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An Evaluation of Nancy’s Masterpiece: The Band-aid Period

We’ll see many policy analyses and evaluations of Nancy Pelosi’s compromise health care reform bill as it gets closer to a final vote. This one won’t be thorough, since the bill is one of daunting length (1990 pages) and complexity, and I haven’t had the time to do a really detailed analysis. But I’ll do the best I can now, because enough detail is available to get a general impression of the bill, and evaluations that are timely are sorely needed, if only to feed the very essential debate that must go on before such a consequential bill becomes final.

The thing that sets this bill apart from most, is that it specifies two distinct periods in which the legal structures created by the bill will be different. The first period is from January 1, 2010 to the date in 2013 when the exchange, the public option, the mandates, the subsidies, and the outlawing of denials due to preexisting conditions become relevant, and the period thereafter, when most of these conditions take effect, and when eligibility for the exchange and the public option will be gradually expanded.

I’ll begin this analysis and evaluation with the first “band-aid” period. Speaker Pelosi’s office has conveniently produced a list of 14 provisions that take effect immediately. There are three categories of provisions: those mainly focused on addressing the problems of coverage and cost we see in the present system, provisions which provide “goodies” to Medicare recipients, and provisions providing miscellaneous “goodies” to sub-groups in the population, or address long-term but not the current central issues of health insurance reform.

Coverage and Insurance Cost Provisions

”2. IMMEDIATE HELP FOR THE UNINSURED UNTIL EXCHANGE IS AVAILABLE (INTERIM HIGH-RISK POOL) — Creates a temporary insurance program until the Exchange is available for individuals who have been uninsured for several months or have been denied a policy because of pre-existing conditions.”

A recent Harvard study estimated that nearly 45,000 deaths annually are due to lack of insurance. The question that needs to be addressed here, is how much this figure is likely to be reduced during the “band-aid” period before the exchange and the PO are operative? It is a question I can raise, but cannot answer accurately at this point. It’s clear from the bill that the uninsured entering the risk pool will be able to buy private insurance at a cost no greater than 125% of the rate being offered by the insurance companies to individuals. For someone losing employment and work-related coverage, the cost of individual insurance, apart from the 25% increase, would be a great financial burden. People already seriously ill, will do all they can to get the insurance, since those in the risk pools can’t be denied insurance due to preexisting conditions. However, those who are healthy won’t have a mandate forcing them to buy insurance until the exchange is available in 2013. So they may well risk not having coverage. If they do take the risk, and get sick, they can always get coverage, but the bill doesn’t provide for immediate entry into the pool for the sick, and as far I can tell at this point, there will be a wait of up to 6 months before they get in, a wait that can well be fatal, or that can greatly exacerbate the severity of their illness, and the prognosis for recovery.

So, realistically, we have to ask how many people will actually sign up for the high risk pool. Right now there are 47,000,000 people without insurance. Roughly 0.1% of them die every year. CBO estimates that 36 million of the 47 million will eventually be covered once the exchange is established. But how many will enter the high risk pool and be covered before the exchange is established? I’m going to conjecture that because of the absence of a mandate, the paperwork involved in applying, and the cost, absent subsidies of individual private insurance, we are likely to see no more than 1/3 of the uninsured get insurance before 2013. This is admittedly a guess, and if anyone has a more reasonable conjecture about the percentage involved, I’d be interested to see it. But, using the 1/3 guesstimate, roughly 31,000,000 will still be uninsured in the band-aid period. That period will be at least 3 full years and may also involve part of 2013, depending on how quickly the exchange can be established in that year. Assuming the exchange might be ready halfway through 2013, there would then be 3.5 years in the band-aid period. At the beginning, it will take time for people to enroll in the high risk pool and get insurance, so less than 1/3 of the uninsured will be covered. At the end of the period, many more than 1/3 may be covered. I have no easy way to estimate these details, so I’ll use 1/3 covered and 31,000,000 uninsured as an average for the whole 3.5 year band-aid period. Since roughly, 0.1% of the uninsured die every year due to lack of insurance, I estimate that this legislation, over the whole band-aid period leaves 108,500 to die from lack of insurance. An amount equal to thirty-six (36) 9/11 tragedies. Is this a price we can afford to pay in order to make the reform bill deficit neutral over the period 2010-2019? This is a central question that legislators who claim to care about the well-being of the American people have to address before they pass this bill.

