NEMA Currents : Health Care

The Politics and Policy of Job Creation

Owen, Sarah — Wed, 18 Nov 2009 04:00:00 GMT

This week House and Senate leaders announced that Congress will do something to respond to rising unemployment before they adjourn for the year. I don't know any economist -- or anyone else, for that matter -- who would argue that the current 10.2% unemployment rate and lack of job creation in this economic recovery is NOT a problem. Quite the contrary - workers and their families are very concerned about the availability of jobs, and employers are concerned not only about being able to keep the workers they currently employ, but also being able to grow the workforce when practicable.

What will Congress' answer to the unemployment situation be? Some of the suggestions have been out there a while: another extension of unemployment benefits, extending certain individual tax breaks, giving tax credits to small businesses, providing aid to state Medicaid programs, increased government investment in infrastructure projects, etc. And while there may be some merit and value to these suggestions, one has to wonder: what is the appropriate role for government to play in creating jobs?

The National Chamber Foundation and the American Enterprise Institute sponsored a forum this week which examined the "Challenges to Creating 20 Million New Jobs: What is the Proper Role of Government?" Some of the panelists' general comments:

You don't grow the economy by increasing taxes.
You don't grow the economy by increasing uncertainty (e.g., potential new government mandates on businesses).
Increased regulation, higher taxes, and higher costs (health care, energy) will make job creation more challenging in this recovery.
Job creation is most robust when the government limits its interference in the free market and allows the private sector to lead the way.
The American people are concerned about jobs, but they care more about freedom, opportunity and enterprise.

Over the next few weeks, Congress should give serious thought to what government policies -- if any -- would actually result in jobs being created and unemployed Americans returning to work. And while they're at it, they should also carefully consider the effects certain high profile legislation (e.g., health care reform, climate change, the so-called "Employee Free Choice Act") could have on job creation.

Running the Public Option

Owen, Sarah — Wed, 28 Oct 2009 15:09:00 GMT

In American-style football, a quarterback who "runs the option" receives the ball, runs either right or left (accompanied by another offensive player), and, depending on the opposing defense's strategy, either laterals the ball to his accompanying player to avoid a tackle or keeps the ball and advances it himself. Not all quarterbacks can pull this off, but when executed effectively, the "option run" is a useful tool in the QB's arsenal.

It isn't hard to draw a parallel between football and the health care debate raging in Washington. As House and Senate leaders hammer out health care reform legislation for floor debate in their respective chambers, the decision of whether to include a public option (in which the federal government creates a public health insurance plan financed by premiums to compete against private plans) has taken center stage.

What is unclear, however, is who is calling the shots. Is it President Obama? Is it Senate Majority Leader Harry Reid? Is it the House Democratic leadership? Is it the moderates who want to support health care reform but are wary of taking votes that they find hard to justify to finger-wagging constituents at raucous town hall meetings? Or is it the American people themselves?

And which public option (if any) will prevail? A "robust" public option, as championed by the House majority leadership? One that allows states to "opt out," as Senator Reid has advocated? One that contains some sort of "trigger," as Senator Olympia Snowe (R-ME) has said she could support? Will the House and Senate approach the public option the same way, or vote on different versions?

Word on the field is that the bills will soon be introduced and debated by each chamber. But until the game is over, it is hard to predict the winners and losers.

Watch the Pots...They'll Eventually Boil

Owen, Sarah — Wed, 23 Sep 2009 16:11:00 GMT

With every new presidential administration comes a different set of priorities and issues, and Congress' legislative agenda reflects this fact. However, while much of the media focus has been on the big ticket items--health care reform, climate change, regulation of the financial industry, and the economy, there are several other items that are simmering on the backburner. At some point, the heat will get turned up and these issues will really start bubbling.

Here is a sampling of just a few such issues:

Consumer Financial Protection Agency Act (HR 3126): expands government regulation of consumer financial products, potentially impacting business' credit agreements with customers. Click here to learn more and to send a message to Congress.
Healthy Families Act (HR 2460): mandates that businesses with 15 or more employees provide up to 7 days of paid sick leave to their employees.
Protecting America's Workers Act (HR 2067): strengthens the authority of the U.S. Occupational Safety Health Administration (OSHA), giving OSHA more tools for increased enforcement and penalties.
Toxic Substances Control Act (TSCA) reform: Congress plans to introduce/consider legislation to overhaul our nation's chemicals management system. NEMA has urged Congress to include the "Environmental Design of Electrical Equipment Act" (HR 2420) as part of such reform. For more infromation, please click here.
Employee Free Choice Act (S 560/HR 1409) or similar compromise: strips workers' of their rights to secret ballots for union organizing elections and imposes mandatory binding arbitration on employees and employers if they fail to achieve consensus on contract terms within 120 days. Click here to read more and take action.

