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CBO: A Strong Public Plan Saves Lots of Money

According to Congress Daily, the CBO says attaching the public plan to Medicare rates will save even more money than originally thought:

In a bid to wrangle concessions from the Blue Dog Coalition on healthcare reform, House leaders Thursday released CBO estimates for liberals' preferred version of the public option that show $85 billion more in savings than for the version the Blue Dogs prefer.

Rep. Stephanie Herseth Sandlin, D-S.D., a Blue Dog co-chair, said any possible new momentum toward a public option tethered to Medicare rates is, in part, "because of the cost issue" and the updated CBO score.

The original House bill required the public plan to pay providers 5 percent more than Medicare reimbursement rates. But as part of a package of concessions to Blue Dogs, the House Energy and Commerce Committee accepted an amendment that requires the HHS Secretary to negotiate rates with providers. That version of the plan will save only $25 billion.

In total, a public plan based on Medicare rates would save $110 billion over 10 years. That is $20 billion more than earlier estimates, a spokesman for House Speaker Pelosi said.

In other words, the conservatives want to spend $85 billion more than the liberals do. Moreover, the CBO is estimating savings to the government. That is to say, the $85 billion reflects reduced federal spending on subsidies because premiums in the public plan will be lower. Savings to individuals and businesses paying lower premiums will be much larger than $85 billion, and politically, much more important.

Meanwhile, a new New York Times poll shows that the public option is stil la god 20 percent more popular than health-care reform in general.

By Ezra Klein  |  September 25, 2009; 11:04 AM ET
Categories:  Health Reform  
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Comments

I still don't get why the ability to use medicare rates is meaningful unless providers are forced to accept the public plan if they also accept medicare. Otherwise any insurance company is free to use medicare rates- its simply a matter that providers will not accept that insurance. There is something missing from the terminology of "use medicare rates" that is leaving something important out of the equation.

Posted by: spotatl | September 25, 2009 11:09 AM | Report abuse

I'd like to know the CBO assumption on the number of physicians that "opt-out" when Medicare rates are used. This is continually an undernoticed component of the public plan in the house bill, and was directly negotiated with the AMA.

Posted by: wisewon | September 25, 2009 11:10 AM | Report abuse

But that would require sacrificing an ideology that says that anything government does is bad and inefficient-- and this must be maintained at any price!

Posted by: adamiani | September 25, 2009 11:16 AM | Report abuse

does CBO also give statistics as to how many doctors would shut their doors with this reimbursement??

Any idea how many people would be dumped onto the public plan from employers??

oh wait, they don't push Ezra's agenda so I'm guessing there's not going to be any mention of that.


oh and adamiani,

its not efficent, its price fixing. That's more than a subtle difference.

Posted by: visionbrkr | September 25, 2009 11:27 AM | Report abuse

Gee, thanks Captain Obvious. So if you use the strong arm of government to force providers to take less money, you spend less money. I don't need the CBO to tell me that. The issue is what are the other consequences of imposing these price controls on a greater share of the market? Will the doctors and hospitals just take it lying down? Will more of them opt out of Medicare? Will they just continue shifting even more of the cost to private insurers? Will they try to make up the lower revenue with increased services?

There are a number of unanswered questions here, which you just ignore in favor of making a partisan jab. I know from reading you over the last couple years that you know there are tougher issues to address here, and that it is not so simple as "the public plan saves money." Why do you feel the need to throw out these occasional superficial posts that parrot Democratic talking points? You're better than this.

Posted by: ab13 | September 25, 2009 11:32 AM | Report abuse

how about we just put guns to doctors heads and force them to perform surgery on us? That'd probably save even more money, no???

Posted by: visionbrkr | September 25, 2009 11:36 AM | Report abuse

"how about we just put guns to doctors heads and force them to perform surgery on us? That'd probably save even more money, no???"

It's a pity that people who are so ignorant are permitted to state their opinions freely alongside those of us who know what we're talking about.

Posted by: steveh46 | September 25, 2009 11:53 AM | Report abuse

"its not efficent, its price fixing. "

In markets where there is only one insurer, is there not already price fixing -- but with the profits going toward advertising, insurance CEOs, and with cost-cutting measures hurting the larger insurance market? It's a monopoly. Given those two choices, I choose the public option.

