The Health Care Debate: Just the Facts (posted by DT)

In recent correspondence, some of my commenters have complained that my tone is too dismissive, too one-sided, and therefore can not succeed in winning anyone over, or that it doesn’t focus on “solving problems”, just bashing the opposition. So in that spirit I want to lay out my understanding of the health care debate in Washington, with a goal of swaying those of you who are against “Obamacare”.

Problem: The health care system in the US is broken. It is estimated that 40 million people (15% of the country) don’t have health insurance. A Harvard School of Public Health study says that 45,000 people die each year because of lack of access to health care services. That’s way more people than have died in all terrorist attacks against the US- ever. For those of us who do have health insurance, we are at risk to lose it at any time if we lose our job or if our insurance company decides to cancel it due to an expensive medical condition. If you own a small business and buy your own health insurance, and a family member gets cancer, your insurance carrier can cancel your policy before they have to pay for all the treatments. At the same time, the US spends more money than anyone else on health care for no better results. Business Week compares the US to France:

France also demonstrates that you can deliver stellar results with this mix
of public and private financing. In a recent World Health Organization
health-careranking, France came in first, while the U.S. scored 37th, slightly
better than Cuba and one notch above Slovenia. France's infant death rate is 3.9
per 1,000 live births, compared with 7 in the U.S., and average life expectancy
is 79.4 years, two years more than in the U.S. The country has far more hospital
beds and doctors per capita than America, and far lower rates of death from
diabetes and heart disease. The difference in deaths from respiratory disease, an
often preventable form of mortality, is particularly striking: 31.2 per 100,000
people in France, vs. 61.5 per 100,000 in the U.S.…And France spends just 10.7%
of its gross domestic product on health care, while the U.S. lays out 16%, more
than any other nation.

So we’re paying more and getting less, and the uninsured are getting WAY less. So what’s the solution? There are many possible solutions to the health care dilemma. I’ll lay them out from the Left of the political spectrum to the Right:

Socialized Medicine: This is the system in the UK. The government is in charge of the whole system. They pay the doctors and own the hospitals. Basically the health system is treated like we treat the post office in the US. The VA health system in the US is socialized. This is not being considered by anyone in the more general US health care debate. Any reference to “socialized medicine” by critics of Obamacare is hyperbole and should be treated as such.

Single Payor: This is the system in Canada. Doctors and hospitals can be private, but payment all comes from one source- the government. Medicare in the US is single payor, for Senior citizens and the Disabled only. This is the solution favored by the American Left. It is deemed “radical” in the media, though I would point out that our closest neighbor already has it. My Canadian-born friends tell me that this system stinks, by the way, and they prefer the current US system (they all have health insurance). Single Payor is not under consideration in the current debate in the US, though there was a brief hope for the Left when the Senate proposed allowing people over 50 to join Medicare if they paid in. This was scuttled at the last minute in the Senate bill when Joe Lieberman changed his earlier position of support for reasons that are unclear.

“Obamacare”: This term is a misnomer, in that the plans passed by the House and Senate were led by Congress. Obama’s lack of leadership has been striking; I think he feared that the debacle of the Clinton initiative was due to Congress being left out of the process and so he has overcompensated in the other direction. The bills passed by the House and Senate are similar, and I won’t go through the differences here. The legislation rests on three connected concepts:

1. Insurance companies can not be permitted to deny insurance to anyone based on their pre-existing condition, and must cover all people who apply.
2. Given #1, everyone must be mandated to have health insurance, just as people in most states are mandated to have auto insurance to drive a car. If this principle is left out, healthy/young people would just stay out of the health insurance market and join only after they get sick. Insurance would cover too many sick people and would become unaffordable.
3. Given #2 and the high cost of health insurance, the government must subsidize poor people so that they can afford insurance. We can’t mandate insurance to people who can’t afford it.