Congressman Alan Grayson (D-FL) is justly famous for saying that the Republican health care plan is for people to go ahead and die quickly when they get sick. But, a few days ago, in an appearance on Ed Schultz’s MSNBC show, he expressed his approval of Nancy Pelosi’s bill as “the only game” right now, and as “a good bill” that saves money and lives, and he incorrectly claimed that the bill would save "the 44,000 lives" lost annually. It’s fair to assume that he doesn’t think that the same moral outrage he expressed at Republican intentions with respect to health care reform is merited with respect to the House bill. However, if his moral outrage was based, as he claimed, on the occurrence of nearly 45,000 fatalities per year resulting from the present system, it’s hard to understand why he wouldn’t feel nearly as outraged about the continued loss of 31,000 lives per year in the band-aid period. Does moral outrage and immorality end, and pragmatism begin somewhere between 45,000 and 31,000 deaths per year, or going beyond the band-aid period between 45,000 and 11,000 (the deaths we can forecast if 11,000,000 remain uninsured)?

”3. BANS LIFETIME LIMITS ON COVERAGE — Prohibits health insurance companies from placing lifetime caps on coverage.”

This one looks like a good reform that should certainly make a difference in the number of bankruptcies and home foreclosures resulting from medical bills. But it won’t end them because of the effects of deductibles, co-pays, and the cost of drugs that insurance won’t pay for.

"4. ENDS RESCISSIONS — Prohibits insurers from nullifying or rescinding a patient’s policy when they file a claim for benefits, except in the case of fraud."

An unambiguously good provision that eliminates one of the worst injustices in the present system and does so immediately.

”5. EXTENDS COVERAGE FOR YOUNG PEOPLE UP TO 27TH BIRTHDAY THROUGH PARENTS’ INSURANCE — Requires health plans to allow young people through age 26 to remain on their parents’ insurance policy, at the parents’ choice.”

This one should prevent increases in the number of uninsured, since fewer young people in school will be swelling the ranks of the uninsured before they get jobs and have employer-based insurance available.

”9. IMMEDIATE SUNSHINE ON PRICE GOUGING — Discourages excessive price increases by insurance companies through review and disclosure of insurance rate increases.”

Now, why is it that whenever Congress deals with large corporations, it seems incapable of just mandating behavior, specifying criminal penalties, and subjecting corporate executives to the penalties of the law? What’s this nonsense about discouraging “excessive price increases” through sunshine. A lot of good that’s done in persuading the credit card companies who have had plenty of sunshine lately, from raising interest rates way beyond the levels of usury, and into loan shark territory. If we don’t want “excessive price increases,” by the insurance companies in the band-aid period, why not just define them, prohibit them, and specify criminal penalties for individuals working for corporations who violate the law, and enormous fines for the corporations themselves? The fact that the House won’t do that sort of thing to corporations and their employees who have been “murdering people by spreadsheet” by the thousands, and also driving a million others into bankruptcy and foreclosure each year, is the kind of thing that convinces people that Congress and the Democratic Party are just playing games, and really have no interest in protecting working people from rapacious corporations. To stop stealing we make it illegal, and prosecute the criminals doing it. To stop the corporate protection and extortion racket called private health insurance, we also need to make the extortion illegal and to prosecute and imprison the executives who are dictating price increases that exceed inflation.

Medicare-related “Goodies”

”1. BEGINS TO CLOSE THE MEDICARE PART D DONUT HOLE — Reduces the donut hole by $500 and institutes a 50% discount on brand-name drugs, effective January 1, 2010.”

”6. ELIMINATES COST-SHARING FOR PREVENTIVE SERVICES IN MEDICARE — Eliminates co-payments for preventive services and exempts preventive services from deductibles under the Medicare program.”

”7. IMPROVES HELP FOR LOW-INCOME MEDICARE BENEFICIARIES — Improves the low-income protection programs in Medicare to assure more individuals are able to access this vital help.”

”8. PROVIDES NEW CONSUMER PROTECTIONS IN MEDICARE ADVANTAGE — Prohibits Medicare Advantage plans from charging enrollees higher cost-sharing for services in their private plan than what is charged in traditional Medicare.”

It’s clear that these provisions are there to give something to people over 65, so that they will have more positive feelings about the “reform bill,” and to be able to claim that it strengthens Medicare. Having said that, it’s hard to understand, from the perspective wanting to do right by Seniors, why the doughnut hole is not just completely eliminated immediately. Of course, the answer to this question, is the need to keep the bill deficit neutral. To progressives who either 1) don’t believe that deficits are anything to worry about during near depressions, or 2) think that the current income tax system is much too regressive and that wealthy people pay far less than their fair share, this reason for keeping the doughnut hole, and only gradually reducing it between 2010 and 2019 is far less than compelling. To speak plainly, this half-hearted attempt to close the doughnut hole, will seem like another decision Congress has made which is over-solicitous of the interests of well-off people at the expense of people over 65.

