The rate at which the Koch Industries funded Americans for Prosperity (AFP) churns out front groups to promote its right-wing corporate agenda sets the organization out among similar conservative “think tanks.” This week, AFP created their latest front group called “Patients United Now,” an entity set up to defeat health care reform. Patients United follows a familiar pattern AFP has used for their other front groups: create a new stand alone website, fill it with lines like “We are people just like you” to give the site a grassroots feel, and then use the new group to recruit supporters and run deceptive advertisements attacking reform. This “astroturfing” model has been used by AFP to launch groups pushing distortions against other progressive priorities:

– The “Hot Air Tour” promoting global warming skepticism and attacking environmental regulations.
– “Free Our Energy,” a group promoting increased domestic drilling.
– The “Save My Ballot Tour,” a group that pays Joe the Plumber to travel around the country smearing the Employee Free Choice Act.
– “No Climate Tax,” a group dedicated to the defeat of Clean Energy Economy legislation.
– “No Stimulus,” a group launched to try to stop the passage of the Recovery Act.

Notably, AFP was also instrumental in orchestrating the anti-Obama, anti-tax tea party protests in April.

With nearly 70 Republican operatives and former oil industry spokesmen working behind the scenes of AFP’s various fronts and disclosures that point to ever increasing oil and corporate donations to the group, one must wonder, who is guiding this massive front group factory? The answer is Tim Phillips, the President of AFP who has built a long career of inventing fake grassroots causes. In Phillips’ official biography, there appears to be over a 10 year gap — but that period was when Phillips developed his very first astroturf groups to do everything from smearing his opponents with anti-Semitic attacks to laundering money for criminal lobbyists.

Click More To Read The WonkRoom’s Investigation Of AFP’s Tim Phillips
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Ezra Klein and Jonathan Cohn are right to celebrate the Congressional Budget Office’s (CBO) recent decision to exclude the federal mandate to purchase health insurance from the federal budget “so long as people had a variety of private plans from which to choose and a government entity was not in charge of collecting their insurance premiums.” As Ezra notes, an opposite ruling led to disastrous consequences during Clinton’s reform efforts:

In 1994, a pretty similar question was decided in the other direction. Robert Reischauer, then the director of the CBO, decided that the premiums that individuals were charged to purchase private insurance under Clinton’s plan would be included in the budget. This didn’t change the nature of the proposal. But it made its cost tag look huge.

Donna Shalala, Clinton’s secretary of health and human services, later termed the ruling “devastating.” And it was. It made health care reform look obscenely expensive. And the same thing could have happened this year. Rather than costing $100 billion per year or so, it could have cost a couple trillion a year. No change in the plan. Just a change in the budgetary treatment of the plan.

This time, the CBO ruled that the mandate could remain off the books if consumers could “choose among a number of insurance plans,” the plans offered “different levels of coverage,” and consumers could “choose among several different insurance companies competing on price.” Most conceptions of the health insurance exchange envision just this kind of competition — a key distinction from the Clinton proposal which funneled all health insurance dollars through various Health Alliances.

But the very fact that we’re all so worried about the CBO highlights the craziness of allowing one office to hold health care reform hostage. Why exactly are reforms jumping through hoops to satisfy the CBO? We do it because we have to — that’s the process, the CBO has the magic numbers — but shouldn’t we design legislation based on what’s most effective in controlling costs and increasing access, not around how some actuary chooses to calculate something?

Ezra Klein argues that “if you rebuild health care financing around a single tax, you’d also have to rebuild health insurance offerings around what is, in effect, a single payer”:

Employer-based insurance, for instance, only exists because employers pay for it. If the government were paying for it through a VAT, then that insurance would no longer be attached to employers. That would be a good thing because employer-based insurance is a bad thing. But it would also mean individuals would “lose” their current insurance (even though it would be instantly and seamlessly replaced). Which is why we won’t have a VAT.

Back in 2003, the Center for American Progress proposed a universal plan that allowed Americans to keep their employer-based coverage, established a new health insurance exchange modeled on the FEHB, strengthened Medicaid, offered coverage subsidies and financed it all through a Value Added Tax (VAT). And as Len Burman notes, the tax has some advantages:

- It is the only plausible revenue source that would pay for universal access to health insurance without very tight targeting by income.

- A VAT combined with free health insurance is highly progressive

- A VAT that is earmarked to pay for health care would serve as a brake on health care spending because otherwise the VAT would tend to increase

- Announcing a future VAT would stimulate spending in the short term

- When fully phased in, a VAT would encourage savings (since it is untaxed by the VAT), which will boost long-term economic growth and provide a cushion against future recessions.

