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Democratic Leadership Healthcare Proposals Pose Significant Risks

Press Release

Location: Neptune, NJ

Democratic Leadership Healthcare Proposals Pose Significant Risks

Congressman Chris Smith, a senior member of the House of Representatives long active on health care issues and legislation in Congress, supports reasonable health care reform but strongly opposes President Obama's national health care plan, also called H.R. 3200 and dubbed the "America's Affordable Health Choices Act of 2009." Congressman Smith issued the following responses to questions posed by the Asbury Park Press about the Obama healthcare plan. The following article ran in the Aug. 17 online edition of the Asbury Park Press, and a similar version ran in the Aug. 16 print edition of the paper.

EDITOR'S NOTE: Following up on our July 26 editorial on the need for further public discussion of the key issues in the health care reform debate, we invited Rep. Frank Pallone Jr., D-N.J., and Rep. Chris Smith, R-N.J., to respond to eight questions raised in the editorial. Pallone's responses appeared on the Aug. 2 op-ed page. Today, we are running Smith's responses.

Smith, dean of the New Jersey congressional delegation, says he supports reasonable health care reform but strongly opposes the so-called Obamacare plan for several reasons, "especially the sweeping new powers to manage an individual patient's care that would be vested in government bureaucrats as well as huge risks to patients inherent in the public plan."

Smith serves as co-chairman of the bipartisan Congressional Alzheimer's Task Force. He founded and serves as chairman of the Coalition for Autism Research and Education, the Spina Bifida Caucus and the Lyme Disease Caucus. He helped create a program to fund and significantly expand federal autism research, and wrote Title I of the Children's Health Act, which authorized a comprehensive surveillance project to learn what causes autism. He is the prime sponsor of numerous other comprehensive health care laws.

Q. Will the creation of a public plan drive private health insurance companies out of business? Private insurers say they will be unable to compete with the lower costs offered by the federal government, ultimately leading to a single-payer system.

A. There is a great deal of justified concern that the massive new public plan will unfairly benefit from numerous advantages over private insurance plans that, especially over time, will drive many private plans out of business. Notwithstanding claims to the contrary, the public plan will not compete on a level playing field with private insurance companies. A public plan will be empowered to force below-market payment rates to providers (with potential compromise in the quality of care), will not pay state premium and property taxes, will be insulated from lawsuits in state courts in favor of federal courts, will not be compelled to abide by state financial regulations, and will have reasonable assurance that U.S. taxpayers could be forced to cover any deficits.

Rather than defeat an amendment offered by Rep. George Radanovich, R-Calif., requiring the government plan be subject to the same standards and business environment as private plans, the Democratic committee leadership should have accepted the proposal, creating a true level playing field between private insurers and the government-run plan. Like many consumers, I have, at times, been personally disappointed in the performance of private insurance plans. However, Obamacare puts patients — especially the chronically ill and very old — at greater risk of not getting necessary care because government bureaucrats may construe a patient's age, prognosis and medical outcome as factors precluding coverage of a vast array of services, from knee and hip replacements to expensive interventions to combat cancer.

By creating a massive new super-powerful government bureaucracy, I am deeply concerned that patients will encounter both unconscionable and life-threatening delays in addition to outright denials in service. Our health care system must be life-affirming and compassionate, and the patient's doctor must remain the quarterback — not a federal bureaucrat.

Q: Are there adequate incentives to keep employers who now offer health insurance to employees from dropping it because of the creation of a public plan?

A: No. Obamacare creates a new significant penalty on employers, 8 percent of payroll, for not providing what the bill calls "acceptable health coverage" — a set of health benefits designed and approved as "essential" by government bureaucrats. A fat new 8 percent tax can hardly be regarded as a benign "incentive" but it may cause some employers to retain their private plan. However, some employers — perhaps many — may conclude that just paying the new tax as opposed to paying for a private health insurance plan furthers their bottom line.

Q: For all the talk of dramatic reform, the legislation does not fundamentally alter the payment and reimbursement structure — a major driver of escalating health care costs. Why not devise a system that rewards providers for success in keeping people healthy — rather than for ordering more tests and procedures? The current system rewards inefficiency.

A: Under Obamacare, employers are not given the flexibility to attempt to control costs by varying employee health premiums based on participation in wellness programs, even though these programs are proven to significantly advance healthier living and lower costs.

The director of the non-partisan Congressional Budget Office, Douglas Elmendorf, testified before the Senate Budget Committee that none of the bills contained the "sort of fundamental changes that would be necessary to reduce the trajectory of federal health spending by a significant amount." Elmendorf's assessment included the House bill that will cost roughly $1.2 trillion, will raise taxes by $753 billion, will cut $563 billion from Medicare programs — with hospitals, nursing facilities and home care hit particularly hard — and will raise the budget deficit by $239 billion.

Rather than the administration's massive restructuring and expansion of federal control over health care, we should aggressively be moving forward to protect Medicare, which is projected to become insolvent by 2017, and make it a model for both responsiveness and efficiency.

Medical liability reform, including reasonable limits on pain and suffering awards with reduced payments to malpractice lawyers, was strongly pushed by President Ronald Reagan and under Republican control passed the House but failed in the Senate. Defensive medicine — ordering unnecessary tests and procedures to mitigate a possible malpractice lawsuit — imposes huge costs on both providers and patients. Sadly, Obamacare takes a pass on liability reform.

Q: Why does the legislation exempt federal officials from participation in the public plan, and why did Obama balk when asked whether he would enroll in the plan? If it is good enough for the general public, why isn't it good enough for our elected leaders?

