Monday, June 15, 2009

The Stage for the Great Health Care Debate, Quagmire in Iran

The Stage is Set...
Of all the policy ambitions laid forward by President Obama for his first year in office, perhaps the most aggressive was the notion of signing universal health care legislation into law.

Let's review first the history:
This is at least a 50 year old debate. Universal coverage was first proposed (as near as I can tell) by President Harry Truman. It was advocated by not only Truman, but John Kennedy, Lyndon Johnson, Richard Nixon, Jimmy Carter and perhaps most aggressively, by Bill Clinton. All of them failed. Sure, Johnson took a step towards universal coverage with "The Great Society" which created the Medicare and Medicaid systems that provide coverage for the elderly, disabled and poor. President George W. Bush expanded Medicare coverage to include prescription drugs. Fully 5% of our GDP is now spent on government-funded health care. But 5% is less than a third of the estimated 16% of our GDP spent on health care in total, a far-cry from single-payer systems in Canada and Great Britain. And 42 million Americans remain without health coverage, mostly those in the lower-middle class, too rich to qualify for Medicaid, too young and able to qualify for Medicare but too poor and too underemployed to receive employer-provided health care.

Bill Clinton went for the gusto in year one. He had a Democratically controlled congress and was coming off a resounding victory in the 1992 elections. It wasn't even a close fight -- no universal health care bill ever made it to the floor of either house of congress for a vote.

The Current State:
42 million uninsured Americans. Estimated costs of $1.5 trillion dollars over the next decade to provide health care coverage to that population. Health care inflation exceeding the general rate of inflation by 2 to 3% per year in a rise that threatens to consume the economy. Four times the spending on health care of the rest of the first world with shorter life expectancies. Massive deficits without a cent spent on health care. A promise of no new taxes on those making under $250,000 per year. Millions already being spent by health care industry groups lobbying against increased government intervention.

So, how, against this history and these circumstances can the betting public (as measured by current Intrade rates), put the odds of congress passing universal health care coverage this year be even money?

President Obama has been very savvy so far. No secret meetings, a la Hillary Clinton in 1993. Bringing health care groups to the table. Leveraging the reconciliation process and the adjoining procedural rules in the Senate to dodge a fillibuster. Laying out broad principles without committing to specific policy options early on. All very smart.

But the heat is rising. Republicans and industry groups sense that there is a real chance that a bill will be passed this year and are pressing hard with ads and media appearences. "Do you want the government that ran the post-Katrina operation to run health care?" they ask in a piece of bitter irony. They point out rationing in single-payer systems. They decry a public option as crowding out existing private insurance.

But this issue is far more complex than any sound bite. Here are a few key issues to watch for:
(1) Cost Is THE Issue
We spend a ton on health care. There are a number of reasons for this. Republicans claim that it is because economic incentives for individuals don't favor good choices about care. My insurance covers going to a Doctor, so how hard am I going to think about the economic implications of going for a minor cold?

There may be some truth to this argument, but it doesn't explain why we spend many multiples more than countries that have single-payer. Ah, but they RATION care, say conservatives. You want a heart transplant in England, you better get in line.

The cold, hard fact is that EVERY health care system rations care. The criteria are just different. In single-payer systems, the rationing is explicit, as the government dictates which procedures will be covered and when. In our system, it is more subtle. It comes in the form of insurance caps for yearly coverage. It comes in the locking out of uninsured people from access to care. And it doesn't work very well -- we still spend a ton.

In a sense, Republicans are right, economic incentives do drive up the cost of care. The incentives are for Doctors, reimbursed per procedure, to rack up as many procedures as possible. The incentives for employers, who can reimburse health care tax free but are taxed on cash compensation, to provide stronger health care benefits and weaker wages. And the incentives for individuals are to take advantage of coverage as much as possible. It's broken on every level.

The other thing that drives our health care costs is perscription drugs. Essentially, we finance pharma R&D for the rest of the world. We pay five times the cost that single-payer states pay for perscription drugs and hundreds of times the cost that third-world countries are charged. Why? R&D is very costly for new drugs, but once the R&D is completed, the marginal cost of actually making the drugs is very low. Single-payer systems negotiate low-cost drugs beause they have ultimate leverage -- you don't like our price, don't sell it in our country. Drug companies go along because they have already spent the R&D and they marginally make money on the price that they sell drugs to Canada, England and France. In the third world, they largely sell at cost, which is a nice humanitarian gesture to African nations ravaged by HIV. In the US, however, they own a monopoly for as long as the patent is good. There is no single entity that can negotiate higher prices, therefore the manufacturers pretty much set the price.

