Politics with Marc Ambinder

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Jun 11 2009, 10:05 am

Health Reform: Diagnosis, Cure, In Progress

That nyaaaaaaaah you heard yesterday was the sound of Republicans realizing that Democrats are pressing ahead with comprehensive health care reform a lot more quickly than they had previously anticipated. The frenzy of lawmaking has made it difficult for Republicans to try and frame the issue, and they're late to the game. We have a pretty good idea, at this point, of what the national health insurance picture will look like post-reform. And privately, Republicans are pessimistic that that they can gin up enough public anxiety to prevent a major transformation that reflects, in general, the Democratic Party's principals.

President Obama makes the broad case today, attempting to further kindle a sense of urgency (as if there wasn't enough already!), in a major, programmatic speech. And on Monday, Obama brings his case to the most ornery and important of constituencies: the American Medical Association... the doctors... (the AMA's members tend to be more skeptical than the average doc)... the folks whose decisions influence the system more than any other actors.

Here's a brief sketch of the state of play, as of today. Consider it a clip-and-save of what you'd need to know if you were asked to give a cocktail party encapsulation of the reform efforts.

1. The White House's apparent flexibility on such items as the oomph given to a "public plan" and the way to pay for reform is... actually very real. There is a consensus among Obama advisers about what they'd like to see, but there is also a consensus that what emerges from Congress will be good enough.  What would Obama like to see? My guess is that they like the idea that Sen. Olympia Snowe is proposing. Snowe would allow a robust "public plan" (see below) to kick in if and only if the insurance industry can't come up with a way to reduce health care costs, cover everyone and raise the general level or care. Time horizons differ, as do penalties.

2. For a "public plan" -- that is, a government-run health insurance plan -- to do what reformers want it to do, it needs to be financed with something other than the premiums that individuals or employers pay into it. So far, only the House of Representatives' health care bill contains a "public plan" that is remotely like an additional entitlement. And even in the House, it's not clear whether the plan is big enough to do what reformers really want it to do: pressure health insurance companies to forfeit in a few years because the government's plan is so manifestly better than the private options.

3. Sen. Max Baucus seems to have delineated the boundaries of what type of public plan he'd accept. He could possibly accept a plan that bypasses government altogether; Sen. Kent Conrad has thought about regional non-profit plans that are "public" in the sense that they aren't subject to profit motives but not government-run in the sense that bureaucrats won't make decisions.  Or, Baucus could accept a non-robust public option, run by the government, that nonetheless is a real but limited competitor to private plans.

4. Don't pay too much attention to the debate about public plans; there doesn't seem to be enough support for a robust plan that would transform the system into single-payer.  Pay more attention instead to the debate about financing. Right now, the most conservative estimates of what universal health care will cost the government over 10 years would require an infusion of about $200 billion to $300 billion more dollars than is currently budgeted.  Either premiums will have to rise, the government will have end the exclusion on taxing health care premiums (similar to an idea that John McCain supported as a presidential candidate and one that may test the limits of the White House's vow not to raise taxes on those earning less than $250,000 a year), benefits will have to be reduced; care will have to be rationed; or administrative costs have to be strangled.  Obama has endorsed a few measures to avoid tax hikes; he'd give a Medicare evaluation panel the power to set prices subject to a congressional veto.  But the question is far from settled, and there are major political considerations to bear in mind, like regional variations in the cost of health care.  The current tax-free nature of health benefits is a sop to the middle class at the expense of those without insurance, and it will probably find its way into the dustbin.

5.  In the long-term, what makes universal health care affordable is its universal-ness. Healthy individuals pay, in essence, for the chronic care of sicker individuals. The trick is to figure out how to force healthy people who pay for health care out of pocket to buy insurance. They account for roughly half of the uninsured population. Requiring them to buy insurance would solve the problem, but figuring out how to penalize people who refused is politically tricky.  White House officials want universal, universal coverage, but they're open to plans that phase in a mandate; these plans would start with children and work their way up to healthy adults.

Comments (2)

Marc,
You say
"We have a pretty good idea, at this point, of what the national health insurance picture will look like post-reform."
Did I miss one of your posts where this has been nailed down? It doesn't even seem like we are positive which model Congress will choose, how could we possibly know what the national health insurance picture will look like post-reform?

BenDoubleCrossed

Cost shifting

Why does a four day hospital stay cost $21,000?

America was hooked on health care the way junkies were hooked on smack. The dealer gave free samples until the client was hooked.

When I was a young man and America was the world’s manufacturer. Factories provided free and complete health insurance as part of the benefits package. Because it was free it was abused. Mom took children to the emergency room for a rash and to the doctor for a small cut. Demand was artificially high.

Over time manufacturing jobs moved overseas and were replaced with lower paying service economy jobs. And employers offered health insurance with less coverage and higher deductibles. Was it because America could not compete with manufacturers in countries where government paid for health care. Irregardless, American leaders signed GATT and NAFTA into law!

And America’s leaders permitted millions of illegal aliens to cross the border to do work American’s would not do. Our schools educated their children, our State governments gave them drivers licenses, our banks granted them mortgages and our hospitals provided them health care.

Robin Hood wears whites. Patients with good insurance policies and patients with no insurance policies received inflated invoices to cover the costs of those who could not pay. Hospitals robbed from the rich to provide health care for the poor.

President Obama made the analogy everyone should have to buy health insurance just like every motorist is required to buy auto insurance. But people choose to own a car. Were you asked if you wanted to be born?

If government run universal health care is the answer then private insurance has no place at the table. Where is freedom when government has the power to tell you how to spend after tax dollars? Requiring elderly and the poor to buy health insurance will force some to give up food or shelter!

Nonetheless, since everyone will have government health care, the cost of a hospital stay should be reduced to the price of a high end hotel! Cost shifting will have been replaced by the treasury printing more money.

WAKE UP AMERICA!

Real wealth cannot be created with a printing press. It only creates inflation. Congress must do away with the Fed and reclaim responsibility for regulating the money supply.

Do not bail out failed corporations. Allow free enterprise to transfer wealth to companies that make good decisions.

Do not impose new mileage and pollution requirements on an automobile industry already reeling from a failing economy.

Do not pass Cap and Trade. It will increase the cost of energy and exacerbate America’s failing economy and oppress the poor and middle class.

Do create new jobs in America and keep the wealth here: The Germans fought WWII with synthetic gas produced from coal. America has 1/4th of the coal reserves on Earth. Liquefy coal and declare energy independence from Arab enemies. Now that is sustainable!