What’s holding up the Senate Finance Committee on health care reform?

Many are extremely frustrated by the slow progress in the Senate Finance Committee, but it looks like one reason for the delay is the serious consideration by the committee for an excise tax on health insurance companies for gold-plated health care plans.

A proposal to tax insurance companies on their most expensive health-care plans may help lawmakers seeking a bipartisan solution for financing President Barack Obama’s $1 trillion health-care plan.

The plan, offered by Democratic Senator John Kerry of Massachusetts, would impose an excise tax on insurers that could generate tens of billions of dollars. Making the companies pay may help break a deadlock in Congress over funding. Obama opposes taxing health benefits for middle-class Americans and many Republicans and Democrats have said they won’t accept a plan to tax the policies of the wealthiest.

“We’re taking an intense look at it,” Senator Charles Grassley of Iowa, the ranking Republican on the Finance Committee, said in an interview yesterday on Bloomberg Television’s “Political Capital with Al Hunt.”

The measure would help end “perverse incentives to over- utilize and have high-cost care,” said Grassley. “We’re interested in it as a discipline within health care.”

Senator Olympia Snowe of Maine, another Republican on the Finance Committee that is drafting health-care legislation, said she was also open to the proposal.

‘Practical Option’

“That may be a practical option, as a way of attacking future costs in health care and driving them down and creating disincentives for the most expensive policies,” Snowe said July 23. Earlier this week, Senator Kent Conrad, a North Dakota Democrat on the Finance Committee, said the idea is under consideration by the panel.

The Kerry proposal is similar to an amendment that Senators Bill Bradley, a Democrat, and John Danforth, a Republican, floated in the 1994 effort to overhaul health care. Obama has said he wants his plan to remake health care, which accounts for 17 percent of the economy, to have bipartisan support.

“It might be a way of accomplishing our goals,” Kerry said.

Grassley agreed. The proposal, he said, has “been a subject of discussion for two days of the last four or five” in the committee.

This is an excellent option given that any proposal to limit the health care deduction for individuals who have gold-plated plans went nowhere for political reasons. The delay must relate to the various ways this can be structured and the need to have it scored properly by the Congressional Budget Office. If the numbers work, this will go a long way towards getting a bill that can achieve broad support and even bring along some Republicans.

Taking on the health insurance companies

Anyone wondering how the health insurance companies have been increasing their profits at such a rapid rate should read this recent article from BusinessWeek. It appears that large health insurers completely dominate the market in many states.

The insurance industry is up in arms over congressional proposals to create a publicly financed competitor in an effort to bring down health-care costs. That may be because it doesn’t have to face much in the way of competition now: Most regions of the U.S. are dominated by just one or two health insurers.

Each year the American Medical Assn. (AMA) surveys the commercial health-insurance landscape and finds little if any competition. Its latest report says that, out of 314 metropolitan markets, 94% are controlled by one or two companies, or fewer. In 15 states, one insurer has 50% or more of the entire market.

Such market concentration has become a potent argument for supporters of a public insurer, President Barack Obama among them. With no need to generate profits, a public plan could offer lower premiums, thus bringing competitive pressure to bear on the private insurers to do the same.

Ezra Klein makes a similar point in the Washington Post.

In the modern health-care system, there is no higher power than the insurance market. And the insurers who populate that market have grown all the stronger. The Justice Department judges an industry “highly concentrated” if a single company controls more than 42 percent of the market. By that definition, 94 percent of statewide insurance markets are highly concentrated. A recent study by the advocacy organization Health Care for America Now showed that in Indiana, WellPoint controls 60 percent of the insurance market; in Iowa, Wellmark accounts for 71 percent; and in Alabama, Blue Cross/Blue Shield holds 83 percent. In the past 13 years, there have been more than 400 corporate mergers involving health insurers.

