Synopsis of H.R. 3200

Synopsis of HR 3200: “America’s Affordable Health Choice Act of 2009”
By Rebecca K. Wetzel [1]

“Timid men prefer the calm of despotism to the tempestuous sea of liberty.” Thomas Jefferson

Introduction:

H.R. 3200 or “America’s Affordable Health Choice Act of 2009” is a massive proposal for the centralization or nationalization of the US Healthcare system by MANDATING REGULATIONS on individuals, employers, private insurers, hospitals, doctors and states.

In the words of The Congressional Research Services report, “Private Health Insurance Provisions of H.R. 3200”, H.R. 3200 would establish new federal health insurance standards.” [2] The essence of H.R. 3200 is the federalizing of all healthcare in the United States.

H.R. 3200 gives all regulatory authorization over those components to the Secretary of HHS and creates a new Health Benefits Advisory Commission. In examining H.R. 3200, what clearly jumps out is the broad sweeping powers over the healthcare component of the US economy that the US Government is seizing. This authority also extends to the Medicare Program, Medicaid, and SCHIPs.

525 pages of H.R. 3200’s 1018 pages are devoted to reforming, restructuring, and assessing treatment and hospitalization under the Medicare coverage for the elderly.

Another obvious revelation is the ambiguous language that opens the door to significant unintended consequences that will have political and government structure altering outcomes perhaps for the long term future. All economics teachers will tell you everything has a cost, and every economic choice we make has a consequence. [3]

Mr. Obama continues to waffle on whether or not there will be a public option plan in H.R. 3200. On Saturday, August 15 he stated that the public option plan is only a sliver of the bill. It only takes a sliver of an opening for mice to enter your home and cause chaos and disruption.

Even if H.R. 3200 excludes a public option plan, the intent of H.R. 3200 is for the Federal Government to seize control of the nation’s healthcare system, dictate the benefits and treatments of your healthcare coverage, access your financial records to automatically transfer the taxes you would owe if you chose not to have healthcare insurance, and to determine if you qualify for Medicaid.

What is truly missing from H.R. 3200 is the fundamental principle upon which this nation was founded: Freedom of Choice.

What is unclear in this legislation is the estimated cost of initiating the complete overhaul of healthcare system as we know it. The Congressional Budget Office has re-assessed the potential cost of H.R. 3200 at approximately $1.68 Trillion. Although H.R. 3200 does not clearly specify how the entire cost will be covered, provisions are made in the bill for the wealthy citizens to have their income taxes increased by as much as 5%.

There are no checks and balances in the bill for the government overreaching in its power into the lives of the American people as the bill specifically states in Section 223 on page 124 that “There shall be no administrative or judicial review of a payment rate or methodology established under this section or under section 224.” Hence, citizens are denied the right to court review of complaints against the Federal government over the healthcare issue. Does this have a potential unintended consequence of limiting citizens’ rights under the Federal government?

Article IV of the US Constitution guarantees due process of law to citizens.

The 3rd Amendments to the Constitution guarantees individuals the right to privacy and security in their own homes.

The 4th Amendment to the Constitution states, “The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.”

The 9th Amendment to the Constitution guarantees individuals the right of privacy.

The 14th Amendment guarantees individuals and entities equal protection of due process of law.

The purpose of the bill is stated on page 1: “To provide affordable, quality health care for all Americans and reduce the growth in health care spending and for other purposes.” [4] What does “for other purposes” mean? Does this open the door for unintended consequences?

The Congressional Budget Office report describes this particular health care plan in the following way: “federal individual mandate for health insurance would be unique and unprecedented because it would impose a duty on individuals as members of society and it would require people to purchase a specific service that would be heavily regulated by government”. Such a public policy is unprecedented and represents a Federal take-over of 1/6 of our nation’s private sector.

