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The Two Ted Kennedys


Well, lookee there: Congressional Democrats actually won one. That’s right. After 14 years of ignoring core liberal principles – including the last 18 months when they actually had a majority – they took on the Republicans and won.

How did this happen? Well, it’s an election year, and by forcing an issue that Congress has been putting off for years–automatic cuts in Medicare physician payments–Democrats seized the chance to score a few points.

Essentially, the Democrats decided that, instead of agreeing to another fudged compromise to put off the decision to cut payments, they’d set the insurers against the doctors. So they found the money to put off those automatic cuts by taking some away from private Medicare insurers. Now, it was a bit of a surprise that so many House Republicans joined them and drop-kicked the insurers with whom they’ve been aligned for so long, although of course they’re all up for re-election. But once there was a veto-proof majority in the House, the Senate Democrats realized that they could force the issue and score a political win.

First time ’round on the roll-call vote, not enough Senate Republicans voted with the Democrats to create a veto-proof majority. But the Democrats hung tough and sent the Republicans home to the 4th of July festivities as the party that wanted to cut doctors’ fees so rich insurance companies could stay just that.

When the Senate returned seven Republicans, including three up for-re-election this November, caved. And to call attention to the issue, Sen. Ted Kennedy, back from brain tumor surgery, made a dramatic entry on to the Senate floor, where he cast the filibuster-overriding vote. The cuts in Medicare physician payments were suspended and the money will instead to be taken from private Medicare insurers.

The New York Times’ Paul Krugman speculates that this – as well as the expected Congressional over-ride of President Bush’s veto – means that the Democrats have found their spines and may get enough Republicans on their side to pass Obama’s full health care program, should he become President.

But there’s a little problem here, and it’s not Ted Kennedy the Senator, it’s Ted Kennedy the patient.

Kennedy’s illness sparked a lot of vitriolic discussion about whether he would have received emergency surgery if he’d lived in Canada. He didn’t even stay home in Boston, home of five major teaching hospitals, but went to a super-specialist at Duke University in North Carolina. And while rich politicians in any nation will always get the medical care they desire, there is an honest discussion to be had about whether it is appropriate for society to be paying for the type of care Kennedy received.

That conversation often gets railroaded by the crowd who say that health care by government means rationing. Now in fact that’s a laughable accusation in the U.S. as the taxpayer, via Medicare, pays for just about any new treatment that the medical care system can dream up. That’s a major reason why we spend so much on health care in the U.S. But it is unquestionably true that other countries spend less on health care in part because they do fewer more aggressive procedures, including fewer more aggressive procedures on very ill elderly people. Like Kennedy.

This generates two arguments. The first is very controversial. How much is it worth spending to keep an elderly and very sick person alive for a few more months? After all resources spent on the elderly and ill are then not available for other needs. This isn’t just theoretical. Right now we spend $100,000 on a cancer drug that may extend life for three months, when there’s no pre-natal care program for 15% of America’s pregnant women

The second argument is less well known. The types and amount of treatment all patients receive, including the very, very sick, vary tremendously in different parts of the country. More importantly, perhaps, the data is pretty clear that less care results in better outcomes. So potentially we could provide all the effective medical care that’s needed while providing less actual care.

Regardless of your reasoning, providing less care means spending less money. This could and should be good for society overall and may improve health. But it also means that the debate about how to treat patients like Ted Kennedy–and those even older and sicker–and also the debate about what the appropriate level of care is for everyone, translates into an argument about putting less money into the system overall.

Any wonk knows that we need to deal with the problem of un-contained and unjustifiable health care spending growth. But every rational politician knows that significant cuts to the Medicare budget will cause a vigorous reaction from those currently receiving money for providing that “unjustifiable” care. And when that someone is a doctor or a hospital, it’s easy for them to rally support for their cause, as the Republicans found out this week.

Eventually we’ll have to do something about how we agree to finance, and provide, care to the next generation of Ted Kennedys. By then there may not be some greedy evil insurers to play off against the good guys. Instead there’ll be a massive change in what and how Medicare pays the health care system. And then the real hardball will begin.

