Sunday, November 29, 2009

Let the Health Care Debate Begin

So the debate in Congress by the Senate over health care reform is finally about to begin. For those in favor of reform, it has been terribly frustrating to put up with the same tired arguments of “socialized medicine” and “government takeover of health care” from those opposing the Democrats’ proposed bills. It’s one thing to criticize; but the problems faced by those who are unable to obtain affordable health insurance are real. What is the Republican alternative to help these people?

A recent article by conservative columnist and physician Charles Krauthammer
Kill these bills, then do health reform right sounds promising because it at least suggests some alternatives. But do they really solve the problem of the uninsured or are they little more than right-wing talking points?

Of course the reader can read the entire commentary in the link above. But I would like to provide some excerpts with some commentary of my own.
The United States has the best health care in the world -- but because of its inefficiencies, also the most expensive.
The quality of health care in the US is not in question. But it doesn’t matter how good health care is if one cannot get access to it due to lack of insurance. There is no question that we spend far more per capita than other countries that do provide true universal health care. Most importantly, it is only in the US where people die or go bankrupt for lack of coverage. Instead of pretending that the US is the best at everything, we should look to adopt what works in other countries.
The bill is irredeemable. It should not only be defeated. It should be immolated, its ashes scattered over the Senate swimming pool.
The bill even in the eyes of supporters has many flaws. But it least it would end the practice of people being denied coverage for pre-existing conditions or dropped because they got sick and had to file a claim. Do any Republican alternatives even address this?

Then do health care the right way -- one reform at a time, each simple and simplifying, aimed at reducing complexity, arbitrariness and inefficiency.

First, tort reform. This is money -- the low-end estimate is about half a trillion per decade -- wasted in two ways. Part is simply hemorrhaged into the legal system to benefit a few jackpot lawsuit winners and an army of extravagantly rich malpractice lawyers such as John Edwards.
The idea behind tort reform is that if we limit damages that patients can sue for, the cost of malpractice insurance would then go down which would help to make health care more affordable.

But in a paper by Americans for Insurance Reform,
Stable Losses/Unstable Rates they come up with this conclusion:

Specifically, AIR has consistently found that total payouts (by insurance companies) have been stable, tracking the rate of medical inflation, but premiums have not. Rather, premiums that doctors pay rise and fall in sync with the state of the economy, reflecting profitability of the insurance industry, including gains or losses experienced by the insurance industry’s bond and stock market investments.

They explain further:

Insurers make most of their profits from investment income. During years of high interest rates and/or excellent insurer profits, insurance companies engage in fierce competition for premium dollars to invest for maximum return. Insurers severely underprice their policies and insure very poor risks just to get premium dollars to invest. This is known as the “soft” insurance market.

But when investment income decreases — because interest rates drop or the stock market plummets or the cumulative price cuts make profits become unbearably low — the industry responds by sharply increasing premiums and reducing coverage, creating a “hard” insurance market usually degenerating into a “liability insurance crisis.”
So the assertion is that the low interest rates and poorly performing stock market of this last decade has been the main driver of higher malpractice premiums and not an increase in claims. If so, then the main beneficiary of tort reform will be none other than the insurance industry which has been vigorously lobbying for and financing the opposition to health care reform.

Second, even more simple and simplifying, abolish the prohibition against buying health insurance across state lines.

Some states have very few health insurers. Rates are high. So why not allow interstate competition? After all, you can buy oranges across state lines. If you couldn't, oranges would be extremely expensive in Wisconsin, especially in winter.
But health insurance is an extremely complex product that is subject to regulations that each state has established. As explained by in their paper Across State Lines Explained:

Allowing the state laws chosen by the insurance company, rather than the laws of the state where the consumer lives to govern health insurance regulation is what makes this policy so controversial.
But if some states do indeed have high rates because of very few competitors, why don’t other companies become licensed in those states to provide some competition and lower prices now? Maybe it’s at least in part because of the
McCarran-Ferguson Act passed by Congress in 1945 which has granted the health insurance industry an exemption from federal anti-trust laws and captive markets with no curbs on price fixing and other anti-competitive practices. In addition, critcs feel that allowing this competition across state lines may provide for better prices for the young and healthy but would still not address the needs of those who cannot get insurance because of pre-existing conditions.

Third, tax employer-provided health insurance. This is an accrued inefficiency of 65 years, an accident of World War II wage controls. It creates a $250 billion annual loss of federal revenues -- the largest tax break for individuals in the entire federal budget.
My, what would the Tea Partiers who watch Krauthammer on Fox News have to say about this idea to raise taxes? In any event, Krauthammer overstates the amount of savings compared to the
White House Office of Management and Budget which predicts an estimated $155 billion loss in 2010. Even so, it does raise an issue of fairness. Should people who get their health insurance from an employer get a tax subsidy when those who buy insurance on the open market have to use after-tax dollars? (A similar argument can be made for home owners who can write off mortgage interest compared to renters who get no tax break.)

Even so, this would be a tough sell since it would mean a tax increase for the middle class when many of them are already struggling. Repealing the Bush tax cuts for the wealthy who are not struggling would be a better way to help pay for all of this.

Insuring the uninsured is a moral imperative. The problem is that the Democrats have chosen the worst possible method -- a $1 trillion new entitlement of stupefying arbitrariness and inefficiency.

The better choice is targeted measures that attack the inefficiencies of the current system one by one -- tort reform, interstate purchasing and taxing employee benefits. It would take 20 pages to write such a bill, not 2,000 -- and provide the funds to cover the uninsured without wrecking both U.S. health care and the U.S. Treasury.
Insuring the uninsured is a moral imperative. The proposed bill does reek of stupefying arbitrariness and inefficiency. But with the simpler option of single-payer (Medicare for all) not politically feasible, this bill is probably the best we can hope for. Since the Clintons’ attempt at health care reform back in 1993 was blocked, the number of uninsured has skyrocketed during the years of subsequent Republican control of the presidency and Congress. Now that the Democrats are again in the majority and trying to pass health care reform, we again get Republican cries that they can do health care reform better.

So do the Republicans have a better way to do health care reform or are they little more than obstructionists working on behalf of the health care industry as many have charged? For a start, why doesn’t Krauthammer write up his proposed bill so we can all examine and debate its merits or faults? Certainly 20 pages is not a lot to ask of a professional writer. Would the proposed bill truly insure the uninsured (including those with pre-existing conditions) or would it mostly just ignore their existence? Let the debate begin!

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