By Robert Laszewski
Let’s pretend that either Senator Obama or Senator McCain will be able to implement their respective health care reform plans if elected. This exercise should be easy. We’ve been doing it for months now.
Or, we can get real and expect them to do the same.
For all the arguments both candidates are making that they are change agents, including over their competing health care reform proposals, this dirty little secret remains –– neither Senator’s health care plan has a chance of being implemented.
Senator McCain is not going to get a likely Democratic Congress to pass a health care reform plan that eliminates the deductibles of employer-based health insurance and pushes millions of consumers into a wide-open and less regulated insurance market.
Maybe the Congress should pass it — but they won’t.
If Obama is elected he will not get even a Democratic Congress to pass his health care plan which will cost at least $100 billion a year. The 2009 deficit is now projected to be in the $500 billion range–and that is before the huge cost in 2009 to extend the Bush tax cuts even Obama favors and the cost of the Freddie and Fannie bailout.
Maybe the Congress should pass Obama’s health care reform plan in the face of these overwhelming fiscal realities — but they won’t.
So this presidential debate over "my health plan versus your health plan" is interesting but it’s actually pretty irrelevant.
The real question that needs to be put to these candidates: Just how will you achieve bipartisan health care reform in the face of the reality of needing to deal with a Democratic Congress (McCain) and a crippling budget challenge (Obama)?
Bipartisanship means reaching out to get enough of the other guys onside. Political leadership means finding the place a deal can be made. So, just how would these candidates get the job done?
Let me suggest that it is more important for voters to hear from these candidates about how they will handle the real world of health care reform rather then the pretend one they seem to be debating.
Let me give you a for-instance.
There is one bipartisan health care reform plan that takes from both sides and the CBO says is cost neutral. It has 16 Senate sponsors–8 Republicans and 8 Democrats.
Senator Ron Wyden (D-OR) and Senator Robert Bennett (R-UT) have crafted a health care reform plan that gives both sides the most important things each are looking for:
- For the Republicans, it gives them a plan that moves away from the third-party employer-based payment system to one of individual responsibility and the promise of a more vibrant market.
- For the Democrats, it provides a plan that assures everyone will have access to coverage and provides the financing to get about everyone covered in the short-term.
But here’s the big one: The Congressional Budget Office and the Joint Committee on Taxation have said the Wyden-Bennett plan could be operational by 2012 and would be budget neutral by 2014! In health care terms, parting the Red Sea would be an easier accomplishment.
I’d ask McCain and Obama just how they would accomplish health care reform–in the real world not in the pretend one they are in now. I’d go further and ask each of them if he would sign the Wyden-Bennett plan if it came to his desk.
If I had the answers to these questions then I would really know something about just how they would be "change" agents and accomplish health care reform!
Categories: Uncategorized
My comment – http://www.youtube.com/watch?v=2J9Qs9pszuE
As always, thanks for the thoughtful analysis, although I’m more skeptical of Wyden as a possible model. I suspect that some of the groups concerned about key elements of his plan have held back on weighing in out of concern that doing so would generally throw cold water on momentum toward broader health reform. Also, one of Wyden’s key selling points — the CBO assessment that his plan is budget neutral — also reflects a series of policies that could easily be portrayed as a massive tax increase on Americans. The plan imposes a new income tax to help pay for reform. While this new tax is offset in whole or in part for many Americans by a new individual deduction (which replaces the employer-based deduction), this new deduction is indexed only to general inflation and is not available at all to more affluent Americans. Merits aside, I think this leaves the plan very vulnerable politically to the charge that it would represent a significant income tax increase, particularly for affluent Americans.
Peter:
My hunch is based on her, “it’s really quite simple, there is no mystery here….” characterization when referring to the position to which she aspires, that she’s got the health care conundrum figured out as well.
That simple “one size fits all” ideological world view, where answers are so transparent, i.e., the “I know the Truth” (with a capital “T”) crowd, is quite unsettling in its mass appeal!
Our current position, both economically and from a global sentiment perspective is a direct consequence of such ill advised “faith based” confidence.
I agree with a previous poster, “wake up America”! The stakes are rather high…
Greg, I wonder what kind of “getting real” on private sector solutions for healthcare Republicans can propose now with yet another bailout, now AIG, to the tune of $85 BILLION in taxpayer funds. Yes, that efficient free market, unregulated system where personal responsibility is a cornerstone to it’s mission statement. I guess when Sara Palin said Fanny and Freddie were just too big and needed to be broken up into smaller companies (don’t know how she would do that with a free market approach?), maybe she could enlighten us about AIG and Lehman and Bear Stearns. Does she think U.S. Healthcare is too big to fail, one family at a time? Bet not cause those individual tradegies don’t get prime time coverage and wall street political contributors don’t have a stake in those failures.
Here’s a crazy idea.
Regulate a minimum price for prescription drugs which reflects what we pay. The variable cost of a pill is what, a penny? We pay the pharmas research overhead while they sell to nationalized countries at bargain basement prices–but still above their variable costs.
True, pharmas can’t afford to sell that cheap to everyone as they’d never recoup their massive research costs unless we all started ingesting their pills like candy. But force them to not bargain any better with another country and it will force the France’s and Canada’s of the world to turn their heads and cough. Remove their collective bargaining power and you should see social health care be revealed for the farce it is–all those stories Michael Moore missed as he padded around Paris.
The result will be all the developed world shares the burden of research. Prescriptions that we pay $80 might drop to $20 and the Parisians will start paying 15 Euros instead of whatever Francs they found in their couch.
America better wake up to the fight.
