Saturday, September 26, 2009

Obamacare and the Doubling Down of Political Bets

As I read about how Democrats and Republicans are negotiating the final Senate Finance Bill on health reform, I am getting the distinct impression both sides are “doubling down,” i.e. doubling their initial bets on the final product.

The Democrat Bet

The Democrats are betting that, by imposing mandates, taxes, and penalties on individuals, businesses, and health plan contents, government can, at long last, beat back the for-profit health industry and control health care.

The definition of the word mandate, “authoritative order or command, esp. a written one,” captures the essence of what’s going on. Democrats are saying, We have the power and the political capital, and By God, we are going to use it - soon, before the end of the year while we still have it – no matter what the consequences, which we will define using our own rosy assumptions.

A Tell-Tale Example

A tell-tale example is the case of mandates pertaining to the contents of health plans – chiropractic care, wigs, autism, in-vitro fertility procedures, massage therapy, and so on. In many states, such as Massachusetts and Minnesota, there are more than 70 of these mandated benefits, the inclusion of which, drives up premiums but assures the plans are comprehensive.

By a vote of 14 to 9, the committee rejected an amendment by Senator Jon Kyl, Republican of Arizona, that would have prohibited the federal government from defining the specific health benefits that insurers must offer. The government would prescribe a minimum package of benefits under all health bills pending in Congress.

A Love-Affair

The Democrats, it seems, have a love affair with the word “comprehensive,” which pleases more of their constituents more of the time but drives up costs.
Republicans are arguing comprehensive benefits, coupled with low-deductible, low-copayment insurance has brought us to where we are today – unsustainable health inflation that threatens to make the nation globally uncompetitive and businesses and individuals insolvent.

If you offer “comprehensive care”, i.e. care covering virtually every possible contingency to everybody, at low cost to everybody without awareness of the true costs , costs will soar.

Obama care simply expands and lock-ins this flawed model and defeats the goal of making health services more affordable for everyone. The Republican Plan, which follows, rests on the bet that Democrats will not be able to get 60 Senate votes to assure government control of the health system.

• allow everyone to purchase health insurance across state lines.

• Give individuals the same tax break that companies get when they supply health insurance for their employees.

• Third, make health insurance portable.

• Companies should help their employees own their own insurance so that it travels with them from job to job, state to state, and is under their control.

• Congress should enact tort reform so that doctors can do what is best for their patients instead of practicing costly legal defensive medicine.

• Let people purchase insurance that meets their needs, rather than requiring intrusive, one-size-fits-all federal government mandates.

The Republican bet is – if the Democrat plan goes down, perhaps we can start over and come up with a badly needed sensible reform that benefits everyone.


Unknown said...

You're completely right in highlighting that comprehensive benefits and mandated inclusions are the elements driving up cost. Instead, we must focus on understanding how we can achieve the same "health" while reducing the drivers of expense...this is impossible when they're mandated in and the substitutes are locked out.

I've put together my thoughts on what a more sustainable health platform would look like. The ability to differentiate (including on price) is an important element.

Richard L. Reece, MD said...

I don't think I've ever been "completely right" about anything. But thank you anyway. The Democrats tend to oppose anything that smacks of consumer driven care, which is why the're putting a lid of HSAs. Also the mention of "price" is taboo. People ought to believe they'r receiving a "free" entitlement, courtesy of the government.