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The "Other" Health Care Issue

President Obama took to the airwaves last night to argue for comprehensive health-care reform in the face of increasing obstruction from Republicans and skepticism from "moderate" Democrats. There has been tremendous public debate over every dimension of health-care reform. Currently the key issues seem to be about cost - how much the bill itself will cost over the next 10 years, and whether it will succeed in reducing health-care costs in the long term.

Long-term care costs are important. As the refrain goes, if we fail to do anything, Medicare (and to a lesser extent Medicaid) will consume all of the federal budget at some point in the next few decades. And the administration has good ideas on this score, such as the Independent Medicare Advisory Council, which would have the power to modify reimbursement rates to create the incentives that lead to better patient outcomes at reduced costs.

But there are really two separate issues at stake in the health-care debate, and controlling costs is only one of them.

The other "health-care issue" is that close to 50 million people have no health insurance at all, and the rest of us have a lot less than we think. I don't just mean the fact that your health insurance policy may not actually pay for the care you need, as described by Karen Tumulty. I mean the fact that you have your body until you die, and you only have your insurance until you lose your job, or the next time you have to get medically underwritten.

It's easy to call this a moral problem, but it's also an economic problem. The current system distorts the labor market by restricting mobility and penalizes companies that do want to provide decent health care for their workers. It also pushes sick people into the public system (Medicaid), sapping government resources and pushing up taxes in the long term.

If we could simply have a health-care bill that creates a health insurance option open to anyone and subsidizes the cost for poor people - perhaps by taxing rich people - that would look like a major accomplishment to me. (Health insurance for poor people has to be subsidized one way or another, or else they will simply die; unlike a car or a house, you can't save money on insurance by trading in for a cheaper, healthier body.) Universal coverage used to be the goal of health-care reform. Now that we are deep into the legislative trenches, it has been replaced by fiscal concepts such as budget neutrality and reducing long-term cost inflation. But it seems to me the value of universal coverage was forgotten somewhere, and it is certainly something worth paying for.

Instead we have the following political situation. Moderate Democrats and Republicans can posture on the grounds of costs and incentives, without having to come out against universal coverage. President Obama has insisted on a budget-neutral bill, playing into the hands of the Blue Dog Democrats. Republicans are united in hoping to block any bill at all to weaken the Obama presidency.

I'm not paid to write about politics (actually, I'm not paid at all), but I think Nancy Pelosi might have this one right. She says she doesn't need a single Republican vote. Clearly the Republicans don't want anything to pass. But if there is a bill that provides universal coverage, and other benefits and risks that won't be clear until after the 2010 election, would you rather have voted for it or against it? I think the answer to that is pretty clear, which is why the Democrats should be able to pass this with zero Republican support. Of course, that assumes they can remember why they thought health-care reform was so important in the first place.

By James Kwak  |  July 23, 2009; 11:21 AM ET
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You can subsidize the cost of insurance for poor people without creating another terrible public option. Medicare and Medicaid lose hundreds of billions of dollars every year to fraud and waste. Why would you want to expand that model? Is that really the best way to help poor people acquire medical insurance?

Why doesn't the reform effort do anything substantive to separate health insurance from employment? They could do this by extending the tax preference to individually purchased plans thus creating a plausible choice for employees in the marketplace.

Why doesn't the roform address State regulations that mandate one size fit all policies and limit the number of insurers that can even compete for business within any given State. If people weren't forced to buy policies that covered everything under the moon then they would have a better chance of being able to afford a policy.

And it's not like health insurers are making massive profits anyway. They average about a 3% profit margin. That's not unreasonable. This reform effort seems to be focused on killing the middle man without actually addressing the cost of care problem.

Posted by: fallsmeadjc | July 23, 2009 12:01 PM | Report abuse

President Obama, not congress, should negotiate Medicare fees with doctors. When fee reviews for the various specialties come due why not have the negotiations take place at the White House in the Oval Office?

Posted by: booke | July 23, 2009 9:13 PM | Report abuse

I am a Canadian and I would like to share some facts about our own economy and our experience with universal health care. We have:

- 100% coverage at 10% of GDP
- the World Economic Forum has ranked Canada as having the best banking system in the world
- not one Canadian bank has needed a government bailout
- we are the only G7 country to pay down its debt
- we posted 11 consecutive budget surpluses
- this year we posted our first budget deficit (after 11 years of budget surpluses)
- the forecast is a $50 billion deficit (population 33 million people)

While a majority of Americans consider their health care system broken. Moreover the crisis in the financial system is estimated to cost US taxpayers $12.5 trillion over the next decade.

In the province where I live (British Columbia) a family of three or more pays $108 a month in medical premiums. This covers every major and minor illness, injury or need. For example: birth, premature birth, pediatric care, primary care, specialists, hospital care, vaccinations, cancer, stroke, dialysis, diabetes, organ transplant, HIV/Aids, broken limbs, spinal chord injury, catastrophic injuries, palliative care. You name it.

In addition, many corporations (public and private) will top this up with benefits including:

- paying the insurance premium
- providing dental, vision and prescription benefits extended to dependents
- life and injury insurance
- paid sick days, extended maternity leave, bereavement days, extended sick leave

In Metro Vancouver (where I live) Microsoft, Electronic Arts and Disney Pixar have located large operations. While rural communities in my province have suffered from the downturn in the forest sector.

Universal health care supports Canadian business operations and makes them more profitable and competitive. Thus, one of the incentives to locate in Canada. For those Canadians who have lost their jobs during this recession they and their children have the social safety net of universal health care.

I agree with experts, like Dr. Michael Rachlis, who contend the Canadian health care system (after 50 years) can be improved by restructuring, and without the need for "large infusions" of private or public capital.

Rachlis' option being community-based health care, with family doctors and specialists, working as a team out of one clinic. I believe this approach received "high marks" in Dr. Atul Gawande's now-famous article in the New Yorker.

Posted by: tippygolden | July 24, 2009 10:40 AM | Report abuse

What works? A single payer and outcomes based practice. Preventive medicine rather than emergency room care when health goes bad.

Insurance is a simple affair - collect statistics, collect from many, most of whom do not make a claim, and distribute to the few who do.

This doesn't require many competing companies each with its own bureaucracy, policies and paperwork. Most of all it does not require a profit to be taken off the top.

Since the bigger the pool of insured the better the ratio of contributions to pay-outs, it seems obvious to me that a government plan is the way to go, especially since we already have a bureaucracy of government statistics gatherers. But if private insurance companies continue their cherry picking, a government plan will be left with the rest. If everyone is covered by one plan we are all set.

That said, Americans take very poor care of themselves, witness the high percentage overweight and the fact that anybody still smokes. Need we mention risky behavior like riding motorcycles without helmets? Having everyone covered is fine, but there surely must be a penalty for proven risks that people take voluntarily. With such penalties healthy personal habits are encouraged - and that would be the biggest money saver of all.

What worries me is that a cobbled together plan will come out that will above all make sure that nobody's ox is gored who presently have a well fed ox. That kind of plan will solve little because those taken care of will be the insurance companies, big pharma and providers, not the insured.

Posted by: Clif | July 26, 2009 6:07 PM | Report abuse

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