I wrote a few weeks ago about Wal-Mart’s motivations for signing a letter endorsing a mandate requiring employers to purchase health insurance for their employees. Now it appears that the National Retail Federation has written its own letter distancing itself from Wal-Mart and the employer mandate. The letter is not only interesting in that it calls Wal-Mart out by name, but it is also one of the most prominent industry-wide stands against the government-heavy health-reform efforts in Congress. Given that the Democrats have had a few recent stumbles on this front, and are now saying that they won’t make their August recess deadline for completing the bills, this new development could be the first major rift in the Obama plan to keep industries allied with them or at least on the sidelines during the legislative process.

The Obama administration began the year promising fundamental reforms in health-care to “bend the cost-curve” with painless “delivery-system reform.” Peter Orszag, the Obama administration’s budget director, went so far as to claim the administration would institute reforms in Medicare and Medicaid that would literally alter the way medicine is practiced in America.

But it’s not working out that way. Indeed, there’s nothing more business-as-usual than the cuts in Medicare and Medicaid the administration and their congressional allies are planning to partially pay for their government takeover of American health-care.

Take the much-touted “deal” with the nation’s leading hospital trade associations — which, by the way, is apparently not a done deal. The specifics of what was agreed to remain somewhat vague, but it is clear enough that what is being planned is nothing more than across-the-board payment rate cuts. Hospitals would get a smaller inflation update, and, beginning in 2015, smaller “disproportionate share” payments for taking care of lower-income and sometimes uninsured patients. All that talk about “rewarding quality” and “purchasing value” and “changing the delivery system” was apparently just talk. These cuts will hit all hospitals — the best and the worst — with basically the same percentage cut in their Medicare and Medicaid revenue. Low-cost, high-quality facilities will get cut just as much as low-quality, high-cost institutions. There’s no effort to steer patients based on hospital performance, or really even to tie payments to what happens in the facilities. It’s budget cutting, and that’s all that it is.

It’s also not surprising, and not new. This is always the way government runs health-insurance plans. Health-care policy types often talk of making health-care more efficient with innovative reforms, written and implemented by government bureaucracies. But the only thing the government ever really does to slow cost growth is pay providers less for the services they render. And it’s been done many times before (see, for instance, here and here).

Of course, nothing of lasting value ever comes from such arbitrary price-cutting. Hospitals shift costs to private premium payers, and perhaps tighten their belts for a while until the payments rise again. But they don’t fundamentally change how they operate, or organize their relationships with physicians any differently. There’s never been any bending of the cost-curve with these kinds of price controls, and there won’t be this time either.

The Washington Post has a helpful chart buried on the back page of its health supplement today that lays out the possible winners and losers in health reform. The chart, which is couched in very speculative language about “could” this and “might” that and even one “a big ‘if’” thrown in, focuses on population segments, namely the uninsured, Medicare and Medicaid recipients, those with individual coverage, and those with employer coverage. This approach differs from the usual analyses that couch winners and losers in terms of industry groups, such as insurers, doctors, hospitals, and pharmaceuticals. Buried among all the “mights” and “coulds” is a common theme, that individuals in each of the groups looked at could have to pay at the end of the day. Depending on which group you belong to, you could face some combination of: “pay[ing] a penalty” for not buying insurance, “relatively higher premiums,” “higher outpatient deductibles,” “lower quality of care or disrupt[ed] access to services,” and “some or all of your health benefits, which are now exempt from taxation, could be taxed.” Caveat emptor.

And to all the snickerers out there: Yes, I do read the health section, not because of its articles about how to work out with your dog or its reviews of the relative merits of substances like probiotics or vitamin D, but because it occasionally has useful gems like this one.

