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Passing Any Health Care Reform This Year Will Depend Upon The Battle Between Winners and Losers.

16 Jun 2009
Posted by Pete Davis

Health care reform is very hard.  That's why Presidents Truman, Nixon, and Clinton have failed to make it happen.  No matter what you do, some gain and some lose.  However, the current system is increasingly painful too.  The trick will be to spread the cost of improving the system enough to maintain political support.  Whether Congress can pass any health care reform this year will be decided in the next few weeks.  A lot will depend upon the how much the winners win and upon how much the losers lose.

At 5 p.m. yesterday, the Congressional Budget Office released preliminary estimates of Title I of the Senate HELP Committee's draft health reform bill.  It would cost $1.042 trillion over the next 10 years to provide health insurance to between 16 and 17 million Americans who currently have none.  Another 15 million would shift off of their employer's health insurance to the more generous federally subsidized insurance that would be offered to those up to 500% of the poverty.  (See table on p.25.)  Those subsidies would be available to singles with incomes of up to $52,950, couples up to $67,700, and families of four up to $106,015.  Those numbers are well above the U.S. median incomes. (See Table 1.)  That's quite a redistribution of income.

Paying for a $1 trillion health care reform will take a lot of money out of the pockets of health care providers and taxpayers.  President Obama has proposed tax increases and Medicare cuts of that amount, but the majority of them have received lukewarm support at best, even from members of his own party.

President Obama's made a strong pitch for health care reform Monday before the American Medical Association Monday.  He said in part:

"If you like your health care system and your doctor, the only thing reform will mean to you is your health care will cost less. If anyone says otherwise, they are either trying to mislead you or don't have their facts straight."

"Now, if you don't like your health care coverage or you don't have any insurance at all, you'll have a chance, under what we've proposed, ..."

In other words, the only way to have health care reform is to generate enough efficiency gains so those who like current coverage don't lose anything and so that those getting better coverage don't impose too much cost.  That sounds like a stretch, but Robert Pear of the New York Times recently described how the White House gets there.

Something approaching 30% or $700 b. of the $2.2 trillion of U.S. health care costs fail to improve health outcomes, but squeezing out even half of that will take years.  That doesn't mean we shouldn't try.  Our current health care system is falling apart for anyone who can't pay, and 47 million uninsured is a politically unacceptable number.

It would be nice to think President Obama and Congress could solve this with one mega-bill this year, but I suspect we'll end up disappointed with a lowest common denominator bill that makes some lower cost improvements.  Then we'll look for next year's bill and the bill the year after that.

 

"First do no harm".

"If you like your health care system and your doctor, the only thing reform will mean to you is your health care will cost less ...", plus insurance for the uninsured too!

A free lunch! But isn't there some saying about bewaring politicians who promise free lunches?

As for new efficiencies paying so much of the cost of national health care, I do believe that Orszag gave away that game in his recent response to Virginia Postrel's challenge that Medicare cost efficienies be enacted first, so we can see they are real and count their actual value, before writing them into the budget.

Orszag's reply was that that idea won't work politically, because AARP (and thus the political system) will block any kind of benefit "cuts" unless there is a payment received for them in the form of extended benefits.

Now think about that for a moment: Orszag admitted that the politicians won't cut waste simply because it is waste, even on the order of 30% waste.

Of course he's right. No politician ever gets a vote for denying benefits -- much less medical benefits! -- to anyone. That only costs them votes. "Heartless politician denies needed medical care to..." The same stick that is being use to beat up the insurance companies in Congressional hearings today. Add to that all the money and support the politicians get from medical providers -- from hospitals to unions of health care workers to doctors to suppliers et al -- and that is one whole lot of political incentive against efficiency. Where is the political incentive for it?

Cost efficiency in the health care system, as in any economic system, requires strong incentives for continuous efficiency improvement. Where are those politicial incentives?

Without them, the best we can hope for is Orszag's deal -- widened health coverage in exchange for AARP agreeing to a one-shot adoption of cost saving measures (which probably will be politically undercut forever after).

The worst and maybe more realistic case is widened coverage with the politicians then reneging on delivering cost savings -- for what is there to enforce their obligation to do so, if they really don't want to and their constituents don't want them to?

Maybe Postrel was too tough on Orszag, I'd propose a much simpler and easier challenge.

Right now with have a government run single-payer health care program, Medicaid, with a 40% fraud and graft and "legal graft" rate from coast to coast (or at least on both of them).

Not 40% spent on inefficient procedures, but on felonious fraud and graft, and on "legal graft", Tammany's famous term for what sure looks like graft to the eye, but which isn't technically illegal because the people who write the laws and regulations write them that way because they are profiting from it all.

Here's what would be my challenge to Orszag: Just get all this massive fraud and graft out of Medicaid (and Medicare too). That's got to be easy, right? Let's pick the low-hanging fruit first. Is there any hanging lower than that?

And let's do that before imagining that national health care will be paid for by efficiency savings. Because if Obama and Orszag and the Congress can't even do that ... forget about it.