Besides, aren't the caps also price fixing, then? And, isn't price fixing done in other countries (Japan)? Doesn't that work?

The point is: the public option controls costs and offers choice. It does not, on it's own, drive insurance companies out of business. If they did, I'd be with you on this ... but they don't.

It seems that the Dems are arguing for cost savings and choice, while the other is arguing against some fuzzy notion of socialism and fears of a future government take-over of health care (like that evil empire, Great Britain) ... it's not only untrue, but not persuasive either.

Posted by: Chris_ | September 25, 2009 12:00 PM | Report abuse

Ezra - Ugh! This CBO data is beyond meangingless. If a public plan paying Medicare rates looks like it would have a chance of passing, Obama would lose all the "deals" he's made with Docs, hospitals, insurers and pharma. Perhaps some progressives would welcome this, but it would not help get a reform bill pass.

And let's be honest, conservatives do not want to spend $85 billion more than liberals just because they oppose the public option. An actual bill written by conservatives would certainly cost less than the $1.2 trillion house bill.

A more interesting post would have examined whether the CBO scoring of a public plan changes the dynamics of the debate in any way

Posted by: mbp3 | September 25, 2009 12:32 PM | Report abuse

That's over 10 years.

Conrad could request they score it over 20 years and then maybe even he could see the incredibly massive savings a strong Medicare Part E (formerly known as the public option) could provide.

And being a frugal N. Dakotan, he'd HAVE to support it then!

Posted by: riffle1 | September 25, 2009 12:40 PM | Report abuse

If the Government forced doctors to see any one with a Government card for free then that would save even more money but there is that small matter of the economic freedom of doctors.

No matter what the price tag of the final version of Obamacare comes out to be there will always be a political incentive to expand those benefits and the cost because people will want better healthcare and they will elect politicians that promise them more healthcare. When Medicare was passed in 1965 it was estimated that it would cost 9 billion dollars/year in 1990. How's that worked out? Obamacare will be the same because that's how things work in Congress. These projections are nonsense.

Posted by: fallsmeadjc | September 25, 2009 12:41 PM | Report abuse

ab13,

Will suppliers refuse to do business with Wal-Mart because it demands a lower per unit price than other smaller retailers?

Some may, but many also take volume purchases into consideration.

As far as providers dumping Medicare, it's not happening. It happens with Medicaid I suspect because the reimbursement rates aren't as favorable.

With Medicare the rates may be less than ideal (the ideal being the highest possible price that the market will bear from the providers viewpoint), but the rates must still be profitable if so many providers opt to accept the programs payment schedule.

I hear people talk about this massive exodus of providers from Medicare, but then I talk to people who actually are in Medicare and they tell me that they have more freedom of choice in providers than they do with their old private insurance plans. Ah, the bitter reality!

Yes, by all means, let's continue to do this the most expensive way possible to consumers, taxpayers, and non-health related businesses! Perhaps some day all excess capital can be directed towards health care expenditures so that it isn't "wasted" on innovations outside of the health care sector.

Posted by: JPRS | September 25, 2009 12:45 PM | Report abuse

It's ironic hearing folks complain about the CBO numbers. I'm sure that many were saying a month or so ago -- LOOK at the CBO numbers, this plan is unaffordable!

I can't wait to see what happens when the CBO scores HR 676.

Posted by: JPRS | September 25, 2009 12:48 PM | Report abuse

What do you know, turn out the Republicans (and Republicans dressed like Democrats) are once again on the wrong side of everything that is good.

Posted by: impikk | September 25, 2009 1:06 PM | Report abuse

JPRS, really Walmart? You think comparing a private business with a lot of market share pressuring suppliers to lower costs is equivalent to gov't price fixing? Your analogy fails on many levels. Walmart's suppliers do not have another large population to easily shift costs onto to make up for what they lose selling to Walmart, as providers can do with private insureds. (And I love how you seem to have unconsciously made the "lose a little on every sale and make it up on volume" argument.)

As for your assertion that "Medicare rates are still profitable," this is demonstrably false, I don't know why you'd decide to just make a factually untrue claim to support your argument.

And your "Yes, by all means, let's continue to do this the most expensive way possible" remark is just example #196,238,712,936 of the ridiculous assumption that opposing a public plan means supporting the status quo.

