A Spoonful of Sugar Helps the Baucus Go Down
Deep in my moderate heart (my whole wheat side) I want to believe that health reform is happening in the public interest.
My frosty side thinks otherwise.
In my opinion, the Baucus plan is the foundation of health reform. The beltway media knows it, Obama knows it, and informed citizens are growing to know it. The final bill will include landmark measures regarding pre-existing condition coverage and a mountain of regulation to control costs.
But (BUT) the final bill will likely be an unmitigated disaster. The seed is rotten.
The legislation has to be enforced by a combination of oversight and legal controls. I believe that neither of these august bodies will perform their function. Instead, I foresee the enforcement of mandates while any law that limits the "free market" will be undermined, overlooked, and overturned. Without a public option that has the funding and oversight necessary to force private industry to compete, industry will game the system. The cost of covering pre-existing conditions will raise all costs. Mandatory coverage places the onus of responsibility on citizens to insure themselves.
In my opinion, the final bill will transfer more wealth to the same financiers who engineered the current crisis. I believe that the banking tycoons are manufacturing another speculative bubble based on a mandated subsidy for increasingly shitty coverage.
And speaking of coverage:
The political implications are clear. The Dems will frame the failure of reform on big business. The Reps will frame the failure on government's inability to work on behalf of taxpayers. Both will be correct because both sides have created this coming debacle. And many voters will back Dems because the alternative will be a GOP typhoon of epic crazy.
We are being gamed. If the final bill is the Baucus Plan with sugar on top (as Obama's speech indicates) then this bill must die. Reconcile the bill and force a competitive public option or kill the final product.
Mark my words: if the Baucus plan with sugar reaches Obama's desk, it will be the biggest transfer of wealth upwards since the Iraq War.
Tell your Representative that you will not subsidize private care of your body. Demand a public option.
Yep, have done that, zip. So far the Reps' stenographers at the phones don't seem to have a check-mark column for "Won't buy your stinking insurance with no Public Option", though. Might have to create one (she said hopefully).
September 15, 2009 12:17 PM | Reply | Permalink
I know. I can only say that if the bill passes the way it looks, be prepared for the spin. Four years is a lifetime for state and federal courts to gut the reforms and leave in place a subsidy pool.
I will only accept a mandate with a funded public insurer.
This debate doesn't impact me or my family directly. I've got TriCare. I only wish that military health care were presented as a public option model. My health care is fabulous.
But the final bill is too risky and demands that citizens buy in to a dysfunctional model in exhange for a few modest protections.
I can't help but see a method to the August madness: make mandates moderate and palatable. Make public insurance risky and extreme.
The legedermain seems to have worked.
September 15, 2009 12:42 PM | Reply | Permalink
And no guarantee even those bogus "protections" will be enforced. It's looking more and more like 1994.
September 15, 2009 8:30 PM | Reply | Permalink
I share your experience and perceptions on this. I have been communicating with my reps everyday because of what is going on.
What concerns me is that the general public will not pick up on this and buy into the notion that 'at least we got no more denial for pre-existing conditions'. They'll feel good about the compromise with no idea what it cost us.
The timing of enacting this bill... does not take effect until 2013, after the next presidential election. Does this mean it gets revisited even if a public option is passed should a republican be elected to office?
The mandates... more money to the very companies that have brought us the status quo.
Public Option... despite what the president and others are saying 'cost controls' are the 'main reason' to have health care reform. And just as many on the right do not want 'government run insurance'... I do not want privately run insurance... where's my option/choice?
The talk of a 'trigger'... an insult to our intelligence, a scam, and a joke(thought not a funny one).
This is a political battle and a war between classes and a fight from the powers that be to maintain the status quo while squeezing more profits from the middle class.
September 15, 2009 12:18 PM | Reply | Permalink
What is especially frustrating is that I based some of my vote for Obama on the fact that his plan lacked mandates. In my mind, mandates are a poison pill. Especially mandates with a penalty. The best case scenario is that taxpayers subsidize coverage for the poor. Fair enough. But where are the cost controls?
