Corporate Research Group’s Weblog

UBS analyst Justin Lake says the odds are 60/40 in favor of the enactment of the Senate healthcare reform bill with certain changes made through a budget reconciliation process.  Lake says that House Speaker Nancy Pelosi (D-CA) is building momentum to win the votes necessary to pass the Senate bill in the House.  While she’s not there yet, Lake says, “The power of the Presidency; the power and respect that Pelosi commands with most of her Democrats; and the power of being the majority party and being able to manipulate the rules of the game —  all argue that the Democrats will get it done.”

New Republic reporter Jonathan Cohn on health insurance industry profits:

The issue…isn’t the profits that insurers make. It’s the actions insurers take to maximize those profits….The quickest, surest way for insurers to boost profits is to avoid spending a lot of money on sick people. And, particularly in the individual insurance market, insurers can do that in any number of ways. They can charge sick people higher premiums, deny them coverage altogether, or — failing that — revoke their coverage after they start filing claims….They can make it difficult for the chronically ill to get the care they need, by manipulating benefits and provider networks or making it more difficult to obtain authorization for treatments. And they can always jack up rates on blocks of business that have high expenses.

All of which gets at something I’ve been trying to say for some time.  Industry profit margins of 3% to 5% aren’t the problem.  Administrative costs of 10% to 15% of premiums– i.e., expenditures aimed largely at maintaining the infrastructure needed to do all the things Cohn outlines to ensure profitability — is a big part of the problem.  Cohn continues:

These practices help explain why people with serious medical problems so frequently find insurance inadequate or simply unavailable. But they don’t explain why health care generally is expensive for everybody, even the healthy–and why it’s getting expensive so much more quickly. Those problems are the result of the entire health care sector–doctors, hospitals, device makers, the drug industry–providing too much medical care or charging too high a price for it. The insurance industry likes to point this out and it is right to do so.

Said another way, I can understand when insurers raise premiums — even at double-digit rates — to offset rising costs (sorry Mr. President).  But I can’t justify higher rates simply to support an administrative infrastructure aimed at denying coverage and care to the sick.  Only a highly regulated public-private insurance market or a single-payer system gets at a solution.

From Justin Lake of UBS:

House Leaders Looking At A Tried & True Parliamentary Procedure To Pass The Senate Bill. This is far from certain, as we are at least 9-14 days away from any potential votes, but the House Dem Leadership is looking at avoiding an up or down vote on the Senate passed bill from December 24, 2009 when the House debates the as-of-yet unformulated Budget Reconciliation/FixIt bill. The Leadership is looking to use a procedural maneuver that would be part of a self-executing Rule — a process that has been used from time to time in the House by both parties when they have been in the majority. It would work something like this:

*Before the House takes up the Budget Reconciliation/FixIt bill they would have to adopt a Rule governing the debate as is the normal procedure. The Rule would contain a self executing clause that would state that upon adoption of the Rule and then debate and adoption of the Budget Reconciliation bill that the Senate bill/December 24, 2009 would also be considered as adopted.

*The whole package would then go to the Senate for approval. In this manner, assuming Senate approval, the Senate bill/December 24, 2009 and the Budget Reconciliation/FixIt bill would all be sent along to President Obama at the same time. And nervous House Democrats would be assured that the Senate bill would not move to the President by itself without the Budget Reconciliation/FixIt bill alongside; since many House Dems do not trust the Senate to pass the Budget Reconciliation/FixIt bill once the House has already stuck out its political neck and taken the tough vote.

Understand?

President Obama after his meeting last week with health insurance companies:

They couldn’t give me a straight answer as to why they keep arbitrarily and massively raising premiums — by as much as 60% in states like Illinois.

Here’s a funny spoof from the Onion News Network, which reports that President Obama is bipolar.  Among the signs:

Last week he proposed a healthcare plan that was nothing more than, “If you need a doctor, go see a doctor.”

Actually, that’s not a bad proposal.

