The Democrats’ Dilemma on Health Reform

I actually feel a bit sorry for them. President Obama and Democratic leaders in Congress got some very, very bad advice from health policy experts they relied on during the past election. It was the same bad advice they have been getting year after year, election after election, for as far back as memory serves.

But now that it is time to legislate, these politicians must face real economists who look at evidence over at the Congressional Budget Office (CBO). Although the CBO Director and staff are appointed by Congressional Democrats, they are professionals and they have been willing to stand up to the pressure and essentially say that last year's campaign rhetoric was hogwash.

Here are some of the uncomfortable facts Congress is hearing from the CBO:

  • All of the cost-saving ideas mentioned by Barack Obama during last year's election campaign — preventive medicine, electronic medical records, coordinated care, etc. — will in fact save very little money.
  • Spending an additional $100 billion to $150 billion every year on health care will make the cost problem worse, not better.
  • Capping out-of-pocket premium costs to people at, say, 12.5% of family income and forcing employers and/or government to pay the balance will create a new entitlement to be added to our already unsustainable entitlement spending burdens.
  • The cost of any employer mandate will be passed on to employees — in the form of less take-home pay, if they are lucky enough to keep their jobs at all.

To add insult to injury, the CBO is also telling Congress that one way costs could be controlled is by changing the way the federal government subsidizes private health insurance — along the lines suggested by John McCain during the election and in a bill by Sens. Tom Coburn and Richard Burr and Reps. Paul Ryan and Devin Nunes.

So, do we here at the NCPA take the low road and say, "I told you so," or the high road of magnanimity?

I'm thinking about it.

Comments (39)

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  1. Tom H. says:

    John, go ahead and gloat.

  2. Ken says:

    Agree with Tom. Rub it in.

  3. Mike D says:

    I would recommend managnanimity were the other side not so insufferably arrogant. As it is, let ’em have it.

  4. R A Jensen says:

    Unfortunately the Ds are still addicted to government and federal solutions to all their agenda items — namely more taxpayer money to create more entitlements to create more voter clients. Guess what boys and girls, it used to work, but now it doesn’t.

    Here’s a thought, gee it’s only been studied to death before this, create programs and laws that reduce federal cost burdens (ie. eliminate mandates, such as EMTALA and the pool complicating parts of HIPAA) and payment structures for NECESSARY government assistance programs that do not encourage overspending by providers, and much of this problem will evaporate.

    Just maybe, by doing the right thing for folks, instead of trying to bribe them with government handouts, you just might create a more loyal voter block. Republicans — you guys pay attention too.

  5. Joe S. says:

    Show no mercy.

  6. Frank Timmins says:

    Definitely the “low road” is the effective option. We are up against a force that thrives on uninformed decision makers, and simple embarrassing “gotcha’s” are much more effective than magnanimity. In fact, that magnanimity may have gotten John McCain unelected last November.

  7. Bob Geist says:

    John, everyone is missing what is slipping by beneath the radar–making docs into society’s cost control gatekeepers. All the talk about “payment reform” is nothing more than transfer of the HMO and fed gatekeeper roles (franchising and price fixing) to clinicians (in capitated “accountable care organizaion”). I predict that will be the “compromise” health care “reform” now that the Mayo has spinkled holy water on “value pay” contingent on “resource utilization” AKA money or in the hands of the “reform” sales machine, “healthy outcomes”…er… “quality”, “efficiency”, take your pick. Bob

  8. Bud Blate says:

    There are 3 categories of uninsured.

    1. Those who can’t afford to pay for insurance.
    2. Those who can afford it but choose not to buy it, usually young and healthy.
    3. The uninsurable with pre-existing conditions who can only get insurance through their employer’s group plan and are SOL if they lose their jobs.

    How do the Republicans adress these issues?

  9. kas says:


  10. John says:

    Go ahead and gloat, since you don’t know what you’re talking about. Everyone loves a know-it-all who is wrong. Let’s face it–you’re just creating elaborate excuses to dodge taxes because you’re beholden to the corporations who fund your think tank. They don’t want to pay taxes, so you bark like a dog when someone mentions health care reform. It’s sad, really.

