Inside Washington's Headlines

by Ken Feltman

Radnor Inc.

March 2009


Legislative insight

Political intelligence










Ken Feltman is Chairman of Radnor Inc., a political consulting and legislative relations firm in Washington, D.C. He is past-president of the International Association of Political Consultants and the American League of Lobbyists.




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Healthcare: Generational warfare coming?

The law of unintended consequences pushes us ceaselessly through the years, permitting no pause for perspective.

- Richard Schickel

Second of a series.

A battle with a PPO over a referral to a specialist. Zooming cost increases at an HMO. Inexplicable denials of coverage. These common frustrations have more and more Americans ready to turn healthcare over to Uncle Sam. The healthcare providers and insurance companies are doing a poor job of satisfying the public. More and more politicians spin enticing versions of healthcare reform. An increasing number of healthcare consumers believe that it is time to give the government a chance.

The law of unintended consequences should give U.S. consumers pause before we let the government plunge into nationalized healthcare. Once the government creates a national program, consumers will not be able to undo it unless it collapses. We will be stuck with whatever they establish or stumble into.

People of other nations seem happy with their national systems. Why wouldn't Americans be happy, too? First, we are not a nation like most others. We are an amalgamation of 50 states, assorted territories and possessions, and different systems of government below the federal level. In fact, four of the "states" claim not be be states at all, but commonwealths. Our federal laws and most state laws trace their history to the British common law. But not in Louisiana, where a knowledge of the Napoleonic Code is required.

Do Americans have too many rights to accept reform?

Yes, other nations have similar divisions. Germany carves out special privileges for former Danish areas; Spain has coexisting cultures and approaches to governance; Britain has never been able to fully submerge the Celtic fringe under Westminster's administration. But they and other nations have centralized health services. Why couldn't Americans? But for one major problem, perhaps we could.

The laws regulating the insurance industry, and related healthcare services, are centered in the states. Federalization has come only slowly and with difficulty - court challenge by court challenge, state legislature by state legislature - over the decades. The federalization is incomplete and creates conflicts among the laws, customs and practices of the states.

Americans are very aware of their "rights" - even to the point of claiming rights that have never been established in the law. One of those "rights" is the right to choose from among different offerings, whether in automobiles, toothpastes or healthcare programs. Of course, choices present confusion and conflicting claims, but Americans are addicted to choices. Healthcare providers and medical insurance designers have attempted to present enough choices to satisfy everyone. But that costs money. Now, the cost is overwhelming consumers' willingness - even ability - to pay. But that does not mean that Americans will accept fewer choices quietly. Expect a noisy battle.

Federalization invariably limits choice but some healthcare experts say that to control costs, choices must be limited even more. The variety of plans offered in different states must be trimmed back. The experts suggest that Congress can preempt healthcare from state control or influence when establishing a national system. The very idea of federal preemption of state laws and prerogatives raises all sorts of opposition in most states. Here is just one possible consequence of preemption:

The federal standards as usually proposed are likely to require that all healthcare providers actually provide approved services within their specialties. That seems quite reasonable, but many states have a different view. One common example: Generally, Catholic hospitals, and some other religious hospitals and clinics, do not dispense birth control products and services, while including maternity services. Those healthcare facilities also tend to restrict reimbursed access to birth control products to their employees - even non-Catholic employees - through their employer-provided medical plans.

The federal government has been engaged in rear-guard skirmishes over birth control for years. Expect more of it when hospitals and clinics must either comply or be threatened with loss of federal funding. After all, Americans prize freedom of religion. Non-religious groups see birth control as part of family planning, not an example of freedom of religion. Let the battle begin!

Through the years, the states have navigated these emotional issues and achieved an understanding, however unlike the understanding that Washington may intend. The states have provided a bit of Solomon-like law, imperfect and ever-evolving. State by state, community by community, we have different speed limits, fuel efficiency standards, smoking-in-public laws and ordinances, teacher accreditation requirements, building and construction safety codes, product packaging and health warning labels - and medical insurance laws. Our very freedom to adapt everything to the local level ties the federal government down, like Gulliver. Now, will the federal government establish standards, enforced by well meaning but rigid-to-the-rule bureaucrats, unfamiliar with the more practical tolerance of the local communities?

The hidden problem: Will healthcare reform hurt children?

We can in time resolve those issues at the federal level, as we have at the state and local levels in the past. But another, much greater problem confronts us: The likely direction of healthcare reform could replace a frustrating and costly system with one that short changes children. That's right: children could be the big losers in healthcare reform. Wait a minute: Nobody wants that. No, but....

Policy wonks have designed most of the currently discussed proposals for healthcare reform. Policy wonks have almost no concept of the political battles that will affect their carefully calibrated plans. For example, a large percentage of the wonks suggest that the U.S. accept the most common world-wide solution to controlling the increase in medical care costs: Rationing care. Today, without really planning it, Americans ration employer-provided health insurance: Everyone gets care, but you get employer insurance only so long as you maintain your employment connection. Anyone who lacks job-based health insurance is likely to pay more or get less convenient and less comprehensive healthcare.

The wonks propose that we shift the way we ration care. The rationing would be by type of treatment required, not by employment status. That is how most countries do it and it seems to the wonks to be the fair way to ration care. Then, the next step is to cut spending on new medical research and technology. That aspect of healthcare reform policy will be discussed in an upcoming Radnor Report.

