Health Care and Student Loans: The Bad Guys Are on the Run
Progressives should be feeling good right now. There is clear evidence that we are winning on two really big issues.
Starting with the smaller of the two, Sallie Mae, the largest private issuer of student loans, is now proposing to accept a plan in which the government is the sole issuer of government guaranteed loans. Sallie Mae's plan is that it continue to be given the opportunity to originate these loans, picking up fees in the process.
This proposal is in response to the Obama administration's plan to get the private sector out of the government guaranteed loan business. There is ample evidence that the involvement of private firms just adds costs -- approximately $90 billion over ten years according to the Congressional Budget Office. Sallie Mae's compromise proposal is a recognition of the fact that it cannot stop the Obama plan.
If this story is good, the news on health care is even better.
The industry is now proposing a scheme whereby it will curtail cost growth by 1.5 percentage points a year. At these point none of the details of the proposal are public and it is unlikely that any of the commitments in the proposal will be binding in any serious way on the industry.
However, the fact that they would suggest that such cost savings are possible is an enormous concession. After 10 years, the cumulative savings from this proposal would amount to more than $400 billion a year, more than $3,000 for every family in the country.
The industry is talking this way because they are scared to death at the prospect of having a Medicare type public plan, which will both provide competition for private insurers and create an effective mechanism to constrain the fees charged by health care providers. As many have argued, the public plan is a real game changer.
These new developments in both the health care debate and the debate over student loan policy are great news. In both cases the industry groups are now prepared to make important concessions that they never would have envisioned even a year ago.
Of course, there is no reason to accept their compromises. Why should we waste any of the money that could be going to help college students so that Sallie Mae executives can draw high salaries and its shareholders can enjoy large dividends. Let them make money in the market, not by adding costs to a government program.
Similarly, the threat of a public plan has forced promises of concessions from the health care industry. If we don't actually get the public plan, there is no enforcement mechanism for these promises. If we go ahead and put the public plan in place, then we know that the industry will deliver on its promises.
Now is not the time for compromises. We must keep the pressure on. It is showing results.
The key thing is to make sure a public plan option (Medicare for whoever wants it) stays in the mix.
May 11, 2009 10:41 AM | Reply | Permalink
Dear President Obama,
We applaud your goal of adding the uninsured to our customer base (as long as their premiums are fully subsidized). And you should know that we are positioned to (in fact, the only ones who can) make good on your goal of reducing the rate of health care cost increases.
We promise to control future health care costs by restricting practices and denying procedures to the insured wherever possible.
Your friends,
The Health Care Industry
May 11, 2009 10:45 AM | Reply | Permalink
Was just thinking the similar, but very up close and personal, as in: oh goodie, just in time, I just can't wait for the new fun of having to deal with the Humana policy of my elderly Dad when he inevitably suffers some maladies soon. It was hell with my Mom a few years ago, and now it's going to be worse?
Cutting costs and price wars without a central body in control, and with the end consumer without any power at all, oh what fun. I do get an impression a lot of people in the blogosphere really don't know what's going on out there in the over-65 insurance world nor of how long it's going to take to fix the real, basic gatekeeper problem. Until the last problem is fixed, I really don't see much hope of getting away from dealing with the frustrating over-the-phone denial of service, based on current Medicare code if it's beneficial to them, and not if it's not.
May 11, 2009 1:07 PM | Reply | Permalink
Dear Health Care Industry,
I am in receipt of your letter. I appreciate your pharisaical gesture in this endeavor. Point of fact, I have reserved a seat at the negotiation table between the end of my foot and your collective ass.
I suggest you stay out of the exam rooms and OR's of America. Middle-managing and skimming off healthcare dollars is not policy. The game is up, casino is closed, match point Me.
Sincerely,
President Obama
May 11, 2009 3:36 PM | Reply | Permalink
The public plan is a must and not a 'bargaining chip'. Because it has been shown that in this part of the marketplace "competition" is completely ineffective, as it always seems to be in most areas of the market, in keeping the cost of goods/services low. The word that jumps to mind is collusion but that is an issue for another thread.
Health care is a cash cow for private interests...and it shouldn't be allowed to be that. Next up the pharmaceutical companies and doctors. I kinda like Japan's approach on the doctors...strict government mandated limits on what can be charged for specific procedures.
May 11, 2009 11:39 AM | Reply | Permalink
I keep having a feeling of deja vu. Remember Medicare Part D, the prescription drug coverage? That is what I'm afraid Medicare Part E will resemble. Medicare Part D has been a major cash cow for the insurance companies, and offers minimal benefits to citizens, plus it encourages higher drug costs.
I would really enjoy seeing a Constitutional Amendment making medical care and housing basic rights protected by the Constitution. Then we might make some progress.
May 11, 2009 12:17 PM | Reply | Permalink
The Constitution seems not to have stopped all the crooks, both in and out of government, from stealing us blind. I honor its intent but in practical terms it has become a useless document held up for public consumption while those praising it are picking our pockets.
