This morning on MSNBC, Rep. Eric Cantor (R-VA) ripped into health reform, calling legislation to introduce the a public option “crazy talk.” “You’ve seen the cost,” Cantor said, “the latest estimate being discussed here on the House plan is three trillion dollars.”
Republicans are seizing upon a study produced by HSI Network LLC to claim reform will cost $3-3.5 trillion over the next ten years. They are taking to the floor, firing off press releases, and making nonstop television appearances, using the HSI figure to demonize health reform. But we’ve seen this dog-and-pony show before, when HSI played exactly the same role in 2008. They armed John McCain with friendly numbers for his health plan, while tearing into Barack Obama’s plan.
This is how it worked: Stephen Parente, one of the owners of HSI, was tapped by McCain policy adviser Doug Holtz-Eakin to formulate the McCain health plan. Then over the course of the summer, Parente and his colleague at HSI Roger Feldman, who is a former Bush economist, were quoted in various friendly media outlets praising the McCain plan without noting that they had authored the plan they were analyzing:
— “Roger Feldman, a professor at the University of Minnesota who focuses on health insurance, said the Minnesota program shows that high-risk pools can work. He added that Sen. McCain ‘will have the same question — how much does he want to subsidize these plans?'” [WSJ, 6/2/08]
— “Steve Parente, a professor of finance at the University of Minnesota, estimated the effects of an earlier version of McCain’s plan, with a $4,000 tax credit. He found that even that less generous plan would increase the number of people with insurance by 23 to 27 million.” [National Review, 3/3/08]
Indeed, the McCain campaign paid $50,000 to HSI, the same firm that wrote their health plan, to produce “independent” comparisons between the McCain health plan versus Obama’s. Trying to conceal the payment, the McCain campaign reported the $50,000 as “legal consulting.” Strangely enough, the McCain campaign also paid HSI $10,000 in the final weeks of the campaign for “get out the vote consulting.”
Unsurprisingly, the HSI study found that McCain’s plan would cover “more than half of the nation’s 47 million uninsured — and two million more than the plan put forward by Senator Obama.” But as NPR has noted, the HSI study of the McCain and Obama plans was an extreme “outlier” compared to almost every major academic think tank that had surveyed the two candidates’ health plans. HSI’s model of the Obama campaign plan predicted a Federal cost more than 4 times than that predicted by the independent Tax Policy Center.
Reprising their role during the Presidential campaign, HSI is now spreading misinformation about the House health bill. The Ways and Means Committee has noted:
— The HSI analysis assumes substantial erosion of private coverage that rests on two likely false assumptions: (1) that private plans sit idly by and fail to offer products at lower prices to compete with the public option for business; and (2) that an employer shared responsibility requirement is ineffective and leads to massive dropping of ESI, despite contrary experience in Massachusetts and in today’s market where the majority of employers already offer coverage on a voluntary basis.
— The analysis says there are no offsets in the discussion draft, yet the bulk of the text consists of payment and delivery system reforms in Medicare and Medicaid that will yield hundreds of billions of dollars in savings.
In addition to serving as the GOP’s favorite health care think tank, HSI doubles as a data service conversion center. The latest “Data Conversion Special!” advertises that for $100, HSI will convert mainframe cartridges into CDs or DVDs.
Though HSI has yet to produce their actual methodology for analyzing the the House health reform bill, they certainly have a unique revenue model.
HSI’s Stephen Parente responds:
Lee and company. Hi. Steve Parente here, co-principal of HSI. If you would like to see a response to the Dems Ways & Means accusations about lack of independence of HSI’s analysis to date, please see our response on the http://www.hsinetwork.com home page. In addition, we have received no money for this work. I’m not sure that could be said of others, particularly the PACs testifying to Congress next to me on Tuesday. For academic references to the models used and published in Health Affairs and by the Department of Health and Human Services, please see http://www.ehealthplan.org. I’m happy to talk to any journalist and will give full disclosure. I could also confirm or correct the time line you have above. STP