More Troubles for Baucus

The scandal involving Max Baucus and his live in girlfriend continues to unfold.

Sen. Max Baucus gave the director of his Montana office a nearly $14,000 raise as they were becoming romantically involved last year, a spokesman for the senator said Friday.

Baucus, a Democrat who chairs the Finance Committee, recommended the woman, Melodee Hanes, for Montana's U.S. attorney post in February, by which time she was his girlfriend. He has called the former state prosecutor "highly qualified."

Hanes, 53, withdrew from consideration in March, saying she had received other opportunities. She was hired in June as a top official in the Justice Department.

The problem with this entire scandal is that it started with a personal relationship between Baucus and a member of his staff. Everything after that can be read a number of ways. In fact, his live in girlfriend, Melodee Hanes, may in fact have been more than qualified to warrant a nomination for U.S. Attorney. She may in fact have received a raise that was in line with the rest of Baucus' staff. In fact, all of this looks bad and it looks bad because she was his girlfriend.

There's a reason why some companies forbid dating in the office. All companies frown upon it regardless. In this case, it's even worse. In this case, interpersonal relationships mix with public policy. I don't know if Hanes was qualified to be U.S. Attorney. I don't know if she was supposed to get a raise. I do know that Baucus shouldn't have dated a member of his staff and that's what's caused all these other problems.

Baucus Nominated Girlfriend For U.S. Attorney

There's a small but growing scandal involving Max Baucus.

Senate Finance Committee Chairman Max Baucus is defending recommending his girlfriend for appointment as Montana's U.S. attorney.

Baucus said the he and former state office director Melodee Hanes began dating when they were both separated from their spouses. The Montana Democrat said they did not have an affair.

In a statement issued by his office Saturday, Baucus said he recommended Hanes to become Montana's U.S. attorney because she is a highly qualified prosecutor who tried more than 100 jury trials, and said she is widely regarded as an expert in child abuse prosecution.

Baucus and Hines are now living together. Hines eventually took a post within the Justice Department. Furthermore, Hines worked in Baucus' office when they began dating.

There's of course several problems here. First, it's highly unprofessional, though not unprecedented, for a U.S. Senator to date a member of their staff. Second, there was a clear conflict of interest here. It's obvious that Baucus didn't make it clear that Hines was his girlfriend when he nominated her. These conflicts must be disclosed.

This scandal is about a lot more than whether or not Moledee Hines was or wasn't qualified. Even if she was, this was a cynical political ploy. It's exactly these sorts of conflicts that people are sick and tired of. If you're going to nominate your girlfriend, that's something you must disclose.

Of course, it's exactly the sort of scandal that the MSM seems to have little interest in. That's because following Baucus' name there's a D. So, don't expect this to get much traction anywhere but non traditional media. Baucus is of course at the center of the health care debate.

The Democrats Are Failing Basic Politics

Yesterday, the so called Doctor Fix failed in the Senate. This was the measure that would stop Medicare cuts set to go into effect next year. The measure would have cost $247 billion over the next ten years. Harry Reid wanted to pass it on its own mostly in order to not have the cost be included in the final health care bill. The AMA was strongly behind the measure and the Democrats were hoping to get them aboard health care reform. Thirteen Democrats joined all the Republicans to defeat the measure.

When President Bush first proposed his tax cuts, he got near unanimous approval from his own caucus. He also got moderates like John Breaux on board. As such President Bush split his opponents and got his own party unified. By reaching out to Ted Kennedy on NCLB, he also got a similar effect. With immigration reform, he had the exact opposite effect. In that case, his own caucus was split.

There's a simple rule in politics. Unite your own party and split your opponents and you win. It's one of those things that's easy to say but difficult to pull off. Yet, success and/or failure entirely depends on successfully executing this model. So far, President Obama and the Democrats have failed miserably. On no initiative has the president been able to split the opposition. In fact, on each of his initiatives, it's his own party that has been divided. On cap and trade, he lost 44 members of his own party. (though 8 Reps switched as well) On health care, we know that at most Olympia Snowe will get on board. That's it.

In fact, the reason that the health care bill was first supposed to pass by August, then October, then Thanksgiving and now at some undetermined date is because the President and the Democratic leadership can't unite his own party. The Democrats wanted to give seniors a one time $250 check. Now, Steny Hoyer is leading the Democratic charge against that initiative and that's losing steam. For all of these initiatives: health care, the doctor fix, the $250 stimulus, the Republicans have been united against them entirely. That's why with only about 40% of the legislature the Republicans have still been able to stop all the President's initiatives. That's because the President and the leadership, UNBELIEVABLY, have proposed nothing but initiatives that have united the opposition and split his own party.

Now, let's think about this. If the Democrats can't unite the party behind a simple $250 check, how are they going to unite their party around something as complicated as health care reform? In fact, it should be more and more clear that the President simply can't manage the crafting of legislature. This is no easy task. Like I said, uniting your own and splitting the opposition is easy to say but much more difficult to do. It's also clear that the President and the Democrats have no idea how to do it.

Since mid summer, it's been clear that the Republicans have been united against health care reform. It's also been obvious that all flanks of the President's own party have been united against parts of the bill. We all remember when Nancy Pelosi said that without the public option 100 votes would be lost in the House. We also remember Max Baucus saying that the public option doesn't have the votes in the Senate. We had a similar phenomenon on cap and trade. Most of the Blue Dogs had problems with it and Representatives from certain energy producing states also had problems. As such, the Democrats were similarly split, though 8 Republicans cross the aisle. The Democrats are so split in the Senate that the bill doesn't appear to come up at all anytime soon.

That's the presidents two main initiatives, cap and trade and health care reform. On both, he and his leadership have managed to accomplish the opposite of what he wanted to do. He's split his own party and united the opposition. That's a recipe for long, sustained, and continued failure.