Where are they?
I note than in Obama's speech he elevates 1/10th of a percent into some kind of holy benchmark. I mean, fuck, how is that anything more than a joke at the expense of voters? We are expected to pay for our coverage and the coverage of our huddled masses in exchange for at minimun 1/10th of one percent over ten years?
Talk about lowering the bar. Lilliputians could hold court with a bar that low.
September 15, 2009 12:49 PM | Reply | Permalink
Another problem:
The reform bill must not increase deficits. Yet tax credits are going to fund some of this coverage.
How is this being paid for in order to create parity?
We don't know. I haven't seen anything which indicates that costs won't exceed the tax credit. So the only way to create the "blue dog parity" is to increase the cost of the mandated healthy pool to offset the credit. This in turn can be "hedged" by investors... They can gamble on the ability of the mandated pool to bear the expense, ie, stay healthy and employed.
And a new investment bubble is born... And it will be ignored because the health of our economy is dependent on speculative bubbles. It's gangsterism.
September 15, 2009 1:01 PM | Reply | Permalink
But too much can lead to diabetes and obesity.
C
September 15, 2009 1:01 PM | Reply | Permalink
Agreed. I contacted my reps yesterday.
September 15, 2009 3:30 PM | Reply | Permalink
Agree with you, Zipper. The bill I had in mind was gutted well before the August recess. For every paltry "gain" there seems to be a pretty steep cost to the middle (and lower) class, and most of those costs are not publicly acknowledged.
Regarding the one-tenth of one percent, I'll support you with Bob Somerby's thoughts (because I think they are well worth reading), as I did on Rutabaga Ridgepole's blog (which you may have already seen):
From Obama's speech:
To which Somerby notes:
September 15, 2009 4:58 PM | Reply | Permalink
Exactly. In exchange for a mandated customer pool subsidized by tax credits, you have to (gasp!) roll back your costs by .01%!
Health industry: Wow! My arm is sore from all that twistin!!
September 15, 2009 5:21 PM | Reply | Permalink
.1%
I really am an accountant. (Smacks forehead)
September 15, 2009 5:24 PM | Reply | Permalink
Thanks for the DH link. Recommended reading.
September 15, 2009 7:21 PM | Reply | Permalink
It's too late. They're not listening to us anymore. I was okay with incremental change, as long as it wasn't stupid or pointless. Guess the joke's on me.
September 15, 2009 5:07 PM | Reply | Permalink
Honestly, Orlando, what I see is high finance attempting to recreate bubble economics with our bodies as a derivative.
They take our honest and noble yearnings and turn them into a roulette wheel.
Energy, property, health... What's left to exploit?
Just remember: when high finance blew its lid a year ago, it was liberal heroes Dodd, Frank and Biden who fell prostrate before Wall Street.
Orthodox Capitalism is the new religion and Wall Street is its Vatican.
September 15, 2009 5:41 PM | Reply | Permalink
Hi Zipper - I'm torn as to how to respond. My first instinct was simply to rage at you, but I realize your passion for the best reform package that might be legislated is not only understandable but worthy of admiration.
On the other hand, I'm going to rage a little, and hope you forgive me. My reason is that this issue is so enormously important, that it's imperative to get it right, even if it means temporarily offending people who are on the same side but draw the wrong conclusions. And so, my apologies in advance.
I won't repeat here all the very extensive posting and commenting I've done on this topic, but I hope anyone interested will visit my blog for that material. I will simply make the following points. First, the Baucus "plan" will be modified for the better in the final bill, but even unmodified, and even without a public option, it would represent a transformative leap forward on the road to universal and affordable high quality healthcare. I favor the public option, but I hope the evidence I've presented elsewhere will convince others that it is not nearly as critical a feature of reform as other components that will survive.
As I've also done elsewhere, I invite anyone with a different perspective to visit the evidence I've presented, and then respond to each item, individually and in detail - point by point. I hope we can reach some agreement if we confine ourselves to the actual healthcare data.