  11. Greg says:

    John (the John who posted a comment a minute ago), get a life.

  12. John Seater says:

    These guys really are jerks who deserve to be on the receiving end of some gloating, but that’s not the main point. The main point is substantive. The people pushing this health care bill were *wrong*, wrong about just about everything, whereas NCPA was right. It is good practice in both science and advertising to establish whose predictions were right and whose were not. It is a social service to establish who knows something and who does not. Go for it!

  13. DoctorSH says:


    Unfortunately the only way to deal with an arrogant SOB, is to be one yourself.

    So gloat, and be arrogant and stand up firmly for what you feel is right. Anything less is a sign of weakness to an arrogant, narcissitic president.

  14. Ron Greiner says:

    Individual Health Insurance is gaining 2 million new customers per year. These people are coming from employer-based insurance plans like the NCPA puts on their own employees.

    A 35-year-old couple and 2 children can get portable HSA Individual insurance for $206 a month in Lansing, Michigan. Tell us John how much you are paying for non-portable family coverage with the NCPA group plan.

    Do you pay so much more just to make the premiums tax deductible?

    President Obama said people are getting too sick to keep their insurance. Is he talking about the NCPA employees with their non-portable group plan?

  15. Brian says:

    It doesn’t seem to matter whether you gloat or not. Congress appears incapable of understanding your point.

  16. Patrick Skinner says:


    I’m concerned as I’ve not read or heard of any provisions in any of the Dem’s bill’s to provide enough Doctors in the future. With 18 million additional boomers on Medicare in 5-10 years, what smart kid will choose medicince over law, go to med school for 12 years, take on $300k in student loans, to work for a Gov’t dictated fee, that would not repay his loans, much less allow his kids to go to college? Can you expand on this?

  17. Don Potts says:

    Very good report, and we should hope for the best.

  18. Stan Ingman says:


    I am sorry for the Republicans, the party of no. They may become so irresponsible so as to need a new name as a minor party.

    The recent games they have playing with false data and false stories on the Canadian Health System show how weak they have become.

    The recent story about women with a brain tumor going to Mayo Clinic, for example. CNN and Fox changed the facts of the case to make it seem much worse than it was.

    Then Republicans on floor site false story to make a political point seem beyond the pail.

    In addition we have no discussion of a Canadian option on the table, unfortunately. More Canadian like their system than American being happy with our system. They know they have a much better deal – more access to a full range of acute and long term care services.

    I would ask you John to lay out the facts on the case. I listened to a Canadian report go back to investigate the facts of the case this weekend. See if you can clarify the story with facts without editorial first, then you can make your own comments later.

    All systems have pluses and negatives. In balance the quality of care in Canada, France, Germany, Sweden, and Switzerland are mostly equal to or better than USA. On certain diseases the care in the USA would rank at the top as Representative Price, a physician from Georgia claims. I would agree. When he says we have the best system in world, the answer is yes and no. Dependents upon what measures you select to use. Our system does some great things for people who have insurance or who can pay. Distribution is weak issue perhaps.

    We will need to do reform at some stage, putting it off one more year will make it more costly later. It is interesting that the party of no, wants to delay or says we have no crisis.

    But now the party says we need reform. For 8 years they did not seem to think reform was needed. They now want to participate and they have so many ideas.

    My prediction is that the President may have last laugh on this one and reform will come in the Fall, and vested interest will lose some ground. If it is reform in name only, and no cost containment is implemented, we will need to do it again in 4 yrs. More and more physicians, those who truly like to practice medicine are starting to see the down side of their partnership with insurance, drug and hospital companies.

  19. Breck Henderson says:


    I’m sure you’ve seen the New Yorker article linked here:

    The author makes a good case that the flaws in Medicare allow doctors to abuse the system in the pursuit of more income, with McAllen, Texas, as his example. I’ve had doctors order tests and office visits obviously designed to improve the bottom line, and not improve the quality of care, so it rings true to me.

