“Top Ten Reasons to Kill the Senate Health Care Bill”

I got pushback on a post I put up yesterday critical of the health care reform bill from readers who pointed to the fact that folks like Paul Krugman and Al Franken were supporting it meant it must be at least OK.

Well, it isn’t, and don’t delude yourself into thinking that. Why did health insurance stocks rise to all time highs when the bill was passed?

This tidbit comes from reader Chuck S, and refers to the Senate version (the House version is pretty much certain to be made to conform to the Senate bill).

Top 10 Reasons to Kill Senate Health Care Bill

1. Forces you to pay up to 8% of your income to private insurance corporations — whether you want to or not.

2. If you refuse to buy the insurance, you’ll have to pay penalties of up to 2% of your annual income to the IRS.

3. Many will be forced to buy poor-quality insurance they can’t afford to use, with $11,900 in annual out-of-pocket expenses over and above their annual premiums.

4. Massive restriction on a woman’s right to choose, designed to trigger a challenge to Roe v. Wade in the Supreme Court.

5. Paid for by taxes on the middle class insurance plan you have right now through your employer, causing them to cut back benefits and increase co-pays.

6. Many of the taxes to pay for the bill start now, but most Americans won’t see any benefits — like an end to discrimination against those with preexisting conditions — until 2014 when the program begins.

7. Allows insurance companies to charge people who are older 300% more than others.

8. Grants monopolies to drug companies that will keep generic versions of expensive biotech drugs from ever coming to market.

9. No re-importation of prescription drugs, which would save consumers $100 billion over 10 years.

10. The cost of medical care will continue to rise, and insurance premiums for a family of four will rise an average of $1,000 a year — meaning in 10 years, your family’s insurance premium will be $10,000 more annually than it is right now.

Background information on each point:

1. Hardship Waiver And Restrictions On Immigrants Buying Insurance Undercut Arguments For An Individual Mandate, by Jon Walker

2. What’s in the Manager’s Amendment by David Dayen

3. MyBarackObama Tax by Marcy Wheeler

4. Emperor Ben Nelson: All Your Uteruses Are Belong To Me by Scarecrow

5. The Senate Bill is Designed to Make Your Health Insurance Worse by Jon Walker

6. Best way to “Fix It Later” Is With No Individual Mandate Now by Jon Walker

7. The Senate Health Care Bill is Built on a Mountain of Sand by Jon Walker

8. The Devil in Anna Eshoo’s Details by Jane Hamsher

9. Liveblog of the Dorgan Reimportation Amendment by David Dayen

10. Answering Nate Silver’s 20 Questions on the Health Care Bill by Jon Walker

The Senate bill isn’t a “starter home,” it’s a sink hole. It needs to die so something else can take its place. It doesn’t matter whether people are on the right or the left — once they understand the con job that’s about to be foisted on them, they agree. That’s why Harry Reid and President Obama are trying to jam it through as fast as they can, before people get wise. So email the list to your friends and family, tweet it and spread the word.

Yves here. This list still misses a few very bad features. For instance, most have fallen for the “preexisting conditions” bit, that the new plan is better because it forces insurers to cover those with preexisting conditinos. Well first, if you recall, insurers have used the failure to report ANY preexisting condition, no matter how trivial, as a reason to deny coverage when someone gets a costly illness. So health insurers will be permitted to charge those with “preexisting conditions,” again even if trivial, a 50% premium to the rest of the population. This not only defeats the idea of enlarging the pool, but also continues the abusive use of the notion of “preexsiting condition”. And before you argue that including all those people is costly and needs to be recouped somehow, every other advanced economy has a form of government-supported medicine that covers all citizens, is cheaper than ours, and delivers no worse, and in many cases, better health outcomes. Covering these people is not the problem; the problem is the system we now have.

Second, insurers that cross state lines get to be regulated by the state with the least regulations. Just as we saw with financial services, this will lead to a race to the bottom. For instance, I have a plan regulated by New York State, and New York State allows me to appeal to the state if I think I have been denied coverage incorrectly. Every time I have used this option, I have prevailed (and once, the NYS response was quite a smackdown to my insurer, Cigna). I’d lose this very valuable right under a new plan.

Third, Obama has engaged in a massive bait and switch. As Marshall Auerback pointed out,

From a Washington Post interview:
Obama said the public option “has become a source of ideological contention between the left and right.” But, he added, “I didn’t campaign on the public option.”

Lots of links below the fold that appear to create a contradiction between the statement above and the actual facts.

TomP’s diary

– In the 2008 Obama-Biden health care plan on the campaign’s website, candidate Obama promised that “any American will have the opportunity to enroll in [a] new public plan.” [2008]

– During a speech at the American Medical Association, President Obama told thousands of doctors that one of the plans included in the new health insurance exchanges “needs to be a public option that will give people a broader range of choices and inject competition into the health care market.” [6/15/09]

– While speaking to the nation during his weekly address, the President said that “any plan” he signs “must include…a public option.” [7/17/09]

– During a conference call with progressive bloggers, the President said he continues “to believe that a robust public option would be the best way to go.” [7/20/09]

– Obama told NBC’s David Gregory that a public option “should be a part of this [health care bill],” while rebuking claims that the plan was “dead.” [9/20/09]

Obama sees Reagan as one of his role models, but as my politically-minded buddies like to point out, Reagan sought to get and succeeded in winning 75-80% of what he wanted. Obama starts out with a much less ambitious ask and settles for at most 60%.

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111 comments

  1. TC

    Yep. This President appears but another in a long line of worthless, lying sacks of crap. Still waiting on change we can believe in. His fascism ain’t cuttin’ it, which you forgot to mention: namely, the medical advisory boards he, again, lied in his speech before a joint session of Congress a couple months back, saying these “death panels” were untrue. What a jerk this guy is. Harry Reid, too: putting in the Senate bill a provision saying these death panels cannot be legislatively repealed. Disgusting pigs.

  2. Bob Goodwin

    Here here Yves. Kudo’s to you for dissecting this completely and coherently. It is a truly disturbing bill for people at all ends of the political spectrum. The government in power has act badly for both of the last two administrations.

  3. Cyd

    Yep. This President appears but another in a long line of worthless, lying sacks of crap.

    Even worse. The media lies and covers for him. Congress pushes through unpopular bills that most of the citizens do not want and nearly all do not know what is in it. For what? To stick a finger in the eyes of conservatives and to “make history”. They buy the votes from Senators with all sorts of favors, which if done by everyday shleps, would be highly illegal. I am literally appalled at the current government from the WH on down. That says a lot after we had Bush, who were it not for his war mongering, would be an angel next to this current, lying, visibly incompetent idiot.

  4. Advocatus Diaboli

    Isn’t corporate welfare grand? Socialism from the rich and bootstrap capitalism for the rest..

    How can anyone claim that this abomination is a “reform” of any sort? They are rearranging the deck chairs on the titanic (or hindenburg).

  5. NOTaREALmerican

    How odd, liberals complaining about restrictions on health insurance. Liberal are living in some fantasyland that Obama is writing this legislation himself. His administration has to create something that will be acceptable to the insiders of a Political system split 50-50 between socialists and fascists; while the normal “citizens” look on (maybe, if there’s nothing on TV).

    And, in typical big-government manner, the liberals can’t project themselves ahead 20 years and image what the resulting government subsidized health-care scam will look like after the “conservatives” have had their shot at ruining the country for a few political rounds (which, unbelievably to a liberal, WILL actually happen again).

    Think there are limits on fornicating harlots and rules about proper male 5th appendage placement now, wait `till then.

  6. T.Rex Bean

    Wrong, wrong, wrong. This bill isn’t perfect but it’s an historic advance and improvement on what we have now. I’m not prepared for a political discussion on this — and others, such as Krugman and Nate Silver, et. al. have done it far better than I could — but to to compare Obama’s achievements with Reagan’s (such as they were) neglects the traditional bias of the MSM toward Republicans (yes, you read that right), not to mention that Reagan had carte blanche after he was shot by a deranged would-be assassin. Reagan’s bravery (‘Honey, I forgot to duck”) boosted his popularity enormously and helped ensure passage of legislation he backed.

    1. Yves Smith Post author

      Having tried that, it’s much harder than you think, particularly if you are not independently wealthy and still need to earn an income. Most countries do not like the idea of immigrants taking jobs from the locals.

    2. jest

      believe me, we are trying. yves is right, other nations make it difficult for us to leave, so we are stuck with you.

      if you can find a way to deport me out of this god forsaken country, i’m all ears.

    1. Doug Terpstra

      Indeed, it’s a bass ackwards perversion, a rude colonoscopy, a (BOHICA) rear-entry coup hatched by the insurance and drug cartels to ream the sheep—as if shearing weren’t enough.

      This whole thing would absolutely kill the Democratic Party if it weren’t for Sarah, Rush and Glenn.

  7. Len Franciscus

    Why did stocks rise? You’re implying that that rise was legitimate. So I assume that you think there wasn’t ever a stopck bubble then, that all stock prices are legitimate?

    Yves, your argumentation is simply atrocious when it comes to politics. You’ve got some major blind spots.

    1. Yves Smith Post author

      Len,

      This is the second time you have commented, and each time the remark has been a simple ad hominem attack, with no substantive argument made. Did you bother reading research reports on drug stocks to see what analysts were saying? Did you provide a shred of information saying the all time highs were not warranted? No, because this bill puts the health insurance industry in a better position than it was before.

