Category — Health Care Reform

I’m going to make a few predictions about the future of U.S. healthcare, provided that the bill under consideration passes.

First, the bill will prove substantially more expensive than projected. Ezra Klein is naive to take the CBO numbers at face value, and Peter Suderman is right to dig deeper, but I strongly suspect that that’s not the half of it.

Significant upward revisions are on the way, but only after passage. Everyone will profess to be surprised. Everyone will be lying, because large new federal programs usually cost more than expected. There will be fights about whether a very large sum of money — the difference between today’s estimate and the future’s — is really all that large. These fights will be of little consequence.

Second, I predict that Obamacare will trundle along despite all of the above. I hope I’m wrong on this, but I don’t see a serious repeal effort in the near term. Once something’s done in Washington, it’s very hard to undo, even if everyone agrees that it’s a bad policy.

Third, even if the bill is implemented more or less as we see it now, I predict that U.S. health outcomes will not substantially improve relative to other countries. I predict this because U.S. health outcomes are already fairly good. There’s not a lot of room for relative improvement, even if we do spend more money. We’re in the middle of the pack of industrialized nations today, and I expect that we’ll still be in the middle of the pack ten years from now, barring any major localized catastrophes (civil war, plague, nuclear attack, a major dollar crisis, or the like).

A substantial part of the difference in health outcomes between the United States and the world’s very healthiest countries stems not from lack of health insurance, but from the American lifestyle. Americans eat more, drive more, and exercise less than most other wealthy nations. We have more accidents, more heart disease, more diabetes, and more cancer owing to things that aren’t addressed here at all. These are things we will presumably keep right on doing to ourselves.

Giving many more people free or subsidized insurance will certainly improve some people’s particular health outcomes, but it won’t have a large effect on health outcomes across the board. Many of the newly covered people will be poor but young and healthy. They won’t especially need the insurance, and it won’t help their health in the least. Policies like these buy a small amount of health with a large amount of cash. The rest becomes a corporate subsidy.

Now, the corporations may need this subsidy to pay for the new requirement that they cover people with preexisting conditions and the other various restrictions they will face. But this just brings me back to my biggest problem with the bill as it’s finally being voted on: What is “state-subsidized mandatory insurance for anyone with a preexisting condition,” if it’s not a farmed-out corporatist version of socialized medicine? I’ve wondered about this for a long time but never found a satisfying answer.

If I’m right in this hunch, then even single-payer could prove to be a better system than the one we’re on the verge of implementing, which seems to further marry the worst aspects of both the market and socialism, albeit in a spectacularly inefficient way. It seems also to foster more entanglements between big corporations and the government, of exactly the sort that genuine libertarians hate, and that liberals ought to hate as well.

So: Bigger deficits, no significant attempt to repeal, no big improvement in health outcomes, and more corruption in the form of state-corporate collusion. Those are my predictions. Oh, and at some point a new crop of Democrats will get fed up with it all and try to implement single-payer. By then we won’t even be able to pretend to pay for it.

I have learned far more about healthcare reform than I ever thought I would in recent months.  In the end, what leaps out at me is that this issue – unresolved – will become a more and more of a thorn in conservative’s side.  If people think the Tea Party phenomenon is bad, just wait until a real populist movement rises up that is fundamentally opposed to free trade, that wants more rather than less government, that demands protectionist policies and entitlements.  The one thing which I can see spurring on something like this more than any other issue is a combination of poor employment and poor (and expensive) healthcare.  Is it so hard to imagine the Tea Partier who wants government to keep its hands off his Medicare, to be turned into an advocate of protectionist policies?

The current reform bill is not nearly liberal enough to avoid such a movement, nor is it conservative enough to really put into place any real chance at a market solution.  It keeps the lousy system we have in place now, and adds to it a tremendous cost to the middle class.  Furthermore, I see no future political will to actually implement any true market solution for healthcare.  So Republicans should think about ways to make national healthcare more sustainable via market mechanisms (choice, HSA’s, etc.) while still accepting the fact that an overall national/social model will be adopted eventually.  Otherwise healthcare will likely persist as an issue and Republicans will be increasingly on the losing side of that issue.

I think the best model would probably be something like single payer plus health savings accounts.  Make people of whatever income responsible for basic healthcare costs, but protect them from really damaging bills.  Free up businesses and entrepreneurs from the chains of healthcare uncertainty.  Somehow find a way to increase the supply of healthcare; and work toward means by which we can make cheaper, alternative healthcare solutions more available.  Alternatively we could adopt something like Wyden-Bennett.  My reluctance to support this bill, pure ideological concerns aside, is that I worry it will only help persist the status quo, and the status quo is no good.