I think it's obvious why this is so important - the welfare of hundreds of millions of Americans is at stake, and mustn't be sacrificed on the altar of ideological purity. As we approach legislative denouements on this issue, I see it as vitally important to do two things with equal energy and enthusiasm. The first is to push for the best bill possible, and I would include a public option in that category despite my perception that it isn't central. The second is to press equally hard, and with equal conviction, for the final product to be voted on. I say this with confidence that the non-controversial components of the proposed bills will be a gift to the American people of great value. Antipathy toward even those we don't admire who might share in that beneficence, such as the insurance industry, must not, in my view, impel us to punish ordinary people by canceling the gift.
I remain open, here, and elsewhere, to discuss very specific points. In so doing, I would appreciate including quantitative data in the discussion, because generalities have already proved to be an unfortunate source of profound misconceptions about the specifics.
Thanks.
September 15, 2009 5:26 PM | Reply | Permalink
Thank you for your comment.
I have read your blog, and I don't question your facts. But I do question your base assertions, but in a friendly manner.
Allow me to elucidate:
The bottom line is mandates. The case Obama laid out was that opting out of health insurance raises costs overall.
This means that customers create a money pool. Not the insurer. The insurer manages the fund in the manner befitting bureaucracy.
Now this pool of money, or insurance account is appropriated for health care. There is a primary line of accounting and thousands of sublines for various individuals and packages.
Now what this creates is an account-predicated system. If someone who does not have their money allocated in a managed account partakes of the system, the account is still drawn from in the form of various above line and below line methods:
Above line: direct cost hikes. A one dollar across the board x ray fee at all Catholic Hospitals.
Below line: useless referrals, tests that are ancillary to the diagnosis, etc.
So no matter what, insurance accounts pay for the entirety of health care.
The logic behind the mandate is to expand the pool in order to create an account that will not "deficit" and promote the need for above and below line offsets.
This is combined with sensible regulations that guarantee care and coverage. This makes sense.
But premiums have vastly outpaced inflation and vastly outpaced all reasonable metrics. So the problem is deeper than simple accounting.
The problem is:
Quis custodiet ipsos custodes
Who guards the guards. There has been nothing in place to prevent premiums from overtaking income. And there is nothing in place to control the cost of care itself.
And both feed from each other, like an ouroboros.
So, on the surface, I agree with your blog that the measurements associated with the non-public option reforms would be a vast improvement.
My question to you is:
With HIPPA privacy laws, how much of these cost controls are viable? What apparatus is in place outside of a toothless FDA and Insurance Commission that could enforce regulations? And how much of this legislation could survive judicial review?
That is why I want a public option so badly. There must be an effective healty care system that can demonstrate in real world measurements how managed health care should work.
Because the problem runs deeper than the solutions and the mandate is simply too high a price to pay for an unsolved problem.
September 15, 2009 6:21 PM | Reply | Permalink
Z - I don't understand some of your sentences, but I would be glad to take the issues one by one if you wish, rather than attempt to address your comments that I understand as well as the ones I don't.
To start, you're right that premiums have outpaced inflation - however, that rise is not due to insurance company excesses but to the unsustainable cost rises in healthcare itself. Insurance company profits remain at about 3-4% of their budgets (less than 2% of total healthcare costs), and their overhead, at abouty 11%, is not inordinate. It would shrink somewhat if proposed reforms pass, because much of the underwriting expenses would be obviated, but even single payer nations experience about 6% overhead, so there's not a large gap that can be closed.
Furthermore, proposed legislation would set a minimum on medical loss ratios - the percent of each premium dollar that must pay for medical services instead of profits or overhead. At 85%, for example, this too would prevent profiteering or gross inefficiency. Most states already do this at various levels, with apparent success, so it's not hypothetical. That doesn't make a public option irrelevant, but limits the additional benefit it could confer.
Finally, the proposed reforms will require specific medical services that are deemed essential to be covered by law as part of the basic package, and this will be open to inspection, as it is in other nations whom we're emulating. Denial of claims for those services would be legally punishable, as it is elsewhere. If you're concerned about enforcement, focus on that issue, but it's a bit premature until the legislation passes.