May 11, 2009 5:00 PM | Reply | Permalink
Unfortunately the only concession that matters is for the private companies to either get out of these industries or be forced out. They're not just doing business, they're hurting America.
May 11, 2009 1:26 PM | Reply | Permalink
Either private insurers will have to find a way to limit care or the government will. There is no getting around that hard fact. No amount of prevention or streamlining will obviate that hard fact. Its sad, but true, and absolutely necessary. And taking money from other programs to fill that hole would only serve as temporary, stop-gap measures.
May 11, 2009 3:07 PM | Reply | Permalink
The private insurers already limit care...they unfairly deny coverage on procedures they say they will cover. No I don't see it as health care having to be rationed. That is a right wing talking point in the effort to keep the status quo in place. It can be done without having to ration necessary/basic care.
May 11, 2009 3:23 PM | Reply | Permalink
While there must be some limits to care--humoring hypochondriacs isn't good policy, for example--but is that the only place to get significant savings?
Insurance company profits, advertising budgets, and exec salaries are all completely unnecessary to delivering healthcare. The costs of drugs and supplies that currently go to the un-/under-insured can also be significantly reduced just by using the prices already negotiated by the insurance companies rather than charging "list price" to anyone without a contract.
And we can be smarter about what tests/procedures are ordered. It doesn't have to translate into draconian rationing of basic services.
(Just out of the hospital on "good" insurance--$3000 out of pocket and counting.)
May 11, 2009 3:29 PM | Reply | Permalink
This battle hasn't even begun, Dean. You're counting chickens before they hatch.
When the insurance industry is crying "I'm melting" as they fade away, then I'll start to feel some comfort that we are winning.
May 11, 2009 6:21 PM | Reply | Permalink
Yes! Now is not the time to be happy, but rather to be vigilant!
May 12, 2009 10:30 AM | Reply | Permalink
"The industry is now proposing a scheme whereby it will curtail cost growth by 1.5 percentage points a year. "
What does that really mean? How does saving 1.5% of some unstated increases amount to $2T over 10 years? And is it 1.5% of the growth rate or 1.5% of the total annual cost (I would imagine the latter)? Is it 1.5% per capita or total (the difference is population changes, both as to total population and those counted as getting health care)? There is far too much slop in both Baker's blog and the WaPo article. I see only a lame-ass PR stunt which should be made to backfire immediately.
Baker seems to assume it means that if costs are projected to increase by 10%/yr, costs will only increase by 8.5%/yr under this scheme. So if this year is 100 we have
2009 = 100 annual cost
2010 = 108.5 saves 1.5
2011 = 117.7 saves 1.8 more or 3.3/yr
2012 = 127.7 saves 2.1 more or 5.4/yr
...
2019 = 226.1 saves 33.3 that year.
(At 10% we'd end up with 2019 = 259.4)
So the great savings here would be the sum over 10 years of the annual difference, with 2019 saving 33.3 out of 259.4 -- either way health care costs more than double over 10 years (in this simple model).
How exactly does not increasing costs so much 1) result in actual savings, 2) eliminate a deficit? Not increasing so much is still an INCREASE in annual costs.
I don't see wages increasing here, certainly not as fast as health care costs have.
Smoke or mirrors?
May 11, 2009 6:25 PM | Reply | Permalink
"much"? "start-up expenses" are significant compared to total costs over TEN years? How does health coverage extension have ANY significant start-up costs?
May 11, 2009 6:33 PM | Reply | Permalink
Start up costs, in order of priority:
Enough low cost loans and grants for nurses to upgrade their education to allow them to become clinical and classroom instructors.
Enough again to train all the nurses we will need BEFORE they all get trained.
Enough to increase the number of doctors, therapists, technicians and support personnel.
You think adding 47 million people to the system won't need a few bucks to expand facilities and build new ones? To add more equipment and staff to existing facilities?
Tried thinking a little longer before you write?
May 11, 2009 9:13 PM | Reply | Permalink
"Tried thinking a little longer before you write?"
Icky, Ginny. Put some numbers on it if you're not just being rude.
May 12, 2009 3:14 AM | Reply | Permalink
Lending establishment that offers a high guaranteed loans is what modern Mom needs today to meet the needs of their kids.Modern Mom is a new website geared for mothers (obviously), that has just gotten a face lift. Modern Mom was purchased by celebrity Brooke Burke and Lisa Rosenblatt, wife of Richard Rosenblatt, the head and co-founder of Demand Media, for a small amount of guaranteed loans. The websites overhaul has spruced it up, adding Burke as the face and voice of the site, and they've even added features like Mommywood, a corner of the website devoted to famous moms. Mothers are certainly hard working people, just as fathers are, and both sides of the parental fence need all the help they can get, with either a no faxing payday loan or sites like Modern Mom.
May 30, 2009 2:15 AM | Reply | Permalink