FIND THE SALAMI
I am stirred, not shaken, to defend the Progressive Policy Institute. Really. At least in part. (Note . . . Speaking of health care, I need it more than most; below I refer to a "David Hackett," when I meant David Kendall.)
Mark Schmitt foregrounds something I believe to be true and under-appreciated: "[U]niversal health care is 'universally supported by people who don’t have to win elections and universally feared by people who do.'" It's not only because the conservative movement and narrow, monied interests oppose NHS and will attack politicians who get out in front of any such bandwagon. I also believe that certain major liberal institutions are decidedly unenthusiastic because their constituents are already well-insured. The political problems to some extent are closer to home than may be apparent. Of course, in general big important things are hard to do; we knew that.
It is heartening to see poll results showing majority support for NHS, but as an old communist once said, politics ain't arithmetic. It's more like boxing. To beat the champ, it's not enough to win on points. You have to knock him out.
When it comes to proposing social program initiatives, you can think in terms of two alternative strategies: blow them away, or salami slicing. I think of them as the outside game and the inside game. Jesse Jackson described them as tree-shaking and jelly-making. I think the dichotomy applies to politics in general.
The outside game is founded on a compelling, grand, accessible image of a new approach. The latter is the well-known incrementalist strategy. Start with something small and workable that lends itself to expansion, one slice of the salami at a time.
A year ago I went to a conference where Ray Boshara of the New America Foundation, a fine fellow, spoke of the left's focus on "scalable demonstration projects." When it came my turn to speak, I confessed that after years of attending left meetings, as well as meetings of "The Left," I had never once heard the phrase "scalable demonstration project." The left of my experience was into tree-shaking. But Ray was talking salami, the language of liberal parliamentary activism. It's how things usually get done, if they get done, although it's not where the political impetus for things getting done originates.
As people like Kevin Drum, David Sirota, Greg Anrig and others have been clamoring, somebody should always be out there with the apocalyptic tale of how the health insurance system is falling apart, and why single-payer NHS should sweep it all away. As this sort of feeling builds up, good things will happen, small at first, hopefully bigger later on. Both sides of the argument here seem to gloss over the process. You need the agitation to support legislative initiative, and you need legislative plans to bring agitation to fruition.
Until the revolution comes, what I want to know in regard to health insurance reform is, where's the salami? When it comes to action, transition is everything.
PPI, Mark Schmitt, and Ed Kilgore are in the salami business. So am I. Ed recommends the policy analyses by David Kendall of the Progressive Policy Institute. I think his diagnosis of the problems with the status quo and the Bush Administration proposals is mostly on target. In a nutshell, employer-based group insurance is under attack, and efforts to foster "shopping" and "choice" are misguided.
The most far-reaching component of the Kendall plan is to provide open access to "the health care choices Members of Congress enjoy." The rhetoric cleverly puts a conservative Member on the defensive, but the actual remedy is founded on "working with the states" to propagate such a system. I think this is a cop-out. If they wanted to, many big-state governments could move in this direction themselves. I'm not aware of any state officials suggesting that they be permitted to plow their Medicaid and Medicare money into any such arrangement. Kendall does not have a plan. He has a plan to make plans.
The rest of the Kendall speak to the efficiency of the system, but not particularly to the biggies of coverage and cost containment.
Health insurance is fundamentally a coordination problem, and the solution entails coercion. We need everybody in the same risk pool (or what is the same thing, separate pools with identical average risk). Some people will always have an incentive to evade such strictures. "Choice" facilitates evasion, and ultimately the disintegration of risk pools. Of insurance.
If you're not forcing people out of current health insurance arrangements they find satisfactory and you're creating a new public system, taxing everyone to pay for a new system implies a burden for those already paying for their own insurance. It's not just that this is politically hard. It's bad policy. We don't force people to take their kids out of private schools because we like the public school system. In the same vein, we have industries where people are making between minimum wage and $20,000 a year. A decent family health insurance policy can cost $9,000. Mandating such a system requires getting the subsidies right, lest we blow thousands of jobs out of the water.
