Policy Studies

The Advantage of Medicare Advantage 
Why Reducing Seniors’ Choices Won’t Protect Taxpayers

By John R. Graham
November, 2009

Medicare Advantage, in which about one-quarter of Medicare beneficiaries are currently enrolled, is a program that subsidizes beneficiaries’ access to private health insurance. The Pacific Research Institute will shortly publish Medicare Advantage or Medicare Monopoly? a thorough analysis of the costs and benefits of this program for Medicare beneficiaries and taxpayers, which proposes reforms that improve the program.1 This installment of Health Policy Prescriptions explains why the government’s crude attack on Medicare Advantage plans harms both
seniors and taxpayers.

State Impact of Medicaid Eligibility Expansion 
Special Analysis

As part of healthcare reform efforts, The House and Senate are considering an expansion of the Medicaid program... 

Office of the Actuary

By Richard S. Foster

This memorandum summarizes the Office of the Actuary’s estimates of the financial and coverage effects of the non-tax provisions in the proposed “America’s Affordable Health Choices Act of 2009” (H.R. 3962) through fiscal year 2019. The estimates are based on the bill as passed by the House on November 7 and include the estimated net Federal expenditures in support of expanded health insurance coverage, the associated numbers of people by insured status, the changes in Medicare and Medicaid expenditures and revenues, and the overall impact on total national health expenditures. We have not estimated the impact of the various income and excise tax proposals or the impact on income and payroll taxes due to economic effects of the legislation. Similarly, the impact on Federal administrative expenses is excluded. A summary of the data, assumptions, and methodology underlying our estimates of national health reform proposals is available in the appendix to our October 21 memorandum on H.R. 3200. 

The Tax Man Cometh – Taxing Health Insurance Plans
And Raising Income and Payroll Taxes by Limiting Flexible Spending Contributions

September 30, 2009

Under the Senate Finance Committee’s modified chairman’s mark, beginning in 2013, all plans
(with a few exceptions) that cost more than $8,000 for individuals and $21,000 for families
would be subject to the high cost plans tax of 40%. Although the tax would be imposed on
insurance providers and employers, the burden would be passed on to consumers.

Should We Abandon Risk Assessment in Health Insurance?

Originally Posted At The Council For Affordable Health Insurance
May 2009

Many health care reform advocates want to eliminate “risk assessment,” the ability of health insurers to consider the health of an individual or group when determining whether to provide health insurance and at what price the insurance is issued. They argue that considering the health of the applicant is unfair because it punishes the sick by raising their rates or limiting their health plan choices. These advocates’ solution is to require health insurers to accept every applicant, plus they want to charge everyone the same premium, or close to it. And they claim these changes will only work if everyone is required to have coverage. In a health insurance system where: Every applicant is accepted regardless of health status; Everyone is charged the same premium, or relatively close to it (modified community rating), and People can shift from one plan to another.

The Modern Health Care Maze
Development and Ef fects of the Four-Party System

Our national health care system is so dauntingly complex that reform efforts seem hopelessly adrift. How should we proceed in reforming that system? As a rule, any “realistic” reform project must begin with a sur vey of its
principal stakeholders. A stakeholder, by definition, is any par ty who has a “stake” in the outcome—that is, anyone who stands to benefit or to suf fer from either maintaining or changing the status quo.

The Obama Health Plan
Rationing Higher Taxes, and Lower Quality Care

Originally Posted At Heartland
By Peter Ferrara
August 11, 2009 

President Barack Obama and Congressional Democrats are rushing to enact legislation that would overhaul the
way health care is financed and delivered in the United States. It would dramatically increase the role of government in virtually all aspects of health care. Such an initiative should be carefully studied to determine
whether it actually solves problems in the health care arena or makes them worse.

What's the Prognosis for Obama's Health Care Plan?

Originally Posted At Laffer Healthcare Report
August 4, 2009

Internationally renowned economist Dr. Arthur Laffer has released the findings of his report, “The Prognosis for National Health Insurance.” The report applies an economic model to the principles for health care reform advocated by President Barack Obama. Renowned economist emphasizes need for patient-centered reforms that provide incentives to consumers and medical providers

Are Health Care Reform Cost Estimates Reliable?

Originally Posted At JEC
July 31, 2009
Are Health Care Reform Cost Estimates Reliable? History Shows True Costs Are Often Significantly Understated
Since the end of World War II, major health care reform proposals have generally always cost more—sometimes significantly more—than the highest cost estimates published while the legislation was pending. Consider the following examples...

