Health Care Reform Lite

J.D. Kleinke


“The only constant in health care is change.”  It’s one of those shop-worn things you hear too often on health care’s rubber-chicken circuit; and not only is it not true, but it is exactly untrue.

Of course, there is one thing different in 2009: everybody gets to whine about it on Facebook.

So too health care reform.  When the “journalists” at Fox News, the red-faced demagogues in Congress, and the alarmists in your organization are done ranting about “ObamaCare” and the sky falling, understand that the essence of the health care bill moving forward today is one very simple thing: a violent endorsement of the status quo, paid for with an artfully diffused redistribution estimated to cost, on an annualized basis, less than 4 percent of the system’s annual $2.2 trillion haul.

Under the plan that looks most likely to pass after some classic Capitol Hill 3 a.m. horse-trading – this time between the grumpy far left and poll-sitting centrists on both sides of the aisle – health care “reform” will involve little of substance beyond (1) the long overdue jamming of 46 million people currently outside the system into that system, and (2) an equally long overdue prohibition against health insurers kicking them back out.  For the middle-class taxpaying swing voter in denial of what could happen in 90 horrifically unlucky days at their job and within their bone marrow, i.e., the average voter with coverage they might not be able to afford after simultaneously being fired and getting leukemia, #2 is worth the entire effort – and the reason any politician of calculation if not conscience should vote for the plan.

But at the end of the legislative process, and as with the bitterly debated Medicare Drug Benefit in 2004, all we’re doing is expanding exactly what we have today for most Americans, to include (almost) all Americans.  We’ll spread the economic pain around the system fairly evenly, via mandates, taxes and fees that will show up in new equilibrium prices for insurance, drugs, and devices.  And the economics of finally putting everyone into the system – instead of waiting until they are on death’s door, a.k.a., the door to the emergency room  – will more than offset the upfront costs of getting them there.

Best of all, that last bit of accounting – which lifts what everyone knows to be the worst economic and emotional drag on the entire system – has not been accounted for in the current plan’s financial scoring.  Such accounting involves too multivariate a set of equations, too many interdependent factors, too many unknowables in the cost and epidemiology of unmanaged disease – and so the CBO had no way to consider the most profound part of the entire initiative.  Meaning: the systemic economic effects of including everyone in the system are gravy.  Billions of dollars worth of gravy, if you believe any of the estimates of what the “safety net” costs all of us every year via the madness of hospital-to-insurer-to-employer-to-you-and-me cross-subsidy.

My point about how the Medicare Drug Benefit has played out in the past five years bears repeating. When the “Part D” benefit was debated in Congress, the hysterics on the right screamed on cue about “government bureaucrats” in our medicine cabinets, an entitlement that will bankrupt the country, etc.; while the hysterics on the left carped about the evils of capitalism, the program’s outrageous use of money-making corporations to deliver products to people, etc.  Out of that political sausage-grinder came a classically American public health care program of government funding and corporate delivery.  The health plans, specialty drug plans, and PBMs that administer the program – and the drug companies that supply it – did not get everything they wanted, but they got enough to stay in business, make some money, and deliver long needed care to millions of people who previously couldn’t afford it.  Yes, many of the plans did especially well thanks to Federal subsidies, included in the “Medicare Advantage” program to prove the “efficiency” of the private sector; but that was a bone to the right, not the left, to support the program, so we’ll ignore that pesky irony.

The Medicare Drug Benefit may be working no more perfectly than anything else in health care, but it is working just fine for millions of Americans who had too often been forced to choose between medicine and food, between certain death and slow starvation.  Maybe that’s why so few on the right or the left have brought it up in the debate: its embodiment of political compromise and its programmatic success constitute enough actual empirical evidence to sully anyone’s ideological polemics.

Consider the Medicare Drug Benefit a perfect trial run for what we all should hope will pass into law in the next few months: health insurance market reform.  It’s not true health care reform – this would apparently require an Act of God rather than an Act of Congress.  But the bill before Congress today will finally let the health care system function like something closer to an actual system, because the worst external perturbations to that system – the chronically uninsured, chronically sick, and chronically most expensive to care for – are finally included.

And if you are running a health care organization and worrying about the effects of “health care reform lite,” take note of what happened to those involved in the Medicare Drug Benefit: a few organizations failed miserably, some have profited mightily, and most have muddled through, figured out the rules of the new game, and are doing just fine.

