Debunking Bill Clinton’s Medicare Claims

by Robert Moffit

When former president Bill Clinton’s good, he’s very, very good. That formidable rhetorical skill was on display in his defense of Obama’s Medicare policy at the Democratic National Convention. Though Obama needs help, much of what Clinton said was flat out wrong. Consider just two examples.

1. On the ten-year $716 billion in “savings” from Obama’s Medicare payment cuts, Clinton insisted: “There were no cuts to benefits at all, none.” Very Clintonesque: technically correct, and thoroughly misleading. In fact, President Obama and his allies in Congress cut the funding for Medicare benefits, which directly affects Medicare patients dependent on the funding of those benefits. By 2019, the Medicare actuary estimates that 15 percent of the affected providers will become unprofitable, and that number reaches 40 percent by 2050. As Medicare payments dip below the cost of Medicare services, medical professionals and institutions will withdraw from or cut back on providing Medicare services, guaranteeing serious problems for seniors trying to access those benefits. The Medicare actuary says that the cuts will “jeopardize” seniors’ access to care.

2. On Obama’s alleged contribution to the solvency of the Medicare (HI) Trust Fund, Clinton said: “And instead of raiding Medicare, he used the savings to close the donut hole in the Medicare drug program.” Recall that President Obama said he would not sign a health bill adding a “dime” to the deficit. So, the “savings” from the big Medicare payment cuts could be used to either shore up the Medicare trust fund or finance other provisions of Obamacare, such as the new entitlement expansions, thus keeping the bill deficit-neutral. Not both. In a December 23, 2009, memo on the Senate version of the bill, which eventually became law, CBO clarified the situation: “The key point is that the savings to the HI Trust fund under the PPACA would be received by the government only once, so they cannot be set aside to pay for future Medicare spending and, at the same time, pay for current spending on other parts of the legislation or on other programs.” 

So, what’s really happening? In a January 22, 2010, letter to Senator Jeff Sessions (R., Ala.), ranking member of the Senate Budget Committee, CBO Director Douglas Elmendorf reported that “The majority of the HI trust fund savings under PPACA would be used to pay for other spending and therefore would not enhance the ability of the government to pay for future Medicare benefits” (emphasis mine). Whatever else it does, that “other spending” doesn’t strengthen Medicare.

Oh, and about filling up that “donut hole. It is a congressionally created gap in drug coverage, where beneficiaries pay 100 percent of the costs up to a catastrophic threshold; a bizarre benefit designed to offset drug costs in Bush’s 2003 entitlement expansion. What Clinton did not say is that Obamacare reduces Medicare spending by $716 billion after taking into account the relatively few provisions of the law — like filling the “donut hole” — that increase Medicare spending. So, no; none of the $716 billion is used to close the “donut hole.”      

One more thing: Clinton noted that the $716 billion in “savings” is also assumed in Ryan’s proposed budget: “You got to give him one thing: It takes some brass to attack a guy for doing what you did.” But Ryan doesn’t propose to do what Obama did. Obama is just doing what Clinton tried and failed to do. In 1993, Clinton wanted to take $189 billion from Medicare and Medicaid (over the period 1994–2000) to finance the ill-fated Clinton Health Plan. Repealing Obamacare, as Ryan proposes, would end Obamacare’s spending and thus the use of Medicare “savings” to cover that spending. In Ryan’s plan, Medicare savings are for Medicare.  

Nobody beats Bill for brass.  

 — Robert Moffit is a Senior Fellow at the Heritage Foundation’s Center for Policy Innovation. 

Obamacare: It’s Still a Gateway to Single-Payer Health Care

by Sen. Tom Coburn

More than two years after the passage of Obamacare, the data overwhelmingly show the law will fail to achieve its core objectives of lowering costs and improving access. That, ironically, may have been the design. By making private insurance unaffordable for everyone, it will become available to no one. All that will be left is government-centered, government-run, single-payer health care.

Let’s look at the law’s promises that were rigged to fail.

First, supporters of the law said the law would bend the cost curve down and reduce health-insurance costs. Yet health-insurance premiums are increasing faster than before the law was passed and experts confirm costs will increase along with federal health spending.