      I have a policy against ad hominem attacks, and block the IP addresses of repeat offenders when they have been told their comments were out of line, as you were advised last time. I prefer to enforce it when readers resort to fact free shredding of each other, but I am not above invoking it when the object is political arguments.

  8. funkright

    Thank God I live in Canada.. We’ve got our issues, to say the least, but at least we can come together on such a vital issue like health care.. Every other ‘first world’ country seems to have gotten it ‘together’ as well.. I’ve followed USA politics for most of my adult life (and even in my younger years) and America seems to be more divided today than in any other time in my life.. It’s sad.. Truly sad and quite pathetic.

  9. Ted K

    I was thinking of attempting to play peace maker above, but based on my own history of rabble-rousing over at “baselinescenario” I’m not going down that road. I would argue though that if the person isn’t using vulgarity, or using racist or sexist comments, it does NOT behoove blog hosts to deny guests ability to post. In the end almost all info presented on these blogs comes from places like New York Times, Bloomberg, WSJ, LA Times, Reuters, etc. The only special function blogs provide is a different lens to view already available data and an outlet for people’s steam. A safety valve if you will.

    That being said, I am right on the borderline myself. I probably support the health care reform bill as it stands, but I find myself wavering quite a bit. I think Yves Smith’s arguments and point by point blows (with maybe the exception of abortion) are quite persuasive. And her post above gives me reason for pause to chew on this issue some more.

    I rank Yves’ post up there with one of the better posts I’ve seen on the issue, from Paul Krugman http://krugman.blogs.nytimes.com/2009/09/08/why-the-public-option-matters/ He seems to be arguing in the post that without a public option there is ZERO leverage to get private insurers to lower costs. I think it’s the most important point in this big mess. Also if you are looking for facts or substantive arguments on the health care issue, there is none better than Uwe Reinhardt. You can find his posts over at New York Times. http://economix.blogs.nytimes.com/author/uwe-e-reinhardt/

    1. Yves Smith Post author

      Ted K,

      Thanks for your kind words about the post.

      The reason I have close to zero tolerance for ad hominem attacks is that this style of argument has become common in political discourse, and on blogs, and it is simply bogus. This is one of my quixotic pet peeve campaigns, along with trying to reclaim the language, like using words like “propaganda’ rather than “spin” (which implies it’s just a game and both sides are equally matched, which is almost never the case) and “fraud” (which you hardly ever see in the MSM.

  10. Wkaka

    Number 1 reason for passing the current health care bill: This is not the end, it is just the beginning. Modifying an existing program is much, much easier than trying to pass a new program. Every session, every budget bill will be an opportunity to change, modify, extend the existing program.

    Bill Clinton told the Obama’s that his biggest mistake on health care was that he made it an all or nothing deal. And we got nothing for 15 years. Clinton believes that if he had compromised on his original bill and allowed a flawed bill to pass that we would today have a better system today than his original bill tried to put into place and a MUCH better system than we actually have today.

    Piss this one away and you will be waiting another 15 years for another chance. I am tired of waiting.

    1. Yves Smith Post author

      WKaka,

      With all due respect, I believe you have been conned.

      This bill bears absolutely no resemblance to a proper health care system, nor is it a credible bridge to one. A government requirement that citizens by health insurance or face fines bears no resemblance to government funded health care.

      Given its fundamentally flawed design, that it further entrenches a health insurance industry that simply increases the cost of delivery (US administrative costs are in the double digit %, while in every other advanced economy, they are in the single digit %), this is in no way, shape or form a transition to a better plan. And as other readers have pointed out, more conservative Administration are certain to make it even more corporate, less citizen favorable.

      Any plan to contain the cost of health care, at a minimum, has to be willing to put the health insurers out of business (save for oddball stuff like travel insurance) and arm wrestle with Big Pharma over prices. This plan not only takes no steps in that direction, it actually cedes ground.

      1. greenback

        “This bill bears absolutely no resemblance to a proper health care system, nor is it a credible bridge to one. A government requirement that citizens buy health insurance or face fines bears no resemblance to government funded health care.”

        I won’t dispute the first sentence, but the second sentence sounds wrong from two perspectives. I don’t see any economic difference between (a) paying a health care tax to the government and (b) compulsory premium payment to a health insurer. Also, this does bear some resemblance — not enough, but some — to Germany’s plan.

        1. Yves Smith Post author

          Greenback,

          There is a huge difference. Insurers in the US been an ineffective, indeed, counterproductive means of containing rising health care costs. Simple example: if we had a single payer system, the government could negotiate drug prices. Private insurers lack any reason to do so, as well as the bargaining power.

          Similarly, we need integrated solutions on other fronts. The cost of going to med school and the inability to discharge student debt in bankruptcy, create a huge millstone on doctors (and others). The government could conceivably cut these Gordian knots, private insurers, never.

      2. Wkaka

        I honestly do not believe that. I do not believe that this plan is worse than doing nothing. And that is your choice. This or nothing for the next 15 or 20 years. This is as liberal a plan as you can get at this time.

        I know with 99% certainty that I will be buying insurance in the open market in the next 10 years. 60% chance of it happening in the next 5 years. I have done it before, several times and each time gets harder and more expensive. The next time me and my wife will be in our 50’s.

        My personal finances are good, house paid off, SEP IRA fully funded even after the market declines. I have worked my whole life to get to this point. One major illness without insurance and it is all gone. This matters to me. It is not some philosophical discussion. I dont really care about most of what you are talking about. What matters is if I will be able to purchase insurance at a reasonable rate. Without I face financial ruin. With it, I have a chance.

        And I think I will be able to do that with this plan. Maybe you are right and I am wrong but I think if this does not work that it will be easier to fix this than to start over. And I absolutely know I will be better off with this plan than with nothing. And that is what we will get if this fails, nothing.

        1. Yves Smith Post author

          Wkaka,

          I appreciate the fact that the current system has treated you badly, but that does not mean a new system will treat you and your wife any better, its sales pitch notwithstanding.

          I suggest you read the post and comments above. The bill allows for substantial age based price discrimination, as well as based on pre-existing conditions. Your assumption that your coverage will be cheaper is optimistic, to say the least, and not grounded in fact. Insurers will if anything have more latitude to engage in price discrimination along certain axes, and you appear likely to fall into the categories that will be hurt.

          1. Wkaka

            I want to thank you for your effort on deconstructing the health care bill. I know it is a thankless job to wade into this mess. And thank you for your time to answer my comments. I will pay closer attention to the details going forward. Answer me one question though. Do you honestly think that I will be better off under the current system than under the new bill? Is our difference only that you think we can do better? (OK, 2 questions) Because I do not. I do not like what we got but I will take an improvement over what we have today and fight for more tomorrow.

        2. Jojo

          @Wkaka – Yes, perhaps they can fix up this travesty of a plan like they have fixed up the income tax perhaps? It has fixes upon fixes, upon fixes. The income tax is how many volumes currently?

          And if the current health system is in such poor shape, why doesn’t this reform take affect until 2014 instead on immediately?

          I agree with Yves – what we have needs to be torn down and rebuilt from the bottom up.

          As for buying health insurance, I haven’t had any for the last 3 years. I expect to die from something that might have been caught had I had access to preventative care. Welcome to the club….

  11. sangellone

    My father is a case study in healthcare expense. In March of this year he underwent colon cancer surgery. 6 months later a CT scan revealed he had metastatic cancer of the liver. He will not live another year. Unfortunately he fell on ice this past Monday and on Xmas Eve I called the EMT’s to transport him to an emergency room as his pain was great
    and he was non ambulatory. X-rays revealed no broken bones but as he couldn’t walk and as he was in agony I insisted the doctor admit him to hospital as he needed IV pain killers. Doc said no broken bones, I said do a CT scan. CT scan revealed two broken ribs and vertabrae. I had requested ambulance take him to Fairfax trauma center but EMT’s said they would take him to Springfield ‘Healthplex’ which has no ‘rooms’ for overnight stays. Emergencyroom Doc
    upon ‘discovering’ fractures calls for another ambulance to take him to Inova Alexandria Hospital.

    Point is, there is not much you can do for broken ribs but administer strong pain killers ( I know, been there done that) but my father racked up an easy $10,000 in medical costs simply because ‘the system’ will not prescibe ‘the good stuff’ without hospital care. He stayed 2 days in hospital for the sole purpose of receiving ‘diluadid’ ( if that is the proper spelling) just as I had, some years earlier, spent $5000 out of pocket, for a morphine drip for two days when I fell and broke my own ribs!

    1. bob

      An elderly relative had pancreatic cancer. She was in and out of the hospital all of the time because she kept getting dehydrated. She could not drink water because of late stage complications in her stomach.

      She had a port installed and it should have been no problem to have someone at home hook her up to a simple IV bag once a day.

      It took 5 trips to the hospital, including over the holidays, before her doctors, and health insurance company would consider it.

      Try buying a simple saline IV without a doctors order. They considered it, its not possible.

      And then, after it was approved, it was billed to her insurance company at $500 a day for the supplies to do it at home. One litre of saline, $500.

  12. SteveInChicago

    Thanks for one of the few fair-minded discussions on this that doesn’t seem to be based mainly on partisan concerns. I consider myself a Liberal, and they absolutely need to rip this thing up and start over. There should be enough good ideas out there that everyone can agree on.

    – We can eliminate pre-existing conditions. This will cause rates to rise somewhat, but it will affect all insurers equally and they should be willing to concede it.

    – A lot more people are eligible for Medicaid than actually use it, especially low-income single parents. We have to get them into the system. People with access to personal doctors cost a lot less to treat than people who have no option but the emergency room.