Whether there is a reasonable alternative is harder to say.  Federalism is quickly going out of style – and the next real national movement may be a unity of tea partiers and union members, social conservatives and progressives – the sort of movement Mark has predicted, but one that is bereft of libertarian and free trade principles.  What would that do to our trade policies?  To our employment rate and productivity?

Suffice to say, for anyone with a libertarian economic outlook, or for anyone with concerns over civil liberties, this should be a concern.  Perhaps fending it off with a reasonable compromise on healthcare reform would actually make a great deal of sense.

Reading this Will Wilkinson piece (which is a follow-up to pieces by Megan McArdle, Tyler Cowen, and Michael Cannon – all of whom you should also read on this subject) has gotten me thinking once again about health insurance reform, and especially about the way we think about entitlements in this country.  More specifically I’ve been thinking about the ways we can begin to move away from entitlements and start thinking about the government as a provider of safety nets instead.

For instance, one time between jobs my family was left without insurance and without any income.  The fact that we had been living paycheck to paycheck did not help matters, making COBRA impossible to afford.  We had a baby on the way and were left without any means to pay the bills.  So we applied for Medicaid, and were accepted – which was a very good thing, since my wife was also pregnant and since the delivery was fraught with complications that I’m sure would have bankrupt us had we not had any insurance.

Soon thereafter I was once again privately insured and we were no longer were covered by Medicaid.  It functioned as a safety-net just when we needed it most.  My wife and I had, prior to having children, gone quite a long time with no insurance at all.  We were “young invincibles” without a real pressing need for insurance, and we consumed very little healthcare. I’m very grateful that there was some safety net for us to fall back on, but I also realize that Medicaid itself is far from perfect or sustainable (which is to say nothing of its big brother, Medicare).

A few thoughts on Medicaid:

• It is a very tedious process to become enrolled.  It is time-consuming and there is a great deal of paperwork.  I imagine this dissuades a number of people who need it the most from signing up.
• Many low income people do not use Medicaid as a safety net, but rather as a primary means of insurance.  They renew it every year, and have little incentive to become insured via employment or via private insurers.
• Many providers do not accept Medicaid and many more are not paid (or not paid enough) if they do accept Medicaid.

While Medicaid as a safety net against catastrophic medical costs makes sense, Medicaid as an entitlement for the poor does not.  I’ve heard of people who take lower paying jobs or who choose to only have one spouse work simply because the higher paying or second job would disqualify them from receiving Medicaid benefits.  This is quite obviously a perverse incentive.  Furthermore, the care available to Medicaid enrollees is subpar, extending the class divide ever deeper and creating a class of citizens who are increasingly dependent on the state. 

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Via Andrew, Jonathan Bernstein thinks the Democrats should pass the bill regardless of the public’s distaste for the process:

Reconciliation is thirty years old, and there’s nothing at all wrong with using it to pass legislation.  What’s more, pass and patch (or pass-then-patch) involves passing health care reform through perfectly normal, regular, procedures — and then fixing the original bill through reconciliation.  Now, granted, Republicans are apt to complain about procedure, and it’s true that Americans don’t like partisan squabbles and don’t like hearing about procedure.  But once the bill is passed, it seems very likely that the national press will tire of procedural complaints about a bill passed weeks, and then months, ago.

Second, it’s a real mistake for Democrats to worry too much about how Republicans will portray things that they do.  Republicans are naturally going to bash Democrats for everything; should Democrats respond by doing nothing?  Surely not.  Democrats should do things that they believe are good for the nation.  Democrats believe that health care reform is good for the nation.  They are, like it or not, going to be attacked for health care reform. Those who get their information only from Republican news sources will believe those attacks — but people who get their information only from those sources are not swing voters.

Regardless of my own feelings about this bill – which are mixed, to say the least – I think Bernstein is correct.  The electorate has a short memory. Tangible results stick in that memory far more than abstract procedures. Six months after the bill is passed, most Americans will still not know what reconciliation is, which deals were struck, and so forth, but a healthy portion of voters will know that healthcare reform succeeded (for now).  More Americans will be glad to hear that an end to pre-existing conditions clauses has been hammered out then will become emotionally revved up over the Democrat’s handling of the process.  It’s possible that the bill will remain unpopular, but it’s hard to see how giving up entirely will look any better for the Democrats.