Most of these issues won't make the front page of the newspaper or create as much debate as say, health care reform, but it is important to know that they are on the stove. Industry needs to keep an eye on these pots (as well as numerous others...this list is by no means exhaustive) and communicate to Congress on both those proposals with which we agree and those we don't. The moral of the story: we don't want the pots to boil over before we have a chance to have our say on their potential (positive or negative) impact.

Competition is missing from the healthcare reform attempts

Vastagh, Stephen — Fri, 18 Sep 2009 17:38:00 GMT

Yesterday, the long awaited Senate healthcare bill was introduced; I was hoping that it would promote sufficient competition, which is missing from all other healthcare bills.

The lack of competition or the diminishing of competition in many sectors of the American economy is preventing improvement in our health care sector, as well.

There is not sufficient competition in the current health care system at the points where health care services are paid for, i.e. where healthcare services are provided, whether by physicians, hospitals or other health care providers (clinics, physical therapy services, etc.)

Only in social or centrally controlled systems is competition missing, nay prohibited. Yet this is what largely characterizes the American health care system. The providers of health care services (physicians, hospitals, physical therapy centers, etc.) should be competing with each other. The payers for health care services should be encouraging competition and shopping for the best value in services. The largest of these payers is the Government’s Medicare and Medicaid; the other payers are the health insurance companies. Payers also include individuals who, in increasing numbers, pay in part or in full for healthcare services.

Take the insurance companies: their purchasing agents are shopping for the best value for their copier machines and paper supplies but are they shopping with equal fervor for the best values for laboratory, physical therapy, operating room, hospital, physician, or any other services? I do not know but I doubt it. I heard from a surgeon that much waste is seen in operating rooms because there does not seem to be an incentive for efficiency in the hospital. The reason must be that prices are set and set so high that does not incentivize efficiency. High prices may survive if there is no competition, if there is not another hospital’s operating room that offers the same service for less.

If the purchasers of a product, primarily the insurance companies, cannot vote with their feet, the providers of the product have no incentive to compete, to be more productive and more efficient. The supply of health care service providers needs to be increased increasing the choice for health care purchasers thus spurring competition.

The “public [insurance] option” debate in the healthcare reform proposals has a potential for being effective only if the operating methodology of the “public option” is one that introduces and/or increases competition in the provision of healthcare services. I have not heard the discussion of the details: how would the “public option” operate? If it is not more than a government subsidized (funds or in-kind subsidy) insurance company which is staffed by hiring people who have worked in the private insurance companies it will have no impact but will have a high price tag to the tax payers. If on the other hand, the “public option” health insurance company will encourage and promote competition among doctors, hospitals, and other health care service providers it will attract customers with lower premiums and it will force the private health care insurance companies off their comfortable secure seats where they are de facto protected from competition by the fixed prices of the largest of them all, the Government’s Medicare and Medicaid program.

Once the insurance companies feel forced to compete they will in turn create incentives for all providers of materials and services for the healthcare system to compete, resulting in lower healthcare costs.

A “public option” entity should achieve the clout and credibility to influence regulations and other actions to promote competition in the health care system and to provide greater choice to all Americans whether individuals or companies. There is a greater probability of decreasing costs and improved quality due to competition than due to the various other centrally designed scenarios in the various current reform proposals which generally have no track record of success.

I would hire executives of Wal-Mart to run the “public option” health insurance company. They know how to get the lowest prices out of their suppliers…we need nothing less drastic in the American health care system.

Pulling out the Bully Pulpit

Owen, Sarah — Wed, 09 Sep 2009 13:00:00 GMT

Tonight President Barack Obama will address a joint session of Congress to outline and clarify his plans for health care reform and to exhort Congress to work cooperatively to enact legislation to expand affordable health care to uninsured Americans. After several tumultuous town hall meetings during the August break, some members of Congress are looking to the president to inject some sanity back into the debate and set a more positive tone going forward.

It isn't very often that Congress meets in joint session. Typically, they only do so to hear the annual State of the Union address, receive foreign dignitaries, and respond to crisis situations, Calling the House and Senate together for the sole purpose of advancing the nation's debate on health care reform is extraordinary...and brilliant. The presidency is the biggest "bully pulpit" in the world, and while President Obama's approval ratings have slipped this summer, Americans still like and trust him a lot more than they do Congress. The president knows that he has a tremendous opportunity to make a solid case to the American people. So what will he say?