    – Having the loser pay in a Malpractice lawsuit would cut down on frivolous suits without denying legal process to anyone.

    – Currently, small businesses get screwed on the cost of insurance. Forcing all insurers to offer a few simple, standardized plans (catastrophic only, catastrophic + a HSA, PPO) with pricing available to anyone would get a lot more people insured.

    – Make the cost of individually purchased health insurance deductible.

    – Standardize forms wherever possible. Bill the patient only after the claim has gone through the insurer.

    – I’d personally love to see a public option, but it isn’t politically viable.

    I’d be happy with this as a starter home.

    1. Yves Smith Post author

      This is a sensible list, and I wish someone had promoted it instead of what we are getting.

  13. GYSC

    I am against government run, well, anything. I work for a large Pharma company as a molecular biologist so of course I am probably biased anyway. My two questions:
    -Is is constitutional to force buying of a product or face penalty? Looks like a court case.
    -pre-existing clause is iffy at best; I imagine there will be a huge move to disqualify as many as possible during the transfer, ehat happens to them?

    1. Doug Terpstra

      Constitution? Wassat? That’s now as hallowed as toilet paper, soon to be followed by dollar bills.

    2. Anonymous Jones

      I can’t wait to see the unassailable Works of God done by your private police forces, private zoning departments, private judicial systems, private fire departments, private flood control districts, and private armies. Good luck!

      [Sorry, I know I shouldn’t feed the animals. Punish me…]

      1. JTFaraday

        Actually, considering this person confessed their bias based on how they earn their living, I still think they asked THE two critical questions about this Bill.

        That the GOVERNMENT seems to be providing the WRONG answers on these two questions, seems to suggest that there IS a big problem in contemporary government and that “liberal” faith in it is misplaced.

        It’s important to come to grips with that–rather than glibly forking over more power. And money. Where is that money going?

        Corporatist government is not going to be government the way “liberals” like to pretend it is. What exactly is the distinction between “the government” and “private” healthcare financing and medical/ pharmaceutical corporations in this Bill?

        It seems to me there really isn’t any distinction. “Keep THIS government out of my Medicare” could well be about right.

        1. JTFaraday

          In other words, if corporations seize the power of the government to write their own Bill in order to deploy the power of the government to subjugate you to themselves, you had best kill that Bill.

          And turn out the political part(ies) that did it to you.

    3. liberal

      “I am against government run, well, anything.”

      Does that mean you’re against government-run and -enforced patent systems?

  14. jay22

    Those are valid reasons to dislike the bill or to wish the bill was better in those 10 areas….but it doesnt make a good argument to kill the bill.

    If you had any chance of passing a bill that improved all of those 10 areas you could make a good argument. Since that wont happen, the kill the bill argument is poorly thought out.

    If an employer offered you a job at $20/hour, 3 vacation days, bad benefits, required long hours, required odd hours and required you to be on call sometimes….you could probably come up with a long, long list of why that job is not the best job ever. But it is better than being unemployed.

    It is an error to compare the bill to the best possible scenario. Make a comparison to current conditions. This list has valid issues, but was put together by someone who cant see the big picture.

    Getting a staple punched through your toe is bad, but it looks awful good if you have 10 staples in your toe right now.

    1. Yves Smith Post author

      Jay22,

      You have not made a case as to why the bill is better than the status quo. The bill will enrich Big Pharma and the health insurers, and its “fix” for pre-existing conditions is has the potential to abused from a price standpoint.

      You have not given a single reason as to why the bill represents progress. I’m willing to hear one, but I must note not a single defender of it in this thread has offered a single substantive argument.

      1. Francois T

        There is one (not much but hey!) provision in the House version of the bill that I like a lot.

        Te medical loss ratio (% of dollar of premium collected that goes into paying for health care) has a floor of 80% for small to medium insurance companies and 85% for the large ones.

        BTW,insurance companies are allowed to rescind in cases of fraud only. Fraud is to be taken as a criminal act here, meaning a willful intent to deceive and gain from said deception.

        I’m not so sure insurance corps will be that eager to go to court every time they accuse a member of “fraud” to try to rescind coverage.

        Of course, the devil will be in the details of the final bill.

        Time will tell, and I’m not optimistic about the final result. House Democrats do not appear eager enough to tell the Senate to go to hell.

        1. Yves Smith Post author

          Jeez, I missed that one…a worst case of only 15-20% taken out by the insurers? And that is before we get to doctor and hospital admin costs. I am just about certain that no government sponsored system has double digit admin costs.

          Your point re fraud is a good one.

        2. run75441

          Francois:

          The MLR of 85% is used for Group Coverage and 80% is used for Individual Coverage. What it also does is prevent insurance companies from charging premiums just to charge premiums, keep them, when there are no claims. There should be some discounting going on for younger insurees as a result.

          The 2:1 differential in the House Bill and the 3:1 differential in the Senate Bill is the cap for the elderly as based upon what is charged for the younger insurees. If the Insurance companies charge lower rates for younger as required by the 85%, it spills over into the older insurees also. Bruce Webb here: http://angrybear.blogspot.com/2009/12/medical-loss-ratio-revisited-cost-and.html “Medical Loss Ratio Revisited: Cost and Coverage Controls that Work” has a pretty good hansdle on it.

    1. Doug Terpstra

      “That’s not funny, that’s sick!” —Monty Python.

      No wonder the bill is such a sloppy mess. And they all retire for brandy and cigars after that bit of dinner theater. Yuck!

  15. bob

    Killing the bill seems like the only rational choice.

    Consensus decision making has become selling out on all sides and coming up with a plan that no one can reason for, but that some paid particpants feel strongly indifferent to.

    Some above may claim that it’s progress. They still can’t say they agree with it.

  16. DoctoRx

    Late in the day for me to comment but have been out till now . . .
    Well done Yves!
    Even as a never-admirer of BO have been surprised at his pro-Big Pharma policies. He hasn’t fought for anything other than any bill, and the result is a bill written by lobbyists, when the President elected by all the people should have been out there all year fighting for all of us who have no lobbyists.
    This is a failure of Presidential leadership, big time.

  17. steve from virginia

    The overarching reason for rejection is that is too expensive as drafted. No attempts have been made to constrain the ever- expanding medical care bubble.

    The medical business is at the same place the real estate business was in 2005. Deflation – not Congress – is calling the shots.

    Deflation and Ali al- Naimi, Saudi Arabia’s oil minister. What the current nonsense represents is a bailout of the medical insurance business. Too bad for them, the valve on the dollar pump is in the hands of the Saudis who have decided the dollar is now worth something. A oil- supported dollar opens a fierce competition for them, with finance possessing all advantages with insurance companies far downstream.

    At bottom, reality rules; the gods destroy both the mad and the sane if they are all standing on the wrong street corner. I almost cannot blame Congress because they don’t understand the new, deflationary ground rules. Most people in the developed West don’t understand, even economists.

    The mandate is un- Constitutional and will fail in court. At that point the plan will be pointless. What a waste of time …

  18. mark

    Hi yves,

    Always enjoy your commentary. However, I do want a public health care option and it is not going to happen in one step. So it may take a few reveisions, but we will get there over time. THere are too many special interests to get it done any other way unfortunately. It’s sickening, but the system is so corrupt we will not get there any other way.

    mark

  19. bob

    One more thought.

    Teabaggers-

    Make sure you are going to earn your name again, dragging your collective “I told you so” balls right across america’s face.

    Loud an proud, make sure you don’t show any humility now, you won, there is no hope. We really are lucky to have you around showing us how hopeless everything is, its just wonderful that you all could make it.

    Do you need directions home? A cab perhaps?

      1. Yves Smith Post author

        More like random snark, because we had no one defending teabaggers or taking teabagger-like views.

  20. MB

    The question is should the current bill (which is not yet in its final form) be passed, or should we wait in hopes of a better bill in the future. Even those who call for passage agree that what we currently have is “a disappointing, flawed bill” (Krugman -http://krugman.blogs.nytimes.com/2009/12/23/economists-letter-on-the-senate-bill/)

    But what are the future prospects for a better bill? Most of the flaws listed in this post would seem to call for a bill with a more progressive agenda. But this is the best we can do with the current requirement of 60 Senate votes. And it seems likely that the democrats will lose seats in 2010. We face the prospect of being more in need of reform while being less capable of it.

    And, to those who say that this is not the path to a better system, will it matter in the end how we get to insurance for all, as long as we get there? Once universal coverage becomes the norm, will either party dare to dismantle it? Conservatives originally opposed Medicare. But now they passionately defend it. Their constituency, which has grown to expect and depend on Medicare, demands it.

    If we pass this bill now, we have at least some chance of seeing further reforms in the future. Is some chance not better than none?

  21. paper mac

    It appears as though the senate bill is a done deal- the forces arrayed behind it are formidable and I can’t see the house getting many concessions here. Likewise, I would be very surprised if the bill was actually scrapped. The Obama administration was unwilling to twist any arms to get a public option or real reform going, but they seem to be quite ready to start throwing weight around to get this abomination passed, chalk up a victory for their constituents (corporations), and move on. If this does come to pass, what’s next? How will Americans deal with conclusive, overwhelming evidence that their government does not, will not, and can not serve their interests as currently construed? I think health care reform is actually incidental to the underlying issue, which is that the government stopped being responsive to the will of the People except in the most cosmetic way long ago.