And I don't know if your next comment was addressed to me or not, but I'm not complaining about the CBO numbers. I'm saying that it is misleading to suggest that a CBO score fully represents the long-term consequences of creating a public plan that pays Medicare rates. The 10 year gov't cost differential is not the issue here.

Posted by: ab13 | September 25, 2009 1:09 PM | Report abuse

steveh46,

oh my I'm sorry I was going to an extreme to make a point that is lost on many here. If you didn't see that then that's your fault not mine.

and its nice how the savings is mentioned but not the unintended consequences of such a change. The fact that many doctors could stop practicing, those of us with private insurance will feel it much more in the cost shifting.

As I've said before wouldn't it be a "goof" on the liberal mentality around here if a public plan was devised to be "too good" so that no doctor partiicpated in it. That was my point.

Posted by: visionbrkr | September 25, 2009 1:27 PM | Report abuse

visionbrkr, you have a poor memory.

Posted by: steveh46 | September 25, 2009 2:38 PM | Report abuse

The anti-public option people claim on Mondays, Wednesdays, Fridays that it will offer better prices and knock the private insurers out of business.

Then they claim on Tuesdays, Thursday, Saturdays that it will impose price controls and lead to worse service.

Well you can't have it both ways. Either the public option is GOOD and people buy it, or it's BAD and they buy something else.

In other words, if private insurers can always enter the market and compete, and the public option provides worse coverage (e.g., doctors won't accept it, longer wait times, etc.) then the public is going to prefer to buy the private insurance.

Posted by: Lee_A_Arnold | September 25, 2009 2:41 PM | Report abuse

Most Doctors Support The Public Option or single-payer systems.
http://www.huffingtonpost.com/2009/09/14/majority-of-doctors-back_n_286352.html

"A Robert Wood Johnson Foundation (RWJF) study published in Monday's New England Journal of Medicine shows that 63 percent of physicians support a health reform proposal that includes both a public option and traditional private insurance. If the additional 10 percent of doctors who support an entirely public health system are included, then approximately three out of four physicians nationwide support inclusion of a public option. Only 27 percent support a private-only reform that would provide subsidies for low-income individuals to purchase private insurance."
------------------------------------

Many Doctors find dealing with private insurance company bureaucracies more costly to them in time and paper-work.

Posted by: perhapsnot1 | September 25, 2009 4:02 PM | Report abuse

I wish one of these committees would request the CBO to SCORE SINGLE-PAYER.

Posted by: perhapsnot1 | September 25, 2009 4:06 PM | Report abuse

These testimonies are from the comment section of the Huffingpost articleon Doctor's Aupport of a Public Option. I can't stand by their veracity but the arguments make objective sense:
+ Lerrin I'm a Fan of Lerrin I'm a fan of this user 7 fans permalink

Doctors' practices are small businesses that currently have to deal with a myriad of insurances, each with their particular nuances & conditions. They have to hire people dedicated to working with said insurances and assure payments.
While Medicaid and Medicare may be lower pay/lower pay- they DO pay eventually, and pay at an essentially known and consistent manner.
Not necessarily so with the insurance companies (who reject claims) and/or the un/underinsured (who then become financially responsible for the end results).
From a business perspective: Would be much easier to plan/budget if you knew how much you could expect and when to expect it - even if less than deserved.
Reply Posted 12:54 PM on 09/15/2009
- + oldngrumpy I'm a Fan of oldngrumpy I'm a fan of this user 172 fans permalink
photo

Drs and their staff that I have talked to have said that they must dedicate approx. 25% of their staff and Dr time to dealing with insurance forms and arguing over rejected procedures, drugs, and tests. They claim that they could greatly reduce their billing if that requirement were fixed. It is imperative that some unified forms and procedures be instituted by mandate so that this waste is eliminated. Of course, single payer fixes this in one stroke.
Reply Posted 01:16 PM on 09/15/2009
- + 00angel I'm a Fan of 00angel I'm a fan of this user 4 fans permalink

the majority of the time .. the problems are dealing with medicare / medicaid...
Reply Posted 01:51 PM on 09/15/2009
There are More Comments on this Thread. Click Here To See them All
- + HowdyDoody I'm a Fan of HowdyDoody I'm a fan of this user 20 fans permalink
photo

I'm a health care provider who essentially will have to go out of business because health care companies (1) won't reimburse what they initially promise or without lots of haggling and additional paperwork; (2) have cut back my fees drastically; (3) have saddled people with huge deductibles, so they quit coming; and, (4) the time required to bill companies, argue with a myriad of bureaucratic policies and people, and resubmission of improperly denied claims, or the pussyfooting around the companies do in hopes that you'll give up trying to get paid.

