Health Care: 2009 Is Not 1994

April 9th, 2009 at 11:02 am | 16 Comments |

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Is 2009 the year of health-care reform?

In Monday’s Washington Post, E. J. Dionne declares it “health care’s year.”  Mr. Dionne’s reasoning seems heavy on partisanship – he closes: “The president has invested too much in health-care reform to lose this fight.  So he won’t.” – but many on and off the Hill have also concluded that 2009 is going to be big.

With that in mind, various groups are working feverishly to fashion their own proposals. Recently, Politico.com wrote a nice overview of the different players (notice the subtle product placement of my book in the 3rd last paragraph).

Writing in Roll Call, AEI’s Norman Ornstein provides a well reasoned and written essay on the factors favoring a major health-care deal this year.

Many of the items on Mr. Ornstein’s list aren’t earth-shattering — yes, there are more uninsured than in 1994; yes, the White House is hungry to capitalize on the economic crisis; yes, economic uncertainty has left millions of Americans with a taste of life without the certainty of health insurance.

Mr. Ornstein makes an additional point, though, one often missed by commentators on this issue: health care has become a major issue because it has become a middle class issue. Mr. Ornstein points out the angst of insured middle America.

Now add to these groups the largest one–people who have good jobs, good employers and no reason to fear the loss of their health insurance, but who have the same recurring story. Every year, the human resources person comes to them and says something like this: Our insurance has gotten too expensive. We are changing the plan. Maybe a new insurer, maybe not. But new conditions, higher co-pays, higher out-of-pocket expenses, new doctors, a new pharmacy benefits manager with a different slate of acceptable drugs, new forms.

With the yearly turmoil and high costs, many more people are willing to take a leap of faith because the status quo is not acceptable.

And it’s easy to push further. For middle America, it’s not simply the frustration of changing health plans (and probably primary-care providers since new plans often mean new networks) or the fear of losing health insurance altogether, it’s also the fact that health costs have hit them hard in the wallet.

Between 2000 and 2006, the earnings of the median American worker stagnated – the recession before the recession. Indeed, this decade has been one long recession for many workers.  How? Between 2000 and 2006, health costs have soared with health-insurance premiums having roughly doubled.

NewMajority Editor David Frum observes in Comeback the bottom line for families:

Employers during the Bush years paid handsomely for labor. In fact, employers’ costs for employing a typical, median worker jumped from $19.85 per hour in 2000 to $25.67 in 2006. That’s a raise of more than $5 per hour, or 25%.

Yet the average worker saw none of the money. Every dime — and then some —was gobbled up by the rising cost of employer-provided heath insurance…

Look at this from the point of view of some typical American family. Married, two kids. Between 2000 and 2006, their pay has barely gone up at all. They’ve had a nice little tax cut from the Bush administration, worth perhaps $500. But they’re paying $1,100 more per year in out-of-pocket health care costs.

It would be one thing if Americans felt they were paying more for a better product.  But would even the slickest insurance lobbyist attempt to argue that health care today is twice as good as it was at the beginning of this decade?

There are still hurdles for Washington to clear before achieving sweeping health-care legislation. It’s possible, for instance, that infighting between the White House and its very liberal allies in the House of Representatives will undermine the effort, or that Congress becomes so consumed with economic issues that health reform simply falls to the backburner – a scenario in which the lasting legacy of GM’s Rick Wagoner is preventing an Obama health-care success in 2009.

But Republicans and conservatives must realize that even if Democrats come up short this year – and that’s a big if – President Obama and his party have identified a major issue for middle America and a politically attractive prescription: focused government programs. Strong opposition without a strong alternative proposal may serve us well in the short-term and it may even sink a weak health-care bill; it is not a thoughtful long-term strategy, however.

