Catching up from when I was gone….this article on health reform went up at Spot-on a couple of weeks back. It’s called The Not So Common Good.

We’ve been hearing a lot about the problems of the uninsured. We’ve
been hearing more how the cost of healthcare is making it harder and
harder for individuals to afford insurance, and for employers to
provide benefits to employees. Those are the drivers for why health
care reform has suddenly emerged as a political force – even if the
governor who once led discussion of the topic, Mitt Romney, is
backpedaling away from his "liberal Governor of Massachusetts" pro-gay,
pro-big government stance so that he can appear sufficiently
conservative to win a Republican primary or two.

But the train is out of the station on the reform message. Even though the chances of real reform are slim,
everyone and their dog has a plan. Most of these plans are
self-serving. And even the ones that aren’t are generally built on
continuing the employment-based health care system that got us into
this mess in the first place; Senator Ron Wyden, economist Vic Fuchs
and the single payer crowd being the honorable exceptions. Continue

This is bizarre, but both Wal-Mart and the SEIU want the employer-based health insurance system to end. So apparently today they’re going to agree about that.  Of course as Wal-Mart has a completely fungible workforce, any attempt to make it pay for  its employees health care either via a pay or play system, or by increasing taxes, will lower its profits. And so it has vigorously opposed any pay or play attempts, and has forced the rest of its unionized. health-benefits providing grocery competitors more or less into its line of thinking.(See this old chestnut about Wal-Mart vs Costco on that score).

So that the SEIU and other unions have backed them into a corner on this means one of three things . Either Wal-Mart is worried about its public image of being a dreadful employer. Or that it’s genuinely worried that its employees not having health insurance lowers their productivity. Or that it believes it can back a universal insurance plan that means someone else (presumably the taxpayer) will pay for its workers to get insurance and thereby get the issue off its back.

You can guess which one I think it is.

Eliot Spitzer calls a spade a spade in his speech about reforming healthcare in New York. He goes after two of the biggest subsidized sacred cows: 1) Medicaid costs which are double the national average. In fact New York spends more on Medicaid in total than California, with a much lower population. 2) Subsidies to teaching hospitals in the form of fake graduate medical education payments.

… health care decision-making became co-opted by every interest
other than the patient’s interest.  Government abdicated its
responsibility to set standards, demand results and hold institutions
receiving billions in state tax dollars accountable to the State and to
the people those institutions serve. 

Let me give you a few examples:

Take the Berger Commission.  This was a process that should never
have been necessary in the first place.  In most industries, when the
demand for a specific service falls permanently, as has the demand for
long stays in hospitals, supply inevitably follows.  Yet because of
wasteful State subsides and the State’s failure to make strategic
choices, tax dollars have been spent on empty hospital and nursing home
beds instead of insuring our 400,000 uninsured children.  Now we face
dramatic instead of gradual change to rationalize a system in desperate
need of reform.

These changes are painful – and we will use every effort to
implement them in a way that is sensitive to patients, communities and
workers.  But because of the State’s inability to confront the status
quo, these are the kinds of hard choices we must now make to increase
health care quality and decrease health care costs. 

Another example of institutions driving the system is the way the
State pays for graduate medical education.  New York’s Medicaid program
has spent more than $8 billion over the last five years on graduate
medical education – $77,000 per graduate resident in 2005 compared to
similar states like California that spent just $21,000 per resident. 

This education is critically important, but we’re currently funding
it in an excessive and irrational way that isn’t directly correlated to
the actual students being taught – thus costing the State exorbitant
amounts of money in what amounts to general subsidies to teaching
hospitals.  In fact, when we looked closer at this broken formula, we
discovered that many of those dollars are going to pay for phantom
residents and doctors who don’t even exist.

The same lack of accountability has also been evident in the special
subsidies the State gives hospitals to underwrite labor costs.  In
January 2002, with hundreds of millions in new revenue on the table for
health care, the time was ripe for a debate on how best to invest this
money.  But instead of a public debate, the State committed billions of
dollars in new spending to underwrite a portion of the increased costs
of the hospitals’ pending labor agreement. 

