Dr. Robert Moffit on health care reform.
HH: Be very afraid. Congress is back in Washington, D.C., and they are taking up the health care legislation with a vengeance. And as a result, I am devoting the entire day to the conversation about what it is Congress is considering doing, why you need to get in the game, why you cannot sit out there. I’ve been telling you this for months, especially you doctors and medical professionals. And linked at Hughhewitt.com are all the blue dog Democrats in the House, all the possible Democrats in the Senate who might vote against this monstrosity. Next hour, I’m going to talk with Professor Clayton Christenson of the Harvard Business School. He is the author of The Innovator’s Prescription. Hour number three, I’m bringing in a lefty, Dr. Irwin Redlener from Columbia where he is head of the Children’s Health Fund effort there, because I want to make sure I give them a chance to tell you why single payer really isn’t as bad as we thought. But I’m kicking off the day with an hour-long conversation with really the dean of the health care experts in Washington, D.C. Robert Moffit is the director of the Center For Health Policy Studies at the Heritage Foundation. You can read all about the Heritage Foundation and their health center at www.heritage.org. Robert Moffit, welcome to the program, great to have you here.
RM: I’m happy to be here, Hugh.
HH: Now I want to set the stage a little bit. A lot of people talk a good game on health care, and very few of them know what they’re talking about, and I include most of the media in that. How long have you been at this, Bob Moffit?
RM: Well, I’ve been at this for about 25 years in health policy. I first got involved in health policy during the Reagan administration when I was appointed as an assistant director of the Office of Personnel Management, the agency that manages the federal workforce. And my responsibilities were to deal directly with Congress, but one of the responsibilities I had was to represent the policies of the administration in dealing with the federal employee health benefits program. That is the very popular and successful program that covers members of Congress and Congressional staffers and federal workers and retirees. And in 1981, we had a crisis in the FEHB, and I had no interest in health policy at all, but we had a crisis in the FEHB, and I had to learn it very quickly, because it was obviously the health benefits program that affected members of Congress. And since I was a Congressional relations director, I really had to learn this business. And it was a very, very, very hot shower, but I learned quickly. And when I left the Office of Personnel Management, the Reagan administration appointed me as deputy assistant secretary at the Department of Health and Human Services. I got a promotion. And I stuck with it ever since.
HH: Now Bob, you probably do not know this, but after you and Don DeVine and the guys had left, I came over with Connie Horner as the general counsel and then deputy director of OPM.
RM: Oh, yes, of course.
HH: But I was smart enough to get away from the health care, because the FEHB was such a monster, I ran away from it when I left.
HH: So I am…one of the things I’ll begin with out of tune here, out of turn in my outline, the President, President Obama continually says I want to give you the same plan with this public option that members of Congress and feds have. That’s a deception, Bob Moffit. It’s got nothing to do with the FEHB, what the public plan is.
RM: Exactly. The Federal Employee Health Benefits program, the President constantly refers to the FEHB, and it sounds great. You know, you’re going to have a health plan just like members of Congress. The fact of the matter is there’s two things to remember about the FEHB. Number one, there is no such thing as a federal employees health plan. There are 283 of them. 283 of them. Some of them are very expensive, like the Blue Cross/Blue Shield standard option, which is like $13,000 dollars a year now, approximating $13,000 dollars a year for family coverage, and some are very, very inexpensive. The mail handlers’ plan, which is a union plan, is over $5,000 dollars, but it’s not a terribly expensive family coverage plan. There are a wide variety of health care benefits and options in the FEHB, everything from traditional insurance to managed care to health savings accounts plans in the FEHB. Some are very expensive, some are much less expensive. So there’s no single plan in the FEHB. Now that’s number one. Number two, there’s no government health plan in the Federal Employee Health Benefits program that competes with all these private carriers. It does not exist. So when the President says that he’s creating something that looks like the federal employee system, that is simply not true.
HH: Bob Moffit, there are a lot of those ‘simply not trues.’ And I always shy away from attributing to people bad faith, even President Obama.
