The stock market doesn’t fear healthcare reform

What do investors think of the end of freedom and Obama's socialist takeover? So far, they're strangely unbothered

By Andrew Leonard

Topics:Healthcare Reform, How the World Works, Stock Market

Now that the totalitarian socialist freedom-haters have had their way with America, it seems like a good time to check in on the health of some corporations that will be most directly affected by healthcare reform: health insurers and drug companies.

OK, it’s early yet, but a little more than an hour after the opening bell at the New York Stock Exchange, the stock prices of insurers WellPoint and Humana were down, while Aetna was up. The share prices of Pfizer, Merck, AstraZeneca and GlaxoSmithCline were all up, with gusto.

One could take this data to mean those who argued that the new law of the land is a corporate sellout to the pharmaceutical industry were correct. Lobbying organizations such as PHARMA and the American Medical Association supported the healthcare reform bill because they were confident that their businesses would not be harmed. For some Democrats, that reality leaves a bad taste in the mouth.

But an early Wall Street Journal summary this morning makes a more pertinent point. (Italics mine.)

: Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21. More Andrew Leonard

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“There are clearly things that we’d like to see continued," he told clients

By Lee Fang

Newt Gingrich on "the good parts" of Obama's healthcare reform (Credit: AP/Bob Child)

Topics:Newt Gingrich, Healthcare Reform, 2012 Elections

Since Newt Gingrich’s meteoric rise in the polls in the last two months, the Washington Post and New York Times have begun reporting on the Republican front-runner’s dual role as a vocal critic of President Obama’s healthcare overhaul and as a paid consultant who explains the law’s benefits to corporate clients.

What hasn’t been reported yet are two conference calls in June and December 2010 in which Gingrich and his for-profit Center for Health Transformation touted “the good parts” of Obama’s plan and offered advice about how clients might take advantage of a myriad of provisions of the Affordable Care Act.

In a February 2010 investigation into Gingrich’s healthcare business, I found that the Center’s consultants had curried favor for drug companies, health insurers, health IT companies and hospitals, which paid Gingrich hefty retainer fees in exchange for access, advice and health-related earmarks.

The conference calls, co-sponsored by Siemens and NextGen Health Care, were central to Gingrich’s effort. In her introductory remarks, co-host Charlene Underwood, government affairs vice president at Siemens, described the calls as a “GPS” for firms seeking to “navigate what promises to be a circuitous route for health care reform.”

On both occasions, David Merritt, the vice president of Gingrich’s health firm, spoke first, explaining the law and the stages of implementation. Merritt praised many parts of the law, including spending on public wellness programs and incentives for employers to encourage people to focus on preventative care.

”I think the bill, and the provisions that have the most potential to truly transform the delivery side of care, would be in what’s called Title III where a lot of these demonstrations, a lot of these changes to reimbursements, will be found,” he said.

For clients in the business of electronic medical records, Merritt said the Affordable Care Act offered incentives for better reporting standards and that early adopters of health information technology would benefit. Siemens and NextGen Health specialize in health information technology.

Gingrich also spoke on the calls reminding listeners that health reform could be shaped through committee hearings in 2011 and through the repeal-and-replace period in 2012, when (he suggested) a Republican president would take over. Touting his access to the Republican Party, Gingrich said he would be advising the congressional leaders as they took aim at the law.

On one call, Gingrich suggested that his clients — each paying as much as $200,000 in yearly retainer fees — would have a role in crafting policy.

“There are clearly things that we’d like to see continued and we’d like to see legislation passed almost concurrently that will sustain the good parts,” said Gingrich, explaining what would happen if the bill were to be repealed. Showing his savvy at generating business, he added that he would “love the help of all of our members in identifying” which parts of reform should remain law.

Gingrich’s private description of the Affordable Care Act differs dramatically from what he had said to voters publicly. In interviews over the last two years, he has described President Obama’s program as a “centralized healthcare dictatorship” with provisions that “would, in effect, be death panels.” At Republican debates, he said that if elected, he would literally sign the repeal at his inaugural ceremony.

He stuck a different tone on the 2010 calls with his clients.

Gingrich applauded the “rapidly emerging standard of care” that would come with new Medicare reporting patterns prescribed by the law. “I think that those people who understand it and adapt to it, and learn how to use it faster will have a substantial net advantage,” Gingrich advised.