Of course, this does leave the interesting, fundamental question of how such massive fraud and graft has festered in this government run health care system until now. E.g., why did Spitzer, when he was AG here in NYS, totally ignore the state's notorious Medicaid fraud, which was his explicit responsibility to police, to instead go charging off after Wall Street, which was the jurisdiction of the SEC and Feds?

Could it be because that's how basic political incentives direct the provision of politically managed health care?

Do Obama's plans propose to change or reform these political incentives in any way?

Or do his plans simply propose to create a commission of experts that will identify "most efficient" medical practices that the politicians will retain all their current incentives to totally ignore, just as they always have?


Cost of health care

The Democrats in the House of Representatives have proposed a health insurance plan with serious consequences for employees, employers and all taxpayers. The plan includes a surtax beginning in 2011, a surtax that would rise significantly in 2013 if savings in Medicare and Medicaid are not met, requirements that employers pay for workers’ health care coverage and a penalty for those employers who don’t pay.
Let’s get a few things straight. First, all taxes destroy money. Tax is the opposite of stimulus. Just as federal deficit spending stimulates the economy, federal taxes depress the economy. A tax on anyone, rich or poor, is a tax on the economy.
Second, if you (objective "you," not meant to be personal) believe it costs you nothing when the rich pay more taxes, you are naive. The rich are the people who invest in the businesses that hire you and your relatives. With less money to invest, less money will be invested, and there will be fewer jobs. Think jobs are hard to find now? You ain’t seen nothin’ yet.
Third, employers never have and never will pay for anything. There is no magic pot from which business costs are paid. All business costs either are passed on to customers (i.e., you and me) or are deducted from your and my wages. The government wants you to think businesses pay and you don’t. It simply isn’t true. When your company pays, it costs you.
Fourth, those “savings” in Medicare and Medicaid actually come out of the pockets of doctors, nurses, hospitals and pharmaceutical companies. Already there is a shortage of doctors, nurses, hospitals, and effective drugs. So what do you think cutting back on the compensation of these health providers will accomplish? If you said, “Fewer doctors, nurses, hospitals and drugs,” give yourself a gold star.
The House plan is a nightmare for America, and for what? Because the House believes employers and employees are better able to pay than is the government. Never mind that the economy is starved for money, businesses are struggling and people are out of work. Never mind that in 1971, the government gave itself the unlimited power to create money and that contrary to popular faith, deficit spending never has caused inflation, recession or any other negative effect. Never mind that no government check ever has bounced, not even during the Great Depression.
With absolutely no supporting evidence, the federal government believes it is poor, and can’t afford health insurance, while the public is rich, and can afford anything. The government hopes it can tax, tax, tax and cut, cut, cut, and nothing bad will happen.
My prediction: The plan, if approved, will be a disaster of such magnitude, even this recession will look tame by comparison.

Rodger Malcolm Mitchell
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www.rodgermitchell.com


Don't do more harm - Two important points

"It would cost $1.042 trillion over the next 10 years to provide health insurance to between 16 and 17 million Americans who currently have none."
So about 1 trillion over 10 years, that's about 100 billion per year. And how much did our adventure in Iraq cost? And the tax rebates for the wealthiest 0.1%?
(Not to talk about bailouts for some investment bank)

The previous commenter, Jim Glass (not verified), said
"...Medicaid, with a 40% fraud and graft and "legal graft" rate...." I don't think it is that high, normally I saw ~3% of budgeted Medical/Medicare expenditures are overhead, admin expenditures, including fraud. But Jim Glass conveniently forgets another BIG item:
Some 27% or such of your health insurance premium goes into overhead, administration, denial of claims, CEO salaries, and only about 70% go as payments for doctors, pharmacies, hospitals. (see also [1] for detail and comparison to Canada).
(I didn't believe the 27% number until I had a quarrel over some bill; insurance claimed one payment amount (on the EOB [Explanation of Benefits], as payment, after rebate), but the check to the hospital -which hospital admins kindly faxed me - was some ~7 or 8% less (than the already rebated amount). I called the phone number on the check, and learned that this company - which processes payments for out-of-state insurers - takes out this amount for processing these insurance payments, and that the health care providers must give this fee as a rebate.) So if there's such a big loss in one step, the ~27% overhead figure sounds believable. Some HMOs might be more efficient though.-- As the 27% overhead taken by private insurance companies is such a big amount of money, any proposal to change this is doomed; the insurance industry has a 100-million dollar ad campaign against it as soon as it is recognized as a threat to their 27% take. (Remember the Harry and Louise ads when the Clinton plan was announced (ca 1993)?).-- If Jim Glass doesn't get paid by them, he is at least taken in by their propaganda, to focus on the wrong problem (which is most likely NOT 40% of Medicare payments, and if people moved to another state, and NY Medicare still pays their bills they had incurred while in NY, so what? ).

