Open Wide: Here comes the change you thought would never happen

The morning after the election, I posted a speculative blog in Health Affairs on three possible scenarios for President-elect Obama’s implementing health reform: folding it into a bold, ambitious emergency legislative package (Complete the New Deal), carving funding out of the current $2.5 trillion national health spend (Braveheart), and postponing implementation until the economy recovers but taking steps now to prepare for it (Wait/Lay the Groundwork).

At the time, the Wait/Lay the Groundwork option seemed 70 percent likely. But with economic conditions worsening, I’m now convinced Obama will probably opt instead for the Complete the New Deal option, and try to implement health reform in the first 120 days of his Presidency, before the health care industry “dragon” can even stir from its cave.

Let’s call Obama’s program The Real Deal. We can already see its contours: an economic stimulus program including highway construction and other state-directed public works, a green energy spending initiative, emergency housing assistance including a foreclosure prevention measure, an auto industry bailout, labor law reform and income supports through tax credits for low income people.

The State Children’s Health Insurance Plan tie-over expires at the end of March 2009. Rather than merely extending SCHIP, I believe the new President will opt to include in the Real Deal legislative package his entire health reform program: a “play or pay” employer mandate, a federal health insurance exchange modeled on Massachusetts’ Connector, a new federal Medicare-like plan for the under 65 population, SCHIP re-authorization and expansion, a Comparative Effectiveness Institute, and Medicare Part B payment reforms.

Most of the President’s health reform ideas have been around for at least a decade, and have the advantage of having been tried once (in Massachusetts). There is no focused opposition to the President’s plan, other than from a Republican party now in full rout and the crews at the Cato Institute and the Wall Street Journal. Obama is under no obligation whatever to govern from the center. He ran to the left of most of his Democratic primary care opponents, and was elected on an overtly redistributionist, New Deal-esque campaign platform.

The fact that the new President takes office in the midst of an authentic national economic emergency gives him an opportunity to submerge the expected loud chorus of industry objections to the specifics of any health reform plan in a much larger societal cry for decisive government action to end the economic crisis.

The President-Elect has been preparing the public for a Big Bang legislative package by reminding people that this is the most serious economic crisis in our lifetimes. He has been materially aided by an epic stock market crash and continuing confusion from the outgoing administration about how to rescue the economy.

Obama’s new Chief of Staff designate, Rahm Emanuel, told a CEO Forum in Washington last week that it would be a shame to let a crisis go to waste, and that the administration intends to “go long” in January. Emanuel is, of course, a veteran of the Clinton White House, and watched helplessly in its Political Affairs office while Hillary, Ira Magaziner and the legendary Health Care Task Force “reinvented the marshmallow” (to use Pete Stark’s priceless phrase) and talked health reform to death in 1994-95. That won’t be permitted to happen again.

As the Wall Street Journal approvingly noted, Emanuel was the architect of the compromise with Newt Gingrich in 1997 that created the Balanced Budget Act. The health care industry should recall that BBA brought the most serious cut in Medicare spending we’ve seen since the program was enacted, courtesy of a Democratic President. Emanuel understands very well the logic of “Do It Now/Fix it Later.”

The new President is also under no obligation to be bipartisan. Although he will make the obligatory gestures; he is likely to be only one or two AEGIS Destroyers away (The USS Susan Collins or USS Olympia Snow, to be built at Maine’s Bath Iron Works) from the 60 votes he needs to enact his program without filibuster. Most ingredients of his plan were included in Senate Finance Chair Max Baucus’ health reform framework, signaling that the Senate Finance Committee is likely to support his proposals. And the powerful desire to enact something Ted Kennedy could see signed into law only adds to the urgency of the moment.

Divisions between the Clinton White House and Congressional Democratic leadership paralyzed the first two years of the Clinton Presidency. Under Emanuel’s guidance, Obama has moved skillfully and aggressively to co-opt or neutralize Congressional opposition within his own party with clever appointments and consultation. The result is a degree of party unity and excitement unseen by Democrats since Lyndon Johnson’s time.