Economics textbooks tell us that concentrated markets reduce the competitive behavior that benefits consumers and lead to outsize profits for the dominant firms. Predictably, health-care premiums shot up more than 90 percent between 2000 and 2007, while the profits of the 10 largest insurers increased 428 percent over the same period.

We have a system that is not sustainable. This isn’t capitalism – instead we have several large insurance companies practically stealing money from American taxpayers.

Right now, President Obama is trying hard to get a bill with the help of all the major players, including the insurance companies. Therefore we’ve seen him go after costs and premiums, but he has not taken on the insurance companies in a direct manner.

If the current effort at reform fails or stalls, expect to see a full-throttled attack against these companies that informs the American people just how much money they are making and the tactics they are using to deny coverage to pad profits.

Krugman slams the media for health care coverage

Paul Krugman has been tough on Barack Obama at times, but he’s behind him on health care. Today he mocks the media for focusing on everything but the actual policy issues.

The talking heads on cable TV panned President Obama’s Wednesday press conference. You see, he didn’t offer a lot of folksy anecdotes.

Shame on them. The health care system is in crisis. The fate of America’s middle class hangs in the balance. And there on our TVs was a president with an impressive command of the issues, who truly understands the stakes.

Mr. Obama was especially good when he talked about controlling medical costs. And there’s a crucial lesson there — namely, that when it comes to reforming health care, compassion and cost-effectiveness go hand in hand.

Of course, the policy issues are too boring for our brain-dead media when compared to all the drama surrounding the process.

Krugman also focused on one of the most important policy developments over the past several days.

I don’t know how many people understand the significance of Mr. Obama’s proposal to give MedPAC, the expert advisory board to Medicare, real power. But it’s a major step toward reducing the useless spending — the proliferation of procedures with no medical benefits — that bloats American health care costs.

And both the Obama administration and Congressional Democrats have also been emphasizing the importance of “comparative effectiveness research” — seeing which medical procedures actually work.

So the Obama administration’s commitment to health care for all goes along with an unprecedented willingness to get serious about spending health care dollars wisely. And that’s part of a broader pattern.

Many health care experts believe that one main reason we spend far more on health than any other advanced nation, without better health outcomes, is the fee-for-service system in which hospitals and doctors are paid for procedures, not results. As the president said Wednesday, this creates an incentive for health providers to do more tests, more operations, and so on, whether or not these procedures actually help patients.

MedPAC was originally created by Republicans to look for ways to cut costs in Medicare and Medicaid, so you would think they would be openly in favor of this development of giving this panel real power, but most Republicans are too busy trying to kill the reform effort.

CNN smacks down Lou Dobbs on Birther silliness

At least someone at CNN has some journalistic integrity left. Next, they need to get rid of Dobbs.

CNN President Jon Klein wrote an email last night to “Lou Dobbs Tonight” staffers telling them the Obama birth certificate story is “dead,” TVNewser reports.

“It seems this story is dead,” Klein wrote, “because anyone who still is not convinced doesn’t really have a legitimate beef.”

CNN focused on the additional information that all Hawaii records are now electronic, so they don’t produce paper copies of “original” birth certificates.

Will this end the story? Don’t bet on it. The level of hatred on the right for Obama is reaching a fever pitch.

UPDATE: A civil rights organization is demanding that CNN remove Lou Dobbs from the air.

Birther mania

Since Barack Obama announced his candidacy for President, we’ve seen the lunatic fringe on the right push the limits of idiocy. Since his election, the levels of insanity on the right have grown exponentially.

The “birther” movement has set a new standard, even by the standards of the loony right wing. They make the teabaggers looks like sober economic scholars.

Naturally, Jon Stewart, the most trusted newsman in America following the death of Cronkite, has a field day with this one.

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Pay particular attention to his smackdown of Lou Dobbs, who brings up “questions” surrounding Obama’s place of birth several days after a guest host ON HIS OWN SHOW completely debunks the asinine story. Further proof that Lou Dobbs is a complete buffoon. Why is this clown still on CNN?