That being said, I don’t think the Democrats have what it takes to push this thing through reconciliation or patch it up after passing it in the House.  Unlike their opponents, the Democrats have very lackluster party discipline.  The centrists are already calling a halt, and the progressives in the House seem unwilling to pass the Senate bill because it’s too conservative for their taste.  The president hasn’t taken much of a leadership role either, and so the bill remains in legislative purgatory.  My guess is that Keith Hennessey is correct, and the bill is dead. 

Perhaps legislators can come back with more modest proposals in the future, but I imagine it will be far in the future.  While I would love to see market reforms in the health insurance market, I don’t believe that Republicans are very serious even about their own ideas.  This is largely the basis for my own support of the Democrats’ bill.  While there are certainly libertarians and conservatives with alternative proposals for healthcare reform, Republican leadership has historically been against any changes to the status quo.  I don’t think the status quo is sustainable.  If the bill dies, I’m not really sure what we can expect.  If I thought the Republicans would take up the cause of a bill like Wyden-Bennett and join ranks with Democrats to push something through as an alternative, I would be more optimistic.  As it stands, every outcome looks grim.  Healthcare costs in the public and private sector continue to rise unsustainably, and our system is too broken to do anything about it.

 

P.S. Reconciliation is not necessarily a budget-restricted procedure, however due to the Byrd rule that is now the case.  However, anyone who thinks that the budget and healthcare reform are not inextricably linked needs to talk to Paul Ryan about the matter.  Healthcare is the budget, and without addressing it we will never be able to right this fiscal ship.

“If Obama’s efforts to create a viable regulatory framework in which individuals can buy private health insurance (a) pass congress, and (b) turn out to work well and be popular, then you can imagine a version of Ryan’s plan being put into place. But in the absence of that kind of reform, I just don’t see how you can do this, which is presumably why the implementation is delayed all the way to 2021 which helps Ryan avoid needing to think about implementation details.” ~ Matt Yglesias, writing about Rep. Paul Ryan’s alternative budget

I think Yglesias actually makes a pretty strong point here.  While I’m overall fairly sympathetic to Ryan’s budget – he does, after all, balance it (at least according to the CBO report [pdf]), something virtually no other politician is willing to even propose – I think there is a fundamental flaw with implementing a healthcare voucher program without first fixing the broken, dysfunctional health insurance market.  The exchanges created in Obamacare would be one way to do this. 

What Yglesias does not point out, however, is that Ryan’s budget proposal also puts an end to the tax exemption for employee benefits.  Simply coupling this tax reform with the ability to purchase insurance across state lines creates an entirely new health insurance market.  Suddenly people on the individual market are given the same tax preference as people who receive their insurance from an employer.  Health insurance drifts away from employers and becomes personal and portable.  People wouldn’t lose coverage when they left their jobs.  Meanwhile, insurers would lose their long-held local and state monopolies and be forced to compete nationally, driving down costs both through added competitive pressures and by the better bargaining powers that these large, national firms would have, with their much larger, national cost-sharing pools.

Of course, the hard questions in healthcare will center around two inextricably linked concepts – pre-existing conditions clauses, and individual mandates.  Almost all modern democracies have some form of universal coverage, and the only way that it has been achieved with any semblance of a free market has been by doing away with pre-existing conditions clauses and implementing some sort of individual mandate.  If the former is done without the latter, nobody would buy insurance until they were sick – defeating the purpose (and the viability) of insurance to begin with.

Other alternatives exist, of course.  My personal preference is a model along the lines of Singapore’s healthcare system, which mandates health savings accounts and then picks up the tab on any costs above a certain flat percentage of income.  This puts healthcare directly in the hands of the consumer (cutting out insurance companies altogether) and provides them with catastrophic coverage if something should go wrong.  Furthermore, by placing costs and transactions directly in the consumers hands, it keeps costs from skyrocketing.  The mandated savings would be flat, but the catastrophic coverage functions progressively, covering less and less as income rises.

Either way, before any privatization of Medicare and Medicaid can occur, the private insurance market must be transformed.  Paul Ryan has shown true grit in crafting a budget that is actually balanced, but the possibility of backlash to cuts in entitlements is very real if the systemic problems in our healthcare system aren’t taken care of first.  Both Yglesias and Ezra Klein see this budget as a sort of draconian rationing of benefits for seniors and poorer Americans. If the insurance market could actually be fixed, however, then the system of vouchers which Ryan proposes would be adequate and possibly even better alternatives to the status quo.

Well, that’s the headline they gave my post saying about the same thing over at David Frum’s digs in any case.

