Senator Max Baucus 7-09[1]

July 29, 2009 Frederic G. Marks Pacific Palisades, California

Senator Max Baucus 511 Hart Senate Office Bldg. Washington, D.C. 20510 Re:

Health Care “Reform”

Dear Senator Baucus: I am writing to you because as Chairman of the Senate Finance Committee you are working to prepare legislation to “reform” health care. Please stop! Please reconsider the false premises of your effort, as set forth on your website, at http://baucus.senate.gov/issues/healthcare.cfm New physicians take an oath: physician, first do no harm. The same should apply to legislators: whatever you do, first do no harm. The legislation now being developed in your Committee would do a great deal of harm. Commenting on President Obama’s proposals, eminent journalist Robert J. Samuelson said recently: “It's hard to know whether President Obama's health-care ‘reform’ is naive, hypocritical or simply dishonest. Probably all three.” See “Wrong Way on Health Reform,” Washington Post, June 15, 2009. One version of health care “reform” legislation being prepared by Senator Kennedy's staff and the Senate Health, Education, Labor and Pensions Committee specifically exempts members of Congress and federal employees. If such legislation is good for other Americans, why does it include an exemption for members of Congress? Financially driven controls on medical practice have already caused many physicians to question whether they would encourage their own children to go to medical school. If the type of legislation you are working on becomes law, physicians of my acquaintance predict that in the future very few Americans will choose the medical profession as a career. The following is a list of reforms that can be enacted by Congress at relatively little or no cost to the federal government that would help to reduce health care costs.

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1. Provide the same income tax deductions whether people get insurance through their employer or on their own. 2. Require the states to allow individuals and companies to shop nationwide for health care insurance. 3. Reduce the legal expenses of physicians and other providers by reforms described below. The most basic false premise of the legislation your committee is working on is that 45.7 million people lack insurance for health care because they cannot afford it. The truth is that not 45.7 million, but about 8 million people don't have health care insurance because they cannot afford it according to analysis of Census Bureau data by Sally C. Pipes in her book The Top Ten Myths of American Health Care (2008), chapter three. Ms. Pipes summarized the data in a recent interview as follows: “Of the almost 46 million Americans counted as uninsured by the U.S. Census Bureau, 14 million of them are eligible for existing government programs but have not signed up. [In her book Ms. Pipes adds that “more than ten million . . . aren’t U.S. citizens,” and I would add that many of these may be here illegally.] Another 17 million of [the uninsured] are earning over $50,000 a year but do not buy insurance because they feel it is too expensive. Twothirds are young people between 18 and 31 who consider themselves ‘invincible.’ They would buy insurance if it were cheaper and available to cover catastrophes, which is why one has insurance. Because 64 percent of Americans get their insurance through their employer and insurance is not portable, many of the uninsured are just between jobs and hence counted as uninsured, even if they are only uninsured for a short period of time. There are only about 8 million uninsured that need some assistance.” [Emphasis added.] http://article.nationalreview.com/?q=MmYwNjgyMDQ0NWMxZTdhZmZkNzY4ZjcwMTUyMmI1ZDY=&w= MA== These 8 million could be provided with health care insurance at far less cost than the current proposals in Congress. They could all be given vouchers on the U.S. Treasury good for the purchase of major medical (catastrophic expense) insurance, at a cost of probably no more than $4,000 per year per household, for a total federal outlay of less than $15 billion a year. In comparison, the Congressional Budget Office has stated that the current proposals in Congress would cost at least $100 billion a year, and probably much more. Remember, both Medicare and Medicaid ended up costing a multiple of the originally estimated costs. Those among the eight million who would otherwise be uninsurable because of pre-existing medical condition could be apportioned among insurance companies via the "assigned risk" approach widely used with auto insurance for high-risk drivers.