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16 Comments so far ↓

  • Mike K

    Republicans need to address this issue and there are ways to do this without turning the health care system upside down. If Obama and the Democrats do it we will get a Canadian style program with over-emphasis on voter inducements like primary care with no co-pay. This will fill GPs offices with worried well, just as has happened in Canada. When Oregon tried to prioritize health interventions in order to ration Medicaid payments about 20 years ago, they ended up with a rank system that placed the common cold as #1. This was pretty embarrassing at the time but only demonstrated how foolish it is to use methodology that belongs to sociology, not science (sorry sociologists). What is necessary is to use the present system, which is diversified but responsive, and add a few basic principles. One is to pay for scientifically valid treatment. Another is to require some responsibility for recipients. A simple way to do that is to use co-pays. Medicare was designed in 1965 to have a 20% co-pay. The French use a similar principle and allow private insurance to fill the gap and offer optional treatments, such as acupuncture and chiropractic manipulation, if the subscriber is willing to pay for them.The American insurance system went off the rails when it began to pay for non-emergency care to compete with Kaiser and other HMOs. Emergencies are predictable statistically and insurance companies can write policies that work. What we have now is not insurance. It is a hodge podge of prepayment plans that do not have proper incentives. The French, for example, require the patient to pay the doctor and then get reimbursed by the health plan. This simple step does a lot to keep all parties aware of the costs. Promises are cheap when made but very expensive when it comes time to pay for them.

  • sinz54

    Mike K: The co-pay system only works with moderate health care expenses, not for surgeries which can be frightfully expensive.Consider my situation. I’ve got kidney failure. And a kidney transplant w/hospitalization costs about $200,000 (not counting rehab). Even if Medicare picked up 80% of that, that would still leave me on the hook for $40,000.The only reason it’s not, is that my private insurer will pick up the tab for that remaining $40,000.I don’t know what the French do about this, but I can’t see myself taking out my checkbook and writing a check to the hospital for $200,000 up front, hoping to get reimbursed later. My check would bounce.

  • sinz54

    Here in Massachusetts where I live, Governor Mitt Romney signed into law a health-care reform package that insures some 95% of Massachusetts residents, relying mostly on private insurers. Everyone is mandated by law to purchase some form of insurance. No one can be turned down by a private insurer for a pre-existing condition. And for those who cannot afford the premiums of a private insurer, there is a last-ditch public program, MassHealth, which comes with strict means testing. Middle-class employed folks would not qualify for it. That ensures that MassHealth will never drive the private insurers out of the market.Admittedly, costs of this program have risen faster than inflation. But that was anticipated in advance. Cost-containment was deliberately postponed until after the system was fully in operation. Had strict cost controls been proposed as part of the program at the outset, health care providers like specialists and hospitals would have fought the program tooth and nail, and perhaps gotten it killed. Only now, that Massachusetts has gotten accustomed to the program, can cost-containment be tackled seriously without derailing the program.The Romney program is superior to the proposal Obama made during the 2008 campaign, in at least two ways: First, the mandate results in universal coverage from the start of the program. Second, the public option is constrained so as to never drive the private options out of business. (Some liberals have said openly that the purpose of making the public option universally available is to entice most Americans to switch to it, thus sneaking us into a single-payer system by the back door.)I am absolutely opposed to a single-payer health care system. Where my health is concerned, I want to ensure that if one option fails, there are others.

  • Mike K

    Sinz54, the principle of co-pay does not apply to major illness. It is intended to be a threshold to primary care. I don’t know if you’ve ever been in the military or worked in a big city hospital ER but I have done both. People come in at 3 AM to get prescriptions refilled.With respect to your question about the French system, that is addressed in my analysis but, briefly, catastrophic Illness like renal failure or diabetes are completely covered in the French system. No co-pay and no wait to be reimbursed. They do restrict the full care to the diagnosis so that, a cancer patient who develops appendicitis has to follow the system for the appendicitis but is fully covered for complications of the cancer.Hospital care is also covered by a variation called “One third to pay” in French. It pays the hospital directly. The co-pay is then dealt with through the “gap” policy.It is a complex system but that is one thing I like about it. I fear the One Big Solution that is so characteristic of the political left. I prefer the messy multiple solutions that life suggests are the preferred route for biological systems.

  • Chrisc23

    My question is probably dumb. Why can’t people find health insurance like car insurance? I shop around for car insurance and house insurance.