Senate votes to kill the F-22

I’ve been following the Obama administration’s attempts to reform the defense procurement process and cut unnecessary military spending, so I was happy to see the Senate side with the President and kill the F-22 fighter program. Fred Kaplan explains why this is so important.

This is a big deal: The Senate today voted to halt production of the F-22 stealth fighter plane, and it did so 58-40, a margin much wider than expected.

Not only is this a major victory for Secretary of Defense Robert Gates, who lobbied strenuously (something he rarely does) to kill this program, and for President Barack Obama, who pledged to veto the defense bill if it contained a nickel for more F-22s. The vote might also mark the beginning of a new phase in defense politics, a scaling-back of the influence that defense contractors have over budgets and policies.

Then again, I might be dreaming. Surely things couldn’t be changing quite that much. Could they?

Kaplan explains how rare this is for Congress to kill a weapons program at the request of the White House. Hopefully a new level of seriousness will prevail on Capital Hill.

Of course, many Senators are still committed to old battles, and many Senators lined up behind the F-22 because of jobs in their districts. Defense contractors and their supporters at the Pentagon have known for years that the best way to preserve a program would be to sprinkle as many jobs around the country in as many districts as possible. As a result, many Democrats, including liberal Senators like Barbara Boxer, opposed the administration here and tried to keep the program going. On the other side, many Republicans who didn’t have a dog in this fight were willing to back the White House. Of course it helped that John McCain was a fierce advocate for killing the F-22.

One of the worst examples of putting politics over the national interest is Chris Dodd, who’s fighting for his political life as he faces a tough re-election campaign next year.

The floor debate was more transparently self-interested than usual. Dodd argued with intense passion that killing the F-22 would create a “dangerous gap” in America’s technical know-how. The next advanced fighter jet, the F-35, won’t enter production until 2014. The highly skilled workers who make F-22s can’t be expected to hang around four years; they’ll get different jobs, and they’ll be unavailable when the country needs them.

Levin took the floor to point out that production of F-35s actually starts next year and that the FY 2010 budget contains money to build 30 of them. In other words, Levin said, “There is no gap.” He wondered where Dodd got his information. Dodd replied that it came from the defense contractors. That’s where he probably got the whole speech, too.

We’re also seeing how important it was for Obama to keep Defense Secretary Robert Gates.

Gates has slashed or killed a bevy of outmoded, over-designed, or unnecessary weapons systems in this budget. One or both houses of Congress have gone along with almost all of his swipes. Part of the reason for this compliance is Gates himself, who is almost universally respected; he’s known to be a hawk (a centrist hawk, but a hawk all the same), and he’s worked for Republicans as well as Democrats. In fact, he is a Republican.

Maybe it takes a Republican defense secretary to usher in a new era of defense politics. Are we in fact on the verge of such an era? There are many reasons to be skeptical (the annals of history among them), but what happened today might be a harbinger of something genuinely new.

Signs of hope in the West Bank?

Given the recent turmoil in the region, I was a little shocked to read this article about progress in the West Bank.

The International Monetary Fund is about to issue its first upbeat report in years for the West Bank, forecasting a 7 percent growth rate for 2009. Car sales in 2008 were double those of 2007. Construction on the first new Palestinian town in decades, for 40,000, will begin early next year north of Ramallah. In Jenin, a seven-story store called Herbawi Home Furnishings has opened, containing the latest espresso machines. Two weeks ago, the Israeli military shut its obtrusive nine-year-old checkpoint at the entrance to this city, part of a series of reductions in security measures.

Whether all this can last and lead to the consolidation of political power for the Fatah-dominated Palestinian Authority based in Ramallah, as the Obama administration hopes, remains unclear. But a recent opinion poll in the West Bank and Gaza by the Jerusalem Media and Communications Center, a Palestinian news agency, found that Fatah was seen as far more trustworthy than Hamas — 35 percent versus 19 percent — a significant shift from the organization’s poll in January, when Hamas appeared to be at least as trustworthy.