Mandatory Regulation:

What does it mean to be a MANDATED REGULATORY program? In the state of nature animals of prey such as jackals feed on lesser animals. Although we cannot change natural behavior, we can regulate what predators consume. In the marketplace, monopolies feed on smaller competitive businesses and individuals as monopolies, like all businesses and individuals, have a natural appetite to make a profit. After all, it is profit that enables one to meet their needs and wants. [5]

Price is a rationing factor in the marketplace. If the price is too high for some people based on their profits, then they will shop around to find a competitive price that suits their financial standing.

In any economic system, including that of the United States, there are four questions to answer: what to produce, how to produce, for whom to produce, and what is the role of government in production.

The critics of capitalism have obviously not read Adam Smith’s The Wealth of Nations. Smith, the father of capitalism, published The Wealth of Nations in 1776. Capitalism is the economic system that is based on competition, the rationing system is determined by the price mechanism, individuals make the determination what they will purchase from competitive choices, and individuals have the right to own property.

Let’s take the example of an artist, an entertainer, a doctor, a nurse, or a mechanic. All of these produce goods and services. They set the price they are willing to accept for the fruits of their labor.

Consumers, in turn, decide if they are willing to accept the going price for the services of the artist, entertainer, doctor, nurse or mechanic. Government regulates to make sure that the producer of goods and services is not taking advantage of the consumer just as government intervenes if the consumer takes from the producer of goods and services without a fair market compensation for services rendered.

Adam Smith advocated limited government, but the government had the responsibility and obligation to protect consumers from predators such as monopolies. [6] Critics of capitalism reveal their economic and political illiteracy when they maintain that Smith’s theories supported big business over individuals.

Under capitalism, the interaction of supply and demand determines what to produce, how to produce, for whom to produce, and the role of the government is to regulate business and protect the consumer.

Socialism is the economic and political theory that advocates the government ownership of the means of production. In his “Class Struggle of History Theory”, Karl Marx has Socialism as the second phase of his Class Struggle Theory in his work, The Communist Manifesto in 1848. Marx’s three phases are (1) class revolution of the haves v. the have-nots, (2) government ownership to eliminate private property, and (3) the utopian of communism where there will be no government to regulate behavior because people will share out of love for one another. Ironically, in the last section of his book, Karl Marx admitted that the utopian system of Communism was simply that: a Utopia. Marx then concluded that the political economic system he supported was that of Socialism. [7]

Under socialist systems, the government owns the means of what will be produced, dictates how goods and services are produced, determines for whom goods and services are produced, and the government’s role is to control the production of goods and services. In the case of the artist, entertainer, doctor, nurse, or mechanic, a socialist government would determine what prices you set for your services as well as the length and time of effort you put into your work. A socialist government would also be your employer.

There has never been a pure capitalist system. What was created in 1776 with the North American Revolution against England was a system that held the principles of capitalism as its goals. The Declaration of Independence, regrettably never read by but a few Americans, calls for a system where the usurpation of power by the government is limited. In fact, it was the egregious usurpation of power by George III of England that was the ultimate cause for revolution. The battle cry for the revolution was “No Taxation without Representation”.

Socialism, on the other hand, has existed as a political system, and generally, socialist systems are overturned because they place the ultimate focus on government authority over individuals and businesses.

When a government takes over the price mechanism function of an economy, the government has the power and authority to issue mandatory regulations. With such power, the government is close to nationalizing or taking over the ownership of businesses. In the spring of 2009, the United States government took over the ownership of two automotive businesses: General Motors and Chrysler.

Mandates Over Individuals in HR 3200:

•Individual mandates are an unprecedented violation of individual liberties: A Report by the Congressional Budget Office (CBO, which reports directly to the Speaker of the House Nancy Pelosi) issued an assessment in July 2009 stating that the “federal individual mandate for health insurance would be unique and unprecedented because it would impose a duty on individuals as members of society and it would require people to purchase a specific service that would be heavily regulated by government”.