Second, defenders of the law said the bill would massively extend health-insurance coverage. But in June the Supreme Court threw out the forced Medicaid expansion which the Congressional Budget Office originally estimated was responsible for half of new coverage under the law. And despite claims of increasing coverage, more Americans are without health coverage today than when President Obama took office.

Third, supporters claimed the law would reduce the deficit. Yet, none of the law’s gimmicks has managed to hide its true costs. One gimmick was omitting a $300 billion payment to doctors who care for seniors on Medicare. Another illusion was the promise of $70 billion in savings — half of the bill’s projected deficit reduction in the first decade — from a now-defunct long-term care program. The Congressional Budget Office’s most recent analysis shows the law is jammed with $1 trillion in tax hikes and will spend more than $1.7 trillion over the next decade.

Fourth, and most important, the law’s individual mandate was rigged to fail. Unless the law is repealed, in 2014, the new individual-mandate tax will effectively force all Americans to buy insurance. Health-insurance companies will be forced to offer coverage to virtually every American, regardless of their pre-existing condition or health status. Employers will be penalized if they do not offer health coverage. The problem is this approach will never work, which the lawmakers who backed the “public option” knew full well.

According to analysis by the Congressional Research Service, the IRS does not have the authority to enforce the individual-mandate tax. Moreover, because the tax penalty is far less than the price of purchasing health coverage and insurers are forced to cover Americans at any time, millions will choose to pay the tax and only sign up for coverage when they get sick. 

As a result, insurers will be left paying for people who are comparably older and sicker than the general population. The result is a classic death spiral where the costs of covering the insured skyrocket, discouraging even more people from buying insurance. States that have tried similar approaches have seen their costs skyrocket.

At the same time, employers will make a similar economic decision, choosing to pay a $2,000 penalty per worker, instead of paying four to ten times that for a worker’s health coverage.  As former Democrat Governor Phil Bredesen said, when employers do the math, dropping workers’ coverage “will make good financial sense.”

Many workers who are not offered coverage through their employer will be eligible for federal subsidies to buy government-approved insurance through insurance exchanges.  If workers seek health coverage through the exchange, the costs of the subsidies to taxpayers will skyrocket – likely by hundreds of billions of dollars. Yet, if workers chose to simply pay the mandate tax and go without insurance, health insurance costs will climb still further.

The scenario outlined above is not speculation but is a forecast based on current trends described by nonpartisan experts.

Taxpayers should remember that liberal Democrats — who have made “catching up with Europe” and imposing a single-payer, government-run health system on America their life’s mission — celebrated the law’s passage for a reason. For them, it was a win-win outcome. Either the law would succeed and expand government’s role in health care, contrary to their own understanding of how market-economies work, or it would fail and pave the way for single-payer health care in a politically feasible way. If the private insurance market crumbled, government could mount a rescue operation and “save” patients.

Thankfully, that future is not yet written. Lawmakers who believe patients and doctors, not politicians, should manage our health-care system have plenty of ideas on how to repeal and replace Obamacare. What we need, however, is for the American people to see the urgency of the problem and replace not just the law but the politicians who put it in place. 

That Terrifying Medicare Voucher Threat

by Robert Moffit

Vice President Joe Biden warned you: If you are 54 years of age or younger, be afraid. Be very afraid. If conservatives and misguided centrists have their way, in your old age, when you are frail and vulnerable, you could end up with a Medicare “voucher.” Recently, Representative Kathy Hochul (D., N.Y.) told an audience of senior citizens exactly what to expect: “You are now going to have a voucher and you can go out and negotiate with insurance companies on your own. . . . I heard that and said: No way.”

Yes, no way. There is no major Medicare reform proposal, including the Ryan proposal, that would issue future senior citizens a voucher (a certificate or coupon or a check for a fixed dollar amount) and then force them to fend for themselves — on their own – in negotiating with health-insurance companies who will, as Florida congresswoman Debbie Wasserman-Schultz also insists, “cherry pick” the healthy and drop or deny coverage to the sick.

It’s all scary nonsense. The Ryan proposal, among others, is a defined-contribution system that in, say, 2023 would provide direct payment from a government account to a health plan of a person’s choice, including traditional Medicare; health plans, including employer-based retiree plans, would have to meet government standards, including benefit standards of the traditional Medicare program, plus new and much-needed protections against the costs of catastrophic illness; all such plans would be offered through a Medicare exchange; all such plans would be governed by existing Medicare insurance rules, meaning persons could not be legally denied coverage or dropped merely because they are sick; low-income persons would be specially protected from unforeseen out-of-pocket cost hikes; and all enrollees would benefit from an improved risk adjustment among plans in the competitive market to guarantee continuity of patient care and health-plan stability.