As a result of this deal, well over $3 billion alone was pumped into
the health care delivery system with little to no accountability.
Don’t get me wrong: labor costs are real, and the need for training is
real.  What made this a poor choice instead of a wise investment is
that the money was not based on the number of patients served and it
didn’t create a robust system of accountability for institutions that
were growing out of control.

Good luck, Governor. Given who you’re taking on, you’re going to need it! Go read the whole thing.

UPDATE: Some just excellent discussion on this in the forums. JD writes in to comment: "I actually think Spitzer can (mostly) pull it off, though he is
directly confronting both SEIU (Local 1199 has 300,000 members in NY, I
think) and HANYS (the New York hospital association, which has massive
clout). Of these, my guess is that 1199 will be more open to compromise
for the sake of true structural reform. They are showing themselves
more and more willing to think outside the box, find win-win solutions,
and all that. HANYS, not so much. But we’ll see.
As for health plans (my area), it is still too soon to tell how
they’ll react. They won’t like the Medicaid premium freezes, though one
of Spitzer’s key cabinet members (Deborah Bachrach) was an
advocate/lobbyist for the PHSP association. PHSPs are local non-profit
Medicaid-only plans, most of which are owned by hospitals. Collectively
they have over a million members in the state. This and other
appointments mean that Spitzer’s policies are going to be informed by
people who know the ins-and-outs of both the payer and provider side,
and so we are unlikely to see misguided efforts to "bleed the bastards"
which will accomplish, exactly, nothing."

RP writes "…for every dollar we manage to cut from our Medicaid program, we will be
giving up 50 cents in federal contributions. Perhaps we should, but a
lot of that money goes to NYS residents whose health care jobs (about
10% of total jobs here in New York City, for example) might disappear
or whose wages and salaries would be cut."

I’m up over at Spot-on discussing the basics of Bush’s Health Plan. Go read and return to comment.

I was awakened during my slumber through the State of the Union by a
mention from President George Bush of a health care proposal that I
almost agreed with.

No, I haven’t come around on health savings accounts, and association health plans.
Nor did I join the Republicans in their standing ovation for
malpractice reform. The Bush proposal that woke me up was the creating
a tax deduction for health insurance that would apply to everyone.
Potentially this really matters, and inside it is the germ of the right
idea. But I guarantee you that most Americans won’t have a clue where
this came from, and why it made it into the president’s speech.

Let me explain a little. Health insurance for the vast majority
of Americans (60%+) comes from their employers. 99.9% of Americans
think that this is a natural relationship that costs them nothing and
they, in general, have no idea what it costs their employer. This is
though a historical accident, with its roots in a wage freeze policy
during WWII when employers added benefits to attract workers because
they couldn’t raise pay rates. The idea became fixed after the Supreme
Court ruled that health benefits didn’t count as taxable income.

So, today, you’re better off getting insurance paid for by your
employer than taking the cash, getting taxed and buying the same
insurance yourself. Lately self-employed people have also been able to
deduct their health insurance costs so the only saps left paying for
health insurance with post-tax dollars are those who are not
self-employed, don’t get it from their insurers and actually buy it
themselves.

You may think that’s not very fair, and you’d be right. Which is why Bush’s proposal is interesting.Go on, Continue …

Although he’s regarded as a sell-out by Harpers, Obama seems to be taking the sensible tack that Hillary Rodham Clinton won’t survive the Democratic primaries based on her pro-Iraq war vote and her incrementalist health care strategy. Today he called for universal care by the end of the next Presidential term.

The AP report seems to think that makes him the same as Hillary and Dennis Kucinich. That’s just ignorance of the press. Clinton has been explicit about doing this incrementally and Kucinich has been explicit about wanting single payer. Obama is, my guess, too smart to lay out any specifics. But an incremental reduction over 10 years in the uninsured rate (as AHIP favors, for example) is not the same as universal insurance by 2010.