President Obama outlined both the far-left and far-right positions on healthcare reform in a speech yesterday:

On one end of the spectrum, there are some who’ve suggested scrapping our system of private insurance and replacing it with a government-run healthcare system.  And though many other countries have such a system, in America it would be neither practical nor realistic.

On the other end of the spectrum, there are those, and this includes most Republicans in Congress, who believe the answer is to loosen regulations on the insurance industry — whether it’s state consumer protections or minimum standards for the kind of insurance they can sell.  The argument is, is that that will somehow lower costs.  I disagree with that approach. 

Compromise — and I’m just guessing here — would be something in between.

President Obama in remarks yesterday calling on Congress to vote on healthcare reform within the next few weeks:

Everything there is to say about healthcare has been said and just about everybody has said it.  So now is the time to make a decision.

Who knows, but maybe the President of the United States is actually smarter than I am. 

The Administration successfully parlayed the WellPoint rate hikes in California — increases that in fairness were logical and justified at least to some extent — into a symbol of the need for reform by highlighting the financial burden on small businesses and families trying to afford healthcare coverage (and once again demonizing millionaire health plan executives). 

Now the President has backed opponents of reform into a corner by agreeing to incorporate into his revised healthcare proposal four additional Republican ideas.  These ideas, which Republicans stressed in last week’s bipartisan healthcare summit, include a greater emphasis on combating fraud and waste, alternatives for resolving medical malpractice disputes, increased Medicaid payments to doctors, and the inclusion of HSA plans in insurance exchanges. 

The subtext is that the Administration has compromised (and compromised again), and now it’s the Republicans turn.  Don’t hold your breath.  Republicans have refused to compromise all along, and my guess is they will continue to refuse to compromise.  Their strategy is obstruction. 

Obama, meanwhile, has laid the groundwork for Democrats to push through reform — even if it requires the use of reconciliation — without appearing too bad in the eyes of the public.  When faced with the inevitable conservative cries of outrage, the President can just say, “Hey, we tried to compromise and look what happened.” 

All of which seems like pretty shrewd politics, especially considering that six in 10 Americans already blame Republicans for not compromising enough on healthcare reform.  Of course, winning the U.S. Senate election in Massachusetts would have been a better strategy, but hey, any port in a storm.

We have officially jumped the shark on healthcare reform with this ABC News report depicting President Obama as Super Mario — complete with music, video game sound effects and animations of Obama, Speaker Pelosi and Blue Dog Democrats (literally portrayed as little blue dogs).

From the website of the Centers for Medicare and Medicaid Services, “FAQs: Individuals Arriving from Haiti for Medical Care.”

May Haitian individuals admitted on humanitarian parole qualify for Medicaid?

Yes.  Individuals granted humanitarian parole are ordinarily non-qualified aliens ineligible for any benefits as non-qualified aliens. However, the Refugee Education and Assistance Act of 1980 permits Cubans and Haitians who have been granted humanitarian parole to be provided benefits as Cuban/Haitian Entrants.  Therefore, Haitians granted humanitarian parole because of the earthquake are qualified aliens exempt from the 5-year waiting period, and if otherwise eligible, may receive all Medicaid services available under the State plan.  The emergency services restriction affecting some non-citizens does not apply. 
 

As I predicted in January in my most roundly vilified post to date (and as this Reuters report suggests), House Democrats are putting together the votes to push through healthcare reform.  It’s not yet clear whether the House will pass the Senate bill (as I had predicted) or whether Democrats will use reconciliation to pass a slightly improved version (i.e., Obama’s compromise of the House and Senate bills).  Either way, I’ll be anxious to count how many anti-reform protesters forego needed benefits proffered by the legislation as a matter of principle.

U.S. Sen. Tom Harkin (D-IA) during President Obama’s healthcare summit last week, in response to Republican calls for a step-by-step approach to healthcare reform rather than comprehensive legislation.

If we want insurance reforms, you can only do that if everybody’s in the pool.  You can only get everybody in the pool if you make it affordable for middle class families and others.  You can only make it affordable for middle class families and others if you have cost controls….That’s why you can’t do this incremental approach.