A voucher is, of course, a defined contribution; but not all defined contribution programs are “vouchers.” A voucher is just one form of defined contribution. The Merriam Webster definition of a voucher is a “form or check indicating a credit against future purchases or expenditures.” Many ordinary Americans have had some experience with vouchers when their flights were cancelled or delayed, and airlines issued them compensatory certificates redeemable in cash value for the purchase of food and lodging.

If liberals want to label Ryan’s Medicare proposal a “voucher,” as Representative Hochul insists, then logically they must also apply that term to huge chunks of today’s health-care system: the private plans in Medicare Advantage, which cover 27 percent of today’s beneficiaries; the 1100 plans in the Medicare drug program, which cover 60 percent of today’s beneficiaries; the hundreds of plans in the Federal Employees Health Benefits Program(FEHBP), which cover roughly 8 million active and retired federal employees and their families, as well as the defined contributions for stocks, bonds, and equity funds in employer-based pension programs. Worse, “vouchers” will fund Obamacare’s insurance exchanges in 2014.

Meanwhile, liberals in Congress need to break the terrifying news to the vast majority of retirees around the country that they are in some form of “voucher” system already. They just don’t know it.

— Robert Moffit is a Senior Fellow at the Heritage Foundation’s Center for Policy Innovation. 

CAP Action Dowdifies CBO Medicare Report

by Rea Hederman

A Harvard economics professor has made a strange claim about a 2006 Congressional Budget Office report on Medicare premium support. Writing for the Center for American Progress Action Fund, a liberal lobbying organization, Dr. David Cutler and his co-authors assert that “CBO concludes that premium-support plans would achieve much of their federal savings from ‘increases in the premiums paid by beneficiaries, not from increases in the efficiency of health care delivery.’” This would be a strong negative finding indeed. But that is not, in fact, what CBO concluded. 

The quote is lifted from a paragraph in which the CBO outlines why opponents dislike premium-support reform. The full sentence, found on the first page reads, “Opponents also maintain that much of the federal savings from premium support would come from increases in the premiums paid by beneficiaries, not from increases in the efficiency of health care delivery.” In other words, Dr. Cutler — a foe of premium support — is presenting his viewpoint, but labeling it as a CBO conclusion.

This is unfortunate. Using this new methodology and citing the same report, one could just as easily say that CBO concludes that premium support would “lead to a more efficient Medicare program, one in which the government and beneficiaries received more for the money that is spent on Medicare, whatever that level of spending might be, than they do today.”

In fact, CBO drew very few conclusions in its 2006 report. It did, however, present one very important conclusion: that premium support, based on a process of competitive bidding, would save substantial money for taxpayers. The most money would be saved with the federal share of Medicare based on the lowest competitive bid. CBO found that much of this savings would be from the high-cost areas of traditional Medicare. 

Medicare is a complex policy issue, and clarifying the policy options in a fashion that is understandable to the general public is the right thing to do. It is unfortunate that Dr. Cutler and his co-authors chose to misrepresent the CBO conclusions.

— Rea Hederman is assistant director of The Heritage Foundation’s Center for Data Analysis.

The New Resident Duty Hours Fail

by Jason D. Fodeman

A year ago, the Accreditation Council for Graduate Medical Education (ACGME) changed the rules governing the schedules of medical residents. The new work hours were intended to curb resident fatigue, which the Institute of Medicine (IOM) had previously concluded was contributing to medical errors and accidents. But the new duty hours have actually exacerbated fatigue, jeopardized resident education, and endangered patient care at our nation’s teaching hospitals.

Up until the current guidelines took effect in July of 2011, medical residents could work up to 80 hours per week and 30 hours continuously. The new rules, while maintaining the 80-hour schedule, have limited the maximum shift for first-year residents to 16 hours. Senior residents may work 28 hours straight.

