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Adventures in a Health Care Nation

Dec
8
2005

Greetings and welcome to my first Spot-on column. My designated role on Spot-on is to explain the whacky work of American health care, particularly the politics of it. I may on occasion deviate off into the broader world of politics and the vagaries of a certain football team from west London, but I fully expect to get slapped around by the editor if that happens too much.
Health care is an enormous subject, and that’s not counting medicine or health as being part of health care. I define “health care” as the systems, policies and organization supporting the finance and delivery of medical care, and I have a whole blog devoted to that subject for the health care wonks that congregate there. The point of my writing for Spot-on is to try to explain to you tech geeks and politco-addicts over here why health care is important in the context of American politics, and why there’s a strong school of thinkers (me included) who think that health system financing reform will be the dominant political issue of the next two decades in these here United States. Now those of you with long memories may remember that there was quite some fuss about health care in the early part of the Clinton Administration, and those of you who go back further may remember that Richard Nixon (Yup, him!) was on the verge of introducing national health care reform when a minor break-in at an office building plucked him off the White House lawn for good. So it’s not as if health care has not been a political issue before, and in fact it always has been and always will be.
But that’s different from saying why it will be the political issue of the next two decades. And to back up that statement you’ll have to indulge me in a little history.
Although shamans and faith healers have been around since the dawn of civilization, the prominence of “my son, the doctor” in American culture is relatively recent. Up until the early years of last century a visit to the doctor was statistically as likely to harm a patient as to help them, and a hospital was a place poor people went to die. Like much else that’s familiar to today’s cognoscenti, it was technology that made the difference, and the technologies that mattered were mostly anti-biotics and anesthesia, which enabled doctors to correct disease with drugs and defects with surgery. Following an age of development in the 1920s and 1930s, a combination of government financing (the Hill-Burton Act) and hospital and physician-organized pre-payment systems (Blue Cross and Blue Shield plans) fueled an explosion in hospital construction and health care spending. The new technologies gave them something to spend that money on.
Then a historical accident locked those payment systems into place. Because of a wage freeze in World War II, employers started to offer “health insurance” as an employment benefit. Subsequent court rulings exempted that benefit from workers’ income tax, and unions became aggressive in protecting that benefit. That’s why you probably get your health insurance at work, but you don’t usually live in company housing or buy your food at the company store — although in some alternate universe that split off from our’s early last century, that’s probably still the case.
The reason of course that health care benefits became important is that health care costs are firstly expensive — paying the doctor in chickens doesn’t cut it for hospital care, MRIs and the like — and secondly that they are very unevenly distributed. A few people cost most of the money. It’s basically the 80/20 rule, except that it’s worse as more than 80% of the dollars are spent on fewer than 20% of the people. That means that absent a whole bunch of complex regulations that have never been successfully put together by any government in this country, private insurance doesn’t really work for health care because if the insurer can figure out who’s likely to be expensive (hint: they’re likely to be old or have a chronic illness like diabetes) they have a massive incentive to try to avoid insuring them. This is not like house or car insurance; it’s like house insurance when you know pretty much exactly whose house is going to burn down or car insurance when you know in advance who is going to crash.
Every other nation has solved this problem by putting most or all of its people into very large “risk pools”. In other words making sure that the people likely to have expensive problems were covered by the people likely to be healthy and that insurance companies couldn’t segment the pool. And that is more or less what America started to do with a combination of employment-based insurance for workers and state-provided insurance for the elderly (Medicare) and the very poor (Medicaid). But everywhere else in developed countries the government either offered a backstop which picked up those not insured elsewhere, or provided care directly to everyone–sometimes in a monopolistic fashion. Most of those national systems were completed in the 1945-1970 period. This nation alone left those in the gaps out altogether. And the biggest gap is those who work for companies who don’t provide (and pay for) insurance, who of course tend to be lower-income workers. Low income workers and their families make up most of the 45 million uninsured Americans. And the number of those receiving their health insurance at work is falling quite fast, as the cost of care continues to increase and more and more Americans work alone, in part-time work, or for smaller companies.
I won’t go into a litany of why the uninsured are a problem, not just for themselves but for the whole of the healthcare system and America as a whole. That’s for another column. But one thing we do know. They are never going to buy their insurance voluntarily, so there are three main proposals to solving the problem. The first, known as single payer, suggests that the government should abolish private (i.e. employer-based) insurance and take over paying for everyone. The second suggests that we should mandate that employers purchase insurance for all workers, and that government should plug up all the gaps. This used to be called “pay-or-play” and was the guts of the Clinton plan in the early 1990s. The third proposal is some kind of mandate on individuals to buy insurance, with some type of subsidy to help the poor do so. As you might imagine, these solutions go from left to right in their political orientation. But there is a fourth “solution” which is to essentially do nothing. That’s the policy we’ve been consciously following since 1994.
The problem with doing nothing is that for a set of reasons that I’ll discuss much later, the current incentives in American health care lead to higher costs which translate into higher premiums and therefore increasingly fewer people and businesses able to afford them. But there are not enough people directly affected by these costs to be a significant voting block–especially as those most affected by uninsurance are more likely to be young, or minorities, and less likely to vote.
So it’s not the issues of the uninsured that makes health care such a big reform topic; it’s the issue that the rest of us might become one of them. And down that road are scary things like bankruptcy, losing access to health care, and death. So health care becomes a big issue in elections when enough people become concerned about losing access to insurance that a government-mandated system of some kind looks better than the alternative.
Why am I saying that the next two decades are going to be that time? Well demographically the baby boomers are moving into their later middle ages. The oldest is now 60, five years away from the safety of Medicare, and the youngest is 40 — old enough to realize that they’re going to die some day. What do we know about American employment patterns? They are increasingly eliminating middle-class jobs with decent benefits, sending many (including many baby boomers) into jobs without health insurance. What do we know about American elections? They are decided by middle-class white male baby-boomer voters (mostly in the south and mid-west) who vote Republican while the experts say they shouldn’t, because they perceive that the Democrats haven’t got anything to offer them.
My contention is that as losing health insurance becomes the dominant issue for this group, they’ll start thinking about and voting on what alternatives they are being offered to get it back. And while it’s only a minority of this group that will likely have immediate issues with health insurance or the lack of it, it will only take a swing of 5 percent away from the Republicans for the national political map to change heavily.
The smarter political thinkers in both parties know all about this — it’s just the public hasn’t woken up to it yet. But it will, and figuring out the answer will be the mother of all domestic political battles for the coming decade.

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