Personally, I’m not convinced by the above arguments, but it is clear that one can preserve the current employer based system and fund the expansion of coverage through some form of new revenue, whether it be a VAT of some other combination of taxes. (Preserving employer coverage would obviously require a smaller VAT and as Matt Yglesias points out, we’ll probably need some form of taxation to sustain the system in the long run.) I just hope that we don’t over-rely on taxation. The present system wasted a lot of dollars and improving its efficiency may be the only way to build sustainable reform.

Building on their pledge to reduce health care spending by $2 trillion and responding to President Obama’s request for specific cost-containment proposals, UnitedHealth’s new Center for Health Reform and Modernization released a report demonstrating that the federal government could save $540 billion over the next decade if it adopted (through Medicare Fee For Service) existing United Health Care cost-saving measures:

The new research paper provides policymakers and health care leaders with a range of “real world” savings options, based on empirical data and actual results from a selection of UnitedHealth Group programs…. Most of the savings estimates derive from applying more broadly the approaches UnitedHealth Group has found to work either in its commercially-insured or Medicare programs.

Their argument is this: plug United’s existing initiatives into Medicare and save billions over a decade. Some of the savings:

- Member Incentives to Use Highest Quality Providers ~$37 billion

- Cancer Support Programs: Voluntary guidance on cancer treatment best practices and patient options, including hospice care ~$5 billion

- Institutional Preadmission Program: Provision of onsite nurse practitioners at skilled nursing facilities to manage illnesses and prevent avoidable hospitalizations ~$166 billion

Fair enough, but if United is so certain of the savings then why hasn’t it implemented the measures across its entire network, lowered its rates, and attracted millions of new customers? Efficiency, after all, is a competitive advantage. And, as Robert Laszewski asks, “If United Health knows how to save $500 billion in Medicare costs why has it been lobbying for years to maintain the hundreds of billions of dollars in extra payments private Medicare plans–of which United is the biggest player–get from the government? It would seem to me that if they know how to save all of this money in Medicare they wouldn’t need the extra 14% the government pays United and all the other private Medicare plans above what it pays itself under the traditional Medicare plan.”

United cost-containment measures are voluntary and they’re being presented as an alternative to a new public option. But why why can’t both coexist? A new public plan could lead the way in greater cost containment innovation, implementing some of United’s so-called “real-world” solutions with other innovations. It can take what United is calling a voluntary effort and transform it into standard practice across all public programs, muscling private health care insurers to follow suit and reduce spending across the board.

New details are emerging on the Senate Health, Education, Labor & Pensions Committee’s (HELP) health care bill, originally slated for release tomorrow, but now pushed back to next week.

According to news reports, “a brief, unofficial summary of the Senate health committee’s draft reform proposal circulating among Washington lobbyists Wednesday includes a public plan option that would pay providers — who would be required to participate — 10 percent more than Medicare rates.”

There is more:

- An individual and employer mandate for coverage

- The legislation would expand the Medicaid program to cover individuals earning up to 150 percent of poverty

- It would subsidize people earning up to 500 FPL to purchase insurance through state-based insurance exchanges

- Expands the Children’s Health Insurance Program (CHIP) to people up to age 26

- Establishing a “federal health reserve” type entity called a Medical Advisory Council that would assist in designing minimum standard benefits

On quick glance, this is very good news for public option proponents who were concerned that the HELP legislation would build on state-employee pools and establish fifty different plans around the country or develop some kind of trigger mechanism. This summary suggests that while providers participating in Medicare would also have to offer services in the new public option, the reimbursement arrangement would give the new plan leverage by allowing it to piggyback on Medicare’s reach. Reimbursing providers less than private insurers, but paying them more than Medicare rates allows the new public option to pass on the negotiated payment rates to consumers in the form of lower premiums.

As Lester Feder, who is covering health care reform for The Nation, explained it:

Of course, we’ll save the most money if the public plan pays what Medicare pays. But short of that, any public plan will be more effective if it doesn’t have to negotiate the rates it pays providers on its own, but can piggy back on the rates the (much much much) larger medicare program can negotiate with providers. It’s about market leverage. Let’s say I run a small chain of department stores. It’s expensive for me to negotiate with my suppliers, and if I’m not very big I won’t get great deals. So instead I say, “I’ll pay you what Walmart pays plus 10%.” Then I’m benefiting from Walmart’s ability to negotiate with suppliers.

There are some political pitfalls here — which I will re-visit– but from a cost-containment perspective, it makes sense.

In an interview with the Wall Street Journal, Big Pharma CEOs admit what AHIP’s Karen Ignagni have only implied: they’re willing to support health care reform so long as it increases their profits. As the Wall Street Journal observes, “extending health-insurance coverage to millions of uninsured Americans is likely to benefit drug makers,” increasing their “$291 billion in annual U.S. sales” by $15 to $18 billion, according to some estimates.

