Is health care reform dead? Part 1
I hope not. Here’s why, from a response to a question Larry asked me here:Â
Larry, to your question about the role of health care reform and the budget deficit: you are correct that I support health care reform as a means of addressing the deficit though the plan that was likely to be passed didn’t do it. I argued many times on this blog that my greatest concern with health reform, and my criticism of all plans that the Dems brought forth, was cost control. Obama spoke a gazillion times about “bending the cost curve” but I never saw a plan that actually paid much attention to doing it. The plans were all health insurance reform not health care reform. The budget items that threaten to blow up our country are Medicaid and Medicare and the costs of medical care to all Americans. We MUST address those issues through health care reform or the whole economy will implode. I was in favor of seeing the health care package passed because I believe without a first step there will never be a second step. I’d be thrilled to see a new approach, starting from scratch, that does a better job of dealing with cost control than what we saw, but I’m very concerned it will get shelved for political reasons. Medicare and Medicaid benefits cannot be sustained at current levels and now that both sides have effectively said as much perhaps we can see a bipartisan decision to bite the bullet and make a move that is political suicide if either side takes it alone. Again, I’m skeptical, but it’s the only hope for us to truly “bend the curve”.
The question comes up again though care of Obama’s hint that it may simply not be doable (though in his comments at the DNC this morning he was adamant about moving forward). The fact is, what he may not be able to accomplish is passage of either of the bloated bills passed by the House and Senate. The idea of shoving through the Senate plan on an unhappy House with the promise of amendments imposed through reconciliation is a reckless one with potentially catastrophic political consequences for the Democrats (GOP leaders must be struggling with which way to root on this — they oppose the health care plan but must recognize the enormous political opportunity reconciliation would provide). The most reasonable approach, as I alluded to in my comments above, is a bipartisan effort that takes ideas from both “plans” and creates an effective package unburdened by superfluous political gifts to congressmen, senators, lobbyists, labor, or business sectors to buy their 
support. Easier said than done.Â
I placed “plans” in quotation marks because there was never really a comprehensive Republican plan that came up for a vote so it never had to undergo the horse-trading of the Dems plan to try to generate a supermajority. Doing so would undoubtedly lead to the same kind of bloat the current plans enjoy. Nevertheless, let’s try to focus on the main ideas in the plans and see what can work and what can’t.Â
In general the two sides can be differentiated by their respective focus on coverage (Dems) versus cost (GOP). The Democrats want to: expand coverage to include the vast majority of the currently uninsured viewing this as the highest priority of reform; guarantee affordable insurance to all Americans regardless of age or health; eliminate both ceilings on coverage and denial of coverage for pre-existing conditions in order to assure few Americans suffer personal financial devastation from sickness, disease, and injury; assure that proposed changes add nothing to the deficit; and, ideally, they would like some kind of public option to create a competitive entity that will keep private insurers from gaming the system. Recognizing that these goals are extremely expensive they needed a plan to provide insurers revenues to offset the costs these goals will impose. There are essentially three elements to the revenue side: 1) make insurance coverage mandatory and impose penalties on individuals and businesses that fail to comply; 2) impose a tax on “Cadillac” insurance plans (Senate) or high income earners (House); 3) increase the Medicare tax by .5% on high income earners (Senate). By all accounts, including the CBO, the Dem plan achieves its major goals…at a high cost.Â
The GOP offered a 10 point plan with goals including: lowering health care premiums, guarantee access to affordable health care regardless of pre-existing conditions, enact medical liability reforms, encourage health pools for small business, and allow purchase of insurance across state lines. The CBO evaluated the plan and found little change in the ranks of the uninsured but insurance premiums that dropped among all groups of the insured. From what I can tell, however, the reason premiums drop is that by opening insurance across state lines businesses and individuals would take advantage by going to states with fewer insurance mandates and therefore they are getting insurance policies that cover less. Less coverage, lower premiums — this is not rocket science. So while our out-of-pocket costs would drop under the GOP plan we would face more bills when we get sick because less is covered. I don’t know how to measure that but you get what you pay for – and what you don’t. The GOP plan does nothing about the poor and uninsured that use incredibly expensive emergency rooms as their personal health care provider at taxpayer expense. The protections for access to insurance for those with pre-exisitng conditions are thin — coverage will be available but it will be very expensive (as it should be?). Nevertheless, the GOP plan costs a pittance compared to the Dem plans and in the current economic environment that makes some elements of the plan attractive.Â
The first question anybody thinking about this issue must ask themselves is whether health care coverage is a right, as Ted Kennedy argued. I find that question easy: no it’s not. But the follow-up question is tougher: is it a necessity? Specifically, is there a national economic imperative for making sure all Americans are covered? There’s no question that what makes our long-term economic outlook so lousy isn’t wars, stimulus plans, earmarks or discretionary spending – it’s Medicare and Medicaid. I addressed ideas about the revenue side of these programs here but real
progress needs to come on the cost side — and a big part of that is lack of insurance for 35 million Americans and 10 million illegals. I’m a deficit hawk so the idea of adding a $1 trillion health care program to the economy doesn’t sit too well; but I am fairly well convinced that the cost of not adding it will be substantially greater.Â
I’ve tried to consider how to make this work on a smaller scale but everything is so complicated and intertwined that’s it’s hard to micromanage – kind of like trying to be just a little pregnant to see how it feels. If we force insurers to cover pre-existing conditions and eliminate caps we need to see they have revenue offsets. Either we have an insurance coverage mandate or we don’t. As taxpayers we pay for the health care of the uninsured anyway. They go to ERs, get taken care of at enormous expense, the hospital sends the state the bill, and the state taps its Medicaid funds which it gets from you and me. So why wouldn’t we want to force those people to buy coverage in the first place? I can’t find the economic argument against that. A constitutional argument maybe but not a purely logical argument based on what’s best for the country. I’m happy to hear the other side if you have it.Â
I’ve already written more than I expected and I could go on. But let me stop here and consider this Part 1 if I find the wherewithal to continue.