There are legitimate macro-economic objections to the President’s health reform plan. The engine of the President’s health reform proposal is likely going to be a 6-8% payroll tax, which is in effect what “play or pay” employer mandate represents for businesses that presently do not cover their workers. By locking in a rich benefit package modeled on that offered federal workers, Obama could doom efforts to make the benefit itself more affordable, a serious problem for which the bill is now coming due in Massachusetts.

In addition, he promised other employer mandates: a $2 an hour increase in the minimum wage indexed to inflation, a week of paid sick leave, paid family leave, comparable worth pay standards for women, a 10% increase in the tax rate for businesses filing as Chapter S and a much easier path to unionization. To dramatically raise the cost of employment in the trough of a serious recession, and likely 10% unemployment, is a huge economic and political risk.

Obama can blame the outgoing Bush regime for the deepening recession for about nine months. Enacting the full spate of employment promises could defeat private-sector job creation not only next year but for many years. If the economy fails to rise from the trough by 2010, he could lose a lot of his new Congressional majority and will be blamed for the country’s continuing economic struggles.

There is also the fiscal risk. A trillion dollar FY2009 federal budget deficit looks like an opening bid, since it does not factor in a new stimulus plan, further financial system rescue costs or an economy that could continue to worsen through 2009.

The federal government will already issue $1.5 trillion in new debt in fiscal 2009, a 25% increase in total federal debt in a single year. The prospect of a federal deficit exceeding 7% of GDP looms larger with each passing week.

Obama’s health reform plan requires new federal revenues, principally to fund subsidies to small employers and the vouchers for individuals who are not covered by the employer mandate. Obama proposed to cover these with the repeal of the Bush tax cuts, something he has now apparently resolved to put off until recovery happens, and a “peace dividend” from quickly ending the Iraq War, which also isn’t going to happen in time to help health reform. If the 52 Blue Dog Democrats in the House insist on “pay as you go” financial rules, and Obama cannot find more realistic revenues to fund his plan, health reform could stall in the House.

Advocates of doing health reform now will point to the rapidly declining cost of federal borrowing, as frightened investors have piled into Treasury securities, pushing interest rates on federal securities down to record lows. They will also point to the strengthening dollar as evidence that global investors have thus far not been scared off by our deteriorating fiscal position.

However, finding new revenues to fund health reform could be challenging if economic conditions do not improve. Perhaps lowering the mortgage interest deduction to $750 thousand principal and/or the capping the employee tax exemption for health insurance for high-income individuals (e.g., people making more than a General Motors fork lift operator) could substitute for a general tax increase.   

A more cautious individual would choose the Wait/Lay the Groundwork Scenario. Were I President, that’s probably what I would do. And finding an alternative to the employer-based approach such as Zeke Emanuel’s idea of an individual voucher funded by a Value Added Tax would make a great deal more sense than the proposal Obama campaigned on. Explaining how Zeke’s plan works to voters and the industry, however, would take both time and skill. It might produce a better solution, but one that may not get implemented.

However, cautious people don’t run for President in the first place. The Clinton health reform debacle proved conclusively that, given time, the health care “dragon” will eventually awaken, and gum Obama’s proposal, or that of anyone else, to death. Time is the enemy of health reform. The Presidential stack of chips will certainly shrink as time passes; it will never be greater than it is at Inauguration in the midst of a scary economic crisis. 

Though I could be embarrassingly wrong and soon, I think the new Administration is going to try to get health reform done very quickly, and fix it later: The Real Deal Right Now. And rather than fighting health reform, the health care industry might better focus its energy on forestalling or watering down the Employee Free Choice Act, that would have a ruinous impact on health costs and on the re-engineering of healthcare.   It is going to be a very interesting next six months!

P.S. Other than voting for Obama twice (spring and fall), I had no ties to the Obama campaign and have none to the transition.