Based on conversations "gleaned from...top aides," the D.C.-based paper The Politico provided a few guesses in an article that appeared over the weekend:

President Obama will lay out his Administration's plan (what's on the table, what warrants further debate, etc.).
The president will not confront or scold members of his party, but he will make overtures to Republicans.
President Obama will make it clear that it is better to get something done than to do nothing at all.
He will attempt to reassure supporters of the "public option" to his commitment for it, but will likely do so in a way that leaves the door open for him to sign legislation that doesn't include it per se.

Will the president emerge successful tonight? And if so, how will such success be measured? Looks like there is an interesting evening (and weeks) ahead...

Health Care Reform We Can Afford

golds — Fri, 21 Aug 2009 17:51:00 GMT

Finally, a form of health care reform that will save us money and lives. No, I'm not talking about the massive, complex, and costly bill that passed through the House Energy and Commerce Committee at the end of July. I'm talking about efforts by the Obama administration -- and a multitude of supporters, including NEMA -- to jump-start the transition to health information technology (HIT). Yesterday, Vice President Biden announced an infusion of $1.2 billion in federal grants to help medical providers purchase and use new technologies for this purpose.

How will HIT reduce our costs and improve our health? As David Blumenthal, HHS' National Coordinator for Health IT, puts it:

Broad use of HIT has the potential to improve health care quality, prevent medical errors, increase the efficiency of care provision and reduce unnecessary health care costs, increase administrative efficiencies, decrease paperwork, expand access to affordable care, and improve population health.

For an example of how this works, take medical records. Why, in the year 2009, do so many physicians and hospitals still rely on putting notes on paper and storing them in metal filing cabinets -- where they are inaccessible to hospitals, other physicians, and patients? My bank certainly doesn't do business that way anymore. Let's digitize our electronic records the way we've digitized every other critical piece of data, and give our medical providers the ability to prevent redundant tests and to share information with others on a worldwide basis.

You might ask, "What does NEMA know about HIT?" Well, our medical imaging members -- the Medical Imaging and Technology Alliance -- will play a significant role in this evolution. They own the global standard -- DICOM -- that for years has allowed doctors and hospitals to transfer medical images (from X-rays, CT scans, MRIs, and the like) from coast to coast and beyond. That's the kind of uniform communications protocol that will be invaluable when it comes to shipping other health information as well.

In the past decade information technology has helped every other industry in our society become more efficient and effective . It's time for IT to make medicine more efficient and effective as well.

Summertime Blues

Owen, Sarah — Wed, 29 Jul 2009 13:10:00 GMT

Last week I wrote columns on the possible "compromise" on the anti-democratic "Employee Free Choice Act" (HR 1409/S 560) and the proposed "millionaire" surtax designed to pay for health care reforms. I'd like to say that all of the problems with EFCA and the health care bill have been worked out, but this is July, not April Fools Day. Very little seems to have changed from last week, other than the fact that legislators are increasingly short-tempered and sleep-deprived from hours of negotiations.

When frustration abounds, members of Congress and Senators often say things or propose things that are questionable. Here are two such tidbits from the past week:

During his speech at a National Press Club luncheon, Representative John Conyers (D-MI), chairman of the House Judiciary Committee, apparently questioned the point of lawmakers reading through the House health care bill before voting on it: "I love these members, they get up and say, 'Read the bill.' What good is reading the bill if it's a thousand pages and you don't have two days and two lawyers to find out what it means after you read the bill?"
According to a July 28th article in Roll Call, Senate Majority Leader Harry Reid (D-NV) is considering ways to speed compromise legislation on union organizing and arbitration through the Senate to head off opponents. The article quotes an unnamed leadership aide as saying, "This is not the kind of thing where we could have a long, drawn-out rollout. We'd have to say, 'Here's the deal,' and then get to the floor and get it passed before anyone can mobilize against it."

Speaking from experience as former Hill staffer, good policy does not get made when driven by tired, frustrated lawmakers scratching and clawing to cobble together the minimum number of votes required to pass major legislation. It's time for Congress to take their summer break...the work will still be there when they return in September.

Hold on to Your Pants

Owen, Sarah — Wed, 22 Jul 2009 13:43:00 GMT

Think that the proposed "millionaire surtax" to help pay for health care reforms won't impact job growth? Think again.

Last week, the House Ways & Means Committee approved health care surtaxes which, when combined with the expiration of the Bush tax cuts and reversion of the top federal tax rate on wages to 39.6% at the end of 2010, would mean a "significant tax hike" on business income in 2011. The Tax Foundation recently issued a report that found that one-third of the $49 billion that would be raised by the surtax in 2011 is from business income. The report also estimated that the total tax increase on business income would be $51.3 billion, a 24.5% increase, assuming business income is the last dollar of income earned. Tax Foundation president Scott Hodge said, "The U.S. business sector includes millions of 'non-corporate' businesses that pay their taxes on the individual income tax returns of their owners. That means new tax hikes on personal income, which may soon bring total rates over 50% in most states, will be hurting small businesses. Some pundits like to cite the statistic that only 4% of the 36 million tax returns with 'business' income are subject to the surtax, but that 4% of tax returns earns 60% of the $882 billion in total ''business' income."