As usual Mike you make some good points. I am just very wary of the a central government taking over such a large part of the economy. They seldom manage anything well—good intentions is not enough for me. I judge by past accomplishments. The present bill is too big and I feel filled with too many surprises. Obama just admitted the other day that someone had sneaked in a provision that might not let us keep our own doctors—what “sneaked in”. Wonder what other surprises are lurking in this 2000 page monstrousity!
Ron Russell´s last blog ..Political Correctness
Ron,
In this case, insurance companies have done SUCH a poor job in administering health insurance that we have no alternative than to give government a change to fix what private enterprise has screwed up and refuses to fix on their own. I mean look at premiums. They burden not only individuals, they burden small business, sucking as much or more outta business than do regulations & taxes. We cannot trust a company board to anything other than to seek profit wherever they can. Profit and the public interest diverges at some point. At least with the government running it you have the ballot box and e-mail addresses of your representatives and senators. Try calling Blue Cross and telling them your premium is to large or the quality of your claim needs improvement.
David W. Walters´s last blog ..War sucks
I think we do need some type of Health Care Reform. But a complete takeover of the System by the Government is completely ridiculous. We can simply look at other countries that have already done this, to see that it doesn’t work. Just passing some type of tort reform would have a resounding effect. The doctors wouldn’t have to order every test under the sun for a patient, just to protect his a$$ from being sued. A physician pays over one third of his earnings just for liability insurance.
USAWatchmen´s last blog ..A Tea Party With Sarah Palin
Again, why is it ridiculous (“I think we do need some type of Health Care Reform. But a complete takeover of the System by the Government is completely ridiculous”)
-When the insurance companies have TOTALLY failed to provide the American Public a necessity?
David W. Walters´s last blog ..War sucks
I think Ron answered your question in his comment, David. Our federal government is notorious for mismanaging most endeavors they undertake and it is always at the expense of the general public. I have to go with Ron’s assessment; their good intentions are not enough for me. If some common sense reforms were put into place, then I could go along with that, but not a complete take over of health care by the government. As USA has already noted, that has been tried in several countries and the results have not been all that promising.
Mike,
As always, you have written a good article. I think I understand where you are coming from on the cost angle, but let me make sure. You are saying that the biggest reason our deficit is so high is the amount of money we are spending on Medicare/Medicade in paying the health care costs for uninsured Americans and illegals?
Thanks for the comments. I will address some of this, including tort reform, in Part 2. But maybe you guys can help me with something I’m not clear on: what part of the Senate plan calls for a major expansion of governments role in health care? In one way or another Ron, USA, and Larry have suggested that’s what the Dems are talking about; but the Senate plan abandoned a public option so what’s the government left to do besides provide funding and tax credits? I’m just not clear on how this is anything close to “government taking over such a large part of the economy.” Am I missing something?
In answer to your question Larry, my comment was meant to reflect the long-term. The reason we can’t bring our expected deficit down in 10 years is all to do with unmanageable growth in health care costs. Certainly our current deficit is all to do with war, stimulus, drug plan, tax cuts, and discretionary spending; but we could deal with that over the next ten years if health spending was under control.
You said “what part of the Senate plan calls for a major expansion of governments role in health care?”
A couple of examples:
Requiring everyone to buy Health Insurance for one.
Requiring them to buy it through a single exchange for another.
ThirstyJon´s last blog ..Ronald Reagan on Rebuilding America
How is requiring people to buy insurance an expansion of government’s role if there is no government option involved (Senate plan)? The uninsured buy insurance from private insurers — where’s the government in that transaction? Yes, it’s mandated but there is no huge government bureaucracy here or govt takeover of insurance or health care. There is also no “single exchange” in the Senate plan. I’m not seeing your argument here.
If the government requires it and regulates it is a form of “takeover.” It is not identical to the government administrating the whole thing from start to finish, but it is still a form of takeover.