One item that is an absolute necessity is a mandate for universal coverage (with rare waivers and tax penalties for those who refuse). Without a mandate, healthcare reform will be an absolute disaster, and no other nation would seriously entertain the idea of a healthcare system where individuals were not mandated to be covered - either by purchasing insurance or paying taxes in lieu of paying premiums. Without a mandate, the young and healthy will opt out, leaving insurers to pay only for the old and sick, and the consequent costs of premiums would become astronomical. I don't believe you would find a serious healthcare economist in the known universe who would claim that we could keep a lid on costs to the insured without a mandate.
I know I'm belaboring the point, but it's worth belaboring: insurance reform is desirable to eliminate inequities such as denial of insurance or exorbitant rates based on illness or pre-existing conditions. To control the problem of costs, however, the focus must be on healthcare itself, with insurance as only a minor player. Yes, a public option would squeeze some excess out of insurance costs, but so much more of the excess lies within healthcare itself, that there would be some legitimacy, even if exaggerated, in claiming that when it comes to costs, insurance reform is like rearranging the Titanic's deck chairs. I'm all for neater deck chairs, and less expensive ones, but we'll still drown if we don't fix healthcare.
The proposed bills make some legitimate efforts in that directions, but more is needed. First, let's pass the bills, and then get on with doing the rest.
I know you've raised other point, but this is a start.
September 15, 2009 7:27 PM | Reply | Permalink
Now:
First of all, you are appealing to anonymous authority by citing unnamed health care economists.
Mandates are acceptable if proper controls are implemented. I remain unconvinced of these controls.
Health care costs are out of control. These costs can be partly blamed upon the insurance industry. Costs aren't negotiated. The costs is almost exclusively passed to consumers because they are a money pool that lacks basic protections from gouging.
Mandates and these modest reforms are not enough. The system is fundamentally unsound, and these reforms are worthwhile but need the market power of a federal insurance option.
Anyhow, we will talk in circles.
September 15, 2009 8:11 PM | Reply | Permalink
Z - I still believe you're engaging in too many generalities. I can certainly document the views of economists on a mandate, but I don't think you'll find any who disagree.
To get to a less certain issue, we agree that costs are excessive, and I think you agree with me that the excess lies within healthcare, not insurance. We also agree that insurers pass on these costs to subscribers.
Would a public option change this? Very little. If a radiologist wanted to charge $200 for an x-ray, and the private insurers agree, but the public plan offered only $150, the radiologist could simply decline to cover patients in the public plan and limit x-rays to those who are privately insured. How do we know? It already happens. There's very little of this with basic Medicare benefits, because there is almost no private insurance competition for those benefits, even though Medicare reimbursements are lower than private insurer reimbursements. When it comes to Medicaid, however, with even lower reimbursements, many providers simply refuse to accept Medicaid patients (except in emergencies, where care is required by law).
In one respect, however, there may be some long term advantage of a public option in promoting reductions in excessive healthcare costs, in that a public option can encourage the development of accountable care organizations or other alternative payment mechanisms through its ability to absorb short term losses for longer term gains. I doubt that this would make much of a difference, but it could help. Ultimately, there is no substitute for reforms aimed directly at healthcare providers, and insurance reform would do little to constrain costs in the absence of that effort.
September 15, 2009 8:50 PM | Reply | Permalink
I read the essay on the Promethean Model. A good study that would certainly work because of the incentives based on efficiency and quality, as opposed to quantity of procedures and number of referrals.
Now, we will disagree with the efficacy of the public option. The Promethean Model essay points out how, in fact. The standard approach is to be line-item billed. A public option can adopt different approaches. Further, if customers and businesses have the choice to join a public option, health care costs will become cheaper due to competition. Do you honestly think that radiologist has a choice when a competitor will do it more cheaply? You act as if only one radiologist gets to set the rates and the insurers are forced to comply. I hope you know better than that.