Dr. Sherry Glied, an Obama HSS nominee, stated, “Developing a system to promptly identify and penalize scofflaws will take effort and ingenuity, particularly, in our diverse and mobile country. It may require a degree of intrusiveness and bureaucracy that some will find unpalatable.” [8]

•Individual Mandates will not resolve the uninsured problem: Massachusetts was the first state to enact an individual mandate with tax penalties and fines. However, this mandated program has not fulfilled its intended persons because some people are exempted while some people have deliberately chosen to forgo health insurance. The cost of care for those without health insurance is always passed on to the consumer. Government, like businesses, passes its cost of public policy onto to its consumers—the tax payers—in the form of higher taxes.

Currently there are approximately 47 million Americans without healthcare. This number is approximately 15% of the population which means 85% have healthcare coverage. Of that 47 million, 12 million are illegal aliens. Of the remaining 35 million, 12 million are those who have chosen not to purchase healthcare because they are in the upper income bracket and can pay for their healthcare out of pocket. Of the remaining 23 million, 12 million of those who are eligible for already existing federal programs such as Medicaid and SCHIPs but have chosen not to sign up for these programs. This number also includes young people in their 20’s to 30’s who feel they do not need healthcare insurance. The remaining 11 million are the ones who really need help.

Hence, HR 3200 claims to seek healthcare reform when its structure and function clearly indicate it is healthcare overhaul and take over by the US Government. [9]

•Individual Mandates will not solve the Free-Rider Problem: In economics and public policy, the free-rider is the person who benefits from a public policy at the personal expense of others. Even under the proposals of H.R. 3200, the free-rider problem ill exist because the bill has provisions for leveling the cost of covering those who cannot pay on insurers, institutions, and tax payers. The Urban Institute has produced studies showing that people with health insurance account for 30% of the uncompensated care delivered to the non-elderly.

•Individual Mandates are expensive: Dr. Sherry Glied, Obama nominee, states: “Funds diverted from uncompensated care would not be sufficient to pay for the subsidies needed to cover most uninsured people. Eliminating the free-rider problem through universal insurance might make the health care system more fair, but it wouldn’t make it less costly.”

•Individual Mandates are a Special Interest Bonanza: Government mandates that individuals purchase health insurance will define a MINIMUM SET of covered benefits that satisfies that mandate.

Minimum or limited benefits are code words for restrictions and rationing. When something is limited, it is in short supply. When items are in short supply, the cost increases.

Does this limitation then defy the stated purpose of H.R. 3200?

If benefits are limited in supply, there will be competition to have access to the benefits. Thus, health care providers who wish to stay in business will compete or LOBBY the Federal government to make sure their products and services remain in the benefits package.

•Individuals will be required to pay or play: Section 59B on page 167 states that the IRS will be authorized to levy a 2.5% income tax on individuals the Secretary of HHS has determined does not have acceptable health care insurance.

Does this open the door to unintended consequences?

Section 202(d)(3) authorizes the Commissioner of the Health Benefits Commission to automatically enroll those persons eligible for Medicaid into the Medicaid program (regardless of their choice).

•Individuals will automatically have their financial records accessed by the Federal government: Section 163 authorizes the Secretary of HHS to enable automatic electronic transfer of funds from an individual’s financial accounts.

(Note to those critics who say that showing our healthcare cards at medical facilities allows them to access your financial accounts: no, showing your healthcare card at a medical facility provides them with information that you have insurance coverage. Some individuals argue that we already do our banking online and pay bills online. The difference between banks and private sector is you are WILLINGLY ALLOWING them to access your financial accounts. Even if you allow the IRS to access your financial accounts online for a tax payment or refund, the difference is you are WILLINGLY ALLOWING THEM ACCESS. Compulsory access moves the government into the absolute control of your financial accounts. Remember, you will not have any federal judicial review of the healthcare under H.R. 3200, and that includes if the government ‘accidentally’ withdraws too much from your account.”)