Jeff Goldsmith is president of Health Futures Inc. He
is also the author of a book released this year titled "The Long Baby
Boom: An Optimistic Vision for a Graying Generation." Health Futures specializes in corporate strategic planning and
forecasting future health care trends.

22 replies »

  1. Your article is timely and very appropriate. Now, more than ever, is the perfect time to forge ahead with efforts to reform the healthcare industry. While we continue to invest in cutting-edge medical technologies and drug treatments, we must also lend greater attention to effective demand management strategies and increasing access and affordability.
    Comprehensive reform should include greater utilization of primary care and community health centers, particularly in rural and other underserved areas. We know that community health centers save billions of dollars in healthcare expenses each year, and they employ patient-centered medical home models that include health promotion education and patient care coordination. By expanding this safety net of care, we can significantly reduce gratuitous hospital visits that are more aptly suited for the ambulatory care and primary care settings.
    We must also increase healthcare affordability for small business owners who employ the vast majority all Americans. I would give consideration to association health plans or other mechanisms that allow businesses to spread the risk among a larger group. The automation of medical data, including EMR and other IT initiatives, should also be implemented. These strategies achieve significant administrative cost savings.
    I am hopeful the incoming administration will consider these and other options as our nation begins to tackle health reform. Having spent more than a decade in the healthcare industry, I see first hand the need to deal with these challenges immediately, in spite of a faltering economy. We can greatly reduce costs by focusing on common sense prevention, access, and affordability strategies, while continuing to invest in responsible medical and drug technologies. In the long term, this will greatly improve quality of life for all Americans.

  2. The only reason Communism failed is that it was attempted by ignorant, backwards people. American ingenuity can successfully implement Communism where the Soviets and Chinese have failed.
    This has been largely accomplished in our public schools. Generations of Americans now believe that Equality of Opportunity means Equality of Outcome.
    Our brightest high school graduates cannot function as entry level employees, and lag far behind their peers in the developed world. But it is too soon to celebrate. We cannot declare success until the best and brightest perform at the level of the dullest and slowest.
    I agree with Mr. Goldsmith that we will likely (unless we are standing in soup lines) see an attempt to bring Equality of Outcome to medicine.
    This line of thought assumes we can be brought to an equitable level of health.
    Equality of Outcome can only truly be achieved in death. Perhaps this ultimate negation of freedom is the natural progression of government. It has certainly been done before.