  22. Andrew

    Yves, I’m a big fan of your writing on financial issues, but as someone who studies public health policy, I think you’re dead wrong on this one.

    Many of the things you cite are false. For example, the bills do NOT allow insurers to sell insurance from a low-regulation state to another state – the bill does allow the selling of insurance across state lines, but any policy that does so must meet the regulations in EACH STATE it sells in. Also, the point on taxes is false – the taxes kick in later, such as the excise tax kicking in 2013.

    The mandate is more controversial, but the reason every health economist and health policy analyst endorses it is because without it there is no way to protect against adverse selection issues which would send the cost of insurance far higher for each individual. In MA, for example, though overall premiums have climbed since the reform (due, I might add, to the high cost of health CARE, not so much the insurance itself), in the individual and small group markets, premiums have DROPPED 40% since the mandate was imposed. Jonathon Gruber at MIT has calculated that without a mandate, insurance premiums per person would average $4400, versus $2700 with a mandate.

    You complain that the bill allows insurers to charge older people 3x what they do younger people – yes, but compared to what? The current reality is that in some states, insurers charge up to 25 times what they charge younger people.

    The >$11,000 claim you cite is a maximum – most people’s out-of-pocket expenses wouldn’t climb anywhere near that. And that again compares to today, where there is NO cap and someone would wind up in medical bankruptcy.

    No insurers cannot drop you for not reporting a pre-existing condition because they are not permitted to ask about any pre-existing conditions due to guaranteed issue.

    I know you’ve had issues with Nate Silver, but the graph he posts here is absolutely correct – yes, the system will still be overly expensive, but compared to today, costs will be FAR cheaper.

    http://www.fivethirtyeight.com/2009/12/why-progressives-are-batshit-crazy-to.html

    I agree fully on the abortion issue and the pharmaceutical deal. In regards to the former, keep in mind this is the price of Ben Nelson’s vote. Reconciliation, as has been pointed out multiple times, even by progressive senators like Feingold and Harkin, will not work for this, although you could conceivably use it for adding a public option or Medicare buy-in later. And so long as you need 60 votes to overcome a filibuster, you need Nelson’s vote unless Olympia Snowe or Susan Collins are willing to vote for it, which they aren’t. It’s best to deal with this through the courts.

    The Pharma Deal is bad, but not worth sinking the whole bill over when, again, that is something that can be taken up again later.

    You argue that only a bill that puts the insurance companies out of business is worth doing, but I have to ask where you are going to get the support in Congress to do that. I know you have issues with Obama, but I doubt any president could get a single-payer bill through Congress when even Bernie Sanders has said there are no more than 10 votes for single-payer in the Senate. Nor did either the House or Senate have anywhere near the votes for a strong, Medicare-rates public option. All that could have passed would have been a weak public option, which most estimates had putting almost no downward pressure on premiums due to its limited scale and need to self-support itself via premiums.

    Moreover, the bill allows states to opt out and craft single-payer systems (if you’re looking at single-payer, that’s the most promising field, since CA, WA, and PA all have viable efforts). It vastly expands federally-funded community health centers for 25 million people (eventually up to 45 million), while allowing them to use Veterans Admin. prices for drugs.

    The biggest failings are the slow implementation, the low actuarial value of “bronze” plans, the Senate bill’s multiple, state-based exchanges instead of a single national exchange, and the low subsidies. The subsidies and low actuarial value of the bronze plan are things that can be very easily fixed and expanded through simple appropriations.

    1. Yves Smith Post author

      Andrew,

      Thanks for your comment, and for giving detailed arguments. However, some of the points you raise are in dispute, and one is a misconstrual of what I wrote.

      On this point, “For example, the bills do NOT allow insurers to sell insurance from a low-regulation state to another state – the bill does allow the selling of insurance across state lines, but any policy that does so must meet the regulations in EACH STATE it sells in.”

      Howard Dean has said otherwise, specifically, that residents of his state will no longer be afforded the protection of Vermont state regs (which are pretty stringent) now provide.

      Dean has looked at the bill extensively and apparently reads it differently than you do on this and another issue, namely, pre-existing conditions. I never said coverage would be denied, but that insurers could charge more for those with pre-existing conditions. That point was stated quite clearly in the post.

      So it looks like in exchange for introducing a ban on insurance companies denying coverage for pre-existing conditions, they are allowed to charge those same people up to 50% more on coverage, (again, according to Howard Dean; so far nobody has rebutted this specific charge). So yet again, we ration by price, not pre-existing conditions.

      As for putting insurance companies out of business, we need to start talking openly about how they are a major part of the problem. Why is their no will for a single payer option? The complete failure over the last few years to shed enough harsh light on health insurers.

      Unless that is put on the table, they cannot be reined in sufficiently. The next best option would be to regulate them like utilities, that could be a (long) interim step to winding them down or curtailing their role considerably.

      1. Andrew

        Yves, here’s the bit about state regulation, which Jon Walker (who is of the shelve-this-bill crowd) opposed and highlighted: http://fdlaction.firedoglake.com/2009/12/19/“nationwide”-plans-replaced-by-opm-exchange-for-multi-state-plans/

        Regarding pre-existing conditions, the only provisions they may price-discriminate on are (1) age, (2) geographic location, and (3) smoking. I actually am fine with allowing them to discriminate 2-1 based on age, in order to keep it more affordable for younger people with lower incomes, but I think that subsidies need to also be indexed to age as well.

        Also, the loophole in the original Senate bill in which an insurer could still issue lifetime caps has been removed.

        If we’re talking about the failure to implement single-payer, the blame would go far beyond Obama to basically the entire Democratic Party, which last truly pushed for single-payer in the ’70s. Even then, by the mid-70s, Ted Kennedy had abandoned single-payer and was pushing the Kennedy-Mills bill (still stronger in terms of regulation than today’s effort). Carter campaigned on something similar, then abandoned the effort when he became president. And Clinton never tried for single-payer, instead crafting a “managed care within managed competition” system of employer-linked “health care alliances” (sort of like the exchanges in the current bills).

        So even if you had a president pushing for single-payer, there has been no groundwork for it.

        Even so, other countries show that regulated, private insurance systems can work. And yes, these bills, for all their flaws, do push us towards that. Moreover, if the state waivers survive, then state-based single-payer becomes very feasible. I also anticipate a future federalization of Medicaid and SCHIP (which these bills take steps towards by pledging full federal funding of their expansions), which could probably be combined with Medicare to create a single, wraparound public program.

        Keep in mind too that as horrible as the insurance companies are, when people keep calling for cost controls, they somewhat misdiagnose the problems. Insurers, for all their heinous practices, aren’t a huge contributor to the cost problem, their main contributor being the additional paperwork they cause through billing. However, the main contributor to costs within the system are providers and, yes, the drug companies. By FAR. Medicare for all would alleviate some of the cost problems by simplifying administration, but the overall cost curve is still terrible, and that’s because of problems in the administration of care and the lack of integration. I actually would favor an NHS-type system modeled on the VA for that reason. This bill does make several good steps, however, towards bundling payments, which is a potential game-changer.

        1. Yves Smith Post author

          Andrew,

          Thanks again, this is very helpful, but I think we are talking past each other a bit. The insurer admin issue is a huge issue. I am going from memory, but admin costs are a single digit % of total health care costs in other advanced economies (I think 8% is a good number) and ours is something like 14%. That 6% differential is pure waste. It strongly supports the thesis that health insurers are negative value added.

          One thing they did have in Australia, and I would imagine other countries have this too, is uniform record keeping. All doctors must keep their records electronically, and use the same system. None of this US handwritten doctor notes that no one else can read nonsense.

          1. Andrew

            Admin is a large issue, but keep in mind that admin costs are relatively low for large-group plans and highest for small-group and individual plans. Also, one of the reasons why I was someone ambivalent about a (weak) public option was that it wouldn’t have done anything significant to cut administrative costs throughout the system. Yes, it may have had somewhat lower internal administrative costs, but the costs to the system in terms of billing, etc., would have been just as complicated, since you’d simply be adding one more insurer, and one too weak to completely price out the others.

            Maybe I’m just too much of an optimist, but I really do see this bill as a major first step. Yes, it’s far from perfect, but doing this will make the insurance market vastly less of a minefield than it is today while providing coverage to millions more. And while people consistently throw around the charge that insurance does not equal care, in an insurance-based system (including a Canadian single-payer system), yes, insurance = care. There’s a reason several thousands die a year due to the lack of insurance.

            Of course, this is far from complete, but no bill restructuring 20% of the economy could do it in one try. Imagine where we’d be today if ClintonCare had passed. At the time, liberals savaged it for being overly complicated, for not being single-payer, etc., yet had it passed, we’d have universal coverage, fairly serious cost controls and we would now be having discussions about how to improve and perfect the system rather than starting from ground zero and fighting to put in place rather common-sense insurance regulations.

            Keep watching too how the exchanges develop. One major change I hope gets added in conference is for the bill to adopt the House’s national exchange. The exchange dramatically simplifies billing since its the exchange that handles enrollment, and it creates a functioning market with several competing plans. And yes, even the Senate bill now has prudent purchasing requirements. Depending on how strongly-regulated the exchange is, you could have a very tightly-regulated set of plans – yes, private, but government-directed. And that’s a model that The Netherlands and Switzerland show can work.

            Of course, if the exchanges are state-based or have no prudent purchasing requirements than you get something like the Medicare Part D fiasco, with hundreds of plans, horribly regulated.

