansas; we'll be encouraging them to call their Senators.

Saturday, July 18th

Monday, July 20th
Upper West Side, 7 PM - 9 PM
Youth Hostel, 103rd & Amsterdam, BOARD ROOM
Refreshments will be served.

Wednesday, July 22nd
71 Lexington Ave., Apt. 5, Brooklyn, 7-9 PM

Thursday, July 23rd
Grammercy, 6-9 PM
12 Grammercy Park South (E. 20th St. between Park and Irving)

Westchester, 8 PM - 10 PM
7 Davenport St, Harrison, NY 10528

For canvasses, check out

Saturday, July 11, 2009

Eric Cantor's Nose is Growing

Yesterday, GOP House Minority Whip Eric Cantor was interviewed on NPR by Steve Inskeep. A transcript follows, minus introductory statements:
Q: Here’s something I’d like to know. In your mind, what is a reasonable amount of time to give this admin to do whatever it can to turn the economy around that it says it inherited?

A: Steve, I don’t actually think that’s the right way to approach this question. When we considered the first stimulus bill in January, representations were made, promises were made by President Obama that if we acted quickly and passed the bill, we’d be able to stave off job loss and stop the unemployment rate from exceeding 8 1/2%. So I think that the proper test is, representations and promises that were made did not come to fruition.

Q: But the reason I ask that is because, as you know, the administration has said, “Wait a minute, we never said it would work in the first few months, we have not even gotten around to spending all the money yet, give us a little bit of time.” What is a reasonable amount of time to give them?

A: Again, this is not what the administration said. The administration said that we needed to act with a sense of urgency, that is how we were going to be able save jobs and avoid folks from having to go on the unemployment lines. That should still be our goal. We shouldn’t have been expediting the review of an 11-hundred page bill without anyone in the House reading it if the course that we expected was going to be a one- or two- or three- or four-year period in which to see the money go out. That’s where we get into the situation where you waste taxpayer dollars.

Q: Although the administration is saying now it took years to get into this mess; it’ll take time to get out. What’s a reasonable amount of time? What’s the time on the clock for him as far as you’re concerned?

A: Steve, there’s not a question—we shouldn’t be arguing about how we got here because that’s pointing blame. I think the American people are tired of that. They want to know how we’re getting out of this situation. Republicans had a plan, I went and personally gave him our stimulus plan back in January. We still want to work with this president. The way we see an economic recovery coming about is through investment. We’ve got to get small businesses back into the business of putting their money to work, taking risks, so that jobs can be created.

Q: Do you think that the economy will be the heart of next year’s congressional elections?

A: Well, listen, no one has a perfect crystal ball. But clearly I think that the economic situation before us needs to be satisfied in order for the electorate to begin to have some confidence in their leadership. I think what you’re seeing in polling right now is a reflection of the fact that this president & this congress own this economy.

Q: How many Democrats do you think are vulnerable?

A: Steve, again, you look at the numbers out of the last election. There are 49 Democrats sitting in seats that John McCain won. Obviously not all of those are vulnerable, but I do think you start there. And then you also look at the seats that have individuals who are new to Congress that perhaps were in seats that were held by the Republican candidate prior. I do think there are a sufficient number of vulnerable Democrats that will allow Republicans to make significant gains, if not take over the Congress and the U.S. House in 2010.
Note Cantor's insistence on portraying Obama's recovery plan a failure while refusing to say how much time a plan should be given to take effect, all while claiming he doesn't want to assign blame--but that Obama and the Democrats "own this economy." One wonders how many more sides of his mouth Cantor has from which to speak.