Just like most everyone in 1989.

J.D. Kleinke is a medical economist, author, and health information industry pioneer.  He has been instrumental in the creation of four health care information organizations; served on several public and privately-held health care information company boards; and written

24 replies »

  1. I would agree that the same game as fifteen years ago is happening and the results can same be expected.
    The thing is the result last time was an exponential growth of health care costs and thus the same thing can be expected this time.
    You have tumor and you do nothing and it does “the same thing as yesterday”. Yes, but at a certain point, “size matters”. At nearly 20% of the GDP and growing uncontrollably, “nothing changing” with what you appropriately call the US health care non-system is something of a disaster.

  2. The Congressional Health Care Bills are nothing less than a Bait and Switch. The Con in the Conservative vernacular is just that “a Con Job.”There angle is I’m against everything that does not Cater to Corporate Welfare and profitability. Wars are acceptable without justifiable cause in exchange for unjustifiable blood shed and lost of life of our Armed Forces for personal Gain. Health Care or more accurately Health Insurance Reform is no different. Catering to Corporate interests of manipulation and exploitation of the sick for personal Gain. Can you see the similarities?
    Since the Two wars ,we have already exceeded the 1 Trillion dollar mark not to mention the expansion of Government in last 8 years. Where were these voices of Fiscal responsibility Then? Especially when it came to Iraq! How about the trillions of dollars of debt to China? Still No call for Fiscal Responsibility?
    Now we speak of almost 1 Trillion dollars in ten Years and now we have the call for fiscal conservatism? This is Nothing more than selective Morality. The same mindless people who blow with the political winds will rise against inclusion of the uninsured but will latter accept it. These folks who are so against government run anything,but they will not oped out of Social Security, Medicare and other Government Programs. Why ? Their excuse is;I pay into it and In the same breathe deny others of their chances. How narcissistic and selfish of them!
    The Congressional Health Bill has become a Circus of money laundrying from our premiums into the politicians Back Pocket. This Bill adds Millions to the rolls for insurance exploitation and fails to control costs , Cap premiums and out of pocket expenses. Its everything that a closed market syndicate would wish .

  3. It may be true that we have made several advances, but Health Care has become Fractured by Health Maintenance Organizations. J.D. You have mentioned Aids which is World Wide. Today,Deaths from HIV/AIDS amount to approximately 15,000 deaths each year in the US. However,Hospital Acquired Infections are Preventable and Kill nearly 100,000 people a year. Still,some 2 million others end up with life long disabilities and expenses that are of no fault of their own.
    Its Ok if you wish to pay Excessive Fees for substandard inflated care. Still, I would rather support justifiable expenses. A gallon of Gas is still a gallon.If that same gallon was made less efficient(decreased mileage and reduce power) to increase the number of trips to the Pump. Would you agree to pay $6.00 a gallon for a return of 12 miles to a gallon? I don’t think so ?
    Health Care is unjustly inflated and grossly lacking in varying Degrees. Unless you have seen it first Hand. I doubt you will understand the Consequences of Profit Driven Health Care.

  4. The same coverage, Ken? Really? You mean your health plan today doesn’t pay for any drugs, devices, surgeries, MRIs, genetic tests, or other medical innovations created since 1985? You’re definitely not getting your money’s worth.
    In 1985, most heart disease and cancer diagnoses were death sentences; we had no surgical or pharmaceutical treatments for stroke; we had no drugs to slow the crippling and often killing effects of dozens of diseases like multiple sclerosis, arthritis and Alzheimer’s; organ transplants were rare events that usually backfired and killed the patient anyway; HIV/AIDS was called “gay man’s cancer” and was also a death sentence; the seriously mentally ill were imprisoned and electrocuted in hospitals; and tens of millions of people suffered the darkness and despair of chronic depression, many abusing their children in the process and setting up the cycle for the next generation.
    Are we getting the most for all that inflation? No. But a gallon of gas is still a gallon of gas, and for my money (and my life), I’m glad it’s 2009.

  5. In 1985 I paid $20 a month for family health insurance. Today I pay over $350 a month for roughly the same coverage. If you do the math {((350-20)/20)*100 = 1650%}, that is a premium increase of 1650% over the past twenty-four years. By comparison, in 1985, the cost of gasoline was around $1.20 a gallon on the East Cost. If the cost of gasoline had increased 1650% over the last twenty-four years, we would all pay around $21 a gallon today on the East Cost for gasoline.

