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House Health Care Reform: Ignoring the Elephant?

Democrats-cap-and-trade-bill-house-renewable After some frantic last minute political
gyrations and a lot of pressure from the President, House Democrats
have announced details of their draft health care reform bill.

Much as expected, the 852-page bill
emerging from three House committees would impose a mandate on larger
employers to provide insurance, impose a second mandate on individuals
to obtain coverage, prohibit medical underwriting by insurers, establish
a government-administered public plan to compete with insurers’ offerings
through insurance exchanges, offer subsidies to lower-income individuals,
and expand Medicaid. The target ten-year trillion-dollar (or more) price
tag would be funded through a combination of taxes on high income individuals
and reductions in some Medicare and Medicaid payments.

So, is this the answer to the nation’s
health care crisis of sky-rocketing costs and growing millions of uninsured?

Probably not.

The bill does make a serious effort
to cut the numbers of uninsured. As Massachusetts’ experience has
shown, a combination of Medicaid expansion and subsidies for other lower-income
folk, combined with mandates on employers and individuals, can significantly
increase the numbers of those with coverage. However, this is an expensive
approach, as Commonwealth taxpayers can attest. It is also one that
is likely to be less effective on a national scale during a recession
than when implemented in one wealthy state during better economic times.

Both the employer and individual mandates
have weaknesses. The employer mandate, with its option of a modest levy
instead of paying directly for insurance, could lead to firms currently
providing coverage choosing the less expensive levy, while the exclusion
of smaller firms from the mandate could result in restructuring of businesses
into multiple pseudo-independent units. The individual mandate suffers
from similar weaknesses: penalties may be insufficient to force the
young and healthy to obtain coverage, while the application of penalties
to only those for whom “affordable” coverage is available provides
an obvious loophole.

A big reduction in the number of uninsured
with no new controls over costs carries its own risk. As Massachusetts—even
with only a modest percentage increase in its covered population—discovered,
making health care more accessible means a jump in demand, but with
no corresponding increase in supply. The predictable results: higher
prices and disenchanted consumers unable to obtain care.

While the House bill’s approach to
reducing the numbers of uninsured seems at best problematic—and in
which failure to achieve almost universal coverage may undermine attempts
to impose restrictions on insurers’ medical underwriting practices—the
much bigger failure is the absence of changes necessary to bring health
care costs under control.

For larger businesses and their employees,
already facing higher than CPI annual premium and out-of-pocket cost
increases, the bill provides little help. In fact, the increase in demand
for care resulting from expanding coverage is likely to mean—in accordance
with normal economic laws—even higher premiums.

For government budgets, the draft bill
implies ever-increasing crises. If Medicaid eligibility is expanded
to all those with incomes below 150 percent of FPL, the ten-year cost
will exceed $500 billion—even assuming implementation is not immediate—to
be financed somehow by cash-strapped states and the federal government,
on top of expenditures that are already growing far faster than revenues.
And while the draft bill includes numerous provisions relating to Medicare,
the CBO scoring of an earlier draft concluded that only a $160 billion
reduction would be achieved over ten years—a very small bite out of
a projected growth in expenditures of over $2.2 trillion (and with the
Medicare Trust Fund exhausted by 2017).

Perhaps not surprisingly, the House
Democratic leaders in their Capitol Hill announcement chose not to address
either the direct cost of the draft bill’s provisions or—the real
elephant in the living room—the continued enormous growth in government
and private health care expenditures that the bill would do so little
to control—and that seem likely to bankrupt us all.

The sad conclusion—notwithstanding
the howls from business groups— is that the bill’s Democratic drafters
have chosen to duck the really tough decisions (and the Republican opposition
has succeeded in being both evasive and intransigent in trying to protect
the profit interests of its own financial supporters). So, politics
as usual. 

Roger Collier was formerly
CEO of a national health care consulting firm. His experience includes
the design and implementation of innovative health care programs for
HMOs, health insurers, and state and federal agencies.
He is editor of Health
Care REFORM UPDATE
[reformupdate.blogspot.com].

More on health care reform by this author:

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ZanderNateRoger CollieranonCarl Stevens Recent comment authors
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Zander
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Zander

So, what is the incentive to work hard and carve out some place in this republic to make your own land, home, and family: as your own man, and live here in peace? Why should I work so hard and take care of my own? accept my own course and honor my commitments I make as a free man, when I do my part and this King and His Lords want me to cover those who should be free to fail?

Nate
Guest
Nate

Margalit “we eliminate the waste and profits of private payers,” Depending on the benefits I make $10 to $17 Per employee per month. That works out to $4 to $6.80 per member. Please share with us how much of my revenue you feel is waste and profits. Let me remind you that while I make as revenue $4 to $6.80 per member per month Medicare LOSES $58 to fraud alone. That includes no administration or cost. I get sick and go away for one week and you starting posting the same unsupported liberal BS we have discussed 100 times before.… Read more »

Mary
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Mary

As a democrat supporter of Obama, I thought people were nuts when they were questioning his citizenship. NOW, I can’t believes the wasteful spending, lies, chicago style politics he represents. I now wonder myself about his birth certificate. I believe he is the most corrupt Administration since Nixon. I can’t wait to vote him out of office! Very sorry I supported him. What a disappointment. I didn’t know he was so corrupt!