The other point is that other developed countries have BETTER or comparable outcomes and everyone covered, with expenditures much less as percentage of GDP. So it would appropriate for us to study how they do it, and learn from their experience. (They somehow all include a public/governmental health care plan, and strict regulation of private insurers).

Anybody discussing health care and insurance not mentioning these two facts does not have your best interests at heart (but probably gets a share of the ~27%).

---------------------------
[1]S. Woolhandler et al.,
Costs of Health Care Administration in the United States and Canada NEJM (03) 349:768-775
http://content.nejm.org/cgi/content/short/349/8/768
"Results: In 1999, health administration costs totaled at least $294.3 billion in the United States, or $1,059 per capita, as compared with $307 per capita in Canada. After exclusions, administration accounted for 31.0 percent of health care expenditures in the United States and 16.7 percent of health care expenditures in Canada. Canada's national health insurance program had overhead of 1.3 percent; the overhead among Canada's private insurers was higher than that in the United States (13.2 percent vs. 11.7 percent). Providers' administrative costs were far lower in Canada."
H/T to http://scienceblogs.com/transcript/2008/08/lets_talk_about_facts_this_el...


Status quo is not an option

We can't continue with the present healthcare system. It is unsustainable over the long term.

Do the Republicans have any better ideas? I haven't seen a sound proposal for reform from any of them . . . one which makes healthcare affordable and accessible for all Americans, and cuts the outrageous inflationary curve for healthcare. The cost is killing our economy.

Bill Moyer said it best yesterday. Profiteering in providing healthcare to Americans is wrong . . . capitalism isn't a good way to run certain human endeavors. It isn't pro-life, and it isn't Christian.


Bill Moyers' religious economics.

Bill Moyer said it best yesterday. Profiteering in providing healthcare to Americans is wrong ... capitalism isn't a good way to run certain human endeavors. It isn't pro-life, and it isn't Christian.

My God! (since we are invoking religion) does he ever have a point. And health care is the least of it! Capitalists profiteer in providing food, clothing, and shelter too!

Think about it: The typical person can go for decades without seriously needing medical care -- heck, the human race survived hundreds of thousands of years without any of what we'd call medical care.

But without shelter, clothing, food, anybody will be **dead** in just days. Think of the power of extortion that results for capitalists -- the immorality in profiting from letting other people just live day-by-day!

Babies! They profiteer from providing milk to babies!

Is there a better way to supply these most basic necessities of life to the people? A way that is more Christian, more pro-life, more moral?

Certainly. Let's follow the successful precedent we've already established in our nation's single-payer (no profiteering insurers!) government health care plan for the needy -- Medicaid!

The example is right there in front us all, stretching from coast-to-coast. Left coast...
~~~
"Of $34 billion annually spent by the Medi-Cal program for health care for some 7 million poor Californians, state officials estimate that as much as 40 percent or nearly $14 billion is stolen in fraud."
~~~
... to Right coast...
~~~
New York Medicaid fraud may reach into billions ... "It's like a honey pot," said John M. Meekins, a former senior Medicaid fraud prosecutor in Albany who said he grew increasingly disillusioned before he retired in 2003. "It truly is. That is what they use it for."...

James Mehmet, who retired in 2001 as chief state investigator of Medicaid fraud and abuse in New York City, said he and his colleagues believed that at least 10 percent of state Medicaid dollars were spent on fraudulent claims, while 20 or 30 percent more were siphoned off by what they termed abuse, meaning unnecessary spending that might not be criminal. "So we're talking about 40 percent of all claims ..."
~~~
Wow, 40% of claims on on both coasts, not for inefficient procedures, this is f-r-a-u-d being discussed. Pretty consistent! Maybe it's God's work?

If it is, let nobody say our politicians are trying to interfere with it!
~~

"Over half of states now spend less than one-tenth of 1 percent of their Medicaid budgets to fight fraud ... New York cut the number of health-department staffers combating Medicaid scams from 200 to 50 [as] expenditures have grown by $30 billion ...

"Federal supervision of these fraud-fighting efforts is almost nonexistent. The GAO reports that the federal agency responsible for overseeing Medicaid employs just eight people, wielding a minuscule budget of $26,000 annually ..." [CJ]
~~~
Amen! Let no politician interfere with God's way!

So get in contact with Bill and tell him we have seen the truth.

The Christian, pro-life method of supplying life-vital goods and services is: Single-payer provision by the government!

Once the venal profiteering is eliminated -- and our politicians are finally fully empowered in protecting the moral integrity of a non-profit system -- how can things help but be better?

And how can this possibly be true only here, with Medicaid? Where's the logic in that?

Why would one believe that removing the venality of the profit motive, and entrusting all to our politicians, would produce such benefits only for Medicaid, and not in the provision of other even more basic necessities of life (not to mention all the rest of health care)? And for that matter the less-basic wants of life too?

Get back to Bill and tell him he underestimates the power of his own belief. The Christian, pro-life resort of removing the venal profit motive from human transactions and replacing it with single-payer provision by government ... how can it help but be The Way?

And tell him good luck with The Rapture -- he's earned his spot there.




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