  3. A better discussion would be to address the issues of the macro-economy as it is impacted by healthcare and ecology? I am not a financial wizard nor do I have a crystal ball, or for that matter neither does Greenspan as he has readily pointed out many times. I also recall the words of an old mentor of mine and they were, “with age comes experience, unfortunately, that experience for many is the continued repetition of the first year’s errors”.
    I, as a result, do not propose to offer a panacea that addresses the issues of ecology, finance and healthcare but would limit myself to address the area in which I am experienced and offer an approach that takes into account the errors, failures, and successes of the past years. Before making that suggestion I would comment that addressing the issue of making a profit I would leave to those companies that seek to provide insurance and they know how to accomplish that. But to that statement I would add, at what level of profit- sufficient to maintain an ongoing company or sufficient to make that particular enterprise the darling of Wall Street?
    Current financing of healthcare in the United States and the resulting costs is a good example of well intentioned plans gone astray. In large part it is based on an approach that was put in plave almost 70 years ago. While that approach may have made sense then, it has now become so abused and has created a situation where in many, if not most, of the insured do not have any concept of what they are paying. The situation is so astray that there is no consistency from one insurer to another in terms of what is or is not covered. Yes, there are some laws and regulations that address who must be covered, where services must be provided but nothing that defines a basic health plan that must be provided. Instead it is left to 50 different (at least) agencies in the various states to adjudicate what that might be and what it might cost the insured of that state.
    Step one, begin by defining basic health care coverage as being what is currently provided to the members of Congress and the Senate. I have never seen that package and I am certain there is coverage that goes beyond basic but it would be a starting point that can be modified appropriately.
    Step two, mandate this basic healthcare coverage package as “Universal” for all residents of the United States from birth to death.
    Step three, mandate a flat tax on before tax gross earnings to pay for this coverage that is applied to all, living and legal. This flat tax percentage would be the same for all irrespective of earnings. Regain all the taxes currently applied to various items whose intent was to cover public health issues and forward those dollars to the central agency gaining the health tax dollars.
    Step four, mandate that any and all insurers seeking to sell health insurance in a state or region (area larger than a single state) must offer that coverage to all residents of the state (region) at the same premium cost per individual.
    Step five, as implied in Step four, remove the administration and management of this package from the hands of the state and federal government. Neither has over years demonstrated either an ability to implement and manage or the effective control of costs. Place the responsibility in the hands of the insurer but with a mandated accounting that at least 85% of all premium dollars must be spent directly on health care coverage of the insured.
    The above eliminates the need for Medicare as it currently exists, Medicaid as it currently exists, other federal and state plans offering coverage to special segments of society, the uninsured (for the most part). It also opens the opportunity to create a system that is accountable at all levels. Believe me that when the various industries such as oil, pharmaceutical, automotive, etc. are paying these pre tax dollars, they will demand and gain accountability on costs and quality heretofore never seen or demanded.
    I realize that this neither addresses ecology, risk calculation or macro-economics but it goes to the heart of the current issues and addresses an approach that will provide healthcare coverage to all with a significant amount of wasted dollars being removed. It might even lead to a lower annual premium on an individual basis. I also realize that it requires a great deal more to fully implement but it offers the basic idea of universal coverage of a defined healthcare plan for all residents without encompassing a single payer system. That is one hell of a starting point.

  4. A good discussion here would be better if it took macro economic and ecological pressures into account that this is not a normal recession and there will not be a normal recovery. Things to consider:
    1. Oil rose to $147 and then the poor economy further worsened; 2. last year Greenspan said the economy was worsening because oil production was peaking sooner and at a lower rate than he’d expected; 3. our nation is trillions on debt and now dependent on other nations’ $; 4. the financial and economic crisis is not being solved, but worsening because we are not addressing the underlying ecological constraints forcing the economy into contraction. Finally, how do you insure people -calculate risks and make a profit- during such an economic maelstrom?

  5. New Deal, Real Deal, Reform, are just words so I say Big Deal and BS.
    Reform is the continually application of bandaids, patches and fixes that has led to the issues currently faced. Healthcare costs are out of control. That is a factual staement but many causes go into making that statement correct.
    Begin with who pays for health care and how it is paid. For the majority of insured, it is paid for in large part by their employer as a result of almost 70 year Congressional legislation to place a bandaid on frozen wages during a war effort. Do not reform this, get rid of it and make healthcare the responsibility of every individual. I mean evry individual (both real and legal). Apply a flat tax and that is the end of the individual’s contribution. No co-pay, no co-insurance but complete dollar coverage for health care that is specifically defined (no cosmetic surgery, no fat spa treatment, etc.).
    The government has already demonstrated its inability to manage such programs (Medicare, Medicaid, and Mass.) are great examples of their failures. Universal health yes but through an open market of entrepreneurial healthcare insurers. Force the accounted expenditure of 85% of all premiums on direct healthcare.
    The above addresses those who can afford health insurance but either choose not to buy or opt out greatly reducing the uninsured significantly.
    Too many corporations (legal individuals) use the “corporate shield” to avoid taxes so I say tax their gross incomes and not their net incomes. This would really shake the Exxons and and pharmaceutical industries. It will also create a fund large enough to provide preiums for all currently uninsured and under-insureds in this nation.
    Put an end to all the political crap and address the problem. Bauccus, Emmanuel, Gingrich and the Clintons do not and did not. Magaziner was an afterthought and not a cause but just a scapegoat.
    Wake up, healthcare is a privilege for which you have the right to pay its expense. You, the individual pay for it in the form of wages lost as a health care benefit for which the employer gets a tax benefit but you do not, its a cost factor to you in the form of a monthly contribution to gain a plan along with copays and coinsurance, and it is an added tax (today) to pay for Medicaid and the unisured (today). You, the citizens of the US are paying the reported 2 trillion (somewhere I saw 2.5 trillion) dollars and that is a fact and it is out of control and there are wasted dollars that only serve market investors and not healthcare.
    Make it a real system with real accountabilty not a new “Deal” political piece of garbage. Then I do not care what pneumonic or name is applied to a program initiated by Obama or whomever.

