A Project of The Annenberg Public Policy Center

Health Care Summit Squabbles

This marathon discussion had no shortage of factual malpractice.


Summary

We tuned in to watch the president’s health care summit at Blair House today — all six-plus hours of it. And we weren’t surprised to hear some factual missteps in the discussion:

  • Sen. Lamar Alexander said premiums will go up for “millions” under the Senate bill and president’s plan, while President Barack Obama said families buying the same coverage they have now would pay much less. Both were misleading. The Congressional Budget Office said premiums for those in the group market wouldn’t change significantly, while the average premium for those who buy their own coverage would go up.
  • Alexander also said “50 percent of doctors won’t see new [Medicaid] patients.” But a 2008 survey says only 28 percent refuse to take any new Medicaid patients.
  • Sen. Harry Reid cited a poll that said 58 percent would be “angry or disappointed” if health care overhaul doesn’t pass. True, but respondents in the poll were also split 43-43 on whether they supported the legislation that is currently being proposed.
  • Obama repeated an inflated claim we’ve covered before. He said insured families pay about $1,000 a year in their premiums to cover costs for the uninsured. That’s a disputed figure from an advocacy group. Other researchers put the figure at about $200.
  • Sen. Tom Coburn said “the government is responsible for 60 percent” of U.S. health spending. But that dubious figure includes lost tax revenue due to charitable contributions to hospitals and other questionable items. The real figure is about 47 percent.
  • Reid said “since 1981 reconciliation has been used 21 times. Most of it has been used by Republicans.” That’s true: GOP senators have used it 15 of the 21 times for legislation they wanted.
  • Rep. Charles Boustany said the main GOP-backed bill would reduce premium costs by “up to about 10 percent.” According to CBO, that’s true for the small group market, which accounts for only 15 percent of premiums. But premiums in the large group market would stay the same or go down by as much as 3 percent. 

Analysis

Democrats and Republicans met with the president at Blair House Feb. 25 for several hours of televised discussion about health care overhaul. The summit was ripe with errors and misleading remarks.

Premium Costs, Up or Down?

Republican Sen. Lamar Alexander of Tennessee and President Barack Obama disagreed about how the Democrats’ health care overhaul efforts would affect premium costs.

It all started with Alexander’s remarks, when he said the president’s proposal, much like the Senate bill on which it is largely based, would increase premiums:

Alexander: For millions of Americans, premiums will go up because those — when people pay those new taxes, premiums will go up — they will also go up because of the government mandates.

Later, Obama took on that claim directly, saying that Alexander was wrong.

Obama: No, no, no. And this is an example of where we’ve got to get our facts straight. … So let me respond to what you just [said] Lamar, because it’s not factually accurate. Here’s what the Congressional Budget Office says. The costs for families for the same type of coverage as they’re currently receiving would go down 14 to 20 percent.

Actually, both men were misleading.

Sen. Lamar Alexander

What CBO said (see Table 1) is that for those who are in group policies, there would be no significant change in premiums, compared with what would be paid under current law. For those in large groups, there would be somewhere between no change at all and a 3 percent decrease in premium cost. For small groups, the change could fall between a 1 percent increase and a 2 percent decrease.

The only significant increases would be seen by those who buy their policies individually, CBO said. For those persons, the average premium per person would be between 10 percent and 13 percent higher.

Alexander was technically correct when he said premiums would go up "for millions." CBO figured that 32 million persons would fall into the nongroup market by 2016, should the Senate bill become law. What he didn’t mention is that they would make up only 17 percent of workers covered by private insurance. And he didn’t mention these costs would go up because benefits would improve in the nongroup market.

The senator was correct when he cited "mandates" as one cause for the increase – but that’s not the only reason premiums go up. The bill would require plans to have a standard level of benefits. However, most of those buying their own coverage would receive subsidies that would prompt them to buy more expensive plans than they normally would. CBO said "the average insurance policy in this market would cover a substantially larger share of enrollees’ costs for health care (on average) and a slightly wider range of benefits." People would basically use money from the government to buy themselves a nicer plan than they would if they were only using their own money. CBO said well over half of those buying individual policies — 57 percent — would get government subsidies "that would reduce their costs well below the premiums that would be charged for such policies under current law."President Obama

But Obama also misled when he claimed that the costs for "families" would go down by 14 to 20 percent "for the same type of coverage as they’re currently receiving." For one thing, he was referring only to policies purchased directly by individuals — not to all families. And as we’ve seen, the bill generally would require more generous coverage than is currently provided, at higher cost. Overall, premiums in the individual market would go up, not down. Some in the nongroup market might choose to keep their current policy, with no changes. The legislation would permit that for a few years. But CBO said those "grandfathered" policies probably would not see a substantial change in their premium costs, relative to current law.

