About the Author

James C. Capretta

James C. Capretta

New Atlantis Contributing Editor James C. Capretta is an expert on health care and entitlement policy, with years of experience in both the executive and legislative branches of government. E-mail: jcapretta@aei.org.


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James C. Capretta’s Latest New Atlantis Articles

 Health Care with a Conscience” (Fall 2008) 

 Health Care 2008: A Political Primer” (Spring 2008) 

 The Clipboard of the Future” (Winter 2008)

 

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Text Patterns - by Alan JacobsFuturisms - Critiquing the project to reengineer humanity

Wednesday, November 10, 2010

The Debt Commission Endorses Obamacare 

When the co-chairmen of President Obama’s debt commission released a draft series of recommendations today, they presumably intended to show momentum and create pressure for others to come around to some kind of an agreement.

Press stories are sure to focus on the Social Security changes and how they will antagonize some liberals, thus proving that the proposal is serious.

But the most important entitlement decision in the entire package is the explicit endorsement of Obamacare. The Bowles-Simpson proposal would leave in place the entire trillion-dollar monstrosity. Indeed, many of its supposed cost-cutting recommendations would build on Obamacare’s flawed structure of government-driven cost-cutting through price controls. In particular, they would like to create what amounts to a global budget on health care, with the Independent Payment Advisory Board (IPAB) given the unilateral authority to hit budget targets with price cutting. This is exactly the opposite of what’s needed, which is cost discipline through consumer choice in a functioning marketplace.

Meanwhile, Bowles and Simpson refused to endorse moving Medicare toward a defined contribution program, as Rep. Paul Ryan’s Roadmap proposes, relying instead on the usual laundry list of cuts to the existing program structure.

None of this is all that surprising, given how the commission was formulated. It’s not really a bipartisan commission at all; it’s an Obama commission. It was created by the president and stacked with Democratic appointees. Two-thirds of the 18 members were picked by the president or Democratic congressional leaders. Only six were appointed by Rep. John Boehner and Sen. Mitch McConnell.

The president says the public doesn’t want to “re-litigate” the health care war. He’s wrong. As last Tuesday’s exit polls make clear, a strong plurality wants exactly that. The American people know that the ill-advised law was railroaded through Congress and is a colossal mistake.

The fundamental problem here is that it is not possible build a bipartisan budget framework on a foundation that includes a partisan health-care plan with sweeping implications for future spending levels. To have a bipartisan budget requires a bipartisan health plan. And that means repealing Obamacare and starting over.

posted by James C. Capretta | 6:45 pm
Tags: debt commission, Roadmap, Paul Ryan, Independent Payment Advisory Board
File As: Health Care

Monday, November 8, 2010

Out and About 

Last week’s news seemed to be dominated by post-election assessments of what it will all mean, and I was fortunate enough to get invited to put my two cents in.

Last Thursday evening, I appeared on the PBS NewsHour (along with Ron Pollack, executive director of Families USA and Susan Dentzer, editor-in-chief of Health Affairs) to discuss what the election will mean for the recently passed health care law. The full segment is available for viewing here:

A transcript of the proceedings is available here.

Earlier on the same day, I also appeared at a forum sponsored by the Hudson Institute entitled “After the Election: Can the New Congress Repeal Health Care Reform?” The session was moderated by Hanns Kuttner of Hudson, and my fellow panelists were Tevi Troy, Thomas P. Miller, Nina Owcharenko, and Doug Badger. The full Hudson session is available for viewing here:

posted by James C. Capretta | 3:42 pm
Tags: election
File As: Health Care

Wednesday, November 3, 2010

The Implications of Last Night 

It’s important to start with the obvious: Yesterday marked the end of the hyper-activist phase of the Obama administration, and that’s no small matter. Republicans picked up an astounding 60+ seats in the House and now enjoy their largest working majority in decades. Moreover, the House will be quite conservative, with scores of new members elected on an explicit promise to limit the size and reach of the federal government. Come January, don’t look for the new House to go along with any of the ambitious and expensive federal programs, tax increases, and burdensome regulatory requirements that have marked the first two years of the Obama era.

Republicans also made impressive gains in the Senate, making it even less likely that any type of legislation will get enacted without at least some Senate Republican support. And with 24 Democratic senators up for reelection in 2012 — many of them in states much less friendly than the ones in which their colleagues competed this year — there will be opportunities for Republican senators to effectively control the fate of legislation if they are smart about building bipartisan coalitions.