Mandates over Private Insurers:

•The Commissioner of the Health Benefits Commission will dictate to private insurers how much and what rate may be charged as determined by the Commissioner (page 17 of H.R. 3200)

•Participation by all insurance plans is mandated. (page 20 of H.R. 3200)

•The Commissioner and Secretary of HHS are authorized to determine the financial solvency and audit all private insurers and employers. (page 22 of H.R. 3200)

•The Commissioner and Secretary of HHS will determine the quality benefits of all healthcare plans of all insurers. (page 25 of H.R. 3200)

•In Section 122, pages 26-30 of H.R. 3200, the following minimum services to be covered as essential benefits includes:

Hospitalization

Outpatient hospital and clinic services

Professional services of physicians and other health professionals

Such services, equipment, and supplies incident to the services of a physician or a health professional’s delivery of care

Prescription drugs

Rehabilitative and habilitative services

Mental health and substance use disorder services

Preventive services

Maternity care

Well baby and well child care

•The National Health Benefits Advisory Committee will make recommendations for benefits and treatments in all insurance plans. No appeals process is specified. (page 30 of H.R. 3200)

•The National Health Benefits Advisory Committee and the Commissioner will design the essential benefits package so that the cost sharing will provide a level of coverage that is designed to provide benefits that are actuarially equivalent to approximately 70% of the full actuarial value of the benefits.

•Under Section 122, the limitations on the amount of benefits and treatments in a fiscal year (FY): $5000 per individual/ $10,000 per family.

•The Commissioner will establish uniform marketing standards which all insurers will be required to meet. (page 37 of H.R. 3200)

•Under section 1173A of the Social Security Act the Health Benefits Board will be authorized to conduct electronic financial and administrative transactions of funds. (page 41 of H.R. 3200)

Mandates on Employers:

Employer healthcare insurance will not face a level playing field. The government does not have to worry about cost, and the government can simply raise taxes or print more money. H.R. 3200 along with increased energy taxes and Card Check, which will force unions in most businesses, will drive up operating costs of business so that employers will opt out of providing health insurance.

The Lewin Group conducted a study of the current healthcare legislation before Congress. Their study shows that the public option plan if adopted will cover approximately 103 million people. The unintended consequences of this legislation will result in 83.4 million people will lose their private insurance. This would represent a 48.4% reduction in the number of people with private coverage.

According to the Lewin Group study, 88.1 million people would see their private, employer sponsored health plan go away, and they would be shifted to the public plan.

Yearly premiums for private coverage will increase as much as $460 per privately insured person as a result of cost shifting to a public plan. [10]

In time, the only plan would be the government’s single payer plan which Mr. Obama stated in 2003 and in the campaign at Ames, Iowa in 2008 was his goal and intention.


Medicare:

525 pages of H.R. 3200 are devoted to Medicare. This alone tells you that Medicare is a significant component of our nation’s healthcare system.

In April 2009, Mr. Obama stated, “The chronically ill and those toward the end of their lives are accounting for potentially 80% of the total health care bills out there. It is very difficult to imagine the country making those decisions just through the normal political channel. This is why you have to have some independent group that can give you guidance.” [11]

Is this the reasoning behind the Advisory Boards and government agencies that will be created by H.R. 3200 to enter the homes, nursing homes, etc. to advise the elderly about the end of life wishes?

16.7% of our annual GDP is health care. (The GDP is the Gross Domestic Product which includes the total dollar value of all goods and services produced in the US. It includes Government spending, Consumer spending, Savings, Investments, and Business spending. IT IS NOT SOLELY GOVERNMENT MONEY.)

52% of our federal budget is spent on welfare and entitlement programs. Included in these are Social Security, Medicare, Medicaid, VA, and SCHIPs.