The Tax Foundation's findings are alarming - if the proposed surtax and expiring tax cuts hit business income simultaneously, it isn't hard to imagine where businesses will make up the difference. That means no more job growth.

The U.S. Chamber of Commerce produced a short video illustrating the impact these surtaxes would have on income that is worth watching. The Chamber also has sounded the call for America's small businesses to urge Congress to vote no on these surtaxes and policies that impede economic and job growth. This ad says it all:

Health Care Reform: Protego Charm or Cruciatus Curse?

Owen, Sarah — Wed, 15 Jul 2009 15:42:00 GMT

Legions of “Harry Potter” fans are running to movie theaters today for the much-anticipated release of “Harry Potter and the Half-Blood Prince.” But Washington’s attention isn’t on the bespectacled wizard and his pals – it is focused on the proposed overhaul of our nation’s health care system.

Depending who you talk to, the various health care proposals being debated by several House and Senate committees either will provide the magical cure for the nation’s flawed system or serve to bring about its destruction. Earlier today, the Senate HELP Committee by a party line vote passed its version of the “Affordable Health Choices Act,” which is estimated by the nonpartisan Congressional Budget Office (CBO) to cost $611 billion over ten years. The Senate bill provides a public plan and a “play or pay” mandate that requires employers to provide health insurance.

Three House Committees—Energy and Commerce, Ways and Means, and Education and Labor—begin marking up the House health care overhaul proposal this week. Estimated to cost $1.042 trillion over ten years, the “America’s Affordable Health Choices Act” (H.R. 3200) creates a Health Insurance Exchange system, includes a “public option” for insurance, expands Medicaid, and imposes new requirements on employer-sponsored health plans.

Will these proposals work like Harry Potter’s “protego” charm, protecting and advancing the health of Americans, more than 45 million of whom currently lack health insurance? Or will the changes increase costs and threaten employer-sponsored plans, tormenting the insurance market like the unforgiveable “cruciatus” curse? Time will tell.

What is Health Care Reform? Depends on Who You Ask

golds — Tue, 07 Jul 2009 16:48:00 GMT

Health care reform is a big deal for U.S. businesses, including our electrical manufacturers. Health care costs have grown steadily for more than a decade, and businesses -- which bear much of the cost for their employers -- have felt the strain on their bottom lines. (Of course, in that time medical diagnosis and treatment have also improved markedly, to the point that many formerly invasive diagnostic procedures are now painless and carry much-reduced risks due to dramatic progress in medical imaging.)

So to American business health care reform means bringing some rationality and stability to insurance costs.

Yet, as Catherine Arnst observes in a recent Business Week article, to many in Congress reform is less about cost and more about access. And in order to ensure health care coverage to the 47 million uninsured, Congress will turn to business to pay the freight. That will drive costs up, not down, for this nation's employers. In an era where global competition requires that American business be as efficient as possible, this cannot be good for our economy.

So what's the final product going to give us, reduced costs or increased access? Some politicians claim it can give us both. And according to UC-Berkeley economist Phillip Cryan, in a study he just published for the liberal Institute for America's Future and Economic Policy Institute, Obama-style health care reform can also boost employment. How? Under his rosiest scenario,

"New jobs would be created in health care; improved health would raise productivity; some employers who choose to pay rather than play would save money; and, again, the overall rate of health inflation would slow."

But I'm not drinking that Kool Aid. This Rube Goldbergian description simply defies logic. Let's start with the idea that new jobs would be created in health care. It's almost certainly true, but not as a consequence of wealth creation -- such new jobs will arise as a consequence of wealth redistribution. In other words, some businesses will shed jobs in order to pay for new health care mandates, while the health care industry gains jobs. And while the congressional version of health care reform will provide access to more Americans, this doesn't necessarily equate to either better health or more productivity. After all, while more Americans now have health insurance, more Americans also suffer from obesity as well.

Interestingly, Arnst's article also notes an MIT study that suggests small business health care costs will drop if reform goes through. This is because small businesses pay so much for health care coverage, and the pay-or-play system -- as expensive as it will be for larger businesses -- would presumably lower this group's costs.

Having worked in Washington long enough to see many congressional "fixes" that drove costs up rather than down, I'll believe it when it see it.