Miscellaneous “Goody Bag” Provisions

These together constitute a “goody bag” that eases various aspects of the health care reform problem. None of them is particularly momentous, but together they could help a substantial number of people. This “goody bag” makes it harder for progressives to oppose this bill. It includes the following items.

”10. CONTINUITY FOR DISPLACED WORKERS — Allows Americans to keep their COBRA coverage until the Exchange is in place and they can access affordable coverage.”

”11. CREATES NEW, VOLUNTARY, PUBLIC LONG-TERM CARE INSURANCE PROGRAM — Creates a long-term care insurance program to be financed by voluntary payroll deductions to provide benefits to adults who become functionally disabled.”

”12. HELP FOR EARLY RETIREES — Creates a $10 billion fund to finance a temporary reinsurance program to help offset the costs of expensive health claims for employers that provide health benefits for retirees age 55-64.

”13. COMMUNITY HEALTH CENTERS — Increases funding for Community Health Centers to allow for a doubling of the number of patients seen by the centers over the next 5 years.”

”14. INCREASING NUMBER OF PRIMARY CARE DOCTORS — Provides new investment in training programs to increase the number of primary care doctors, nurses, and public health professionals.”

Items 11 and 14 are certainly good features of the bill, but they don’t address immediate health insurance problems. Items 10, 12, and 13 help to alleviate current hardships. But it’s fair to say that they are band-aids that won’t have a substantial effect on the number needing insurance. So rather than being key elements in a solution to the problems of universal coverage, or insurance and pharma costs, they are expedients that are there to alleviate the hardships of some during the band-aid period.


In evaluating the band-aid period aspect of the House bill, there are a few key points that really stand out. First, the very fact that there is a “band-aid” period is a grievous problem with this bill. It does two things. First, it ensures that there will still be roughly 31,000 fatalities per year during the band-aid period, a total of 108,000 dead throughout the period, still 2/3 of the present number of fatalities forecast without a bill. To the people who have no insurance and who will die because they don’t have it, the House is saying: “help is on the way: just hang on until 2013, or alternatively you can pay the enormous cost of individual health insurance in the high-risk pool – if you can afford it before the subsidies kick in.”

Second, the “sunshine provision” in the band-aid period, rather than persuading us that it will be effective in meeting the problem of insurance cost increases, is so weak that it tells us the opposite: namely, that Congress is just giving lip service to the idea that insurance cost increases must be regulated and minimized during this period, and that we can probably expect insurance cost increases of between 40% and 50 % over the band-aid period. So, during the band-aid period, this bill does almost nothing to address the problem of rising insurance costs. There’s also a further effect on the people going into the high-risk pool who choose to, or are forced to, buy insurance at 125% of the going rate for individuals. Because, as individual rates go up by 40 – 50% over rates today, their rates, already 25% more expensive than scale, will increase proportionately, so that their rates are 75% above today’s rates. Will they be able to afford that insurance, even if it is finally available to them? Many of them won’t; and to the extent that occurs, fatalities due to lack of insurance will increase beyond the 31,000 per year level during the “band-aid” period.

While the “Senior buy-off” Medicare provisions in this bill are certainly an improvement that progressives can get behind, and while the miscellaneous “goody bag” provisions are also hard for progressives to turn down. It’s hard to see how anyone could mistake the band-aid period for a substantial improvement over the present system except in the case of eliminating rescissions. This reform should prevent further growth in the ranks of the uninsured, but, not necessarily, because the bill may not control pricing of policies tightly enough to protect those who are seriously ill from exorbitant price increases, which effectively prevent them from taking advantage of the no rescissions aspect of the bill. This is a point to watch closely in the final bill.

So, what should we think of this bill, evaluating it from the perspective of what it provides in the band-aid period. Does it improve things in that period or not? Is it better than nothing at all? Is it an immoral and an intolerable bill, in some ways like Alan Grayson’s "Republican plan" saying to thousands of people each year, “If you get sick then die quickly.”

The truth is that the bill does improve things immediately in 2010. It prohibits rescission. It provides a way, through the high risk pool, for people with preconditions to get insurance, even if it is at a high price. It also does some good things for Medicare recipients, and a number of good things that are part of the “goody bag.” Yet even though this bill is an improvement compared to the status quo, I think that both putting it forward, and voting for it, are immoral acts, if the bill, in any way, creates a dynamic that prevents us from, or weakens our efforts to, take up the health insurance reform problem in the next session, and thereafter, for as long as it takes to get a bill that will end fatalities, bankruptcies, and home foreclosures, due to lack of insurance.