At the same time, allowing individuals to opt in or out of a new program with premiums or tax subsidies raises the unraveling problem. The question is how to establish a system that is initially bifurcated, with a new public, second track that provides an escape hatch from the private and employer-based health insurance market. The new system has to be an improvement on what people have now, the better to induce voluntary migration. If single-payer can deliver better care at lower cost, it should grow at the expense of the old system. As politics permits, the incentives for people to move into the new system can be stepped up. To me this points to some kind of pay-or-play arrangement based on employers.
The virtue of single-payer campaigning is that it paints a picture of where we want to end up, but without a transition path, we'll never get there.


The private school analogy would apply only if people were barred from paying for extra medical care, which no one seems to be advocating. After all, those whose children who attend private schools still pay taxes that support public schools (unless we shift to a voucher system, which one might consider a rebate and would be a lousy move).
John
http://www.haberarts.com/
March 8, 2006 8:34 AM | Reply | Permalink
I'm also bothered by these things being touted as steps toward universal health care. It's not about idealists opposing small gains; it's about realists fearing proposals that make gains less likely.
We must insure everyone. You can believe in a single payer or some managed care system that puts everyone in the hands of HMOs, but either way, the key is that the funding and risk alike are spread over the entire population. That's an efficiency that controls costs, and without it, the plan is a recipe for assaults on higher taxes, a cry that always wins. It's also a way of demanding that the plan apply to all voters, forging a shared interest between those comfortable enough to rely on health care but realize uncertainties exist and empathize with others, the vast majority who struggle and sacrifice to afford health care, and those who can't, people who suffer egregiously for that and whose costs also burden us all. And without this shared interest, the plan amounts to another welfare program, and we know that caring for those in need is essential to the philosophy of government that many of us have, but is vulnerable to GOP class warfare.
Tell me: do you seriously think we'd have a program as successful as social security if it had been designed to cover only the poor? Would it even have passed? You might call it a step toward coverage for all, but call it what it would be: a political (and economic) disaster.
John
http://www.haberarts.com/
March 8, 2006 8:47 AM | Reply | Permalink
Interesting post. I read in the Wall Street Journal yesterday (3/7/06) a story on how the Canadian single-payer system is faltering and losing support among Canadian citizens. The gist of the article focused on the growing segment of the Canadian population turning to private medical companies due to the absurd bureaucracy which results in obscenly long waits for basic medical procedures. The problem with central healthcare is that we would fall into a similar mess almost from the get-go. Three month waiting lists for, say, knee surgery.
March 8, 2006 8:48 AM | Reply | Permalink
You know, everybody seems to make the point that it is just astoundingly difficult to make the transition to single payer.
Well, how difficult was it to do so with Medicare? What was the history here? Is the difference really just a matter of scope? Is it mainly that special interest are just going to dig in their heels like mad on this one, because it will put them out of business entirely? Based on history, what might one reasonably expect?
If you won't address those obvious questions, I wonder how seriously one should take you and your analysis.
March 8, 2006 9:01 AM | Reply | Permalink
John
Your point is excellent. Everyone can be for universal healthcare as long as it seems they are not going to pay for it. I think that is why there is a split between advocates and officeholders.
The model should be Social Security and Medicare the two successful social insurance programs. The key to gaining political support is a plan in which everyone pays and everyone benefits, it will also solve self-selection and cherrypicking problems.
Social Security, despite private pensions, withstood the Bush assult precisely because everyone is involved in the program. That should be how universal healthcare should be structured regardless how many payers there are.
Daniel A. Greenbaum
March 8, 2006 9:01 AM | Reply | Permalink
Medicare or some version of it was proposed by Truman. It passed inthe Johnson Administration 25 years later. It was opposed by the AMA as "socialized medicine."
Daniel A. Greenbaum
March 8, 2006 9:03 AM | Reply | Permalink
It's a good question. Part of the answer: a few differences with Medicare:
There was less to replace with Medicare, hence less potential for conflict.
The public sector was much smaller, hence an expansion of spending and taxes was easier.
Medical costs were lower and not increasing as rapidly.
We weren't looking at the aging of the population and the imminent retirement of the Baby Boom.
A social movement was around in the 60s and 70s that created pressure for an general expansion of government. Today we have the opposite sort of public pressure.
