LOVELAND 9-12 PROJECT LEGISLATION COMMITTEE
POSITION PAPER

SUBJECT:        Nationalized Health Care

DATE:           July 9, 2009

1.      Constitutional Provision(s):  NONE.  The Constitution does not grant the federal government the authority to provide health care to anyone.  Therefore, nationalized health care is unconstitutional.

2.      Background:  The Census Bureau estimates that there are 304 million people in the U.S.  The federal government contends that 46 million or 18% of the population of the US have no health insurance. We need to look more carefully at this information. Of these 46 million “un-insured”, 21% or 9.7 million are non-Americans or illegal aliens. Another 3 million are eligible for government programs but are not aware of them. An additional 15 million of chronically uninsured can afford insurance, but choose not to (60% of these are individuals under age 35, most of which are in excellent health). Still another 18.3 million are temporarily uninsured, i.e. between jobs or changing health insurance companies.  Approximately 51 million are covered under Medicaid, 45 million are covered under Medicare, and 5 million are covered by State Children’s Health Insurance Program (SCHIP).  That leaves approximately 203 million with private health insurance.  The federal government is trying to provide health insurance to the 46 million uninsured.

Insured patients go to the doctor, sometimes pay a co-payment, and let their insurance company pay the bill, frequently unaware of how much it costs.  Insurance companies negotiate with medical providers and contract for how much they will pay for each type of service, usually less than the full amount billed.  The federal government dictates a price it will pay for each service, which is always less than the amount billed, and frequently less than the actual cost of the service.  Uninsured patients are expected to pay full price.  This is how the federal government shifts unpaid medical costs to private insurers and the uninsured.  In fact, “Medicare provider payments for hospital care are only 71 percent of private rates, while Medicare provider payments for physicians are only 81 percent of private rates.  In other words, Medicare payment levels are roughly 19-29 percent lower than private levels.” A New Public Health Plan:  How Congressional Details Will Impact Doctors and Patients, by Greg D’angelo, WebMemo No. 2482, Published by The Heritage Foundation, June 12, 2009.


"Approximately 47% of all medical payments are made by the three federal government programs through federal, state and local governments." The Beginning of the End of Private Health Insurance; How Obama’s public health option will quickly evolve into the only option, by Ronald Bailey, Reason Online, June 9, 2009.  This goes a long way toward explaining the rapid increase in the cost of medical services, since 53% of all medical payments have to cover the cost of the service provided, plus unpaid costs left over from the 47% of government payments.

Since insured patients pay a fixed amount for insurance, they have little or no incentive to shop around for the best price in medical treatment.  Furthermore, because of this entrenched system of payments, it is difficult to compare prices for medical services.  Any true reform of health care would mandate the disclosure of accurate prices by all medical providers:  what Medicare, Medicaid, SCHIP, private insurance, and uninsured patients will each pay for the same service.

The one thing that patients can shop for is medical insurance, but comparing plans and coverage is difficult.  Due to rising costs, patients are settling for less coverage and higher deductibles.  More flexibility in policies and pricing is needed.  In addition, it should be easier for insurance companies to enter new markets to ensure greater competition.

Another problem faced by private insurers is meddling by the government.  State legislatures frequently require that private medical insurance policies must cover certain things, like mental health services.  Therefore, medical insurance premiums are inflated with coverage for services that may not be wanted or needed by the patient.  Even if health care were reformed tomorrow, next year legislators would start meddling again and the cost of health care would start getting out of control again almost immediately.  Well intentioned public servants, responding to special interests and special needs, are the single greatest obstacle to an efficient health care system.

Congress, as usual, is using a sledge hammer to swat flies.  Rather than eliminating costly and wasteful laws and regulations, streamlining insurance forms, and paying its fair share for medical services, Congress is instead attempting to take over the entire health care industry.  Health care currently accounts for 16% of the U.S. gross domestic product.  Health care is far too important to leave in the hands of incompetent bureaucrats.

