Another Attack on Innovative Care

by Grace-Marie Turner

An article in the Wall Street Journal explains how physician-owners of hospitals — among the highest-quality, most-efficient hospitals in the country — are “descend[ing] on Congress” to seek relief from strict limits on expansion of their facilities imposed by the Affordable Care Act.

Congress, the author writes, “wanted to clamp down on a sector that some policy experts contend is prone to perform unnecessary procedures at high prices, driving up overall health spending,” though she provides no specific explanation of this claim.

Nine of the ten top-performing U.S. hospitals listed last December by the government’s Centers for Medicare & Medicaid Services were physician-owned hospitals. Yet the ACA forbids these facilities from expanding and bans new ones from opening.

The ban on this competition is supported by the American Hospital Association and the Federation of American Hospitals, which lobbied hard for its inclusion in the health law.

Big, monolithic community hospitals have been trying for years to quash these upstart physician-owned hospitals that provide better, more-efficient care with higher-rated outcomes. The main reasons: The big hospitals don’t like the competition from the efficient, quality innovators. Unfortunately, they have succeeded in using the power of big government to try to thwart them.

John W. Dietz Jr. with Indiana Orthopaedic Hospital says holding back physician-owned hospitals is unwarranted, given the massive number of people expected to gain health insurance in the years after the ACA is fully enacted in 2014. The hospitals often specialize in orthopedic, cardiac, and other care that allows them to fine-tune their expertise.

The WSJ article portrays the hospitals as “luxury facilities” that are trying to “wiggle around the federal health-care law’s growth caps,” but at the very end of her article, Mundy admits that “new Medicare measurements showing that doctor-owned hospitals represent about half of the top 100 facilities whose performance will merit bonus Medicare reimbursements because of their cost efficiency and patient satisfaction.”

“We are getting more work done for less cost,” Dietz says. Physician-owned facilities, he explains, can be more responsive because there is less bureaucracy. Doctors own them and are able to actually practice medicine rather than spend an inordinate amount of their time on cumbersome paperwork.

The big hospital organizations have long asserted that physician-owned hospitals purposely serve healthier, more profitable patients, leaving community hospitals to treat sicker, more expensive patients. Paul Kerens, president of Physician Hospitals of America, denies this claim, contending that “physician owners started getting into the hospital business to provide better patient care and provide efficiencies of care.”

A physician-owned hospital in McAllen, Texas, has offered to expand so it can treat more under-served Medicaid population. So far, no deal. The big hospitals don’t want the competition, even if it means having Medicaid patients stand in line at their hospitals for hours, days, or even weeks to get the surgeries and other treatments they need.

Members of the Physicians Hospitals of America are in Washington this week to talk with Congress and administration officials about their results and the need to expand to serve patients. The existing facilities are extending their hours and doing surgeries on weekends to serve growing patient demand, and they’re asking Congress to loosen the limits on hospital expansion and allow facilities that were partially completed when the health law passed to open.

Higher-quality more-efficient care, greater patient satisfaction, and doctors and nurses ready and willing to take care of patients? Certainly we can’t have any of that in the new world of Obamacare!

Massachusetts: An Apples to Oranges Comparison

by Grace-Marie Turner

AEI’s Tom Miller challenges health economist Austin Frakt who wrote in a recent JAMA Forum article that the penalties in Obamacare are high enough to get people to comply with the individual mandate. 

Many others have argued that the initial penalty of $95 a year in the Affordable Care Act is insufficient to get people to purchase a $5,000 health-insurance policy, especially when people know other provisions of the law mean they can purchase a policy at the same low price if they wait until they get sick.

Frakt argues that the federal penalty will be sufficient based upon experience with the Massachusetts mandate. But this is an apples-to-oranges comparison.

“Despite cautioning that Massachusetts differs from the rest of the country in many ways, the usually careful Frakt still concludes that ‘all the best evidence and logic we have point in the same direction’ and indicate that the ACA’s mandate penalties will be adequate,” Miller writes in his AEIdeas blog post, “Hyping the individual mandate’s penalties.”