We had pretty solid Democratic control of Congress, unlike today.
I can't think of anything that makes it easier today, except for the implications of unsustainable cost growth, which the public isn't quite clued into so far.
March 8, 2006 9:12 AM | Reply | Permalink
I am not sure, but I think we have more people in our own public health care systems than there are people in Canada. Not many folks opting out of Medicare, the DOD or VA systems. Hummm. Maybe we should look at our home grown models and let the Canadians deal with their own issues.
Ron Byers
March 8, 2006 9:23 AM | Reply | Permalink
Daniel
Bush's Social Security plan was fairly sound. By all odds, the best argument AGAINST his plan has nothing to with the merits of it. Rather, the largest problem was the fact that it would take at least a small amount of effort on the part of the individual to maintain the private account. The stock option portion was fairly flawless because no matter which portolio citizen A chooses (From what I recall there were either three or five choices), it will be secured by the U.S. treasury. So in essence, nobody would lose money on the venture. I think it's pathetic when a solid piece of legislation fails for the simple reason that people cannot be trusted to work effectively with their own entitlements. Of course, another aspect to the program's defeat comes down to the fact that there is no way the Democrats could let a Republican get the credit for overhauling Social Security. And the Dems did a great job of killing it. But keep in mind it has a cost. Whenever the next Democrats wins the White House and proposes nationalized healthcare, you can rest assured that the GOP will unite and kill it just as the Dems did with Bush's social security proposal. A sad but true state of affairs.
March 8, 2006 9:24 AM | Reply | Permalink
That's funny Gettysburg, I didn't know Bush ever formally came out with a plan. I could be wrong. Now I agree he did float a few proposals, one of which you summarize, but one of his big problems was his unwillingness to actually push a single plan. That lack of leadership contributed to his inability to change social security.
Ron Byers
March 8, 2006 9:36 AM | Reply | Permalink
To give universal coverage without a tax increase -- or with a small increase, as insurance payments will be replaced with taxes -- one needs to slash costs on a huge scale. Single payer system may decrease tremendously the administrative costs. Moreover, by tracking effectiveness of operations and drugs and setting price controls there exists a potential to save even more on purely medical costs.
We are talking about saving of the order 30%. Hybrid plans would probably offer only a fraction of it.
By the way, a decent coverage of a family CAN costs 9k, but should it cost 9k? Especially if we are talking about an average family, not a self-selected buyer of an expensive policy?
Well insured middle class is hit with the medical inflation, even if it is in the form of a freeze of their net salaries that stems from the rapidly increasing cost of benefits. Moreover, the middle class is much less secure than before. Those who are free-lancers or self-employed are directly hit with very high increases of insurance rates. So the natural constituence of the radical reform should be broader than the ranks of uninsured and those who are sympathetic.
March 8, 2006 9:36 AM | Reply | Permalink
I think that your comment "I can't think of anything that makes it easier today, except for the implications of unsustainable cost growth" starts to get at the real political case for single payer nowadays, but doesn't really capture it fully.
Look, nowadays EVERYONE knows that health care costs are going out of control, and in the most telling of ways -- in the dent it puts in their pocketbook. Even as compared to 1994, the time of Hillary's aborted health care reform, the employee contribution today for a family plan is nearly twice as much, over $220/month. That HURTS. Where there's pain, there's room for effective politics.
And while it's certainly true that the era was different back then with regard to expanding the public sector, it's also true that the smear "socialized medicine" has lost much of its bite since the disappearance of the Red Menace. I think the American people are much more in a mood to think over the case for single payer based on its merits, as opposed to its ideology. If a government solution promises to be cheaper or more secure then people will pay good attention.
And we now have before us, in the form of the Medicare prescription plan, an excruciating example of the sort of confusion non-single player plans might induce into people's lives.
In short, there's a lot going on nowadays that makes the case for single payer a much easier sell than it's been in the past.
And it all starts with the pain of paying for medical insurance, and the worries of losing it altogether if you get laid off.