Palin Takes on Baucus

Sarah Palin's facebook page has been relatively quiet lately. She made it louder with a roughly 1000 word commentary on the Baucus bill. Most of the criticism echoed that of the Price Waterhouse report released earlier last week. The main criticism comes down to the idea that pre existing conditions will no longer stop someone from being covered but the penalties for not having coverage will be small.

The bill prohibits insurance companies from refusing coverage to people with pre-existing conditions and from charging sick people higher premiums. [1] It attempts to offset the costs this will impose on insurance companies by requiring everyone to purchase coverage, which in theory would expand the pool of paying policy holders.

However, the maximum fine for those who refuse to purchase health insurance is $750. [2] Even factoring in government subsidies, the cost of purchasing a plan is much more than $750. The result: many people, especially the young and healthy, will simply not buy coverage, choosing to pay the fine instead. They’ll wait until they’re sick to buy health insurance, confident in the knowledge that insurance companies can’t deny them coverage. Such a scenario is a perfect storm for increasing the cost of health care and creating an unsustainable mandate program.

Like the conclusion of the Price WaterHouse study, Palin concludes that young people will simply not get insurance until they get sick. This will drive up costs for everyone and thus only make health care even more expensive. It's important to note that in demonizing the likes of Palin and the insurance companies no one has answered this charge. No one has been able to say how this assessment is wrong, and that's because it isn't. The administration claims that subsidies and credits aren't factored into the formulation. That's absurd. Neither subsidies or credits are free and neither bring down the cost of health insurance. All it does is move the cost from one party to another. This is the biggest flaw in the Baucus bill. It can't be fixed. If Baucus' bill raises the fees and penalties that would be a massive new tax. Covering those with pre existing conditions sounds great in theory but in reality, there are major flaws in this scheme.

Beyond this, Palin also criticizes the president's hypocritical lack of transparency.

In January 2008, presidential candidate Obama promised not to negotiate behind closed doors with health care lobbyists. In fact, he committed to “broadcasting those negotiations on C-SPAN so that the American people can see what the choices are. Because part of what we have to do is enlist the American people in this process. And overcoming the special interests and the lobbyists...” [12] However, last February, after serving only a few weeks in office, President Obama met privately at the White House with health care industry executives and lobbyists. [13] Yesterday, POLITICO reported that aides to President Obama and Democrat Senator Max Baucus met with corporate lobbyists in April to help “set in motion a multimillion-dollar advertising campaign, primarily financed by industry groups, that has played a key role in bolstering public support for health care reform.” [14] Needless to say, their negotiations were not broadcast on C-SPAN for the American people to see.

It's often difficult for people to see how corrosive non transparency is. That's because there is no direct effect from non transparency to people's lives. After all, if a bill helps you, do you really care if it was done transparently. Instead, non transparency corrodes the system until the system itself stops helping the masses and helps the special interests. People need to understand that these bills are over 1000 pages. So, unless everyone is going to read and fully analyze them all, they need to know how someone came to the decision they did. When deals are made behind closed doors, then deals are made that benefit the deal makers and not the public. That's what is happening now. Once the process is corrupted, the bill is no longer viable. That's what we have now.

All of these points Palin made as well. Palin once again renewed her support for free market ideas. I continue to be surprised that Palin didn't try to take the lead in debating health care reform. Her contributions have been at the margins. Everytime she made a contribution it wasn't merely debated but hyperanalyzed. Death panels became a part of the lexicon. Yet, she makes a contribution every few weeks rather than on a regular basis. She could have gotten a lot more involved. Palin said one of the reasons she stopped being Governor was to support conservative people and ideas. This was the perfect platform for that. She's stuck one foot in the water but to be taken seriously, she needs to get deep into the fight.

The Enron Accounting of Health Care Reform

The president wants a massive health care overhaul. He also wants to keep it under $900 billion over the next ten years, and he wants it be deficit neutral. So, how do the Democrats plan on accomplishing all these things? It's through Enron style accounting.

1) Collect taxes and revenues in year one but don't begin to provide services until year three.

The CBO has become the "gold standard". Everyone has treated it as the gospel. It's so called scoring system has flaws however. It only takes the first ten years of revenues and expenses. So, how did the Baucus bill come in with a budget surplus? It begins to collect taxes and revenues right away. The plan, however, doesn't begin to be implemented until 2013 and doesn't take full effect until 2015. So, some taxes are collected for up to five years before expenses begin to take full effect. Yet, the CBO only scores for the next ten years. So, when you take ten years of revenues and only seven years of expenses, it's no wonder that the plan looks as though it reduces the deficit.

Of course, the CBO doesn't score the consequences of this. First, this won't be paid with CBO scoring. It will be paid with real dollars. So, at some point the revenues collected before there are any expenses will run out. That will happen in the second ten years. Of course, by then President Obama will be out of office. No one will remember the promises made now. The consequences of these budget deficits will be the same nonetheless. Second, collecting revenues is just a fancy term for raising taxes. That will happen starting next year. Raising taxes in a recession is counter productive. It only perpetuates any recession. So, while this Enron Accounting trick will make things look good for the CBO, it won't stop the real world effects of the policies.

2) Expansion of Medicare and Medicaid

All the plans call for a major expansion of both Medicare and Medicaid. Of course, Medicaid programs expect the states to pick up a major piece of the tab. The extra strain on state's budgets isn't figured into any CBO scoring. In fact, it's not even mentioned by any politician. Of course, states can't print money and most have balanced budget amendments. So, asking them to pick up an extra tab for a federal government program only strains their budgets even more. There's a reason why Governors have been sounding the alarm. They're about to be on the hook for a major federal government expansion. Of course, the strain on state government's budgets isn't factored into the scoring of the CBO. In fact, it's barely acknowledged by anyone pushing the reform. Of course, the costs are still real. Putting extra pressure on the fifty state budgets has real consequences even if they aren't acknowledged.

3) Phantom cuts to be decided later.