Then Miller proceeds to take apart Frakt’s argument: The size of the subsidies and penalties and the other regulatory differences between Obamacare and Romneycare are significant and do not provide a basis for legitimate comparison.

The authors’ suggestion that mandating coverage might play an even larger role in encouraging the healthy to participate in health insurance markets nationally than it has in Massachusetts represents more of a “hope” than a “finding,” and it fails to speak to the particular effectiveness of the size of the ACA penalties or the law’s enforcement policies.


Frakt cites another study which found “that Massachusetts’ mandate and penalties reduced average premiums from what they would have been without them, thereby curbing adverse selection. However, a closer look at the study suggests some quick jumps across categories and wider holes through which more ACA mandate hopes than robust evidence are driven around in circles,” Miller says.

Miller also cites community rating regulations that already were in place in Massachusetts before the state’s health-reform law was passed in 2006 that contained premium variation. But there is no such existing law in the nation, and the premium distortions, and spikes for some populations, are expected to be much greater as a result. This makes comparing the two markets highly problematic.

What’s the larger point here? Austin Frakt usually does careful work in a fair-minded manner. Even within the JAMA Forum article, he notes that Massachusetts differs from the rest of the country in many ways, so one should be careful about making generalizations. . . .

The temptation is to push those points just a little too far, when it seems to be for a good cause (and all your friends agree with you already). 

Miller’s bottom line: “Whatever happened in Massachusetts stays in Massachusetts, for now.” 

In other words, the generalization just doesn’t work.

Focusing on Mental Illness

by Michael James Barton

In days following the tragedy in Connecticut, most of the focus has been on firearms legislation. I submit that we would be wiser to focus more attention on how states handle the mentally ill that are prone to violence over on the homepage. It is an issue that I do not think gets nearly the attention and debate it deserves, which is a shame since such modifications by states could make a difference.  

SCOPE Act: Protecting the Physician-Patient Relationship

by Phil Gingrey

A multitude of flaws in President Obama’s health- care law have been exposed, both prior to its enactment and since it passed on a straight party line vote. They range from tax hikes on small business owners and the middle class, to gutting $716 billion from Medicare, to its punitive individual mandate.

Little attention has been paid, however, to a component of the Affordable Care Act found in section 1311(h), which will prove catastrophic to the doctor-patient relationship. These few lines empower one bureaucrat—the Health and Human Services (HHS) Secretary—to determine whether a physician is providing “quality health care measures.” Based on that finding, the Secretary is empowered to cancel a physician’s health insurance provider policy, effectively forcing him out of practice.

Allowing the HHS Secretary, who is not governed by the Hippocratic Oath or a state medical board, to define “quality health care measures” will have a devastating impact on our health care system. Consider the recent controversy surrounding mammogram guidelines. In 2009, the U.S. Preventative Services Task Force advised mammograms for women over 50, which contradicts the American Cancer Society’s typical guideline that screenings begin at 40, and therefore served to divide the medical community.

Under President Obama’s health care law, should the HHS Secretary determine that performing mammograms on women younger than 50 violates a standard of care, the provider must comply, regardless of his or her concerns. Failure to do so would allow the Secretary to shut down a medical practice. The powers given to the Secretary are so broad, he or she could literally dictate how all physicians nationwide practice medicine. 

This violates the sanctity of the doctor-patient relationship, as physicians are trained to treat patients individually and not with a “one-size-fits-all” approach. Under this new regulation, patients’ standard of care may be diminished. This rule also threatens access, driving more doctors from their practices and creating an even greater shortage of medical providers. In turn, patients will face longer wait times in between appointments, and in some cases, it will be time they can’t afford to lose. Oftentimes, it is the sickest and poorest Americans’ access to care that is disproportionately threatened.

Much like the Medicare “cost-cutting” panel known as IPAB, section 1311(h) places another unelected bureaucrat in Americans’ health care decisions. The Secretary does not answer to a governing board and may be influenced by special interest groups or political  and financial interests. The regulation also directly contradicts the President’s promise that “if you like your doctor, you can keep him.”