March 8, 2006 9:36 AM | Reply | Permalink
I think you are exactly right that universal healthcare should be structured like Medicare, as it increases the risk pool to the entire nation. Secondly, a single payor system would greatly reduce the administrative costs associated with the multitude of plans that now exist. Of course, this would put the insurance companies out of business except for supplemental insurance that would go beyond the basic program. It would also reduce the profits of Big Pharma because of the bargaining power a plan covering the entire country would yield. The insurance companies and Big Pharma would fight tooth and nail against it.
"War is a Racket." Brig. Gen. Smedley D. Butler
March 8, 2006 9:57 AM | Reply | Permalink
Words, words, words. Somebody show me the numbers.
How much would premiums i.e. taxes be for a single-payer plan? Have any acturaries run the numbers? How do they compare with private premiums now being paid?
And why think that there will be no place for private insurers to supplement a single-payer system? Personally I'm not expecting single-payer to cover everything. Realistically it can't. I just don't want to lose everything I've worked for if I get sick and maybe some help deciding between competing panaceas.
--Emma
March 8, 2006 10:03 AM | Reply | Permalink
Emma, I've been asking this question over and over myself and no one ever answers it. The best information I can find suggests that we now spend nearly $6,000 per person per year on health care (roughly $1.8 trillion in total for our population of about 300 million). People say single-payer will reduce costs by about 25%. I don't know if I believe this, but if we accept it as true, then we will be paying about $4,500 per person per year or $1.35 trillion. Now some of this cost is already paid by the government (through Medicare, Medicaid, etc.), but what isn't would have to be raised (I imagine) by new taxes (or by individuals paying part of their own cost).
I like the idea of single-payer, but I need to see someone seriously address the issue of how it will be financed before I can throw my support behind it unequivocally.
March 8, 2006 10:16 AM | Reply | Permalink
The experiences of other countries (i.e., UK, Italy) that have moved from failing private healthcare systems to NHSs has shown that you need 3 political factors in place simultaneously to pull off a dramatic reform: (1) a system whose failings are clear and painfully obvious to a large portion of the public; (2) weak political organization on the part of physicians; and (3) a pro-reform party in clear control of the government at the time. Right now in the US, it's arguable whether we have (1), we have (2), and we definitely don't have (3).
I'm always skeptical of policy reports or commentaries on the US healthcare system that bemoan its problems without offering any concrete proposal for an alternative. This is, of course, tricky, but it's absolutely essential for reform-minded people to think very carefully about what can work and what can't. For one thing, I'm not at all convinced that an NHS like Canada or Britian has would work here. An unstated principle behind any healthcare system is that it rations care in some way: in our system, we ration care by price (or ability to pay for coverage); in the above NHSs, they ration care by making people wait in line for it. In the US, however, rationing by queue isn't likely to work: because the healthcare sector expanded so dramatically with federal funds after WWII, most every small town in America has a large hospital nearby, which is not the case in Canada; giving universal coverage to people who have such easy access to physicians might be even more exorbitantly expensive than our current system.
Again, these are all details that need to be thought through. I'm no fan of the Bush ideas for "reform", but at least those are ideas that can be discussed.
March 8, 2006 10:21 AM | Reply | Permalink
ron
Bush did take the time to barnstorm the nation, however, and we all know how much he hates doing things like that. The issue was dropped when it became clear that it had no chance of getting through Congress. I had opined earlier on a different thread about the issue that entitlements such as social security, healthcare, etc. cannot be expected to originate from the White House. We live in a time where the partisan divide is too great and the risks of not getting re-elected are all too real (as Max hints at). Instead, such measures MUST come from Congress. Just like we saw the Democrats kill Bush's social security measures, the GOP killed Clinton's healthcare proposals in 1993-94. We live in a time where it's quite literally too big of a risk to allow any president too much success on any given issue. Congress should find a way to work together to get the healthcare issue solved because any president that tries to tackle it will get stonewalled just as Clinton and Bush have.
March 8, 2006 10:42 AM | Reply | Permalink
How was Social Security sold back in the '30s? What campaigns did the European countries use to sell their single payer programs? We have a plethora of role models; it reallly isn't necessary to re-invent the wheel. (If you want an unbiased account of the Canadian system, don't count on getting one from the pages of the Wall Street Journal.)