But that pay increase my be threatened by the introduction of a new public option — that could negotiate drug prices — and comparative effectiveness research that isn’t guided by an industry hand. As the Wall Street Journal reports, “to help accomplish their goals, the drug makers spent $47.4 million on lobbying in the first quarter, up 36% from a year earlier, according to company-disclosure reports filed with Congress and analyzed by the nonpartisan Center for Responsive Politics. Pfizer Inc. more than doubled its spending on lobbying in the period to $6.1 million”:

The pharmaceutical executives are using their new access to try to steer lawmakers away from measures that could reduce drug margins, pressing instead for cost reductions by hospitals and insurers.

In their meetings at the White House and on Capitol Hill, as well as in speeches and op-ed articles, industry executives and lobbyists have backed such steps as shifting insurance coverage toward prevention, which could increase sales for heart, diabetes and other drugs that patients take long term….Pfizer Inc. Chief Executive Jeffrey Kindler says he backs “comprehensive health-care reform in this country” and is willing to make compromises. But he opposes a public insurance plan except for the poor who otherwise can’t afford insurance, saying it would crowd out private insurers and take “the form of price controls” that fail to reward companies for their expensive and risky investments in drug development.

Indeed, the threat of a robust CER effort and a muscular public option have brought the pharmaceuticals industry to the table and it’s terrified of losing it’s seat. The industry heavily lobbied for input over what’s researched and how, and is now afraid that despite it’s best efforts, some of the CER money will still be spent without its input:

Thornhill, whose firm represents the Partnership to Improve Patient Care–an association funded by BIO and PhRMA and other organizations to lobby on CER–puts the chances of getting the Baucus proposal into health care reform at just 50/50. But even it if is included and signed into law this fall, he notes, a new institute won’t be set up until the end of 2010 at the earliest, with research projects beginning no earlier than 2011.

So “you have this gap between when the [stimulus] funding gets handed out until you have new framework even established,” Thornhill noted. “So its hard for us to go out and lobby to have this Conrad-Baucus entity just control the funding. The pushback is ‘What are we are going to do for two and a half years? Just sit on our hands?’”

Several weeks ago, the health care industry visited the White House and pledged to “work together” with President Obama and Congress “to provide quality, affordable coverage and access for every American” and lower health care spending by $2 trillion. But New York Times’ Robert Pear is reporting that the nation’s anti antitrust laws may prevent the health care industry from voluntarily reducing costs:

Anti-trust lawyers say doctors, hospitals, insurance companies and drug makers will be running huge legal risks if they get together and agree on a strategy to hold down prices and reduce the growth of health spending. Robert F. Leibenluft, a former official at the Federal Trade Commission, said, “Any agreement among competitors with regard to prices or price increases — even if they set a maximum — would raise legal concerns.’”

Some anti-trust lawyers argue that this interpretation may be relying on antiquated view of anti-trust law. In fact, they suggest that the industry’s ‘voluntary effort’ to reduce health care spending is predicated on an interpretation that prohibits “any agreement among competitors.” In other words, while the pledge casts the industry in the glowing light of cooperating with a popular President, anti-trust law serves a cover, legally protecting the industry from having to implement their pledge.

In an interview with The Wonk Room, David Balto, a Senior Fellow at the Center for American Progress explained, “The antitrust laws permit a broad range of collaboration to cut costs and bring lower prices to consumers. Firms have been able to adopt standards and share information that have led to improved cost control. These companies would like to pretend that they want to collaborate to reduce costs, but antitrust is the obstacle. They are simply wrong.”

What’s more alarming is the growing concentration of today’s health insurance markets. “There have been over 400 health care mergers in the last 10 years”; 1 in 6 metropolitan areas is dominated by a single health insurer that controls at least 70% of consumers. As Balto recently pointed out, “In the seven years of the Bush administration, all non-merger enforcement actions have involved health care providers, with no enforcement involving health insurers,” Balto said. This approach has contributed to greater insurer concentration, “more anticonsumer insurance provisions, greater payment delays, less coverage and poorer service.”

After orchestrating and funding the so-called Tea Parties movement, Americans for Prosperity — a nationwide front group founded and funded by the right-wing polluter Koch Industries — is launching an ad campaign characterizing President Obama’s effort to reform the health care system as a government take-over that will ration care and care and deny treatments.

Americans for Prosperity is notorious for its fake grassroots efforts, funneling millions of dollars into conservative campaigns designed to undermine Democratic initiatives. As Lee Fang put it, “AFP is a professional AstroTurf machine”:

- Hosted ‘Drill Baby, Drill’ rallies around the country.

- Financed Joe the Plumber’s tour against the Employees’ Free Choice Act and other anti-EFCA rallies.