  6. Yeah – except the kids starting showing up only after Sarah Palin posted. I can’t blame anybody their school-boy crush, especially on a pol moll as hot as Tina Fey, but the important lesson we should all be teaching our young people is that there is no simple answer to ANYTHING in health care. So much for Palin’s ideological bluster, here or anywhere.
    High school kids beware: our health care system trods into the most profound and sacred parts of our lives; and too many adults with what sound like sound politics show up in health care only because they want to impose on YOUR body, YOUR life and YOUR beliefs their unconscious pathologies with their own bodies, lives and beliefs…

  7. Round and round in circles with each side quoting “facts” that contract each other, such as: American healthcare is the best in the world … Oh no it’s not! It provides mediocre quality for exorbitant cost and leaves nearly 50 million without coverage … No, it’s only round 15 million, and the money we spend goes to good use (e.g., drug research, better medical devices, etc.) … Wrong! Too much of the money goes to big pharma and insurance company profits. Not only that, but lobbyists for the major player groups pay government officials to write rules favoring them. So, government run programs would do a better job, e.g., the VA healthcare system and Medicare … Wrong! Government has a history of corruption and inefficiency. But if private insurers tried to compete with t public plan, they would be at a competitive disadvantage. Unfair! … So what! It would be good to crush private insurers who care only about making money for themselves and not about the health of their members. And government can become more efficient with adequate transparency and oversight … That would be a disaster! If government takes control of people’s health, some bureaucrat will determine what care you should get, not the doctor. And private insurers don’t make huge profits … Are you kidding! Insurers routinely dispute doctors’ judgments and deny care in order to increase their profits … And on and on it goes.
    The truth probably lies somewhere in the middle of the extremes.
    The real culprit, imo, is the negative side of human nature coupled with the perverse commercial incentives of a perversely mutated form of capitalism along with overly self-centered materialistic cultural values in which the ought-to’s and can-do’s are misaligned and in which a principled and pragmatic approach to healthcare reform is sorely needed.
    Any sustainable solution must address these two certainties:
    (1) Despite drowning in oceans of information, there is a very serious knowledge void when it comes to understanding how to deliver high value (cost-effective) well-care and sick-care to each person.
    (2) There are financial disincentives to the provision of high value care (e.g., Mayo Clinic Proposes “Pay for Value” for Health Care Quality Improvement.
    And therein exist the underlying causes of our healthcare crisis, along with the path to recovery!

  8. THCB = scarred strait for kids who don’t appreaciate their childhood.This is what you have to look forward to kids, no get outside and break or sprain something

  9. I’m really proud. THCB has turned from being a free-for-all bar fight into a corrupter of the youth of today!
    I anticipate hearing the sirens coming down the street any moment now!

  10. J.D. your doing a terrible job informing our youth.
    Our systems have been a mess since Congress passed Medicare in 1965.
    The only fix you reference is far from true. Medicare was a major change, HMO Act 1973 was a major change and failure. COBRA and HIPAA both major changes. GINA minor but significant changes. When the autopsy is done there won’t be one fatal blow but death by 1000 mandates and reforms. You should instruct our young student, and most adults, to study the last 44 years of reform, what was promised, what was passed, and what the outcome was then determine how they think we should proceed. The most important thing Zac could learn is don’t trust anything handed to you by a journalist and trust anything a politician promises even less.
    The managed care you refer to was actually the result of Ted Kennedy and 1973, so before you cast blame on business maybe understand the source of the problem.

  11. If the Federal, State and local government employees work for the American people then why don’t we chose to cut their healthcare? Most individuals do not make the changes needed until they are personally effected. Maybe our government officials should have to live like average Americans.
    The Federal Government, is the largest employer with more than1.8 million employees, and with an additional 636,000 for the US Postal Service and an estimate 17,000.000 for state and local government.. These Federal, Sate and local agencies offer employees flexible work schedules, telework; child care and elder care assistance. programs. They also receive incentives programs; child support programs, dependent care flexible spending accounts; and employee assistance programs and can retire in their 40’s receiving more than ¾’s of their salary with retiree health care and other non-pension post-employment benefits for life. How many American’s can retire in their 40’s with better benefits than tose who are working.
    An estimated 46 million Americans remain uninsured with millions more remaining underinsured while Politicians receive the country’s best care and the American people are responsible for their healthcare. Yet these government officials seem unwilling to extend similar protections to the rest of America all the while whining about their healthcare cost being increased by 8%.
    Then why would we expect reform?
    Tad DeHaven writes would add that the task of cutting benefits for government employees is especially difficult because state and local politicians are generally beholden to the government employee unions. Even those policymakers not predisposed to carry water for the unions are hesitant to ruffle the feathers of a sizable voting block, not to mention a vocal one that still has a lot of regular citizens conned into believing government employees are underpaid, selfless, public “servants.” Trust me, I’ve witnessed this game first hand.