    Is the author right in his analysis and conclusions, or are there other factors that he ignores?

  20. Tim McBride says:

    Your take on this is very distorted and not at all fair. You don’t even make a very clear presentation on what the recent CBO analysis really says. As for the $100B making people worse off, I am not sure where you draw that conclusion. It’s patently false. Your conclusions that the reforms will lead to less take home pay for workers is also very distorted. Actually of course the reforms should lower premiums for individuals and could lead to increases in their pay.

    I can only assume your goal is to torpedo any reform passed by the other side, to play a destructive role. It would be nice if you actually tried to get in there and work to make the legislation better. But I guess it’s more fun to be the party of “no”? That may be fun for you, but bad for the country.

  21. Linda Gorman says:

    The New Yorker article leaves out some important issues. The most important is that it accepts the Dartmouth Atlas claim that Medicare spending is “our best approximation of over-all spending patterns.”

    This does not appear to be true. Wharton’s Richard A. Cooper has shown that while Medicare spending is not correlated with quality (as measured by Medicare which is a whole story in itself), quality is correlated with overall health care spending. His result supports other work by Doyle. It is telling that the Baicker and Chandra rebuttal to Cooper’s article resort to accusing him of “fail[ing] to meet scientific standards” in a peer reviewed article, and of confusion about statistics.

    There have been several substantive critiques of the New Yorker article. A recommended starting place is a post at the Healthcare Value Blog.

  22. Larry says:

    John, gloating would bring focus in a potentially negative manner. Keep bring people the facts. Transparency is the key. As more facts see the light of day, the electorate and taxpaying citizens of this country get it. You may also want to reference an interesting article at:

    You can also follow the debate at

  23. Linda Gorman says:

    In response to the person who stated that people with pre-existing conditions cannot get insurance if they lose their employer group insurance:

    Federal law requires that all states make policies available for those who have pre-existing conditions that make them uninsurable. Some states use high risk pools, other use insurers or last resort, and some have destroyed their direct purchase markets with guaranteed issue for all.

  24. Bart Ingles says:

    From the CBO report:

    “…the current tax exclusion for employment-based health insurance—which exempts most payments for such insurance from both income and payroll taxes—dampens incentives for cost control because it is open-ended.”

    I think this is not quite right. The tax exclusion dampens incentives for cost control not primarily because it is open-ended, but because it picks up too great a percentage of the cost across the entire range of policies. For a person in the 28 percent federal income tax bracket, the exclusion is equivalent to a 43 percent federal tax credit. The total incentive is even greater if you live in a high tax state– perhaps as much as 55 percent.

    If the tax benefit as percentage of the premium were only about half as high– say equivalent to a nonrefundable tax credit worth 20 or 25 percent– then open-endedness wouldn’t matter as much.

    Simply placing a dollar cap on the tax exclusion would do nothing to limit incentives for lower cost employees, for example those who work for a small business that happens to employ only young males.

  25. Dr. Francis Kendrick says:

    Health care insurance is the only type of insurance in which every health care service generates a claim. Payment of a claim covers cost of the service plus cost of administering the claim plus cost of fraud detection plus cost of enforcing penalties for fraud plus cost of appealing denial of claims plus cost of trivial demands for unnecessary service. A primary care physician told me that 30% of his practice consists of overutilization. When you receive a utility bill of say $100, would you give a third party $125 to pay it for you? That is what we are doing with traditional health care insurance.

    With consumer driven health care, patients have incentive to use the health care system prudently because they are spending their own money. When the patient and doctor participate in a transaction without a third party payer, the cost of health care will decline and health care insurance will become affordable because insurance will be relegated to its proper role of protecting ones assets rather than being a prepayment for usual and routine services. In the absence of third party payment, fraud will become rare or non existent. It is axiomatic that health care is rationed by whoever pays for it, hence avoid third party payment if possible.

