Thursday, September 17, 2009

The Cost of Health Care Reform

I am continuing my series on the misinformation swirling about health care reform.  Today I will focus on the trillion dollar cost you keep hearing about. 

Somehow, logic gets lost in all the numbers being bandied about.  You know the old saying, "Figures don't lie, but liars can sure figure."  Never was that more true than in the debate over the cost of health care reform.

At the risk of sounding simplistic I would like to point out that common logic proves that the single payer system would be the most cost effective way to go.  It makes me crazy when the pundits tell how much this is all going to cost while ignoring the horrendous amount we spend right now.  At the risk of repeating myself I will point out that we spend over double the amount of any other industrialized country PER PERSON on health care right now.  How can this be?  Those countries have eliminated the outrageous profits that the insurance and pharmaceutical industries reap under our care.  How hard is that to figure out?  (If you don't read the rest of this post,  please scroll down to the sentences I have highlighted in red.)

Ah, I hear you saying, we don't have to cover everyone as other countries do.  But isn't one of the main reasons for reform?  To take care of that issue, the current plans being discussed are  to make everyone share the burden.  That's how all insurance plans work.  They charge premiums from the healthy to pay for the illnesses of the sick.  Ah, you say; "I pay my way; why should I have to pay for someone else's misfortune?"  Aside from the moral issue, here is the elephant in your room.  You could be one of those who get sick and have the insurance company cut you off in spite of being a responsible citizen.  Maybe you are able to pay your way right now just because you are lucky.   

I will point you to two articles that bolster my premise.  The first was by Paul Krugman, New York Times, the Pulitzer Prize winner economist.  It was written some time ago before the sell-out by Max Baucus (that Max is so proud of.)

The second is by Bob Ceska from The Huffington Post.

(Caveat:  I have edited both articles for brevity and for staying with the cost subject of this blog.)


The Congressional Budget Office scored the full proposed legislation from the Senate committee on Health, Education, Labor and Pensions (HELP). And the news — which got far less play in the media than the downbeat earlier analysis — was very, very good. Yes, we can reform health care. 
Let me start by pointing out something serious health economists have known all along: on general principles, universal health insurance should be eminently affordable.

Insuring the uninsured shouldn’t cost all that much, for two reasons.

First, the uninsured are disproportionately young adults, whose medical costs tend to be relatively low. The big spending is mainly on the elderly, who are already covered by Medicare.

Second, even now the uninsured receive a considerable (though inadequate) amount of “uncompensated” care, whose costs are passed on to the rest of the population. So the net cost of giving the uninsured explicit coverage is substantially less than it might seem.

Extending coverage to most or all of the 45 million people in America without health insurance — should, in the end, add only a few percent to our overall national health bill. And that’s exactly what the budget office found when scoring the HELP proposal.

The HELP plan achieves near-universal coverage through a combination of regulation and subsidies. Insurance companies would be required to offer the same coverage to everyone, regardless of medical history; on the other side, everyone except the poor and near-poor would be obliged to buy insurance, with the aid of subsidies that would limit premiums as a share of income.

Employers would also have to chip in, with all firms employing more than 25 people required to offer their workers insurance or pay a penalty. By the way, the absence of such an “employer mandate” was the big problem with the earlier, incomplete version of the plan.

Those who prefer not to buy insurance from the private sector would be able to choose a public plan instead. This would, among other things, bring some real competition to the health insurance market, currently a collection of local monopolies and cartels.

The budget office says that all this would cost $597 billion over the next decade. But that doesn’t include the cost of insuring the poor and near-poor, whom HELP suggests covering via an expansion of Medicaid (which is outside the committee’s jurisdiction). Add in the cost of this expansion, and we’re probably looking at between $1 trillion and $1.3 trillion.

There are a number of ways to look at this number, but maybe the best is to point out that it’s less than 4 percent of the $33 trillion the U.S. government predicts we’ll spend on health care over the next decade. And that in turn means that much of the expense can be offset with straightforward cost-saving measures, like ending Medicare over payments to private health insurers and reining in spending on medical procedures with no demonstrated health benefits.

So fundamental health reform  is now within reach. The “centrist” senators, most of them Democrats, who have been holding up reform can no longer claim either that universal coverage is unaffordable or that it won’t work.