        2. run75441

          Andrew:

          If the MLR works the way it should for both Group (85%) and Individual (80%), it should be the cap on costs as opposed to profits. An insurance company that drops below these caps would either have to add bennies or drop premiums. As a result, Aetna would no longer be able to drop 600,000 insurees to improve profitability.

          The MLR should also mean the younger crowd gets quite a bit of discount and/or lower premiums as a result of having no claims . . . more-like a safe driver discount. The 3:1 Cap in the Senate bill and the 2:1 Cap in the House Bill for the elderly I am assuming is driven off of the lowest insuree premium, in either bill, from the discounted younger insuree premium which results from the MLR.

          Provided this is true, then the elderly would not have too bad a row to make premium payments. If it is not, then your assumption of penalizing by age, a natural occurring result, is somewhat flawed. Age is not the biggest driver of healthcare costs today; however, the plethora of treatments, new and supposedly improved medical equipment, pharmaceuticals, etc. having little benefit to the patient is that cost driver and is in bad new of a cost/benefit analysis (something Ozijh from Australia pointed out occurs there with the PBS[?] in another post here). Maggie Mahar goes into a good explanation here: http://www.tcf.org/Publications/Healthcare/Maggie%20Agenda.pdf Page 4, “What drives Cost Inflation.” Using an aging population as the reason for increased healthcare costs is political and untrue.

          But what if, the MLR doesn’t work as I described it and Middle Aged Americans (45-54) are forced to face a premium of 3:1 (Senate Bill)? This group has a median income of 57,000 with 25% having an income >$100,000 (US Census). The subsidies stop at ~$58,000 and are not levied according to SCP/SCHP rules which are set according to state poverty levels. In other words living in NJ is more expensive than in SD, which is one reason why SCHP does what it does.

          A top of the line FEHB plan would probably cost in the realm of $10,000 – $12,000 for a younger couple and would more than likely be overkill in benefits as it would cover everything. The same plan for the 45-54 age household would range from 2-3 times that amount. It is just such a plan this group would need as there is a higher probability of disorders and illnesses. In Mass and under that state’s plan, the cost ranges from $1700 – $2000 monthly for low deductible and co-pays. The 2:1 and 3:1 if not based upon the lowest cost to the younger crowd will drive many of the 45-54 age group into financial difficulty. http://www.healthbeatblog.com/2009/12/glass-half-empty-glass-half-full-part-3–older-americans-at-risk.html “Older Americans At Risk”

          I agree the bill needs to be passed and fleshed out. I believe in the 2012 date and not the 2014 date as the later date allows a new Congress to take it up. The present bill is basically the skeleton for much more to come and it is definitely a shot across the healthcare and healthcare industry’s bow.
          During the 2004 Presidential Debates, Kerry made the remark during a debate with Bush. He wanted all Americans to enjoy the same healthcare benefits that Congress enjoyed. Without a thought given, Bush quipped: “you don’t expect Congress to pay for it?” Congress doesn’t pay for it, we will pay for it the same as we pay for their healthcare insurance. It would be nice if they joined the same plan which is passed for us and enjoyed what the Average American has for benefits at what the Median cost is for Americans.

        3. JTFaraday

          ” I also anticipate a future federalization of Medicaid and SCHIP (which these bills take steps towards by pledging full federal funding of their expansions), which could probably be combined with Medicare to create a single, wraparound public program.”

          I think it is very telling that they *could* have done something like this NOW, and they didn’t. I think progressives who insisted on a “public option” are correct in their assessments that the FAILURE to do something like this indicates that the current–ostensibly “Democratic”–government is committed to defunding the social welfare state.

          Rather than defending the Bill as the only “politically possible” Bill in this moment and reaming progressive critics, people need to start figuring out what it says about where this government intends to go in the future.

          Because it seems to me this bill is roughly the health care sector the equivalent of privatizing social security.

    2. Tao Jonesing

      “Moreover, the bill allows states to opt out and craft single-payer systems (if you’re looking at single-payer, that’s the most promising field, since CA, WA, and PA all have viable efforts). It vastly expands federally-funded community health centers for 25 million people (eventually up to 45 million), while allowing them to use Veterans Admin. prices for drugs.”

      That’s all thanks to Bernie Sanders, Independent from Vermont, not Obama or the Democrats. We’ll see if those provisions wind up in the final bill. I hope so.

      “The Pharma Deal is bad, but not worth sinking the whole bill over when, again, that is something that can be taken up again later.”

      I’m a big fan of IP and patents to the extent that they promote innovation, but the evergreening of Pharma patents to provide perpetual supercompetitive profits with no new innovation is not just bad, it is as bad as it gets. I guess it all depends on what you care about, though.

      I care about a strong middle class and an equitable patent system, and both seem to be under attack from the Senate bill. That being said, I’m waiting to see what the compromise looks like while cheering on the critics, like Yves and Jane Hamsher.

      1. run75441

        Tao:

        I would point out that innovation has been the driver of increased healthcare costs moreso than aging. I believe you meant innovation with a substantial benefit to patients and/or the insured. Innovation with little benefit is largely driven by the advertising axiom “new and improved.”

        With a few exceptions, the critics here are largely misinformed on the Senate Bill, which it does have issues. Andrew, John and a couple of others make some valid points and appear to have read the bill. The bill will be sliced and diced over the next 2-4 years (dependent on what passes) and will emerge as a different bill.

        1. Tao Jonesing

          run75441,

          By innovation I mean significant advances in science and technology, the kind of things that can be protected by patents. My use of the term was not limited to health care or pharma. When patents are too strong or too weak, they stifle competition, and innovation suffers.

          I’m not as sanguine about the prospects of the bill being successfully tweaked over the next 2-4 years. They’re hoping that we’ll forget so they don’t have to make any changes, and my money is on them.

          1. run75441

            Tao:

            What would you suggest? We missed a chance to start the control in 1993 when healthcare was ~$800 billion or enough to fight much of the war in Iraq. It sits at ~$2.6 trillion and by the time momentum builds up again in 4 years, we can easily see another 500 billion or so added to that amount.

            Do you believe people will be up to a fight in the next 2-4 years as compared to now? The accelerating costs of healthcare are outstripping people’s ability to pay for it. At least today there is a basis to do something as compared to starting from ground zero again with the same Senators who claim to be Dems but are Dems only when it is convenient.

            I am not happy with the bill either muchless Nelson or Lieberman.

  23. kievite

    Some random points for discussion:

    The decision who should live and who should not are implicit in
    any old age treatment. Keeping cost of insurance for older people
    high is one way to resolve this problem.  There might be others
    but one need to demonstrate that they are better…
    I agree with Yves as for "Massive restriction on a woman’s right
    to choose, designed to trigger a challenge to Roe v. Wade in the
    Supreme Court." That’s a real shame and paint the country in very
    unfavorable light (blend of neo-theocracy with neo-plutocracy ;-)
    The current situation in medical insurance in the USA is not
    that horrific. Basic insurance (hospital coverage only ) is
    reasonably cheap. I think in most states it is around $200 a month.
    When you pay $40 for internet access per month and $100 for cable TV
    this in not that much. If you accept restriction on choice of
    doctors (in-network option) you payments are also not that high even
    in present system (say $500 a month per family).
    Good corporate plan provides for very high level of care at a
    reasonable cost. Especially dental care.  I think that is
    competitive with any country on the globe including Germany.
    No matter what is the origin (public or private) the existence
    of insurance inflates the costs of treatment in the current system.
    Doctors milk insurance and that’s a know fact. Similar situation
    exists in body shops for cars when the price paid by insurance
    companies inflates the cost of repairs quite dramatically (often
    100%).
    I agree with Yves that public option is strategically important.
    But for a different reason. First of all not all waist in private
    insurance can be recovered in government option. We need to
    understand that government is wasteful in its own right: If in
    private insurance companies a lot of money are paid to top brass, in
    government they partially will be wasted in red tape. In my view the
    main value of public option is not what it provides but that it
    exists is a competitor and creates that possibility of arbitrage and
    rotation. I think the role that it plays should be similar to USPS
    vs FedEx and UPS.  Moreover it is inevitable that without
    public option private insurers will milk the system much harder in
    ways similar to investment banks. I think there should be even some
    rotation of legislation (pro-anti government) over the time. May be
    10 year is a period after which some private insurance companies
    which provide less efficient care by some metrics need to be
    nationalized for 10 year and so on. That will an effective put a
    ceiling of executive pay which is out of control.  May be such
    periodic rotation can help to eliminate the excessive milking of
    population by private insurance providers.
    Absence of public option makes government jobs somewhat more
    attractive.