One last point: Alexander said “taxes” would also cause premium costs to go up – but that’s not really the case, according to CBO. Paradoxically, CBO predicts that the Senate bill’s excise tax on high-cost health plans would actually bring premium costs down. That’s because the tax would induce employers and employees to choose lower-cost plans with less coverage, to avoid being hit by the tax. CBO said the average premium for those affected by the tax would be 9 percent to 12 percent lower. The bill also includes some taxes on medical device manufacturers and drug importers; CBO found those taxes would have a less than 1 percent effect on premium costs.

Medicaid Naysayers?

Sen. Alexander noted that Obama’s proposal, like the Senate-passed bill, relies to a great extent on Medicaid — which he said "none of us would want to be a part of because 50 percent of doctors won’t see new patients." That claim was echoed by GOP Sen. Charles Grassley of Iowa, who said "Doctors don’t take Medicaid."

But according to a 2008 survey of 4,700 physicians by the Center for Studying Health System Change, nationwide only 28 percent of physicians won’t accept any new patients who are insured by Medicaid. HSC, which is funded in part by the Robert Wood Johnson Foundation and is affiliated with Mathematica Policy Research Inc., also found that 19.2 percent accept some new Medicaid patients, while 53 percent accept most or all of them.

Poll-Watchers

Senate Majority Leader Harry Reid of Nevada cited a Kaiser Family Foundation poll from this month showing that 58 percent of people would be "angry or disappointed" if health care legislation doesn’t pass.

Reid: It was interesting what that poll said: 58 percent of Americans would be disappointed or angry if we did not do health care reform this year — 58 percent.

Reid is correct, as far as he goes. When asked how they would feel "if Congress decides to STOP work on health care reform and doesn’t pass a law this year," 38 percent said they would be "disappointed" and another 20 percent would be "angry" — a total of 58 percent.

But the same poll also showed that only 32 percent supported passing a comprehensive health care bill right away, while another 41 percent wanted to put it on hold until later in the year or indefinitely, and 20 percent wanted to give up on comprehensive change for the moment and pass only key provisions. And regarding the health care legislation currently being proposed, only 43 percent supported it, while 43 percent opposed it.

Meanwhile Senate Minority Leader Mitch McConnell of Kentucky said a majority of Americans are against the health care overhaul as it has been framed thus far:

McConnell: If you average all the polls, the American people are opposed, 55 to 37.

He’s reasonably close. Pollster.com puts the weighted average of current polls on the subject at 51.4 percent opposed and 41.9 percent in favor. Those polls ask the question a number of different ways: about the Senate plan, the House plan, Obama’s proposals and earlier iterations of all of those.

McConnell’s figures also are in the neighborhood of what some recent major polls have found. A Jan. 22-24 survey by CNN found 38 percent favor and 58 percent oppose the bills passed by Congress. A Quinnipiac poll done earlier in January came up with 34 percent who "mostly approve," while 54 percent "mostly disapprove." And National Public Radio’s poll released Jan. 26 asked about Obama’s proposal specifically, finding that 39 percent approved, while 55 percent disapproved.

Obama’s Inflated Claim

Obama said that families with insurance pay $1,000 to $1,100 a year as part of their premiums to cover the cost of health care for the uninsured. We’ve dinged him on that inflated claim before. The president got the figure from the health care advocacy group Families USA, which calculated it by dividing "uncompensated care" — the proportion of care given to the uninsured that’s not covered out of pocket or by public or private funds — by the number of insured households. But that’s not a fair calculation.

Researchers from the Urban Institute looked at Families USA’s conclusions and questioned its premise that all or even most of uncompensated costs are shifted directly to the privately insured. In fact, Urban Institute researchers found that only $8 billion of uncompensated costs would be paid for by the insured in 2008 — about $200 per family. The rest is taken care of by other sources, such as government programs that reimburse physicians for uncompensated care, or physicians who take smaller profits.

Coburn’s Cost Comments

During his remarks, Sen. Tom Coburn of Oklahoma said that "the government is responsible for 60 percent of the country’s health spending." It’s a statistic he’s touted before. But it’s a misleading claim that includes tax revenue lost to the government because of charitable contributions to hospitals and other calculations not normally included in the figure for public spending on health care.

The Congressional Research Service has found that, "in 2007, national expenditures amounted to $2.24 trillion, of which 53.8% came from private sources such as private health insurance and 46.8% came from public (federal, state, and local government) sources." So what is Coburn talking about?

