The nebulous nuts and bolts of health care reform

December 27, 2009 | By | 3 Replies More

How is that “health care reform coming?  New York City’s Mayor Michael Bloomberg, a savvy businessman with a long and successful career, is skeptical regarding the pending health care reform bills.  This is what he had to say on Meet the Press today:

MAYOR BLOOMBERG:  You know, if you really want to object to something in this bill, number one, I have asked congressperson after congressperson, not one can explain to me what’s in the bill, even in the House version.  Certainly not in the other version.  And so for them to vote on a bill that they don’t understand whatsoever, really, you got to question how–what kind of government we have.  Number two, when they talk about bending the curve, as, as the governor said, bending the curve is a flimflam euphemism for increasing costs, but we’re going to say we’ll do it at slightly lower rate than we would have otherwise.

GOV. PATRICK:  That’s not what I’m talking about.

MAYOR BLOOMBERG:  I understand that.  But they are not talking about reducing costs,  they’re talking about chancing the first derivative.

MR. GREGORY:  Slowing it, right.

MAYOR BLOOMBERG:  Slowing the growth down.  And when you look at where the cost savings are going to be, well, they’re going to cut something out of Medicare and Medicaid.  Now, anybody that runs for office will tell you, you don’t do that.

MR. GREGORY:  Right.

MAYOR BLOOMBERG:  I mean, the bottom line is it’s  so politically explosive, it really would be a first time in the history of the world if they ever cut anything out of either of those two programs.

I suspect that based upon the utter inability of any credible knowledgeable person to frankly state the cost of “health care reform,” that Americans are in for a rude awakening.  Consider the starting point:  the terrible financial condition of Medicare. Here’s how bad it is:

The present value of unfunded obligations under all parts of Medicare during FY 2007 over a 75-year forecast horizon is approximately $34.0 trillion. In other words, this amount would have to be set aside today such that the principal and interest would cover the shortfall over the next 75 years.

No private non–criminal corporation would submit operating budget this insane.  Yet this is the type of program that we have come to expect from Congress, and it is based upon scores of accounting tricks.   These sorts of tricks and traps are exactly what has been alleged about the current proposals for “health care reform.”   Consider the arguments articulated in the November 13, 2009 issue of Reason.

Congress is using “every budget gimmick in the book” to conceal hundreds of billions in healthcare-reform costs that will lead to “massive tax increases” and higher insurance premiums, one of the country’s leading healthcare experts warns.

Early on, Obama originally pledged that his plan would save the typical American family $2,500 a year in healthcare costs.  The main purpose of health care reform was “cost control.” (see Obama’s State of the Union Address from February 2009).  Where is this cost control in the current bills?  How can we possibly cover tens of millions of people who can’t otherwise afford coverage, yet save lots of money for those who are paying their way?

Both of the current proposals both depend on a government-funded free-market program administered by for-profit insurance companies.  Paul Krugman has argued, however, that the free market doesn’t work regarding health care.

[Y]ou don’t know when or whether you’ll need care — but if you do, the care can be extremely expensive. The big bucks are in triple coronary bypass surgery, not routine visits to the doctor’s office; and very, very few people can afford to pay major medical costs out of pocket.  This tells you right away that health care can’t be sold like bread. It must be largely paid for by some kind of insurance. And this in turn means that someone other than the patient ends up making decisions about what to buy. Consumer choice is nonsense when it comes to health care. And you can’t just trust insurance companies either — they’re not in business for their health, or yours.

The second thing about health care is that it’s complicated, and you can’t rely on experience or comparison shopping.. . .

We are a country filled with people who abuse their bodies and then depend upon the health care system’s expensive treatment.  The annual cost of obesity alone in the U.S. is $200 Billion.  In fact, we spend less than one percent of total health care spending on prevention.  Where is the “stick” (or the “carrot”) in the current proposals that will actually make obese, chain-smoking and otherwise reckless Americans change their wasteful and destructive ways?

These are my concerns about the current proposals.  Well, those concerns and these and these and these . And now we have the business-savvy mayor of NY stating that he has yet to find a member of Congress who understands how the current proposals would really work.  And we have a Congress with a history of not actually dealing with fiscal catastrophe, but only putting it off for a few years.   We have a system that has yet to explain how it will force Americans to live healthier life styles, in order to save that money.  We have competing 2,000 page proposals loaded with lots of stuff that will only be revealed AFTER “reform” is passed.  I can already hear it:  “We didn’t catch that obscure language inserted by [financially interested corporation] that will cost taxpayers an additional $40 Billion every year”).