A critical factor has been the strength of the Palestinian security forces.

An important element in making the Palestinian force effective, American and Israeli officials say, was taking young Palestinian men out of the ancestral grips of their villages and tribal clans and training them abroad, turning them into soldiers loyal to units and commanders.

There still remains much to do. Israel has eased some checkpoints and other restrictions, but Palestinians are still angry over the many controls imposed by the Israelis. That said, the improved situation in the West Bank is a very significant development that can increase pressure on Israel to move forward on the peace process.

Barack Obama says no more excuses

In his speech at the NAACP, Barack Obama again stresses personal responsibility.

We have to say to our children, Yes, if you’re African American, the odds of growing up amid crime and gangs are higher. Yes, if you live in a poor neighborhood, you will face challenges that someone in a wealthy suburb does not. But that’s not a reason to get bad grades, that’s not a reason to cut class, that’s not a reason to give up on your education and drop out of school. No one has written your destiny for you. Your destiny is in your hands – and don’t you forget that.

The days of black leadership making excuses are over. Obama is delivering a message that all parents should be delivering to their kids – no matter what the obstacle, it’s your own fault if you make excuses and don’t try.

Going after the insurance companies

Anyone who wondering why health care premiums are exploding just needs to take a look at the insurance industry.

Schumer pointed to the profits of the 10 largest insurance companies — which shot up 428 percent between 2000 and 2007, from $2.4 billion to $12.9 billion — as a reason health care reform is needed.

The insurance industry has not been playing ball on reform, and now Senate Democrats are getting fed up.

With other industry groups pledging savings to help pay the cost of health care reform, Senate Finance Committee Democrats slammed insurers for holding out — and threatened to impose new fees on the industry that could cost it as much as $100 billion.

The Finance Committee members are currently hunting for hundreds of billions of dollars to help finance reform, and with the hospital and pharmaceutical industries having pledged $235 billion, the senators said it was time that the insurers paid their share.

“We need the insurance companies to step up to the plate and be part of the solution. Most of the negotiations so far, the insurance industry has been at the table but you can only sit there at the table with your arms crossed for so long,” said Sen. Chuck Schumer (D-NY).

Schumer and Sens. John Rockefeller (D-WV), Debbie Stabenow (D-MI) and Robert Menendez (D-NJ) pounded the insurers, who they portrayed as unwilling to help pay for reform even while they have enjoyed exploding profits.

“The insurance companies are the people who are just rapaciously, greedily and unstoppably making money by underpaying the patient, by underpaying the provider and by overpaying, therefore, themselves,” Rockefeller said.

We’re seeing a new urgency from the White House and other Democrats on the health care reform issue, and it’s refreshing to see them ratchet up the pressure on the insurance industry.

Kill the F-22

An interesting battle is brewing in the Senate.

President Obama placed his political capital on the line Monday and reiterated his threat to veto a military spending bill unless the Senate removed $1.75 billion set aside to buy seven additional F-22 fighter jets.

Mr. Obama stepped up his campaign after liberal Democrats like Senators Edward M. Kennedy and John Kerry of Massachusetts said they supported the purchases, arguing that the program would retain high-paying jobs in many districts nationwide.

The F-22, the world’s costliest fighter jet, is the most prominent weapons system that Mr. Obama wants to cancel or cut in his plan to rein in military spending. A vote by the Senate to keep producing the plane would be an embarrassing setback for him.

Obama’s argument is simple – the military doesn’t need or want more of these planes. Ironically, one of his allies here is John McCain, who deserves credit for his never-ending battle against wasteful military spending.

From a purely political point of view, Obama might welcome this fight, even if an initial loss in the Senate occurs. Obama needs to show he’s willing to get tough on spending, and a veto here would send a strong message.

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