The biggest scam and the biggest promise made by the administration is the cuts to fraud, waste and abuse in Medicare and Medicaid. These cuts aren't actually in the plan. They're just promised and they'll be taken on by later Congress. Of course, later Congress aren't bound by the promises of this Congress. The cuts aren't specific except for the amount, $500 billion. That just happens to pay for half of reform. In other words, proponents of health care reform know how much they want to cut but they don't know where these cuts will be. The same government that counts a slow down in the increase in government spending as a cut is now to be trusted to make significant cuts to a major government program. Of course, these cuts won't start until 2013, just conveniently after the next election.

Baucus Bill Passes Now What

No one knows the answer to that. Senator Olympia Snowe sided with the Democrats and besides that this bill passed on a party line vote. So, it passed 14-9 out of the Senate Finance Committee. What no one knows is what will happen from here. The Senate Finance Committee has continued the same dynamic that has existed throughout the process. The further in we are the less is clear.

Senator Snowe sided with the Democrats but she also said this doesn't mean that she will vote for the final bill. At the same time, Senator Joe Lieberman said he wouldn't vote for this bill, if he were on the committee, but it's unclear what he would do with another bill. Both Jay Rockefeller and Ron Wyden voted for the bill but it's unclear how happy they are with the bill. It's still unclear how the liberals will feel about a bill without a public option and vice versa for moderates.

Meanwhile, this "transparent" process now goes back to the backrooms of Congress. Now, this bill will be combined with the other bill passed all the way back in July in the Health Education Labor and Pension Committee. That process will be lead by Harry Reid.

Meanwhile, the House is trying to do something similar and that process is being lead by Nancy Pelosi. That's been stalled since the end of July. That's when the last of the house committees passed their bill. Since then we've been promised a final bill and we are all still waiting.

A couple weeks ago, I wrote a piece pointing that still there is no bill. Now that this "bill" has moved out of committee, that is still correct. First, this isn't a bill. It's a very detailed outline. This committee allows for a so called bill to pass without the actual language of a bill.

Second, and much more importantly, no one expects this to be the final bill. Still, what I've noticed for the last month remains the same. Nothing has been settled. We don't know if there will or won't be a public option. We don't know what will be taxed and how much. We don't know if there will be a mandate.

So, now, Nancy Pelosi, Harry Reid, the President and his aides, along with a select group of legislators (of which no more than one, maybe, will be a Republican). From that we'll get two different bills. What will be in them no one knows including those charged with making the bill. Then, they'll hope that these two final products will have enough votes to pass. If that happens, they'll have to go back into their backrooms and negotiate one final bill.

So, the Baucus bill just passed and we don't know anymore about what health care reform will look like now than we did back in March when it started. Welcome to the most transparent administration of all time.

The Mandate Conundrum

The health insurance companies have been demonized for not covering those with pre existing conditions. Most of those that demonized them, however, didn't understand why health insurance companies did this. If you can get health insurance any time, you'll wait until you need it to get it. So, a lot of people will wait until they're sick to get health insurance.

Health insurance companies were on board with laws mandating that they must cover everyone even if they had a pre existing condition. They wanted something in return. They wanted a mandate that everyone get insurance. This way no one could wait to get sick to get insurance.

The health insurance providers and the lawmakers were each trying to thread a very sharp needle. This became a very complicated policy making version of a jigsaw puzzle. Lawmakers wanted to make a mandate but they needed to figure out how to apply it.

Health insurance companies knew that if a mandate would force millions of 30 and under to get health insurance that would bring them billions in premiums for mostly healthy people. Young people by and large would pay their premiums and use very little health care. So, that new profit would more than offset the losses that health insurance companies would incur from covering millions with pre existing conditions that would get sick far more often.

So, the Baucus plan included a mandate and it included a rather onerous fine to not get it, up to $3900 yearly. It even went as far as potential jail time for non compliance. Of course, news of this set off a firestorm. So, Baucus, and the committee, cut the fines significantly. Now, they're as high as only $750 yearly. That won't go into effect until 2017. Of course, with fines that low, most young people would still rather pay the fine then get the insurance.

That's the crux of the analysis done by Price Waterhouse Coopers that received so much attention today. What the report found essentially was that the fine wouldn't be onerous enough. As such, most young people would choose to pay the fine and still not get insurance. So, the insurance industry would be faced with millions of new sick people they would have to insure and they wouldn't have millions of healthy people they collect a premium for to offset. That's the main reason why the report concluded that the Baucus bill would increase premiums an EXTRA $4000 yearly over the next ten years.

Of course, there's still a conundrum. The way to fix this is to make the penalty so much that it forces young people to get insurance. Doing that would of course amount to a tax on millions of young people. Most young people do NOT make $250,000 and more. So, first, that would break Obama's pledge. Second, it would be a disaster as a policy. Millions of young folks would pay for health insurance they never use or pay a fine they can't afford. How does that sound, especially in a recession?

The problem is of course a fundamental lack of understanding the problem. The president and the democrats see two problems: 1)far too many people get denied coverage for pre existing conditions and 2)far too many people don't have insurance. They see this problem and they think that to fix it you simply mandate it. Instead, they should think about why this happens. In my opinion, it happens because of a fundamental lack of competition in health insurance. Health insurance providers don't cover those with pre existing conditions because they can. In each state, there are very few providers. Since all don't cover those with pre existing conditions, none need to. If we could improve competition, the market would find a way to cover those with pre existing conditions. The problem is the perverted market in health insurance. That far too many go without coverage and aren't covered due to pre existing conditions is a symptom of the problem. It's not a problem itself. The current plan misses the fundamental problem.

Too Cute Baucus Bill Totally Useless

Here's somethings you may not know about any bill that comes out of the Senate Finance Committee. There doesn't need to be a full final bill. All there needs to be is a very detailed outline. Go to the Senate's site and this is the bill. It's 223 pages and spends half it's time comparing itself to current law. That's not a bill but rather a plan. The House Health Care bill is over one thousand pages, and it's strictly text of the bill. That's an actual bill.