Still, Republicans must understand that they are still the opposition party, without the ability to effectively govern the country. That has important implications.

For starters, it means that the health care war is really only just beginning. By all means, the House should press for full repeal. But it has always been the case that the decisive health care election was always going to be in 2012, at the presidential level. The only way the fight for repeal-and-replace can be won decisively is if a Republican presidential candidate runs on an explicit replacement platform, and wins. Then there will be a clear mandate to overturn Obamacare and move the nation’s health-care system toward consumer control and market competition. Republicans in the House and Senate should recognize this, and lay the foundation for the ultimate victory by highlighting the most unpopular and damaging aspects of what was passed.

On budget matters, Republicans in both chambers would be wise to take the long view. The greatest challenge Republicans face is making good on their commitment to actually implement real cuts in government spending. The politics always get much, much tougher when the conversation moves from the abstract of the campaign trail to the specifics of legislative language. Republicans must understand that real progress on fiscal matters in coming years will require building a durable center-right coalition that is strong enough to take the intense heat that always comes whenever real cuts are on the table for consideration. Consequently, House and Senate Republican leaders should resist the temptation to go it alone after last night’s victories. Instead, they should reach out immediately to those remaining conservative Democrats in the House and Senate who have expressed a desire to downsize government too, and work with them to implement serious budget discipline. That was the Reagan model for his 1981 agenda, and it worked. Of course, it will require some compromises, but those compromises (on details, not principles) will be worth it if the result is a bipartisan budget framework that can be contrasted with what will surely be a far more liberal tax-and-spend agenda coming out of the White House.

[Cross-posted at NRO here.]

posted by James C. Capretta | 1:23 pm
Tags: election, repeal, budget
File As: Health Care

Wednesday, October 27, 2010

Democratic Delusions 

As Charles Krauthammer and David Brooks have already noted, this campaign season has been marked by an unusual degree of Democratic self-delusion. Everything is to be blamed for the current plight of the party except its elected leaders and the policies they have pursued while in office. Thus, the reason Democrats are headed for an electoral drubbing is that secret corporate money has distorted our democratic processes. Or if not that then because voters can no longer hear the truth through all the misleading clutter spouted by right-leaning media. Or perhaps because the electorate is just too dim to realize how important and positive the Democratic agenda has been for them and the country.

The self-delusion seems particularly acute when the conversation turns to health care. Democrats and their media apologists just can’t bring themselves to believe that there is anything substantive behind opposition to Obamacare. And so, instead of engaging in serious argument, they offer up condescending nonsense — such as this New York Times editorial which supposedly debunks the myths being peddled on the campaign trail by candidates trying to stir up opposition to Obamacare.

But the Times editorial doesn’t come close to debunking anything — because all it does is address distorted caricatures of arguments made by Obamacare’s opponents rather than the real ones that have convinced most Americans that Obamacare is a colossal mistake.

The Times piece begins by calling “pure nonsense” the suggestion by Senate candidate John Raese that Obamacare will force some patients to go through a bureaucrat or a panel to reach a doctor. And, of course, it’s true that the new law does not have an explicit provision which puts a bureaucrat in charge of physician access for all Americans.

But Obamacare does create the Independent Payment Advisory Board, or IPAB, which has the potential to become a very powerful hurdle to certain types of care. Under the new law, the fifteen-member IPAB has the authority to implement cost-cutting mechanisms in Medicare without further congressional approval. Indeed, IPAB’s proponents have been quite explicit in their hope that the panel will use government-funded “comparative effectiveness research” as the basis to terminate Medicare reimbursement for items and services deemed not “cost effective” by budget cutters. So, here we have an unelected board of so-called experts with the authority to unilaterally decide that certain treatments should not be funded by Medicare. Only the most blinded enthusiasts of governmental activism don’t see the potential problems with this approach, or understand the legitimate fears that it creates in the electorate.