Research published in the New England Journal of Medicine highlights that these mandates have failed to achieve what they were intended to. The study’s authors contacted every institution in the country that sponsors an ACGME-accredited residency program, and ultimately 6,202 residents at 123 different institutions completed a twelve-question survey. Of those surveyed, 43 percent indicated that resident work schedules had actually worsened, and 50 percent said that quality of life for senior residents had deteriorated, compared with 30 and 14 percent, respectively, who noted improvement in these areas. Forty-one percent of residents believed that the new guidelines have worsened their education, while only 16 percent believed the changes have benefited resident learning. The survey also indicated that some residents were concerned that patient care was suffering. Overall, 48 percent of residents disapproved of the changes, with only 23 percent approving.

At first blush, these findings may seem counterintuitive, but upon closer inspection, they make perfect sense. Residency programs still have the same number of workers with the same collective responsibilities, but the first-year residents are more limited in the shifts they may work. Consequently, second-year residents and above are increasingly given the most grueling schedules.

Before the changes went into effect, the first year of residency was very physically demanding — but as residents entered senior roles and took on more responsibility, the physical burden subsided in exchange for the intellectual challenge of managing sick patients with complicated problems. The reduction in physical stress granted the senior house staff time to think, read, and learn from patients.

The new duty hours have turned this commonsense approach to residency on its head. Now the residents with the most clinical responsibility are also the most physically taxed. As a result of the new work-hour mandates, senior residents are substantially more fatigued and have significantly less time and energy to read and learn from their patients. This does not just hurt the quality of resident training. It’s actually dangerous.

Medical residents currently care for the sickest and poorest patients. These mandates are impeding their ability to offer the best care. And by compromising the education and training of young doctors, these duty hours could jeopardize the quality of medical treatments provided to all patients.

The goal of these new regulations was to improve patient care, education, and quality of life for residents. As a resident working under this new regimen, I know that it has substantially missed the mark on all three parameters. The ACGME should revert to the old work-hour structure until a more practical and sustainable solution can be reached. If it fails to take the initiative to do this, then Congress and the Department of Health and Human Services should consider stepping in.

Resident fatigue is a real problem — patients should be protected from tired, overworked residents. But the ACGME’s cure is worse than the disease.

— Jason D. Fodeman, M.D., is an internal-medicine resident and a senior fellow in health-care studies at the Pacific Research Institute.

Violating the DNA of Our Culture

by Grace-Marie Turner

Obamacare violates American values down to our country’s very DNA.

A majority of Americans continue to oppose the health law because we understand that it is at odds withthe fundamental principles and democratic processes of our country. We were aghast at the way the law was enacted two years ago — ignoring citizens who were marching in the streets and burning up the phone lines on Capitol Hill pleading with legislators to vote “no.”

We oppose its government-centric takeover of our health sector with its mandates on individuals to purchase government-approved health insurance, mandates on businesses to pay for insurance or pay huge fines, and the massive new government bureaucracy to centrally manage one-sixth of our economy.

The HHS anti-conscience mandate that has now taken effect is not an aberrant rule but is woven into the fabric of a law that is in conflict with the Constitution and with American values. The U.S. Conference of Catholic Bishops called the federal regulation an “unprecedented threat to individual and institutional religious freedom.”

But the Obama administration has determined that most employers and health plans now will have to provide “free” access to a long list of “preventive” health services, including sterilization procedures and contraceptives that can cause abortions.  Citizens and businesses have become servants to the state.

The White House is trying to deflect opposition and frame this as a fight over the right to free birth-control pills.  But we understand that this is really about the fundamental issue of the founding principles of this country and the meaning of the Constitution’s protection of our freedom.  The real question is not whether women can have access to these products but whether health plans and employers can be compelled by the government to pay for them even if doing so violates their religious beliefs.

When the law was being debated in Congress, the Obama administration repeatedly assured Catholic leaders that it would respect religious liberty in implementing Obamacare. This mandate shows that the Obama administration has broken its promises and has no intention of reversing course.

The anti-conscience rule gives pro-life private employers and health plans the choice of violating their fundamental beliefs by paying for the offending products or dropping health insurance for their employees, in which case they are subject to steep fines.

Forty-three Catholic dioceses have filed twelve lawsuits challenging the anti-conscience mandate. The Becket Fund for Religious Liberty also is representing a number of colleges and other religious institutions in suing the government over the mandate.