    Consumer driven health care is here now. It needs no new legislation and no bureaucracy. It is growing rapidly to the benefit of individuals, families, and businesses that provide health care benefits. Current proposals for health care reform will snuff out consumer driven health care and deprive us of our best chance to preserve the quality of the best health care system in the world as well as prevent us from reducing the cost of both health care and health care insurance.

  26. Bart Ingles says:

    Quoting myself,

    “Simply placing a dollar cap on the tax exclusion would do nothing to limit incentives for lower cost employees…”

    A stronger statement would be that if the dollar cap were set to limit only so-called Cadillac plans, then it would do nothing to incent cost control for the vast majority of employees.

  27. Ed Smith says:

    I can’t believe that the Dems on this board do not understand free markets. Food is more important than medical care. Why don’t we just let the Federal Government provide all of our food too? The reason is, our foods (relative to medicine) are unregulated. We have endless choices and food is cheap, which is another reason why we are all so unhealthy. Maybe if the Feds took over our food supply, we would all lose weight, standing in those food lines and we would not need to worry about rising health costs.

  28. Tim McBride says:

    I completely understand free markets. What I am surprised at is that people studying or commenting on health care policy don’t understand health economics, and have not studied the concept of market failure.

  29. Jack says:

    there isn’t a free market in the first place so how exactly can you talk about “market failure”

  30. Brian says:

    In response to Dr. Kendrick-

    1) there is no appeal in insurance. They drop you end of story.
    2) Insurance is DRIVING the cost of healthcare. Doctors don’t patients don’t. Insurance does.
    3) MOST un-nessessary medical tests and procedures are ORDERED by the insurance groups themselves.
    Example: My mother in law passed from brain cancer. about 3 years ago, her insurance, BC/BS, told her that she MUST undergo exploratory surgery, she MUST undergo chemotherapy. Granted they also said they were only going to cover 40% of the cost and she would have to pay for the rest of it. She refused. She continued to pay her premiums and yet Insurance dropped her at her end-of-life time because she had not followed through with proper care AS ORDERED. Her doctor advised against the medical procedures and she, the consumer declined these procedures, and for that she was punished. They didn’t have a problem cashing her payments though! They even cashed her premium AFTER her death. (It was set up for automatic deduction from her checking account). Did we get that money back? NO! The insurance company will not return that money, AND its legal! That’s the worst part. It is legal for them to steal from the elderly. The insurance companies act with impunity and there is no appeal. Now that government has shown that even it will not stand up for the rights of citizens in the face of corporate greed, government has shown that insurance companies are obviously above the law and can do as they please, at anytime, and that there is no-one to stop them. Go elsewhere? There is no other place to go except for becoming un-insured and have your credit and your finances destroyed.
    The only winners so far in this healthcare debate has been insurance companies, brecause yet again, nothing is going to change in any meaningful and affective way. No surprise. Your premiums also include the cost of buying votes in washington.

  31. MsSilentNoMore says:

    No, Tim McBride, I believe your take is distorted. Base on your vague statements of denial it is obvious that you are nothing more than one of Obama’s planted liberal bloggers that he spoke with on his conference call last week and your liberal meaningless rhetoric will not work here.
    Where are your facts. and just exactly what do you think the CBO analysis really says? The Democrats Plan Would Result In Employers Canceling the Insurance for 10 Million Americans. “Looking at one year—2017—as an example, CBO estimates that, under the HELP proposal, about 147 million people would have employer-sponsored insurance in that year, 15 million fewer than would have such insurance under current law. Most Americans are happy with the care that they have but will lose it under a government-run health care system. A government-run plan backed by tax dollars and subsidies will undercut private insurance rates, force private insurers out of business and cause many Americans to join the public plan, even if they like their plan and their current doctor. Yea this is really being able to keep our Heath care that we like so much, as Obama falsely stated?
    No, once again your conclusions are the ones that are false. Your propaganda that reforms should lower your premiums for individuals and lead to increases in pay would be laughable if it were not such a blatant lie. This demonstrates that you have not read the bill. if you had, you would know: fact#1 section 102: To pay for the new federal health board, there will be a new “fair share” tax imposed on everyone’s health insurance and the government has not yet decided what your portion will be. How could this cost less when this is a tax added to what you already currently now pay?
    In addition, Republicans have proposed many sound solutions to health care Reform that focus on keeping what is good about the Greatest Health Care System in the World and working to correct what is wrong.
    What would be even better is if the Democrats were actually working to improve health care rather than using their Gangster Government tactics (Villanize, bully, and intimidate) the Chicago Way! That is what is bad for the country. It is a travesty how the Democrats are using Health Care reform as the guise to shove socialism down our throats of all Americas not to mention using this legislation to deny many health care options to the elderly in order to pay for Health Care for ILLEGAL ALLIENS, REAL AMERICAN RIGHT!
    Our Health Care system is one of the best in the world and better by far than Canada or UK. Why else would Canadians and well as many other wealthy foreigners come to the US for their health care? I do not see foreigners going to Canada, UK or other countries with nationalized health care when they are seriously ill. You need to take your much-distorted view and read the bill before you start spouting your lies and misinformation.