The Minimum Wage Increase and Unemployment

Originally Posted At Republican Study Committee
July, 2009

On January 4, 2007, when the Democrats took control of the U.S. House of Representatives, the minimum wage stood at $5.15 per hour and the unemployment rate was 4.6%. On May 25, 2007, the Democrats enacted a plan to raise the federal minimum wage from $5.15 to $7.25 over three increments. As evidenced by the above chart, rising unemployment since 2007 has coincided with minimum wage increases. So Chairman Miller was right: life has dramatically changed for millions of people. 

A New Small Business Surtax = New Small Business Job Killer

By The J.E.C.
July 15, 2009

Larry Summers, director of the White House National Economic Council, recently opined: “I don’t think the worst is over... It’s very likely that more jobs will be lost. It would not be surprising if GDP has not yet reached its low.”i This is cause for concern at a time when unemployment, at 9.5%, stands at its highest level in 26 years. An additional 2.6 million American workers have lost their jobs since President Obama took the oath of office. More jobs were lost in June than in May. Against this backdrop, congressional Democrats want to increase taxes on the engines of job growth and innovation for our economy – small businesses.

Taxpayers In 39 States Could Pay A Top Tax Rate Over 50%

Originally Posted At Tax Foundation
By TF Staff
July 15, 2009

Fiscal Fact No. 178
New taxes to fund the federal government's plan for higher health insurance spending continue to be debated in Washington. According to a new Bloomberg report, the top surtax rate will be 5.4 percent in the House plan.[i] That will be the top rate in a three-tiered surtax aimed at high-income tax returns...

Congressional Budget Office 

Committee on Ways and Means
U.S. House of Representatives
July 14, 2009

Dear Mr. Chairman: The Congressional Budget Office (CBO) and the staff of the Joint Committee on Taxation (JCT) have completed a preliminary analysis of the specifications related to health insurance coverage that are reflected in draft legislation called America’s Affordable Health Choices Act, which was released by the House tri-committee majority group on July 14, 2009.1 Among other things, those specifications would establish a mandate for most legal residents to obtain insurance, significantly expand eligibility for Medicaid, and set up insurance “exchanges” through which certain individuals and families could receive federal subsidies to substantially reduce the cost of purchasing that coverage. The analysis presented here does not take into account other parts of the proposal that
would raise taxes or reduce other spending (particularly in the Medicare program) in an effort to offset the federal costs of implementing those coverage specifications.

At the Fed, Nothing Succeeds Like Failure

Originally Posted At The CATO Institute
By George A. Selgin
July 14, 2009

Although plenty of questions are being asked about Secretary Paulson's plan granting sweeping new powers to the Federal Reserve, a crucial one is in danger of being overlooked. That question is: What use has the Fed made of past extensions of its powers? Is it reasonable, given the Fed's record, to expect it to use new powers responsibly?

The answer ought to give plan supporters second thoughts. It is that, whenever the Fed acquired new powers in the past, it abused them, often with dire consequences for the U.S. economy.

The Sources of Insurance
Private, Public, the Uninsured, and Reforms for the Future

Originally Posted At Freedom Works Foundation
By Max Pappas and Kristopher Rawls
July 8, 2009

Central to every discussion about how to improve health care in the United States is the number of those who are uninsured. This paper looks at the various sources of health insurance in America and at the number of people who are uninsured and finds the wrong number of uninsured is too often used in policy reform debates. According to the Census Bureau, there were 46 million uninsured Americans in 2007—about 15.3 percent of the population. The more relevant number for policy makers to consider is 16 million, or about 5 percent of the population.
An accurate understanding of how many Americans are uninsured and why is critical to formulating successful health care policy for the future. While 16 million is still a large number, at just one-third the often used 46 million uninsured, it is likely to call for a different set of reforms.

Key Issues In Analyzing Major Health Insurance Proposals 

By The Congressional Budget Office
December, 2008

Concerns about the number of people who lack health insurance and about the high and rising costs of health insurance and health care have led to proposals that would substantially modify the health insurance system in this country. Because the Medicare program already provides nearly universal coverage to the elderly, those proposals generally focus on options for providing coverage to and reducing costs for the nonelderly population. Because 
most nonelderly people obtain their insurance coverage through an employer, proposals could affect that coverage in some way. 

Obama's Health Care Reform: What Will It Do To Seniors?

Originally Posted At The Heritage Foundation
By by heritage.org
June 15, 2009

Cuts Medicare to Pay for New Public Plan: Some of the projected savings for financing Obama's health agenda, including the creation of a new public plan, would come by squeezing savings out of Medicare. At a time when Medicare is dangerously close to bankruptcy, it is shortsighted to funnel funds into the creation of another government-run program instead of shoring up Medicare.