ThirstyJon´s last blog ..Ronald Reagan on Rebuilding America
Mike,
Excellent analysis, as always. I share your concern about cost controls, but cannot see how we do this when we leave a relatively small-but significantly expensive-part of society uncovered. Those people, left uncovered, will continue to use emergency rooms as their primary care facility. Thus, I would andwer your quesiton about Kennedy’s thoughts: Proper health care benefits might not be a right, but is a definite necessity in the larger picture.
At this point, I’m interested in a step-by-step proposal from Congress with an explanation of exactly what, if any, savings are provided to the consumer and the country as a whole. Nothing like a bit of clarity…
Politics, as usual, is the nasty preventive medicine that has continued to block real reform. I am particularly tired of the same-ol’, same-ol’ of “get government our of my health care” charge. For those Conservatives who have had so much celebration over the defeat of the current bill and have crowed about this being a rejection of all things “Obama” I ask 4 simple questions:
–With no reform in place now, won’t costs of the uninsured and costs in general continue to skyrocket?
–If so and if you support the idea of a return to GOP rule at the Congressional and Executive levels, won’t this problem eventually land at THEIR feet?
–Without government intervention that the GOP does support-like exchanges, tort reform, and forcing for-profits to drop pre-existing conditions- how with the GOP affect change?
–Are we really so attached to the idea of defeating the Democrats that we would let a problem that most of us agree needs to be solved get bigger and more complicated to solve?
Thanks Laurie. I agree with much of what you wrote and the answer to your question “If so and if you support the idea of a return to GOP rule at the Congressional and Executive levels, won’t this problem eventually land at THEIR feet?” is a resounding yes. And that’s why I tried to make my case in non-partisan terms. This is a national issue and whoever is running the store will need to address it. So it’s time for everyone to get off the soapbox and
DO SOMETHING!!!
I wonder what would happen if a huge portion of the population ditched health insurance all together, and instead formed voluntary non-profit cooperatives that only addressed catastrophic problems. Maybe there would be a special department where people could voluntarily pay the premiums of those who cannot afford the coop, and/or a department to donate to non-catastrophic needs.
I know of groups that are already doing this.
For example:
http://www.samaritanministries.org/
http://medi-share.org/
In other words, if the people want to be free of insurance companies, leave them behind!
I am very concerned about anything the federal government will do.
ThirstyJon´s last blog ..Ronald Reagan on Rebuilding America
Thanks for your comments TJ. I not familiar with non-profit coops but the idea is interesting. I certainly see no problem as long as the members of the coop are covered or cared for at the same minimum level as everybody else and do not look for public assistance for other health care issues. Do these coops qualify for tax-exempt status?? That sounds like an interesting loophole.
I would propose letting all people make their own health insurance decision with zero expectation from the federal government to help. If folks choose to buy insurance from a “for profit” insurance company that is there choice. If they chose to coop with others that is there choice.
ThirstyJon´s last blog ..Ronald Reagan on Rebuilding America
that’s what we have now….it ain’t working. Can we drop Medicare?
If you believe that it is the role of government to make people do what is best for themselves than you have a point.
I don’t recognize that as a legitimate role of government.
ThirstyJon´s last blog ..Ronald Reagan on Rebuilding America
ThirstyJon-
Intuitively, your proposal makes some sense. Practically, there are some problems. What happens when somebody makes a choice NOt to be covered, ends up sick and unable to pay the bills? Should their “choice”, then, give them the option to declare bankruptcy and stick the providers and the taxpayers for the costs of their “choice”?
What about the person who “chooses” to opt for a coverage plan that, we’ll doesn’t cover them for a major illness. Again-do they get the government/taxpayer bailout?
No government/taxpayer bailout.
Bankruptcy maybe. It is a risk to lend and it is morally wrong to take someone’s basic necessities in the collection of a debt. The lender needs to consider this risk before lending.
ThirstyJon´s last blog ..Ronald Reagan on Rebuilding America
ThirstyJon:
You realize that over 60% of bankruptcies in the US are medically related, right? People who were doing ok with their regular debts but got socked under due to an unexpected illness and then discharged these debts-all of them- because of it? Bankruptcy, in these instances, IS a government/taxpayer/provider bailout. And, even among the insured, this is an all-too-common experience.
If you advocate for “choice”, even the choice to be under- or undercovered, then you should also realize that the “lender”, in these cases, are the physicians, providers and, eventually, the taxpayers themselves. And yet every party in that “lender” group is either unwilling or unwitting. Where’s the morality in making a “choice”, only to foist your costs off on somebody else?
Physicians and Providers can know that there is risk involved with providing an expensive service and then make a choice how to handle that. There is a risk that some won’t be able to pay. And there doesn’t need to be a taxpayer bailout. There may be one, but there doesn’t have to be.
Individuals may make a moral choice, or an immoral one. Perhaps Physicians and Providers should consider the moral record (integrity) of individuals before providing them with a service.
ThirstyJon´s last blog ..Ronald Reagan on Rebuilding America