The McCain campaign
asserts that its plan
“would drive more people
into the individual market,
fomenting competition,
reducing premiums
and discouraging consumers
from buying more coverage than
they need
or can afford.”
“Can Afford”, indeed.
With such a wide disparity of incomes now, isn’t that the crux of the problem? What a family that makes $500K/year can afford is a lot different from the US Median family income, of about $60K.
Moreover, any of the “high deductible/catastrophic-only ” plans suffers from the same inherent disparity, and thus, as incomes get higher, the “incentive” to seek value, which is the rationale of a high deductible, loses its power; conversely, as incomes go to the low end of the scale, even the deductible gets out of reach, forcing lower-income families into the low-deductible/higher-premium option, and inevitably to no insurance at all.
In order for the “high deductible” effect to exert a real force in a consumer’s health care value choices, (which, in turn, is what will keep overall health costs lower, through market pressure), the deductible (and a corresponding premium), need to be means-based.
And in order to prevent insurance companies (and provider-organizations that would combine service and insurance) from “cherry picking” consumers, i.e., only going after those with the “greater means” — the law could require all health insurance companies, (and provider-insurance organizations), to charge only the amount determined by the means of the average US family income.
The role of the government, then, would not be to “run” the health care system (as Republicans warn). Instead, it would simply be the initial collector of deductibles and premiums — based on each family’s means to pay, by income — and the government would then directly pay, (at the point of care for the deductible, and periodically for the premium), the US average amount to the insurance companies.
Insurance companies (and provider organizations) would then continue to do what they do — negotiating packages of services from doctors, hospitals, drug companies, and other providers. These providers would need to “opt in” to the system, and could not start taking “cash only” from wealthier patients unless they opted to stay out of the whole system.
The means-based ranking could cover a range of incomes from $10,000 to $1,000,000 per year. Their means-based payments for deductibles and premiums could use pre-tax income. One could further incentivize savings and value-based consumption, by allowing a large percentage (e.g., 10 to 20 percent) of incomes to be put into a Health Savings Account, that could accrue interest tax-free (like an IRA).
The advantage of this approach is that it allows each entity to focus on what they already do well:
a) The role of the government is limited to collecting funds from wealthier citizens to cover the costs of poorer ones, and paying (reliably) the insurance companies an average amount.
b) The role of insurance companies is limited to finding optimal packages of providers, hospitals, and services that deliver effective health care at good value.
c) The role of health care providers is limited to providing the best health care results, with the greatest safety and value — which will be monitored by the insurance companies.
d) The role of the patient is focussed on trying to stay healthy, and then, if and when health care services are needed, to make value-based choices — but in a framework that is adjusted by means to pay.
This method also makes it possible to enforce portable health care coverage, that cannot be denied because of a pre-existing condition, and that cannot be canceled. Indeed, a health-care consumer ought to be able to change health care insurance companies each year if they wanted to.
Using the power of means-based deductibles (and corresponding premiums) it is possible to exert, with market forces, pressure that can drive innovation, while increasing value, and reducing costs.
Another advantage is that it is really a simple, incremental step from what we have now — just use the US average income to determine what insurance companies can charge, and then have the government be the mediator between consumers (of varying means) and the insurance companies.
Randall Walker, MD
Asst Prof of Medicine
Mayo Clinic College of Medicine
Rochester, MN
There’s no answer to the problem of health care in this country because, in essence, there is no problem: our representative government now represents the interests of corporations and wealthy shareholders. And the wealthiest can afford the best health care and health care coverage that money can buy.
The fact that millions of other people lack coverage and millions more have woefully inadequate coverage – that’s just other people’s problems and so it’s no problem at all to the well-represented.
In this context, the 100 billion dollar figure for Obama’s plan, if correct – or even half that much – makes no sense at all. Corporate and moneyed interests are much better served by putting real money elsewhere.
The point everyone misses is the scam that insurance companies are free to continue to run. They are for profit very much so, they have executive compensation which blows the average MD’s take home pay away, and they are in the business to figure out how not to pay. For those of us who have insurance, the average Joe’s policy, it gets lousier every year. Higher premiums, co-pays for everything and huge new “facility fees” that are tacked on by docs because the insurance companies are re-imbursing less and less. No one seems to care abut this. Forget McCain’s Healthcare program. What I want is his policy and pay what he pays for it. I had a $500.00 co-pay recently (facility fee) for an outpatient colonoscopy! Unbelievable. Does McCain have that? How much did he pay out of pocket for his melanoma treatment?? These are the things people should be talking about. $2500.00 are you kidding me?? That does nothing to help with my medical bills. I’m paying out easily twice that a year for very basic, preventive care (like a colonoscopy). I have an obviously pathetic BCBS insurance plan and it ain’t cheap! Oh yes, my costs are not deductible because they are not a large enough percentage of our household income. Give me a break. Who made that rule? They’ve got us coming and going and Americans just keep putting up with it!
You mean focus on “issues”. Why I thought this election was about “personalities”. At least that was before, Lehman, Merrill, AIG and whoever is on deck next.
The intricate web of toxic financing, CDOs, and those derivatives, which no regulatory entity even concerns itself with (yeah, go free market) have yet to surface. Just how much due diligence could B of A jammed through in 2 days?
Let’s watch for the first B of A hiccup after swallowing Countrywide, let alone drilling into their MBS or CDO portfolios via Merrill.
Yeah, the economy is fundamentally sound! LOL….
So, a health reform agenda, during an economic contraction within a meltdown subtext, is a fantasy.
How can they talk specifics?