Because there is no bill but rather an outline, there also won't be any Congressional Budget Office analysis. That's because there's nothing for the CBO to analyze. They can't analyze a plan. You can't put numbers behind an outline. That's what the Baucus "bill" is. It's nothing more than an outline. Remember, the Republicans wanted to put in an addendum that force the Senate Finance Committee to put the bill on line. Baucus balked saying that this could take two weeks. Of course, it would. That's because first Baucus would actually have to write the bill.

Most of those in sales have probably gone through a period of intense cold calling. Anyone that has cold called has likely far too often turned a prospect into a lead even though they knew that this prospect would never turn into a sale. The salesperson would sit on the phone convincing the other party to allow them to present an idea in the future. The prospect was likely even resistent to that. It's a way for the salesperson to make themselves feel better. That way the lead could be written up and so it looks as though work is being done. In their own mind, they feel as though their hours on the phone aren't being wasted.

That's what this Senate Finance Committee bill feels like. If there is no bill but merely a plan, then what's the point of passing it? You can't pass a plan through Congress. You actually have to pass a bill. So, this "bill" will likely make it out of committee. That will allow the President to tout another "accomplishment". The accomplishment will be as meaningless as any lead a salesperson gets merely to say they've gotten another lead. That's because a final bill would still have to be created for the full Senate. This "bill" has to be merged with the bill that came out of the Health Education Labor and Pension Committee. It's not going to be any easier to do this just because this plan passed out of the Senate Finance Committee.

Everything we've witnessed out of the Senate Finance Committee was purely for dramatic purposes. It has no legislative or political value. Nothing is settled as a result. In fact, things are less settled. The Senate Finance Committee couldn't pass the public option whereas the HELP committee did. So, one or the other will have to give. Whenever this "bill" passes, we will be in a state of just as much chaos as we were in before it passed. The entire exercise was entirely useless. The Senate Finance Committee allows for a bill to be presented in a form that's really nothing more than a detailed summary. Baucus must have felt that this form had a better chance to pass. As such, he presented a 223 page outline. That outline will likely get out of Committee. Yet, an outline is totally useless when it comes to figuring out what the final bill will be.

Refereeing over Chaos

The New York Times has an interesting article about the current state of the health care bill in the Senate.

As the Senate majority leader, Harry Reid, Democrat of Nevada, takes on the delicate task of melding two competing versions of major health care legislation, aides say he will lean heavily on President Obama to arbitrate a number of contentious issues that still threaten to divide liberal and centrist Democrats and derail a final bill.

Mr. Reid’s challenge is to stitch together legislation that can win 60 votes to stop a Republican filibuster. It must satisfy liberals demanding more generous subsidies and safety-net provisions for the middle class, without alienating centrist budget hawks or Senator Olympia J. Snowe of Maine, the only Republican who has indicated she might back the bill.

Democrats now control 60 seats in the Senate, with the appointment last week of Paul G. Kirk Jr. of Massachusetts as the interim successor to Edward M. Kennedy, who died in August. But the party is far from united on the health care issue, even though Mr. Obama has declared it his top domestic priority and has expended enormous political capital on getting a bill passed.

It's interesting mostly in the fantasy like predictions that the article makes for health care reform. For instance, the article predicts that the Baucus bill will make it out of committee by the end of the week. I'm not sure the bill will even make out of committee but it is very unlikely to make it out by the end of the week. The committee took half of Friday off and will take today off for Yom Kippur. Tomorrow the committee will take up the contentious Rockefeller/Schumer amendment to add in the public option into this bill. The current version has only a co op. The committee is about half way through more than 500 amendments, but the article predicts the bill will be ready for a vote by Friday.

Then, it engages in more fantasy when it predicts the Senate will merge all the bills into one and bring them to a vote by October 15th. Now, the House has been in the position the Senate will purport to be on Friday since before the break. There's no final bill to speak of yet.

Besides this, the article recounts what any astute observer already knows. There simply aren't the votes to pass it. Now, it doesn't say that. Instead, the article points out many differences between moderates and liberals.

To appeal to Ms. Snowe, as well as to centrist Democrats like Senators Ben Nelson of Nebraska and Mary Landrieu of Louisiana, the combined bill would not include proposal for a government-run insurance plan, or public option, despite the clamoring of liberals who support it, senior Democratic Senate aides said.

...

The White House may also be asked to settle regional disputes, including disagreement over proposed cuts to Medicare Advantage, which offers extra benefits to some people 65 and older but often costs the government more than traditional Medicare.

“None of these decisions are going to be made without significant presidential input," said Jim Manley, a spokesman for Mr. Reid.

So, by appealing to one group, the final bill will disenfranchise another. By doing so, all the final bill will do is lose two votes to gain one. There's so many issues of contention including the size of subsidies, the cost, cuts to Medicare, and who to tax among them. So, by the time the final bill is done appeasing everyone, no one is happy. That's been one of the problems all along. So many legislators have come forward with potential problems that there's too many constituencies to appease. Some are diametrically opposed to each other. It's total chaos.

Now, Harry Reid wants the president to figure it all out. That's simply wishful thinking. No one can figure this out. If you increase subsidies to appease the liberals, the costs become too much for the moderates to swallow. On the other hand, the liberals demand insurance mandates but don't want the poor and middle class to pay too much. You have to cut Medicare somewhere to pay for it. The liberals aren't too keen on Medicare Advantage so they want that cut. Yet, seniors like Medicare Advantage and so all legislators that represent a lot of seniors, a la Bill Nelson of Florida, are against those cuts. At the same time, the president has pronounced the bill must be revenue neutral. Good luck Mr. President in squaring that.

Beyond this, the new Rasmussen poll has support for health care reform at an all time low of 41%. Seniors support the bill at an astonishing 16%. This is the legislative version of the food fight scene in Animal House.


Like I said, good luck refereeing that Mr. President.

Not Buying Health Insurance Soon Criminal?