- Started NoStimulus.com, “a grassroots website that we hope will be a focal point for the widespread frustration ordinary Americans feel at the runaway government growth that we see during good economic times and bad.”

Now, operating under the name Patients United Now, Americans for Prosperity — which is mostly funded by large multinational corporations — is masquerading as an organic grassroots movement outraged over the Presidents health care proposals:

We are people just like you. We went to D.C. with questions about “reform”— because we all favor policies which keep insurance costs down and help those patients with pre-existing conditions get coverage. Buying “care insurance” should be like buying car insurance: flexible, transparent and simple. We support health care for the poor through Medicaid.

But what we found SHOCKED US: Radical solutions. Discussions behind closed doors. Patients like us NOT included, just big companies, lobbyists, unions and politicians.

For many in D.C. cutting costs means CUTTING CARE—-your care.

The effort provides cover or ‘grassroots clout’ for conservative politicians and activists to oppose the President’s health care initiative. But this collection of trumped-up charges, outright lies and complete fabrications makes little headway in critiquing the President’s actual proposal. Because just like all other peddlers of the “government take-over” critique — Frank Luntz, Conservatives for Patients Rights, Betsy McCaughey, and Sally Pipes — the goal is to define Obama’s proposal in their terms rather than to engage in a debate about health care or offer real solutions to the crisis. As Frank Luntz admitted to the New York Times, “we don’t know what he is proposing. We want to avoid ‘a Washington takeover.’”

A so-called “government-takeover” may be a personal ideological crusade for AFP — whose founders also established the conservative CATO organization — and its AstroTurf movement of corporate clients, but most Americans support greater government involvement in the health care system. A recent poll by Lake Research for Health Care For America Now shows that there is “intense and widespread support” for the choice of a public health insurance plan, with 73% of voters favoring a choice of a public or private plan, including large majorities of Democrats and independents (77% and 79%) but surprisingly, even a high plurality of Republicans (63%).

The cast of health care crisis deniers and stone throwers, whose constituency are only as large as their fund raising outreach efforts, are prominent not for their message, but for their coffers. Frank Luntz represents Blue Cross Blue Shield, CIGNA Dental Health and Pfizer. Conservatives for Patients Rights are funded by ‘undisclosed’ special interests and a $20 million personal investment from CEO Rick Scott, Betsy McCaughey sits on the board of a medical device company and Sally Pipes’ Pacific Research Institute receives money from Altria (formerly known as Philip Morris), Microsoft, Pfizer and ExxonMobil.

So if the question is, why do it? Why lie about the President’s efforts? Then the answer is a mix of ideological conservative zeal, political calculation — denying Democrats a victory on the issue — and businesses interest. Ultimately, these groups are expressing the voices and opinions of their particular backers — large corporations — not the American public.

In an interview with the New York Times, GOP wordsmith Frank Luntz — who recently penned a health care messaging memo instructing Republicans to attack President Obama’s health reform efforts by criticizing the deficiencies in foreign health care systems — concedes that Republicans will label Obama’s reform effort a “government takeover” of health care, regardless of the actual proposal:

Is it a correct description of the president’s plans for reform?
We don’t know what he is proposing. We want to avoid “a Washington takeover.”

But that’s not at issue. What the Democrats want is for everyone to be able to choose between their old, private health-insurance plan and an all-new, public health-insurance option.
I’m not a policy person. I’m a language person.

Indeed, “rather than challenging the tenets of American reform proposals, Luntz establishes a straw man argument against a non-existent health plan.” As Democratic strategist Paul Begala observes in a recent retort to the Luntz memo, “Because they know they cannot win the argument honestly, Republicans are resorting to mendacity.”

Opponents of reform sometimes claim that we can’t afford reform. The truth is, we can’t afford the status quo.

A new study from the Urban Institute shows that, absent serious health reform, fewer and fewer Americans will have health insurance, employers will drop coverage, and health care costs will eat up an ever-greater share of household and government budgets.

They find that, absent reform, individual and family spending on health care (the sum of insurance premiums and out-of-pocket costs) will rise approximately 40% per capita under a best case scenario of low unemployment and economic growth.

Under an intermediate or worst case scenario (in which fewer workers have jobs and comprehensive insurance, more uninsured burden the system, and health care costs continue to spiral upwards), they project individual and family spending on health care to increase 50% in an intermediate case scenario or almost 60% in their worst case scenario.

Read the study here.

This growth would increase health care spending as a share of income from 2009 to 2019 by 13% in the best case scenario to 40% in the worst case scenario.

The study also finds that, under the best case scenario without health reform, by 2019, 20.1% of non-elderly Americans would be uninsured (approximately 57 million people). In a worst case scenario, 23.2% of non-elderly Americans, approximately 66 million people, would be uninsured.