March 8, 2006 10:44 AM | Reply | Permalink
Gettysburg
The Bush plan or rather its presentation was a fraud. There is a crisis in Medicare because there is a crisis in healthcare. There is no crisis in Social Security. If Bush had allowed money to come out of FICA there would be a crisis.
The main problem facing Social Security is Bush's taxcuts. These so depleted the surplus that has been built up by the increase of FICA in 1982, the largest tax increase in history, that in order to meet all the obligations of the government and social security taxes will have to be raised perhaps by an amount that is politically impossible.
Bush tried to convince Americans that there was a problem with social security when there is none and that they should trade in the certainty of a social security check for a the risk of investing all of their retirement money. That was a terrible plan.
Daniel A. Greenbaum
March 8, 2006 10:45 AM | Reply | Permalink
That isn't what people were objecting to in the "plan," Gettysburg. The objection was that there was no way proposed to fund the private accounts. This would have made sense if the general fund was flush with cash, but that just isn't where we were by the time Bush proposed the "plan." If he had tried it in 2001, he might have gotten the thing through. Using the budget surplus to fund personal SS investments would have been hard for Democrats to oppose.
March 8, 2006 11:00 AM | Reply | Permalink
Presumably you'd hike corporate taxes somewhat. On balance the corporations who fund employee health care today would come out ahead, since that big expense goes away. (I'm assuming that the savings on benefits will be kept by the corporation, not split between corporation and worker. Safe bet?)
March 8, 2006 11:08 AM | Reply | Permalink
This is great stuff! Starting with Max and going straight through the comments. It takes us through the nay-saying yes-butters to a place where an actually strategy can be formed.
I'd only add that we need to keep in mind the cost-savings as the pork is cut out of the services provided by healthcare insurance (delaying payments to hospitals, huge administrative costs to medical practices,e tc.) and pharmaceuticals (arbitrary price-hiking of over 15% a year on many drugs, extensions of rights preventing marketing of generics, etc.). Meanwhile (unlike Canada, for example) we have the infrastructure in place, the rural hospitals, the labs, etc.
For someone who's self-employed, my experience with both private industries has been disillusioning in the extreme. Ending their gouging of healthcare institutions, practitioners, and consumers would make a huge difference.
March 8, 2006 11:37 AM | Reply | Permalink
I wouldn't call Bush's "barnstorming" a profile in courage. Everywhere he stopped his crowd was prescreened. In fact, I don't think Bush ever encountered a single person during his photo op tour who wasn't part of the Republican faithful.
Usually when a President goes on a promotional tour he is trying to gather support for an identified plan. In this case he was trying to, , , , hell I don't know what he was trying to do, because the longer his tour the lower his ratings sank. Maybe if he had started with social security reform before his raid on the social security fund he could have done something historic. As it is his Rovian approach to social security policy failed as usual. What Bush has needed for 5 years is to hire some reality based experts to advise him on how to help improve the lot of middle class Americans. He hasn't, opting instead to push slogans. As a result, except for some temporary tax cuts and a deeply flawed prescription drug bill, he has accomplished less that either his father or Bill Clinton.
Ron Byers
March 8, 2006 11:46 AM | Reply | Permalink
Rationing by price? Or rather by a cat-and-mouse game between HMO-like service providers and customers? The providers introduce co-payments -- e.g. my provider introduced co-payments for X-rays -- and deny permission for some procedures and drugs, only to relent when someone bitches a lot.
What is amazing is that providers do not try to run studies about effectiveness of drugs, operations, devices etc. Recently the government had such a study about an increasingly popular (and expensive) operation for emphysema sufferers, and as a result, pulmunologists basically stopped recommending it. One could think that consortia of insurers could do the same, but it is just not done.
I estimated that we can cut 30% of the costs. Surely, providing health care to currently uninsured and liberalizing the access to some benefits would work in the other direction, but that 30% would provide a lot of cushion.
My perception is that the current system is falling apart. Some states are cutting madicaid enrolments by hundreds of thousands (per state) and HSAs may demolish parts of the system that still work reasonably well.