Alternative plans that want to do #1 only won’t work for the reason denoted in #2. This plan does not change the insurance market, and does not require any change for those who currently have insurance. #3 will cost money and must be funded by taxes somewhere- plans to do this differ in the House and Senate bills. Cost savings are also part of this bill, through mandating efficiencies in Medicare by pushing harder to fund scientifically-based medicine and de-fund treatments that are not proven to work. Both bills are scored by the CBO as deficit-neutral, in that they pay for themselves through the Medicare efficiencies and tax revenues. The bills would in fact decrease the federal deficit (remember that Medicare & Medicaid are the biggest budget-busters at the federal level).

Market-Based Solutions: The Right has been working on ideas making the health care field more market-based, in order to increase efficiency and control costs. It has been suggested that tax breaks for employer-paid insurance has tilted the market and led to a situation in which consumers are too separated from the cost of the products. Since we don’t know or care how much an MRI costs, and our doctor doesn’t know or care, the doctor suggests using it and we say “sure” when we may not really need it. Or we might take a really expensive medication when a cheaper, older one would be just as good, but since we don’t consider cost we don’t make the efficient choice. There’s no question in my mind that making costs less opaque would help cut costs and increase efficiency. What it wouldn’t do is cover the uninsured. That can’t be done without revenue from somewhere or bigger deficits, both of which are seen as unacceptable on the Right at this time. So market-based solutions would be an improvement over the current situation but would not solve the problem as defined at the top of this post.

Tort Reform: There’s always talk of putting caps on jury findings so that doctors would practice less “defensive medicine” and be less afraid of lawsuits. This would have a miniscule effect on health costs and would do nothing to cover the uninsured. It may not be a bad idea, mind you, but it won’t solve the problem.

The New Republican Plan: Representative Paul Ryan of Wisconsin has put forward a plan for health insurance reform that finally gets specific about what a Republican plan would look like. I think it’s fair to criticize the Right in the US of carping from the sidelines without offering their own plan, but Rep. Ryan has now filled the void. He proposes taxing employer health plans, issuing tax credits, and expanding health savings accounts. The proposal encourages states to establish exchanges to purchase health insurance and also proposes that states regulate insurers to make sure they are not dropping people who get sick. The plan would still allow insurers to charge higher rates to sicker people, and along with much lower subsidies for the poor than in Democratic plans, millions of people would remain uninsured (there’s no individual mandate). Rep. Ryan also has a recent proposal to slow the growth of Medicare by giving Seniors vouchers toward their health insurance instead- these vouchers would grow at a slower rate than past medical inflation. This would indeed lower the costs of Medicare, but would also ration care for Seniors- poor people would eventually be unable to afford to purchase insurance even with their vouchers.

I think it’s clear that the plans of the Right would not solve the problems of our health insurance system. That’s not to say they have no value, just that they make change around the edges while continuing to allow tens of thousands of Americans to needlessly die every year due to lack of affordable health care.

The most common criticism of liberal health care reform is that “we can’t afford it”. Every other country in the developed world ensures full medical coverage for their citizens. None of them has fallen apart and citizens in them are not clamoring for US-style health care. The employer-based coverage system is itself inefficient and is a drag on economic innovation- I might want to stop working for my big company and start a business on my own, but I would be discouraged by inability to get health care for my family. If the reason we can’t afford it is because increased taxes are never acceptable, then I guess, yeah, we can’t afford it. But you don’t get something for nothing- my town voted to raise taxes last month to fund a new Middle School, because it’s a worthy use of our money. So is health care.

Look, I believe that the free market is the best way to produce a better flat screen TV. I don’t want any government meddling in that market, except to inspect enough to make sure that it won’t explode in my living room and burn down my house. Some things, however, are better provided by non-profit or government forces. We want government providing police and fire departments, fixing roads, running our military, inspecting food, educating our children, running child protective services, managing our money supply, etc. etc. etc. One of the things government should be doing in the 21st century is making sure that everyone has basic medical care.