Mr. Obama is currently seeking a reduction in the Medicare budget for the upcoming Fiscal Year. By 2019, he wants a $313 Billion cut in the Medicare Budget. Currently, Medicare’s annual budget is approximately $413 Billion. Mr. Obama’s slashing of the Medicare Budget is questionable. By 2019 the bulk of America’s ‘Baby-boomer’s will be eligible for Medicare coverage.
If the budget is cut, does this have the unintended consequences of rationing who will get Medicare coverage?

H.R. 3200 does authorize government Advanced Directive sessions with those persons as they near the final stages of life. Advanced Directive Planning sessions are wonderful ideas for a family to do with their doctors, family members, spiritual directors, and / or ministers. It becomes a different ball game when the persons conducting the Advanced Directive is a government employee sent to discuss this with you as mandated by law.

Mr. Obama is calling for to removal of the Medicare Advantage Plan and Medicare Part D.

H.R. 3200 will have a tremendous impact on Medicare, Medicaid, and SCHIPs. At the present, it does not appear to have an impact on Social Security. However, we cannot forget there are unintended consequences to any public policy.

Medicaid:

H.R. 3200 proposes a major expansion of Medicaid as a primary vehicle to reduce the number of persons who currently do not have health insurance.

Although Medicaid might theoretically cheaper alternative, it would represent a balkanization of families based on income levels, geography, and even history. Not all poor people qualify for Medicaid. Not all people on Medicaid are poor. Criteria such as disability and whether there is a dependent child in the household factor into Medicaid eligibility.

According to CBO studies, H.R. 3200 would increase federal Medicaid spending to $2.2 Trillion in order to keep generally healthy individuals outside the rest of the insurance pool.

Is this and example of the unintended consequences that is counterintuitive and also counterproductive?

What is Missing:

Health Savings Accounts and Flex Savings Accounts will be eliminated.

Specification as to how States who will be mandated to implement parts of H.R. 3200 are going to cover the costs of implementation.

Endnotes:
1.The author holds a B.A. degree from the College of Arts and Sciences at the University of Alabama with a major in History and a minor in Political Science. Although the University only officially recognizes one major and one minor, Mrs. Wetzel’s transcript indicates she took sufficient course work in history, political science and English to qualify for three majors. Her M.A. degree is also from the College of Arts and Sciences at the University of Alabama in history. During her graduate work, Mrs. Wetzel was a Graduate Assistant in historical research of public policy under the tutelage of the late Dr. Charles G. Summersell and the late Dr. Austin L. Venable. Mrs. Wetzel also served as a lecturer in Diplomatic History of the United States and Foreign Relations. She is a retired educator having taught in the public schools in Alabama, Kentucky, and Pennsylvania. The classes she has taught include English literature, English grammar, Alabama History, Kentucky History, U.S. History, World History, World Cultures, Political and Economic Systems, AP History, AP Government, AP Comparative Government, AP Economics: Macroeconomics and Microeconomics, Rights and Responsibilities, and Current Issues. Mrs. Wetzel received her Teacher Certification from Millersville University, and she has taken post graduate courses at Pennsylvania State University. She is a member of Phi Beta Kappa, Phi Alpha Theta, Pi Sigma Alpha, and Alpha Lambda Delta. Mrs. Wetzel’s two Master’s papers were: “James G. Birney’s Role in the American Colonization Society” and “James K. Polk’s Secret War Agent: Juan de la Atocha”.

2.Congressional Research Services Report, “Private health Insurance Provisions of H.R. 3200, page 7.

3.The children’s story of The Three Little Pigs is an excellent introduction to teach the idea of choices having consequences.

4.Page 1 H.R. 3200.

5.Fred Gottheil, Principles of Economics, p. 304.

6.Adam Smith, The Wealth of Nations, 1776.

7.Karl Marx, The Communist Manifesto, 1848.

8.CBO Report July 2009.

9.Dr. Sherry Glied, Obama nominee.

10.Heritage Foundation, www.heritage.org.

11.Barack Obama, April 2009.