Posted by Matt Holt at 5:00 AM | Permalink

Obama’s Rx for Change


Clinton has quit, Obama has three times McCain’s resources, and the country is fed up with the Republicans’ war, corruption and toadying to corporations. Democrats have won three “safe” Republican house seats in recent months. It’s their election to lose, and assuming that the fences between rivals really are mended, it might be a landslide.

I’ve written previously that I don’t think Obama is serious about pursuing health care reform. But this week in at a Health Care Town Hall held immediately after he clinched the nomination, he repeated that by the end of his first term, there would be universal healthcare.

In an Obama administration, we’ll lower premiums by up to $2,500 for a typical family per year. And we’ll do it by ….covering every single American and making sure that they can take their health care with them if they lose their job…..We’ll do it by the end of my first term as President of the United States……

Coming from someone who had relatively little to say about health care until goaded into it by former rivals John Edwards and Hillary Clinton this counts as a turning up of the rhetoric. So let’s imagine that there is a solid Democratic majority in the House and Senate with a strong Democratic President.

What type of health care reform might actually pass into law?

Obama’s proposed plan is complicated so the plan’s trip through Congress will be tortuous. And some details are still not aligned. Although Obama says most employers would have to provide insurance, he doesn’t mandate that individuals to buy insurance. But then he says we’d get to universal coverage by having people buy insurance, rather than having the government provide it for free.

The Obama theory is that if insurance becomes cheaper, more people will buy it, and those that truly can’t afford it will be subsidized. But that’s not realistic. Ten percent of people account for more than 50 percent of health care costs and the current game in insurance is to avoid covering that 10 percent.

It looks fairly inevitable that the worst excesses of current insurance practices – avoiding people with chronic conditions – will be banned. But the next step, which is spreading that uneven cost of health care across wider populations, means healthy folks who are not paying their “fair share” will have to pay more. That’s necessary if those paying the most – or in reality, currently unable to get insurance – get to pay less. And those who will have to pay more will likely outnumber those getting a better deal right now. So the Obama plan will look like a cost increase to many. This has largely been the experience in the new Massachusetts “universal insurance” plan.

Obama’s way around this is to have the U.S. government subsidize some of the most expensive cases. That’s the source of his $2,500 a family savings. He’ll also allow people to buy into an equivalent of the Medicare system. Both of these safeguard proposals mean big increases in government subsidies that will require more taxes. But this is all likely to be proposed during a recession. The Federal budget is already heading for another record deficit. Add in the opposition from much of the health insurance industry to these reforms (as they will put some of its members out of business), and you can see how hard this will be to pass Congress.

There is one place Obama can go for the money to pay for his plans. The Medicare program continues to run more or less as it did in the 1960s, incenting doctors and hospitals to provide more and more services, at a total cost of some $460 billion in 2008. Remember that Obama says he needs less than $100 billion to cover everybody.

For the past two decades Medicare “reform” has meant paying private plans to take on more of the Medicare population. But more than 80% of Medicare recipients are still in the traditional program, and worse, it’s turned out that it costs Medicare more overall to send a senior into a private plan. So serious reforms of the mainstream Medicare program are going to be necessary.

Any such reforms will have winners and losers. Losers will presumably be those making money providing “too much” acute care now. You can imagine the ability of those “loser” hospitals and doctors to rally political support. So although there be reallocation of funds within Medicare and for the rest of Obama’s plan to work there’ll need also to be an overall reduction in Medicare spending to help pay for the expansion of subsidies to cover more of the uninsured.

So my quick forecast, regardless of who wins in November: We’ll see cuts in Medicare as part of a series of necessary and positive changes in how we pay for health care services. If Obama wins, we’ll also see greater regulation of insurers to prevent the bad behavior we’ve seen in the last few years.

Whether we’ll see real efforts to “cover every single American” is much less likely.

Posted by Matt Holt at 8:22 AM | Permalink

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