I've been watching the health care rush to judgment in fascination; I've written a few posts given my take on the subject. This point reflects on a number of miscellaneous points and other key articles I've recently read.
First, we need to understand that the Obama Administration has hyped a "crisis" for purely political reasons. There is no directly pressing reason why a deal has to be done by the August Congressional recess. [As I write, Senator Reid has just announced that there will be no vote on health care until after the August recess.] Surveys show that most Americans, who are healthy, are not being deprived of necessary medical care. Hospitals aren't closing, and health care insurance providers are not going bankrupt; most employed people and their families have health insurance; most employees leaving a job are eligible for COBRA benefits or have access to short-term medical insurance available on the open market. By law emergency care at hospitals must be provided, regardless of financial situation. Anyone classified within poverty guidelines participate in or is eligible for Medicaid, and SCHIP provides child health insurance up through the lower middle-class. About 85% of the country is covered by health insurance, with some 89% in recent surveys satisfied with their private sector provider. A large percentage of those without health insurance are without it for short durations (i.e., between jobs). Others voluntarily do without health insurance as a personal budget decision, deciding it's cheaper to handle medical costs on an as-needed basis.
There is a lot of misleading propaganda by proponents of nationalized health care comparing our health care system with those of other (nationalized) health care systems. The tacit assumption is that our health care system (or lack of participation in our health care system) is responsible for a relatively shorter average lifespan. In fact, some elements are due to personal lifestyle decisions, such as obesity and smoking. Others are culture-specific, e.g., disproportionately higher levels of homicides and auto fatalities. In fact, the prognosis of patients diagnosed with serious medical issues (e.g., certain cancers) is much better in the United States, where treatment tends to start faster and more effective but costly prescription drugs are readily available.
It is true that we have a growing unemployment problem, and there is a trend of increasing medical costs, largely because of an aging population, but we have too many constraints: a bloated budget and deficit and no money to pay for a government intervention into our health care system. Plus, we're already seeing a funding reserve problem with Medicare and escalating Medicaid expenses, both essentially subsidized by private insurance. We already know many physicians are reluctant to deal with Medicare and Medicaid patients, because reimbursements are delayed and don't cover costs, certain billable events are reimbursed better than others (e.g., operations versus primary care physician office visits), and the paperwork is excessive. And the Democratic fantasy to control costs is to CUT reimbursements across the board? If a Trojan horse public health plan eats away the private sector competition, who but the American taxpayer is going to end up subsidizing this rigged market? Do we really believe that the federal government will manage a new public health option more effectively than the decades that the government has already mismanaged Medicare and Medicaid?
The crisis one is a manufactured one, for purely political reasons. Obama has strong Democratic control of the Congress: there's only one reason he needs it passed as soon as possible: the longer a proposal is out there, it gives the opposition time to defeat it. That's what happened with HillaryCare version 1. If, on the other hand, a new entitlement is passed, the Republicans will have almost zero opportunity of uprooting it: what are you going to do if you have millions enrolled in a public plan? The Democrats are mortgaging their party's future with this public health plan; they are tied to it, for better or for worse. If costs explode out of control (as they have already in Massachusetts), are the Democrats going to let the plan collapse and face the subsequent voter wrath? The Democrats are in the horns of a dilemma, because they know any subsidies adding to the deficit will result in political repercussions. That's why Obama is getting some push back, particularly by the deficit hawk Blue Dog Democrats. They have already seen the President's approval rating drop, and public polls now show net American opposition to the Obama health care plan; it's virtually a rerun of what happened in 1993. They also worry that once the President's often repeated promise that citizens will be able to retain their current providers becomes empty as businesses drop their current providers as a cost-saving move, there will be palpable public anger, especially if the Congress and the President don't themselves enroll in the same health plan. (The GOP, if it's smart, should add a relevant amendment to the final health care bill exposing the hypocrisy of those proposing the public option.)
Fortunately, the American people have been there, done that. Obama lack of oversight over the Congress led to the premature passage of bloated stimulus and omnibudget bills, when we now already face the largest budget deficit in the history of this country. The President promised that unemployment would be capped at about 8%; that didn't happen (we are already of 9.5% and climbing). He insisted that we needed this money as soon as possible, no time for Congress delay or come up with a truly bipartisan plan; instead, less than 10% has been spent to date. We already see a chronic cost explosion in the Massachusetts pioneering state plan. With some price tags at a trillion dollars or more as an opening bill, does anyone seriously believe that Medicare and Medicaid, already known for poor cost and fraud management, lend credibility to a federal government effectively managing an entirely new entitlement program and holding the line at even that amount?
Second, what I think we need to explode the myth of government efficiency in administrative costs. Tom Bevan of RealClearPolitics points out that the basis of percentage (e.g., 3% for Medicare versus 12% for private health insurances) is RELATIVE to total health costs per insured. The per-patient administrative costs were HIGHER for Medicare (almost 25% on average during the first half of this decade). Why? Because the elderly have a higher benefit outlay. Bevan also notes that even the per-patient cost comparison is biased in favor of the government because the government does not pay state premium taxes, marketing costs, etc. Bevan concludes,"This confirms two things most Americans already know: 1) government is rarely, if ever, more efficient than the private sector, and 2) if something sounds too good to be true, it almost always is."