A: Good question. Forcing millions of Americans out of private coverage into a public plan that the president apparently considers ill-suited for the First Family raises serious questions concerning the adequacy of the public plan for the rest of America.

In like manner, the Federal Employees Health Benefits Program provides private health care insurance — in all, no fewer than 283 private health plans nationwide — for all federal employees, including members of Congress. It is unfair and hypocritical to put millions of Americans currently enrolled in a private plan at risk of being forced into a public plan when federal officials are unwilling to subject themselves (ourselves) to the same, potentially substandard health care coverage.

On more than one occasion the Democratic committee leadership blocked or defeated Republican amendments that would have either allowed all Americans access to the exact same coverage plan as the FEHBP or would have required the president and vice president and all members of Congress to move to the government-run public plan. Meanwhile, an analysis by the independent Lewin Group estimated that under Obamacare more than 83 million people would lose their private insurance coverage and could be automatically enrolled in the public plan. As the spiral continues, the private insurance market will implode; Americans will have no choice in health insurance other than the public plan.

Q: Will the plan provide coverage for undocumented immigrants? If so, how will the government enforce the mandate for every individual to have health insurance?

A: Obamacare would require millions of people to be "automatically enrolled" in Medicaid regardless of legal status. Specifically, Section 1802 of the bill requires that "the State shall accept without further determination the enrollment under the Medicaid program of an individual determined by the Commissioner to be a non-traditional Medicaid eligible individual." Nowhere in the legislation is the commissioner required to apply the existing citizenship and identity verification requirements that exist in current Medicaid statute. Again, the Democrats teamed up to defeat an amendment to improve the bill that was offered by Rep. Nathan Deal, R-Ga., to require proof of U.S. citizenship.

No one who is sick or injured should ever under any circumstance be denied needed medical care; however, providing care for a person in need — an unequivocal moral responsibility — is not the same as enrolling that person in a government-sponsored health program.

Q: The plan seems more concerned about covering the uninsured than the underinsured — those people whose medical bills far exceed the payout limits of their policies or whose health plans have unreasonable exemptions. To help Americans with costly long-term medical expenses, why not impose out-of-pocket caps?

A: While the House bill does limit annual cost sharing to $5,000 for individuals and to $10,000 for families, the plight of the uninsured raises an important issue — that insurance coverage does not equal access. For example, according to the non-profit, non-partisan National Center for Policy Analysis, five-year cancer survival rates in Great Britain are 53 percent for women and 45 percent for men, compared to 63 percent and 66 percent respectively in the U.S. Those discrepancies can be largely attributed to access issues — early diagnosis, time to treatment after referral and access to treatments, such as the newest cancer drugs.

As reported by the Heritage Foundation, access to cancer treatment became a major crisis in Britain when patients were having to wait a year or more after being diagnosed to begin chemotherapy, and the British government is spending a fortune to reduce the waiting time to three months by 2010 — a goal unlikely to be met.

Additionally, we should look behind the number of uninsured to develop solutions to providing access to quality health care for different subpopulations. When you break down the 47 million uninsured, 2007 Census data show that 9.1 million live in households making more than $75,000 and may be able to afford coverage; 9.7 million are not U.S. citizens; 18.3 million are young adults between 18 and 34; and a significant percentage were temporarily uninsured who regained their health coverage within several months. More than just having insurance, everyone should have timely access to high quality care, and different solutions may be more effective for different subpopulations.

Before totally disrupting the private insurance market and the 172 million people it covers in ways from which it may take many decades to recover, we should have positive answers to some basic questions: Will individuals be more satisfied? Will they have lower out-of-pocket costs, better access and higher quality care? Will they be able to see providers they like? Will they have a choice in selecting an insurance plan that matches their needs?

Q: Why not establish maximum allowable payments for various procedures, taking regional differences into account?

A: We should first look carefully at our ongoing experience with New Jersey hospitals regarding payment caps under diagnostic-related groupings (DRGs) for Medicare and Medicaid. Used in the U.S. since the 1980s, DRGs are supposed to fairly contain costs by setting maximum allowable payments. The net outcome for New Jersey, however, is that our hospitals currently are being reimbursed only 89 cents on the dollar of costs for Medicare patients and 66 cents on the dollar for Medicaid patients. Those loss rates also are a major reason that 15 operating hospitals in the state are on the watch list for being forced to shut their doors.

We need to be very cautious regarding maximum allowable payments to cover a much larger public plan base, much less to cover all insurers. Part of the concern is that payment caps could drive the quality of care toward the lowest common denominator, rather than toward excellence and innovation. Many New Jersey hospitals are justifiably proud of both their efficiency and their quality.

It is unavoidable that if reimbursement rates do not reflect real costs and thus systematically underpay providers, quality and access will be compromised, as evidenced now by the closure of hospitals and physicians refusing to take new Medicare patients.

Q: Health consumers often have no idea what the charges are for various procedures and tests, and typically don't care, unless the money is coming out of their pocket. Why not require complete transparency in billing from doctors and hospitals?

A: There needs to be more transparency than provided for in Obamacare. The President's plan does not go far enough in ensuring patients and doctors have the information they need to make the best health care decisions. Any reform should assist consumers as they shop for and choose the most appropriate health care provider and treatment for their particular needs, on a basis they choose, such as quality, costs or other considerations.

We all have been frustrated when we get confusing bills from doctors and hospitals. Requiring transparency in billing would be a significant step in helping consumers stay informed. Additional analyses and data by researchers and consumer-focused organizations, however, would go further in helping educate doctors and patients in healthcare options.

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