RM: Oh no, of course not. No, I’m not suggesting that.
HH: You and I both don’t. I’ve read all your stuff. But I nevertheless am wondering do you think he really knows this well enough? Or is someone handing him talking points, because when he continues to say this, as you know from twenty plus years of study as I know from twenty years ago, it’s not even remotely close to accurate.
RM: You know, who can say what he knows and what he doesn’t know. This is a very, very smart fellow. He, the President is very impressive, he gives a terrific speech, he knows how to communicate very effectively with the American people, and he appears to be very sincere. And I do think, I do honestly believe that the President wants to fix what he considers to be the health problems of the country, the problems in the health care system. I don’t deny, I don’t ascribe any bad intentions here. The thing that really bothers me, however, is that it, he repeats things that on the basis of the proposals, especially those that are being generated in the House and Senate, the proposals would undermine the kinds of things that he is saying. For example, he has said repeatedly, repeatedly the President says that if you have a health insurance plan that you have today, and you like that plan, that you will be able to keep that plan. Now he has said this over and over and over again. But the incentives that are hard-wired, deeply hard-wired in the proposals that he is making, and in the proposals that are surfacing in the House and Senate, which embody the President’s agenda, make it impossible for that to be true. It’s simply not possible.
HH: And I want to let people, let’s pause on that, I’m talking, by the way if you’ve just joined us, with Dr. Robert Moffit. He is the director of the Center For Health Policy Studies at the Heritage Foundation. The Heritage Foundation is the gold standard for non-partisan analysis of legislative proposals. Yes, they’re center-right, but they are non-partisan, and you can take what they write to the bank when it comes to facts and figures. Now Dr. Moffit, the President said two weeks ago, on June 23rd, same day you were testifying in Congress, in a White House press conference, and he said it to the AMA the week before that, as you said, he’s said it many, many times, if you like your health insurance, if you like your doctor, you can keep them. We’re not going to change that. Again, this goes to the same thing I’m talking about. That’s just not true. Can you explain to people why it is inevitable this will happen if to them?
RM: Well, sure. I mean, the President says you know, if you like it, it’s not true. Well, he’s got two provisions in his health care agenda, two huge proposals in this agenda of his that make that untrue. The first is, of course, he has an employer mandate. Now for the listeners, an employer mandate works like this. The employer must offer a federally approved level of health care benefits to their employees, or if they do not, they will pay a tax. And that tax will help to finance an expansion of public coverage, okay? Now it is possible, if employers who really make the key decisions in the health care system think it’s really cheaper for them to dump their employees into a taxpayer-financed, government-run health care plan rather than offer the kind of generous benefit requirements that the government says that they will have, that is what is going to happen. And millions of people today who have health insurance through their employers are going to lose it. They will be dumped into the government plan regardless of their personal preferences in the matter.
HH: Bob Moffit, let me ask…I’ve written about this a lot, but there’s one question I don’t know. Is the law going to try and protect public employee unions, for example, teachers who have contracts with local school districts from getting dumped…
RM: I think that you have to watch very closely the fine print of language in the House and Senate bills to find out whether or not that is the case.
HH: You know what I’m getting at. I think hard-pressed school districts will dump their teachers into a public plan.
RM: Oh, I think…well, it all depends. I mean, look at the situation in California, where you have a state government that has a financing system that looks like a banana republic for Lord knows…
HH: Don’t be unkind to banana republics.
RM: No, that’s true.
HH: They have natural resources that they use.
RM: The California financial situation is absolutely off the charts. But no, I mean, the thing is that there is a very, very powerful incentive for employers to dump, if in fact they’re faced with that kind of a mandate. Either pay a tax or they offer the health insurance. It’s possible that many of the employers will dump, and that is likely to be the case. Now when the CBO looked at the Kennedy-Dodd bill…
HH: You’re going to have to hold that thought. Bob Moffit, I’ve got to take a break.
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HH: How was your testimony received, by the way, Dr. Moffit, on June 23rd?