Third, government price controls, being featured in many of the proposed health care plans, don't work. Cortese and Korsmo of the internationally reputed Mayo Clinic explain in the Chicago Tribune that they lose hundreds of millions of dollars each year on price-controlled services for Medicare patients, which must be made up by other patients or their insurers. Yet more than half of the financing for the proposals on Capitol Hill are achieved by additional government reimbursement cuts. The authors essentially argue that they are getting penalized for their quality care because they won't drive up volumes of medically unnecessary piecemeal billable events (e.g., more frequent office visits, lab tests, etc.) to maximize government reimbursements. The remedy is to reward value or quality, e.g., fewer non-preventive office visits, recommendation of generics as alternative prescription medicines where applicable, no post-operative complications, no defensive medicine, etc. The development and validation of said metrics is beyond the scope of this post, but I think we should have incentives like bonus tax credits to providers for low aggregate reimbursements, acceptable and improved health status of patients at the end of a specified time period and future time periods, and assessments of professional standard health provider performance.
Fourth, we need to focus on the real issues and constraints. Obviously a limited federal budget in the middle of a severe recession points out the need to leverage our tax dollars more effectively. Another key constraint is that we don't have enough primary care physicians and nurses; it's not clear we can accommodate millions of new patients without a clear, feasible plan of where those extra resources are coming from. In part, there is a pipeline problem, but there is also need for comprehensive medical malpractice reform, which can make a difference. One example is Texas; which found 85% of malpractice suits were being dismissed (i.e., frivolous lawsuits), the number of malpractice insurers had dwindled to a handful, and rapidly rising premiums were leading primary care doctors to abandon their practices. Texas' reforms led to multiply the number of insurers in the state, double-digit percentage decreases in premiums, and an increase in the number of doctors practicing in the state. We need to focus on the pricing problems for small business operators and individuals/families, whom are charged disproportionately higher prices for insurance or medical services because they lack pricing power. Catastrophic medical expenses are the leading cause of personal bankruptcy; small businesses are unable to find competitively priced insurance to compete with larger companies for employees. One possible bridge, which notably Clinton failed to accept when offered back in 1993, was catastrophic insurance. We could also look at some cost-plus caps on individual ad hoc medical charges, a more transparent, timely, computer-accessible pricing system, and deregulation of the marketing of health plans across state lines. Finally, we need a robust state assigned risk pool system for handling people or families with hard-to-insure, preexisting conditions. (Some states don't have them; others aren't open to new enrollees.)
Fifth, we must reject this concept of a government-created "insurance exchange", which is nothing less than a Trojan horse for a single-payer system. Anyone who thinks an exchange devised by, participated in, guaranteed and administered by the federal government is a legitimate, fair, market-based competition is delusional. We've already seen this play out in a different market, where the GSE's Fannie Mae and Freddie Mac (with cheap US Treasury money behind them) grew from around 6% of the home mortgage market in the 1960's to roughly half of it by the financial tsunami last September. Does anyone doubt that the government, by allowing the GSE's with implicit government backing, exposed the government and the American taxpayer to a disproportionate share of risk? Does anyone seriously believe that a public option would exist without unfair subsidies and implicit guarantee against failure by the government? Does anyone doubt that in a fair market, the exchange would soon be saddled with higher-costing health risks (by definition it would have to accept all comers)? The prospect of cut-rate premiums for higher-risk individuals would be too irresistible; it would be like homeowners trying to buy flood insurance as a hurricane approaches. And if you would have private players outside the exchange, they would be able to undercut the premiums significantly, no longer subsidizing higher-risk people. Policymakers seem to intuitively understand that; IBD pointed out a provision in the current House bill which would effectively bar competitors outside the exchange by 2013. Some Republican lawmakers (e.g., Rep. Ryan) believe that only 5 or 6 insurers would be strong enough to compete in this rigged market.
Sixth, don't believe the spin over financing of the public plan. Pay as you go? Seriously? The same Democrats whom found just $17B in deficit spending cuts in battling an EXISTING trillion dollar deficit are going to find a trillion-plus to fund this mandate? The Democrats are already floating some trial balloons. For example, Obama ran a distorted campaign, accusing McCain of wanting to tax employer-supplied health benefits. (Actually, McCain wanted to give every one, including people buying health insurance on their own with after-tax dollars, a $15K tax credit where most health insurance premiums are below that. The only ones adversely affected would be gold-plated plans costing more than that, probably negotiated by unions which support the Democrats. But even these would have only been taxable for the amount over $15K.) There are also hints of taxing small businesses 8% if they don't offer health insurance. This seems indefensible on its face and counterintuitive to penalize small businesses depending on how they structure compensation. Health insurance originated as a business benefit as a way to work around price-wage controls during WWII. The last thing we need to do given a severe recession is to increase compensation-related costs on small businesses, which provides an advantage to bigger competitors (whom have pricing power to negotiate lower per-employee costs); this will only serve to dampen hiring we need from a critical job creating sector of the economy. Still another rumor is Obama punishing economic success even more, explicitly (e.g., a surtax on the top 5%) or through a favorite back door tactic by Obama, which is to scale back deductions for wealthier Americans. The only real opportunity we have of balancing these budgets is to grow our economy, but Obama's Robin Hood tax policies on investment and wages, not to mention the ideologically-driven cap-and-trade policy, are dampening, not stoking the fire under the economy in recovery.
Finally, fellow conservatives need to compromise. There needs to be a mandate to spread catastrophic health risks across all Americans. We also need to acknowledge that there are rules in the private sector (e.g., not all doctors accept all private insurance plans, and there are rules and regulations about when and where you can go to a medical facility), not unlike rationing rules at a government level; for instance, insurers often will not consider funding experimental procedures. Moreover, insurers have a tendency to chase good health risks and will ignore those with preexisting or catastrophic health problems--which could only aggravate health conditions and the related higher costs, eventually passed on to other patients. We do see an escalating trend of expenses that hospitals are having to pass on to the private sector insurers. Existing state risk pools are not adequately established and funded.