March 8, 2006 11:52 AM | Reply | Permalink
Gee-
Now can we have the names of all those poor politicians who were defeated for their attempts to reform health care. Why, I remember the way Bill Clinton went down in flames in 1996....
Whoops, wrong alternative universe!
As for salami slicing, it only works-sometimes-if you're the party in power. The obvious crude example is the Republican Revolution with the Contract on Armerica in 1994. That wasn't salami slicing.
March 8, 2006 12:04 PM | Reply | Permalink
Alan
Bush's refusal to increase taxes (even nominally) was a problem. But the program he was touting did have a great deal of merit. It goes without saying that some alternative source of revenue will be needed to sustain Social Security in the coming decades. Whether or not it is private accounts we obviously cannot say at this point. Aside from Bush refusing to raise taxes, however, many slammed his proposal because they say it put people at risk when much of their social security was going into the stock market and that people would have to be cognizant of their investments. Being that the portfolios are limited in number and secured by the treasury, a lot of this rhetoric was misleading or altogether false.
March 8, 2006 12:09 PM | Reply | Permalink
It would be helpful to have a break out of that $1.8 trillion, wouldn't it. How much of it is Medicare? Medicaid? Private insurers? Patients? Also, do you think it includes insurance premiums as well as actual health care?
March 8, 2006 12:10 PM | Reply | Permalink
The Wall Street Journal article is unpersuasive, to say the least. While it cites different political issues (provinces moving ahead with supplementary health care program, for example), it provides no statistics indicating problems. Not one.
And it is replete with careful qualifiers like "While most Canadians would never change their system, people like Josephine....."
Finally, the Canadian health care system covers everybody, at 33% less than the cost of American health care!
March 8, 2006 12:11 PM | Reply | Permalink
Two days ago I ferried my 82 year old aunt to the dentist for a very much needed tooth extraction. It went very well. In and out in 45 minutes. No major discomfort or problems of any sort. Very good care.
My aunt will have to pay the full dental bill because she has no dental coverage. She is definitely on a fixed income, lives in an apartment and can't manage much beyond the essentials. The charge for the extraction was $475.00
There is something very wrong with our system when citizens are faced with crazy costs like this, for care that you just cannot do without.
thepeoplechoose
March 8, 2006 12:30 PM | Reply | Permalink
There is much less to the Contract on America than meets the eye, especially in retrospect. Can you name three big changes in policy (not politics; we can't settle the argument about whether the CoA made the difference in the '94 elections) that resulted from it?
March 8, 2006 12:31 PM | Reply | Permalink
A very germane post by NPE, particularly the observation about the requisite conditions for dramatic reform of health care systems. And, since he graciously invites argument about whether our system is failing and/or if a sufficiently large part of the public sense it; let me enter a strong affirmation (based on 40+ years of experience in medicine at various levels of responsibility) that both of those conditions do exist. He is also absolutely correct about the absence from power of a strong pro-reform party. But that can and will change as the failings of the present system become increasingly obvious; i.e., the political equivalent of “blood in the streets” appears.
As for the American public’s willingness to accept rationing by que rather than price (a variant on the American exceptionalism theme) we can be informed by the reaction to airport waiting lines. Who would have ever thought that Americans would put up with a three hour wait for a 45 minute flight?
The arguments for single payer healthcare financing are available in great detail from the Physicians for a National Health Program web site. A review of the major points would answer questions raised by many of the posts.
March 8, 2006 1:05 PM | Reply | Permalink
vorkosigan1
You're right that the article was not necessarily an attack on the Canadian system as much as it was a piece designed to highlight the primary problem with the single payer system. I've read articles before in the Wall Street Journal which were far more convincing. One in particular featured a man who needed bypass surgery to ease blocked arteries but was placed on a ubiquitous waiting list. He ended up getting the procedure done in the U.S. because he feared he would have a heart attack before his scheduled surgery at home in Canada.
Getting back on topic, however, the issue is not whether some will receive adequate care while others will not. Certainly if the U.S. ever adopts this system that would be an interesting aspect to keep an eye on. Under a single payer system, everyone will get the medical care that they need, the problem, of course, being the dreaded waiting lists for the procedures. I don't want to be a pessimist and perhaps our healthcare industry could work together to ensure such problems won't happen in the U.S. (as they do in Canada), but it will take a mighty effort to convince American insurance companies to go for a deal like this.