Effective health reform would ensure affordable accessible coverage for all Americans while working to rein in health care costs, saving families, businesses and the federal government money.

Rumors are circulating that the Senate Health, Education, Labor & Pensions Committee (HELP) will release its bipartisan health care legislation this Friday. Insiders tell the Wonk Room that the proposal will 1) include a robust health insurance exchange that prohibits insurers from denying coverage of preexisting conditions 2) offer subsidies for individuals and small businesses to offset the costs of insurance, 3) invest in prevention and chronic disease management and 4) and may expand eligibility for the Medicaid program.

The fate of the most controversial aspect of health care reform — the public option — remains a mystery, however. Over at The Nation, Lester Feder lays out the principles of a public health option, arguing, quite convincingly, that the public option must be designed in such a way that it 1) reduces health care spending 2) restores competition to health care markets 3) leads the way in improving health quality. In other words, the public option should be designed in such a way that it scores savings with the Congressional Budget Office.

But several Senators have recently endorsed a watered-down version of the public option that builds on existing state employee plans or creates a trigger (a.k.a. “fall-back public option”) that would only establish a public plan if “an arbitrary measure of market concentration were hit in a state” (the White House has also suggested that it is open to such alternatives):

Sen. Olympia Snowe, R-Maine, talked at length Thursday in a private meeting between members and staffers about the possibility of creating a fallback public option that only would kick in several years down the road if insurance companies are not doing their part to bring down healthcare costs and expand coverage, a Republican committee aide said. Snowe has had conversations with Senate Finance ranking member Charles Grassley and Sen. Orrin Hatch, R-Utah, about the proposal. From the Democratic side, Sens. Ron Wyden of Oregon and Thomas Carper of Delaware expressed interest in the idea Thursday, aides said.

State employer pools don’t have a record of lowering health care cost and as Tim Foley notes, “The problem with a trigger like this is the gun has already fired.” In other words, if a health care plan is supposed to break up concentrated health insurance markets and force insurers to negotiate the lowest prices for its beneficiaries, then what are we still waiting for? As a recent Health Care For American NOW report points out, “94 percent of insurance markets in the United States are now highly concentrated,” while premiums “have skyrocketed, increasing more than 87 percent on average over six years”:

If policy makers decide to include a public option, then they should design it in such a way that would enable it lower the nation’s health care spending. A watered-down alternative will undermine the argument of many progressives and ultimately hurt the cause of health care reform.

The debate surrounding a robust public option is one we can win, but first we must be willing to engage in it.

The New Health Dialogue is rolling out a series of posts analyzing the history of health reform. The first installment reviews the efforts of reformers during the Progressive Era. “A combination of poor timing, organized and fierce opposition, and dissension within the ranks of the reformers all prevented health insurance from becoming part of the New Deal,” the blog quotes author Paul Starr as saying:

Roosevelt was apparently so enthused about a national health care program that he intended to campaign on it during the 1938 midterms. However, he chose not to, preferring to defer until the 1940 presidential campaign. Unfortunately, by 1938 and 1940, it was too late. It’s no accident that the vast majority of the New Deal—creation of Fannie Mae, Social Security, the Civilian Conservation Corps, and the Tennessee Valley Authority—came into being during Roosevelt’s first term. The landslide election of 1932 swept giant pro-Roosevelt majorities into Congress and left the conservative opposition neutered, easing the way for an enormous burst of legislative activity. But by 1936, and especially 1938, the opponents of the New Deal—conservative southern Democrats and Republicans supported by the business community—had gathered enough strength to stop the New Deal in its tracks. But that period, Roosevelt’s second term, was when the New Dealers who had agreed to leave health insurance out of Social Security finally made their push.

Obama has certainly learned from the mistakes of his predecessor. As New Health Dialogue observes, Obama “is striking while the iron is hot, making comprehensive health reform an immediate top priority in a way it never was during the New Deal…President Obama has explicitly and repeatedly linked health reform to economic recovery, rather than viewing them as separate challenges [and] he is forcefully committing his political capital to the issue in a way that Roosevelt did not.”

Moreover, despite all of the sabre rattling we’ll hear about the Democrats’ ‘unprecedented’ plan to allow government to “take over” health care, the history of past efforts to reform the health care system or even a review of the government’s role in regulating the economy (or providing health care) strips today’s reforms of any grand originality or conspiracy. The precedent of providing ‘Social Security’ to every American senior, paved the way for Medicare and Medicaid; what was once described as ‘socialized medicine’ — the government providing health insurance — became part of the American experience.

And so it is today. Obama’s hybrid approach builds on the employer based system and strengthens public health programs. It recognizes that the fault lines in the health care debate and the current health care system were born from a long and complicated history. Obama and the Democrats will introduce a plan that is not a product of ideology. Rather, it will be cognizant of the history of the present system. It will be as radical as Medicare, Medicaid, and the VA.