The Times then suggests that Republican attacks on Obamacare’s $500 billion in Medicare cuts are cynical and misleading because the cuts will only come out of providers’ income or from Medicare Advantage enrollees who are unfairly profiting from excessive reimbursement rates. But Medicare’s chief actuary — who works for the president of the United States — has stated repeatedly that these cuts are so deep and arbitrary that they will force many hospitals and other institutions to stop seeing Medicare patients. In fact, the cuts in Obamacare would drive Medicare’s payment rates for services below those of Medicaid by 2019, and Medicaid’s network of willing suppliers of care and services is already very constrained. It’s quite clear that pushing Medicare’s rates to such low levels would drastically reduce access to care for many beneficiaries.

Moreover, the Medicare Advantage cuts will fall disproportionately on low-income and minority seniors who don’t have access to a retiree wraparound plan and can’t afford Medigap coverage. For them, the lower cost-sharing offered by Medicare Advantage plans is instrumental in helping them afford the care they need.

Of course, the Times editorial doesn’t even address the main reason voters are so upset that Obamacare was jammed through Congress. The public knows and understands that federal finances are on the brink of meltdown. The federal government is running trillion-dollar deficits as far as the eye can see, and there is no serious plan to get things under control. And, in fact, the signature initiative of the Obama administration was to pile another massive entitlement on top of the unaffordable ones already on the books, and partially pay for it with a $700 billion tax increase when unemployment is already running near 10 percent. The voters see all of this, and understand it perfectly well. What we have here is a Democratic president and a Democratic Congress that could not help themselves. They saw an opportunity to enact what liberals have been dreaming of for decades, and they decided it was more important to lock that in than to work with Republicans on reviving the economy.

And for that misplacement of priorities the voters will be holding them accountable next week.

posted by James C. Capretta | 6:13 pm
Tags: Medicare Advantage, chief actuary, Independent Payment Advisory Board, John Raese
File As: Health Care

Wednesday, October 20, 2010

There’s No Avoiding ‘Repeal and Replace’ 

In a new piece for National Review Online, I argue that the new legislators that November's election will bring to Washington must not, amidst all their other priorities, lose sight of the need to repeal and replace Obamacare:

Because the hard truth is that the proponents of a supersized welfare state believe they have already won the fight. Their vision is now the law, with the government on course to control the flow of resources in the entire health sector. Even if every other idea to downsize the government is enacted, Obamacare as passed has us on the road to unlimited government — with America’s middle class increasingly dependent on the benefits they receive from elected political leaders.

The Congressional Budget Office (CBO) estimates that Obamacare will add 35 million new people to the federal health-entitlement rolls by 2019, at a cost of $214 billion in that year alone. And that’s almost certainly a vast underestimate of the true costs. Douglas Holtz-Eakin — a former director of CBO and now president of the American Action Forum — and Cameron Smith have estimated that Obamacare will lead to much more migration out of employer-sponsored plans than assumed by CBO: Tens of millions of workers — and the firms that employ them — will figure out that all involved will be far better off with the workers getting the massive subsidies provided by the federal government in the so-called “insurance exchanges,” rather than with the much smaller tax break they receive for getting job-based insurance. According to Holtz-Eakin and Smith, an additional 35 million people are therefore likely to end up in the government’s new subsidized insurance system, on top of the 35 million already assumed by CBO in its cost estimate, putting the total entitlement expansion at 70 million, or more than Medicare’s total enrollment today. The additional enrollees will drive up the costs of Obamacare’s new premium subsidy program to $1.4 trillion over the first decade, or about $1 trillion more than CBO estimated.

And that would be just the beginning of it.... What’s needed to head off fiscal calamity is a market-based health reform that puts cost-conscious consumers, not the government, in charge. It’s the opposite of the Obamacare prescription....

You can read the entire piece here.

posted by James C. Capretta | 9:53 am
Tags: Repeal
File As: Health Care

Tuesday, October 12, 2010

Waivering on the Health Care Law 

I have another new article up, at ObamaCareWatch, on how the regulatory tangles brought about by the health care law are already becoming apparent:

[A]fter just six months of implementation, it’s clear that even ObamaCare’s fiercest critics underestimated just how badly and how quickly the new law would distort decision-making in American health care.

