Saturday, October 4, 2008

Government vs. market reforms, obama strategies No Reform Soon

No Reform Soon

No matter who is elected, significant reforms in the first year of any administration are unlikely because of,

• Huge federal budget deficits with lack of money for federal programs, such as the $65 billion suggested by Obama in his first year, and the $1.2 trillion + for both Obama and McCain programs over next ten years.

• Preoccupation with making the $850 financial rescue package work. In reality, the package with previous bailouts for AIG , auto, and other “rescues,” exceeds $1.5 trillion and may approach $2 trillion.

• Mounting Medicare and Social Security deficits, with costs of Medicare and Medicaid alone already consuming one-third of the federal budget.

• Political debts and obligations secondary to campaign contributions and health care lobbying pressures. In 2007, the health sector spent $451 million – including phRMA $22.7, AMA $22.1 million, AHA $19.7 million, Amgen $16.3 million, and Pfizer $13.8 million.

• Vested special interests profiting from the status quo, including medical device companies, drug companies, medical suppliers, insurers, hospitals, and specialists.

• American’s appetites for quick access to high tech care and hospitals’ and specialists’ desire to continue that access and revenues that ensue.

Add to these reasons that chances for political success are small, devastating consequences of political failure, American’s resistance to Big Bang approaches, the profound differences between state and federal policies in Red and Blue States, and the sheer complexity of health care issues.

I would also not discount the negative attitudes of big and small businesses, who provide 40% or so of health coverage. Here are the approaches to health care favored by U.S. businesses and how they respond to the question; “Does your company favor the following options?”

Yes or Maybe No Undecided

Maintain existing system 84% 10% 3%
with improvements

Shared responsibility, e.g, 67% 22% 9%
Massachusetts model

“Voucher” and insurance 54% 30% 11%

Single payer 39% 48% 9%

Source: Robert Galvin, “Still in the Game—Harneessing Employer Inventiveness in U.S. Health Reform, New England Journal of Medicine, October 2, 2008

I will not go into the details of the McCain and Obama plans. They are spelled out elsewhere – “Election 2008: The Partisan Divide – The McCain and Obama Plans for U.S. Health Reform,” New England Journal of Medicine, August 21, 2008).

In contrast to McCain’s enthusiasm for private, non-government reforms, Obama wants mandated coverage for all children, a new National Public Health Plan and a National Health Insurance Exchange, where those uninsured or with preexisting coverage could buy insurance, and $10 million or so to help doctors install EMRs, a National comparative-effectiveness institute, and financing it all through increased payroll taxes, letting tax cuts for those making over $200,000 expire, and savings through EMR, disease management, and other system reforms.

Whoever wins the presidency will encounter fierce resistance to any attempt at comprehensive reform.

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