The Safeguarding Care of Patients Everywhere (SCOPE) Act repeals this regulation, protecting patients’ access to their medical providers and ensuring physicians may continue treating individuals as they deem necessary. The SCOPE Act continues to hold physicians accountable to their state licensing boards, insurance companies and professional groups, rather than one federal bureaucrat.

The SCOPE Act is not a partisan issue, but a patient issue. We must ensure that those in need of care receive it from a medical provider who is not handcuffed by the HHS Department. Simply put, providers must be free to diagnose and treat patients as they have been trained and according to their sacred oath. Standards of practice must not fall victim to different administrations, leaving patients and physicians in the crossfire. Passing the SCOPE Act safeguards medical standards from the whims of political parties and the grips of outside influence. 

— Representative Phil Gingrey, M.D., is the U.S. congressman for Georgia’s eleventh district.

A Small-Government Solution to a Big-Government Problem

by Al Cardenas

Democrats — the perennial defenders of Medicare as we know it — have turned Medicare upside down with the adoption of Obamacare. And now the alarm bells are ringing in our senior-citizen communities as a result.

As it turns out, the GOP seems intent on branding itself this fall as the defenders of Medicare, attacking President Obama relentlessly for the hundreds of billions of dollars in cuts he’d make to the program to pay for his signature health-care reform law.

And while Governor Romney and his running mate, Representative Paul Ryan, may spend most of their airtime alerting Americans to the president’s cuts to Medicare, it’s their market-centered approach to reforming the program that deserves conservatives’ attention.

Only by reorienting Medicare in line with the principles of market competition can our leaders prevent the entitlement from sinking the federal budget — not to mention the economy.

Ryan’s plan to save Medicare keeps Medicare as-is for everyone over the age of 55. It then relies on a “premium support” model toward future recipients, which would provide seniors with subsidies and enable them to decide how to spend their health-care money. They’d be able to choose from an array of private plans or stick with traditional Medicare.

The would-be veep’s bold approach has become a tent-pole of Governor Mitt Romney’s presidential platform — and has distinguished the GOP ticket as the one that understands the need to introduce competitive discipline into an entitlement system wracked by inefficiency and waste.

Compare this to the Democrats’ plan for Medicare. Obamacare robs the entitlement to the tune of $716 billion by cutting payments to health-care providers.

That’s of great concern to American voters. Nearly three-quarters are worried that cuts in payments to doctors and hospitals will cause them to stop accepting Medicare patients, according to a new American Conservative Union (ACU) poll conducted by McLaughlin and Associates.

Even worse, Democrats are determined to undo the aspects of Medicare that harness market forces — and thereby yield lower costs than the alternative — like the Medicare Part D drug benefit.

Part D allows seniors to purchase prescription drug coverage from private insurers. Beneficiaries can shop around for the plan that best meets their prescription needs. Insurers must compete for enrollees’ business. And the government subsidizes most or all of the plan’s price.

As conservatives we have never been fans of the expansion of the entitlement state that Part D represents. But the Democrats’ plans for reforming the program would only make our entitlement crisis worse.

Many on the left are pushing to implement a “rebate” for those seniors who qualify for both Medicare and Medicaid, the so-called “dual eligibles.”

But if drug companies are forced to sell their drugs at below-market prices to some Part D enrollees, the result will be higher prices for everyone else. Such a “rebate” would amount to a new tax on American seniors — and would be especially harmful to those who take multiple medications.

A study by the Lewin Group, a consulting firm, found that monthly Part D premiums for non-dual-eligibles could increase by 25–50 percent if rebates were enacted.

It’s no wonder, then, that 65 percent of likely voters oppose President Obama’s proposed “rebate” in Part D, according to the ACU poll.

Of course, a plan to levy new taxes on Medicare beneficiaries is hardly surprising coming from the Obama administration. Obamacare is teeming with taxes, mandates, and regulations that threaten to throw our already wobbly economy into a tailspin.

Again, as conservatives we certainly had our issues with the creation of Part D, but the program has been successfully run and is now coming in 43 percent under budget.

In turn, the president’s proposed rebate would unravel these successes and savings and just create new problems.