RM: I think, well, you know, it’s hard to say, but I will be very frank. I think some of the questioning from some of the Democratic members was very, very serious, and I think was very serious questioning, but I found them to be very courteous and respectful, and I was courteous and respectful, too. I think that there’s no reason why this has to be uncivil. I think we have to have a civil debate. And frankly, I think that if we maintain civility in this debate, and we are able to attract enough folks from both sides of the aisle to look at this issue rationally, we might make some real progress. But we can’t, the most important thing we have to do right now is to make sure that we are clear about what it is that is in these pieces, these huge pieces of legislation.
HH: We need a legislative Hippocratic Oath – first, do no harm, because you were there when FEHB cratered because of adverse selection. You helped save it. Then you were there through the Hillarycare debate.
RM: Oh, Lord.
HH: You are still there, for twenty five years, learning this stuff. And I continue to be amazed at the number of people who have opinions on health care that are oblivious to the complexity. And just reading your testimony from June 23rd, I looked up and I said to my colleagues, this is so unbelievably complicated. And you were doing 30,000 feet analysis as well. I don’t think the average American, I want you to bring it down to them, understands that what happens in D.C. is going to actually have real impacts on their lives and their medical care.
RM: Well I mean, again, you don’t take my word for it. I was talking about the business of trying to keep your private plan. The Congressional Budget Office, which is officially a non-partisan office, the director is appointed by the Democratic Congressional leadership, did a release of its analysis of the Kennedy-Dodd bill, for example, which embodies most of the provisions, most of the agenda of the Obama administration. And they looked at this question of changes in coverage. Well, under the Kennedy-Dodd proposal, the Congressional Budget Office projected that there would be a reduction in the uninsured. It would amount to about 16 million more would have health insurance coverage, but they also noted in their analysis that there are going to be changes within this arrangement, because of the existence of the public plan and so on, that about 15 million people would lose their employer-sponsored health insurance coverage. Now that’s not the Heritage Foundation speaking. That’s the Congressional Budget Office. And others who have looked at this say that you know, if you have a public plan, where you do not have a level playing field between the public plan and private health insurance, you are going to have a massive transition of people from private health insurance into the public plan. There are a lot of reasons for that. But one major reason for it is once again, how the incentives are hard-wired. On the bill that I testified on in the House last week, the thing that struck me was that their version of the public plan is that all the payments for doctors and hospitals would be reduced basically to the Medicare payment rates. Now Medicare pays doctors 19% below the average payment of the private sector. Well, you know, what’s going to happen is you’re going to have artificially lower payments, and what’s going to happen is that the public plan will therefore have, because of the payments are set artificially low, are going to have an advantage against the private sector. And it’s going to appear on the surface to be cheaper, but will end up paying more on the back end to keep the program afloat, just like we do with Medicare.
HH: Now I want to quote from your testimony on the 23rd, because I think there are two parts to this which really drive home the advantage a public plan would have over private plans, why it would inevitably lure employers in. The first is what you just said – “The public plan would naturally,” I’m quoting from your testimony on June 23rd, “The public plan would naturally enjoy an advantage over competing private health plans, because by law, the payment rates would be set at such a level, rather than at market rates that would otherwise prevail on a level playing field, the public plan would be given a legal advantage in competition with the private sector plans.” And you go on to quote the Lewin study. Then you go on to point out, and I think this is an eye opener for people, that, “Private health plans and their officers can be sued for contract violation or tort, and the government plan, there is no guarantee that they’ll have the same vulnerabilities, the same liabilities.” And I just thought to myself, the cost of the lawyering, even if they were vulnerable, Bob Moffit, is going to picked up by DOJ. They won’t ever have to pay.
RM: That will be an administrative cost that was unforeseen, which is if the public plan starts violating what people perceive to be their rights, or some contract agreement, or people are damaged or injured in some way because they’re denied benefits, or because the benefits are not delivered in accordance with what they thought it was going to be, or whatever it is, any possibility you can imagine, you’re opening up areas of litigation. But private plans face those areas of litigation today. It’s just that we’re talking about a situation here where we’re going to have much more of it, I think.