Paul Begala has released a point-by-point debunk of Frank Luntz’s now infamous health care memo, in which the GOP wordsmith instructed Republicans to attack the president’s health reform efforts by criticizing the deficiencies in foreign health care systems.

The top quote is key: “The only people who give any credence to Republican Senators’ rhetoric is Democratic Senators,” Begala quotes George Mitchell as saying. In other words, the public agrees with progressive health care priorities and in this health care debate, Americans start out on our side. Begala:

That fact is this: the overwhelming majority of American support health care reform. In fact, Dr. Luntz himself notes that voters trust Democrats over Republicans by a whopping 20 percent on health care . If health care reform were unpopular, Republicans would not resort to misleading rhetoric to mask their opposition. The striking thing about Luntz’s memo is how the rhetoric he advocates apes our message.

So the problem is not in convincing the American people that we need reform; they’ve heard that message before and they overwhelmingly agree with it. The real goal, this time, is to do a better job in mobilizing that public support into action for change. As Chris Jennings often argues, “when it comes to health reform, fear beats hope. In the past, this has meant that nothing gets done.”

Progressives need to answer conservative attacks by defending progressive proposals on their merits — as Begala does– rather than resorting to the comfortable/familiar rhetoric of “affordable health care for all” or “shared responsibility.” Such buzz language has doomed past reform efforts. As Haynes Johnson and David Broder argue in their analysis of President Clinton’s failed health care reform effort, by relying on hollow buzz words, rather than policy specifics, the Clintons allowed the opposition to ascribe meaning to reform rhetoric. Let’s hope we doesn’t make that same mistake again.

In an effort to have something to talk about over the Memorial Day recess, so-called Republican party moderates Reps. Mark Kirk (R-IL) and Charlie Dent (R-PA) have unveiled legislation protecting Americans from the deficiencies of foreign health care systems:

By enacting the Medical Rights Act, Congress will ensure Americans keep the choice, quality and access currently denied citizens of the U.K. and Canada (Canadian law actually bans patients from paying for care themselves, even if denied care).

This is the consequence of taking Frank Luntz’s memo too seriously. Luntz uses straw-man arguments against British and Canadian health care to attack the Democrats’ proposal and Kirk and Dent are targeting their legislation against a non-existent proposal. Consider some of this language:

- In addition, this section prevents the federal government from regulating the hiring practices of organizations that provide health care, such as hospitals, clinics, and the like.

- This section prohibits the federal government from regulating privately supported medicine, legally protecting the doctor-patient relationship against federal controls or rationing for care not paid for by the federal government.

- This section also protects the rights of patients to buy health insurance, or make any other arrangements to pay for their own health care.

Luntz writes that “it’s not enough to just say what you’re against. You have to tell them what you’re for.” If your only goal is to stay ‘on message’ and to convince your constituents that you are in fact an advocate of (or against) something (even if that something isn’t real), then this is what you produce. Of course, if your constituents are literate they’ll just laugh at you.

An America without health care reform is an America where families face spiraling health insurance premiums, businesses drop coverage and trim benefits, doctors are denied objective information about the treatments they provide, and millions of Americans live just one medical emergency away from bankruptcy.

Those who oppose health reform are choosing to maintain this status quo.

A new paper from the Center for American Progress, “America Without Health Reform,” points out that, absent reform, average premiums (the cost of health insurance to families and businesses) are projected to rise more than 70 percent from 2010-2018, according to the Congressional Budget Office.

Read it here.

This cost growth will have cascading effects across the economy as businesses trim benefits and workers lose their coverage.

According to researchers at Harvard University, a mere 20 percent increase in premiums costs 3.5 million workers their jobs, causes millions more to move from full-time to part-time work, and cuts the average income by approximately $1,700. CBO predicts that this 20 percent increase will occur over the next four years.

Read more

Last night, CAPAF Senior Fellow Elizabeth Edwards appeared on The Daily Show with John Stewart to discuss her new book Resilience and health care reform. Edwards stressed the importance of restoring competition in health insurance markets noting that at one point, “the President of UnitedHealth made so much money, that one of every $700 that was spent in this country on health care went to pay him”:

It’s really important, and this is the part I’m afraid will get negotiated away. We have to have a public provider. That is, instead of buying your insurance from United Health Care, or from Blue Cross. You could actually pick a government provider. The insurance companies are against it because they don’t want that competition. And because they’re afraid of the threat of the competition they’re already saying we’re going to cut prices, we’re going to make this so much easier to get. Just the threat, so imagine what the reality will do. We will actually have health costs that could work.

