Benemax

Per our previous post, the 2006 MA Health Care Reform law is emerging in Congress as the model for national health care reform legislation. However, MA voters, not generally know as right wingers, have a different story to tell: only 26% think their state’s reform effort “has been a success” while 37% say it “has been a failure”.

Would you buy a product if 37% of its users rated it unsatisfactory and only 26% gave it a positive recomomendation? Then why should Congress?

New polling data from Rasmussen shows a nation almost evenly divided on the question of health care reform. By a margin of 50% to 45% voters favor “the health care reform plan proposed by President Obama and congressional democrats.” 

However, 75% of those opposed to the plan say they are “strongly opposed” while only 50% of those in favor of the plan feel strongly.

As the debate intensifies and Decision Day nears, voters may be expected to focus more on their own circumstances and their own self-interest. That is not good news for proponents of reform: only 12% believe that health care reform will improve the quality of their health coverage while 37% think the quality of that coverage will decline if reform becomes law.

The intensity of the opposition and the scepticism of public health coverage are land mines for reform proponents. However, this polling also suggests that there may be broader support for a “kinder, gentler” version of reform that would preserve what’s good about the current system (e.g. diversity, choice, consumerism) and concentrate just on fixing what isn’t (e.g. cost escalation, the uninsured).

In researching its June 25th article on the US health care system and the ongoing efforts to reform it, The Economist did some extensive polling…and the results contain some surprises.

First, while 69% believe the system requires “fundamental change” (at a minimum), only 52% are actually “dissatisfied” with the current system and only 32% say their personal care is anything but good or excellent.

Second, by a 2 to 1 margin, Americans think that cost control is a higher priority than covering the uninsured. Therefore, 67% believe reform can be achieved without spending any more money and only 21% would support a reform plan if it meant higher premiums or higher taxes. Only 15% support taxing health benefits or rationing health care.

Conclusion: the idea of health care reform is very popular but any plan that actually reforms anything is going to make a lot of people very unhappy. This puts Congress squarely between a rock and a hard place. People clearly expect action…but any action Congress takes is very likely to be punished at the polls in 2010. A classic case of “damned if you do…”

It seems increasingly likely that the final Health Care Reform package coming out of Washington will look very much like the reform program adopted by Massachusetts in 2006:

(1) A mandate for every individual to obtain qualifying coverage.
(2) A “pay-or-play” requirement for most employers.
(3) Generous subsidies for low and middle income earners to purchase coverage.
(4) A government-run insurance exchange to help individuals and small businesses obtain coverage.

So if Massachusetts is to be the model for the nation, shouldn’t we at least take a look at just how well reform is working there? When enacted, the plan had two goals: Increase access to health care and hold down the cost of that care. How well has it accomplished these objectives?

The Cato Institute, a conservative think tank, estimates that the number of uninsured has been cut in half by the MA plan…leaving the other half, of course, still uncovered. But almost 60% of the newly insured MA residents have their coverage paid for by government subsidies. So the “reform” part of health reform has actually resulted in new coverage for just 20% of the state’s uninsured.

On the other hand, the cost of health insurance is 30% higher in MA than the national average and the rate of increase is at least 50% above national norms.

The reform plan itself is costing 25% more than originally projected (surprise, surprise!) and is now in deficit by roughly $400,000,000. The Economist (6/25) goes so far as to say that the state “faces possible bankruptcy unless it can find a way to rein in costs.” Proposed solutions include cutting benefits, cutting subsidies, cutting payments to doctors and, of course, raising taxes. Probable solution; ALL of the above! 

But why stop there? More creative minds are whispering about a statewide “global budget” for health care spending. This, of course, is simply a euphamism for wage (medical professionals) and price (insurance carriers) controls and (health care) rationing. These whispers have panicked the insurance community and led to a cycle of higher than average price increases at a time when the pace of health benefit inflation is slowing in the rest of the country.

But at least people are getting health care now who weren’t getting it before; correct? Not so fast!

Almost 5% of MA residents report foregoing care because they cannot schedule an appointment with a doctor…an increase of 35% since 2006; and the average wait time to see an internist has grown from 33 to 52 days. Wait times in Boston are longer than in any other major American city…by a factor of 2!

That government interference in the health care market has not achieved its stated objectives is no surprise at all. What is surprising is that the experiment has unraveled so quickly…and that it is now on the verge of being adopted on a national scale. Heaven help us!

