The Health Care Bill - the Law that Keeps on Being Written

On November 22, 2010, and we once again find out what happens when we can't know what is in a bill until we pass a bill. This is the date that the Obama Administration announced that it knows better than an entire industry, and placed a requirement on health insurance companies that they spend 80-85% of health insurance premiums on medical related expenses. While this is not technically a limit on profits, it is at least a close cousin.

It sounds good, doesn't it? Even though most of us are insulated from the full price of our health insurance premiums, because they are paid by our employers, we all know that they are expensive - too expensive, even. So the idea that 80% of our premiums going toward medical expenses sounds like we are going to end up getting more bang for our buck. On the face of it, it appears that, if a health insurer is spending more than 20% on costs/profits, that they will have to reduce them in order to comply with the law. Although this not necessarily the case, let us, for the sake of argument, assume that insurers will comply with the law by reducing their non-medical expenses.

Off the top of my head, non-medical expenses include, but are not limited to, administrative costs (people's salaries), infrastructure (computers, office equipment, offices, etc.), fraud investigations, and profits (can't forget those). So, which of these are going to get cut? Profits are the easy answer, but profits for health insurance companies are currently around 3.5%. There isn't much more to cut, there. So, what else is going to get cut? People's salaries? Or should we just reduce the number of people employed in the insurance industry? Maybe we don't need those new-fangled computers (even though they probably make the industry much more cost efficient). Fraud investigations? That wouldn't cause incidents of fraud to rise, would it? When you look at the actual places that cuts would be made, it becomes evident that there might not be all that much fat to cut.

The other way that companies could come into compliance... the easy way for them to comply with this new rule, is to increase the other side of the equation - the amount spend on medical expenses. Rising medical expenses would result in rising premiums, and if the non-medical expenses remained constant, they would become a smaller percentage of premiums. This is certainly not the intent of the new regulation, but it is a likely result of it.

I don't normally make predictions, but if and when this latter scenario plays out, the next move will not be the repeal of this rule, it will be the adoption of even more regulations. If medical expenses increase as a result of an increase in the cost of specific tests and procedures, price controls will be instituted to prohibit their inflation. If insurers start authorizing additional tests in order to cause their medical expenses to rise, regulations will be instituted to limit what tests can be administered for what conditions.

But here is the real travesty. No one voted on this regulation. Not one Congressman. Not one Senator. Every single person that voted for the health care bill in March can honestly say that this is not what they voted for. But they did vote for it. They voted for it because they voted for a bill that said things like "The Secretary shall make such rules..." over and over throughout the legislation. Our legislature, once again, has abrogated their responsibility of creating the law, and handed it over to the executive branch. This is why Nancy Pelosi was correct when she said that we couldn't know what is in the law until they passed the law - because the law wasn't written, even then. In my last post, one of my suggestions to the new Republican majority was to take back the power that they have given over to the executive branch. The more I think about it, the more important I think this is. Congress should pass a law requiring that all executive-enacted regulation must be ratified by the Congress, either within a certain period of time, or, better yet, before it goes into effect. On November 22, 2010, we learned of another piece of the health care bill. It won't be the last, because, eight months after the bill was passed and signed into law, the health care bill continues to be written.

An Open Letter to John Boehner

Dear Mr. Boehner,

First of all, congratulations on your historic victory in the just concluded midterm election. I remember 1994, staying up to watch the election returns come in as seat after seat fell to Republicans, and they were able to take control of the House for the first time in 40 years. This was the first election since then that has had me so enthused, and I look forward to your inauguration as the new Speaker of the House. As hard as it is to imagine, the election is the easy part. Governing is the hard part. You've won. Now what? You seem to have made a good start, you struck the right tone in your speech on election night. You seem to realize that this was not a victory for Republicans as much as it was a defeat of Democrats. But now it is time to move forward, and with that in mind, I would like to offer you a little advice.