  32. MsSilentNoMore says:

    To Stan Ingmam, the absence of facts to support your liberal platitudes leaves me unimpressed. Our systems do great things for those who do not have any insurance as well as for those who do. There is not one that is denied the best of care in our present system. They may not have insurance but they are not lacking medical care. Personally, I know five Hispanic individuals who work for two small municipalities and their insurance is paid for by the city. However, they choose not to insure their families because according to them “they can get free care through the emergency room” One of their family members just got a liver transplant via emergency room care at zero cost to them. Another just brought home his fourth child via emergency room, at no cost. This is not the exception. This is the rule. Illegal aliens are crossing our Texas boarder by the hundreds daily to take advantage of our free emergency room care to have their babies as well as address other medical issues. I am a bilingual teacher, and many of the parents tell me about themselves and relatives coming to US free healthcare via emergency room.
    Obviously, as evidenced by your support of the Democratic socialist bill, called health care reform, you prefer the Obama’s system of Patient Dumping, like the one Michelle Obama enacted in Chicago, where her Scheme booted poor patients out of the Hospital emergency room and forced them to have to drive one hour away even though they were in serious condition. This is the better way?
    In section 1233 of the present Health Care legislation, on page 424, it clearly states that the elderly will be denied services and forced to participate in planning consultations conducted by the government so that they can inform the elderly of all of their end of life options. What a travesty!!!!!! As for the rest of us, according to section 102 of this health care legislation, we will be forced onto the Government run option. We will not able keep our present insurance because our employers will choose to pay the smaller fine rather than continue our health care, just as the Pelosi companies have stated they will if this legislation passes. Also according to section 102, we are prohibited from buying a different private plan because the government according to this legislation will make it illegal to sell or by new private insurance after the first day that this legislation goes into effect. There is no cost containment in this ill-conceived Democratic bill.
    Yes, you are right all systems have pluses and minus however the nationalized option has been tried over and over again and have failed. The quality of care in Canada, France, Germany, Sweden, and Switzerland are not equal to or better than USA. There were no facts changed by Fox or CNN the patient herself did live interviews and supported what CNN and Fox both said Unlike the liberal media that call themselves journalist, they report the facts and back them up as well.

    I know several Canadians and they everyone have horror stories about the Canadian Health care system. You need to stop swallowing the propaganda of tingly leg ABC, NBC, CBS Obama media. READ THE BILL! DO YOUR OWN INVESTIGATION REGARDING THE FAILING SYSTMES OF OTHER COUNTRIES INSTEAD OF ACCEPTING THE PROPOGANDA THAT YOU NOW TAKE AS FACT.