The problem lies in our approach to health care and the lack of competition. I am sure you know this.
September 15, 2009 9:09 PM | Reply | Permalink
Empirically, providers do get to set rates when they find insurers willing to pay them. They can then deny services to patients covered by insurers who pay less. Medicaid is a salient example, as I already indicated. Only when a single insurer dominates the market can it strongly use its influence to reduce provider reimbursements. That happens with basic Medicare services, but Medicare costs are rising at rates very similar to private insurer costs, and so even there, the role of insurers in cost constraints is very limited. Reform must focus directly on the providers, and can accomplish only small effects via the insurers. It's worth doing both, but with no illusions about which is more imnportant.
September 15, 2009 9:24 PM | Reply | Permalink
Incidentally, I liked your William Faulkner quote. It is certainly better to have feelings than to be numb.
September 15, 2009 9:31 PM | Reply | Permalink
Hey, you called me out by name (ok, username) yesterday much in the same fashion as this ... I responded with a verbosity worthy of your own prodigious explanations to we plebes.
September 15, 2009 6:55 PM | Reply | Permalink
Zip, I'm usually right there with you, but not on this issue. I agree that forcing companies to accept patients with pre-existing conditions will drive up the cost of health services. But non-profit co-ops can generate an economy of scale so large that it cancels those costs out and then some (and then a lot). It's a bottom-up solution which will, to the best of my knowledge, place the first non-profit business model in direct competition with the for-profit business models of the insurance companies.
If we really believe in the goodness that people are capable of, then ought we not believe that the non-profit model will defeat the for-profit model (especially on the field of health)?
September 15, 2009 5:59 PM | Reply | Permalink
Check out how the managed non-profit solution is working for California.
Not at all.
They are toothless overregulated systems built for research and publication, but not for care. And they have no clout when it comes to negotiating costs. Fred has already demonstrated how little administration costs in the overall scheme.
If a non-profit is forced to pay after market for equipment, the equipment will be substandard. If they are forced to pay for prescriptiom drugs after market, the cost will be higher. Ad infinitum.
A true competitive solution has the power of government negotiatied price controls with a single payer pool.
September 15, 2009 6:34 PM | Reply | Permalink
Google Kaiser Permanente and behold the marvels of non-profit managed care.
September 15, 2009 6:38 PM | Reply | Permalink
How is a co-op managed? Is it not owned by the members? And if that's the case, in what sense does the division between management and the managed still exist?
September 15, 2009 6:49 PM | Reply | Permalink
You know the best advertiser of all these goings on is Ed on MSNBC.
He will not stop screaming bloody murder. He has the evil ones on to get the discussion going, of course, unlike my hero KeithO.
There is something happening here and I am afraid I have been more like Mr. Jones.
HEALTH CARE SHOULD BE A PUBLIC UTILITY. It should NEVER, NEVER, NEVER be kept in the hands of profit stealing corps and their bloody CEO's
THESE ASSHOLES ARE KILLING PEOPLE EVERY SINGLE HOUR OF EVERY SINGLE DAY AND THEY KNOW IT.
If I could add purple coloring to this comment I would.
THIS IS NOTHING BUT BLOODY MURDER, we must scream bloody murder, we must criminally prosecute those who are abusing the system...
AND THE ENTIRE DAMN SYSTEM SHOULD BE DESTROYED AS FAR AS I AM CONCERNED.
Good post, good comments and your comments are just as good.
September 15, 2009 6:50 PM | Reply | Permalink
Ed has exactly what the Democrats so lack - a populist voice. Democrats wouldn't have to worry about teabaggers and birthers if they had more than handful of people who could speak in simple language.
What about the reports that the bill is going to be totally unaffordable for the middle class (note to Professor wonks -- you are not middle class). But hey, not to worry. The recession is over! (on Wall Street and inside the beltway - and what else matters?)
