Wednesday, July 22, 2009

Health Care Reform Lurking

But Not Good Enough?

The Washington Post ran seven articles on health care, one on the front page, in an 18-page first section today. The coverage added up to more than 10 percent of the paper's first section. Hurricane Katrina may have been the last time that coverage of a single issue was so dominant in the Post, though I suppose I should check back issues to see if Michael Jackson's death might have made a similar footprint.

But the Post's focus is right on and the effort demands attention. In "Health Insurance Industry Spins Data in Fight Against Public Plan" writer David Hilzenrath says the industry is "cherry-pick[ing] the facts."

Citing an industry spokesperson who says the vast majority "of Americans are satisfied with their existing health coverage," Hilzenrath makes the editorially sound observation that the same poll shows that respondents also support "the creation of a public [health insurance] plan." Fetching additional data from another source, Hilzenrath observes that the public's apparent affection for their existing health insurance ought to be taken with a grain of salt. He writes:

"Those who described their health as "excellent" -- people who presumably had relatively little experience pursuing medical care or submitting claims -- were almost twice as likely as those in good, fair or poor health to rate their private health insurance as excellent."

In other words, if your health is good, and you're not relying on your insurance to keep you healthy, then you may not know if health care needs reforming (though one day, you will).. The percentage of those expressing approval for their existing insurance plans would also be lower if the 16 percent of Americans who don't have coverage were counted as at least neutral on the matter. Regardless, health insurers are likely the most powerful interest group at work on health care reform these days. And one reform, mandatory coverage, is naturally backed by health insurers.

The Post's front-page story "Like Car Insurance, Health Coverage May Be Mandated," explores the experience of mandated coverage in Massachusetts. In 2007, somewhere near 600,000 state residents, about 16 percent of the population, had no coverage. The state's health care reform required individuals to get coverage or pay a penalty, and required most employers to provide a coverage option or contribute to the overall cost. A year later, only three percent of residents were without coverage. Of that group about half paid the penalty rather than buy coverage, and "71,000 residents were exempted [from penalties] because they did not meet the minimum income levels."

A mandate will certainly benefit health insurers. If four out of every five Americans with no current coverage were to buy even $2,500 worth of health insurance (way below the current average premium), it would mean $80 billion a year in new revenue for the industry.

No rational person who doesn't work for a health insurer wants to create a new revenue stream for companies primarily responsible for the way we ration health care, but a mandate could dramatically reduce a variety of health care costs, including uncompensated emergency and hospital care. The amount of possible savings is unclear, but it's probably on the order of more than $100 billion each year. Several websites provide data that suggest the savings could be much higher. (Here and here are two of those sites.)

Op-ed pieces by Michael Gerson (a former Bush II speechwriter), "Health Care's Sensible Center," and Harold Meyerson (the only mainstream columnist I know of who identifies himself as a socialist), "The Can't-Do Blue Dogs," take apparently opposite positions on how much compromising Democrats ought to be doing on the road to getting health care done. But both writers are clear that the debate is largely between various positions within the Democratic party.

In my view, Gerson makes two big errors in his column. The first is discounting what President Obama might accomplish in the upcoming month. Obama may be too wounded politically by the continuing recession, growing unemployment and "trillions of dollars in stimulus and bailouts" to provide good leadership, Gerson writes. He also quotes William Galston of the Brookings Institution, who told Gerson that Congressional opposition to "boosting taxes on the rich" eliminates that option, but if Obama does enter the political fray with a specific list of reform requirements, taxing households with annual incomes of, say, $350,000 or more, ought to be completely doable. A reform bill promoted by House Speaker Nancy Pelosi envisions raising more than half a trillion dollars from such a tax (see the details here).

On this point, Meyerson is clear. Taxes ought to (and probably would) be paid, if not for "the Blue Dogs' ... deference to wealth." But even though I am anxious to see Obama weigh in on the subject, Steven Pearlstein ("Imperfect Health Reform Still Beats the Status Quo") sees Obama as "boxed in" and "lashed to the mast" of predicted deficits in both health care and federal spending. But so far, Obama's commitment to not raising taxes has been limited to individuals making less than $250,000 per year. To most of us, such an income threshold seems to go way beyond the middle-class, but it still leaves the president free to endorse tax revenues like those advocated by Pelosi.

For me, no analysis of this issue would be complete without checking on what Dean Baker, co-director for the Center on Economic and Policy Research (CEPR), has to say. Accordingly, here's "Taxing Health Insurance Premiums and Subsidizing Health Care Providers," which ran yesterday on truthout. Taxing the health benefits of working people won't do, Dean writes, but changing the drug patent system and relaxing immigration rules limiting entry of qualified medical doctors would cut $200-300 billion in annual health care costs.

The problem with all of this, as Ruth Marcus writes in "The F-22 Model for Medicare," is that current health care arrangements have always worked pretty good for insurers, providers and the shrinking numbers of workers with employer-provided health coverage. This creates both a powerful lobby for the status quo and another group of voters who simply have not supported dramatic reform. To Marcus, this sounds uncomfortably close to the experience with the endlessly funded F-22 fighter jet.
The lineup of powerful members of Congress who fought to maintain production of the F-22 despite the opposition of President Bush, President Obama, Sen. McCain and several secretaries of defense kept the program going. But just yesterday, Congress finally pulled the plug on the F-22.

On the way to a final optimistic note, Marcus advocates another reform not mentioned in the other articles, improvements to MedPAC or the Medicare Payment Advisory Commission, advocated in some form by the Obama administration and some members of Congress. Establishing "a MedPAC on steroids" would create huge Medicare savings and, in the process, reduce health care costs overall. "Because Medicare is the 800-pound gorilla of health care, its reimbursement policies also drive payment arrangements between private insurers and providers," she writes.

And, speaking of the F-22 and other good ways to save tens, maybe hundreds, of billions of dollars in military expenditures, lets give Marcus the last word.

"The politics of health care make the F-22 fight look simple. It won't be easy to expand coverage in a way that controls costs.

But maybe, just maybe, the naysayers are premature."

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