Anyone that's still not convinced that the Baucus bill is rotten should be convinced after they read this latest discovery.

Under the health care bill being considered in the Senate Finance Committee, Americans who fail to pay a penalty for not buying insurance could be charged up to $25,000 by the Internal Revenue Service or face up to a year in jail, according to congressional analysts.

To understand how this can happen you need to follow the wonky nature of the bill and our tax code. It's important because the so called logic reveals just how perverted not only the Baucus bill is but the Democrats' philosophy on health care.

Under the Baucus bill, health insurance is no longer optional. It's not even a right but rather a mandate. In other words, if you're living, you have to heave health insurance. If you don't have health insurance, the government penalizes you. The penalty has been changed once and currently that's as much as $1900. This penalty will be assessed by the IRS.

This is no small point because the president argued that this penalty is NOT a tax. That's important because the President ad nauseum promised not to raise taxes on anyone that earns less than $200,000 yearly. Of course, if this penalty were considered a tax, then this would break his promise. Of course, if the IRS is the one imposing the fee/penalty, it's hard to see this penalty as anything but a tax.

Now, let's follow the logic. Health insurance is now a mandate. If you don't pay it, you pay a penalty. If you don't pay the penalty, you are now evading your taxes. Tax evasion is a crime, just ask Al Capone. So, all those that refuse or can't pay for their health insurance and refuse or can't pay the fine for refusing are now considered the same kind of criminal as Al Capone once was. Such is the logic of President Obama and the Democrats.

At this point, the job I want is the person that creates ads for the RNC. There's no shortage of good ads in response to this. Ads that say things like, "the Democrats think you're a criminal if you don't get health insurance". The magnitude of this discovery can't be measured. The news of this broke just earlier today. There's no doubt that the Democrats will augment the penalties but the philosophy is there. If you don't pay the penalty for not buying health insurance, Democrats consider you a tax cheat. It's just that simple. That label is devastating. The reverberations are coming. Once this news filters through the news cycle health care reform will fall at least five more points.

Amateur Hour On Health Care Continues

The House is getting to the difficult business of combining legislation and putting together a final product. We can all figure out the direction based on who's leading in crafting the final legislation.

House Speaker Nancy Pelosi intends to present a unified, redrafted health care reform bill next week, the head of the House Democratic Caucus said Wednesday.

Chairman John Larson said the new bill would meld together parts of legislation written and approved in July by the House Education, Ways and Means and Energy and Commerce committees. But Larson cautioned against people reading this as the last step in a long health care journey for the House.

So, it appears that we'll have health care reform San Francisco style. Already, there's word that Pelosi is backing away from a deal with the Blue Dogs.

Speaker Pelosi is backing away from a deal she cut with centrists to advance health reform, said a source familiar with talks.

Pelosi’s decision to move away from the agreement that was made with a group of Blue Dogs to get the bill out of committee would steer the healthcare legislation back to the left as she prepares for a floor vote."

Pelosi is planning to include a government-run public option in the House version of the healthcare bill.

Putting myself into the shoes of Speaker Pelosi, I can understand what she's thinking. She's on the cusp of achieving her lifelong political ambition. She's about to engineer a massive liberal health care transformation. She will milk it for all it's worth and squeeze out every possible liberal policy point she can get. Why compromise on anything that will only water down her liberal fantasy?

Yet, this is totally politically brain dead. Mara Liasson described this dynamic perfectly. No liberal Congressperson will lose their seat if they vote for a moderate health care reform package. Meanwhile, 90% of the moderates will lose their seats if they vote for a liberal bill.

I understand that every politician wants to fulfill their liberal fantasy but they should all think about their nightmare. Speaker Pelosi is upon hers. She's about to create a bill that will not receive enough support to pass. Crafting a liberal piece of legislation that shuts out the Blue Dogs means that most of them won't vote for it and that means it won't pass.

Meanwhile, on the Senate side, chaos also continues to reign. The biggest news of the day was the dust up between Senator Kyl and Senator Baucus. The real news though happened at the end of the day. Chuck Schumer and Jay Rockefeller plan to present an amendment that will introduce the public option. Now, Baucus has long said that he's taken out the public option because it won't pass. Senator Snowe won't sign on if the final bill has the public option. So, why include it?

The Democrats voted down an amendment that would allow the final bill to be available on line for three days prior to a final vote. Do the Democrats have any self awareness? All those promises of transparency were worthless. This is exactly why people hate politics. All the Democrats do by voting this amendment down is reveal themselves for the duplicitous and opportunistic politicians they are.

Most importantly, the Finance Committee is nowhere near agreement on anything. We can only imagine what will happen when the public option amendment will get voted down. Will the liberals revolt? That's just one minor problem. The bill keeps changing so much the CBO can't score it. Meanwhile, the Democrats are looking to schedule a vote before the CBO has a chance to score it. All of this only creates even more tension to an already tense process. Worse yet, it costs votes. The Democrats will barely pass this as it is and yet all they do is create roadblock after roadblock that will make it even more difficult to pass. It's truly amateur hour right now in the health care debate.

The CBO States the Obvious

The CBO chief still can't score the Baucus plan. It's changing far too much for that. Doug Elmendorf did however weigh in on the issue of benefit cuts to seniors under the Baucus plan.

Congress' chief budget officer is contradicting President Barack Obama's oft-stated claim that seniors wouldn't see their Medicare benefits cut under a health care overhaul.

The head of the nonpartisan Congressional Budget Office, Douglas Elmendorf, told senators Tuesday that seniors in Medicare's managed care plans would see reduced benefits under a bill in the Finance Committee.

Now, in his speech two weeks ago, the President called any assertion that seniors would have their benefits cut under his plan a "lie". Technically, he could still be correct. After all, he still has no plan. So, the president could still find his way toward a plan that won't cut benefits for seniors. Of course, if he were to do that, he couldn't support anything near the Baucus plan.