Gingrich has dismissed criticism about his influence peddling, saying he has done “no lobbying.” But according to his clients, he is part of their lobbying operation. In slides before the Gingrich webcast, Siemens listed the Center for Health Transformation and “N. Gingrich” as part of its “Influencers” campaign, along with its team of D.C. lobbyists and trade association memberships.

In 2010, I asked the former speaker about his refusal to register as a lobbyist. Although he met with lawmakers and helped craft industry-friendly legislation with Capitol Hill staff, he told me that his influence peddling did not technically constitute lobbying because it “benefit[ed] the country at large.”

——

Listen to June 2010 webcast here

Listen to the Dec. 2010 webcast here:

: Lee Fang is an investigative journalist in the Bay Area. More Lee Fang

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Three-judge panel in Virginia backs constitutionality of Affordable Care Act

By Larry O'dell, Associated Press

President Barack Obama gestures during an event in the East Room of the White House to honor NASCAR driver Jimmie Johnson for his fifth consecutive championship on Wednesday, Sept. 7, 2011, in Washington. (AP Photo/Evan Vucci) (Credit: AP)

Topics:Healthcare Reform

A federal appeals court in Virginia has dismissed two lawsuits that had claimed President Barack Obama’s health care overhaul was unconstitutional.

The unanimous decision was issued Thursday by a three-judge panel of the 4th U.S. Circuit Court of Appeals. It is the second appellate court ruling affirming the government’s right to require individuals to buy health insurance or pay a penalty. A federal appeals court in Cincinnati also upheld the law, but an appeals court in Atlanta struck down the insurance mandate.

Two of the judges on the Virginia panel were appointed by Obama, the other by Bill Clinton. They rejected claims by the state’s Republican attorney general and Liberty University that the insurance mandate is unconstitutional.

More than 30 lawsuits have been filed over the law.

: More Larry O'dell

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Costa Rica's universal system has long been lauded. Now, it's on the verge of going broke

By Alex Leff, GlobalPost

A Costa Rican patient awaits care in a San Jose hospital on July 20, 2011

Topics:GlobalPost, Health, Healthcare Reform

SAN JOSE — Right-wing radio host Rush Limbaugh once vowed to flee to Costa Rica if President Barack Obama’s health care reforms took effect.

Limbaugh might have overlooked a couple of critical details: Costa Rica’s respected universal healthcare system is highly socialized. It’s also on the verge of going broke.

Costa Ricans credit health care with helping boost its life expectancy to 78.7 years — on par with the richest countries in the world. Costa Rica’s broad coverage ranked better than most of the Americas, including the United States, in a 2000 World Health Organization index.

Now, hobbled by mismanagement, the system has become overwhelmed by a burgeoning population that includes an increasing number of elderly and new immigrants who rely on the public system for care.

A damning report by the Pan American Health Organization, an international public health agency, found that Costa Rica’s social security system, known as “la Caja,” or savings bank in Spanish, spent greater sums than ever on health care even as service in public hospitals faltered.

At hospitals considered among Latin America’s finest, waiting lists run painfully long. A tally of patients awaiting biopsies at one San Jose hospital reached 11,000 last year.

Laura Chinchilla, Costa Rica’s president, told television viewers last month in one of her most somber addresses that la Caja is on the brink of a “serious crisis.”

“The [budget] shortage can no longer be covered by the current system, and any temporary solution will do nothing more than worsen the problem and the future situation of the institution,” Chinchilla said.

The long queues sway patients with means to opt for faster care in private clinics, popular among throngs of “medical tourists” from the United States.

“If it’s a little thing, it’s better to go to a private doctor,” said Susana Trejos, whose family grows fine coffee in the southern region of San Vito de Coto Brus.

But private health care prices are prohibitively high for most Costa Ricans, so they turn instead to la Caja.

To fund it, wage earners pay a little over 9 percent of their salary in social security tax. Their employer matches that with another 27 percent of each worker’s salary, and the government pays into la Caja as well to help cover the poor.

Anyone in the country of about 4.6 million can fill a prescription at a public pharmacy or have an operation, all paid for by Caja insurance.

Now, Costa Rica’s population is aging rapidly compared to the slowing birth rate — with some enduring seniors living past 100.

Many elderly people live on meager state pensions, leaving them to rely on the state for their care. “This can cost a fortune, and it all keeps getting handed out with not a single charge,” said Dr. Fernando Morales, director of the National Geriatric Hospital in San Jose.