HH: Now let me ask you, where are the private insurers? Where are the unions? Where’s the pushback to this plan, given its obvious for whom the bell tolls, it tolls for the health care providers out there, the insurers out there. They’re going to get wiped out.
RM: Well, the American Medical Association, after the President spoke to the American Medical Association a couple of weeks ago, he made a very strong appeal to them. He reiterated the key elements of his health care policy agenda. He said he wanted a new government-run health care plan to compete with private sector plans. He wanted a national health insurance exchange. He wanted a government mandate on employers. He wanted a…he’s now open to a mandate on individuals to buy a level of insurance that is government approved. And he warned the doctors that you know, this was something that they should deal with. This is something that, you know, they should start to make an agreement with him on, and that he was really trying to get their approval. The interesting thing is the day after the President gave his speech to the American Medical Association, that was widely covered in the media, the doctors said no to the public plan. They said no. They voted against it. I think the real reason for this is that the doctors understand that in fact, it will not be competitive, and it will in fact make, they will give the employers and employees fewer choices over time. And of course, what it means, too, is that the doctors are going to have more and more, health care spending is going to be more and more government control, which means medical treatments and procedures are going to come more directly under medical, under federal supervision.
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HH: Dr. Moffit, part of your testimony, and I do want to get to what we could do to solve problems, but I also want to make sure people understand, we already went over the public plan, and part of your testimony from June 23rd is that the bill on both the House and Senate side would concentrate enormous regulatory authority over health insurance to the federal government. It would ruin the states’ regulatory authority. It would centralize control. It will bureaucratize medical decisions. And yet I don’t see the state insurance commissioners up there screaming, Bob Moffit. Have you run into them in the halls of Congress?
RM: No, I haven’t. I was at a conference, however, on health care sponsored by Governor Haley Barbour last May, May 8th, actually, and it was health insurance executives, the health insurance commissioners from the various states. There was a conference in the South. It was held in Jackson, Mississippi, and there was discussion about health care reform, and how to improve the health care system. And one of the themes that did come up among the health insurance commissioners was that they felt that the President’s agenda to centralize the decision making about health insurance in Washington was going to undermine their authority, which it certainly would. And at least among those health insurance commissioners, we saw a great deal of concern on that. I think the point is, though, it’s a very, very important point, it would concentrate, the House bill in particular, would concentrate enormous authority in the hands of the federal government, particularly in the hands of the secretary of health and human service. And in health insurance reform, states as different as Massachusetts and Utah, who’ve pursued, you know, different approaches to health care, they’re very, very different politically, they’re very different culturally, have really, you know, enacted consequential and very far reaching health care reforms. Now you may not agree with that happened in Massachusetts. I frankly think it’s a mixed bag. There’s some very good things in Massachusetts. But nevertheless, the states have tremendous potential to carry out major, consequential health care reforms. And that is something that we ought to encourage, really. There’s no question about it. There are tremendous examples of progress at the states, and what we ought to do is promote that sort of thing, not crush it. And what I’m concerned with is that if Congress decides that it’s going to take over the entire regulation of insurance, we’re going to crush the creativity of the states in coming up with new ideas, particularly to cover the most difficult cases, the people who are the poorest, the sickest, the most vulnerable among us. And those are the people who are at the state level who could best be handled most efficiently by the states. They’re certainly not handled well today by the federal government.
HH: Bob Moffit, I’ve got to ask you…
RM: And anybody who knows anything about Medicaid knows that’s true.
HH: And I’ve got to ask you in that regard, in California where I live now, I served for ten years on a board that…commission, a public commission that looks to the needs of especially children zero to five. And of course, there’s a huge illegal population in California.
RM: Oh, yeah.
HH: What happens under these bills to the people who are not in the country legally? Obviously, there’s a public health imperative here to treat them so that they do not become disabled or Petri dishes of disease or anything like that. But there’s also an enormous hidden cost here. What happens under these plans?