2.      Loveland 9-12 Project Position on the U.S. Government competing as a medical insurance provider: 

(a)     The federal government is not qualified to implement a national health care program.  Medicare and Medicaid, both of which are run by the federal government, will run out of money in the near future.  Congress continually underestimates the cost of these programs.  Any new or expanded federal government health care programs are destined to also fail.

(b)     Medicare and Medicaid are rife with fraud and waste.

(c)       In 2003, Medicare paid hospitals only 95% of the cost of medical services, Medicaid paid only 89%, which left private insurers to pay 122% of the cost of medical services. A New Public Health Plan, supra.  Uninsured patients pay even more. 

(d)     The federal government refuses to pay its fair share for medical services and shifts the burden of unpaid costs to private insurers and the uninsured.

(e)     Due to the federal government’s refusal to pay for medical services at the same rates as private insurers, any federal government insurance plan will be able to charge less for premiums.  These lower premiums will be an unfair competitive advantage over private insurers, and will result in the federal government insurance plan crowding out private insurers, until the federal government insurance plan is the only one left in the marketplace.

(f)     When the federal government takes over as the single payer for all medical services, and continues its refusal to pay the full cost of those services, not to mention eliminating any profit for medical service providers, the results will be shortages in medical services, rationing of health care, denial of services, and the dismantling of the finest health care system in the world.

THEREFORE, the Loveland 9-12 Project OPPOSES the federal government offering an insurance plan that competes with private insurance companies, or expansion of Medicare or Medicaid, or any plan that nationalizes health care.

3.      Loveland 9-12 Project Position on House Resolution 676: 

(a)     This provides that all individuals residing in the U.S. are covered under the USNHC Program.  Everyone will receive a card after filling out a 2-page application.  The Secretary of Health and Human Services determines who is eligible.  Visitors from other countries will be covered except for premeditated (or preplanned) non-surgical procedures.  NO MORE PRIVATE HEALTH INSURANCE.

(b)     Services covered are:  primary care and prevention; inpatient care; outpatient care; emergency care; prescription drugs; durable medical equipment; long-term care; palliative care; mental health services; the full scope of dental services (other than cosmetic dentistry); substance abuse treatment services; chiropractic services; basic vision care and vision correction (other than laser vision correction for cosmetic purposes); hearing services, including coverage of hearing aids; and podiatric care.  No deductibles, copayments, coinsurance or other cost sharing shall be imposed with respect to covered benefits.  H.R. 676 WILL MAKE IT ILLEGAL FOR PRIVATE INSURERS TO SELL HEALTH INSURANCE BENEFITS THAT DUPLICATE BENEFITS UNDER THIS ACT.

(c)     All participating medical providers must convert to public or not-for-profit institutions.  The U.S. government will pay the private physicians, private clinics and private health care providers for reasonable financial losses incurred as a result of the conversion.  Not-for-profit entities can continue to operate as privately owned, but cannot be investor owned.  THIS IS A COMPLETE GOVERNMENT TAKE-OVER OF THE MEDICAL INDUSTRY.

(d)     This shall be paid for from the following sources:  (1) existing sources of federal government revenues for health care; (2) increasing personal income taxes on the top 5 percent income earners; (3) instituting a modest and progressive excise tax on payroll and self-employment income; and (4) instituting a small tax on stock and bond transactions.  Plus additional annual appropriations are authorized to be appropriated as needed.  All funds now going to Medicare, Medicaid and Children’s Health Insurance Program will go to this program.  THIS PROGRAM WILL FORCE A HUGE TAX INCREASE ON ALL TAXPAYERS.

(e)     There will be a huge increase in government control over the delivery and choice of health care services to all individuals.  Participating providers will be compensated through a GLOBAL BUDGET funneled through a NATIONAL DIRECTOR, a REGIONAL DIRECTOR, and a STATE DIRECTOR.

(f)     New bureaucracy will establish fees, staffing levels, electronic billing system, electronic medical records system, prescription drug formulary system, and quality standards.

THEREFORE, the Loveland 9-12 Project resoundingly OPPOSES H.R. 676.

NOTE:  There is little chance that this bill will be voted on or passed.  However, it is important to understand the extreme measures that are being considered in Washington DC.