  6. My short series about Best Care Anywhere: why VA healthcare is better than yours starts here. The whole thing takes 5-10 minutes to read.
    Best is a short and very readable book, packed with good information.
    VA healthcare is not a one-snapshot situation. Recent publicity makes it sound horrid but don’t be shallow: the VA ranks higher than any non-government system at every measure of quality and safety. Check it out.
    N.B.: the author, Philip Longman, is a pro-markets guy, suspicious of government. Fortune hired him to write a piece finding the “Jack Welch of healthcare,” the private enterprise wizard who made healthcare work, as private enterprise surely must. What he found instead in his research was that the VA (yikes, “socialized medicine”) is the one that did it.
    As he researched, Longman also observed the sensible automated reliable processes the VA has in place, which stood in painful contrast to what he’d seen a few years earlier during his beloved wife’s terminal cancer. Blood test results were routinely lost, x-ray films were lost, etc.
    Fortune killed Longman’s story, and he wrote the book. Read it. It’s short and it’s good.
    One key factor is that unlike today’s insurers, the VA has a patient for life, no matter what the condition, so they have every incentive to prevent costly complications down the road. In contrast, insurers in general have every incentive to punt your costly butt to the next insurer a few years from now, even if it means screwing you in the process.
    Actually, the VA DID have a patient for life. One insane thing the Bush people have done is end that fundamental policy. Now a veteran has to prove a condition is service-related, or s/he’s denied treatment.
    This is what has led to the long arguments covered on NPR about Iraq veterans being denied coverage for PTSD, even being denied the diagnosis. This from the crew that ranted at length about supporting our troops!
    One result is that soldiers who can’t handle getting through arbitration, or who do and lose, then get punted to Medicare, where government costs are higher and outcomes are worse. (Not to mention the government’s cost of running the arbitration.)
    I cannot imagine any benign reason for this, other than sheer stupidity. It certainly wasn’t to shrink government to the size where it could be drowned in a bathtub, as the neocons had sworn.
    Another key factor in the VA system’s success is that all the code written by their team (read about the Hard Hats in my summary) is open source, with top priority put on interoperability. Longman told me last month that the Bushies have authorized hollowing out parts of that system and replacing them with for-profit proprietary systems.
    Think about that the next time you wonder why our healthcare costs are so high. As I’ve studied healthcare this year, educating myself, I started with an open mind and I’m increasingly concluding that it’s become a rat’s nest of parasites, totally defeating the good efforts of the many people who go into it to help people achieve health.
    We must root out those parasites – and stop kidding ourselves about whether private enterprise is the solution. I’m hoping that Peter Orszag will do what he seems able to do.

  7. For all the Chicken Littles who are clucking about the ineptitude of the VA, the horrors of universal healthcare, etc., two points:
    1. There is a difference between the VA un-Bushized and not (i.e. responsive to patients and voters; see e-patient Dave’s pieces on e-patients.net);
    2. I’ve had experience with private healthcare and public. Neither is a picnic, but the former is nearly intractable when adjustment is required. For the latter to work, call a politician.