RM: Well, actually, these bills, as far as I can read, what these bills do is they confine direct subsidies for assistance to people based on their legal residence, the Kennedy bills and the House bill. I don’t think that they provide direct subsidies to illegal immigrants. So in a sense, they don’t deal directly with the overwhelming problem of those who are uninsured who are here illegally.
HH: Or emergency room medicine then.
HH: They’re not going to deal with that issue.
RM: No, but it’s got to be dealt with. Frankly, I don’t think it’s a problem for the health care system. I think it’s a problem for the immigration department. I mean, we do not do a good job in controlling our borders, and the health care system suffers as a result of that, because a lot of hospitals, particularly in Southern California and New Mexico, Arizona and Texas are on the receiving end of a large demand for medical services that result in very high rates of uncompensated care.
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HH: Dr. Moffit, by the way, is it like an all-hands drill at Heritage right now as these massive pieces of legislation roll down the tracks?
RM: Well, yeah, because you’re talking about bills, the House bill is 852 pages long. The Senate bill, the Kennedy bill is 615 pages long. After the July 4th recess, we’re going to find variations of this, so they may be larger. That requires a lot of effort on the part of the staff, my staff in particular, to actually get a clear idea of exactly what is in these bills. Remember this, Congressional rhetoric means nothing. The details are everything. As Tom Daschle once said, details kill. Boy, they surely do. They’re working us overtime.
HH: How do people stay abreast of your work? Obviously, www.heritage.org is the website, but is there a newsletter…
HH: www.fixhealthcarepolicy.com. Let’s briefly talk, Bob Moffit, about these uninsured, because the President isn’t making it up. Americans are concerned about the costs.
RM: Oh, they are, and they’re right to be concerned.
HH: So what should we do?
RM: Oh, there’s so much that can be done, and that’s what’s so frustrating for a lot of my colleagues here. This issue could be easily handled. The most important thing we have to do is have equity in the tax treatment of health insurance. Now I want to make sure that I explain this very clearly, because it’s not hard, but it’s complex below the surface. But the basic principle, the basic policy is not hard. What we have to do is to make sure that every American who is a taxpayer gets tax relief for the purchase of health insurance, regardless of where they get it. You, if you get health insurance right now through your place of work, I do, you and I get an unlimited tax break for the value of that health care benefit.
RM: If I lose my job or I change my job, and I go from one place to another, and I try to buy health insurance outside of the place of work, and let’s say I want to buy a health plan outside of the place of work, but I want it to be equivalent to what I did get at the place of work, under the current arrangement that we have today, I would have to buy that health plan without any help through the tax code. I get no tax relief for the purchase of that. I have to buy it on my own without any tax relief. And that could mean that I would be paying 30 or 40 or 50% more in premiums for the same package of benefits that I would have gotten if I would have gotten it at the place of work. Now what that means in effect is this. Workers who cannot get health insurance through the place of work are treated unfairly by the tax code. This is so unfair that it cries out to Heaven for justice. It is the fault of the Congress that we have this situation. And when you talk about the uninsured, overwhelmingly, the majority of people who are uninsured are working people who do not get health insurance through the place of work, and we basically penalize them with a tax penalty if they try to buy in on their own. That has got to stop. With regard to low income people who don’t pay taxes, the most intelligent thing for us to do is to directly subsidize them with premium assistance.
HH: Let’s repeat that, because that gives the lie to the idea that center-right people are indifferent to this. I couldn’t agree with you more.
RM: No, look, I’m frankly, no one, no one that you’ll ever talk to is more in favor of generous, direct assistance for low income people to keep them out of the hospital emergency room than me.
RM: I believe the most important thing for us to do is to make sure people have adequate health insurance, keep them out of the emergency room, because when they start going into the emergency rooms, or when they get sick, because the situation, their medical condition has deteriorated because of the lack of access to care, we pay big bucks for that. So this is true. The President’s right to talk about this. The second thing we have to do is we have to give the states technical assistance to try new and different things to expand coverage to what are called very hard cases – vulnerable people, people who are very poor, who have medical conditions, the sickest and the poorest among us. That is something that we should do, and we should promote state experimentation in the delivery of care. I think that this could result in a tremendous increase in the quality of care for these people.