Thanks to America’s aging population combined with Medicare’s flawed funding structure, the program is on the road to fiscal ruin. According to a 2012 report for the Medicare trustees, the program’s trust fund will run dry by 2024.

Voters will have to decide how to address this looming cost crisis. Republicans want to rely on the market forces that have made even the most wasteful government programs more cost-effective. And they have the backing of American voters — four in five of whom support this approach within the drug benefit.

Democrats, meanwhile, are committed to harmful new taxes and reduced services for America’s seniors.

The irony is that while Democrats use phony scare tactics to claim Republicans want to end Medicare, it is the Republicans’ sound fiscal solutions that would save it.

— Al Cardenas is the chairman of the American Conservative Union.

Obama’s Medicare Cuts Will Affect Benefits

by Robert Moffit

Question: If you cut funding for benefits, will you then affect persons dependent upon those benefits? Of course you will. Financing directly affects the quantity and quality of the benefits available to the beneficiaries. 

Uniquely in the case of the Medicare program, some folks are laboring mightily to obscure that simple fact; a feverish effort akin to what G. K. Chesterton once described as an elaborate exercise in the “fine art of missing the point.”

Exhibit A: The administration’s practiced defense of its $716 billion in Medicare payment cuts. In his recent debate with Representative Paul Ryan, Vice President Biden said, “We stopped overpaying insurance companies, doctors, and hospitals.” Likewise, in his first debate with Governor Romney, President Obama emphasized that Americans would be “no longer overpaying insurance companies . . . by making sure that we weren’t overpaying providers.” The messaging point: medical professionals and organizations will be cut, not your benefits.

Exhibit B: The labored disjunction between financing and benefits you find in the media. Chelsey Moran of CBS News in a September 12, 2012, report on “misleading Medicare ads,” commenting on the administration’s Medicare payment cuts, flatly declares: “The cuts, however, do not limit access to Medicare recipients, and Mr. Obama’s health care law actually gives more benefits to seniors — including new preventive care benefits and increased prescription drug coverage.” Likewise, John Presta, writing at, insisted, “The changes to Medicare does not affect Medicare recipients directly, but rather reduce payments to hospitals, health insurance plans and other providers. It eliminates a program called Medicare Advantage whose costs have gotten out of control and which will be covered by traditional Medicare at a lesser cost.” Jeffrey Bruner, a “fact-checker” writing for The Tennessean said of the $716 billion Medicare payment reductions: “It doesn’t cut any current benefits.” One finds similar declarations in many other media outlets, including Politifact and the Los Angeles Times.

But Obama’s Medicare payment cuts do directly affect Medicare benefits. Take the Medicare Advantage program, a popular system of private health plans, covering 27 percent of all seniors. Per capita spending is indeed higher in Medicare Advantage than traditional Medicare because patients get additional benefits. Cutting Medicare Advantage payments means cutting those benefits. On September 22, 2009, during the Senate Finance Committee’s consideration of the Senate version of the health-care bill, Senator Mike Crapo (R., Idaho) closely questioned Douglas Elmendorf, the director of the Congressional Budget Office (CBO). The topic was the impact of the administration’s proposed cuts on the value of benefits in the Medicare Advantage program:

Senator Crapo: It is my understanding that under your analysis the value of the additional benefits that those in Medicare Advantage receive today would end up being reduced to about $46 a month per member in 2019. And that is a little more but not too much more than just half of what it is today? 

Mr. Elmendorf: My notes say $42 of additional benefits per month in 2019, and I’m told that it’s a little less than half of what we would project under current law.

Senator Crapo: So, approximately half of the additional benefit would be lost to those current Medicare Advantage policy holders?

Mr. Elmendorf: For those who would be enrolled under current law, yes.

Senator Crapo: So, the current plan holders would recognize about half the benefits they see today under the current law?

Mr. Elmendorf: Yeah, that’s right.

Back to the media “watchdogs.” For example, Presta’s account is marred by basic inaccuracies. Notwithstanding his confident assertion that traditional Medicare covers Medicare benefits at lower cost, Medicare Advantage plans overwhelmingly bid below Medicare’s benchmark payment for standard Medicare benefits. Also, in point of fact, the president’s health law does not “eliminate” Medicare Advantage.