The overriding problem with the bill is that it prioritizes deficit neutrality over the deaths of many thousands of Americans per year. Yes, I said earlier that the bill will reduce the 45,000 annual deaths by some substantial amount, but in the “band-aid” period before the exchange takes effect in 2013, we’re still looking at 31,000 or so deaths per year from lack of insurance. And, even after that at current death rates due to lack of insurance we’re still looking at 11,000 annual deaths. These likely forecasts suggest that the current bill is a great moral failure of Nancy Pelosi, the Democratic Party, and progressives who support it.

We can, if we like, look at the bill from the perspective of how it compares to no bill at all. And compared to no bill at all, and, if we assume that we will have no other reform bill over the next ten years, this bill is certainly an improvement.

However, whether or not we have other bills, whether now, or next year, or any year in the future, is our choice, the choice of Democrats, progressives, and the American people. So, the comparison of this bill with no bill at all is a false framing, narrowly circumscribing our choices. and relieving us of responsibility to look at what we ought to have, or what we might have had, or what we may yet have, if we fight harder right now.

There are bills we should have formulated, and bills already formulated, like HR 676, that we can pass, that will not leave 31,000 annual deaths due to lack of insurance, and nearly as many health-related bankruptcies and foreclosures, if progressives “just say no” to Pelosi. There are bills that can virtually eliminate fatalities due to lack of insurance, and also bills that reduce the levels of these much more, if progressives “just say no” to Pelosi. So, why isn’t the House bill like those?

The answer is that the bill’s number one priority is not solving America’s health insurance problem. It is, instead, to pass a bill that legislators can say is deficit neutral. That is “deficit hawkism,” adhering to the ideology that prioritizes bringing tax revenues and Government expenditures into balance ahead of other far more essential national needs and priorities. In the case of health insurance and health care reforms, adhering to that ideology is not only mistaken, or stingy, or an instance of false economy, but given that it accepts the inevitability of hundreds of thousands of American deaths over the next decade, it is immoral. And its application in this legislation is also immoral.

Why isn’t health insurance reform in the House bill made fully operative until 2013, since, if it were operative within a year, along with subsidies that ensured that nearly everyone would get insurance, it would save more than 70,000 additional lives in the first 3.5 years compared to the current bill? The answer is that it is Congress and the President placing the false standard of deficit neutrality over the next decade, above the moral imperative of ending fatalities due to lack of insurance.

The extent of immorality accompanying this choice is even more apparent, when everyone sees that we have not employed that standard to the bank and wall street bailouts, or to the Wars in Afghanistan, and Iraq. We prioritize some things above “deficit hawkism,” just not the lives of more than 108,000 Americans over the next 3.5 years, and about 72,000 more over the next ten. In addition, passing this bill, with its “band-aid” period, brings with it the near certainty, if we try to revisit health insurance reform, of having to face a propaganda campaign emphasizing the idea that we just got through legislating reform, and that we therefore, ought to wait until the “band-aid” period is over, and the legislation with its public option plan, has had a chance to work without considering more reform. Looking at things from the perspective of these considerations, and the possibility of other and better alternatives, and not from the perspective of whether it is better than no bill at all; the House bill, because of its enactment of a “band-aid” period of more than 3 years, and its provisions that don’t end substantial lack of coverage after that, is both immoral and intolerable. It needs to be defeated, and another bill needs to be quickly put in its place.

(Also posted at the Alllifeisproblemsolving blog where there may be more comments)

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Joseph M. Firestone, Ph.D. is Managing Director, CEO of the Knowledge Management Consortium International (KMCI), and Director and co-Instructor of KMCI’s CKIM Certificate program, as well as Director of KMCI’s synchronous, real-time Distance Learning Program. He is also CKO of Executive Information Systems, Inc. a Knowledge and Information Management Consultancy.

Joe is author or co-author of more than 150 articles, white papers, and reports, as well as the following book-length publications: Knowledge Management and Risk Management; A Business Fable, UK: Ark Group, 2008, Risk Intelligence Metrics: An Adaptive Metrics Center Industry Report, Wilmington, DE: KMCI Online Press, 2006, “Has Knowledge management been Done,” Special Issue of The Learning Organization: An International Journal, 12, no. 2, April, 2005, Enterprise Information Portals and Knowledge Management, Burlington, MA: KMCI Press/Butterworth-Heinemann, 2003; Key Issues in The New Knowledge Management, Burlington, MA: KMCI Press/Butterworth-Heinemann, 2003, and Excerpt # 1 from The Open Enterprise, Wilmington, DE: KMCI Online Press, 2003.

Joe is also developer of the web sites,,, and the blog “All Life is Problem Solving” at, and He has taught Political Science at the Graduate and Undergraduate Levels, and has a BA from Cornell University in Government, and MA and Ph.D. degrees in Comparative Politics and International Relations from Michigan State University.