11 September 2009

Reaction to Obama Speech

Having had a day to digest what he said, I am cautiously optimistic that President Obama's speech, which was very good in many ways, will have the effect of uniting the party and lending some backbone to wavering Democrats. I think some kind of health care bill, hopefully one worth having, will pass the Congress this year, and that the president and Democratic members of Congress will receive more credit than opprobrium for it.

I appreciated that the president laid out a pretty clear and convincing case for why a public insurance option is necessary (although most people seem to have missed the point that it is necessary in large part because it is the
only realistic plan on the table which will have the ability to cut costs). I was not too thrilled that he didn't insist on it more forcefully, but I am not giving up, despite Lawrence O'Donnell's refrain that legislation always only moves in one direction (in this case, as in almost all cases, rightward). I think it may be possible to convince enough Democrats that only a public insurance option will really work to control costs.

The conventional wisdom is that the insurance lobbies will do anything to kill it, and that may be true, because it really does attack them at their point of vulnerability. Both sides agree, with opposite policy conclusions: public option, if structured rationally, will outcompete private insurance, for the simple reason that private insurance spends more than 30% on overhead and administration, not to mention profit, which is
zero added value. The public insurance system would be able to function on 3 or 4% overhead, like Medicare, and would deliver a much better value for premium spent. Eventually, if allowed to function rationally, we would have a system like that in many other countries, where most people receive insurance through a public system, and very wealthy people choose to have private coverage for convenience.

One way around the obvious impasse this might create would be to have private companies function as TPAs (third-party administrators)
of the public insurance system. Lower overhead, lower profit, but at least they would survive. Medicare actually functions in this way to a great extent.

But on the area of paying for all of this, I think the administration is kicking the can. It's just not realistic to expect to pay for covering 1/5 of the population now not covered through cost savings. Not gonna happen. And the tax on "cadillac" policies won't be enough.

What is needed, maybe not this year, but soon, is a paradigm shift. We need to recognize that
health care is valuable and we need it, and we have to pay for it. There will have to be modest tax increases on the middle class, and large tax increases on the very rich, to pay for it (and to pay for some other much needed programs that have been sorely neglected under what amounts to 30 years of rightist government).

Overall, I think Obama did a pretty good save of what threatened to be a total debacle, so I'm reserving my criticisms and offering the administration my support to get this done, while reserving strong advocacy of a robust public insurance option as an essential ingredient of a workable plan. If we fail to get that in the final bill, we will be back trying to figure out how the total mess that the legislation will create can be fixed pretty soon after it takes effect (which isn't even for years, anyway).

It has been clear to me for years that the insurance paradigm is really unworkable when it comes to paying for health care. Insurance works for unlikely casualties, like shipwrecks, burglaries, fires, car accidents, etc. It spreads risk and provides security for an affordable cost. It tends to break down (and require subsidies) covering broad risks, like earthquakes and floods. And it fails completely covering costs that everyone is guaranteed to experience, like health care costs. Insurance does function (barely) to cover the risk of catastrophic costs, but the system is so bogged down paying (badly and with totally unsustainable inefficiencies) for ordinary care that it is fundamentally dysfunctional. What is needed is a reimbursement system that not only spreads the risk of catastrophe, but recognizes the role of public subsidy to transfer the cost of health care for the poorest third or so of the population to everyone else: this is simply the reality of the situation. And, what most people just won't acknowledge, is that the system needs to rationalize rationing. We have rationing now, it's just that it's grossly inequitable. The ability to make medical care choices based on what's best overall for patients and families, without profit considerations, needs to be returned to doctors, with realistic controls to protect against abuse, through stringent regulation and a system that covers everyone for rationalized health care costs and protects consumer interests.

No comments:

Post a Comment

Gyromantic Informicon. Comments are not moderated. If you encounter a problem, please go to home page and follow directions to send me an e-mail.