Coburn asked CRS to consider the effects of tax subsides on overall health care spending by government. As the agency succinctly summarizes:

CRS: Take a dollar an employer pays for a premium for an employee’s health insurance. This dollar is part of the employee’s compensation, but it is not taxed like other income (at an average federal, state and local tax rate of 15%); it is excluded from income for income tax purposes. In essence, the employee receives a 15 cent government subsidy for this dollar spent on health insurance—the government pays 15 cents and the employee pays 85 cents.

However, CRS explains in a footnote that "most economists agree that the costs of employer provided fringe benefits are passed on to employees," not governments. Nonetheless, CRS crunched the numbers for Coburn and calculated that "public sources" account for 60 percent of health care spending if you consider these tax subsides to employees with health insurance, individuals’ deductions for out-of-pocket medical expenditures, and even private "charitable contributions to hospitals and other providers."

Reconciliation

Reid said Democrats were not pushing the idea of using "reconciliation," a legal maneuver that would allow health care to pass by a simple majority without filibuster. But he said Republicans had used it more often than Democrats.

Reid: But remember, since 1981 reconciliation has been used 21 times. Most of it has been used by Republicans, for major things, like much of the Contract for America, Medicare reform, the tax cuts for rich people in America. So reconciliation isn’t something that’s never been done before.

Scholars from the Brookings Institution and American Enterprise Institute agree. In an article published in The New Republic magazine, Thomas Mann and Molly Reynolds of Brookings and Norman Ornstein of AEI cited 22 instances of reconciliation between 1980 and 2008, including the Personal Responsibility Act, which made changes to welfare; Bush’s two big tax cuts; and the 2005 Deficit Reduction Act, which made changes to Medicare and Medicaid.

Three reconciliation bills, all written by Republican majorities, were vetoed by President Clinton. Of those remaining, 13 were used by Republican-majority Senates and six by Democratic majorities.

The authors wrote that passing health care legislation in this fashion would fit a pattern going back three decades.

Update, March 2: We originally wrote that the Mann, Reynolds and Ornstein article said using reconciliation to pass a health care overhaul would be the "most ambitious" use of the process to date. Since then, Mann, the lead author, told us that this characterization doesn’t apply to the current situation. "We argued last year that reconciliation legitimately could be used for health reform, but that it would be ambitious, difficult and partial, given the constraints of the process," Mann told us. "Its much more limited use this year, adding amendments after the bill itself has passed following a successful cloture vote, is very modest and unquestionably legitimate."

More Premium Cost Claims

Republican Rep. Charles Boustany of Louisiana claimed that the House GOP health care bill would bring down health insurance premiums:

Boustany: We put forth a plan earlier in the year, during the debate, that actually the Congressional Budget Office showed that it brings down the cost of premiums up to about 10 percent. And, actually, for individuals seeking — and families seeking insurance in the individual market, those cost savings could even be higher.

It’s true that the CBO found that health care premiums for those in the small group market would decrease between 7 percent and 10 percent by 2016. But the small group market accounts for just 15 percent of premiums, according to the CBO. It estimated smaller drops for other segments of the private market. For example, premiums in the individual market, which accounts for just 5 percent of the private market, would go down between 5 percent and 8 percent, CBO said. The other 80 percent of premiums, which make up the large group market, may go down by as much as 3 percent, CBO said, but may actually stay the same as under current law.

-by Brooks Jackson, Viveca Novak, Lori Robertson, Justin Bank, D’Angelo Gore and Jess Henig

Sources

Congressional Budget Office. Letter to Sen. Evan Bayh. 30 Nov 2009.

Hadley, Jack et al. "Covering the Uninsured in 2008: A Detailed Examination of Current Costs and Sources of Payment, and Incremental Costs of Expanding Coverage." Kaiser Commission on Medicaid and the Uninsured. Aug. 2008.

Families USA. "Hidden Health Tax: Americans Pay a Premium." May 2009.

HSC 2008 Health Tracking Physician Survey. Center for Studying Health System Change. September 2009.

Kaiser Health Tracking Poll. Kaiser Family Foundation. February 1010.

Health Care Plan: Favor/Oppose. Pollster.com. Web site accessed 25 Feb 2010.

Letter to Senator Tom Coburn. Congressional Research Service. 1 Dec 2009.

CNN Opinion Research Poll. CNN. 26 Jan 2010.

"U.S. Voters Say Sacrifice Modesty, Rights For Security, Quinnipiac University National Poll Finds; Support For Health Reform At 34 Percent." Quinnipiac University. 14 Jan 2010.

Coburn, Tom, "New CRS Report Shows Government Already Controls 60 percent of Health Care in the U.S.," Press Release. 4 Dec 2009.

Hungerford, Thomas L., "Public and Private Expenditures for Health Care, 2007," Congressional Research Service. 1 Dec 2009.

Congressional Budget Office. Letter to John Boehner. 4 Nov 2009.