The latest sign of how bad things are — and how bad they will get — came in the form of a New York Times story indicating that the Department of Health and Human Services (HHS) has issued waivers to dozens of employers and insurers to allow them to avoid, for the next year at least, some of ObamaCare’s costly new insurance requirements. According to the Times, the HHS waivers have gone to companies such as McDonald’s and Jack in the Box, as well as to selected health insurers and union-sponsored plans. These companies and plan sponsors were warning HHS that the new health law’s ill-advised and inflexible burdens would force them to drop coverage altogether — a fact that the legislation’s critics had predicted before passage, but that the administration denied. All totaled, about one million Americans are enrolled in plans that are now exempt from the costly new requirements; it seems likely that number will only grow in coming weeks with more HHS waivers.

The Obama administration is trying to have it both ways here.

Read the whole article here.

posted by James C. Capretta | 9:46 pm
Tags: waivers, coverage
File As: Health Care

Tuesday, October 12, 2010

The Private Insurance Boogeymen 

I have a new article at Kaiser Health News on the efforts of Kathleen Sebelius and the Obama administration to shift attention in the health care debate to private insurance companies as antagonists:

On Sept. 9, [Health and Human Services Secretary Kathleen Sebelius] sent a letter to the trade group representing the nation’s health insurers expressing her displeasure with stories in the press that quoted insurers that blame a portion of their looming premium increases on the mandates in the new health law....

[T]o apparently show how serious she is about getting the industry to toe the line, the secretary’s letter issued a plainly stated threat: Any insurer that dared to utter the truth about why premiums are rising might be banned from the government-managed "exchanges" through which the administration hopes most individual and small-group purchasers of insurance will eventually get their coverage. For many insurers, if the law gets implemented as planned, banishment from these exchanges could very well mean going out of business....

It is not every day that a cabinet secretary issues a threat aimed at controlling the speech of an entire industry for plainly political reasons.

But it does fit a pattern. For more than a year, the administration has sought to frame the health care debate as primarily a fight between advocates for consumers and the private health insurance industry, and Secretary Sebelius has been leading the way in this regard.

Read the whole article here.

posted by James C. Capretta | 5:53 pm
Tags: Kathleen Sebelius, exchanges
File As: Health Care

Tuesday, September 28, 2010

On ‘Repeal and Replace’ 

I was asked by the New York Times to participate in another of its online "Room for Debate" exchanges. Here's what I submitted:

The Obama administration and its allies are trying to create the political perception that the mandated coverage provisions that are going into effect this year will take the steam out of the repeal effort. That’s very unlikely to be the case. Yes, some Americans will benefit from these insurance requirements, even as many millions of others pay higher premiums to cover the costs.

But these provisions -- both in terms of the benefits provided, and the costs imposed -- are relatively minor in the scheme of things. Much more significant provisions will be implemented in 2011 and beyond.

And these changes won’t be all good news for American consumers. There are large tax increases in the new law, benefit cuts for Medicare Advantage enrollees, and costly burdens for employers that will raise premiums for millions of people with job-based coverage. Moreover, many employers will be reconsidering offering coverage at all based on the new law’s option for putting workers into new state-based exchanges. This will be disconcerting to millions of workers who are perfectly happy with the insurance they have today.

Republicans have said they are for “repeal and replace,” not just repeal, which means they could roll back the new health law even as they put in place new provisions to ensure secure insurance for those benefiting from the mandates kicking in this year. For instance, Republicans support robust funding for high-risk pools, which would allow many more people with pre-existing conditions to get insurance than will be helped by the modest pools in the new law.

The provisions that are going into effect this year aren’t central to the law’s significant changes to American health care. Repeal is resonating with a large segment of the population because much more sweeping changes are in the works, changes that will redistribute wealth, disrupt insurance arrangements that most people find perfectly acceptable today, and create risks for the quality of American health care. Those concerns are not going away anytime soon.

posted by James C. Capretta | 1:29 pm
Tags: repeal and replace
File As: Health Care

Tuesday, September 28, 2010

The Anatomy of a Hostile Government Takeover 

During the long national debate over the future of American health care, President Obama frequently chastised his opponents for launching exaggerated attacks on his plan for “reform.” He took particular exception to the criticism that the changes he was pushing amounted to a government takeover of the whole health sector. He knew full well that this kind of criticism might derail the entire effort in Congress, because most Americans recoil at the thought of a distant and bureaucratic federal government running the health-care system for everyone. So Obama vigorously denied that his program would lead to any such thing. In his August 8, 2009 radio address, he described the “takeover” accusation as “outlandish” and characterized his approach as a mainstream and moderate attempt simply to reform the nation’s private health-insurance system.

