The Chances of Reform Are Now – You guessed it – Zero

A couple of weeks ago I did a post, The
Pretend Presidential Debate on Health Care–The Health Care
Press Needs
to Force the Presidential Candidates to Get Real on Health Care
In it I made the point that facing a $500 billion
budget deficit next year, the sunset of the Bush tax cuts in 2010,
fixing the alternative minimum tax problem once again, and the cost of
the Freddie and Fannie bailout, the presidential candidates needed to get real abouthealth care reform. Instead of giving us their rote health care talking points, I said they needed to start telling us how they were really going to deal with health care reform in the face of all of these challenges.Just when you think things can’t get any worse….Two
weeks later you can add the AIG bailout and as much as a $700 billion
bailout of the financial system now being considered by the Congress to
the reasons why the health care plans of both candidates are no longer relevant.

top of that $500 billion deficit in 2009, the Congress is now being
told it must take on a total of almost $1 trillion in government
long-term costs to try to turn the financial system around.

I would suggest that lots of things have changed since each candidate offered their health care reform plan.

Obama’s health plan will cost at least $100 billion a year. That’s now a non-starter.

health plan counts on deregulation of the health insurance industry. Do
I even need to explain to you why that is a political non-starter in
this environment?

I don’t know about you, but watching both Obama and McCain
I feel like they are living in a parallel universe from the one the
rest of us are in. We are living in the midst of the greatest financial
crisis to face this country since the Great Depression–the outcome
unknown and able to tip either way–and these guys are out there on the
hustings as if this is all just another partisan reason to beat up on
the other guy. I’m not seeing a lot of leadership here. Instead of
making meaningless political speeches in the Heartland, why aren’t they
on the Hill this week leading their respective party–and the
country–to a solution?

These guys have the greatest opportunity of any presidential candidate ever to demonstrate to voters why they should be President by taking their seats in the U.S. Senate and showing us their leadership skills.

On health care, they need to get just as real.

are their plans to reform health care that actually make sense and can
be implemented in the face of all of the things this crisis has changed?

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17 replies »

  1. I can direct you to one Company that delivers on the promise. The Company Is part of the Consumer Driven Health Care movement and offers a viable alternative to The Health Care Crisis. We often hear HEALTH CARE Discussed as a Political issue by the Candidates but yet nothing ever gets done despite all the promises. The Company I am going to introduce you to offers affordable benefits for everyone in the Household for 1 low monthly fee. The medical personnell contracted to accept services receive a discounted fee at the time the service is rendered to the Consumer. Physicians like this because it increses cash flow and saves billing and collections costs. The Consumer is happy because he was able to pay the bill off at time of service and receive the Professional services he or she needed. This really makes a lot of sense and no wonder it is rapidly spreading across the Country. The Company is a 16 year old National Company and here is the Link to it. http://www.deliveringonthepromise.com/40439491 For more information or to discuss this in more detail please feel free to contact me at Sbeck50659@aol.com

  2. You fail to take into account the fact that we already are paying through the nose for health care. I’d be happy to transfer my $400/mo premium that still leaves me paying out of pocket for thousands of dollars in healthcare for a flat $400/mo no-copay buy-in to a not-for-profit healthcare system with a choice of doctors. Arguments like this completely forget that we already pay bigtime for healthcare.
    How about an opt-in plan where we can keep our private insurance, or opt into a single payer system for the same premium? I’d be there in a heartbeat.

  3. Andy, where did I state Freddie and Fanny had no role in the financial crisis? Consistantly partisan? You mean my REJECTION that un/de-regulated markets work? If that points to Republicans then that’s ok by me. I’ve consistantly said that lobbyists and money in ALL parties pervert the system, but Republicans have had control of the White House AND Congress until the recent elections. Republicans have always said they could do a better job and had higher ethics and ideals (God was on their side), but they presided over the biggest glut of lobby money and government financial nepotism we’ve ever had. I point to “K” street and Tom Delay as one prime example where the word was, “if you want to play you need to pay”. Democrats, are not immune to this disease which needs to be stopped if we want any good policies. As for partisanship, it’s now, when the majority of the blame is clear, that Republicans want eveyone to be non-partisan to divert lessons from the past.

