California not really uber alles

Late last week Brian Klepper stirred things up around here calling California’s health care bill Business As Usual. Over at Spot-on earlier this week I was a little more simplistic. I call the California approach The Last of the Old Solutions, largely because it keeps intact the employer-based health insurance system and doesnt include an effective individual mandate because that needs a real tax increase. (My original title of "California not really uber alles”was somehow vetoed over there—but here I’m in charge!)

As I say over there

If the goal is universal coverage, the pay-or-play system in which employers have to offer coverage sounds good – as well as familiar – but it doesn’t really get us there. Hawaii passed something similar in the 1970s and several other states have tried some variant and still no one’s really got close to universal coverage.

Please go there and read the rest and come back here to comment if you’re feeling bored at the end of the year!

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  1. RE: California
    Did you know that in the state of California, there is a Web site listing what discounts hospitals will offer uninsured patients. Applications for these programs are also available for download; and policies for about 82 percent of the state’s 405 acute-care hospitals are supposedly posted – to date – with more to come.
    The site was enabled because of a 2006 law, the “Hospital Fair Pricing Program”, which prohibits hospitals from charging low-and moderate-income patients more than their highest rates charged to government insurance programs in which they participate.
    Talk about price transparency – what do you think?
    Dr. Marcinko
    Atlanta, GA

  2. I agree with what Jeff and Matt have written. In a nutshell, the third-rail issue, that which no one will touch, is the basic observation that potential demand for services as we presently provide them is, for all practical purposes infinite; resources, of course, are finite. So somebody will need to list what’s covered, what’s not, and why. (For those interested in a recent and excellent debunking of alternative medicine, see “Snake Oil Science,” by a professor of biostatistics named R. Barker Bausell, Oxford University Press, 2007: I just read it, and it’s outstanding.)

  3. Jeff – I agree about what are you calling a significant recession? Given that is pretty unlikely, I don’t even think a mild recession in the U.S. next year will do much to change federal policies in regards to health care spending next year due to the following factors:
    1. It is a presidential election year in ’08. Neither party will give the over party much ammo to work with. More posturing than substance. In particular, the early primaries this year will potentially expose the Democratic candidate to 7-8 months of attack ads. I just don’t see anyone rocking the boat.
    2. Bush’s legacy. With a Democratic Congress in place, Bush is even more of a lame duck than normal. Even if there was a chance to do something of substance, I see him trying to focus on “win-win” or minor issues. Clinton did the same thing. About the only real thing that Bush will do this year will be to sign some empty vetoes to make the Republicans look tough on spending.
    Maybe he is able to accomplish something significant on earmark spending but I doubt it. Republicans and their stalwarts on K Street still like their 40-45% percent of the earmark spoils. The only thing that really flipped with the Democrats in place is the the Republicans only get 40% instead of 60% of the earmark spoils. Hell, even the most maverick candidate on reducing gov’t spending in the election, Ron Paul, doesn’t necessary seem that vexed by earmarks.
    3. Democratic Congress. Besides being totally anathema to reducing government spending on health care (see the SCHIP program), they have been ineffectual. Say what you want about DeLay and his deplorable ethics/tactics but he delivered for the Republicans in Congress. Pelosi hasn’t been able to do the same in House and Reid is a pretty ineffectual leader in the Senate. This current Democratic leadership doesn’t have the gusto, muscle, or brains to get something significant in ’08. Need a Democrat in the White House in ’09 to even begin contemplating anything of merit on health care reform.

  4. The most likely “left field” event, Matt, is a significant recession. Why is California running a $14 billion budget deficit? A housing driven economy is slowing down, and retarding state revenue growth. When states run deficits, cutting Medicaid is where you turn to balance the budget. If we have a national recession, you can absolutely expect Medicare and Medicaid spending to be reduced, or, more importantly, restructured. What the “Industry” wants will matter, obviously, in what is actually done. But as the Balanced Budget Act of 1997 demonstrated, even this gigantic industry can get rolled when there is a macroeconomic threat.

  5. If were are likely moving (like it or not) to the world of consumer-directed health plans, can we make the infrastructure for them work and provide the cost/quality information that consumers and employers need to make decisions. It also might not be a bad idea to actually design plans that don’t penalize first-dollar drug coverage and other preventative treatments.

