A healthcare proposal too big to succeed

February 25, 2010

— A. G. “Terry” Newmyer is a serial entrepreneur and the former founding chairman of The Fair Care Foundation, a patient-advocacy group focused on health insurance. The views expressed are his own. —

In recent remarks to business leaders, President Obama declared himself an “ardent believer in the free market.” So, there is at least one person who is an ardent believer in that sentence.

Just this week, I had lunch with a very prominent, sane, and successful Wall Street executive who was CEO of a big-name firm. He left more than a decade ago, during an era when those folks did so with pride rather than with investigations and grand jury subpoenas.

While we ate, we worried aloud about what’s going on in Washington – the new financial capital of the world. My guest cautioned about “becoming too negative as we age.” I tend not to think of myself as aging, though I did note that last year’s inauguration marked the first time a U.S. president was younger than me. And I hardly think our lunch conversation qualifies us as “Grumpy Old Men.”

But if it does, the prospect of Medicare in a few years is looking better and better, particularly in comparison to the vagaries of the private health-insurance market. If the President truly wants us to see him as an “ardent believer” rather than a Socialist, he should be thankful that few have digested his latest healthcare proposal.

The Obama Administration has declared all sorts of institutions as “Too big to fail,” warranting its intervention. His health proposal, while trumpeted as being “scaled-back,” remains too big to succeed.

As an entrepreneur with management and governance roles in several ventures – and a typical small business health insurance plan – I can’t imagine who could understand or make projections based on the latest proposal. Even to those of us with backgrounds in health policy, the Obama plan is too opaque and complex to allow any forward planning.

Without regard to the details, there are two big-picture aspects of the plan that should cause it to be rejected by the entrepreneurial community.

First, the central thesis is that tens of millions more of us will have our health care administered by private-sector insurance companies. To the extent that the president wants to increase our nation’s reliance on the health insurers, shame on all of us for not being more vigorous in our rejection of these gate-keepers, their tactics, and their shameful unethical patterns.

The only reason that more Americans are not wildly outraged about the behavior of these entities is that only a small percentage of us have any serious medical problems in any one year. Hence, the silly statistics about what percentage of policyholders are satisfied with their plan at any point in time.

Tell me, how do you like your life insurance policy? Well, I bet you haven’t had to use it yet, unless my musings are on-line in heaven.

Similarly, the vast majority of policyholders have no significant experience with their health plans, whose mean-spirited and sharp-pencil tactics are evident only when it’s not a fair fight – that is, only when the policyholder or a family member has a serious issue. Given how often coverage plans are changed or modified, the rules and restrictions and costs are likely to be different by the time any one of us is on the gurney.

Second, the Obama’s proposal has a broad, new tax increase that the small business community regards as an emetic. The diverse entrepreneurial crowd has one thing in common – we all want to succeed. Whether we want to horde our rewards or give them to our kids or spend them or give them to charity, we all want to make more money. Most of us want to be rich(er).

Obama’s “slimmed-down” plan still costs about a trillion dollars. So the president proposes to expand payroll taxes to include passive investment income – the kind of income we all want to have going forward. The kind that will allow us to live comfortably in a country whose finances are out of control, with leadership that ardently believes they might even convince us that the free market can endure.


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I agree with your assessment of Obama’s healthcare proposal. Let’s face it, Obama’s ideology is not in favor of free markets, it favors federal control of what was before a free market. I’m not in complete agreement with your comments of health insurers being mean spirited and using pencil tactics though. I live in TX and the dept of Ins heavily regulates and sets the rules. I agree, plans are modified some and the laws in each state may change the restrictions and rules, but in my experience, the insurance carrier pays medically necessary claims without issue, when they are on the hook. I’m not seeing any shameful unethical patterns or tactics being used by the carriers I do business with in TX. It’s pretty straight forward, if it’s medically necessary, it’s covered after the cost sharing with the insured is done. Now, if you trying to have lap band surgery or some other type of procedure that isn’t 100% considered medically necessary then sure, your going to have a fight on your hands.

Posted by DVM | Report as abusive

The bill is a large assemblage of meek and weakened remedial measures aimed at a system running amok. I am a servant and well-paid consultant to numerous Fortune 100 and other even bigger private clients that that deploy resources world-wide. Having worked in a supporting roll both here and abroad in more than twenty executive corporate surgeries (offices and boardrooms were mergers, acquisitions, divisions and remixes are planned and executed) I can conclude that we are destined to become a ‘also ran’ economy shackled with a workforce compromised and hobbled with the damming economic and social effect of the most expensive and least effective health system IN THE WORLD TODAY. Unless we soon enter a period of great turmoil that disrupts global commerce ALL of my clients will continue move operations abroad were the social and direct economic COSTS of health care are stable and a structural support to business. We have a weed in the garden of American capitalism. Let us make a conscience decision to pull it out.