  24. Paul Tioxon

    The one reason this bill needs to pass. Absolutely nothing at all has been done to materially affect health care reform on anyone but retirees since the establishment of Medicare and the poor and invalid with Medicaid. This is an omnibus bill on the entire health care system, nothing like has ever been proposed. This is once in a lifetime legislation that will provide a framework for ongoing corrections to the mess that we call our health care industry. It would be nice to fantasize about politics when you are use to command and control capacity in a private for profit business, but this in not a business. The legislation does establish universal health care, through private enterprise, with individuals mandated to carry health insurance. It does not provide for universal health care through government. It would be a lot easier to legislate Medicare for all and scale up as needed. But that might not happen for a few more years. I would not say cynically, decades, because the American economy does not have the luxury of time to restructure itself and approx 20% of its economy, which is in the health care sector. In the mid 1970’s Congress passed into law health care reform. It passed the Health System Agency act which was supposed to stop the march of costs from reaching 10% of the economy, which people thought was out of proportion then. Imagine as we cross the 20% line and realizing it won’t stop there, not until we make it stop. The private health insurance will keep going up in price, more employers, especially small business will continue to drop the benefit and more and more people will have to buy what the market offers. But isn’t that always been the case in the USA? Why should health care be any different? Did you really expect revolutionary change? As it becomes apparent that the health care crisis has only barely begun to be addressed, the solution will be on the lips of more and more people. It won’t be government’s fault that people are losing their insurance or can’t afford it, since it will only be provided for by the private sector. People will have to be screaming for it in ways that not even Fox News can gin up a pseudo political movement to divert attention. Yes, this bill stinks, compared to a rational solution, but our political process is not rational. It is incremental due to conflicting interests and competing financial players. The Health System act set up regional councils of hospitals, doctors, insurers, consumers, etc. to decide on the allocation of resources in order to contain costs. Every hospital and medical school in Philadelphia want the newest miracle device, the cat scanner, but there were only 2 in the city, both at Penn. A lot of doctors, especially the hospital on US Rt 1 which saw almost all of the head trauma due to car accidents had put in a bid for one and bitterly resented being left out in the cold when it carried the brunt of need for the scanner. I got to hear one of the pillars of the community near tears describing how his brother would be alive if only these devices were equitably distributed. I’m sure some nit wit would deem this a death panel but that is the pop gun artillery Congress came up with then, to address a serious problem. Oh and yes, Sen Kennedy turned down President Nixon national health care plan because it was not pure and holy enough for him and the ideals of the liberals. We would have have government universal health care since the Nixon Administration, but no, there were too many compromises. The same held true when Sen Humphrey blasted Sen Johnson over the toothless, meaning less Civil Rights Act of 1957. It did not include, education, housing, jobs, just voting. It was nominally a bill, according to the liberals. What it was, was the first movement for Civil Rights legislation in Congress since Reconstruction. A huge barrier had been over come in the fact it was considered and debated and passed at all, much less contain sweeping social change. It was followed by 8 more Civil Rights Acts directly addressing the racial politics of our country. So I say, this bill stinks, but it has a preponderance of good and is an enormous movement forward because there is change that will materially improve the lives of tens of millions and set the structure in place to carefully and deliberately reform the mess that is the health care industry in this country. Do not confuse changing our social order with mergers and acquisitions. It just is not going to look as efficient and clear cut as Comcast swallowing NBC/Universal.

    1. Marshall Auerback

      This is always the reason used to beat back the progressives: “Don’t let the perfect be the enemy of the good”, or some variation on this. The problem is that it assumes that we’ve got “good”.

      What benefit does it serve to push someone into an expensive private health insurance program, where he still will get no guarantee of full coverage and where there is no negotiating leverage because there’s no government alternative. This “exchange” argument is the biggest red herring I have yet seen. How does pricing transparency amongst an oligopoly of 5 large insurance companies (because, let’s face it, that is what we’ll be left with) actually ensure better prices for “consumers” (in itself a bogus term for health care). Is there really a big differential amongst the banks in terms of what conditions we can get on our credit cards, or even a loan? Of course not! They are the price setters. It’s a joke.

      1. run75441

        Marshall:

        You are a great guy and I read you religiously. I have to say something in response to your argument though. Lets start with the later part of your post.

        Up until Marquette vs. First National, states could define the terms of credit cards. With the 1978 ruling by SCOTUS, state regulations were thrown out in favor of the National Bank Act. This in itself setup the issues we have with credit cards. It appears SCOTUS (Brenner especially) did us in and Congress has not had us in mind to change to act upon this. Change the National Bank Act and the problem can go away.

        In terms of expense or expensive? I have to ask the question Marshall and I do so respectfully. How is it the Senate bill more expensive as compared to now and also in the future? Ezra Klein (as pointed out below) does a nice comparison here: http://voices.washingtonpost.com/ezra-klein/2009/12/jane_hamshers_10_reaons_to_kil.html “Jane’s Top Ten Reasons to Kill The Bill . . .”

        Scroll down the article and you will come across a chart “What Reform Means in Dollars” comparing risk with and without reform and Income. The risk increases according to income. Scrolling down further and Klein discuuses the excise tax as a major cost control in the present bill and I would add to this the MLR which determines how much profit can be made from individuals and groups. What has never been discussed and still needs to be discussed is what are the the major cost drivers of healthcare. For sure, it isn’t aging. A topic for another time.

        Cohn and Kaiser go into the costs for healthcare in a detailed manner here: http://www.kaiserhealthnews.org/Columns/2009/December/122109Cohn.aspx “The Senate Bill Saves Families Money.” Cohn has another article here: http://www.tnr.com/blog/the-treatment/what-reform-means-families-reponse-firedoglake-others “Don’t Kill the Bill.”

        Is it a great bill? No, I would have preferred the Public Option; but, how does one do get the PO when a group of Senators who have placed the healthcare and the healthcare industries interests over that of the people who elected them? It is not going to change in the short term until people begin to get angry, angry at Congress. And what of the future Marshall? The Urban Institute did a study called “The Failure to Enact Healthcare Reform.” Its not widely publicized; but, it covers expenses to 2014 and 2019.

        “The report makes clear that the cost of failure would be substantial and felt in every state. The analysis shows that if federal reform efforts fail, over the next decade in every state, the percent of the population that is uninsured will increase, employer-sponsored coverage will continue to erode, spending on public programs will balloon, and individual and family out-of-pocket costs could increase by more than 35 percent.”

        The reasons used to reject the present bill or a modification of it appear to be unfounded when examined in a closer manner. In my opinion, the cost of doing nothing will exceed the cost of the present bill or a modification. We missed a chance to capture healthcare in 1993 when it was ~$800 billion as compared to $2.6 trillion now. Rather than let years go by again and watch another $trillion being added to the total, I believe we need to act now with what we have in votes and press the hell out of Congress immediately afterwards.

  25. Intuition

    Any arguments in support of this atrocity of a bill ignore the simple and plain fact that it is illegal for the government to force citizens to purchase anything from a private company. I’m ashamed that any rational human being would ignore such a glaring fact.

    Oh well. If they try to put me in jail for not buying insurance and refusing to pay the fine they will have a serious legal fight on their hands.

    1. MB

      For myself, as a vehicle and homeowner is Washington state, this does not seem to be the case. I’m required to purchase auto insurance from a private company. I’m required to buy solid waste disposal service from a private company. I’m required to maintain septic and runoff water systems using certified private companies. Has this never been adjudicated before?

      1. Intuition

        The situations you mention are distinguishable from the health care mandate. You made a choice to own a vehicle and a house and therefore chose to accept the incidental requirements placed on vehicle and home owners. There has never been a mandate like this health care mandate which is predicated merely on being alive.

        1. MB

          Still, it seems that your statement “Any arguments in support of this atrocity of a bill ignore the simple and plain fact that it is illegal for the government to force citizens to purchase anything from a private company.” is incorrect. We are required to purchase some things from private companies, in some situations.

          And, if you want to get silly about, what about the requirement that one must be properly clothed in public? Even if you make your own clothes, you will be forced to buy materials, or land to farm …

          1. MB

            Hmmm, but if I don’t go out in public, then I’ll be forced to purchase (or rent) shelter – and thus be forced to purchases things from a private company (or have my landlord do so for me). Foiled again! Possibly one could huddle under a pile of leaves on public land …

            This has probably digressed far enough, unless someone can point to a court case that addresses this issue (wouldn’t this have come up in Massachusetts?). That was the point of my original reply.

          2. Intuition

            Yes we could probably go down this rabbit hole forever.

            It looks like the case challenging MA’s individual mandate is still working its way through the appeals process.

  26. lark

    Well unlike you over-privileged jerks, I know friends and family who have suffered death, bankruptcy, severe illness because of our current ‘system’.

    I am sick of our current ‘system’ killing Americans by the tens of thousands every year.

    And yes I have read this bill. And yes every horror story I know of would not have happened if this bill had been in effect.

    If you succeed in killing this bill – you are a killer.
    The blood will be on your hands.

    If you are such a pathetic whiner that you have a fit about getting health insurance (I’d like to see you throw a fit at the DMV about getting auto insurance) and you would kill tens of thousands and ruin the health of many more for your precious freedom to be uninsured, than you are a disgusting repulsive evil piece of slime.

    1. Yves Smith Post author

      I am not advocating being uninsured, and no one on this thread took the tact of defending the right to be uninsured. The few objections to buying insurance are to the idea of forcing people to buy from a private company, which does not mean they are necessarily opposed to government-funded care. And your remarks verged on an ad hominem attack, which as I observed in the thread, is against the comments policy on this blog.

      And as much as you are keenly in favor of the bill, all you have done is tell us about your beliefs, which is not going to change anyone’s mind. If you say the bill would have made a difference to members of your family, please describe how, with examples of what happened and what in the bill would have changed outcomes.

      1. lark

        No, I have not told people about my beliefs.

        I have told them the consequences in blood and death about their political preferences. This is made concrete by my own experience.

        It is necessary to make it concrete by way of personal experience because the blood and death that is always possible for those of us without health insurance is a subject of deep denial in this country.

        Your top two reasons to reject this bill:
        1. Forces you to pay up to 8% of your income to private insurance corporations — whether you want to or not.