  12. Hi Zac –
    It’s great that you are engaged in this debate at 15 years old, and you are right about the current plan not covering quite everybody.
    But like a lot of intelligent and well-meaning Americans, you are misdirecting your anger and frustration with our serious economic problems – some of which were created during the past decade and some of which are normal cycles of an economy through history – at our President and his health care plans.
    Understand that the U.S. health care system has been a mess for decades, and the only real attempt to “fix” it has involved putting a few more people into poorly funded gov’t programs, while letting everyone try to survive as best they can, either through the good graces of their employer, or on their own in a health insurance market that is by its competitive nature, completely hostile to people with illness.
    We have essentially asked health care corporations to fix the system by doing the right thing – and it has not worked out, but only gotten worse, because thhe goal of a corporation is to do the right thing for itself, not for the system. In the 1990s, we called it “managed care” and with a few notable exceptions, it caused more harm than good.

  13. the only point you have to make is who’s leading the healthcare bandwagon. Obama (who else). Do you really trust him to lead us out of these ‘heard times”. The man has more than doubled our deficiet of all time in a matter of months, he’s sky rocketed unemployment rates to the roof. On top of all of that even is his plan does go through and does suceed there will still be (if my numbers are correct) around twenty million sum odd people still not covered with health insurance. We are turning a leaf more and more everyday to becoming a socialist country. if this keeps up we may even go as far as becoming a one world power. Personally i don’t like the grass on either side of the feild; republican, or liberal; it doesn’t matter. All it is, is dirty politics. Anything that will make them an extra dime. You may disagree with me but you can’t help but agree to an extent with some of my points. If me; a fifteen year old high school student can see how this country is going to turmoil why can’t you?

  14. “”In short, in the US, you pay more, get less, and die younger than we do in Europe. What part of that don’t you understand?”
    Actually Tom I get far more and live longer. Seeing as how there are very few 30% black, 20% Hispanic, 5% asian, etc etc people in this country you can’t compare these statistics on the simpleton level your French family is. Compare white Americans to the French and see how that changes things. Compare our asian population to that of asian countries. Our black and Hispanic populations far out perform Africa and south America yet are still considerably below those of white Europe pulling down our “average”. Since there is no such thing as an average person it’s a false comparison.

  15. What baffles me is the fact that there is an entire Plan that addresses all of the needs of America without any government intervention. It’s the LOOP Plan and it would be owned by every American, will eliminate the current unfunded liabilities, would(in about 5 yrs)eliminate Medicare…Medicaid…and Workers’ Comp, will eliminate the highest % of the deficit, and does not limit or restrict medically necessary services. And you would own it yourself!! It covers every aspect including legal and illegal alien concerns. And it will lower healthcare costs by more than 50%.
    Get a free copy of the Plan (24 not 1000’s of pages)no strings attached. If you really want a non-gov’t alternative this is it……be a believer at http://www.careinhealthcare.com !!!

  16. Great assessment! Droll sarcasm and cynicism in a weak,tepid mixture of diluted optimism. Something wish-I’d-said that in every paragraph. The ghosts of Harry Golden and Art Buchwald are texting roflol!
    Comments are waaay too serious but Degan and Lynn get it.
    C’mon folks. Lighten up.