  • ottovbvs

    Have to agree with most of the comments here. I’ve been involved in managing some fair sized businesses and the most gloomy number when we did the annual budgets for the upcoming year was the healthcare bill. Basically because it was uncontrollable. What’s been going on for the past 15 years or so has been a huge increase in the share of healthcare costs borne by employees as companies have gradually shifted the burden. This process has gone just about as far as it can and so companies are running out of options as costs continue to spiral. I always used to tell my colleagues the point at which some sort of universal govt system would come into being was when company managements realized they system had to change because they couldn’t shift anymore onto employees. This point has been reached hence the willingness of many employer organizations to jump aboard the train before it leaves the station. Basically, Republicans don’t have a universal plan that works. This explains why McCain could never explain his plan during the election because it was full of holes and literally didn’t make financial sense. Now the latest approach judging by an article in the NYT by Ramesh Ponnuru is to claim Americans don’t really want universal care. This is a recognition they don’t have a program and ignores a mountain of recent polls showing that this after the economy is the major domestic issue and the vast majority of Americans do indeed want a universal system. Well I suppose it’s a change from the usual horror stories about granny dying in the streets of Montreal or Montreux. “Mike K 12:27 PMSinz54, the principle of co-pay does not apply to major illness.”Mike I don’t know where you get this idea from. Most major illnesses involve hospital stays or even out patient surgery and therefore bump up against deductibles which are essentially copays. If you’ve ever had experience of it the moment when the deductible bill arrives is always a nasty experience. I once was in the middle of a billing argument thousands of $ involving an elderly relative who’d stayed on doctor’s instruction for an extra three days in hospital above insurance company’s allowed time. Resolving it was Kafkaesque

  • ottovbvs

    I’ve just read the Ornstein piece. He says it all. Republicans are denying gravity if they try to derail this but they will which is measure of the unreality they have moved into. Like Ornstein I think Obama and the Dems will pass a plan this year with or more likely without Republican help (although there’s always a chance some Republicans may start to imagine those campaign ads and have a last minute conversion).

  • sinz54

    ottovbvs: Ramesh Ponnuru has dredged up the GOP plan from the 2008 McCain campaign–without recognizing any of the numerous flaws that were already identified with that plan.First of all, private insurers have said that they will agree to insure people with pre-existing conditions, ONLY if the pool of the insured is significantly increased. They need to spread the extra cost of the pre-existing conditions over a wider pool. If expanded (let alone universal) coverage is abandoned, the insurance companies will oppose health-care reform–and that could sink it.Second, Ponnuru seems unaware that many current private managed-care plans come with local networks of providers, making portability impossible. For example: Suppose someone in Massachusetts has a medical condition, but already belongs to Harvard-Pilgrim Health Plan, which has a wide network of providers (doctors and specialists) in New England. Then suppose he loses his job and needs to take another job in another state, say Texas. He cannot take his Harvard-Pilgrim coverage with him to Texas, because Texas doctors are not in Harvard-Pilgrim’s network of providers. He’ll be forced to switch providers–and then he may find that no insurer in Texas will have him because of his pre-existing condition. Neither McCain nor Ponnuru even realize that this is a problem.

  • Jeffersonian

    Does rule of law mean anything? Or are just allowed to as we please in the US? NOWHERE in the Constituion does Congress have any authority to be involved in healthcare. Not providing it, not regulating it. if they believe that it merits the involvement of the Federal Government then get an amendment passed. The fact that this type of malfeasance is accepted so easily is disgusting. Reminder, people, the Federal government exists as an agent for the states not individuals, and such encroachment should not be tolerated. Health care is a product just like any other and not something that people are entitled to. People invest time in learning skills and resources in starting businesses to provide this product, and no one, NO ONE has some inherent right to other peoples labor.

  • sinz54

    Jeffersonian: Your pure libertarian argument is a non-starter. Nowhere in the Constitution does it talk about the space program, the National Science Foundation, Social Security, or Medicare either. But we have those things, and those things are not going away.The fact that the Constitution doesn’t specifically discuss certain things doesn’t mean those things can’t be done by the Government. Only rarely, in special circumstances, has the Supreme Court endorsed that idea. Never as a general principle.

  • Jeffersonian

    sinz54 what part of the 10th amendment don’t you understand? If it hasn’t been delegated to the federal government it’s not theirs, no matter which branch says so. It is up to the states throught the amendment process to cede any power.