But it does severe damage. Medicare Advantage provides a variety of benefits that traditional Medicare does not cover, including protection from catastrophic illness. The Medicare actuary analyzed the payment cuts to Medicare Advantage in 2010 and projected that patient enrollment in the program would be cut in half by 2017. Likewise, independent analysts have confirmed Elmendorf’s initial CBO assessment. Heritage research shows that, by 2017, the value of an enrollee’s Medicare Advantage benefits will decline by an average of $3,714.

The administration’s Medicare payment cuts are also targeted to hospitals, nursing homes, home health agencies, and even hospice programs. Ms. Moran’s confident assertion that Obama’s payment cuts will not “limit access” of Medicare patients is based on precisely nothing. The truth is exactly the opposite. The Medicare actuary in his April 22, 2010, report said that the Medicare payment reductions would “jeopardize” patient access. In his addendum to the 2012 Medicare Trustees Report, the actuary reaffirmed his initial assessment that by 2019 the Medicare Part A payment cuts will cause an estimated 15 percent of these Medicare providers to operate in the red, shift their business away from Medicare, or withdraw from treating Medicare patients altogether. By 2050, the number of these Medicare providers operating in the red would climb to 40 percent under the scheduled cuts. The outlook: Fewer and fewer Medicare providers, reimbursed at bargain-basement Medicaid rates, caring for twice as many retirees, will not “guarantee” your access to Medicare benefits.   

There are lessons here. First, on Medicare especially, double check the media “fact-checkers.” Like the rest of us, they are fallible creatures, struggling with complex material. They also have strong (mostly liberal) views, even if they struggle mightily to repress them for the appearance of journalistic objectivity. Second, use common sense. Try to imagine a liberal media response to conservatives cutting subsidies for school-lunch programs, and defending it by saying they’re just reducing funding for cafeterias (the “providers”), not the kids’ soup and sandwiches.

Bottom line: Your Medicare benefits are not safe from Obamacare, unless your idea of a “guarantee” is a politician’s campaign promise. Good luck with that.   

Will Expanding Medicaid Save States Money?

by Edmund F. Haislmaier

It’s not just the political Left that’s pressuring states to adopt the costly Obamacare Medicaid expansion. Hospitals and clinics, too, are leaning on state lawmakers to expand the rolls. Indeed, there have even been recent studies in some states purporting to show that adopting the Medicaid expansion would be a fiscal positive for the state’s budget, supposedly because it would increase state tax revenues and allow cuts to other state health spending.

My colleague Drew Gonshorowski and I have published a short guide for state lawmakers that deconstructs some of the key assumptions underlying projected fiscal benefits.

One of the biggest — and most dubious — assumptions offered up is that expanding Medicaid will let states save money on “supplemental” payments now made to hospitals and clinics for treating the uninsured.

Such savings are doubtful. Hospitals and clinics have a long track record of successfully lobbying to preserve or restore state “supplemental” funding. For example, the 2006 Massachusetts health-reform legislation, which transformed supplemental payments going to “safety net hospitals” into premium support for the low-income uninsured, achieved near-universal coverage. Yet despite that, Massachusetts’s safety-net hospitals successfully lobbied to continue receiving over $200 million a year in supplemental payments from state taxpayers.

Under Obamacare, it is even more implausible to assume states would be able to cut funding for uncompensated care. That’s because any state payment cuts would have to be imposed on top of Obamacare’s federal payment cuts. Obamacare cuts federal Medicaid “Disproportionate Share Hospital” (DSH) funding by $18.1 billion and Medicare DSH funding by $22.1 billion over the years 2014–2020.

Consequently, governors and state legislators should expect their state’s hospitals and clinics to lobby them for more—not less—state funding to replace cuts in federal DSH payments. State lawmakers who want to learn what their state is already spending—in addition to DSH—on supplemental payments should start by consulting a July GAO report entitled Medicaid: States Reported Billions More in Supplemental Payments in Recent Years. They should then dig into their own state budget documents to find out exactly who is getting exactly how much.