While I do think that the success or failure of healthcare reform rests squarely on the shoulders of the Democrats in Congress and with the president, I still wish that Republicans would come aboard with some reasonable compromises. At this point, though, the Democrats have several options on the table and while I think there is reasonable room for compromise they could always….

….pass a healthcare reform bill via reconciliation. Yes, the Byrd rule makes this tricky. Serious holes could be shot through the bill. But it can be done. Democrats should seriously consider this approach given the continued strength of their majorities in both the House and the Senate. Whatever is cut out during the process can be added back in later. Rather than worrying so much about public opinion should they pass the bill in the wrong way, Democrats should worry about public opinion if the bill fails altogether. That’s a lot more memorable then some abstract legislative process with as benign sounding a title as “reconciliation.” But…

…if reconciliation is too daunting, Democrats could take a Republican bill and remake it into a bipartisan bill – rather than the other way around. Market and tort reforms could be coupled with subsidies (or vouchers) and some broadly popular reforms like an end to pre-existing condition clauses and some sort of optional national exchange. All the reforms I mention below could be packaged together as one bigger bill. Or…

….the Democrats could do this incrementally, with smaller moves and compromises made one at a time – in three or four separate bills over the course of a year or two or three.

First: expand Medicaid to 200% of poverty while at the same time deregulating the insurance market so that insurers could sell insurance across state lines. Shift the regulatory burden from the states to the federal government to avoid the same problems we’ve seen in the credit card industry. Finally, have the federal government pick up the tab for the Medicaid expansion.

In the next bill, introduce an excise tax on “Cadillac plans” while at the same time tackling tort reform. Toss in some vouchers (subsidies) for low-income families to purchase private health insurance. The Cadillac tax will eventually hit enough people to start a shift away from employee-based health benefits. In the future, the vouchers can be adjusted as more and more people leave the current system to purchase personal, portable insurance.

Third, lower the age of Medicare recipients to 50 while at the same time introducing significant means-testing. Change the fee-for-service model to one which relies on results rather than services rendered. In other words, have a Medicare bill that adds more healthy, younger people to the pool, while reducing benefits and/or raising premiums for wealthier elderly while at the same time changing the biggest and most fundamental flaw with how service providers are paid.

Somewhere in here pass a VAT. Put a bunch of money into community health centers, and nursing programs. Deregulate the medical cartels allowing more barefoot doctors, nurse practitioners, and midwives to provide more of our health services. Let low-cost, easy access, for-profit medical centers set up in shopping malls and other easy access places. Make sure Medicaid is accepted at these new walk-in clinics. Let Wal*Mart run them from its stores, all across the country. Let people start tax-deductible HSA’s regardless of the their health insurance.

And so on and so forth. Plenty can be done – even incrementally – to enact change in the status quo. Things can get better for people without enacting sweeping change that scares voters and kills the process in its tracks.

I respect E.D., but he’s completely off base here:

And yes, even though it may cause healthcare reform to die in its tracks, I still think that the right person won in Massachusetts.  I also think that there are ways the Democrats could scale back reform and get some conservatives on board with a much more modest, more market-friendly reform that still helps a lot of people who need help. [...]

In the end, I’m not too down over healthcare reform bottoming out.  I don’t think it’s over, for one thing.  And maybe something better, something more fiscally sound that still covers most Americans will emerge from all of this – perhaps even something with bipartisan support. Maybe a better, less cynical Republican party will begin to take root as well.  Maybe, just maybe, people will take another look at Wyden/Bennett….

There is almost nothing in recent political history to suggest that the Republican Party is anything but hostile to health care reform.  And if not hostile, then indifferent.  Republicans had nearly four years of uninterrupted dominance with which to tackle health care reform, and neither President Bush nor congressional Republicans proposed anything. What’s more, the bulk of Republican legislators are comically ignorant of health care policy, and those that aren’t are far more concerned with their political futures than they are with reforming the health care system (see: Olympia Snow, Chuck Grassley).

By suggesting that Democrats “scale back” reform, E.D. is effectively blaming Democrats for Republican intransigence, which is completely absurd.  Last year, Democrats offered Republicans the chance to make their mark on health care reform.  Yes, it would happen within a liberal framework, but Democrats were more than willing to compromise and scale down if it meant GOP support.  Republicans were repeatedly offered the opportunity to alter the bill to their liking; if Republicans wanted market-friendly reforms, they could have gotten them.  If Republicans wanted something modest and limited, Democrats probably would have delivered.  But they didn’t.  Despite that, Democrats produced and passed a bill that is moderate and bipartisan in everything but name.  The current bill is dramatically more conservative than Bill Clinton’s attempt to reform health care, and owes far more to Mitt Romney than it does to say, Harry Truman.