Now, I don't want to take anything away from Mr. Elmendorf but his conclusions are rooted in basic logic. After all, the president wants to cover up to 50 million people currently without coverage. He won't increase doctors and he doesn't want to add to the deficit. Eight percent of all health care costs come in the last year of life. So, if 50 million more people are added to the pie but the pie remains just as large, then it isn't hard to figure out who will now get less of the new pie.

Once again, I would say that this latest news would kill health care reform except it's already dead. The Baucus plan will go nowhere. Harry Reid is threatening the nuclear option, passing health care reform under reconciliation. He'll soon be in for a rude awakening when he realizes that he won't have the votes to pass it that way either.

In fact, the president really has no choice but to start from scratch with a plan that actually has a chance of passing. If he continues along the path of the Baucus plan, he will continue to dig his own political grave. This isn't about ideology but numbers. The polling against it is overwhelming and he simply doesn't have the numbers in Congress to pass any bill that looks anything like the Baucus plan.

The Baucus Bill Gets Even Uglier

The Baucus health care bill had an awful rollout. After all, Senator Max Baucus showed up to roll it out all by himself. Within hours, Senator Jay Rockefeller was criticizing it, and the Republicans came out against it in unison.

The ugliness may be just beginning. Now, the bill finds itself in front of the Senate Finance Committee. Already there are just over 500 amendments that will still need to be voted on. The bill has already gone through some adjustments. The penalty for a lack of insurance has dropped from a maximum of $3800 to $1900. There's also greater subsidies to help the poor and middle class pay for health insurance.

Yet, the bill continues to get attacked from all sides. Senator Cantwell of Washington is unhappy because without a public option she doesn't think there will be proper competition in health insurance. Cantwell believes that we are going to subsidize high health insurance costs rather than bending the cost curve with this bill. Meanwhile, Senator Kyl sees this as a government takeover that infringes on personal liberties.

Meanwhile, some Senators, like Olympia Snowe, are waiting for the Congressional Budget Office to score the bill. The problem is that the bill constantly changes and so the CBO still can't score it.

The whole process reveals the flaw I spoke about earlier with this bill. Baucus tried to please everyone with this bill. He compromised with the Republicans to take out the public option. He compromised again and kept the price tag under $900 billion. At the same time, Baucus replaced the public option with a co op and made having insurance a mandate to appease the liberals.

As such, he pleased no one. Is anyone surprised that there are more than 500 amendments to be looked at? Everyone is trying to change the bill into their image. Meanwhile, the bill continues to get slammed by Senators from all parties. By the time all amendments are looked at no one can know what it will look like. So, you'll have a bill with no vision.

So, now we all must consider what will happen if this bill gets defeated. Right now the bill is attacked from all sides and no one is happy. That's not a good sign for the bill. This is what President Obama is banking on in the Senate. If it gets defeated, the president is back to square one. The House has no plans to bring HR 3200 for a full vote any time in the future. We can only assume the House either 1)doesn't have the votes or 2) is waiting on the Senate. What if after this wait no bill passes? That's a real possibility. Neither conservatives, moderates or liberals are happy with this bill. That's not a good sign even with overwhelming majorities in the Senate. If it fails, the President's health care reform vision is back to square one.

RIP the Baucus Plan

Fred Barnes, on Special Report, had my favorite description of the recently released Max Baucus health care proposal. He said this is the worst rollout since the Edsel. Normally, when something is universally condemned by both Republicans and Democrats, I tend to like it. If all the politicians think something is bad, it's usually good.

Unfortunately, the Baucus plan is universally being condemned because politicians got this one right. The Baucus plan suffers from the problem that when you try and please everyone you please no one. Baucus didn't want a public option to please Republicans. He tried to keep the prices down, and he also mandated universal coverage. The co op option didn't impress any Republicans. It immediately turned off Democrats like Jay Rockefeller and Anthony Weiner.

This is currently the least expensive plan, however in part, that's because many costs are put off on the states. As such, Governors are universally condemning the plan. It also then places more of the cost burden on the individual. Many Democrats are concerned that middle class families will be hit with significant medical bills. In the meantime, libertarians are concerned that mandated coverage is unconstitutional and certainly against their principles.

Baucus gave everyone something to like in the plan: tort reform, mandated coverage, a relatively small price tag, etc. Unfortunately, he gave everyone a lot more to dislike: a government take over, no government option, cost burden on the middle class, etc.

As such, in unison, both Democrats and Republicans are criticizing the plan. Baucus came out and introduced the plan on his own. There is still time for changes and amendments but this plan appears dead on arrival. This complicates things for President Obama significantly. So far, the only Senate plan is the Kennedy plan. That cost in excess of $1 trillion and it was only going to cover about one third of the uninsured. That plan appears to be a non starter. So, there's no plan yet out of the Senate.

Meanwhile, prior to the August break, Nancy Pelosi planned on setting a vote on HR 3200 for immediately upon returning. Then, we heard the week of September 14th. So far, no vote has been scheduled. Bart Stupack, Democrat from Michigan, is threatening to block passage of HR 3200 unless language is specifically added that specifically forbids federal funding for abortions. So, HR 3200 is on life support.

So, once again, I remind everyone. The president has no plan. There's no plan that's anywhere near passing either chamber. We're heading into our eighth month of our debate and nothing has been settled. The president is going to do a full court press on the Sunday shows to sell his health care plan. He'll be in the dubious position to sell a concept with no specifics. That's been his problem all along. It's why the polls are turning against him, and nothing will change after Sunday. Everyone wants what President Obama claims to want: lower costs, unverisal coverage, and fairness. Most people don't believe he can do it. Since he still has no plan, he's not going to suddenly convince the public of what he's failed to do so far.

The Baucus Bill: Indicative of the Problem

Talk about a letdown. Max Baucus was saying for weeks that he was close to a bi partisan agreement in his committee on a bill. It turns out that this bi partisan agreement is an agreement of one. In fact, the long awaited bill isn't even clearly a bill. The bill still needs to be debated, changed, and ultimately marked up in his Finance Committee.