Cantor claims that Obama didn't say that time would be required for the recovery plan to take effect. A turn to google shows that not to be true. Here's what President Obama had to say on the subject during his January 8, 2009, Fairfax, VA speech introducing the American Recovery and Reinvestment Plan:
It will not come easy or happen overnight, and it is altogether likely that things may get worse before they get better. But that is all the more reason for Congress to act without delay.
Of course, Obama's economic package was passed without a single GOP vote in the House of Representatives, and it got through the Senate only after four GOP "moderates" forced a compromise which included removal of federal funding to states for school construction (considered one of the more effective recession-fighting tools, as it would have created jobs) and cuts to state fiscal stabilization programs, also important during a recession. Nor did the GOP offer anything like coherent objections to Obama's plans, as noted by economist Brad DeLong.

There was a strategy behind the monolithic opposition, as noted by Greg Sargent. In fact, a GOP Representative responsible for "messaging" admitted as much in public.

Months of consistent opposition and obstruction didn't work very well for the GOP. Their poll numbers were (and still are) in the sewer. On March 26, they attempted to unveil an economic (ahem) plan of their own, but that didn't work very well.

They put out something a little more substantive on April 1 (how fitting), but as noted by Ezra Klein, among many others, the plan offered little in the way of details and was completely unrealistic.

Meanwhile, here’s what the stimulus IS doing:

Ezra Klein cites a study by the Center for Budget and Policy Priorities showing that the stimulus is closing 30-40 percent of state budget deficits. Why does that matter?

States must balance their budgets, as mandated by their respective state constitutions. How can they do that?
1. Raise taxes (Conservatives all raise your hands if you’re in favor. Ahh, I didn’t think so.); or
2. Cut spending. What happens if they do this during the worst downturn since the Great Depression?
a. States would have fewer resources at a time when they need them most to cope with the crisis.
b. State employees would lose their jobs (further deepening the recession).
c. The social safety net would collapse (imagine what happens if, as state employees lose their jobs, SCHIP funding is slashed).

It's not enough, God knows. People need jobs, and it takes a long time for an economic plan to take full effect. But surely we shouldn't be taking seriously complaints about the economic recovery plan from a party as completely cynical, dishonest and deeply unserious as the current GOP.

Are Inflation Fears Real? An Economist Says No

Scott Fullwiler, an economist writing at the blog Economic Perspectives From Kansas City, observes that fears of inflation that have been expressed in various circles lately, all having to do with the large amounts of liquidity the Federal Reserve has pumped into the economy (you know, Obama’s economy recovery package?), are misplaced. In fact, he says,
As of July 2, 2009, the Fed reported the following assets on its balance sheet:

* Term Auction Credit: $283 billion
* Commercial Paper Lending Facility: $115 billion
* Central Bank Liquidity Swaps: $115 billion
* "Other" Loans (includes the Primary Dealer Credit Facility): $119 billion

Together, these assets amount to $632 billion. And what do they all have in common? They are all LOANS. Note also that they comprise the bulk of the $726 billion in reserve balances held by banks the Fed reports on its liability side.
Moreover, all of the loans in question are short-term, and have already been repaid.

The fear among Fed critics is apparently that the Fed lacks an “exit strategy;” i.e., it has no clear plan to counter the rise in reserve balances, which they claim will lead to inflation. Yet Fullwiler explains that
Banks DO NOT use reserve balances to create loans. They create loans and deposits simultaneously out of thin air. They use reserve balances to settle payments or meet reserve requirements ONLY. If a bank is short reserve balances for either of these purposes, the Fed provides an overdraft AUTOMATICALLY at a stated penalty rate, which the bank then clears via the money markets or the cheapest alternative. Whether banks in the aggregate hold $1 or $1 trillion in reserve balances, there operational ability to create loans is the same . . . infinite! (Though the creation of even 1 loan requires a willing, credit-worthy borrow in the first place, of course.)...That is how loan creation works in a modern monetary system. The belief that banks need reserve balances in order to lend is only applicable in a gold standard-type of monetary system.
In short, there’s no danger of inflation stemming from the Fed’s activities discussed above & there’s no need for an exit strategy.

Interestingly enough, Fullwiler observes that the financial press (he cites the Wall Street Journal specifically) doesn’t understand how the Fed works.