More than 2,500 pastors and evangelical leaders have signed a letter to President Obama asking him to reverse the mandate.

As George Weigel has said, the anti-conscience rule is “a grotesque overreach by state power, one that threatens the entire fabric of civil society as well as the first of American liberties, religious freedom.”

We will not allow the First Amendment to be trampled, and this battle will continue.

Good Luck Finding a Doctor under Obamacare

by Grace-Marie Turner


“No matter how we reform health care, we will keep this promise to the American people: If you like your doctor, you will be able to keep your doctor, period.”

President Barack Obama,

Speech to the American Medical Association

Chicago, June 15, 2009

In truth, prospects are bleak that you will be able to keep your doctor and even bleaker that there will be enough doctors to meet demand under Obamacare.

The health overhaul law expands health insurance to millions more people without significantly increasing the number of physicians or other providers. And Obamacare has exacerbated the physician shortage because many are considering leavingthe practice of medicine altogether rather than practice under the dictates of Washington bureaucracies.

An Investor’s Business Daily/TIPP survey conducted in September of 2009 found that 45 percent of doctors said they “would consider leaving their practice or taking an early retirement” if the health law stands.

More than 800,000 doctors were practicing in 2006, according to government data. Projecting the poll’s finding onto that population means that 360,000 doctors would consider quitting!

And even without a mass exodus, the Association of American Medical Colleges envisions a shortageof about 160,000 doctors by 2025.

The greatest tragedy of Obamacare may be losing prematurely a generation of the most highly-trained, skilled physicians in history to a health overhaul law that the American people did everything they could to stop.

Physicians say they simply won’t practice under Obamacare rules that strip away much of their autonomy, drown them in bureaucracy, and leave them even more exposed to lawsuits.

Health care already is one of the most highly-regulated industries in the country, and doctors and nurses are forced to devote a significant amount of their day to detailed paperwork, adding to their frustration and taking away from time with patients. Reporting requirements will increase significantly under the health overhaul law, and the penalties for those who run afoul of the avalanche of new rules also will increase.

The supply of doctors will dwindle as demand for services reaches an all-time high. Fewer of those in private practice are taking patients on Medicare, and even fewer can afford to see the millions of new patients likely to be enrolled in Medicaid. 

By increasing demand for care without a comparable increase in the supply of doctors to treat the additional infusion of patients, the law will exacerbate the current physician shortage, as the New York Times reportedon Sunday.   

“In the Inland Empire, an economically depressed region in Southern California, President Obama’s health care law is expected to extend insurance coverage to more than 300,000 people by 2014,” the Times reports.

“But coverage will not necessarily translate into care: Local health experts doubt there will be enough doctors to meet the area’s needs. There are not enough now. Other places around the country, including the Mississippi Delta, Detroit and suburban Phoenix, face similar problems,” according to the article.

Shortly after the law was passed, an April 2010 survey of physicians, conducted by Athena Health and Sermo, foundthat 79 percent of physicians were less optimistic about the future of medicine; 66 percent said they would consider dropping out of government health programs; and 53 percent would consider opting out of insurance altogether.

In August of 2010, The Physicians Foundation completed another major survey of doctors and found that:

  •  67% of doctors had a “somewhat” or “very” negative initial reaction to the new law
  • 74% said they would take steps to change their medical practice over the next one to three years
  • 60% of these doctors said that the new law will force them to close or restrict certain categories of patients: 93% will stop seeing or restrict the number of Medicaid patients they see, and 87% will close or restrict their Medicare practice.
  • Ominously, 89% of physicians said that they believed that the survival of the traditional model of independent private medical practice is threatened. In fact, hospitals already ownmore than half of medical practices, and that unwelcome trend will be accelerated under the new health law.

Seniors are most at risk because they have the greatest need for medical care. The health law takes more than $700 billion out of Medicare to finance new health-insurance spending, primarily by cutting payments to physicians and Medicare Advantage health plans.

If these cuts were to stand, experts at the Centers for Medicare and Medicaid Services say the number of hospitals, nursing homes, and hospice centers facing financial losses under the new law would jump to “roughly” 25 percent in 2030 and 40 percent by 2050. Many Medicare providers will be forced to either stop seeing Medicare patients or go bankrupt entirely.

Doctors are quietly making their plans now to restructure their practices, retire early, get another job, or otherwise protect themselves from the coming regulatory avalanche and payment cuts. 