  8. Agree w/ Peter. The 10 million illegals are here because we pay ’em, just not enough for them to buy health insurance. Since hospitals are compelled legally to take care of them, you pay through the mark-up on your hospital bill when they get sick. One-third of young people are uninsured. How many of them can afford to pay $300-400 a month for health insurance? There are 10 million baby boomers without health insurance- how many of those do you think are free riders? For them, it’s $1000-1500 a month!
    Though 25% of the uninsured are eligible for public programs, lots of states make it really difficult to get on SCHIP or Medicaid because it costs them money. Thanks to the recession, states will be trimming their Medicaid rolls, and making more uninsured people.
    People are out of cash right now, which is why we’re headed into a recession. Health insurance is really expensive. It is the expense, not laziness or moral turpitude, which is the biggest reason why people are uninsured. Sorry, David MD.
    It’s a lot more complicated than your facile post made it seem. Deron is right: deciding who is deserving of subsidy is the second hardest part of all this, and once you put the subsidies in place, they are never going away. The hardest part is deciding what’s in the benefits package, and that will be the subject of another post.

  9. “Of the 47 million uninsured,”
    “10 million are not US citizens,” – Sure, they harvest our food, work in out slaughter houses and clean our toilets, but they don’t deserve healthcare?
    “millions more are already insurable under Medicaid but are healthy and haven’t signed up.”
    You’d better thank your lucky stars because states are running out of money to fund medicaid now.
    “According to the Census Bureau 18 million earn more than the median income of $50,000 but have elected not to buy insurance”
    That’s a broad brush. Just who are those 18 million and why don’t/can’t they buy insurance?
    “1/4 of the 47 million already have employer offered plans but have elected not to buy.”
    Like those great Walmart plans?
    “This leaves just a few million really uninsured.”
    No problem then.

  10. jd states that universal health care will then be locked in, just like Medicare and Social Security. Oh good. Wonderful. Two programs that are doing SO well. I suppose that any solutions based on autonomy, liberty and personal responsibility are anathema to many in the incoming administration. Well, I doubt that insurance companies, hospitals and physicians are going to just roll over. And I can assure you, we are paying very close attention indeed.

  11. Dave’s question is a good one. Where do we draw the line when deciding to choose the “government option”? How many more sectors do we have to screw up before we wise up? The inputs going into government have one very important similarity to the inputs going into the private sector: they are warm-blooded mammals called humans. What is it about the power of law and taxation that makes the government option so enticing?
    Dave, I thank you for putting the issue of liberty on the table too. However, liberty’s death will be a slow one, so no one generation will see it completely unfold. Is this really the direction we want to be heading? Do we really have this little faith in ourselves as citizens that we feel we need every part of our lives to be governed and legislated? Shame on us!
    We don’t need a leader to develop big programs for us. We need a leader to bring us together as a country to fix the messes we’ve created. The most succesful CEOs in the business world have figured out that they don’t need to come to the table with all of the answers. They just need to ask the right questions and align/engage their people around a common mission. I think Obama understands that, I just hope he doesn’t let the power of his position cause him to lose sight of it.

  12. First of all, as Harvard Economist Gary Mankiw has pointed out, http://www.nytimes.com/2007/11/04/business/04view.html?partner=rssnyt&emc=rss
    Of the 47 million uninsured, 10 million are not US citizens, millions more are already insurable under Medicaid but are healthy and haven’t signed up. According to the Census Bureau 18 million earn more than the median income of $50,000 but have elected not to buy insurance and 1/4 of the 47 million already have employer offered plans but have elected not to buy. This leaves just a few million really uninsured.
    The way to pay for additional health care costs is to have smokers pay a “health fee” for each pack of cigarettes smoked. Smokers cost 12% of health care (Dr. Leonard S. Miller, UC Berkeley) which amounts to $250 billion. Studies have shown that raising cigarette costs contribute to smoking cessation. Polluters should pay for their contribution to health care costs by having a health fee on pollution from coal powered electric plants.

