Congressmen Introduce Incentive-Laden Health Legislation

Reps. Peter Welch (D-Vt.), and Earl Pomeroy (D-Nd.) have introduced new legislation that will reform America's health care system by emphasizing the quality of care Americans receive.

The Accountable Care Promotion Act of 2009 calls for the creation of Accountable Care Organizations (ACOs), which would reduce unnecessary health care spending, and provide incentives to physicians who provide better quality health care services for their patients.

The Congressmen cited facts discovered by the Dartmouth Institute's Dr. Elliott Fisher, whose research concluded that “regions with lower per-patient Medicare spending often provide higher-quality care and better health outcomes.”

Said Rep. Pomeroy, “Accountable Care Organizations [are] integrated systems where providers work together. They have primary care medicine at the forefront, helping coordinate a patients access to the care they need."

Under the proposed legislation, health care organizations would voluntary become apart of ACOs, which in return would provide health care providers with a financial incentive that would help cut costs and supply higher quality care.

House Oversight and Government Reform Committee Investigates CEO Severance Packages

The House Oversight and Government Reform Committee held a hearing on "Executive Compensation II: Mortgage CEO Severance Packages," focusing on CEOs involved in the ongoing subprime mortgage crisis.

Chairman Waxman (D-CA 30) said corporate executives currently earn an average of 600 times more than the average employee, up from 40 times in 1980. A CEO can sometimes earn all of 10% of a companies net profits. This works out to around $160,000 per hour. He also said that such earnings may be justified by market conditions but that this does not explain the recent hundred million dollar severance packages received by the former executives of Countrywide, Merrill Lynch, and Citigroup, all of which recorded multi-billion dollar losses before their resignations.

Ranking member Davis (R-VA-11) shared these concerns, but warned against congressional involvement, fearing the consequences of micromanaging these volatile financial markets.

Susan Wachter, professor of financial management of the University of Pennsylvania's Wharton School, described a misalignment of incentives that led to the recent economic troubles which contributed to these huge corporate losses.

Anthony Yezer, Economics Professor at GWU, stated that borrower education is not a viable option for preventing similar financial troubles because borrowers lack the mathematical understanding that predicates financial understanding.

Nell Minow, editor of The Corporate Library, said that the pay packages given to executives contributed directly to the economic crisis because they created incentives to produce more business rather than better.