It’s now been six months since Congress passed Obamacare — not a long time given the sweeping nature of the legislation and the long phase-in schedule for its most significant provisions. Even so, it is already abundantly clear that Obamacare’s critics were dead right: The new health law has set in motion a government takeover of American health care, and a very hostile one at that. The Obama administration’s clumsy and overbearing behavior since its passage proves the point.

First, there are the heavy-handed statements coming out of the Department of Health and Human Services (HHS). Two weeks ago, HHS secretary Kathleen Sebelius sent a letter to the nation’s insurers with a plainly stated threat: Either the insurers conform to the political agenda of the administration and describe the reasons for premium increases in terms acceptable to the Democratic party, or they will be shut out entirely from the government-managed insurance marketplace. What could possibly have provoked a cabinet secretary to launch such an indiscriminate broadside against an entire industry? Simple: A handful of insurers had dared to utter the truth, noting that the new law has imposed costly insurance mandates that will raise premiums for everyone. For that offense, the federal government has essentially threatened to put the truth-telling insurers out of business. And what’s truly astonishing, and telling, is that the new law almost certainly gives the HHS secretary the power to do so if she really wants to.

Then there is the matter of Dr. Donald Berwick. Recall that President Obama took more than a year to settle on Dr. Berwick as his nominee to head the Centers for Medicare and Medicaid Services (CMS) — and then moved in a matter of weeks to put him in place without Senate confirmation. The president tried to blame Republicans for this blatant end-run around constitutional checks and balances, even though Democrats control the Senate and could have held a hearing and a vote if they had wanted to. The truth is that Democrats didn’t want Dr. Berwick to be confirmed in the Senate. They wanted him on the job, for sure, because he is an ardent government-takeover enthusiast, and is prepared to use all of the levers at his disposal to advance that objective. The president and his Democratic allies just wanted to get Dr. Berwick in place without the public’s really noticing. So they chose to circumvent the normal process and put him in the CMS position with a time-limited recess appointment. For the next year and a half, Dr. Berwick is free to use CMS’s enormous new powers to force doctors and hospitals to conform to his vision of effective health care, and he is essentially accountable to no one but the president.

To distract the public from these power plays, the administration decided to launch a series of “information” campaigns that are plainly political and filled with all manner of distortions. HHS sent a letter to the nation’s Medicare beneficiaries supposedly explaining what the new law will mean for them. Somehow, it failed to mention that the law will cut Medicare by half a trillion dollars over a decade, and cut the value of Medicare Advantage by an average of 27 percent by 2017. HHS followed this up by putting the same distortions on television, in the form of an expensive advertising campaign featuring Andy Griffith.

In the meantime, busy beavers in various corners of the federal bureaucracy are laying plans for new fiefdoms. Thousands of new employees are planned for various offices in HHS, including the new office to regulate private health insurance nationwide. The IRS is gearing up both to enforce with tax penalties the requirement that everyone carry government-approved insurance, and to help administer the massive new entitlement program that will require income verification on tens of millions of applicants. States will also be forced to build new bureaucracies to carry out the scores of tasks the federal government will be ordering them to perform.

Massive bureaucracy. Disinformation campaigns. Blatant power plays. The politicization of decisions that should be made with a focus on patient care. The use of government power to threaten citizens and their livelihood.

This is what Obamacare has brought us. And that’s just in its first six months.

[Cross-posted at NRO here.]

posted by James C. Capretta | 11:48 am
Tags: Kathleen Sebelius, Donald Berwick, Andy Griffith, Medicare Advantage
File As: Health Care

Thursday, September 23, 2010

Limited Government in the Twenty-First Century 

David Brooks’s critique of a Wall Street Journal opinion piece by Arthur Brooks and Congressman Paul Ryan served its intended purpose. It’s gotten the right people talking, and thinking, and that’s as it should be when those currently out of power have a very real shot at participating in governing again.

The back and forth began with Arthur Brooks and Representative Ryan emphasizing the importance of the political moment. After years of elected officials passing laws that have piled new federal programs and commitments on top of the ones created by their predecessors, we now find ourselves with a sprawling federal apparatus that is stifling private economic initiative and bankrupting the country. It is also a powerful, self-perpetuating machine — so powerful that the long march toward ever-more activist government has continued for decades almost without interruption despite numerous efforts (think Reagan Revolution) to apply some limits to the government’s reach.