  13. Everything is not free. The health plan that Obama talks about with high end benefits for everyone will take unemployment to 12% within 5 years. The cost will not be $100 billion but more like $600 billion. Then when the plan puts the country on the brink the administrators will pull back on coverage.
    Eventually to make it work no one will be allowed to have a private doctor. Then people over a certain age will be denied treatment for certain things. No heart transplats for those over 60 just not cost effective. No hip replacements for those over 60 not cost effective, etc.

  14. If I understand your funding logic correctly, those of us in the private sector need to send more money to Washington in order to fund a health care system to cover people who don’t already have health care? I need to spend more on taxes so that I can get what??
    I already have health care. My premium for me and my family went from $500 to $640/mo in less than a year. I thought Obama was going to give me a “tax cut?” Don’t I just send him the bill? Will he pay my deductable too?
    Oh I get it…. we send more money to Washington and they will hire more people to oversee who gets our money while simultaneously lowering the quality of care that I am currently paying through the nose for.
    Has anyone noticed there is a primary care physician shortage? Primary care doctors work long hard hours to earn $110K per year. They are already seeing all the patients they want. Where are you going to find the doctors that are willing to take your vouchers? Most (doctors) are no longer taking Medicare patients. More patients requires more doctors. Spending the next 14 years of your life studying medicine in order to make less than the nursing staff has little appeal to new students (duh).
    Government solution: Lower quality for everyone. Problem solved!

  15. Agree with comments about coverage obsession. Coverage does not mean access
    (look at Massachusetts) and access does not mean health. The reason I think Wait/Lay the Groundwork is a more reasonable approach is that you address access and appropriateness first, then expand coverage.
    How long will it take to create enough primary care access, thru more primary docs, geriatricians and community health centers, to accommodate 45 million newly insured people? What happens to public health approaches to obesity and the onrushing epidemic of diabetes in all the coverage expansion? As we’re presently arrayed, we’ve got lots of resources at the hospital and surgical remedies end of the continuum, and very little at the front edge. For all the obligatory pious mumbling about prevention, I don’t see coherent answers.
    Nevertheless, expanding coverage only seems possible about once every fifteen years, and if we miss it this time, we end up w/ 60 million uninsured and 40 million underinsured by the middle of the next cycle, an intolerable outcome.
    This isn’t about liberty or nationalizing the health system; it’s about repairing a huge and inexusable tear in our social safety net. With apologies to my friends at Cato, this is why we need a thoughtful, responsible public sector- the market will simply not fix it. We can grow private and public sectors back together, and get better outcomes if we know what we’re about.

  16. It is interesting that for all the talk about increasing access and containing costs, very little attention has been paid to improving the quality of our healthcare system. Nosocomial infections, other iatrogenic complications and the resulting malpractice lawsuits all contribute to the skyrocketing costs of providing health care services and decreasing patient satisfaction. While it may be more important to focus on expanding health insurance coverage at this point, if the Obama administration does not also work to ensure that allied health professionals maintain high standards of care our nation will find itself stuck in a quagmire of diminishing returns. Such a plan might involve designing new ‘pay-for-performance’ standards or reevaluating capitation as methods of emphasizing good primary care practices and preventive medicine.
    Remember: the current economic crisis is due in part to a failure of the financial sector to rely on sound lending practices to prospective homeowners. It was a breakdown in quality-control, resulting in an excess of sub-prime mortgages that became worthless investments. Hopefully this lesson will not be lost on the next administration’s health care policymakers—this country cannot afford another $700 billion dollar bailout.

  17. Why stop at health care, nationalize the airlines, energy, cars, everything? Apparently wealth is now created by the government and all things good stem from the almighty state. So why should we allow anyone to do anything short of the state. We can all work for the government and they will provide our every need.
    So this is how liberty dies, with thunderous applause?