What sustains the momentum is that we will purportedly be insuring thirty million more people, even though it is not clear what we will be giving up in order to do that.   Things that motivate the idea of “health care reform” are some low-hanging fruit such portability and restrictions on denying coverage for pre-existing conditions.  I’ve advocated that we should pass laws regarding these obviously needed measures separately, so that we can then really look carefully at the rest of the proposal separately, to just it on its own merits, if we can cut through the morass of accounting gymnastics that apparently serve as the backbone of most of the package.   Another thing that motivates passing “health care reform” is the name of the legislation itself.   Who could possibly be against “health care reform.”  A good title does wonders for ramming through indecipherable legislation.

This is the current health care “reform,” as best I can discern it.  It’s not looking promising, because it’s not looking financially sustainable.


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Category: Health Care Reform, snake oil

About the Author ()

Erich Vieth is an attorney focusing on consumer law litigation and appellate practice. He is also a working musician and a writer, having founded Dangerous Intersection in 2006. Erich lives in the Shaw Neighborhood of St. Louis, Missouri, where he lives half-time with his two extraordinary daughters.

Comments (3)

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  1. Erich Vieth says:

    To understand the evolution of the "health care reform" legislation, you need to follow the money. Consider the extent and flow of that money, as described by Lawrence Lessig of "Change Congress." See the short video here for the sordid details, including the case of Joe Lieberman, whose constituents favored the public option by a margin of 68% to 21%. But millions of dollars of corporate influence convinced him to vote against the public option.

    Lessig is less interested in calling legislators "evil" than in changing the system by enacting citizen-funded campaigns: clean money elections.

    We need a clean system of campaign financing—one where politicians pay attention to regular people, the very small-dollar donors who made such an impact in 2008.

    Reforming the system will never be Congress’s first priority until a grassroots movement gives politicians a choice: You can have our money or special interest money, but not both. Now is the time to push for this change, and that’s why the donor strike is important. . .

    What legislation are we rallying around? The bipartisan Fair Elections Now Act was offered last Congress, and was offered again this year by Sens. Dick Durbin (D-IL) and Arlen Specter (R-PA), and Reps. John Larson (D-CT) and Walter Jones (R-NC).

    Under this legislation, congressional candidates who raise a threshold number of small-dollar donations would qualify for a chunk of funding—several hundred thousand dollars for House, millions for many Senate races. If they accept this funding, they can’t raise big-dollar donations. But they can raise contributions up to $100, which would be matched four to one by a central fund. Reduced fees for TV airtime is also an element of this bill. This would create an incentive for politicians to opt into this system and run people-powered campaigns.

    It’s a great bill. . . What are the chances this will pass?

    Better than they’ve ever been. A poll by Celinda Lake in November 2008 found the public supports such a proposal 69% to 13%, including overwhelming majorities of Republicans, Democrats, and Independents.

    For more information visit Change Congress.

  2. Niklaus Pfirsig says:

    The elected lawmakere aren't evil. They are generally ignorant of the will of the people. This may be partly by choice of political affiliation, but I think it is largely due to a common lobbying technique that selectively isolates the legislator from his constituents.

    The lobbyists use several techniques to achieve their goal. One method is to selectively anger a vocal minority into writing their legislator urging legislation that favors the lobbyist's client.

    For example, a few years ago there was legislation pending to prohibit smoking in all restaurants.

    The tobacco lobby maintains a mailing list of heavy smokers which they have collected through premium merchandise programs, (send in 2500 upc labels from brand X cigarette packs and get a cheap quality jacket with the company logo).

    Heavy smokers started receiving free "newsletter" with a few feel-good articles and an editorial opposing the legislation. My father, a chain smoker, started receiving the newsletters, so I read a few of them.

    The editorial, the "payload" behind the newsletter, ranted about how the covernment want to take away everyone's God-given right to smoke wherever they pleased. These editorials were carefully crafted to incite a letter writing campaign opposing the legislation.

    Meanwhile, those citizens favoring the legislation took little action, because most saw no reason why anyone would oppose it.

    So the lawmaker gets a ton of mail from his constituents opposing the bill, and littl support fo it. He may believe that this represents the will of the people and votes against the bill.

    The health care insurance lobby is considerably more influential than the tobacco lobby. Their main tactic is to create F.U.D. (Fear, Uncertainty, and Doubt) in a large sector of the public through outright lies, half truths, and spin as a way to create opposition to any health reform.

  3. Erich Vieth says:

    According to Robert Kuttner, Obama's health care "reform" bill has become toxic to the Democrats.

    "The bill helped about two-thirds of America's uninsured, but did almost nothing for the 85 percent of Americans with insurance that is becoming more costly and unreliable by the day — except frighten them into believing that what little they have is at increased risk of being taken away."

    I agree entirely with Kuttner. The backroom deals, and the $1 Trillion subsidy to private insurers, plus the total lack of cost controls for those of us who must continue to buy health insurance is stinking up the effort. Combine Obama's lack of candor on health care reform with his love affair with Wall Street and his "best work" has become a recruiting tool for conservatives. That is why Martha Coakley, a shoe-in to replace Ted Kennedy, is about to lose in Massachusetts.

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