The simple fact  is that there isn’t a single shred of evidence to support the idea that congressional Republicans have any interest in passing health care reform, even conservative, incremental health care reform.  They are opposed to health care reform, they have always been opposed to health care reform, and if this bill fails, they will still be opposed to health care reform.  If this bill fails, there won’t be another and — if previous history is any indication — it will be fifteen years before another president attempts to tackle health care reform, and in the meantime, the system will move closer to complete failure.

I don’t think I can be emphatic enough about this: the idea that there are Republican votes for a conservative health care bill (it’s already pretty moderate) is a complete fiction.  The truth is that Republicans have made a conscious choice to categorically oppose each and every one of President Obama’s priorities, under the theory that obstruction is the surest way back to political success. Judging from their success so far, I think it’s fair to say that isn’t going to change anytime soon.  To pretend otherwise, as E.D. does, is to be willfully ignorant of political reality.

Ought health care legislation be stopped dead in its tracks after the Brown win? That is a clear promise he made in the campaign (though procedurally he can’t necessarily stop it himself). But many Democrats are saying that the result shouldn’t be ignored and that HCR should be halted. You supported Brown. You supported this (not just any) health care reform. Where do you stand? ~ Michael Drew, in the comments

I went back and forth a bit on the hypothetical – if I were a Massachusetts voter would I vote for Brown (and thus against HCR) or for Coakley (and thus against my better judgment).  I honestly can’t say what I would have done, because I like Scott Brown but I also want reform of our terrible no good healthcare system.  I’ve had some pushback at my other blog (where I have been writing a great deal about Brown) from Daniel Larison and Andrew Sullivan over whether my enthusiasm for Brown was ill-placed.

I may be wrong about Brown – he may not be the reformer many of us dissidents would like, but he’s such a change in tone and style it’s been a relief seeing him actually succeed, defying not only all the odds, but also the current Republican strategy.  Whether he is a mindless Bush Republican as Sullivan has labeled him, or whether he is actually going to change things for the better in the GOP is hard to say – but the stylistic shift he represents is substantial and may be in and of itself a significant step forward for conservatives.   [Read more →]

David Brooks has several good reasons why people should support the healthcare bill – and in true David Brooks fashion, he also offers some reasons why the bill is not good.  Chief among these:

The first reason to oppose this bill is that it does not fundamentally reform health care. The current system is rotten to the bone with opaque pricing and insane incentives. Consumers are insulated from the costs of their decisions and providers are punished for efficiency. Burkean gradualism is fine if you’ve got a cold. But if you’ve got cancer, you want surgery, not nasal spray.

Well let’s flip this on its head, because I’m one of those healthcare bloggers who would have really liked to “fundamentally reform health care.”  You see, watching it all go down in Congress – and especially in the Senate – I realized that America was never going to fundamentally change the status quo, at least not in one fell swoop.  We weren’t going to implement the sort of free market the Cato Institute was pushing for, anymore than we were going to expand Medicare to cover every American.  We weren’t going to adopt a Singaporean or a Dutch system or even the French system that Matt Welch recently waxed poetic about.

No, we were going to pass something vastly compromised, far from perfect, but still pretty major.  It’s big enough and bold enough that conservatives are decrying it as socialism, and conservative enough that members of the further-left are calling for its demise.  But here are the things it does that I think are fundamental and important, and really overlooked by many proponents and opponents of the bill. [Read more →]

The Senate bill isn’t perfect.  It builds upon many things in our system that we’d do better simply doing away with.  It isn’t as fiscally sound as many would like, and I’m not at all sure that many of the more fiscally responsible measures in it will ever end up being enacted.  Such is the nature of our Congress.  When it comes time to make the hard choices they’re often kicked down the road.  Unlike Wyden-Bennett, it doesn’t cover 99% of Americans while paying for itself.  It neither creates the large cost-sharing pools I’d like to see, or spurs enough competition to make up for the lack of these larger pools (or pool).  And while single-payer would probably be more efficient (especially if you think of health insurance as an operating system, which in many ways it is) we’ll likely never get either to single-payer or to a real free market solution anytime soon.  We will be plagued with imperfection and compromise because that’s the nature of the beast, and the beast, dear reader, is here to stay. [Read more →]

Mark Kleiman smacks Jane Hamsher over the head and then does a little dance.  You should read it.