  17. For Mike the Utah health insurance sales guy: Who is going to pay for the losses of the big sick pool of people? We all do, it’s call Medicare. No one with Medicare coverages gets out alive. They all die. And we spend lots of money on them in the last weeks of their lives.
    To save money in health care, the answer is to die young and to die fast. We are just dying to slowly, don’t you see.
    The Healthcare Dismal Scientist

  18. Overall a very good assessment of the situation, but I can do you one better and go back to 1961 when I started managing health benefits for a Fortune 500 company. We tried everything to save money including giving people money to obtain a second option, then we embraced HMOs and when we all killed that idea (a logical one by the way), we moved to other things.
    Today’s “reform” is moving nowhere except as you noted adding millions of people into the existing system. We are all going to pay for this nonsense and not too far in the future.
    The immediate losers will be those Americans with Medicare, and with employer sponsored coverage, 70 million of whom are in self-funded plans not involving insurance. Let’s hope China still like to buy Americasn debt!
    My views based on 48 years of experience are here:

  19. Dr. Beller has it right. Evidence based medical practice, education of patient and provider as to best practices, and transparency of decision making and fees are essential for a rational, efficient health system.
    The other unmentionable, big cost factor is insurance company profits. We should develop a system of non-profit insurance (as in Germany, France, Japan etc). Maybe this is what the “cooperatives” will turn out to be. I hope so.

  20. I am a health insurance agent in Utah and run two websites that sell insurance http://www.benefitsmanager.net and http://www.dentalinsuranceutah.com. I mention this because in Utah it would be great to have a guaranteed public option to put people that the private insurers will decline for health conditions. Plus the way Weiner discribes the public option, it will be priced competitively. So what this means in my industry (I’ve been at it 18 years) is that all my unhealthy clients that get charged more or declined can be put onto the public option now. All my healthy clients can stay on the private option. Hmmmmm follow me yet???? How long can the public option stay affordable?? Who is going to pay for the losses of a big sick pool of people….taxpayers?????

  21. Margalit raises good points (as usual).
    As I discussed at this link , the biggest obstacle to meaningful healthcare reform, imo, is that expenditures will continue to climb and quality will not show much improvement unless we can answer these two unaddressed questions:
    1) What is the most cost-effective ways to prevent, diagnose, treat and manage health problems for each person?
    2) How can healthcare providers and consumers be enabled and encouraged to make decisions and take actions that implement those cost-effective ways of avoiding, understanding, and treating/managing health problems?
    The ONLY sustainable solution to our healthcare crisis is, imo, to replace current economic game-playing with sincere efforts to transform current day models and processes into a system that brings high value to the consumer. This would involve a firm commitment on the collaborative creation, ongoing evolution, widespread dissemination, and competent implementation of evidence-based knowledge focusing on ever-greater cost-effectiveness. This should be our number one priority, along with providing some sort of universal coverage/care.

  22. My younger brother Jeff is the shame of the Degan family. He not only lives in France, he actually likes it there. He has a French wife and two gorgeous little French daughters. Honestly I think the guy is a closet commie. Back in August, in a letter to his fellow countrymen and women regarding health care, he ended it by saying:
    “In short, in the US, you pay more, get less, and die younger than we do in Europe. What part of that don’t you understand?”
    Well, hey there! That’s a danged good question! What part of that don’t we understand? Why is it that so many of us have to be dragged, kicking and screaming like half-witted little preschoolers, into the brave new world of change? What the hell is the matter with us anyway? How can it be that such a huge number of Americans cheerfully join movements of mass stupidity and salivate on cue to the sound of Dr. Glenn “Pavlov” Beck’s bell? It kind of makes you wonder, huh?
    Tom Degan
    Goshen, NY

  23. “and (2) an equally long overdue prohibition against health insurers kicking them back out.”
    I’ve wondered what the difference is between denying coverage for “pre-existing” conditions, which would supposedly be prohibited in this plan, and “uninsurable” conditions, of which I have heard nothing from either side. I don’t quite understand how a condition can be determined to be uninsurable if it hasn’t been discovered, ie, pre-existing, yet I have been told personally that insurance can be denied for the “uninsurable”.
    Am I just up in the night on this concern?

  24. I have to disagree with some of the premises of this analysis.
    First, the “chronically sick and chronically most expensive to care for” are already included in the current system – these are mostly elderly Medicare patients, so the bill will not change much there. The coming of the baby boomers, which is not a threat today, but a reality, will apply a big multiplier to those chronic expenditures.
    As to the “chronically uninsured”, I’m not too certain that they will be actually included in a system where premiums are bound to rise uncontrollably, along with the “patient directed” out of pocket expenses. Their ranks may actually increase.
    I really don’t see how the health care system will be any closer to functioning like an actual system and I must confess that I don’t quite understand what an actual system really means, unless you mean an all inclusive system in stable equilibrium, which I don’t think will happen anytime soon.