September 15, 2009 7:03 PM | Reply | Permalink
Probably already left this with you last week, but I am listening to it anyway so:
http://www.youtube.com/watch?v=k34COolbdmY
September 16, 2009 1:31 AM | Reply | Permalink
dd, for a Fabian socialist, you surprise me. The radicals with whom I'm familiar ( for instance) are anti-authoritarian and anti-capitalist. Yet they tend to support the co-op model (albeit minus government involvement). Isn't socialism founded in mutualism? And aren't co-ops the extension of mutual aid?
September 15, 2009 7:38 PM | Reply | Permalink
Thanks for the link MBH, I have not seen much of you lately.
I will go back again to the link tomorrow. I just read some article in some obscure blog on this and then went to other wiki articles. Carson by himself is not 'familiar'. His four parts of capitalism has to be reexamined. Copyright has to be included although for hundreds of years copyright was linked to patents. Intellectual property is so damn pervasive as a right as to infringe on free speech these days.
Maybe the metaphor of the 'ball player' and his millions which are now morphed into tens of millions and billions when you hit Woods as the top man. Wills loves to spend time on this because he can lead you to the conclusion that we live in a meritocracy which is bullshit, of course.
THE LOTTERY would better describe those few who move into the top one percent and higher.
Copyright is interesting because you can register patterns. Our tech is so damn complicated and multi faceted right now that copyright can be tied to something that manufactures...the pattern on the chip itself. Which is metaphorical in the first and last place...ha
The key to 'keeping' what you have 'won' is the key. That means eschewing or escaping personal responsibility for your actions either by the law itself like 'tort reform', or by knowing how to maneuver within the constraints of the law with over rich and talented law firms (as in the black entrepeneur who was mixing up the medicine finds himself at Rikers awaiting trial while scooters end up celebrating with wine women and song) or by
straight pay offs...........and finally by insurance.
THese corporate CEOs have malpractice insurance covering them for tens of millions of dollars with the premiums paid by the corporation...sure there are intentional conduct provisions but you simply buy a team of lawyers to get around the term intentional....
The British Empire was secured by insurers.
Hell, of the four voyages of Columbus, I think all were 'insured'.
If a six year old is denied coverage for a preexisting non disclosed injury or disease--which happens--the middle class is screwed. But that same insurer would not dare play this game with a goddamn multimillionaire because they know they would be screwed in front of a jury with huge punitive damage exposure.
Its late, that is all i got right now.
the end
September 16, 2009 1:49 AM | Reply | Permalink
Man dd, that's great stuff. Never thought of it like that -- that insurance is ultimately the tool which keeps the power structures exactly as they are. I know that Noam Chomsky believes that, while the state is inherently evil, it can/ought be used as a tool to combat what he calls "business power." I would agree with that. So I'm certainly all for legislation which will mandate insurance companies to cover even the sickest of the sick. And I hear you when you say that our society is run by those who best game the system. I also understand the belief that Baucus' framework is a sham; I have not foreclosed that possibility in my mind. But, in the spirit of Saul Alisnky and incrementalism in general, I think that health reform will take a subtle shift -- and that shift might be accomplished through co-ops. I mean, don't we want collaboration more than anything? And isn't the collaborative model going to generate the most competitive practice in the long-run? And how does a public option ensure collaboration?
Fred references The Prometheus Model. To me, that's the kind of shift that's necessary to ensure health-care-for-anyone-who-wants-it over the long-run. I don't see how you can foreclose the probability that co-ops, structured in Promethean fashion, could accomplish that.
September 16, 2009 7:33 PM | Reply | Permalink
For some informative discussions on the central challenge of reform - restructurng the healthcare system, interested readers with about 45 minutes to spare might consult the latest NEJM online set of articles:
http://content.nejm.org/
I've found the discussion of accountable care organizations and the Prometheus Model particularly thought-provoking.
September 15, 2009 7:43 PM | Reply | Permalink
Fred, the Prometheus Model is a breath of fresh air. Good stuff. Thank you!
September 15, 2009 8:27 PM | Reply | Permalink
Not this time.
Oh please.
September 15, 2009 8:38 PM | Reply | Permalink