I'm starting to spend more time trying to get paid than providing care. It's a nightmare.


Read more at: http://www.huffingtonpost.com/2009/09/14/majority-of-doctors-back_n_286352.html

Posted by: perhapsnot1 | September 25, 2009 4:18 PM | Report abuse

(Warning: bitter cynical sarcasm follows.)
Want to save even more money? Repeal the 13th Amendment and ENSLAVE all of the doctors, then everyone gets their health care for free!
(End bitter cynical sarcasm.)

Who will serve patients covered by your public option if it only pays Medicare rates? Many physicians are already refusing to take new Medicare patients, because they cannot keep their practice financially solvent if they do.

How do you plan to avoid a situation like in the UK, where working for the NHS is so miserable that half of British doctors were born elsewhere?

Posted by: mike_w_long | September 25, 2009 4:26 PM | Report abuse

"How do you plan to avoid a situation like in the UK, where working for the NHS is so miserable that half of British doctors were born elsewhere?"

One quarter of all practicing physicians in the US are foreign-trained. They must be coming here because it's so miserable to be a doctor here.

Posted by: steveh46 | September 25, 2009 4:56 PM | Report abuse

Once again for Mike_....

Most doctors prefer Public Option

http://www.huffingtonpost.com/2009/09/14/majority-of-doctors-back_n_286352.html

""There should be no confusion about where doctors stand in the debate over expanding health insurance coverage: they want reform," said Risa Lavizzo-Mourey, president and CEO of the Robert Wood Johnson Foundation. "This survey reveals important information about the perspective of physicians on issues central to the health reform debate. Policy makers should listen to their doctors."

"We found that no matter how you sliced the data, physicians demonstrated majority support for a public health insurance option, regardless of their type of practice or where they live," said Keyhani."


Read more at: http://www.huffingtonpost.com/2009/09/14/majority-of-doctors-back_n_286352.html

Posted by: perhapsnot1 | September 25, 2009 5:23 PM | Report abuse

ab13,

Wal-Mart is a valid comparison.

The comparison is analogous in terms of efficiencies that come from economy of scale and in terms of bargaining leverage.

The greater the volume of sales a company produces, the lower per unit margin a producer is able to live with. This is a basic point.

This is one reason that McDonalds can get away with charging 99 cents for a Hamburger, while most Mom and Pop Burger joints in the same market need to charge a premium of say $5 to $8. McDonalds may only make a 10 cent margins on each burger compared to the $2 or $3 margin that Mom and Pop Burger makes, but because McDonalds is doing 100 times the volume it's able to make those 10 cent margins add up quickly (it's also able to do this because its purchasing leverage reduces its per unit cost relative to Mom and Pop Burger).

This is such a basic point. It's not a LIBERAL or CONSERVATIVE point -- it's a reality of operating any business that deals in large volume sales.

What you say about "price fixing" to is frankly pretty bizarre. It makes absolutely no sense.

1. How would price fixing happen on the Consumer side of a purchasing equation? Explain that too me. Even in terms of the law, if consumers say "we won't buy that product at that price" -- our law recognizes that as a lawful activity. No one is compelled to buy a good or service at any price from anyone (except for auto insurance).

2. "Price Fixing" by definition occurs only on the SUPPLIER/PROVIDER in relation to the purchaser -- not visa versa. Price fixing is what happens in monopoly conditions or in cases when private sellers are operating in collusion. I've never heard of this happening in the reverse scenario. People might use the term just because it "sounds good" not because they are using it in its technical sense.

Government purchasers may negotiate a FIXED rate for services -- as do private insurers -- but that's not "PRICE FIXING".

Theoretically, there's a risk that if doctors are being paid too little they might emigrate (to Canada? To Socialist France? To the death panels of the UK?), they could retire; or they could opt to become investment bankers. If that happens the rate schedule will likely adjust upwards to accommodate the short-fall in suppliers.