1. Keep things simple. Write legislation that is easy to understand. Whenever possible, have each piece of legislation should serve a single purpose. A bill should have a preamble, telling what it is supposed to do in plain, clear language. It should then have bullet points to explain how it is going to do that. Only then should the legal-eze appear, and even then, if it starts to near 100 pages, red flags should go up that this is getting much too complicated.

This is much of the problem with grandiose legislative initiatives like the Health Care Bill. By the time it was written, it was over 2,000 pages of legal mumbo jumbo that no one could understand. Republicans have their own ideas for health care reform. Instead of rolling these up into one big health care bill, have a series of bills created. For example: Republicans would like to allow people to buy health insurance form any company, regardless of the state that the policy is underwritten in. Great. Write it up. How long would it take to write a bill that just did that? A second Health Care reform Republicans have proposed is that people should be able to buy their own health insurance policy, and get the same tax breaks that corporations get. There is a second bill, write it up, vote on it, send it on to the Senate. Make the Senate and the President go on the record on these "common sense" reforms, that have been written in such a way that the American people understand precisely what it is that is being voted on.

2. Pass a new rule that, in every two-year session of Congress, every member of Congress has the opportunity to bring one piece of legislation to the floor for a vote. It is my belief that this would go a long way to show that Republicans are interested in working with Democrats. Nancy Pelosi came off as authoritative. Democrats, with their large majorities, were unwilling to even listen to Republican ideas, let alone allow them to be voted on. Show that you are a bigger person, and that the Republicans are the party of grown-ups. Every member can bring one piece of legislation out of committee, without committee approval. It will receive an up or down vote, and the American people will know where both sides stand. Of course, all legislation must pass whatever test is placed it by the first suggestion.

3. Target the deficit. Come up with a number that you want to reduce the deficit by, and try to meet it. Better yet, give a number to the President and let him know that any budget that he proposes that exceeds that number will be considered dead on arrival. This would tell the American people that you are serious about tackling the debt.

4. Quit giving away your authority by creating agencies that have the power to write regulations with the force of law. It is your job to make law. Do it. This was another problem with the Health Care Bill. The legislation didn't create rules as much as it created agencies that had the power to write them. And while you are at it, take back some of the authority that you have given to agencies such as the EPA. How about this. Any new regulation put in place by the EPA is only valid for 60 days, unless both houses of Congress vote on the regulation, and the President signs it into law - just like any other law. This needs to be implemented soon, or the EPA may end up instituting cap and trade without anyone every casting a vote on it.

5. For every new law, and new regulation, that you pass, you will repeal one. Better yet, be bold, and go for a two-fer. Repeal 2 laws for every new one that you pass. Most Americans have come to realize that there are too many regulations placed on them. The problem is, every time a new bill is signed into law, the burden becomes heavier. Laws don't often go away, just like spending programs don't. Make an effort to reduce this burden on the American people.

6. Find a way to show Americans that you are just as opposed to Big Business as you are Big Government. Power corrupts, and absolute power... Well, we all know that. The bigger anything is, the more corrupt it becomes, and this is true just as much for Big Business as it is for Big Government. It is a common misconception to think that Big Business is opposed to the regulatory burden placed on it by Big Government. The fact of the matter is, in many instances , they welcome it, because they can afford to accommodate the regulations, passing the costs on to consumers. Where they benefit is from the reduction of competition from small business. The Americans with Disabilities Act is a good piece of legislation, however, you can't argue that it is much easier for McDonald's to be able to comply with its requirements than it is for Ma's Diner.

It has been said, be careful of what you wish for, you just might get it. Well, Mr. Boehner, you have long wished to be Speaker of the House... to have at least one hand on the reigns of government. You have it now, but only with power that has been loaned to you from the American people. Use it wisely, or you may find that this blessing can quickly turn into a curse. I wish you luck, you may need it.

Sincerely,

Brent W. Tuominen