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

More on health care reform by this author:

26 replies »

  1. 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?

  2. 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.
    What will it take for you to see the problem is in the public plans not private payers?
    “We obviously have enough money to chase terrorists, and imaginary terrorists, in far away countries.”
    That is doing one of the few things our federal government is actually tasked with doing under our constitution.
    The point Roger raises is what needs discussed….Government has been and will continue to be the cost curve. It is government intervention and regulation that has driven cost. Remove government and we wont have a problem.

  3. 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!

  4. 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 have reported, do you see a successful effort being mounted to bend the long-term cost curve?”
    Mr. Elmendorf: “No, Mr. Chairman.”

  5. 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 decisions should not be made in normal times. Maybe they should never be made.
    We obviously have enough money to chase terrorists, and imaginary terrorists, in far away countries. We have enough money to provide foreign aid to all sorts of third world economies. We have enough money to launch space shuttles at regular intervals. We have enough money to indulge Wall Street’s exploratory greed and Detroit’s follies.
    Do you think we can find the necessary resources, both financial and moral, to duck these sort of questions on a national level?

  6. 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 must have paid AARP a bundle.

  7. 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”.

  8. 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 I’ll never say “never.”)
    As for the rich, I’m not too worried that they will always be well-cared for, even in the event of some horrible catastrophe. The top one percent of the population controls from a fifth to a third of the national wealth (and the bottom eighty percent get by on about fifteen percent), so I don’t look for their position of prominence to change in my lifetime.

  9. “…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 will at some time require medical attention. All that I have read mentions means tests and/or actual government subsidies for those unable to afford insurance.
    After they got to Congress, the insurance lobby made health care reform an insurance industry wet dream. My complaint is against private insurance of any kind. I’m a single-payer kind of guy. But that option never got to the table, and had it been there would be no political will to consider it.
    Moreover, I also object to insurance being coupled with employment. Until reform happens that irrational arrangement means that unemployment = no medical care, which is both stupid and inhumane. (Also how can American businesses saddled with the responsibility of employee health care compete in a global economy where other countries provide health care without making it yet another expense item for goods and services?)
    btw, unadulterated government health care (say it: SOCIALISM) has been around for years. We call it Veterans Affairs. And the largest component of the current system is government single-payer. We call it Medicare. Senator Bernie Sanders (I-VT) is the only person candid enough to say that out loud, but it illustrates the madness and ignorance of this entire discussion.

  10. 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?

  11. 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)
    Finally, valuating a life based on the number of functioning extremities is a bit strange in this century. Valuating a life based on the amount of cash on hand is equally disturbing.
    John, I agree that de-facto rationing based on ability to pay is part of the current system. I thought that was one of the things that health care reform was aiming at changing. Instead, it seems that we are attempting to change one inequitable system based on financial discrimination, with another inequitable system based on genetics and financial discrimination. Would you classify that as a step forward?

  12. Those defending the status quo include many who raise the specter of “rationing” if the system is changed.
    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?

  13. 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?

  14. 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 life is worth about half a rich person’s life.
    A fat and ugly person’s life would be worth much less that a sexy movie star life. All those misguided young folks loading up on steroids, knowing that there will be a price to pay, are probably indicative that a life of a super athlete is more valuable than a regular person.
    Same would probably apply to short stature, mental defects, a variety of congenital defects, chronic diseases, etc. Maybe even some ethnic groups?
    What if we only have a limited amount of food stamps in a real depression, should we allocate them according to that QALY measure? How about other limited resources?
    There seems to be only one group spared the “fairness” of a QALY system – the rich. They can buy supplemental insurance to avoid the need to price their lives. So basically a poor public plan for the poor and a proper plan for the wealthy.
    May I suggest that before we start down the slippery slope of eugenics, we eliminate the waste and profits of private payers, as well as the blatantly inappropriate practices of some providers. I’ve been told that this is politically impossible. I hope what is proposed in that article is equally politically impossible.

  15. Dr. Rick,
    Keep pushing the end of life care issue. I think it’s more credible when doctors do it than when I do it, as I have been since I started blogging over three years ago.

  16. If this is such a good idea, then let’s do away with Federal Employees Health Benefits Program (FEHBP) that the Congress has, and they will have the “cost saving” plan Obama is talking about…..those cost savings will be used to give the uninsured the ability to have insurance. Let’s roll this ‘great plan’ out Congress and and Federal employees……I understand somehow they would be exempt from the Obama plan! WHAT is that about?

  17. As I’ve said I don’t mind taking my share of pain to get coverage, BUT I will not be forced to pay into a bloated and corrupt money sucking industry. Show me where costs are going to be reduced and I’ll look closer – and I don’t mean a 10 year projection. I feel for the companies and individuals who will not meet any subsidy criteria and will continue to be forced to keep paying extortion premiums/co-pays/deductibles. The other issue is how will this bill be finally written with all the special interest loopholes included. I also don’t see a public plan being administered by private insurance to be significantly less expensive and “competitive”.

  18. Certification criteria for the “Meaningful Use” of EMRs are currently being promulgated by ONCHIT’s HIT Policy Committee. The criteria will almost certainly include a requirement that EMRs empower physicians to implement the results of this research.

  19. Part of the answer to the cost escalation problem will be translating the results of comparative effectiveness studies directly to the point-of-care using electronic medical records.
    At the request of Congress, the IOM recently developed a list of 100 foci for comparative effectiveness research. The foci include things like optimal management of back pain and the reduction of falls in the elderly.
    Certification criteria for the “Meaningful Use” of EMRs are currently being promulgated by ONCHIT’s HIT Policy Committee. The criteria will almost certainly include a requirement that EMRs empower physicians to implement the results of this research.
    Our free, web-based EMR, which is already being used by thousands of physicians, is ready and waiting to incorporate cost-saving, quality enhancing guidelines.
    Glenn Laffel, MD, PhD
    Sr. VP, Clinical Affairs
    Practice Fusion

  20. Dr. Lippin,
    Those of us still previding healthcare will be on a plane to cash-and-carry.
    You can get on the train to nowhere. The bridge is out (no money).
    If healthcare deform does not apply to Congress, too, then it is a piece of political BS that should be flushed, along with its supporters.

  21. There are plenty of things that are problematic with the house bills but frankly I am most perplexed but what I have read on Medicaid. Really just slapping another coat of paint on top of a rusted-out frame.
    States budgets are already stretched very thin this FY because of a big dropoff in most states in revenues across the board and increased costs due to unemployment claims, etc. Federal stimulus bill provided a buffer this FY but the numbers out from the NGA and others for FY10 and FY11 for states look even more depressing. None of the bills I have seen in the House on Medicaid do much to address the near-term reality of the shaky state budgets for the next 2 fiscal years at least.

  22. Bankrupt? We’re heading in that direction even without this bill getting signed. This year’s deficit is already at $1 Trillion and our total US deficit is north of $11.5 Trillion which is 80 percent of GDP. Projections for the next ten years show an additional $7.5 Trillion of debt on top of that. You don’t need to be an economist to see the writing on the wall. We must stop this out of control spending and learn to live within our means.

  23. I just read the HR bill and found it completly disasterious. It basicly will distroy the health care industry. The government is looking to put all, even our illegal citizens on “Access” and remove jobs by reducing paper work. Our nurses and interns will have no job in 10 years. Although they will have a priority to retain their jobs. But at a limit of a salary of 100K. If a private clinic that is for profit would like to participate, it must convert to a non profit facility. Health care is expensive, but not worth your life for government run total health care system. You can not get more health if the “low budget” equipment and drugs are used. Contact your local representative and request that this bill will not get signed!