The only question now is whether a combination of persuasion from President Obama, pressure from health reform activists and, one hopes, senators’ own consciences will get the centrists on board — or at least get them to vote for cloture, so that diehard opponents of reform can’t block it with a filibuster.

This is a historic opportunity — arguably the best opportunity since 1947, when the A.M.A. killed Harry Truman’s health-care dreams. We’re right on the cusp. All it takes is a few more senators, and HELP will be on the way.


Health Reform According to Baucus: (My title)
By Bob Cesca (Huffington Post)

One of Baucus' concessions to the Republicans was tort reform language which not only won't work, but has also failed to bring in any Republicans (bad policy -- bad politics). Meanwhile, the bill is so diluted and bad that roughly half of the Democrats on the Finance Committee appear to be opposed to it.

By Max Baucus' own estimation, his plan carries a price tag of $880 billion over ten years. The press is tossing some very serious kudos and political cover his way because this is clearly less than the $1 trillion mark. It's also $20 billion less than the number President Obama mentioned in his address to Congress last week. And it's the Baucus Plan that many centrist Democrats -- the budget hawks and fiscal conservatives -- appear to prefer.

But wait. If the centrist Democrats were legitimately worried about government spending and deficits, they ought to be supporting the Kennedy Bill (the HELP Committee bill) instead, which, according to the CBO, clocks in at $611 billion over ten years, due in part to the inclusion of the public option.

The incontrovertible reality is that the Kennedy Bill is the more fiscally conservative health care reform bill. So why aren't the self-proclaimed fiscal conservatives in the Democratic Party flocking to embrace it?

One, the fiscal conservatives aren't always fiscally conservative (most of them voted for the Bush wars, the Bush tax cuts and the Bush Medicare Part-D blank check). And two, the Baucus Plan forces you and me to pay more cash to their contributors in the health insurance industry. This works out very nicely for senators like Max Baucus who, as Roy Sekoff pointed out, has pocketed millions in contributions from the health care industry.


Please note the thing that really makes health care reform affordable is the PUBLIC OPTION.  If the Blue Dog Democrats continue to oppose this using fiscal conservatism as an excuse you will know that they are being dishonest and that something else is at play.

I think it's time for the Democrats to quit 'making nice' and do what the republicans did for eight years - close ranks and vote in a block for whatever their president wants.


possumlady said...

This is REALLY eye opening! Thanks so much for this--gives me more ammunition!

kenju said...

YOu really cut to the chase and make it so understandable, Darlene! Thanks.

Darlene said...

*possumlady - You are most welcome.

*Kenju - Many thanks to you, Judy, for your kind words.

Rain said...

The Baucus bill is not very encouraging. It will require all to buy insurance and no way to keep costs down. A lot who right now are saying they can't afford it might no longer have a choice. Worse it's Obama evidently behind it. I am not happy. It's an insurance bonanza. I hope democrats say no if it doesn't get reformed. I am disappointed

Rummuser said...

Wow! I am copy pasting onto a separate folder for the day when we will have these kind of problems.

20th Century Woman said...

You know I'm with you all the way, Darlene.

Darlene said...

*Rain - After reding up on the Baucus bill I certainly agree with you.

*Rummuser - I hope you never have to fight this battle. It gets tiring.

*20th Century Woman - We are on a bumpy ride. Thanks for staying with me.

Chancy said...

Thanks for all this fine research Darlene. I don't understand why the health care plan had to get so complicated that it takes a PHD to understand it.

I do NOT trust Baucus at all. I remember he was one of the few Democrats who voted for the sub par Plan D prescription drug plan for Medicare which ended up with the donut hole being run not by MEDICARE but by plethoria of private insurance companies . Also no provision for Medicare to negotiate with the drug companies for bulk buying of meds. Made no sense. In Baucus proposed bill not much has been done to fix this fiasco.

Bah Humbug.

And how they think they will squeeze "fraud, waste etc enough out of Medicare and Medicaid to "pay for most of this new herath bill" is beyond me.

Medicare works well for most.

PS I agree with Rain is an insurance bonanza.

Darlene said...

*Chancy - Yes, I agree that the insurance companies come out winners in the Baucus plan. How can this lower costs when they keep raising premiums even when inflation is neutral?