Former Treasury Secretary Paul O’Neill entered the health-reform debate in an op-ed in Sunday’s New York Times. Channeling Betsy McCaughey, he points out that the health plans being discussed in the Beltway will do nothing to address one big problem in U.S. health care: hospital-based infections. This is because such changes come from leadership and commitment at the local level, not legislation and regulation at the national level. (Indeed, Medicare still hasn’t really figured out how to reward innovative physicians and hospitals who significantly reduce infections, which is likely a reason for the lack of a “race to the top.”)

Let me get this straight. Current health care entitlements (Medicare and Medicaid) have enormous cost and quality control problems. Check. Medicare alone is trillions of dollars in debt. Check. And so President Obama’s solution to America’s health care woes is to…create new health care entitlements on the theory that if the government spends more, its performance will magically improve?

Check the White House Web site. There’s a bridge in Brooklyn for sale.

My Manhattan Institute colleague and City Journal contributing editor Steve Malanga has an excellent article at RealClearMarkets today puncturing the intellectual slight of hand behind the argument that if government extends its reach into health care markets quality will rise and costs will slow:

The public sector already pays half of all health care bills and has been subject to political manipulation, pressure groups and outright patronage in managing its portion of the health care system so expensively.

One indication of just how much of a culprit government has been in the rapid expansion of U.S. health care costs is a 2005 National Bureau of Economic Research study by economists Laurence Kotlikoff and Christian Hagist which examined the growth in public sector-care spending since 1970 in 10 industrialized countries including the U.S.

The study found that the annualized rate of growth in government spending on health care was not only tops in the U.S., at 6.23 percent, but that the rate of growth here was the fastest relative to increases in gross domestic product among the 10 countries studied. …

Much of this growth, by the way, is not a function of demographic trends like the aging of the population, the economists estimated, but of a constant expansion of benefits by government. That accounted for nearly 90 percent of the increase in spending over the years.

Read the whole thing.  ”Reform” isn’t about finding a new, more virtuous committee of experts to portion out tax dollars.  As long as health care lobbies like the AARP and hospital workers unions can feed directly on transfer payments from Uncle Sam our health care sector will remain inefficient and bloated.  Call it Lobby-a-palooza.

Fix health care?  Fix Medicare first, and then let’s talk.

Perhaps humbled by its shellacking for hosting and broadcasting the Obama-infomercial on Wednesday, ABC and its collaborators at the Washington Post are putting a very different spin on a health-reform poll that has essentially the same message as the New York Times’ one a few days ago. While the Gray Lady promoted the notion that the American people are ga-ga for a so-called “public option” for health insurance (actually a swamp of new federal bureaucracies, if Sen. Kennedy’s bill is any indication), the WaPo/ABC folks are close to pushing the panic button on the plan for a government take-over:

Most respondents are “very concerned” that health-care reform would lead to higher costs, lower quality, fewer choices, a bigger deficit, diminished insurance coverage and more government bureaucracy. About six in 10 are at least somewhat worried about all of these factors, underscoring the challenges for lawmakers as they attempt to restructure the nation’s $2.3 trillion health-care system.

Obama gets just over the bar on health care, with 53% approval (question #2). However, he gets a failing grade on the deficit (48%) and the auto bail-out (45%), which suggests that the disingenuous claims about a so-called “public option” competing “fairly” with the private carriers are necessary. As soon as people figure out its true costs and scope of government interference, they lose enthusiasm quickly.On the hopelessly poorly defined question of supporting a “public option” from a “government agency” or “independent organization with government funding”, 21% favored the former and 42% the latter (#20). Of these 62%, 56% would be cool with the public option driving private insurers out of business through “competition” (#21). That’s only one third of the total sample.Furthermore, the Democratic party’s favorable/unfavorable ratings were 53%/40% versus 54%/38% in 1992, pre-HillaryCare, suggesting that the 2009 version of a health-care take-over faces at least as much trouble as its predecessor (#4).
Not that the Republicans are going to win this fight for us (with all due respect to Rep. Ryan, Senator DeMint, and the others who are struggling for oxygen in the health-care debate): their favorable/unfavorable ratings are 36%/56% today versus 53%/39% in 1992.