No provider is forced to take Medicare, so what you say about doctors losing money is just complete, unfettered, absolute nonsense. Most specialists don't accept Medicaid because of its low fees; most specialists do accept Medicare though because it has higher fees and a higher volume customer base. They may get less from Medicare on a per patient/per procedure basis than they do from some of the private insurers, but Medicare off-sets the difference in terms of the large, steady stream of clients that they send to various providers and specialists.

Posted by: JPRS | September 25, 2009 6:21 PM | Report abuse

According to MedPac, 98.6% of of physicians will accept new Medicare patients.

I am 71. I had 11 private insurance plans. Everyone restricted my choice of doctor--at times to one specific doctor. Now that I have Medicare I have complete choice of physician. I haven't found any of the 1.4%.

Posted by: lensch | September 25, 2009 7:00 PM | Report abuse

visionbrkr: "how about we just put guns to doctors heads and force them to perform surgery on us? That'd probably save even more money, no???"

whoa, ezra touch a nerve there? Look, if the "insurance" companies hadn't been such p*ssies in their negotiations with doctors, pharma, and hospitals, we wouldn't be in this mess. Now they just want us to pay for their mistakes through massive government "subsidies".

p.s. visionbrkr is a health insurance broker, for those who don't know...

Posted by: evangeline135 | September 25, 2009 9:38 PM | Report abuse

evangeline135,

and that's what I get for being honest around here. yes i'm an insurance broker. One that would still have a job (but be likely forced to deal with the government more) if a public option was in place so that's one reason that I'm against it. WHAT IS IT YOU DO??? What qualifies YOU to speak on healthcare?

again as i said earlier it was a JOKE on how ezra doesn't bother to consider the unintended consequences of a public option.

And its not being p*ssies as you so nicely put it, its CALLED NEGOTIATION. Something Medicare in its captive market knows nothing about. Do you even HAVE A CLUE as to where you speak? For the last 5 years insurers have been trying to put the screws to hospitals. In my state of NJ 7 hospitals have gone bankrupt in the last 2 years.

So should we really put the screws to them and maybe we could get about 20 in bankruptcy would that be good????

And you can spew all the Huffington Post slanted articles on the Medicare you want but any reasonable person knows that because private insurance is forced to pay $1.15 on the dollar because Medicare pays 85 to 90 that if all we had was medicare paying what they pay we'd end up with less doctors. Have you seen the statistics for Medicaid acceptance in rural areas of the country?

Posted by: visionbrkr | September 25, 2009 10:08 PM | Report abuse

that last part of my post was directed at perhapsnot1, not evangeline.


If you want to post Huffpost comments section on here I might as well go run to foxnews.com and get some right slanted comments. I won't, but that's about the value of what you posted there.

Posted by: visionbrkr | September 25, 2009 10:11 PM | Report abuse

What makes you think that the Government can competently run an insurance company? Do you think they've done a great job running Medicare? Has their great success with the FHA and Fannie and Freddie in the housing market inspired you to think that they should play an even larger role in our healthcare industry? They already account for half of all healthcare spending. Is that not enough? Is expanding Governmental influence really the best way to improve healthcare? Really? Would you feel the same way if Bush were the President?

Government regulations and cost shifting make private health insurance more expensive than it otherwise would be. If the Government wants to make it more affordable then they should address these negative consequences of their actions within the healthcare marketplace. If they do not address these issues then they are merely using their own mess as an excuse to expand Governmental power and control over our lives. We should not comply and appease their stupidity.

Posted by: fallsmeadjc | September 26, 2009 10:35 AM | Report abuse

Visionbkr you are flailing. Focus.

Why do you think Most Doctors Want a Public Option or Single-Payer System?

Argue the point. [if you can].

Remember my qualification:
"I can't stand by their veracity but the arguments make objective sense."

If you don't think the comments make objective sense then you're free to argue the point.

Making remarks about "Huffington" this! and "foxnews" that! have no value.

Tell us.
Why do you think Most Doctors Want a Public Option or Single -Payer System?

