Guaranteed Healthcare

Faced with increasing political momentum toward some kind of health care reform, the hospital industry, together with other major stakeholders, wanted to retain a place at the negotiating table and protect its interests in whatever legislation resulted.  Urgency increased after the drug and insurance industries offered up their pledges to help with financing reform. Then the stakes increased further when the Obama Administration put out a proposal to cut payments to hospitals by $224 billion over the next ten years to help fund reform.

In May, 2009, President Obama held a high-profile event in the White House, convening leaders from the health care industry to a meeting to discuss reform of the U. S. health care system. Participants included representatives from the insurance, drug, medical device, and hospital industries as well as business, labor and organized medicine. This “alliance” for health care reform produced a voluntary, unenforceable “commitment” to reduce the costs of health care by 1.5 percent, which would amount to some $2 trillion over the next 10 years. Promises were vague, such as promising to “cut both overuse and underuse of health care by aligning quality and efficiency initiatives”. The White House was quick to call the meeting “an historic day, a watershed event, because these savings will help to achieve comprehensive health care reform.”

In June, 2009, Pharmaceutical Research and Manufacturers of America (PhRMA), the drug industry’s trade group, followed up on its offer to help finance expanded health coverage within health care reform. PhRMA’s CEO, Billy Tauzin, was very familiar with politics and the drug industry. The former Republican turned Democrat Congressman from Louisiana had played a leading role as chairman of a House committee in design and passage of the Medicare Prescription Drug, Improvement and Modernization (MMA) Act of 2003. That bill turned the new prescription drug benefit over to the private sector and prohibited the government from negotiating drug prices as the Veterans Administration does so effectively. Tauzin then used the revolving door between government, industry and K Street to become CEO of PhRMA and a top lobbyist in Washington, D.C. with a reported salary in the range of $2 million a year. He continued to lobby against price controls of drugs or importation of drugs from Canada or other countries. (Lueck, S. Tauzin is named top lobbyist for pharmaceuticals industry. Wall Street Journal, December 16, 2004: A4)

We are told by supporters of health care reform bills in the Democrat-controlled Congress that they will save us money in the long run and contain skyrocketing health care costs. But the CBO has projected that the most comprehensive proposal yet, America’s Affordable Health Choices Act of 2009 (H.R.3200 in the House), will add to the federal deficit by $239 billion over 10 years. So the Administration and most Democrats find themselves on the defensive over these costs as Republicans have a field day in proclaiming the risks of even higher deficits than we already are facing. As Rep. John Boehner (R-OH and Republican leader in the House of Representatives) says:

“Americans want a better plan to lower costs and improve the quality of health  care. —It’s not just about health care, it’s also about out-of-control government spending that’s piling debt on our kids and grandkids” (Boehner, J. Americans aren’t going to buy health care spin, Mr. President. Op-Ed. USA Today. August 13, 2009: 11A).

Now that we’re into the recess period of bitter and distorted controversy over the shape of health care reform when the Congress re-convenes in September, it is timely to reassess the extent to which legislation this year may or may not meet the goals for reform. Recall that the three major objectives are to provide near-universal access to affordable health care, contain health care costs, and improve quality of care.

As the leading proposal out of the gate for health care reform in this session of Congress, the House bill (H.R. 3200, America’s Affordable Health Choices Act) during this August recess stage is considered the most robust of the various proposals so far coming out of congressional committees. This act has an overall goal to “reform the insurance marketplace to ensure that everyone can purchase quality, affordable health insurance coverage”. It would do so by creating a not-for-profit public option to compete with private insurers in an attempt to “keep them honest.”  The public option would be offered to individuals and small businesses through a National Health Insurance Exchange whereby people can comparison-shop among available plans. Most operational details as to how these exchanges would actually work are still unclear.

A recent post on the National Center for Policy Analysis's (NCPA) web site by Dr. Scott Atlas of the Hoover Institute and Stanford University expounded on 10 "surprising facts" about our health care system.  After an opening statement that U. S. health care has been denigrated compared to other developed countries around the world, Atlas proceeds to present ten under-recognized "facts" that we should consider before turning to a larger role of government in health care.(1)

As the debate over health care reform becomes all-out warfare between parties and within the Democratic party, Congress will adjourn shortly for its August recess with many of the key questions unresolved.  However, the bill as shaped by two or three House committees (H. R. 3200, America’s Affordable Health Choices Act) gives a point of departure to consider the most that we might expect out of such a bill.

The so-called public option has emerged as the single most divisive point in the health care reform proposals being shaped in various committees in Congress. Republicans have risen up to demonize it as a government takeover of health care on the slippery slope toward socialism. Within the powerful Senate Finance Committee, it is being called a deal-breaker for any bipartisan bill.

Together with an individual mandate described in the last post, an employer mandate is an essential part of all legislative health care reform proposals now being considered in Congress. The House bill requires employers with payrolls larger than $250,000 to contribute 72.5 percent of health insurance premium costs for full-time employees and 65 percent for families. The current Senate proposal calls for employers to pay at least 60 percent of premium costs for their full-time employees. Employers with annual payrolls of more than $400,000 would be penalized for non-compliance by paying a payroll tax up to 8 percent of wages (House bill) or $750 for each full-time worker and $375 for each part-time worker (Senate bill).

We’ve been here before. With much fanfare, health insurance mandates were enacted by Massachusetts in 2006 and touted by many as an effective model to reform health care. After three years’ experience, here is what the “Massachusetts Miracle” tells us about mandates and their costs.

As July starts to wind down and the August recess by Congress fast approaches, the debate over health care reform enters a late stage with increasingly bitter partisan differences over very divisive issues. Every day we hear about more Democrats siding with the Republicans, especially the Blue Dogs worrying about the high costs of plans on the table. Senate leaders are threatening that higher taxes and the public option will be deal-breakers. With President Obama pressing both parties for an early resolution of their differences, the hope for a bipartisan bill this year is rapidly fading. Each day brings new terms into the debate, ranging from triggers to exchanges and coops, without enough details or track record to gain our confidence that any real reform is on track.

Corporate America has highjacked the health care debate and threatens to make real health care reform impossible. Since corporate dollars trump individual votes, we have a corpocracy, not a democracy.

History tells us that societal blind spots are common throughout the centuries from one society, culture or continent to another. An example in the late 1700s involves the first cancer hospital in the world. It was established in Reims, France, but was forced to leave the city in 1779 because of the public’s fear of contagion — most people then believed that cancer was spread by parasites.

Now that we have a new president espousing health care reform and a Democratic majority in both houses of Congress, isn’t this a time to be excited and optimistic for long-overdue reform?  Much as we would like to say “Of course!”, we cannot.  The “reform” effort is already way off the track, despite the hype of “progress” in the uncritical mainstream media.