Watch it:

Indeed, as a new report by Health Care for America NOW points out, “profits at 10 of the country’s largest publicly-traded health insurance companies in 2007, rose 428 percent from 2000 to 2007, from $2.4 billion to $12.9 billion.” In 2007, the chief executive officers at these companies collected combined total compensation of $118.6 million — an average of $11.9 million each.”

Competition from a new public health care plan would require private insurers to negotiate prices on behalf of their enrollees and not just pass along ever-growing health care costs to beneficiaries in the form of higher premiums. Insurer opposition to the public health option is an attempt to protect industry profits, plain and simple and in the coming health care debate, policy makers will have a choice to make: design a system that promotes the general welfare, by providing Americans the choice of a public option, or protect the monopoly of private insurers and continue redistributing as much income as possible to private industry.

The Senate Finance Committee (SFC) is considering partly funding health care reform with a booze tax. And while one of my Wonk Room colleagues calls the idea “plain bunk” because he is a “poor blogger,” my other colleague Matt Yglesias is a long-time booze tax enthusiast:

But what if we could raise some revenue by taxing something else? Like, say, cigarettes. Or soda. Or booze. Well, then the case for doing the taxing remains similar—you can fund useful programs with it. But the case against looks a lot weaker, since reducing consumption of cigarettes or soda is not so bad. You introducing a little bit of allocative distortion into the economy, but not a huge amount, and you’re improving public health which is going to be beneficial.

Indeed, the costs of alcohol use far exceed the revenue from existing alcohol taxes. In 2005, the federal government “pulled in about $8.9 billion from alcohol excise taxes.” By comparison, the economic and social costs of drinking burden “society with an estimated $184 billion per year in health care, criminal justice, social services, property damage, and loss of productivity expenses.” According to the Marin Institute, “annual health care expenditures for alcohol-related problems amount to $22.5 billion. The total cost of alcohol problems is $175.9 billion a year (compared to $114.2 billion for other drug problems and $137 billion for smoking)”:

- In comparison to moderate and non-drinkers, individuals with a history of heavy drinking have higher health care costs.

- Untreated alcohol problems waste an estimated $184.6 billion dollars per year in health care, business and criminal justice costs, and cause more than 100,000 deaths.

- Health care costs related to alcohol abuse are not limited to the user. Children of alcoholics who are admitted to the hospital average 62 percent more hospital days and 29 percent longer stays.

Currently, tax rates differ depending on the type of alcoholic beverage. This particular proposal would simplify the tax code by imposing “a rate of $16 per proof gallon on all alcoholic beverages.” As a result, “beer taxes would go up by 48 cents a six-pack, wine taxes would rise by 49 cents per bottle, and the tax on hard liquor would increase by 40 cents per fifth.”

How much revenue would this raise? Not enough to fully fund health care. According to a 2008 Congressional Budget Office report, “modestly increasing and reforming federal alcohol taxes could generate more than $28 billion in new revenue over five years. Resulting reductions in problem drinking would produce further significant savings in health care expenditures (for both the drinker and affected family members), and decreased law enforcement and other alcohol-related costs.”

Funding health care reform will require a mix of different revenue streams, but if the booze tax is seriously considered “poor bloggers” shouldn’t worry. According to the Center for Science in the Public Interest, since 80 percent of all alcohol consumers are moderate drinkers, they will pay “a negligible amount of alcohol taxes.” “Heavy and addicted drinkers, for instance – who account for most of the alcohol consumption in the U.S. – rightly pay most in taxes since their drinking imposes the greatest costs on society.” Here are the estimates:

- 35 percent of adults pay nothing at all.
- 80 percent of drinkers pay at most $26.50 per year, about 7¢ per day.
- Half of beer drinkers pay at most a penny a day.
- The heaviest drinkers (top 5%), who average some 11 beers per day, pay on average $215 a year, about 60¢ per day.

The main thrust of the Republican health care bill is an argument against greater government spending on health care. By completely repealing the employer-tax exclusion for health care benefits, they’re redistributing money already in the system and giving it to Americans in the form of refundable tax credits.

The argument is this: after the employer exclusion is repealed, employers will convert the money they spend on your health care benefits into higher wages and you’ll be able to use that increase and the ($2,290 per individual or $5,710 per family) refundable tax credit to purchase health care coverage in the new State Health Insurance Exchanges or the existing individual market.

Since everyone would have “universal access” to coverage, greater government involvement in health care would be counterproductive. Government rots the system, and Americans know this, they argue:

In solving our health care crisis, Americans already know that government will not work…Patients should be able to choose from a variety of private insurance plans. The Federal government would run a health care system — or a public plan option — with the compassion of the IRS, the efficiency of the post office, and the incompetence of Katrina.