  18. Jeff:
    As usual, superb, exacting and superior reasoning of health reform options.
    I too am in the converted camp that “Obama-Momo” may just have the capital to push a “Real Deal” solution forward and restructure this beast when no-one else at any other time had sufficient inertia to generate the required tectonic special interest shifts.
    Yet we are in the TwitterAge, Twitthood, etc. The true leveling of the playing field where outdated hierarchies are crumbling before our eyes. Just check out the health reform buzz at http://www.change.gov.
    What a time to be alive!! The opportunity for change is PALPABLE.

  19. “I think the new Administration is going to try to get health reform done very quickly, and fix it later.”
    I think that’s exactly right, and it is the approach that should be taken even if we were in more normal circumstances. As you say, once the health care “dragon” has awoken, no force is yet ready to oppose it.
    There is a kind of perfect storm brewing for healthcare reform now…but not for deep reforms to the delivery system that would eliminate hundreds of billions in waste or misdirected care. Other than large business, hardly any significant constituency is pushing in a meaningful or coherent way for delivery system reform. The perfect storm is for universal health care, which has a constituency of over 50% of the population. We can get there in 120 days if the proposal builds piecemeal on the old system rather than tries to reinvent the wheel.
    People are increasingly out of work: demand for government provided or subsidized health insurance/access increases.
    People are increasingly at risk of losing jobs: demand for the security that health coverage will not disappear increases.
    Vast sums are being spent to prop up the financial system–in contrast, $100 billion spent on universal healthcare looks much smaller than it used to and is harder to fight as profligate spending.
    Obama has perhaps the most political capital that he will ever have and the Republicans are less unified than they have been in a decade or more–The time to strike is now.
    Once we have universal health care, it will be locked in just as Social Security and Medicare are. No one is going to take it away, and the focus instead must be on how to pay for it, just as is happening now in Massachusetts.
    More free-market Republicans will begin to turn their attention away from defending the bloated delivery system (we’re the best in the world! Government cost controls just make it worse!) to criticizing it (how wasteful!). More liberals will turn their attention away from universal health care (we got it!) to reducing the costs of bloated corporations and improving fairness in compensation. Don’t be surprised if $500,000 surgeon salaries become a lot less invisible to the public, whether left, right or center. Once tax dollars are seen as propping up more of the system, the taxpayers will become more conscious of the expense….especially in the first few years. In the process, delivery system reformers will be listened to more closely by left and right.
    The time to get universal health care is now. The time to reform the system to reduce the health care share of GDP from 17% to 12% is over the next 20 years. Not because we like it that way, but because the forces arrayed against reform are too strong if you try to tackle them all at once.

  20. As Deron has noted in the earlier post, with out addressing the underlying causes of poor health, any plan is doomed to failure because of costs. As it stands, 75% of all health cost is due to chronic conditions. That’s over $1.5 trillion dollars just on diseases like diabetes, hypertension and so on. Keeping people from getting sick is far more cheaper than having to treat them once they are already sick. It is refreshing to see that both President-elect Obama and Sen. Baucus have talked about the need for prevention. It may cost a little bit more up front, but the savings are significant in the long run as shown by companies such as Pitney Bowes and others. Prevention of chronic disease has to be a central part of any big “Real Deal” approach to healthcare reform.

  21. While the economic crisis has led some to suggest that now is not the time for comprehensive health care reform, I agree with Jeff that Obama may try to implement health reform in the first 120 days of his Presidency.
    Ignoring the link between economic and health care policies and separate the health care crisis from the financial meltdown, runs the risk of further eroding America’s economy.
    Health care reform is an essential part of restoring America’s overall economy and the finances of our working families. Growing health care costs are straining small and large businesses and workers alike.
    A New America Foundation study concluded, “we must reform our struggling health system not in spite of our economic crisis, but rather because of the impact health care has on the American economy.”
    Congress cannot help American families or address the economic woes without health care reform.

  22. When we start talking about New Deal, Real Deal, mandates, etc. that starts sounding more like moving money around and less like making positive changes to the system. When we address symptoms instead of underlying problems, we end up with big government programs with poor fiscal futures.
    We do not have a healthcare financing problem. We have a healthcare cost problem.