The Cost and Coverage Impacts of a Public Plan

By The Lewin Group
June 15, 2009

President Obama has proposed to create a “public plan” that would compete for enrollment with the private insurance industry, but has provided few details on how it would work. During the 2008 campaign, Senators Clinton and Edwards proposed a public plan administered through Medicare using Medicare provider reimbursement levels. Employers and individuals would have been able to purchase coverage from the public plan by paying a full cost premium, with subsidies provided for low-income families.

CAHI Cost Sudy

By Counsel for Affordable Health Insurance

Democrats in Congress are considering universal coverage, guaranteed issue and modified community rating. These reforms could increase the cost of health insurance 75 to 95 percent for most Americans who buy their own coverage, according to a new study by the Council for Affordable Health Insurance (CAHI) and Mark Litow, one of the nation’s leading health care actuaries. CAHI looked at the cost of health insurance in several states and priced a family plan with a $2,000 or $2,500 deductible (the closest deductible that’s widely available, some copays and other benefits vary). Then CAHI compared those rates to the expected increase predicted by the CAHI study. Health insurance rates will almost double for most American families who buy their own policies if Congress passes universal coverage, guaranteed issue and modified community rating!

Kennedy Briefing Paper
Briefing Paper for Meeting of the Senate Committee on Health, Education, Labor...

May 21, 2009

For the greater part of the last 100 years, Americans have sought ways to provide affordable and quality health insurance coverage to all our citizens. In this journey, we have achieved notable successes, including the creation of Medicare and Medicaid in 1965, the inception of the Children’s Health Insurance Program in 1997, the expansion of prescription drug coverage for seniors in 2003, and more. We have also witnessed setbacks and defeats, including the failure of reform efforts during the Administrations of Presidents Harry Truman, Jimmy Carter and Bill Clinton.

Comparative Effectiveness
Refining the Standards for FDA Approval & CMS Coverage 

Originally Posted At Washington Legal Foundation
By Areta L. Kupchyk And Kathleen H. McGuan 
Posted May 27, 2009

Money talks. The recent $1.1 billion federal allocation for comparative effectiveness research under the American Recovery and Reinvestment Act of 2009 tells us that the government is more serious than ever about gathering data on the relative effectiveness of medical treatments. How the data will be used by the government and third party payors is the question that may be worth billions of dollars more. A fear that patients, doctors, and innovators may lose more than they gain is fueling the political, legal, and scientific debate that will determine how we compare products and use data from such comparisons. Everyone has an interest in this debate. 

A Billion Dollars a Day

The Joint Economic Committee study that exposed the true cost of HillaryCare
Authored by Dr. Lawrence Hunter and Prof. Morgan Reynolds

The JEC study from the early nineties explaining the flaws in HillaryCare, as well as showing the reality that such a plan would cost a billion dollars a day. This policy study is most relevant now, despite the collapse of HillaryCare, as Obama claims a similar universal, government-run plan will cost an order of magnitude less now, some seventeen years later.

The Impact of Government Spending on Economic Growth

By Daniel J. Mitchell, Ph.D.
March 15, 2005

Policymakers are divided as to whether government expansion helps or hinders economic growth. Advo¬cates of bigger government argue that government programs provide valuable “public goods” such as education and infrastructure. They also claim that increases in government spending can bolster eco¬nomic growth by putting money into people’s pockets. Read More...

Eenie, Meeny, Miney Mandate: 
Compulsory Private Health Insurance is Not Universal Choice 

Originally Posted At Pacific Research Institute 
By John R Graham
November, 2006

Mandatory health insurance is an ineffective solution to the perverse incentives that cause America’s hospitals to give uncompensated care. Although Switzerland has lower health costs and better health outcomes that the U.S., characteristics other than mandatory health insurance better explain its relative success. The notion that ever-increasing legions of middle- class uninsured drive health spending by crowding into hospital emergency rooms, has no evidence behind it. High earners who forgo health insurance voluntarily pay more taxes than they must, indicating that health insurance today does not offer value. America’s should provide universal choice in health insurance to all its residents, rather than order them into a system with severely perverse incentives. employers get them tax-free. So, while most Americans know that food spending is going up “unsustainably,” they’re pretty happy as long as they’re “covered,” and the restaurants still get paid. Read More...

Does Barack Obama Support Socialized Medicine?

Originally Posted At CATO Institute
By Michael F. Cannon
October 7, 2008

Democratic presidential nominee Sen. Barack Obama (IL) has proposed an ambitious plan to restructure America’s health care sector. Rather than engage in a detailed critique of Obama’s health care plan, many critics prefer to label it "socialized medicine." Is that a fair description of the Obama plan and similar plans? Over the past year, prominent media outlets and respectable think tanks have investigated that question and come to a unanimous answer: no.

Stop the Raid. Stop the Tax Hike.