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If Congress wants real reform, start by eliminating Medicare as we know it, and instead give means tested subsidies to the elderly poor via vouchers to buy private health insurance as suggested above. The elderly who are not poor could buy their own insurance absent competition from the government via Medicare. The 8 million needy and uninsured people amount to less than 3% of the U.S. population of 300 million. Since they can be provided insurance as indicated above, why should we wreck our existing system of health care for the other 97% of the population by adopting the bureaucratic monstrosities now being prepared in Congress? After all, the finest health care in the world is available to Americans now, and Americans can buy insurance against the cost of catastrophic expense due to serious illness or injury. In his news conference of July 22, President Obama said a big reason for his reform proposals is to reduce the impact of rising health care costs on the federal deficit. This is a bogus claim. It is not private sector health care costs that are driving up federal deficits. It is the costs of Medicare which already require large and growing payments from general revenues to supplement Medicare payroll taxes. See Social Security and Medicare Boards of Trustees, Summary of 2008 Annual Reports, page 1. http://www.socialsecurity.gov/OACT/TRSUM/trsummary.html Furthermore, Medicare per-patient costs are up 34% more than private per-patient costs since 1970, according to a recent study. See “Medicare Costs Have Risen Far More than the Costs of Private Health Care,” by Jeffrey H. Anderson, Ph.D., Senior Fellow, Health Care Studies, Pacific Research Institute. http://liberty.pacificresearch.org/docLib/20090608_HPPv7n06_0609.pdf According to a former Chief Actuary of Social Security, Haeworth Robertson, “the average cost of medical care has increased nearly twice as fast as the general cost of living since Medicare was adopted in 1965—a predictable consequence of providing generous medical benefits, but making someone other than the recipient responsible for paying the bill.” [Emphasis added] President Obama demands that Congress create a "competing" government health insurer to provide "a better range of choices, make the health care market more competitive, and keep the insurance companies honest." In reality, equal competition between a public plan and private plans would be impossible. Initially, the public plan would have a lower cost to the insured, because the government does not have some of the expenses of private sector insurers. Therefore, the public plan would inexorably crowd out private plans, leading to a single-payer system. That is how Canada’s singlepayer system evolved, by first permitting then outlawing private health care insurance. When health care, like anything else, is provided without cost to the consumer, rationing becomes the only way to hold down costs. Therefore, government-run health care in America would ultimately lead to the kind of rationing of health care experienced under single-payer systems in other countries, where treatments available in the

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U.S. are routinely denied; and treatments often are delayed to the point of causing needless suffering and death. The examples of this are legion. Here is one example provided to your Senate Finance Committee by in person testimony of a Canadian citizen, Shona Holmes. She was diagnosed in Canada with a condition that was causing blindness and a variety of other frightening symptoms. However, she found it would take months for her to get on the appointment calendar of an appropriate specialist in Canada. So she went to the Mayo Clinic in Scottsdale Arizona where she was promptly diagnosed and a course of treatment recommended. She needed a cyst in her brain removed to save her vision. When she went home to Canada with the diagnosis, she was denied the prompt attention needed to avert blindness. So, she returned to the Mayo Clinic where successful surgery was performed. See http://www.mayoclinic.org/patientstories/story-339.html The “competition” rationale for a "public option" is totally false. There is no shortage of competition in private health care insurance. Large shareholder owned companies include Aetna, Cigna, Coventry Health, Humana, UnitedHealth Group and Wellpoint, plus not-for-profit Kaiser Permanente. Nationwide there is a plethora of competing private insurance companies, forty at least, offering a variety of insurance plans. You can see a state by state list of the available insurance companies at the following Internet link: https://www.ehealthinsurance.com/ehi/IFPLogoScreen.ds?ZipCode=1282 Today, private health care insurance companies are licensed by the states. Residents of one state cannot buy insurance offered in another state. Federal law eliminating that restriction would cost the government nothing and would allow people to shop nationwide for the best insurance coverage at the lowest cost. The soaring costs of medical care are due in part to beneficial advances in medical science and technology and in part to government distortion of the payment mechanism and interference with the price mechanism which best informs providers and consumers as to what services to offer and to utilize. Medicare/Medicaid are losing propositions for physicians, hospitals, and other providers, who for over 25 years have been trying to shift the unpaid costs of serving Medicare/Medicaid patients to the full pay, privately insured population. Most of the individual states mandate coverage that many, if not most people will never need (e.g., massage therapy, infertility treatment, alcoholism, breast implant removal, etc.) as a condition of an insurer doing business in the state. Absent those mandates, health care insurance would be considerably cheaper for people who do not elect such coverage. Unmeritorious lawsuits against physicians and other providers drive up costs. The following changes, cost-free to the government, would lower legally generated costs and reduce expenses: eliminate punitive damage awards; place a cap on damages for pain and suffering; require the loser to pay the cost of legal fees incurred by the winner in a lawsuit.

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Self-employed people and those whose employers don't pay for employee health insurance are disadvantaged by the tax laws. Changing the tax laws to permit full deductibility of health insurance and other medical costs for such people would reduce the costs to individuals, making the insurance more reasonable for those who choose not to buy at today’s costs. Adopting the proposals your Committee is working on would penalize the poorest citizens by driving up government deficits, thereby accelerating monetary inflation and its offspring, price inflation. The enormous deficits of nearly $1 trillion a year contemplated by the Obama administration for the future, augmented by another $100 billion or more a year of expense for the health care legislation you propose would necessarily cause higher and higher inflation. And inflation strikes hardest against low income people who generally are least able to protect themselves from inflation-driven price increases. Sincerely,

Frederic G. Marks C: President Barack Obama; Senators Chuck Grassley, Dianne Feinstein, Barbara Boxer, Joseph Lieberman and Mitch McConnell; Representatives Henry Waxman and Mike Ross