        2. If you refuse to buy the insurance, you’ll have to pay penalties of up to 2% of your annual income to the IRS.

        … I think are fairly characterized as trivial ‘individual freedom’ arguments (whining) against taking collective action against the blood and death that characterizes the health care ‘system’ in this country. My comparison with auto insurance being required is valid. Where is the protest movement by ‘individual freedom’ people against the requirement to have auto insurance? Oh yes, I forgot: there is a public option for auto insurance. NOT.

        And your argument that rising health insurer stocks show that the bill is fatally flawed is just silly.

        They are getting tens of millions of new customers – of course their stock is going up.

        The real problem with my post, in my view, is that I’m present here, with my arguments and my experience. Most of us who know these disasters with our health care ‘system’ are segregated from the likes of posters in this thread, by the forces of economic and racial and class segregation that characterize this country.

        1. citizenx

          Your analogy / comparison of automobile insurance to health insurance isn’t valid, since the idea behind forcing drivers to buy insurance to not to protect themselves but rather the other driver (even if “full” or “no-fault” coverage is required – that’s the theory in play here). Health insurance, even if viewed as a pooled resource for better rates, is for the individual irrespective of others. Bad lifestyle choices undeniably affect the well-being of the person in question (and perhaps bringing about an infinitesimal increase in group rates for that policy pool), but heavy drinking / drug use isn’t going to poison the system of anyone else. I think this is a HUGE practical and philosophical difference, don’t you?

        2. Yves Smith Post author

          Lark,

          My objection is that this plan enlarges the role of private insurers, and has little in the way of curbs or regulations on their behavior. Insurers make an art form of collecting premiums and not making payments. And the curbs are on an aggregate level (% limits on how much of premiums have to go to paying out on claims) not on particular abuses.

          I also asked you to tell us what had happened to some of your relatives that led you to believe a private insurance plan would be better, and you still have not said why you think they would have had better results with this plan. Private insurers can and do deny coverage all the time. Having insurance does not guarantee that the coverage will be as extensive as you might like to believe.

          As Marshall Auerback noted earlier in the thread:

          This is always the reason used to beat back the progressives: “Don’t let the perfect be the enemy of the good”, or some variation on this. The problem is that it assumes that we’ve got “good”.

          What benefit does it serve to push someone into an expensive private health insurance program, where he still will get no guarantee of full coverage and where there is no negotiating leverage because there’s no government alternative. This “exchange” argument is the biggest red herring I have yet seen. How does pricing transparency amongst an oligopoly of 5 large insurance companies (because, let’s face it, that is what we’ll be left with) actually ensure better prices for “consumers” (in itself a bogus term for health care). Is there really a big differential amongst the banks in terms of what conditions we can get on our credit cards, or even a loan? Of course not! They are the price setters. It’s a joke.

          1. lark

            I don’t like to trot out my ‘cases’ because in my experience, the conservative mind likes to pick apart these ‘cases’ looking for personal fault. That is not the point. The system is sick. I will offer my cases, but I will not respond to offensive ‘fault finding’. None of these people deserved what happened to them. Those of you who base your politics on resentment and fault finding should read the following study. It is several hundred pages. Note that this is published by the Natl Academies Inst of Medicine. You can read it for free online and it contains much material on how lack of health insurance results in death, and also examines why adults lack health insurance. Note that this study is out of date (2001) and the situation has gotten quite a bit worse, of course.

            link
            http://www.iom.edu/Reports/2003/Uninsurance-in-America.aspx

            In the right column, click on ‘read report online for free.

            So, here are my ‘cases’.

            In my experience it is often the case that entrepreneurs starting small businesses sink everything into the business during the start up phase.

            One former boss did this, went without health insurance, got cancer, went bankrupt, was uninsurable, committed suicide.

            This bill would have saved his life because he would have had to buy health insurance.

            One relative was an entrepreneur who went without health insurance because he was pouring everything into the new business. He began to show symptoms of a problem he ignored because he didn’t have insurance. After he collapsed and went in to the hospital, he owed tens of thousands, became uninsurable, and now has permanently compromised health.

            This bill would have saved his life because he would have had to buy health insurance.

            A friend lost her only son because he was young and didn’t believe he needed health insurance. He needed a routine operation, was shuttled from one hospital to another because he lacked health insurance, and he died en route.

            This bill would have saved his life because he would have had to buy health insurance.

            As to your other points, I read Krugman’s blog and Ezra Klein in WaPo and they have lots of charts and analysis that refutes what you say. Why should I repeat that here. If you are acting in good faith, and not ideology, I suggest you refute their posts in detail, with numbers and references.

            For example, do you have a response to this:
            http://krugman.blogs.nytimes.com/2009/12/26/numerical-notes-on-health-care-reform/

            Or to this:
            http://krugman.blogs.nytimes.com/2009/12/23/simulating-single-payer/

            You say that I am borderline ad hominem attack. I think that is a bit evasive on your part. The fact is tens of thousands of Americans die every year due to the current system. This will largely be fixed by the proposed legislation. Where is your moral justification for killing this reform?

        3. Intuition

          It’s a sad day when arguments based on individual freedom are characterized as whining.

          Life = Death. No health care reform will change that. It’s always going to be messy. It’s always going to be risky. Be thankful you have lived at all, appreciate every moment you have, and don’t expect everyone else to sacrifice in vain to make your life better, longer, or your death more comfortable. Death cannot be avoided. No one has the right to steal from me in order to prolong their life.

          1. lark

            “Always messy?” What vague baloney. This is a very typical response from a conservative. You don’t deal with the basic reality of our public health crisis. If you wish to deal with this reality, I suggest you read the report I link to above.

            link
            http://www.iom.edu/Reports/2003/Uninsurance-in-America.aspx

            If you do not care to be informed about these matters of life and death, then perhaps participating in a discussion of our health care reform is not for you.

          2. Intuition

            I am not a conservative. I am a classical liberal in the anarcho-capitalist vein. The concept of “public health” is a myth used by the oppressive government to undermine personal liberty. I’m well aware of the reasons trotted out by statists.

  27. jeff

    “…….and Al Franken were supporting it meant it must be at least OK”

    Are you freakin’ serious? I’ve been reading this blog for 2 years and people on this site think Al Franken sets some type of gold standard for policy? Ok, I get Krugman – but Franken – my god – now even us democrats are SOL

    1. Yves Smith Post author

      Jeff,

      I was quoting from comments on a previous post, don’t make everyone responsible for the views of some.

  28. dearieme

    “One thing they did have in Australia, and I would imagine other countries have this too, is uniform record keeping. All doctors must keep their records electronically, and use the same system. None of this US handwritten doctor notes that no one else can read nonsense.” The attempt to computerise all the records in the British NHS is proving to be a hugely expensive fiasco. Perhaps that is just as well, because – some argue – if it had worked, the records would effectively be public reading matter – so many people would have had the right of access that there would be no confidentiality.

    1. Yves Smith Post author

      I have no idea what they tried to do in England. The records in Oz are not stored centrally. Each doctor keeps computerized records, and my impression was the data field were set (not sure if they were required to use the same software or not) which would make it easy to transfer files to another doctor or hospital. This sort of system would not be hard to implement.

      Anyone who has more insight is encouraged to comment.

  29. Cynthia

    Besides PhRMA and Big Insurers, the only other winners in this bill will be the very rich and the very poor. The very rich are winners because they’ll end up spending an even smaller percentage of their income on health care. The very poor are winners because their health care will be subsidized mainly through the middle class in the form of insurances taxes, higher deductibles, and/or higher premiums. One of the biggest losers in this will be the working poor who aren’t quite poor enough to qualify for subsidized health care. And this bill’s biggest losers will be middle-class workers who are fortunate enough to have decent insurance coverage, simply because they will be the ones who’ll bear the most burden for subsidizing health care for the uninsured.

    Now had this bill been crafted in a progressive way, meaning that everyone with decent insurance coverage spends about the same percentage of their income on insurance taxes, deductibles, and premiums, then I probably wouldn’t mind seeing this bill pass. But seeing that we are forever stuck with a very regressive bill, thanks to Barack Obama and other very pro-elite politicians in power who’ve created a government that exclusively caters to the rich, I think it’s best that we scrap this bill altogether and craft one that puts less burden on the middle class, who are fortunate enough to have decent health insurance. This bill, as it now stands, will help put America one step further down the road to becoming a full-blown, middle-classless society.

    Bear in mind, as recently as the early 1990’s, health insurers only kept about 5% of all health care dollars for themselves. Today, they keep about 20% of these dollars for themselves, leaving only about 80% to cover medical care costs for their policyholders. And because the insurance industry, as we all know, doesn’t add diddly-squat to the betterment of our health care system, making it more of a hindrance than a helper to our health and well-being, health care is in desperate need of reform. But because this bill is tailor-made to make the insurance industry an even bigger hindrance to us and our health care system than it is now, meaning that it will gobble up even more health care dollars for itself than it’s already doing right now, we really need to kill this bill and start all over again from scratch.

    Let me also point out that our income tax system is at least progressive enough so that upper incomes are taxed at a higher rate than lower incomes are. The same thing can’t be said about the way this bill will generate health care dollars to pay for the uninsured. Once this bill takes effect, all policyholders, regardless of income, will have their policies taxed at the same rate. And since deductibles and premiums will be essentially the same across the income spectrum, middle-income people, compared to upper-income people, will have to fork over a higher percentage of their income in order to receive health care benefits.

    So to prevent us from having a regressively-funded health care system, we should do one of two things: 1) transform our for-profit insurers into non-for-profit entities, as the Swiss did several decades ago, or 2) ditch our for-profit insurers and replace them with one single payer, as most advanced economies throughout the world have done. At least a single-payer system will be funded by a income tax system which is still relatively progressive. For-profit insurance is just too intrinsically regressive to ever give us a progressively-funded health care system.

