David Coates

Health Care for the Ages: Initial Reaction to the Passage of Health Care Reform

Yesterday (March 21 2010) was a good day. The House vote for health care reform was a good vote. It started us on a journey towards universal health care. It threw up a road block against some of the most egregious practices of the insurance industry. It established the principle that when you’re healthy you pay in so that when you’re sick you can take out; and that if you don’t earn enough to make that paying easy, tax dollars provided by the better paid should be used to ease that burden. Good principles – the healthy looking after the sick, the affluent helping out the near poor – a kinder and more compassionate social settlement than the one in place the day before: the one in which if you couldn’t afford to buy health care, you didn’t get it; the one in which if you became very sick, you ran a real risk of losing the very health cover you needed.

So yes, a good day – one that will be long remembered – a good day, but sadly not a perfect one.

The Senate bill was significantly weaker in its reforming zeal than the House bill, and it remains an open question how much of that weakness will be corrected through reconciliation. The answer is likely to be less rather than more.

  • We are likely to remain stuck with 50 state-level exchanges, not the one national one that the House bill initially contained.
  • We are likely not to find in those state exchanges any public option worthy of the name, so that the exchanges will be a site for competition only between private insurers, private insurers whose coffers will be overflowing with tax payer dollars paid over to them through the subsidies given to their low paid customers.
  • We will have to live with the Hyde amendment enshrined into law, and extra hurdles created within the exchanges for women wishing to obtain health insurance that will give them the right to choose.
  • And even if it is a better week in the Senate than I fear, we will still remain wedded to a health care system based on profit-taking private insurance companies, one in which the main drivers of rising costs remain uncontrolled.

So yesterday was both an ending and a beginning. It was an ending. It marked the moment when the US health care system was at last reset to give access to affordable health care to virtually all Americans. But it also was also a beginning. It set the stage for the next struggle: on how to keep that health care genuinely affordable, by addressing the inflationary forces still at work deep inside the system.

As costs rise, and they will rise, Republicans will tell us that the fault lies with over-regulation. They will be wrong. The fault lies with the limits on regulation, limits that Republicans and their conservative allies within the Democratic Party fought so hard to enshrine in the legislation just passed.

  • Limits on real competition, and on the full use of consumer power.
  • Limits on the ability of federal authorities to negotiate down drug costs or to end the crazy paper chase of insurers keen to take in your money but not to pay it out.

The President is taking to the road this week, to defend what was won yesterday against Republican attempts to roll it back: to roll in back in the court of public opinion, and even possibly to roll it back in the court of law. That defense needs to be built on the clear argument that regulation and cost control go together – that he who pays the piper calls the tune – that the task now is to so regulate the newly subsidized private health care system as to bring its costs tightly under public control. As we said in Answering Back

Conservatives and libertarians like to portray government involvement as the problem in American medicine: inflating costs on the demand side by giving free care, and on the supply side by over-regulating health providers and insurance companies. This, as we saw, was largely the way advocates of privatization currently explain America’s unique lack of access to medical cover by the poor: not that people are disproportionately poor here, but that regulations disproportionately inflate costs. But the converse is actually true. Costs inflate in the US health system faster than in equivalent health systems elsewhere because our system is less regulated than theirs are. Not over-regulation, but the fragmentation of the system into a myriad of ostensibly competing units, is the extra bit that the US brings to the cost-inflation table. …Prices escalate [faster here] because nobody controls the system as a whole. Doctors do not. Consumers do not. The Government certainly does not. Insurance companies try, but they fail. Indeed, in a real sense, there is no one system for anyone to control. [And because there is not, the lack of control] then adds a powerful inflationary dynamic of its own. The well-insured are left free to seek expensive care that guarantees benefits, however small. Hospitals are left free to exploit their local monopoly positions, able to set prices at will; and no one purchaser of any one drug is large enough to constrain the capacity of those supplying it to set whatever price they deem appropriate. The inflationary dynamic at work here is partly one of defensive medicine – doctors over-medicating for fear of later litigation if they do not. It is also one of cost-shifting. Maybe 2 to 3 million people are now employed to pass the costs of particular treatments from one insurance company to the next, in a paper chase that absorbs maybe 20 percent of the entire health bill. And it is also one of fee-setting. Most physicians set their own prices; and until the era of “managed care” the insurers largely paid what the doctors billed without questioning the clinical judgments involved. The 1990s experiment with “managed care” ended that at least – shifting control from doctors to insurers – but only at the cost of an administrative arbitrariness which alienated all of us from the system, and yet still failed to stem the rise in costs.

David Coates holds the Worrell Chair in Anglo-American Studies at Wake Forest University. He is the author of Answering Back: Liberal Responses to Conservative Arguments, New York: Continuum Books, 2010.

He writes here in a personal capacity.

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