Baucus is about to unveil the proposal and he'll be doing it himself. There is no agreement. It's not even clear that all Democrats would support this bill. None of the so called Gang of 6 will be with Baucas when he unveils the bill. So, essentially, Max Baucas has decided to unveil yet another bill to the mix.

One of the biggest problems for the president on this issue has been confusion. Now, Max Baucas has added yet another bill to the mix. So, we're in a place for even more confusion. Now, there are five bills in play. We still don't know what the president wants. Now, there's another bill to consider.

Keep in mind that another bill has already come out of committee in the Senate. So, this bill will have to be reconciled with that. This bill doesn't have the public option. In the House, Democrats insist on a public option. In other words, chaos is reigning.

The bill itself is about the same as the leaks a week and a half ago. It will have a co op not a public option. It will mandate health insurance. It will create all sorts of fines and penalties for those that don't get insurance if they make enough. It will create all sorts of stiff taxes on health insurance providers for "cadillac plans". There is some language in the bill for tort reform but the details of the tort reforms are still not public. The bill costs about $850 billion over ten years but 1) it doesn't go into effect until 2013 and 2) a lot of costs are put on the states. So, in my opinion, a lot of this relatively low number is actually fuzzy math.

So, we will have this plan competing with a number of other plans and we'll go from there. The president still wants to pass this by Thanksgiving and this proposal only makes that even more difficult. No one, but Baucus, appears all that excited with this bill. Yet, it will now move to the committee and eventually to be reconciled with the other Senate bill. We still have a House bill that looks very different from this one. So, chaos continues to reign.

The Baucus Plan is Nonsense

Max Baucus finally gave the public a glimpse of his health care plan.

Families who fail to get health insurance could be fined up to $3,800 under a health care reform plan proposed by a top Senate negotiator.

Sen. Max Baucus, D-Mont., who as chairman of the Senate Finance Committee is leading talks among the "Gang of Six" senators to hammer out a bipartisan compromise, offered what he described on Tuesday as a "framework" and not a "final product."

But the detailed proposal comes just days ahead of a self-imposed Sept. 15 deadline for such a deal. Baucus is pushing his committee members hard to hammer out a bill, and those details come as strong suggestions.

The framework, a copy of which was obtained by FOX News, includes what amounts to a no-choice option. It would make health insurance mandatory, like auto insurance.

The plan would provide tax credits to help small employers and help cover the cost for households making up to three times the federal poverty level. That's about $66,000 for a family of four, and $32,000 for an individual.

Those who still don't sign up would face hefty fines, starting at $750 a year for individuals and $1,500 for families -- for those making up to three times the poverty level.

The only redeeming part of this plan is that there is no public option. Let's hope that everyone isn't simply focusing on that because there's so much to hate in this plan that the public would miss all its problems. First, Baucus would make having health insurance mandatory like car insurance. Of course, there's a huge difference between mandatory car insurance and mandatory health insurance. Driving is a privilege not a right. No one forces you to drive. They force you to drive with car insurance. Here, you are forced to have insurance as part of living. That's an aversion to everything this country stands for.

The plan gives credits to small businesses to help them pay for health insurance but it also makes it mandatory that most small businesses provide insurance. There's also a co op idea which is not very different from the public option itself.

There's also a plethora of new taxes including those on insurance companies. Insurance companies will also be forced to take on those with pre existing conditions. At the same time, they will force on new taxes. Where do you think this will take insurance premiums? Meanwhile, there will be all sorts of co ops run by the government. It won't take long to achieve single payer under such a scenario.

Furthermore, there are fines up to $3500 for anyone that doesn't get health insurance. There's nothing about tort reform. There's nothing about allowing health insurance to cross state lines. There's nothing about health savings accounts. This was supposed to be a bi partisan bill and all that's compromised is a watered down public option. This bill is more of the same and it should be opposed.

The Broken Corrupt Record of Emory University

This is the main page of the U.S. Finance Committee's investigation entitled Aligning Incentives: The Case for Delivery System Reform. It is an ongoing investigation which Senator Chuck Grassley and Senator Max Baucas recently updated. It is an investigation that centers on a Professor Charless Nemeroff currently a professor in the Department of Psychiatry and Behavioral Sciences at Emory University. He was until recently the Dean of the Department. According to the findings currently published for years Nemeroff took money from firms like Cyberonics, Glaxo Smith Kline, and Pfizer. For this money he published favorable articles about many of their drugs. Rarely if ever did he disclose his financial relationship with these companies when he published these puff pieces. Furthermore, while accepted about $2.6 million in contributions from these pharmaceuticals, he only reported about $90,000 in contributions. As such, not only was he bought and paid for by the pharmaceutical industry for eight years, but he evaded paying taxes on most of these bribes.

In this letter from Senator Charles Grassley, Grassley details a web of fraud, tax evasion, and an utter failure to report repeated incidents of conflict of interest.



This is a copy of a chain of emails within the Medical Department of Emory University on July 20, 2006. In it, one of the Deans of the Medical School, Claudia Adkison, is corresponding back and forth between Nemeroff and her own superiors. She admits to attempting to cover up this egregious fraud. She even alludes to being thankful that a Wall Street Journal reporter wasn't

sophisticated enough to ask the right questions

...

in working on handling the reporter I tried to make this story go away because Emory's name is in the middle of it.

...

I am embarrassed and uncomfortable that I write to colleagues around the country to try to defend this when I know all the issues.

(I wonder what the right questions would have been)
More than one internal correspondence within Emory University show that the school was aware of the fraud going back as far as 2000. Only last month was Nemeroff finally removed from being the Dean of the Psyschiatry and Behavioral Science. He continues to be employed as a full and tenured professor making well over six figures. Nemeroff appears to have made $2.6 million in income from the cumulation of payments from all these drug companies in an eight year period. He only reported about $90,000 in fees.