Republicans rightly point out that if this profit incentive goes away, companies will shy away from costly R&D. But should the US really have to bear the world's burden for pharma research?

(2) What Is Universal Coverage?
Does it mean single-payer? Probably not, from what I've heard so far.

Does it mean everybody has access to health care? What exactly does that mean? Will everyone have insurance? Will we be forced to buy it?

(3) The Public Option
Will there be a government-run plan that everyone can buy in to? Will private plans be subjected to rules about what level of coverage they have to provide? Will employers still be the primary payers for health care?

(4) Financing
How exactly are we going to pay for any sort of expanded program?

Some Common Sense Ideas
Regardless of where you are on the ideological spectrum, it would be hard to disagree that the current system is broken. Our government spends more per capita on health care than nations that HAVE single-payer coverage, yet we have 42 million uninsured.

Here's a few common sense ideas:
(1) A Most-Favored Nation Clause for Pharma
A law that state, simply, that if you are going to sell drugs in the US, you cannot charge more than you charge in any other first-world country. This law would force single-payer states to quit riding our coattails and would force the pharma companies to develop an economic model that does not involve gouging the U.S. consumer.

The length of patents also needs to be examined, particularly for life-saving medications.

(2) An End to Multi-Tiered Care Pricing
Currently, if I go to an emergency room without insurance with a broken leg, it may cost me upwards of $20,000. If I get care through insurance, they will pay only a third of that. If I'm insured through Medicare/Medicaid, the government pays a quarter of that. If the hospital can't collect, I pay nothing.

These tiers of pricing do nothing but force people out of the system. A regulation requiring that hospitals charge the same fees for procedures for all patients would go a long way towards stemming that inequity. It wouldn't have to dictate what the price was -- obviously hospitals couldn't take Medicare/Medicaid patients if the prices were higher than Medicare/Medicaid pricing -- but it would ensure fairness to everyone who walks through those doors.

(3) Universal Preventative Care
Check-ups and vaccinations are cheap. And they save tons of money down the road. There is no reason not to nationalize MMR immunizations and blood pressure testing. Everybody should have access to these basics.

(4) Change the Tax Incentives
John McCain was right - the employer tax exemption distorts the market. End the credit and give all Americans a refundable tax credit in the same amount to be used for health care. Allow all individual health care spending to be tax exempt. Require that all coverage be portable (not contingent on employment), so people don't have to tie job decisions to health care decisions and people don't have to worry if they will have a job tomorrow to support health care they need today.

Are these the complete answer? No. We still have to decide the thorny issues of whether to offer a public health care option (I favor it) and how to regulate coverage (pre-existing condition clauses, risk rating processes, etc.) But it's a start.

The Political Reality
The heat is only going to turn up. Blue Dog Democrats are fundamentally not sold and at least some of their votes will be needed to pass a bill. If a bill isn't passed before the August recess, it is probably dead for the year. And the Sonia Sotomayor confirmation hearings are scheduled smack dab in the middle of when this debate will be taking place, in what I think is an awful political miscalculation by Senate Democrats.

And the biggest political reality of all -- if President Obama can't get this done this year, with big majorities in both houses of congress and public approval at his back, he probably never will get it done, the same as Bill Clinton.

50/50 odds? Sounds a little optimistic in light of the facts. President Obama may be a different kind of President (for better or for worse, depending on your political leanings), but he lives in the same old Washington. Of course, Intrade also has better than 2:1 odds that President Obama wins re-election. So, according to the betting public, President Obama doesn't need to get universal health care done in order to win in 2012. Certainly, Bill Clinton didn't, winning the popular vote by 9% in 1996, the widest margin for a Democrat since FDR. President Obama? I'm not so sure. Health care was the centerpiece of his campaign. He needs to get a bill passed. And he needs to figure out how to pay for it.

A Mess in Iran
Opposition protests and charges of vote tampering abound in Iran. I don't doubt that Ahmadinejad and the corrupt religious mullahs who control Iran are capable of fraud and may have stolen the election. But we need to watch our words. Alleging fraud without evidence, and it is pretty scant at this point, is dangerous. We have no scientific polls that show Ahmadinejad trailing and no direct evidence of vote-tampering. All we have is a "sense" based on pre-election rallies that the opposition was rising. We need more if we are going to contend the election was corrupt. And it is probably irrelevant anyway, as even if we had evidence of fraud, the Iranian government isn't about to take a mulligan.

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