Costa Rica’s labor landscape has also changed, with larger numbers of migrant workers and freelancers that feed a thriving informal sector that now makes up an estimated 40 percent of the Costa Rican workforce, who all receive care from la Caja.

Health officials say that tax fraud is another major drain on the system. Some companies underreport staff salaries to snag a lower tax rate. In a crackdown in 2009, the authorities shuttered a soccer stadium just hours before a big game to force the team owners to cough up over $1 million in social-security back pay.

Much of the blame for la Caja’s shortfall has fallen on previous managers. Under the former Caja chief’s watch, the public health system hired thousands of new workers and hiked wages. Pay for sick leave and overtime also ran up the bills. Social-security revenue, meanwhile, failed to keep pace.

The accusations of mismanagement triggered a shakeup in the Chinchilla administration, causing the embattled president to lose top cabinet officials. Recently, the health minister stepped down, saying that she disagreed with the way the president has handled the crisis at la Caja.

Chinchilla has vowed to rescue the system, ordering cash injections and setting up a committee of Caja directors to draw up a report on suggested reforms. There’s no word on when the report might be released, and it will take time to implement any changes it might suggest.

In the meantime, Hospital de Alajuela, the nearest public hospital to the capital’s international airport, has slashed its emergency-room hours due to budget troubles. For now, it seems that deep reform is stuck in the waiting room.

: More Alex Leff

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The new law may die in the Supreme Court. If it had included a public option, this all would have been avoided

By Robert Reich

How the Democrats could have saved healthcare

Topics:Healthcare Reform, War Room, Democratic Party, Supreme Court

Two appellate judges in Atlanta — one appointed by President Bill Clinton and one by George H.W. Bush — have just decided the Constitution doesn’t allow the federal government to require individuals to buy health insurance.

The decision is a major defeat for the White House. The so-called “individual mandate” is a cornerstone of the Affordable Care Act, President Obama’s 2010 healthcare reform law, scheduled to go into effect in 2014.

The whole idea of the law is to pool heath risks. Only if everyone buys insurance can insurers afford to cover people with preexisting conditions, or pay the costs of catastrophic diseases.

The issue is now headed for the Supreme Court (another appellate court has upheld the law’s constitutionality) where the prognosis isn’t good. The Court’s Republican-appointed majority has not exactly distinguished itself by its progressive views.

Chalk up another one for the GOP, outwitting and outflanking the president and the Democrats.

Remember the healthcare debate? Congressional Republicans refused to consider a single-payer system that would automatically pool risks. They wouldn’t even consider giving people the option of buying into it.

The president and the Democrats caved, as they have on almost everything. They came up with a compromise that kept healthcare in the hands of private insurance companies.

The only way to spread the risk in such a system is to require everyone to buy insurance.

Which is exactly what the two appellate judges in Atlanta object to. The Constitution, in their view, doesn’t allow the federal government to compel citizens to buy something. “Congress may regulate commercial actors,” they write. “But what Congress cannot do under the Commerce Clause is mandate that individuals enter into contracts with private insurance companies for the purchase of an expensive product from the time they are born until the time they die.”

Most Americans seem to agree. According to polls, 60 percent of the public opposes the individual mandate. Many on the right believe it a threat to individual liberty. Many on the left object to being required to buy something from a private company.

Had the president and the Democrats stuck to their guns during the healthcare debate and insisted on Medicare for all, or at least a public option, they wouldn’t now be facing the possible unraveling of the new healthcare law.

After all, Social Security and Medicare — the nation’s two most popular safety nets — require every working American to “buy” them. The purchase happens automatically in the form of a deduction from everyone’s paychecks.

But because Social Security and Medicare are government programs they don’t feel like mandatory purchases. They’re more like tax payments, which is what they are — payroll taxes.

There’s no question payroll taxes are constitutional, because there’s no doubt that the federal government can tax people in order to finance particular public benefits.

Americans don’t mind mandates in the form of payroll taxes for Social Security or Medicare. In fact, both programs are so popular even conservative Republicans were heard to shout “don’t take away my Medicare!” at rallies opposed to the new healthcare law.

Requiring citizens to buy something from a private company is entirely different. If Congress can require citizens to buy health insurance from the private sector, reasoned the two appellate judges in Atlanta, what’s to stop it from requiring citizens to buy anything else? If the law were to stand, “a future Congress similarly would be able to articulate a unique problem … compelling Americans to purchase a certain product from a private company.”