  4. Peter, Fannie and Freddie always had an implicit guarantee from the federal government. They also had lobbyists paying off congressman of both parties to look the other way as they bought subprime loans and re-sold them to Wall Street. They successfully lobbied Congress in the late ’90’s and early 2000’s to avoid further regulation. Democrats in Congress opposed this regulation by demonizing it as an attack on minority home-ownership and affordable housing. To state that Fannie and Freddie had no role in the financial crisis is blatantly wrong. Your consistently partisan comments are disingenuous, and detract from an otherwise solid discussion.

  5. I think Vince gets it right from a high level. Any more money poured into the existing way of doing things is akin to outfitting a horse drawn buggie with jet engines. The system is architecturally confounded. Real reform = scraping it and redrawing the blueprints. This is the role for government. Not “regulation”. You shouldn’t get a $ unless you deliver a positive reportable outcome. Stop paying for the system to look busy and lie to you. If you architect the system so that it competes on value, then you’ll have little need for “in the weeds” regulation.
    I have been adamant that I didn’t think either candidate would offer a real reform plan since well before the primaries. For one, they don’t make the law. Congress does. And with the American People pre-occupied with a lot of things right now, it’s going to take stellar leadership to get anything real done on that front. But now I’m not so sure.
    When the smoke clears from the liquidity crisis, there’s going to be two things that are clear as day. One is that consumer credit is going to need a bailout. And the other is that the price of health care on the cash flow statements of US businesses is going to be untenable. Margins are under intense pressure as it is, and the industry as a whole cannot fuel growth with price increases any more. Add to that the fact that on a good day CMS is going to be bankrupt in the next 5 or 6 years, and you’ve GOT to act. It cannot be ignored any longer.
    But I wouldn’t expect to hear any details from Obama or McCain until after the election. Elections are not won with details.

  6. And besides, we shouldn’t let them frame this as a necessary over-expense just to keep people employed in the insurance industry.

  7. I disagree, Matt. The only thing standing in the way of true healthcare reform is campaign cash. The only way to overcome that — short of public funding of campaigns — is massive turnover in November and massive pressure on the newcomers.
    Jack Lohman

  8. Don’t prematurely write off the potential of a private sector transformation of healthcare. The nation may soon see an unexpected leader do for healthcare what it has done for a half dozen other industries.

  9. The biggest thing working thing working AGAINST true reform is that in reducing / redistributing healthcare spending will impact (reduce / redistribute) jobs in the healthcare sector at a time of high unemployment.

  10. I agree that both Obama’s and McCain’s plans are nonstarters in this environment. McCain’s proposal, aside from involving deregulation, also requires that people pay tax on the value of their health benefits–which is going to be very difficult to explain to consumers, even if that’s balanced by a tax credit.
    But to jump from there to Vince Kuraitis’ conclusion that our current economic woes will prompt a reform of the delivery system is a stretch. While Vince is right that this is what we really need, major players, including hospitals, doctors, and drug companies, will mightily oppose any attempt to rein in their incomes.
    What’s more likely to happen is that the next Administration will continue to nibble at the edges of reform in politically acceptable ways, like renewing and expanding S-CHIP and finding ways to help states bear their growing Medicaid burden.
    There will also be continuing movement toward electronic health records–albeit at a much slower pace than reformers would like–and some experimentation with new payment methods that will encourage better coordination of care and will discourage open-ended provision of unnecessary services.
    Only when it becomes clear that the only alternative to restructuring care delivery is a systemic collapse will providers drop their opposition to real reform. And only when that happens will we be able to achieve and sustain universal coverage.