Posted by: perhapsnot1 | September 26, 2009 3:08 PM | Report abuse

do you really think random polls really take into account the 600,000+ doctors in the US? Ask doctors if they'll gladly take 85 cents on the dollar FROM ALL and not just medicare. If they lose their cost-shifting ability you'll see a mass exodus from the practice of medicine. If they can't meet their costs the older ones will simply retire. There's an access problem now and we're about to flood the system with 46 million people. I do think doctors generally want to "do good" and they see the noble prospects of universal coverage which I agree with but the prospect of the government running it like they run FEMA, Freddie and Fannie and many other government agencies INCLUDING Medicare which is in severe trouble itself is just asinine.

Also the point i made about the left and right wing extremes was meant to explain the point that you taking comments from there is ludicrous. That's like me taking comments from fox about socialism and saying how all the US think obama's a socialist. It carries NO VALUE. Get Fox News to say something pro-Obama or Huff Post to say something pro-Bush and then it'll carry weight. Otherwise its nothing more than talking points from one side or the other. Propaganda for the fight.

Posted by: visionbrkr | September 26, 2009 11:07 PM | Report abuse

perhapsnot1,

see I can post biased crap too :-)

http://www.investors.com/NewsAndAnalysis/Article.aspx?id=506199

you see my poll that I post says 45% would stop practicing. I know Investors is wrong but I do think a good amount would stop practicing. How much is a good amount? I don't know, 10%, 15%? So if there are (i rechecked my numbers and saw somewhere that they expect there are around 800,000 docs practicing now in the US that would be 80,000 to 120,000. Maybe that's high but who really knows. If we need more physicians now to handle the upcoming 46 million newly insured and we're going to lose some doctors, even if its not a lot is that good? By quick math here's what we have now. one doctor for every 318 potential patients in the US (255,000,000 covered individuals divided by 800,000 docs). Once we gain 46 million patients and lose say even the low end of 80,000 docs that'll leave us with one doc for every 416 patients and that's a generous estimate. Have you been to a doctors office lately. Do you think they can handle an EXTRA 100 potential patients, each and every one of them?


Oh and just for good measure here's one person that commented on there:

I am a practicing physician and agree with other MD above. 45% probably underestimates Docs who would consider getting out, but overestimate of those that would. However, Docs are not stupid. They will not work for peanuts and will find ways to cir***vent ObamaCare by opting out and/or re-inventing practices to minimize gov entanglements. Bottom line gov medicine will ultimately lead to inferior care, rationing, and a poorer America. Put healthcare $ in hands of patients! Market solutions best.

Posted by: visionbrkr | September 26, 2009 11:27 PM | Report abuse

Ahh yes Vision; bias.
The Robert Wood Johnson Poll is sound and ethical, and it covered a wide spectrum of practioners from a diverse regional pool.

For biased crap; right-wing, corporate, trash, see your Investors Business Daily poll which is all of these:
[A Tale Of Two Doctor Polls
Pollsters Who Don't Disclose Their Methods Render Their Results Suspect
by Mark Blumenthal
Monday, Sept. 21, 2009
http://www.nationaljournal.com/njonline/mp_20090918_4062.php]

This is the propaganda (with which some of your musings are in accord). These are the same people who printed an editorial saying Stephen Hawking would not have gotten good care in British hospitals...and dude is British and got very good care according to him.

The Huffpo comments carry absolutely as much weight as anything you have to say. I asked if you would argue the logic of the testimony in relation to the (ethical, sound) poll results. You can surely recognize this without getting twisted because of the provenance ("HuffPo! Biased!)

This is important. Try not to be asinine and compare this to the logic of comments inferred from what we both know is propaganda.

Sure, there are a lot of obstacles that need to be addressed like primary care physician shortages and doctors opting out;

but even given the conditions you described...

Why do you think so many Doctors Want a Public Option?

Posted by: perhapsnot1 | September 27, 2009 9:44 AM | Report abuse

perhapsnot,

how many doctors is that? 60% of the 1000 or so polled? how is that telling me anything???

Posted by: visionbrkr | September 29, 2009 7:49 AM | Report abuse

Vision you are reduced to willful ignorance and bad faith.

I withdraw the question. The commenters at Huffpo have far more insight than you have provided.

Perhaps the New England Journal of Medicine and the Robert Wood Johnson Foundation will help to enlighten us with another Sound, Ethical survey.

Posted by: perhapsnot1 | September 29, 2009 12:15 PM | Report abuse

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