Reply sent in response to my Congressman’s justification letter for voting to pass the health care bill.
Dear Representative Connolly,
Thank you for your letter dated, December 4, 2009, explaining why you supported the Affordable Health Care for America Act (H.R. 3962). In the letter you state you voted for H.R. 3962 because it met your tests of “Lower Costs, Increased Choice, Higher Quality, and Peace of Mind”, and for each of your tests you highlighted several examples of provisions within the Act that exemplified the meeting of these tests. This letter will address the first of the tests, “Lower Costs”, that you claim to have met your test. I’ll do this by examining the provisions you presented as the basis of your support of the Act.
Before going into detail in each provision, I have to question the test of “Lower Costs”. Whom does it lower cost for? Is it the patient/beneficiary, the taxpayer, the Government, employers, insurers, or the entire health care system? This is an ambiguous platitude as the analysis will show. I believe the proper test should be to lower total health care system costs; which per the CMS report dated November 13, 2009, it does not. Rather with this Act, “The [National Health Expenditures] share of GDP is projected to be 21.1 percent in 2019, compared to 20.8 percent under current law” (http://www.cms.hhs.gov/ActuarialStudies/Downloads/HR3962_2009-11-13.pdf).
Your first provision was “Eliminates co-pays and deductibles for preventive care”. This will lower costs for Medicare beneficiaries only and raise costs for the taxpayers/Government. This is called cost-shifting and does nothing to lower total system costs. In fact the impact of this provision may actually increase overall system costs due to simple supply and demand. Without the cost share, Medicare beneficiaries may increase their use of these services and if supply constrained, these prices will go up; potentially resulting in increased health premiums for the non-Medicare population. Or perhaps your logic was that the use of preventive services will lower overall spending. I do hope not, as the CBO analysis (http://www.cbo.gov/ftpdocs/104xx/doc10492/08-07-Prevention.pdf) provided to Congressman Deal on August 7, 2009, stated “… the evidence suggests that for most preventive services, expanded utilization leads to higher, not lower, medical spending overall.”
Clearly, your belief H.R. 3962’s provision to “Eliminate co-pays and deductibles for preventive care” helps to “Lower Costs” is demonstrably false, and that should have been obvious to you, with the CBO report available to you and anyone familiar with the basic concept of the law of supply and demand.
Your second provision to “Lower Costs” was “Strengthens Medicare by closing the prescription drug donut hole for seniors”. This is another example of only lowering the costs for some Medicare beneficiaries, those that fall into the donut hole, and raises costs for the rest of the Medicare Part D participants and for the taxpayers/Government. A CBO analysis provided to Congressman Camp, dated August 28, 2009 (http://www.cbo.gov/ftpdocs/105xx/doc10543/08-28-MedicarePartD.pdf), states the following, “…enacting those changes would lead to an average increase in premiums for Part D beneficiaries of about 5 percent in 2011, rising to 20 percent in 2019. However, beneficiaries’ spending on prescription drugs apart from those premiums would fall, on average, as would their overall prescription drug spending …”, as well as “Another example of cost-shifting that does not lower total system costs.
Your claim the Act’s provision that “Strengthens Medicare by closing the prescription drug donut hole for seniors” will “Lower Costs” is true only for some Medicare beneficiaries, other beneficiaries will have higher premiums, and the costs are shifted to the taxpayer/Government. At best overall system costs are unaffected.
Your third provision to “Lower Costs” was “Provides tax credits to help small business provide insurance”. Again I must ask for whom? The government is foregoing tax revenue, taxpayers will have to make up that lost revenue, employers will have to buy health insurance for their employees, and the employees will have to contribute to their health insurance; so everyone is paying more. I assume your theory is an employed worker with health insurance is less costly than an employed worker without health insurance.
Your claim that H.R. 3692’s provision “Provides tax credits to help small business provide insurance” will “Lower Costs” is an improbable claim; certainly in the short-run all involved will have higher costs.
Your fourth provision to “Lower Costs” was “Reduces the federal deficit by more than $100 billion”. That sounds more like the outcome of lowering costs rather than a mechanism to actually lower costs. But let’s examine the assertion. I assume you are using the CBO’s analysis dated November 6, 2009 (http://www.cbo.gov/ftpdocs/107xx/doc10710/hr3962Dingell_mgr_amendment_update.pdf). With a basic reading of the CBO’s analysis, you will find that its cost saving is done by “… substantially reduce the growth of Medicare’s payment rates for most services …”. Additionally, if you took the time to examine the Medicare’s 2009 Trustees Report (http://www.cms.hhs.gov/reportstrustfunds/downloads/tr2009.pdf), you would find skepticism about Congress’ ability to actually execute planned Medicare cuts. This report, signed by both Secretary of the Treasury Geithner and Secretary of Health and Human Services Sebelius states “… further Congressional overrides of scheduled physician fee reductions … could jeopardize Part B solvency …” and “If Congress continues to override these reductions, as they have for 2003 through 2009 …”. There is also the budget gimmickry. Apparently, CBO scoring doesn’t use accrual accounting in its analysis, so ten years of program tax revenues are applied to seven years of program outlays. Estimates past ten years show the program going into deficits.
Since the $100B savings relies on over $400B in Medicare cuts to be executed by Congress, it is a dubious claim that this Act will result in any deficit reduction, it actually is more than likely to result in increased federal deficits; not even accounting for the budget gimmickry — gimmickry you would not have stood for in Fairfax County.
All in all, had you used reports readily available to you and applied some common sense, you simply could not have come to the conclusion that H.R. 3962’s provisions would “Lower Costs”. In fact, the provisions you cite will more than likely increase overall health care costs. True overall cost reductions are possible by Tort Reform (CBO Report to Senator Hatch dated October 9, 2009 (http://www.cbo.gov/ftpdocs/106xx/doc10641/10-09-Tort_Reform.pdf)) and by increasing health insurer competition by allowing them to compete over state borders.
I am disappointed that you chose to send me this generic explanation letter rather than answering specific questions I’ve asked in previous correspondence — How can you cut Medicare when it is has unfunded liabilities going forward? How can you cut Medicare to pay for new program that is not directly related?
Clearly, using your own referenced provisions, H.R. 3962 does not meet your test of “Lower Costs”. For that reason I don’t see any point in reviewing your other “Tests” and their supporting provisions. I can only believe your vote was cast for one of three reasons: blind partisanship, laziness, or incompetence. For you to cast your vote the way you did means either you were told to by Speaker Pelosi, you didn’t do any basic research on what is perhaps the most important piece of legislation in decades, or you saw these reports and simply ignored them. Whichever it is, you have lost my confidence and I will work to ensure you do not return to the next Congress.
Senator Mark Warner
Senator Jim Webb
Fimian for Congress (with contribution enclosed)