However we ration care, we must expect a scramble by lobbying groups to see that their constituents get to the top of the list for care. Powerful group may prevail, with other groups falling behind. When it comes to healthcare, children have less effective lobby groups than other elements of American society. This means that one unintended consequence of reform may be a shift of available resources away from children and to senior citizens. Unless they are involved in the decision-making process, the seniors may not even realize what is being done on their behalf and what it means for their grandchildren.


The American consumer has remedies when the government or larger businesses fail to respond with the choices that people want. A good example may be General Motors' new Volt - an electric automobile that gets 40 miles between charges. Forth miles? Maybe it's the most recent version of the Edsel.

Forty miles may be reasonable for drivers in a relatively contained area, but many Americans drive over 40 miles to work and back daily. Many other drivers put on over 40 miles for weekend errands.

Still, GM and the government have pushed the Volt and it is about to be offered for sale in the U.S.

In the 1950s, consumers began to ask Detroit for smaller, more fuel efficient cars. Detroit ignored them and continued with fins and V-8 engines. Germany and Japan supplied Americans with what they wanted and the U.S. auto industry has never recovered.

There is a parallel with healthcare reform. Even Uncle Sam will not stop the consumer from getting what he or she wants, which Radnor research shows has two basic elements: Ability to pick the practitioner, even in referrals, and little or no paperwork.

One thing Americans do not want: Less care for their children.

Could it really happen? Could kids get less? Yes, because as healthcare becomes even more politicized, lobbying becomes more important. The groups that advocate for children tend to have many things on their plate, not just healthcare. The groups that advocate for senior citizens devote most of their dollars to healthcare lobbying. Beside, the senior lobbying groups have much larger budgets. One director of AARP (American Association of Retired Persons) put it this way: "Our job is to work to get more for our members. Whatever happens to others is up to them. We want more for our members."

In a system of rationed care, more for one group means less for another. What do we know about the direction of the reform efforts that may level the playing field for children?

People make policy. President Obama initially appointed Tom Daschle to lead his administration's healthcare reform effort. That allowed us to predict both the strategy and substance of the new administration's healthcare reform efforts. Then Daschle ran into tax problems. Replacement nominee Kathleen Sebelius, currently governor of Kansas, is thought to share Daschle's - and Obama's - attitudes.

Based on what we know about Obama's attitudes, Americans can expect proposals for a new federal bureaucracy to manage the nation's healthcare budget. Provisions tucked into the stimulus bill (at Daschle's urging before he dropped out) suggest that the Obama administration would seek price controls, restrict access to medication and technology, push for tax increases, mandate health insurance for everyone and expand government healthcare programs while also curtailing private and job related insurance. The Obama administration has already tried and failed to cut military veterans' benefits, including medical benefits for wounded veterans.

Preliminary plans call for a review board to control costs and restrict access. The board would begin by regulating the current federal healthcare system - Medicare, Medicaid and other programs. The current system would be expanded to include new health insurance programs for the large pool left outside the government programs for seniors, the poor and children. Basically, that pool is composed of people now covered under employer-provided insurance, which is expected to decline as people are moved to government programs.

Politicizing healthcare

The board would determine which treatments and drugs are cost effective. Only the procedures deemed cost effective would be permitted for patients covered by the government. Because the government pays for nearly half the nation's healthcare spending, the board would, by default, begin to set standards for private plans. Probably fairly quickly, the government would question the duplication of costs involved in private plans, putting pressure on those plans to cut costs and services.

Obviously, approving drugs and treatments for use in the national program would be politicized, with Congress and the White House, as well as several cabinet departments, subjected to lobbying. The fact that this lobbying would almost certainly spring into action in the U.S. marks a key difference between the U.S. and other advanced democratic governments.

In many other countries, the healthcare system is detached from constant meddling by elected officials. Appointed bureaucrats, often obscure, administer the programs. That is hardly likely to occur in the U.S., where Congress and state legislatures are involved in virtually everything.

In other countries, a centralized national government has overall responsibility for the national healthcare system. Tell that to the state legislators in New York or Mississippi, in Oregon or Indiana: The states will want their say and, under present law, the states will have their say.

Not only that, because this is the United States, a Congressional committee could deny a new and promising treatment for you or your relative, because of the patient's age or cost. That would trouble many Americans. Healthcare is very personal, very private. Would voters pressure lawmakers for increased access to care? Of course!

Taking care from kids

If the voters were successful in expanding access, they would defeat the government's cost-control efforts. We would be right back in a system of care rationed by group instead of by treatment. The new rationing would be by political influence rather than employment status. Who might have the most influence? Why, senior citizens, of course - which could set off generational warfare as children are denied care that grandparents receive routinely.

Some U.S. and Caribbean medical schools have examined the current reform proposals and are believed to be counseling students to concentrate on geriatric specialties. The aging population is only one reason for the shift in emphasis. Rationing of care is another.

As Americans consider these possibilities, healthcare reform could be a hard sell, no matter how broken our present system is.

Just how selfish can Americans become? Selfish enough to deny the grandchildren? Only if Americans do not get engaged will we fall into an unintended consequence that will cut healthcare for children.

The grandparents of the U.S. will need to step into the battle, starting with their own single-minded lobbying groups.

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