  30. Siggy

    Yves,

    A nice parsing of the Senate bill. Based on your presentations it is clear to me that enactment of the bill will do nothing to improve my healthcare options. In fact it will do nothing to improve the healthcare options of most people.

    The argument that if this bill is not enacted we will have to wait 10, 15 years for real reform has no basis in fact or reasonablness.

    I suspect that as a country we would be well advised to look very hard at the German healthcare system. My understanding is that nearly everyone must pay for coverage. Along with that requirement there are the benefits of lower costs per event and lower cost prescription medicines. Overall, my understanding is that outcome measures score much better in German than in the US. Correct me if my perceptions are wrong or off the mark.

    As to overall costs, I’d like to know if it is true that the 80% of the aggregate costs of healthcare over a lifetime will be incured during end of life treatment. That gets me to the consideration of who will make the determination that continued treatment is no longer cost effective.

    If immigration were readily available, I suspect that a large body of educated and intelligent people would be voting with their feet.

  31. AP

    I couldn’t agree more that this atrocity needs to be shredded, but let’s not forget- this post would not exist nor would this debate be taking place if our legislators were doing the right thing in the first place: Doing the public will, and NOT acting on behalf of their campaigns sponsors. As Jane Hampsher from FDL pointed out in your 12/26 post; “This bill doesn’t suit anybody’s needs, except for the insurance companies and pharma who have been able to write all the laws, all of the provisions to their own benefit”

    The fact that this bill has gotten this far is because it’s symptomatic of the entire broken, corrupt legislative process in this country. For that very reason, I expect this bill to pass easily and be signed into law… (in TARP fashion) exception being only if people are rioting in the streets. Luckily for them, We the people, are far too distracted as a country to do that.

  32. RueTheDay

    The Senate and House plans are both travesties. I used to be of the viewpoint that any substantive reform is better than nothing, but I’m changing my mind.

    We need a single payer system that will 1)contain costs and 2) make insurance available to everyone. Those are the overarching goals. The simplest way to achieve this is through a Medicare buy-in program. Let everyone in the country buy into Medicare, with a community rating system, and with subsidies provided based upon income up until a certain level.

    Dispense with the two Rube Goldberg contraptions currently under review.

    1. alex

      “The Senate and House plans are both travesties.”

      The House plan is far better. It has a public option and is superior in terms of many of the important details. Not a great bill, but far better than the senate travesty.

      The problem is the bunk that the senate needs 60 votes to pass. That’s nonsense. The widely abused “procedural filibuster” whereby a bill can be effortlessly defeated by only 40 senators is something that exists only at the discretion of the senate majority leader. If Reid wants to, he can force the opposition to have a real filibuster. Break out the cots and have the whole country focus on the fact that 40 senators are holding up all senate business and blocking the fabled “up or down vote”.

      1. RueTheDay

        I agree. I don’t have a real problem with the idea of a filibuster, but if it’s going to be used then it needs to actually be done and not merely threatened. Break out the cots, start reading phone books, let the Senators piss in buckets, etc. Show the American public the absurdity of it all and have it recorded for posterity (or at least for use by opponents in the next election).

  33. Rdan

    We are waiting for some notion as to what a final bill might offer. The House bill is different. I am not sure the interpretation of cost ratios for young and for older is accurate, but the language is not as precise as a formula might reveal.

    The gloom might not be as warranted as you suggest Yves in the final product. But our analysis will be forthcoming when we have more information.

  34. Dave

    I am just a simple businessman, but this is simple to do if we set aside the special interests and the ridiculous partisanship that stinks up our country right now from BOTH sides.
    1. Establish a federally set minimum criteria for health insurance policies just like HHS did for Med Sup policies.
    2. Mandate they be provided to ALL at an equalized price.
    3. Then if people want/can afford better coverage they can opt to purchase whatever level of supplementation they want/can afford. (Australia has just such a system now and it seems to work well)
    4. Mandate long term care be provided in the specified minimum health coverage at a minimum level to halt this ever increasing and ignored issue that will engulf the welfare system as Boomers continue to age and need care. With our divorce rates, there are fewer families left to care for aging relatives.
    5. Subsidize (adjusted for AGI)at whatever level necessary to provide all LEGAL US Citizens with this minimum coverage. If we don’t prevent illegals from coverage they will come in droves for the freebies they can’t/don’t get at home and stick us with the bills.
    6. Shorten patent protection so generics become more widely available sooner rather than later and negotiate blanket contracts at fixed prices with Pharma.
    7. They need a profit but if they are prohibited from spending 1/3-40% of income on the ridiculous “disclaimered” TV/Mag ads directed at consumers that are causing overwhelm at the Doctor’s office and if we can limit Tort recovery to reasonable limits, especially “pain and suffering”, we should come out with an overall save and all legals covered with acceptable coverage.
    8. Remove employers from the equation and return to the more traditional Doctor-patient relationship to create patient awareness of cost and Doctor liability directly to the patient. This is how we covered health needs before the Feds interposed wage controls that mandated health insurance as a benefit for employee retention instead of bigger paychecks.
    That’s my fix, but no one else seems interested in common sense anymore.

    1. Yves Smith Post author

      Dave,

      I think that is what has so many frustrated, there were a number of ways to skin this cat that would have been much better than what we are likely to get.

  35. NKlein1553

    I’m a little late on picking this up, but Ezra Klein over at the Washington Post has a pretty comprehensive response to this top ten list:

    http://voices.washingtonpost.com/ezra-klein/2009/12/jane_hamshers_10_reaons_to_kil.html

    I think people like Ezra and Yves Smith are pretty much talking past each other here. Ezra seems to be comparing the bill to the status quo while Yves is comparing it to an idealized version of what should be passed. I think both forms of analysis are legitimate, but I tend to agree with Ezra here. Also, just want to say this is my first time posting here, but I’ve been reading for a while. I really enjoy this blog and appreciate the great work you do.

  36. Brian

    Yves,

    You mention that NY State allows you to appeal to them when you feel you’ve been denied coverage incorrectly. I need to do that, can you forward me the contact info of where to do that, I can’t seem to find it on NYS website. brimcc at gmail dot com. Thanks!

  37. Paul Tioxon

    The health care reform act needs to pass, understanding that over the next 10 years, it will be revisited by Congress. But more importantly, after the minutia has been dissected on the final bill, it is the Global perspective that needs to be addressed to see that our society has to restructure itself, with the deliberation of the political process or face the cascading unintended consequences of maintaining a vestige of our Cold War/Industrial past. The fall of the Berlin Wall caught the CIA and The White House by surprise. Some events are too large to measure by the generally accepted means at our disposal. Gorbachev finally relinquished 500,000 soldiers of the standing Red Army because he was the first Soviet Premier to view a valid economic picture of the USSR and he acted accordingly. Fortunately we do not have as bad a situation due to the vast amount of university level research about our society. We have the capacity to make policy decisions for our Republic as a whole and that is what this bill is, more than anything that has been taken under consideration since the New Deal. We can not expect to partially integrate our economy into a global economy and expect parts of it to be maintain without unsustainable costs. No one in the world has the system that we have where employers are stuck with a legacy to provide health care insurance to workers for the vast majority of the population. They have accordingly absorbed the costs, in their business model to maintain this benefit. This alone is a single cost that make them uncompetitive with enterprises around the world who have their governments or some other more rational system that does not add to the cost of goods and services. Lee Iaccoca and the auto industry have known this truth for decades and the price they paid when Pres Clinton failed to get a different system to replace it. As a major contributing factor to the auto industry’s demise, I do not think there is much argument. Multiply this industry after industry, and it is part of a system, that functioned when communism was being contained, when the US economy did not interact to any significant extent with the entire Soviet bloc, China and its satellites. The global economy has opened up new markets to us and we have opened up to them, with attendant systemic reactions. At 20% of economy, there is no avoiding the consequences to the health care sector. It will fall like the Berlin Wall, because as it is currently constituted, it is unsustainable. The questions of individual rights, oppressive government interference are words that fail to describe the changed world that the US economy now finds itself integrated with. If we do not make a rational response, and take the first steps to get our arms around a problem that is too large to measure by what people are accustomed to use to process the events in the world, the news media, pensive books by well meaning journalists, crap from phony fronts for special interests etc. we will have change anyway, through the process of chaos, not deliberative legislative politics.

  38. Lydia Bell

    reply to one comment about system in germany: Although I ‘m now eligible for Medicare in the USA,due to other reasons, I “escaped” to Germany (where I was born but unfortunately lost my cicitzenship) after 35+ years in the US, and here, a 410 Euro job (monthly), which I need to keep for one year, got me into the healthcare system, whose premiums are calculated based on your income, in my case 120 Euros. After working one year fo)r 410 Euros a month, I can continue paying these premiums on a “voluntary” basis, although I would have the choice to look for a private company, where I would pay three or four or five times as much. Point is, with this sytem-based insurance, which is based on my income, I can afford it, and people, let me tell you, after more visits to the doctor and hospital in one year than in the 20 years in the US, (one visit in 20 years with private insurance and a high deductible) all I can say is, treatment was simply OUTSTANDING, OUTSTANDING, OUTSTANDING. I couldn’t stop singing its praises to everyone who was willing to listen. NO ONE, NO ONE, NO ONE here or anywhere else in the industrial world would want to trade it for the US system or would want to live there.

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