Other federal judges in district courts — one in Virginia and another in Florida — have struck down the law on similar grounds. They said the federal government has no more constitutional authority requiring citizens to buy insurance than requiring them to buy broccoli or asparagus. (The Florida judge referred to broccoli; the Virginia judge to asparagus.)

Social Security and Medicare aren’t broccoli or asparagus. They’re as American as hot dogs and apple pie.

The Republican strategy should now be clear: Privatize anything that might otherwise be a public program financed by tax dollars. Then argue in the courts that any mandatory purchase of it is unconstitutional because it exceeds the government’s authority. And rally the public against the requirement.

Remember this next time you hear Republican candidates touting Paul Ryan’s plan for turning Medicare into vouchers for seniors to buy private health insurance.

So what do Obama and the Democrats do if the individual mandate in the new healthcare law gets struck down by the Supreme Court?

Immediately propose what they should have proposed right from the start — universal healthcare based on Medicare for all, financed by payroll taxes. The public will be behind them, as will the courts.

: Robert Reich, a professor of public policy at the University of California at Berkeley, was secretary of labor during the Clinton administration. He is also a blogger and the author of "Aftershock: The Next Economy and America's Future." More Robert Reich

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Federal panel rules individual mandate unconstitutional by a two-to-one margin

By Greg Bluestein, Associated Press

Topics:Healthcare Reform

A federal appeals court panel on Friday struck down the requirement in President Barack Obama’s health care overhaul package that virtually all Americans must carry health insurance or face penalties.

The divided three-judge panel of the 11th Circuit Court of Appeals struck down the so-called individual mandate, siding with 26 states that had sued to block the law. But the panel didn’t go as far as a lower court that had invalidated the entire overhaul as unconstitutional.

The states and other critics argued the law violates people’s rights, while the Justice Department countered that the legislative branch was exercising a “quintessential” power.

The decision, penned by Chief Judge Joel Dubina and Circuit Judge Frank Hull, found that “the individual mandate contained in the Act exceeds Congress’s enumerated commerce power.”

“What Congress cannot do under the Commerce Clause is mandate that individuals enter into contracts with private insurance companies for the purchase of an expensive product from the time they are born until the time they die,” the opinion said.

Circuit Judge Stanley Marcus disagreed in a dissent.

The 11th Circuit isn’t the first appeals court to weigh in on the issue. The federal appeals court in Cincinnati upheld the government’s new requirement that most Americans buy health insurance, and an appeals court in Richmond has heard similar legal constitutional challenges to the law.

But the Atlanta-based court is considered by many observers to be the most pivotal legal battleground yet because it reviewed a sweeping ruling by a Florida judge.

U.S. District Judge Roger Vinson’s ruling not only struck down a requirement that nearly all Americans carry health insurance, but he also threw out other provisions ranging from Medicare discounts for some seniors to a change that allows adult children up to age 26 to remain on their parents’ coverage.

The states urged the 11th Circuit to uphold Vinson’s ruling, saying in a court filing that letting the law stand would set a troubling precedent that “would imperil individual liberty, render Congress’s other enumerated powers superfluous, and allow Congress to usurp the general police power reserved to the states.”

The Justice Department countered that Congress had the power to require most people to buy health insurance or face tax penalties because Congress has the authority to regulate interstate business. It said the legislative branch was exercising its “quintessential” rights when it adopted the new law.

During oral arguments in June, the three-judge panel repeatedly raised questions about the overhaul and expressed unease with the insurance requirement. Each of the three worried aloud if upholding the landmark law could open the door to Congress adopting other sweeping economic mandates.

The arguments unfolded in what’s considered one of the nation’s most conservative appeals courts. But the randomly selected panel represents different judicial perspectives. None of the three is considered either a stalwart conservative or an unfaltering liberal.

Dubina, an appointee of President George H.W. Bush, is not considered to be as reflexively conservative as some of his colleagues. But he’s been under particular scrutiny because of his daughter’s outspoken opposition to the health care overhaul. U.S. Rep. Martha Dubina Roby, a Montgomery, Ala., Republican elected in November, voted to repeal the health care law.

Marcus and Hull were both tapped by President Bill Clinton to join the court. But Marcus was also previously appointed by Republican President Ronald Reagan to serve on the Florida bench after several years as Miami’s lead federal prosecutor. And Hull, a former county judge in Atlanta, is known for subjecting both sides of the counsel table to challenging questions.