Ironically, the failure of past efforts and the election in 2008 of a chief executive and a Congress absolutely committed to accelerating the pace of federal power accumulation has sparked a national counter-reaction of such promising force and intensity that there is now renewed hope that the struggle for limited government may yet be won. That was the point of the Brooks-Ryan essay: an exhortation to voters to seize the historic, and perhaps final, opportunity before them to choose political leaders in the fast-approaching mid-term election, as well as in 2012, who are committed to changing course once and for all. This means rejecting, in a decisive way, the activism espoused by those now in power and adoption of a philosophy that puts real limits on government so that entrepreneurial capitalism can again thrive and produce the improvements in the human condition that everyone desires but which central government can never deliver.

David Brooks acknowledges the importance of delivering a decisive electoral rebuke to those currently stepping on the accelerator of the runaway federal freight train. Indeed, he takes it for granted that such a rebuke is coming. His interest is in what happens next. And here he finds the Brooks-Ryan narrative to be lacking in political subtlety. Yes, the federal government has gone beyond the boundaries of its competency — but that does not mean every federal initiative is unworthy. Brooks favors imposition of limits on government — but he fears that unreflective adherence to an anti-tax and anti-government creed will itself result in disappointment and a lost opportunity. Instead of rolling back the welfare state, Brooks fears reactionaries leading the new coalition will end up squandering their chance to make a difference by alienating independent-minded voters who want government to be competent in promoting growth and opportunity, even as it stays out of the way of job-creators in the private sector.

Of course, some of the apparent differences among these leading thinkers might be more in theory than in practice. And certainly both Arthur Brooks and Representative Ryan took exception to the implication of Brooks’s critique that they lean too heavily toward minimalist government. Both note that they support the government’s role in correcting market failure and providing a compassionate safety net.

Nonetheless, it’s useful to see this kind of debate now — even before the election outcome is a certainty. Calls for limited government in the abstract are one thing; imposition of real limits on government — that is, cuts in programs, and the rollback of regulations — is another matter entirely. Even with a robust center-right coalition controlling Congress, it will be exceedingly difficult to get agreement on specifics, as the kind of subtle difference in emphasis on display in the Brooks-Brooks-Ryan debate plays itself out among hundreds of elected leaders coming from all parts of the country. The hard truth is that every cut creates hardship for voters somewhere, and that means hardship for politicians too.

It’s also clear that the backlash against excessive government intervention in American life would not have near the strength it does were it not for the recognition that the country is careening toward a fiscal crisis. Yes, there is a healthy impulse arising to return to constitutional principles of governance. But even that wouldn’t be enough to take on entrenched federal programs were it not for the fiscal mess we are in. The federal government is running up debt like it never has before. The Obama budget plan will produce a $10 trillion budget deficit over the coming decade. That’s what motivating millions of Americans to cast their ballots for new leadership, and that’s what’s creating a new opening to consider cuts to federal programs that would never be considered if the numbers weren’t so scary.

What we are actually witnessing is the end of an economic era. The democratic capitalist countries of the West have all built welfare states of varying sizes and shapes. Europe’s is certainly much larger and more expensive than what has been built in the United States, but all are under severe strain. There is no escaping demographic reality. The aging of populations in the world’s most advanced economies will make it impossible to sustain government programs and protections at the level that exist today.

What’s needed now is an effort to harness the new national energy for reform and retrenchment to solve the nation’s entitlement problem. That will require a frank discussion with the American people about how to apply the enduring principle of limited government to the modern circumstances of a market-driven economy operating within a competitive global environment. That is the most pressing challenge in these early years of the twenty-first century.

Fortunately for us, Congressman Ryan has already given us a "Roadmap" to get the conversation started. And that’s reason enough to have a considerable amount of hope that the healthy backlash now sweeping the country will, in time, bring about the kind of reforms we need — ones that will unlock the potential of America’s private economy and thus finance a secure and stable social safety net, too.

posted by James C. Capretta | 10:19 am
Tags: Roadmap, David Brooks, Arthur Brooks, Paul Ryan
File As: Health Care

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