March 8, 2006 1:19 PM | Reply | Permalink
Yes, it would be tremendously helpful. Can anyone give a break out? I'm not sure whether the $1.8 trillion includes insurance premiums or not. My assumption is it is just the amount of actual services purchased (and therefore doesn't include premiums), but I could be wrong since I've never seen the number broken down.
March 8, 2006 1:40 PM | Reply | Permalink
Sawicky: "If you're not forcing people out of current health insurance arrangements they find satisfactory and you're creating a new public system, taxing everyone to pay for a new system implies a burden for those already paying for their own insurance."
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This is one big reason why I think we would benefit from an entirely new line of argument in our push for Universal Health Care. Don't say we need it as a way to control the high cost of health care; don't say we need it in order to expand coverage. Let's tell the American people that we need UHC in order to fix the incentives of health care providers, especially those of physicians.
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Prior to the arrival of Managed Care (HMO’s), America’s health care system gave doctors a financial incentive to over-prescribe treatment. With the growing use of private insurance, physicians were seldom discouraged from over-prescribing care. Recommending more tests and procedures tended to increase their incomes. The insurance companies didn’t ultimately worry about this so much because they could always shift their increasing costs onto the backs of policy holders. The result? Skyrocketing increases in health care costs over several decades.
.Then came Managed Care. Suddenly, the incentives for doctors were reversed. Now doctors received a fixed amount of income through their HMO contracts for services in a given time period. Under these constraints, doctors now had a financial incentive to under-prescribe treatment at a certain point. Yes, this approach did manage to slow down the growth of health care costs, but then we started to hear patients complain about receiving inadequate treatment and physicians complaining about the restrictions that were being placed on them by HMO numbers crunchers.
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Total health care costs were being “brought under control”, but they were only being limited through a reduction in the quality of health care being received. Seeing this evolution in the incentives of America’s health care should focus our attention on the need to create a system that gives primary care providers the right kind of incentives. How might it be possible to set up a health care system that gives providers a natural incentive to give patients the best care possible while not also tempting them with financial incentives to over-prescribe care? The answer is to put doctors on a salary..
If a physician gets paid a generous salary for “just being a doctor”, for “doing what a doctor does” [a certain number of hours per day] then she will not receive any extra revenue if she prescribes extra tests & procedures. Nor will she be rewarded financially for under- prescribing care. When physicians are on salary, they are freed from their concerns about financial matters and are able to fully invest themselves in the most idealistic inspirations of their calling. They can simply focus on healing people and not worry about all of the administrative headaches. (More on Fixing Health Care Incentives)
Max is focusing on the need for policy incrementalism; I'm focusing on the need for political incrementalism. If we could win over a significant majority of doctors over to the idea of salaried physician careers in America, we'd be in a much better position to take on the insurance industry and the Phamaceutical Monopolies. Divide and conquer. My impression of Britain's National Health Service is that doctors there have a very large voice in how the provision of health care services is organized. It could be that way in America.
I say that Democrats need to present themselves as the friends of doctors. We don't want to take anything away from [the vast majority of] them; we just want to free them from many of the headaches of being a physician in American today and allow them to more fully invest themselves in the most idealistic inspirations of their calling.
March 8, 2006 1:52 PM | Reply | Permalink
Emma, check this out. It looks like we spent $1.8776 trillion on health care in 2004, with $0.8473 trillion funded by the government and $1.0303 trillion funded by private sources. This would suggest we'd need to raise an additional $1 trillion or so to have universal coverage. That $1 trillion could come from taxes or a combination of taxes and individual contributions.
Note: I'm guessing health insurance premiums are included in these figures, but they are included as premiums less benefits paid so amounts paid in claims are not double counted.
March 8, 2006 2:04 PM | Reply | Permalink
Max-
1. Can you name three politicians who lost because of their support for health care reform? Still no response on this point?
2. If I can adopt your "causation is hard to show," here are the points which I think have flowed from the Contract on America and the absence of effective Democratic opposition:
A. Welfare "reform."