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Health Care Now? Don’t Hold Your Breath

Aug
29
2007

Judging by the number of articles about corporations, unions and politicians decrying America’s healthcare system, you could be excused for believing that we will have health care reform very soon. You’d be wrong.
That doesn’t mean the costs can’t be easily and immediately explained. Recently I heard one manufacturer explain that for their workers making less than $35,000, the average individual’s healthcare cost was over $9,000 and was going up at more than 10% a year. The cost of those health care chickens is coming home to roost in stagnant wages and exported jobs.
And, as a series of articles from Lisa Girion in the LA Times about retroactive policy cancellations makes clear, the “market” for individually purchased health insurance is beyond dysfunctional. Insurers will do anything they can to not sell insurance to people who might use it. That’s because healthcare costs are extremely concentrated among a very few people. Sell a few too many policies to sick people and insurance companies’ profits evaporate.
Historically, this has had limited political impact. And while that situation is changing – a bit – it’s not going to be enough to move legislation through Congress.
Most uninsured have been poor workers who didn’t vote much. America’s middle classes have usually been much more concerned about maintaining the healthcare benefits they have received from their employers. But with rising costs, the easiest option for many employers is simply to stop offering health insurance as a benefit.
Since 2001 for the first time ever in a period of economic expansion the proportion of people getting insurance benefits from employers has gone down. where this shows up most dramatically is in the rate of those uninsured who are middle income. In 1999 at the height of the boom, 18% of average income workers were uninsured for at least three months during a two year period.. By 2003, 25% were. Things have not improved since – in fact today’s data suggests that the uninsurance rate increased in 2006 – and of course the situation will get even worse if there is a recession.
Americans increasingly understand that a lack of health insurance means it’s difficult to get decent health care, and there’s a real prospect of financial catastrophe if they get sick. And these new additions to the uninsured population are much more likely to vote, which is another reason why the issue has become politically more important.


So a core voting bloc and the main paymasters behind the American health care system are in broad agreement that somebody – in other words the government – needs to, at the least, significantly intervene in the system to guarantee universal insurance coverage and reduce costs. But unfortunately this doesn’t guarantee a successful future for health care reform.
The main obstacle is those currently benefiting from the healthcare system – which now accounts for one dollar in every seven of the economy – as it currently operates. For example, somewhere between 30% and 50% of the money spent on health care is unnecessary. Researchers led by Jack Wennberg at Dartmouth have shown that the cost of care delivered to exactly the same type of patients in different areas of the country varies by a factor of up to five with no benefit to the patient. There is a growing consensus that the lack of a system to care for the uninsured adds to that waste. The obvious solution is to cover everybody in a rational social insurance program, by, perhaps, extending Medicare, and to use that program’s buying power to drive out those inefficiencies.
But although this is the right thing to do, it’s in the interests of hardly anybody in the current system to see it done. It might be academically correct that too many angioplasties are being done, but the political impact of cardiologists appearing in commercials saying that patients will be denied needed care will be much stronger.
Similarly while tragic tales of the uninsured make for great press, and a few throw-away lines in a movie, it will be very difficult convincing Americans that they should change away from an employment-based insurance system that most of them treasure to a system that’s often decried as “socialism.” So you can expect to see plenty of opposition to proposals for significant health reform that would solve many of the most vexing problems, quickly and effectively: Having a government-run health care system that insures most, if not all, Americans.
One early indicator of trouble ahead has been the rush from insurers, the AMA, hospitals, and drug and device manufacturers to promote their own plans and associate themselves with reform efforts. You can be sure that this is not being done in a sudden burst of altruism. Instead it’s jockeying for a share of whatever increased federal money “reform” will end up meaning.
The number of proposals on the table means we can expect a louder debate on health care in the next couple of years. But don’t be too surprised if not much changes.

Share  Posted by Matt Holt at 12:34 AM | Permalink

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