HH: Now I’ve got to ask you the $64,000 dollar question. There are things that you and I agree on which I assume that would be palatable to the left and to the center as well…
HH: …and we’re on the center-right. Why then do so many continue to push for such a massively expensive, and almost beside the point approach to these problems?
RM: Well, I’ll tell you why, because this debate is really not about health care. It’s about power. This debate ultimately is not about cost or coverage. It’s ultimately about power and control. That’s what this debate is about. There are a lot of opportunities for consensus on health care. The whole idea, for example, of promoting a very strong role for the states in enacting health insurance market reforms, that has had very strong support from both sides of the aisle, from liberal Democrats like Tammy Baldwin of Wisconsin, who is a champion of the Canadian-style system, and Congressman Tom Price, one of the brightest stars in the House of Representatives, who is a champion of health care reform, he’s a Republican, a conservative, have both agreed that we ought to have a federalism, create a federalism initiative, that would help the states to cover these difficult cases, and experiment with different approaches to health care reform. Both liberals and conservatives, as far as I know, agree that we should provide direct assistance to low income persons, especially working families, who need help in securing private insurance. There’s no reason why we should have a debate about that. The 15% of the population that needs help should be helped. I don’t know of anybody, I know of no conservative Republican in the House or the Senate, who is not in favor of helping those folks, and I do not know any liberal Democrat who is not in favor of those folks.
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HH: I want to thank Bob Moffit of the Heritage Foundation, where he’s the director of the Center of Health Policy Studies for kicking off this full day devoted to health care issues. If you want additional information, www.heritage.org. What’s the website for the Heritage Foundation’s health studies, Bob?
HH: www.fixhealthcarepolicy.com. I want to close, Bob, by a very narrow issue. Hardly a week goes by that I don’t get an e-mail, people know I’m a lawyer, and they know that I practice in the area…find me a lawyer, I’ve been hurt by a doctor, find me a referral. And sometimes, they’re catastrophic issues, and I’m sympathetic. A lot of the time, though, they’re not, and I have to go back to them and say I can’t in good conscience refer your case to anyone, or take it myself, because this isn’t a real injury. And tort reform like that, you know, they’ll go find some other lawyer, drives the cost of this system crazy. Is there any tort reform in these bills pending before the House and Senate, and should there be?
RM: The President, there’s, as far as looking at the House bill, I didn’t see anything. I read most of it. I didn’t see anything on tort reform. That doesn’t mean that Congress is not interested in it. But I’ve got to tell you, the President says he’s for tort reform, but he stops short, for example, of caps on damages, non-economic damages when he addressed the AMA. My own view on this is that medical liability is something that has to be addressed, not simply because of the insurance premiums that are facing doctors, but because of the broader impact of the litigation and the threat of litigation against physicians. And it’s the whole issue of what is called defensive medicine.
RM: The pervasive fear among physicians that if they do not order an extra test, if they do not perform the additional procedure, if they do not do another, they do not take some other specific measure, or prescribe another particular regimen for the patient, that they will be second-guessed, and find themselves on the receiving end of a reputation-ruining litigation. That has got to be stopped. It’s the defensive medicine that drives up health care cost, and causes an over-utilization of medical procedures.
HH: One minute left, Bob Moffit from Heritage, what should people do this week as this debate gets underway? Should they weigh in themselves? Or sit back and hope the experts fix it?
RM: Well, I think what most people should do is they should educate themselves as much as possible on breaking information with regard to what specifically is happening in the House and Senate. It is critically important to understand what Congress is actually doing. I hate to say this, because it sounds very, very cynical, but I’ve got to say it, when it comes to health care policy, a lot of politicians resort to bumper stickers – free care for all, you know, health care that’s always there, as Bill Clinton used to say. You can’t pay attention to what they say. You have to look at what exactly they’re doing. You have to keep up with what exactly they are doing.
HH: And the place to do that, www.fixhealthcarepolicy.com. Is that right?