  11. “why would greedy bankers make subprime loans to people that were likely to default? Stupidity or philanthropy? If the answer is – because Congress created Freddie/Fannie to guarantee such bad loans – I think you’re right.”
    Tom, Freddie and Fanny are private investment companies who don’t guarantee loans but buy loans. FHA is the government arm that guarantee loans. If this were just FHA then these loans would already be guaranteed – hence no problem.
    This happened because not only Freddie and Fanny were not scutinizing the loans they bought but banks such as Washington Mutual heavily lent to the subprime market on the expectation that home values would never fall and that borrowers could pay the increased interest on their ARM loan. These ARM loans were teaser loans to attract uninformed borrowers. Wall Street also packaged these bad loans and had the packages re-rated to AAA then sold them under false pretenses as secure. But don’t forget that these loans also start with local brokers that made fraudulent loans to get the commissions knowing they could pass the risk on by selling them. Almost free money courtesy of the Fed AND a policy of wanting “everyone” to own a house also supported this system. No one wanted to say, “Not everyone qualifies.” There was fraud and incompetence all the way up the food chain – but it was not because of government, but because there was so little government oversight and regulation.
    But this is what we’ve always had with any de-regulated non-oversighted private market. Whether it be energy or the savings and loans industry – the private market works on greed, not community interest.
    I agree with Robert Laszewski that we will not have the money for healthcare reform or energy reform or global warming reform or education reform ….etc. I wonder if this bailout was actually a Bush plan to prevent many of the reforms the Democrats and Obama want from happening and to strap the federal government into drastic cuts that will further hamper its ability to protect the public even more. Does anyone think the FDA will be stronger to protect us after this bailout, given their weakened position during the Bush years. This bailout ensures Bush’s corporate supporters can toast him with Champagne and thank him for the continuing good times for them, while main street America will still struggle with healthcare, jobs and pay not keeping up with inflation – and now also paying for this bailout. But don’t believe Bush when he says this problem started with the drop in housing prices – it started with his and the Republican mind-set that re-regulation and open markets serve everyone. Also any delusion that this money will be recovered is as believable as when he told us the Iraq War would not cost us a penny because their oil would pay for it.
    I would not be upset if the voters voted against every incumbent this election and really did a house cleaning.

  12. You mean the financial sector didn’t have oversight? SEC, SOX, Federal Reserve, Treasury? If this lot didn’t work, what makes anyone think that hiring more chumps will?

  13. Seems to me that deregulation preceded a boom in the banking business and economy, including the roaring ’90s. Ask yourself – why would greedy bankers make subprime loans to people that were likely to default? Stupidity or philanthropy? If the answer is – because Congress created Freddie/Fannie to guarantee such bad loans – I think you’re right. The banking business seemed to be doing just fine until someone claimed there was an ‘affordable housing crisis’, then the government got involved, now look at the mess.
    So you were saying about healthcare…?

  14. I agree with the other comments. This may be exactly the time that reform will pass. Corporations and the country are more in need than ever before.

  15. What exactly does “government oversight” of healthcare look like? That is such a general statement that I just had to ask.

  16. Not so quick, Mr. Laszewski. To the contrary, our country cannot afford to ignore the fact that every year, millions more Americans are going without needed care, which costs us all in the end. At some point, there will be riots in the streets.
    Perhaps it’s finally time to get serious about bringing down costs and eliminating excess profits. It’s time for greater government oversight of our health care system where anything goes when it comes to profits.
    There will never be a perfect time to begin fixing what’s wrong with American healthcare, and the failure to act is immoral and fiscally irresponsible.

  17. Wrong.
    To the extent you define “reform” as increased funding thrown in to the existing non-system of health care, I could agree with you. For example, as a result of the bailout, a Federal spending program of providing insurance to the uninsured will be a non-starter.
    But that’s a very narrow definition of reform.
    We spend twice as much per capita on health (read “sick”) care as most other developed nations; more $$ thrown into the existing system is not needed — the key is systemic health care DELIVERY reform and saving $$, not spending more. For example, we could do A LOT of reform around health information technology, primary care, care coordination, and physician payment alignment with very little $$.
    In fact, I could see the bailout having the opposite effect to what you describe. One of the early interpretations of the bailout is the recognition of need for greater government intervention/oversight into markets that are subject to greed, abuse, and lack of transparency. Doesn’t that sound like health care?