  33. Brian says:

    Mr. SilentNoMore-
    When you say that no-one is going to Canada for care you are 100% wrong. You obviouslyt don’t know many people that are suffering under America’s system. There are literally THOUSANDS that go to Canada for their care. They are un-insurable in America, they cannot afford to pay for medications. Go to Canada and you get the care, You get the same exact medications, produced by the same exact AMERICAN Pharma companiesyet the cost is about 1/5 of the cost for the same EXACT medication here in America. I have gone to Canada for healthcare. Not because it is nessessarily better but because it is the ONLY place to recieve quality care. It is that or sit in an ER room for 18+ hrs for a prescription that I cannot pay for and have my credit ruined for years (affecting housing, jobs, banking, and every facet of life). It is constantly amazing just how gullible Americans can be. All you have to do is take the exception and portray it as the rule and America swallows the lie.
    All the quality in the world won’t make a hill of beans if you cannot afford it. Insurance is ensuring that no-one will be able to afford it. Insurance rations care right now but no-one is taking that fact and scaring elderly people with it. Choice is limited to non-existant right now. You have a choice of 1 or 2 doctors that are “in-plan”. Tough if your doctor isn’t one of them.
    There is only one difference here. A public option offers coverage that insurance denies, covers those that insurance has deemed not worth living, is NOT a financial disaster every facet of life. It isn’t abou6t profit it is about providing healthcare whereas insurance has nothing to do with healthcare and everything to do with profit. I don’t work for a political party, I read the proposals and match that against actual life experience. As yet NOTHING republican stands a chance in lowering cost nor expanding coverage. Blue-dog Democrats? They are a sticking point as well but seeing the media blitz against healthcare reform, I can understand that the driving force isn’t caring about healthcare, it is about fear over losing their seat in government. Instead of doing what is right for America, they would rather pander to the fear and lies and retain those sizeable campaign contributions from insurance and pharma. Basically it is a sell-out by government.

  34. Gerald Musgrave says:

    John ,

    You could be the first to see the parallels in the Cash for Clunkers and health care legislation. It might be productive to have one of the interns look at the Cash for Clunkers program and compare it to health care legislation. The Clunker rules are now 135 pages. To privately sell a car at an auto auction is one page.

    We also know that the program announced that a second revised list of the eligible vehicles–adding some eliminating others. People are getting notices that the deal they had, has been revoked. And to give the dealer $4,500 or void the deal. The government rules are of course to LIMIT participation, not to promote it! Lots of folks are angry. The person who has a car that gets 21mpg and wants to buy a 30 mpg is not eligible. Whereas, switch in a truck that gets only 2 mph better and ends with mph of 20 mpg would be eligible. They think the policy has perverse results. This will seem tame in comparison to health care. On the scale of 1 to 100, auto policy is a 10 and health care is at least a 90. Don’t forget that the program cost of $3,500 to $4,500 per car is a gross underestimation., the famous auto price expert, says the cost will be more like $20,000 per car. According to Business Week about 200,000 cars in the range of the program would be traded on new cars, every quarter, anyway. The estimate is that the billion dollar program would generate about 50,000 net new sales. The result is a program cost of $20,000 per actual car.

    Why not assume the same general result will occur in health care? The program is sold to promote health care but will have elaborate and changing rules that limit health care, will have many perverse effects, and have much higher costs.

  35. Doby says:

    John – We a Chamber of Commerce meeting next week with one of the Blue Dog Democrats from California.

    If you had only one question to pose during that luncheon, what would it be?

  36. Stan Ingman says:

    Some, like right-wing pundit Bill Kristol, even admit it: “This is no time to pull punches. Go for the kill.”

  37. Dennis Logue says:

    Gee whillikers. Health insurance is provided by many of the same insurance companies that provide life, auto, and property insurance. In view of the fact that government now believes health insurers to be “an enemy”,when will our magnificent politicos turn their attention to these other evil insurance programs?
    Indeed, when will our political class also take a look at private pensions,especially those 401(k)defined contribution plans, and substitute a government run progam?
    It hurts my head to think of all the wonderful things government will do to (not for) me over the next few years.

  38. […] will lead to higher prices and more health care spending. As previously explained, there are no realistic offsetting provisions for controlling health care costs. Also as previously explained, the perverse incentives of managed […]

  39. […] will lead to higher prices and more health care spending. As previously explained, there are no realistic offsetting provisions for controlling health care costs. Also as previously explained, the perverse incentives of managed […]