A recent article (June 25) in this respected British journal analyzes the U.S. Health Care system and the current efforts to reform it. In the process it explodes some “urban legends” (see excerpts below):
“Some common diagnoses are wide of the mark. One is price gouging by drug companies. In fact, pills account for barely a tenth of health-care spending in America… Europe does indeed spend less on new branded drugs, but also uses fewer generic drugs and pays much more for them…Greedy drugmakers are not the main cause of America’s runaway costs.”
“Nor are baby-boomers, though they are often blamed for health-care inflation because there are a lot of them and they are getting old. Ageing will clearly push up costs in time (see our special report in this issue), but it is not the main culprit yet.”
“Doctors’ generous pay is another popular culprit. But doctors in several European countries are well paid too. The OECD estimates that general practitioners in America earn 3.7 times the average wage. Their British counterparts earn 4.2 times their national average. American specialists earn 5.6 times the average wage, against 7.6 times for their Dutch colleagues. Yet health-care costs in Britain and the Netherlands remain lower than America’s. The real problem is not how much American doctors are paid, but how. The system of medical reimbursement warps incentives for doctors, insurers and patients that lead Americans to consume more and more medical services. There is strong evidence that Americans use pills, procedures, scans and other expensive forms of health care more often than do patients in other rich countries, and not always to good effect.”

Actually, there are two correct answers: 60 and 51 (really 50, see below). The bills currently being drafted in Congress would need 60 Senators on board to end debate and force an up or down vote. But if it turns out 60 Senators can not be found to support any one bill, there is a second option: treat Health Care Reform as a budget matter rather than a policy matter. In that event unlimited debate is not allowed by Senate rules so only 51 Senators (or 50 plus Biden) would be needed to ensure passage.

But there is a problem with this strategy. Any plan passed under the 51 vote rule would be required to pay for itself within 5 years and be self-supporting thereafter. Currently, none of the draft legislation under consideration would pay for itself in 10 years, let alone 5. Any reform bill passed under the 51 vote rule would have to be a considerably scaled down version of what’s being discussed right now.

So the advocates of comprehensive health reform would seem to have three options:

(1) Convince 60 Senators to support a total overhaul of the health care system;

(2) Craft a compromise that 60 Senators, probably including at least a couple of Republicans, can support; or

(3) Settle for a greatly scaled down version of reform under the 51 vote rule.

The Senate Finance Committee, chaired by Senator Max Baucus, released its draft health care reform proposal over the week end and - Good News! - it does NOT include a Government-run Health Benefit Plan (aka Public Plan Option).

Main features of the draft proposal:

> Insurance Reform (underwriting, rating, etc…).

> Mandate for individuals to purchase health benefits when affordable options are available; tax penalities for non-compliance.

> Subsidies for persons up to 300% of poverty line.

> Tax credits for small businesses to provide health benefits.

> Tax incentive for small businesses to sponsor workplace wellness programs.

> Insurance “Exchanges” to operate on a state by state basis.

> Possible support for non-profit cooperatives at the state level to compete with insurers.

> No employer mandate to provide insurance but some employer responsibility for the cost of subsidies and Medicaid if the employer does not contibute toward coverage. (more on this in future posts)

The Congressional Budget Office, the agency responsible for putting a price tag on proposed legislation, has determined that the health care reform legislation proposed by Senator Kennedy’s Health, Education, Pensions and Labor Committee would cost $1 trillion dollars ($1,000,000,000,000). Equally disturbing, CBO says the Kennedy bill would still leave 37 million people uninsured!

The Blue Dog Coalition of 51 conservative Democrats has gone even further than the  more moderate New Democrat Coalition. The Blue Dogs want to limit the availability of any new Public Health Benefit Plan to areas of the country that lack “sufficient choice” among private insurers and/or where conventional cost containment techniques have failed.

Those of us hoping to preserve (or create?) competitive, free market health care and health benefit systems have something to cheer about today. Two groups of House Democrats have released “terms and conditions” that any Public Health Benefit Plan must meet to be acceptable.

The New Democrat Coalition represents 69 moderate Democrats and the Blue Dog Coalition represents 51 conservative Democrats. Both groups say that any Public Plan must preserve a “level playing field”. That means that the Public Plan must be acturially sound, fully reserved, and financially self-sufficient (no taxpayer subsidy); it must abide by all the same rules and regulations as private insurance plans. In addition, the Public Plan could not reimburse doctors at Medicare rates and it could not require doctors to participate.

Question: will the Federal Government even want to play in the health benefit arena if it has to play by the same rules as everyone else?