Roger Collier
Guest

It’s always amazing and wonderful how readers’ comments wander off into regions that the author of the original post never expected. (No criticism, it’s one of the strengths of THCB.) However, for those who want to pursue the original theme (the House and Senate HELP bills do nothing to attack the single biggest health care problem — cost escalation) may I suggest that they read CBO Director Doug Elmendorf’s responses to questions from the Senate Budget Committee. For example, as quoted by the New York Times: Senator Conrad: From what you have seen, from the products of the committees that… Read more »

Margalit Gur-Arie
Guest

Deron, I did duck the question because it is ill posed. You could ask if it’s fair to use a disproportionate share of resources on any ONE person, thus leaving MULTIPLE others without any resources, regardless of who is disabled. In this case I think it is not a fair approach. This is what war time triage is all about. I just don’t think that disabled/non-disabled should be a factor in the question, or the answer. If we lived in different times and that one disabled person was FDR, do you still think we should withhold resources? These sort of… Read more »

Deron S.
Guest

Margalit – You should run for office because you completely ducked the question.

anon
Guest
anon

With the dems in total control of the House, which does not have a closure rule, I am unsure how the republicans in the House carry one iota of the blame for this bill. The dems can’t duck any of the responiibility for this baby and the author’s gratuitous slam undermines all his comments above as he obviously has no idea how the House works. It will functionally take the quintile that has the best access to healthcare and make it have the worst access as providers drop out of Medicare and their schedules swell with the newly “insured”. Someone… Read more »

Margalit Gur-Arie
Guest

John, my reaction was entirely aimed at the NYT article introduced by Dr. Lippin above, not the house proposal.
I didn’t see any reference to rationing care based on disabilities in the house proposal, and that is a good thing.
I would prefer a single payer as well, or at the very least a heavily regulated private market along the lines that Dr. Emanuel is proposing, where we have 100% coverage equivalent to the Congress plan.
For some reason, this is now regarded as a “political impossibility”.

John Ballard
Guest
John Ballard

Margalit, maybe you meant “eugenics” instead of “genetics.” That’s your earlier reference. “…a poor public plan for the poor and a proper plan for the wealthy…” means financial discrimination, I suppose. We don’t know what the final shape of any such plan will be, but what I am reading indicates that the final result won’t get won’t be apparent until three or four years out (2013+). Even then it will continue to be a work in progress. (It’s way too soon to label it “eugenics” but when I recall the moral, legal and constitutional pliability of the just past administration… Read more »

John Ballard
Guest
John Ballard

“…another inequitable system based on genetics and financial discrimination…” I don’t recall mention of genetics but I haven’t read all the fine print. If that means hereditary conditions requiring medical maintenance my understanding is that reform means those and other “preexisting conditions” will no longer be cause for denial or cancellation of insurance. Financial discrimination, as you pointed out, is already part of the current system. Reform will, in fact, require even young, healthy people to participate. Some of them will die from causes not requiring any return on their contributions (accidents and other tragedies, murder victims, etc.) but most… Read more »

Carl Stevens
Guest

While I believe that health insurance should be a priority following food and shelter, many people select to allocate their resources otherwise. Of the 45 million or more Americans who are uninsured, many simply choose not to purchase health insurance. Why should the government mandate coverage?

Margalit Gur-Arie
Guest

Deron, I believe the question is not well posed. First of all someone needs to show that after reducing all waste, profit and fraud, the system is still lacking appropriate resources. Also, it seems that this rationing is only to be applied to poor disabled people. Let me change one word in your question, In a system of limited resources, do you think it is appropriate to use a disproportionate share of them on a disabled person, if it means that non-disabled people in need of education end up going without? (It is very expensive to educate special needs children)… Read more »

John Ballard
Guest
John Ballard

Those defending the status quo include many who raise the specter of “rationing” if the system is changed.
Obviously, then, RATIONING IS ALREADY IN PLACE.
Either the status quo has no rationing or changes will bring about rationing. It cannot be both ways.
How can so many otherwise intelligent people not see the contradiction?

Deron S.
Guest

Margalit – In a system of limited resources, do you think it is appropriate to use a disproportionate share of them on a disable person, if it means that non-disabled people in need of care end up going without?

Margalit Gur-Arie
Guest

Dr. Lippin, That article in the NYT is an outrage. Futile end of life heroic measures are one thing and deciding that a disabled person’s life is inherently worth less is quite another. The means to achieve that decision are equally outrageous. Asking people if they rather have 10 years of a bad situation or 5 years of a good situation is absurd. To take that insanity one step further, let’s ask people if they would rather live 10 more years in abject poverty or only 5 years in obscene wealth. The conclusion would probably be that a poor person’s… Read more »