State lawmakers who are offered “rosy scenario” fiscal projections for expanding Medicaid would be well advised to think twice.

Edmund F. Haislmaier is a Senior Research Fellow in the Heritage Foundation’s Center for Health Policy Studies.

Medicare Coupons, Strokes, and Heart Attacks

by Robert Moffit

Those who favor reforming the giant Medicare program must explain themselves carefully. But opponents of Medicare reform can just manufacture and spread around some fantastic fictions. Consider a couple of real screamers:   

You’ll buy your health insurance with coupons! Vice President Joseph Biden described the Medicare defined-contribution proposal championed by Representative Paul Ryan (R., Wis.), as “Vouchercare.” Now, vouchers are forms, certificates, or coupons redeemable at cash value for the purchase of a good or service. You can’t have a voucher program without vouchers. Right? And vouchers are scary. So, opponents of reform bet that their success in scary “messaging” is dependent upon leaving millions of frightened Baby Boomers with the impression that they will be left alone with a little piece of paper to negotiate with big bad insurance companies. On September 5, 2012, addressing the Democratic National Convention and millions of television viewers, Cristina Saralegui, a television host, said that Governor Romney would turn Medicare from a “guarantee” into a “book of coupons.” Brian Francisco, writing for the September 17, 2012, edition of The Journal Gazette, reports that Indiana congressman Joseph Donnelly won’t stand for giving hapless Baby Boomers “coupons” to buy private health plans. In that nightmarish future, according to Donnelly, the government would say, “Here’s a coupon — hope your coupon works.In fact, there is no Medicare reform proposal, including Ryan’s, that would give future seniors coupons to buy their health insurance. Ryan’s defined-contribution system, for example, is modeled on the financing of Medicare Part D. In trying to sell the liberals’ Medicare “coupon” gimmick, Donnelly is peddling pure nonsense.

You’ll get a stroke choosing a health plan! Sylvia Lang, writing for the September 11, 2012, edition of Redding.Com, worries that in 2023, people younger than 55 years of age will be “sold” to the “profit lusting” insurance wolves. She says that Ryan’s Medicare proposal would operate like an unreformed individual insurance market, where persons can be rejected for coverage because of preexisting conditions or charged exorbitant premiums based on their health status. Except — it won’t. In all Medicare reform plans, including the Ryan plan, all health plans would be governed by Medicare’s traditional insurance rules, meaning that plans must offer you coverage and can’t reject you or drop you if you are sick. Likewise, health plans would get additional funding to cover the costs of older and sicker enrollees. But why let plain facts get in the way of a good, old-fashioned demagogic rant? Lang writes, “God help anyone in their 70s, 80s or 90s who has to deal with private insurers. Will Ryan take responsibility for the strokes and cardiac arrests that ensue?”

Well, millions of seniors must be recovering from the strokes and heart attacks caused by the life-threatening stress of enrolling in the plans they like. In fact, 90 percent of Medicare patients — including those in their 70s, 80s, and 90s — already are enrolled in a variety of private plans for their drug coverage. There are over 1,100 drug plans offered in 34 regions around the country. Even more shocking, roughly 27 percent of all seniors are enrolled in integrated private plans through Medicare Advantage. In Medicare Advantage plans, seniors routinely enjoy richer medical benefits, including care coordination and disease management, as well as protection from catastrophic out-of-pocket costs; benefits superior to traditional Medicare. Enrollees in private plans, including the poor and the disabled, report high rates of satisfaction, and recent research confirms that the quality of care for Medicare Advantage enrollees is superior to care received by enrollees in traditional Medicare. But, too bad, Ms. Lang wants to “get rid” of those plans. Ms Lang not only wants to take away seniors’ right to keep Medicare Advantage plans they have today, but she wants to stop seniors from choosing better private plans tomorrow. Notwithstanding the president’s promise to all the “little people” who want to keep their health plans, Ms. Lang knows what’s best for them.

The Medicare misinformation machine is spinning overtime. As President Ronald Reagan once said, “Well, the trouble with our liberal friends is not that they are ignorant, but that they know so much that isn’t so.”