  • sinz54

    Jeffersonian: In most cases, the Supreme Court has refused to invoke the Tenth Amendment, *except* when the Federal Government directly forced a state government to comply with some federal law. (For example, some national gun control laws have been found to violate the Tenth Amendment.)But AFAIK, the Supreme Court has *never* subscribed to your libertarian notion that the Tenth Amendment restricts the expansion of the Federal Government in things like Social Security or health care. The only people who believe that are fringe groups like the Constitution Party, the Libertarian Party or Ron Paul’s fans.To get what you want, some President would have to pack the Supreme Court with libertarians. Don’t hold your breath.

  • liv&win

    Reasonable Access to Quality Care which Reasonably Affordable. If you don’t start with the goal, how can you evaluate the alternatives. We have 1 & 2 what we don’t have is Affordability. the problem with many of the solutions is that the attempt to fix the access, quality or cost component, but adversely affect the access, quality or cost component, e.g. lower costs tend to ration care, which first affects access, then eventually quality.I think a solution is found in the school district paradigm. If you live in a certain area, your medical care is provided within that area.I also think there we need to distiguish between primary care (medical, dental, vision, mental health and alternative care) from advanced/specialize medicine. One is easily and affordably organized in a salary arrangment as opposed to fee for service.Finally, with 80% of the cost of healthcare going to 20% of the people, and 80% of this cost going to asthma, diabetes, coronary disease, pulmonary disease and obesity, all of which can be managed most effectively through diet, self-care, exercise and stress education, we need to make cronic health disease management manditory.All of this can be accomplished without government global budgeting which only supports goverment power.Finally,

  • liv&win

    sinz54: FYI, there is always an out of pocket maximum built into plans whether it is MediCare or other. Your calendar year cost do not need to exceed some reasonable threshold.Also, the pay then be reimbursed scheme can only work at the primary care level. No one can be expected to write the check you discussed.I estimate that we can have nearly unlimited access to a primary care physician, oral hygenist, mental health practitioner and alternative therapy for about $100/per person/per month. this would pay the salary of the providers, and end fee for service. We could insure the next level of care (specialists and facility based care). If everyone was insured, this could be brought down to around $150/per month/per person. Prescriptions will cost an extra $25/per person per month, if we begin to allow global price negotiation as do every other country in the world.The coverage would be basically 100%, so there are no additional costs other than the premiums.Yes, we can provide comprehensive access to affordable quality care for everyone.

  • Jeffersonian

    sinz54 I know that this logic may be difficult for you,but it may be that those on the supreme court like many may have a desire for the federal government to grow beyond its limits and thus are willing to render opinions that favor their own desires, rather than what the plain language and history show to be the correct construction and application of the Constitution. Who is putting these justices in? Congresses that want justices whose views line up with their own. You seem to attribute an unmerited infallibilty to their decisions shouldn’t they all then be 9-0, or at worst 8-1? Is there some kind of mystical process they go through to ensure purity of heart in their decision making?An example of the fallacy of your logic is how some jusctices have used the laws of other countries in rendering their opinions. How could any other nations laws be relevant to deciding what ours says? Another example is BCRA. A clear violation of “congress shall make NO law..abridging”. Yet this somehow passed muster. On the basis of the Constitution? NO!! To avoid corruption in politics. When you want to discuss what the Constitution actually allows, as opposed to the employment of sophistry to reach a desried conclusion come on back.

  • sinz54

    Jeffersonian: Whether you agree with the Supreme Court’s rulings (and I am troubled by some of them), the fact is that they are the case law of the land. Let’s be practical about this. The Libertarian and Constitution Parties combined get about 2% of the vote in national elections. We’re not going to elect a Libertarian President or Congress, and therefore we’re not going to appoint Libertarian judges to the Supreme Court.As a conservative, I am seeking real, attainable results: Cutting out waste from government spending, lowering taxes, boosting the private sector. And that means putting forward a program that a majority of Americans would vote for. I am NOT indulging in Ayn Randian or Ron Paulian pipe dreams about ending Social Security and Medicare or ending the Federal Reserve or any of that nonsense. If you read “Atlas Shrugged,” you recall that it took the COLLAPSE of America to create the laissez-faire revolution. I don’t want America to collapse. I’m an American first and a conservative second.