Posted by LocalLad | Report as abusive

This is the wrong proposal at the wrong time. If the 16 million unemployed, underemployed and given up looking for a job Americans had jobs, there would be 16 million more Americans with health insurance (not counting the dependents). Worry about the problems of America, not the ideology of the Democratic party.

Posted by Alpha_Blogger | Report as abusive

There are some things that the free markets just can’t do as well as government. Health care is an example of this. There is no question that it is in the public interest for citizens to have the option to get medical care regardless of ability to pay.

Insurance companies can do some things. But their motivator is profit not health. Because their motivation is profit they cannot truly provide a public service. Some people are just plain unprofitable to cover. And more to the point, the ONLY way an insurance company can profit is to pay out as little as possible in claims while taking in as much as possible in premiums.

The only way for them to profit is to deny coverage for as many treatments as possible or deny coverage all together to high risk patients. The more they can deny to premium paying customers, the more they profit. Regardless of the justification for insurance companies they simply cannot get around the truth of their limitations.

A public option is in the public interest. Insurance companies just can’t compete with a public option and this is why they are so against it. Our health care system is broken. Sure it’s the best medical care in the world. IF you can afford it. Human life is far more valuable than money and must not be placed beneath money in order of importance.

A public option is good governance. It’s responsible governance. And it gives the people a sorely needed much long awaited vital resource which can help them to be more productive and successful as contributors to society.

Posted by Benny_Acosta | Report as abusive

Can any of you commented above including Terry deny the fact that Health Insurance has become a basic necessity in this country? I am a small business owner and the average age in our company is 35. So we hardly use our insurance. But year after year, every year my insurance company raises its rates …sometimes by 35-40% without any explanations!

Whether Obama’s bill is right or wrong is one argument… but should we allow health insurance companies to be for profit corporations raising their revenue outlook every year to be loyal to their share holders… but raising all of our health care costs year after year?

How can we find a way to cap these costs? How do we stop doctor offices and hospitals from taking the opportunity to charge exorbitant fees when an insurance carrier rejects a claim? I don’t know if Obama’s plan is the correct solution… but I am willing to vote for anything that will largely attempt a reformation of our system.

Even though I think Michael Moore did not get all of the facts right like some of us argue, his movie clearly depicts the pathetic condition of our health care system and the need for a reformation as a country.

Opposing is very easy. Providing solutions is very difficult. Yes, we will pay higher taxes… but maybe lesser people will die bcos they don’t have money to get treated!
Even though I will pay a little more as a small business owner, my social responsibility as an American citizen stops me from opposing any attempt to reform the current system without yielding to Insurance lobbies. I am neither a democrat nor a republican and a firm believer of free market and capitalism!

Posted by marag | Report as abusive

The problem as I see it, is that the health care proposal lacks definition. What is the aim? What are the primary goals? Does the plan meet those objectives in a way and at a cost that makes sense?

The Dems approach resembles a shotgun blast towards some nebulous idea, without defining the target that should be solved.

A question I have is, if this issue is so f—ing important, why not put together a non-partisan commission to consider and create national health care goals. Once we can get a fair-minded determination of the objective, then Congress can create a commission to examine the effects current legislation has had in keeping these goals from being realized, then they can repeal and amend as necessary.

Another thing, why does the Fed have to take control? Health systems and health statuses vary from state to state, so how is a one size fits all reform going to be a win-win across the board. Seems a Federal incentive program to encourage state reforms could make more sense, provided the Feds could create some concrete health care objectives.

If Obama’s gargantuan proposal fails to materially produce its intended results, then what are we left with? A trillion dollar bureaucratic behemoth that just feeds and perpetuates itself; and additional layers of quick, short-term patches.

Doesn’t look like a good idea, no matter how many ways you flip it around.

Posted by Dr.Savage | Report as abusive

This bill has small business running scared because its workers face the lovely choice of being fined if they don’t join a health plan or pay the sky high premiums of the plan. Small business wants everyone to go to the ER if they have a problem which the majority of small business workers never do. Just another dig at the US consumer. Force insurance on workers who don’t need or want it and cut into their monthly cash flow. Talk about kicking the consumer while he’s down. I work for http://storyburn.com where the mess that lands on our doorstep each day is getting worse. We have the most read home foreclosure stories on the web as well as several job hunting stories

Posted by muchstardude | Report as abusive

obama can do everything, everything bad and good

Posted by peak | Report as abusive

Of course it’s big, but so was medicare and a lot of other massive bills in the past. Nothing is perfect in this imperfect world. They need to move ahead and give it their best shot, now, and refine and streamline it as needed in the futre. Nothing is written in stone. Nothing is not changeable if they need to make changes. Fear of change, changes nothing. Of course change for change’s sake isn’t going to work, but hey, everyone has had a chance to put their two-bits worth in for a year now – so my message is stop shaking in fear like a quivering, sniveling, whining bunch of chicken-hearts, and DO IT.

Posted by rigpa44 | Report as abusive