Phil Kerpen
February 1, 2007

Social Security has a problem even bigger than its impending insolvency—it is a terrible deal for young workers. Because I’m young, single, and male, Social Security promises me a 1.5 percent real rate of return. And that's what it promises—not what it can actually afford to pay, which is more like half a percent. That’s more like passbook interest than an investment return.

The Leviathan Project

By Dr. Lawrence Hunter
September 30, 2008

This proposal sketches out a new paradigm for understanding the debilitating nature of government grown too large. The Leviathan Project proposed here would comprise a multifaceted, multiphase program of research, public education and political advocacy to address two general questions:
1) What is the optimal (“right”) size of government at which social wellbeing is maximized?
2) How can the uncontrolled growth of government be arrested and reversed to achieve and maintain government at the optimum level to further the general welfare? Read More...

The Obama Health Care Plan: More Power to Washington

Originally Posted at The Heritage Foundation
By Robert E. Moffet
October 15, 2008

Senator Barack Obama (D–IL), the Democratic presidential nominee, has unveiled an ambitious health care plan that is comprehensive in scope, sparse in detail, and limited in its cost estimates. The Senator insists that his proposal would save the typical Amer ican family $2,500 in medical costs. These savings are implausible, and the costs are unknown.

Should the Government Force You to Buy Health Insurance?
There is no such thing as voluntary fascism 

Originally Posted At The Council for Affordable Health Insurance 
January 1, 2009

“There is always a well-known solution to every human problem — neat, plausible, and wrong.”H.L. Mencken

After passing health care “reforms” in the mid-1990s, Massachusetts residents now face one of the most expensive health insurance markets in the country. Instead of fixing the problems, Governor Mitt Romney (R) and the legislature passed an unprecedented mandate requiring both individuals and employers to purchase health insurance. While the new law has significantly reduced the number of uninsured, the state is also straining under the exploding costs.

A Better Way to Generate and Use Comparative-Effectiveness Research

Originally Posted At CATO Institute
By Michael F. Cannon
February 6, 2009

President Barack Obama, former U.S. Senate majority leader Tom Daschle, and others propose a new government agency that would evaluate the relative effectiveness of medical treatments. The need for "comparative-effectiveness research" is great. Evidence suggests Americans spend $700 billion annually on medical care that provides no value. Yet patients, providers, and purchasers typically lack the necessary information to distinguish between high- and low-value services. Read More...

So Many Lessons, So Little Time

Originally Posted At Galen.org
By Brian Crowley
May 6, 2009

In the 15 years since its founding, AIMS has brought a distinctive and influential Eastern Canadian voice to regional and national debates over public policy in areas such as transfer payments, social policy, fiscal and tax policy, health care, education performance and accountability, regulatory burden, Canada-US relations and much more. AIMS is one of the world's most honoured think tanks. It is a four time winner of the prestigious Sir Antony Fisher
Award, which recognizes excellence in public policy think tank publications and projects. No think tank in the world has won this honour more times than AIMS. In its tenth anniversary year (2004-05), AIMS also won the Templeton Freedom Prize for Institute Excellence. More than 200 think tanks world-wide are eligible for the Fisher and Templeton prizes. Of the nearly 100 recognized think tanks in Canada, AIMS is one of only 5 to make the 2008 global "Go-To Think Tanks" list published by the Think Tanks and Civil Societies Program of the Foreign Policy
Research Institute in Philadelphia. While still the Leader of the Opposition, Rt. Hon. Stephen...
Read More... 

Is Congress Importing Healthcare Rationing From Britain?

Originally Posted At Conservatives For Patient Rights
May 7, 2009

Before Britain’s Katie Brickell was diagnosed with cervical cancer at age 23, she tried to get a routine pap test three times, but was refused because the U.K.’s national government rationing board that controls what treatments patients may receive will only pay for screenings for women 25 or older in an effort to cut costs. Denied this routine test by her government’s health care board, Katie’s cancer was found at a late stage. Her cancer is terminal.

Katie’s story is not unique, and mirrors the experiences of many of the United Kingdom’s other 61 million citizens trapped in its National Health System. As our nation goes forward in its own health care reform debate, the failures of the British system should have Americans asking some very important questions such as: “ Who should make medical decisions — me and my doctor — or a government board?”  Read More...

Obamacare to Come
Seven Bad Ideas For Healthcare Reform

Originally Posted At CATO Institute
By Michael Tanner
May 21, 2009

President Obama has made it clear that reforming the American health care system will be one of his top priorities. In response, congressional leaders have promised to introduce legislation by this summer, and they hope for an initial vote in the Senate before the Labor Day recess.

While the Obama administration has not, and does not seem likely to, put forward a specific reform plan, it is possible to discern the key components of any plan likely to emerge from Congress...

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