Therefore, greater government involvement must not only be avoided, but existing government involvement should be phased out. Low-income families with dependent children should shift out of Medicaid and into “higher quality private plans through direct assistance that will be coupled with a tax credit.” Medicare Advantage — the program that contracts with private insurers — should be “reformed” and possibly expanded.

But today, the Commonwealth Fund released a new survey indicating that “elderly Medicare beneficiaries reported greater overall satisfaction with their health coverage, better access to care, and fewer problems paying medical bills than people covered by employer-sponsored plans.” “The findings bolster the argument that offering a public insurance plan similar to Medicare to the under-65 population has the potential to improve access and reduce costs,” the organization concluded:

- Medicare beneficiaries report easier access to physicians. Ten percent of Medicare beneficiaries’ physicians did not accept their insurance, compared with 17 percent of respondents with employer-sponsored plans.

- Medicare beneficiaries are less likely to report not getting needed services. Twelve percent of elderly Medicare beneficiaries reported going without care, such as prescribed medications or recommended tests, because of cost restraints. Of individuals with employer-based plans, 26 percent reported experiencing these cost/access issues.

- Medicare beneficiaries are sicker and poorer but report fewer medical bill problems.

Medicare beneficiaries were less likely to report a medical bill problem than those covered by employer plans.

Within our hybrid public-private system of coverage, public plans compliment private insurers — providing services to vulnerable populations more efficiently. Today, talk of “government-takeover” conjures up images of health care rationing in Great Britain or Canada. If, however, Democrats are able to shift the frame of reference to an expansion and improvement of Medicare, then they may very well win this debate.

Rep. Paul Ryan (R-WI) released a new Republican health care plan (The Patients’ Choice Act) that’s fraught with questions and contradictions.

We pose the following queries:

- Are the State Health Insurance Exchanges voluntary? The two-page summary notes that “The Patient’s Choice Act of 2009 would encourage states to establish rational and reasonable consumer protections.” The more detailed summary says, “The Patients’ Choice Act would ensure that the federal government partners with states to create State Health Insurance Exchanges.”

- Is the GOP embracing European-style health care boards? To control premiums the report suggests “a model that works in several European countries.” The “independent board” would “penalize insurance companies that cherry pick healthy patients while rewarding companies that seek patients with pre-existing conditions.” How would this ensure affordability?

- Are the tax credits adequate? The tax credit for families is $5,700, far below the average $12,300 that families are paying today. More importantly, how will the tax credits grow over time? Will they keep up with skyrocketing health care costs?

- What happens to the individual health insurance market? The plan establishes State Health Insurance Exchanges outside of the existing individual market. How will the individual market be regulated? Will insurers be able to offer standard benefit packages within the State Health Insurance Exchange and more porous policies in the individual market?

Today, Rep. Paul Ryan (R-WI) and Sen. Tom Coburn (R-OK) unveil the Patient Choice Act, their alternative to President Obama’s health care reform initiative. Using Sen. John McCain’s (R-AZ) health care plan as a foundation, the new plan proposes taxing the full value of employer health benefits, issuing (inadequate) refundable tax credits — of $2,290 per individual or $5,710 per family — and expanding the use of Health Savings Accounts. (DOWNLOAD A SUMMARY OF THE PLAN HERE AND HERE)

States are encouraged to “establish rational and reasonable consumer protections” by forming State Health Insurance Exchanges to give Americans a choice of “different” private “health insurance policies” and issue standard benefits, offering “coverage to any individual regardless of age or health.”

The plan privatizes the health care system without controlling health care spending. Employers will react to the elimination of the tax exclusion by dropping some Americans from their employer-sponsored health plans and the Republicans build an inadequate safety net to catch the newly uninsured. Americans will have the option of purchasing coverage in the new State Health Insurance Exchanges, should the state choose to establish it. But here, the same problems that plagued McCain’s health care plan are also evident in this proposal. The Republicans protect private health insurer’s monopoly over coverage, but provide no safety net or affordability measures.

Americans can choose a private health insurance plan from the State Health Insurance Exchanges, but that doesn’t mean they’ll be able to afford it. The Republican proposal allows private plans to charge sicker Americans higher rates for coverage. While they include European-style “non-profit independent board ” that “would penalize insurance companies that cherry pick healthy patients while rewarding companies that seek patients with pre-existing conditions,” they do nothing to prevent higher prices based on sex, age, occupation, or medical condition. To finance these higher prices, Americans can rely on the meager tax credits or money they’ve stashed away in a Health Savings Account.

All in all, the plan is dead on arrival. The idea here is to strengthen the private insurer’s monopoly over coverage while doing very little to lower overall health care spending. It’s an alternative steeped in reactionary ideology and political purpose, not a viable solution to the health care crisis.