  6. I emphasize with the politicians in CA who have legitimately invested a large amount of political capital the past 18 months. Nunez and Schwarzenegger have tried to set aside partisan issues to come up with a viable solution.
    However, given the pending budget shortfall and significant structural budget deficiencies, I am willing to bet the health care reform program in CA is a dead duck on arrival. Even if it passes, it is likely to get so get so mangled that it will be shortly ineffectual in addressing the uninsured in CA.
    I agree with some of the points made in the previous points but the handwriting is on the wall. It was in the form of the report the CBO report on future health care spending in the U.S. One of the points that Orszag hammers home in the report is that politicians haven’t been serious about any real form of cost control. That is true but I can’t imagine a U.S. politician from either major party in the near future getting serious about this. It just doesn’t sell. Plus, Orszag is obviously taking the view of somebody from the government. A $1 saved from the point of the government on health care spending is a $1 removed from the various entities in the health care system.
    I don’t think there is some magic % GDP spent on health care number/threshold that is going to spark serious federal health care reform. Nor do I think health care will be a pressing enough issue that a legitimate presidential candidate can run on a policy solution that advocates curbing health care spending in a substantial way even in 2012. Doesn’t mean that there won’t be attempts at reforming health care in a piecemeal fashion in the interim though.
    I see that the health care industry will be unable and or unwilling to reform itself and that it is going to be outside forces in the form of national spending priorities like defense spending, national infrastructure, or education, that will truly dictate when the feds are serious about health care reform spending. If this scenario plays out, I would predict that you will continue to see a gradual erosion well into next decade with serious reform not in the cards for at least 6-8 years.
    The one thing that may jump start this is if there is some scenario from left-field that alters the U.S. political/economic scene in a significant way (e.g. effect of Sept. 11 on U.S. defense spending). Anyone’s guess here is as good as mine but I highly doubt it will come from the health care industry or even be health-related (e.g., terrorism attack on the U.S. or a pandemic). Say there is a run on the U.S. dollar that causes it take a hard fall and it takes a hit as the world’s leading reserve currency. Health care will obviously be an initial after thought but the days of “livin’ large” (e.g., running significant account deficits) will quickly end. If that is the case, entitlement spending programs such as Medicaid/Medicare will surely be at the forefront of the federal government’s scrutiny.
    So basically, I guess I have a long-winded way of saying that I agree with Matthew Holt about the realistic possibility of universal coverage when the Chinese want their money back.

  7. Until you connect the cost of care across anyone at a rational and visible level (and neither a Congressional or California budget nor health care hidden in the cost of employment is rational), it doesn’t matter what you agree to put in or out.
    Our system of government budgeting is to linked to taxes that anyone can easily follow. Our system of employment-based insurance similarly hides the cost.
    In New Zealand they know what the income tax rate is, and the government there knows that if they spend more on health care they’ll get booted out at the next election, if it means raising taxes. here we could do this on a much more individual level.
    But until we make the costs shared, and rationally visible, we have ZERO shot of getting at Jeff’s hard choices. So we will not have sensible reform.
    My bet is that we only get to universal coverage when the Chinese want their money back.

  8. We are still a long way off from universal healthcare. Jeff, I agree with your idea of a stripped down package. Universal coverage for alternative medicine is a joke and completely uneccesary yet is so often used as an argument agains universal healthcare. Why can’t we start from the basics and get that covered for individuals who cannot currently afford the ridiculous insurance premiums!

  9. Mathew, would you consider posting a link to the State Assembly’s bill so we eastern time zone types can read it for ourselves? Isn’t it interesting that the projected California budget deficit and the cost of the health reform program are both about $14 billion. So to fix both of them would thus requires the state to find a mere $28 billion? That’s the real reason it isn’t going to happen, not provider lobbying or employer intransigence. No state can really do something like this by itself without wrecking its economy. It is what we have a national government for.
    It isn’t really that hard conceptually to construct an affordable benefit. Remember the large majority of the uninsured are young people. A stripped down package which covered primary care MD services, dental care, chronic care type drugs like insulin, and catastrophic hospitalization coverage (w/ some type of negotiated deep discount for the patient’s part of the hospital bill) would do the trick.
    The problem is stopping one’s ears for all the sob stories from the chiropractors, podiatrists, aromatherapists, etc. who want to force you to insure for their services. Your suggestion that the real problem is retaining employer based coverage still dodges the question that somehow, somewhere, a legislative body still has to define what coverage is mandated.
    Why do you think employers are so resistant (a 7.5% payroll tax might be part of the explanation)? It is because thirty years of legislative history suggests our elected representatives, like that easy woman in the musical Oklahoma, “cain’t say no”. Mandated in vitro fertilization, breast reconstruction after cancer surgery, etc. – all worthy goals in a resource unlimited world, but death to an affordable universal benefit.
    Oregon’s John Kitzhaber, an emergency physician by training, seems, so far, to have been the only political leader of either party to have figured out that making these types of hard choices is the real problem in health reform- not “play or pay”, tax deductions or hard subsidies, employer or individual mandate, or all the other comparatively trivial choices. Listen to all the pervarication from the Presidential candidate poseurs on what actually gets covered. It’s enough to turn you into a New Zealander.

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