To understand the total context of this story you need to go back to 2000 to another case involving Emory University. The National Institute Health approached then Professor Jim Murtaugh of the Pulmonology Department. Murtaugh began to blow the whistle on misuse of Federal NIH grant money. In July of 2001, Emory University and Jim Murtaugh entered into an agreement in which Emory University paid $1.6 million for his silence. Soon after that, docuements related to the NIH investigation began to disappear, and soon after that, the investigation was swept under the rug and went away.



In June of 2004, the Department of Health and Human Services approached Kevin Kuritzky, then a medical student at Emory University, about illegal and unethical activities at the V.A. Hospital Emory staffs and Grady Hospital, which Emory also staffs.

One night that is what happened. One time he was left in charge of the entire step down unitfrom 4 PM to 2AM. The first emergency came from one patient who was recovering from lung surgery. The patient's lung collapsed and Kevin was called in to save his life. The patient was suffocating and time was of the essence. Kevin was
panicked and needed to move quick. He needed to find a chest tube, but because of his own inexperience, he didn't know where they kept the chest tubes. In a rush, he did the only thing he could think of at the time. He grabbed the dirty chest tube that had already been used on the patient and injected into their lungs.

Next, Kevin was asked to read an x ray of the patient's lungs to determine if they were stable. This is again not something a medical student is supposed to do on their own and without supervision but since their was no supervision there wasn't much choice. Kevin gave it his best estimation and determined the patient was fine however as it turns out that was just a lucky guess. This patient survived but it had nothing to do with the type of care that was provided them at Grady.

In April of 2004, Kevin Kuritzky was expelled from Emory University 41 days prior to when he was scheduled to graduate. The reasons given related to a handful of tardiness by Kuritzky. The information that Kuritzky provided eventually lead to another investigation of Grady Hospital that concluded

the conditions at Grady Hospital pose an immediate and grave danger to the health and safety of the patients.

Nearly the entire staff of Grady Hospital is faculty and students from Emory University. Kuritzky described being left alone as a medical student without any supervision while he took care of an entire step down unit for days on end.



On top of this, Grady Hospital was also implicated when corruption there and beyond lead to the conviction on more than 130 counts by then State Senator Charles Walker.



The current investigation is both remarkable in the brazen manner in which the corruption is carried out and in the total lack of context that the investigators and the media place on it. It seems with each successive investigation no one from the media to the investigators seems to put two and two together. The common thread is Emory itself. In fact, most of the players remain the same. One player I haven't mentioned yet is Kent Alexander. Alexander is the lead Counsel of Emory University. He arrived just before the NIH approached Jim Murtaugh. Formerly, Alexander spent a great deal of time in the Federal Prosecutor's office, including eventually becoming the U.S. Attorney for the Northern District of Georgia which included Emory University. In the link I provide a mention an email in which he asks his former colleagues to quash the investigation that Kuritzky was leading.



What we have in the current reincarnation of Emory corruption is ironically unremarkable. In fact, just in the last year, Emory has been embroiled in much bigger scandal than its current reincarnation with Nemeroff. At the end of last year, things got so bad at Grady Hospital, Emory University's Medical School's prize possession, that JCAHO, the governing body of hospitals, threatened to shut it down. Had it followed through Grady Hospital would have joined an exclusive club with one other hospital, King Drew in L.A. That hospital got shut down following the disclosure of a tape of a woman begging on the floor for forty five minutes, getting no help, and then dying. For reasons only known to JCAHO, Grady, and Emory after JCAHO threatened to shut down Grady JCAHO eventually dissipated the investigation and it went away. At the same time, Grady was begging everyone in the Atlanta area for dare I say a BAILOUT. They were in need of an infusion of $200 million or face potentially closing. This would have unleashed a medical disaster on the Atlanta area. Grady is not only one of the world's biggest hospitals it is the primary care facility for almost the entire indigent population in the area and provides the only trauma center for hundreds of miles.



As such, Grady was finally given a lifeline only that lifeline came from the Woodruff Foundation. This foundation is named for former Coca Cola CEO Robert Woodruff. Woodruff's name also graces an enormous amount of the buidings at Emory University. While there is no direct links between the Woodruff Foundation and Emory University many Emory faculty and administrators can also be found on the board of Woodruff. Grady has and continues to pay Emory University $50 million yearly in order to staff its hospital. After being infused with money, the hospital also created a 501(3)C board to oversea the hospital. Much of the board is made of folks from Emory and Woodruff and Pete Correll can be found on pretty much every board.



For real conflicts of interest we only need to look no further than Pam Stephenson. She is currently simultaneously a State Senator, Chairwoman of the Board of Grady, and it's interim CEO. As the head of the Board, she played a key role in securing herself the interim position of CEO. Furthermore, she was instrumental in the peculiar firing, after only seven months on the job, of Otis Story Jr, the previous CEO.



In other words, everything currently revealed in the case of Charles Nemeroff has been done by the powers that be at Emory University over and over and in much worse scenarios really. Just think about this. Charless Nemeroff received millions in unreported income. He failed to disclose cash payments while he wrote favorable articles in trade journals for companies that paid him routinely. He failed to disclose consistent conflicts of interest while he acted in much the same way as a hired gun for most of the pharmaceutical companies. For this, he was asked to step down from his post as Dean of his college. He didn't however lose his job entirely and continues to draw a six figure salary from Emory. Kevin Kuritzky was late to classes on a handful of occasions and he was kicked out of Medical School and deprived of a medical career entirely.



This is the proper context of this story. It is a story incidentally that has been reported, poorly I may add, in the New York Times, the Atlanta Journal Constitution, and the Wall Street Journal. The Emory Wheel has dedicate all of four articles to the matter. This one commends Emory University for its handling of the situation and points out that the investigation is still ongoing which would mean it continues for a ninth year.



The reality is that this latest piece of brazen corruption is the latest in a long line of seeming never ending corruption at Emory University. Whistleblowers are routinely silenced. The media is incompetent, corrupt or both.