President Obama hosted a healthcare summit last week in a last-ditch attempt to find common ground with Republicans. Is there any reason for hope? Karen Davis, president of The Commonwealth Fund, comments in this video interview from the Nasdaq Market Site in New York, Feb. 24, 2010.

The New York Times had a long piece this weekend titled The Cost of Doing Nothing, offering a bit of historical extrapolation on the consequences of prior failures to enact some type of healthcare reform:

If President Nixon’s plan had passed, the United States might be spending a trillion dollars a year less than it does now, and President Clinton’s plan would have reduced spending by some $500 billion a year.

Or as Dandy Don Meredith said, “If ‘ifs’ and ‘buts’ were candy and nuts, wouldn’t it be a Merry Christmas?”

My favorite exchange from yesterday’s healthcare summit was between President Obama and Sen. John Barrasso, M.D. (R-WY). 

BARRASSO: Sometimes the people with catastrophic plans are the people that are best consumers of healthcare, in using — the way they use their healthcare dollars. Because a lot of people come in and say, you know, my knee hurts; maybe I should get an MRI. They say — and then they say, “Will my insurance cover it?” That’s the first question. And if I say yes, then they say, “OK, let’s do it.” If I say no, then they say, “Well, what is it going to cost?” And “What’s it cost?” ought to be the first question. And that’s why, sometimes, people with catastrophic — catastrophic health plans ask the best questions, shop around, are the best consumers of healthcare….

I do believe we have the best healthcare system in the world. That’s why the premier of one of the Canadian provinces came here just last week to have his heart operated on. He said it’s my heart; it’s my life; I want to go where it’s the best, and he came to the United States. It’s where a member of parliament, a Canadian member of parliament with cancer, came to the United States for their care. They all have coverage there, but they want is care. So coverage does not equal care….

Half of all the money we spend in this country on healthcare is on just 5% of the people. Those are people, for the most part, that eat too much, exercise too little and smoke….

OBAMA: I just am curious. Would you be satisfied if every member of Congress just had catastrophic care? Do you think we’d be better healthcare purchasers?  I mean, do you think — is that a change that we should make?

BARRASSO: Yes, I think — I think, actually, we would. We’d really focus on it. You’d have more, as you’d say, skin in the game…

OBAMA: Because…

BARRASSO: … and especially if they had a savings account…They could put their money into that and they’d be spending the money out of that.

OBAMA: Would you feel the same way if you were making $40,000 or you had — that was your income?  Because that’s the reality for a lot of folks. I mean, it is very important…to listen to the folks that we get letters from.  Because the truth of the matter, John, is they’re not premiers of any place. They’re not sultans from wherever. They don’t fly in to Mayo and suddenly, you know, decide they’re going to spend a couple million on the absolute best healthcare. They’re folks who are left out….

And this notion somehow that for them the system was working and that if they just ate a little better and were better healthcare consumers they could manage is just not the case.   The vast majority of these 27 million or 30 million people that we’re talking about, they work, every day. Some of them work two jobs. But if they’re working for a small business they can’t get healthcare. If they are self-employed, they can’t get healthcare.

Everybody’s talking at me.
I don’t hear a word they’re saying,
Only the echoes of my mind.
–Everybody’s Talkin’ by Harry Nilsson

I’ve been listening all morning to the President’s live healthcare summit.  I must say, the President gave eloquent opening remarks about the need for reform, the need for compromise, the need to work together.  For a minute, I actually believed there was hope.  Then the Republicans spoke, making clear they don’t want comprehensive reform but rather a “step-by-step” approach.  Or as Sen. Lamar Alexander (R-TN) said, “We don’t do comprehensive well.  The country is too big, too complicated, too decentralized.”  Well, at least they finally admit they have no comprehensive reform plan.  The “steps” are the same ones Republicans have promoted all along: tort reform, sale of insurance across state lines, cost reductions, small business purchasing alliances and so on.  Democrats, meanwhile, were noticeably frustrated about the continued obstruction.  In a nutshell, everybody is saying the same things they’ve said all along, but a bit more politely because the President is in the room and it’s live on TV.