Ultimately, the consequences of the health overhaul law will be passed along to patients through restricted access, long waits for appointments, and rationed care. It’s up to the voters in November to pull the emergency brake, that last chance to stop the Obamacare freight train.

Better Health Care Through Innovation

by Kathryn Nix

Obamacare was sold, in part, on the promise that it would improve the quality of medical treatment and reduce costs through better care coordination and disease management. For the Medicare program in particular, this was to be accomplished primarily through the creation of Accountable Care Organizations (ACOs).

Small wonder, then, that earlier this month the administration trumpeted the fact that 154 ACOs were now “on board” to participate. That may sound like progress, but it’s not the whole story.

The government hasn’t actually come up with anything novel here. Many of the outfits now designated as “ACOs” have been working to achieve these goals for years, if not decades.

As is often the case, government is just now catching on to what the private sector has already begun to accomplish. The problem is, whenever government tries to replicate a successful private model, it almost always fails. That’s because bureaucratic operations simply cannot keep up with the speed of innovation. Ultimately, it becomes an outmoded relic that actually serves as a brake on further progress and delays the attainment of the goals it was meant to achieve.

This dynamic is evident in Medicare. The traditional, government-administered Medicare program is trying desperately to figure out how to bring down costs and offer better, more seamless care. Meanwhile, private plans, including those that participate in Medicare Advantage, have pursued numerous innovative approaches — and enrollees are reaping the benefits.

New collaborations among providers and insurers have been key. Take, for example, BlueCross BlueShield’s Patient-Centered Medical Home Initiative, which serves 4 million members, including Medicare Advantage patients, in 39 states. Early evidence indicates the program has reduced emergency-room visits and inpatient treatments without compromising the quality of care.

Aetna has taken a different tack, embedding nurse “case managers” in physician practices to coordinate care for 20,000 of its Medicare Advantage patients. In 2010, this produced a 12 percent reduction in costly acute-care days — on top of the overall 31 percent reduction across all the insurer’s care-management programs. 

Then there are Special Needs Plans (SNPs) specifically targeting the needs of the chronically ill. A study published in Health Affairs found that enrollees in one such Medicare Advantage plan had “shorter average lengths-of-stay in the hospital, lower readmission rates, slightly lower rates of hospital outpatient visits, and slightly higher rates of physician office visits than their fee-for-service counterparts.”

Meanwhile, new delivery models are also helping provide better quality at lower cost for all health-care consumers. “Hospital at Home” programs, such as the one offered by New Mexico’s Presbyterian Healthcare Services, use mobile nurses and physicians, as well as telemonitoring, to deliver hospital care to patients in their homes. It has produced as good or better outcomes for patients while saving 19 percent compared to costs for hospitalized patients. It’s also another example of a delivery innovation that is available to all privately insured patients, but not seniors enrolled in traditional Medicare.

Doctors Express, the first franchise urgent-care clinic, is addressing gaps in care options facing all patients. The clinics offer less expensive urgent care for those who do not require emergency-room treatment but cannot get in to see a primary-care doctor. One study shows that between 13.7 percent and 27.1 percent of emergency-room visits could be treated in an alternate setting, at a savings of as much as $4.4 billion annually.

One Medical Group, created in 2007, focuses on making primary care more patient-centered. In exchange for a nominal fee, all members enjoy same-day doctor appointments, online scheduling, and the ability to renew prescriptions or fine-tune treatment via e-mail — thereby avoiding unnecessary office visits. When office visits are necessary, patients spend less time waiting and more time with their doctor.

These are just a few examples of existing innovations. There are even more promising innovations on the horizon. Smart technology has paved the way for mobile apps to help patients manage their health, and tele-health enables caregivers to monitor and care for patients remotely. And advances in medical research will continue to revolutionize the practice of medicine.

But government doesn’t drive innovation in the health-care system — the private sector does. To keep the kind of successes outlined above coming, Washington must ditch the big-government approach to health-care reform represented by Obamacare. Congress should pass reform that encourages even more experimentation and innovation to benefit patients, rather than try to impose uniformity by copying yesterday’s successes and locking them in place under a government-run system.

— Kathryn Nix is a policy analyst in The Heritage Foundation’s Center for Health Policy Studies.