Diary

HEALTH CARE REFORM: WHY THE OBAMA PROPOSAL IS LOSING

The other day, I heard a cogent, persuasive argument in favor of the Public Option that did not rely on the idea that the Public Option would be the first step towards a single payor system.  Unfortunately, I did not hear this argument from the President; from Health and Human Services Secretary Sebelius; from “Health Reform Czar” De Parle; or from Press Secretary Gibbs.

Other than this one individual, the majority of people I have talked to or heard speak who favor the Public Option really favor a single payor system.  While this idea has great popularity among perhaps 10-15% of the population, it is an idea that is absolutely toxic to the majority of the electorate.

As a result of the fact that this 10-15% of the population are solidly Democrats, any health care reform agenda proposed by a Democratic Party Administration has to at least pander to this concept, here in the form of the Public Option.  Naturally, this dissuades people who favor market-based reform from signing on to H.R. 3200 or any Bill that seems to be a stalking horse for a single payor system.

As a result of the rise of New Media, in the form of the Internet, talk radio and Fox News, peer-reviewed studies of the genuine drawbacks of  single payor systems in terms of long wait times for basic care like hip replacements, poor survival rates for chronic disease and overt rationing of care are readily available to counter any equally valid arguments in favor of these systems in terms of lower expense.  In sum, with a single payor system you pay less because you get less, something which makes the adoption of  a single payor system something less than a fiat acompli.

This fixation on a single payor system is unfortunate, because many, probably most, people support reform.

While most people are generally happy with their current coverage, they are very conscious in hard economic times of how easy it might be to lose such coverage.  While subsidizing COBRA continuation coverage was the absolutely the right thing to do, it reduced potential pressure for reform from a powerful interest group: people who could not have afforded their COBRA premium absent this subsidy.

Many owners and mangers of small (and even medium sized) employers admit that they can foresee not being able to provide group health benefits for employees: premiums are rising too quickly.

The woman I heard present a ringing defense of the Public Option, in fact, defended it on this basis.  The Public Option could give small business owners options other than the Hobson’s Choice of dropping their employees’ coverage or bankruptcy.  That this kind of compelling, accessible argument has not been the central one is why the Public Option has not caught the public’s imagination.

Even large employers struggle.  Despite success stories like GE and Safeway, who have innovative, effective and successful self-insured plans, the US auto makers are the poster children for expensive, bloated and ineffective health care plans.  The Employee Retirement Income Security Act of 1974 (“ERISA”), which effectively federalizes the law governing many private employer “welfare benefit plans” (like health insurance), and implementing regulations, like the US Department of Labor Multi-Employer Welfare Arrangement (“MEWA”) rules, trap in legal amber the idea that most workers and their families are covered by large employer health care plans.  However, in an economy where 70% of the new jobs are with small businesses, this is no longer the case.

A reform plan that might have worked would have been to change ERISA and the MEWA rules to create platforms that would have allowed individuals and small businesses to band together to gain the benefits of ERISA self-insured plans, such as the ability to in effect “buy insurance across state lines” by being exempt from state insurance laws, the ability to design plans to meet members’ needs, the ability to bargain for group discounts, the ability to work with participants and beneficiaries towards more cost effective utilization (as Safeway has) and the ability to reduce limitations on covering those with pre-existing conditions based on the fact that these plans would be large enough to spread risk.  Such plans could have also tried innovative use of Health Savings Accounts (“HSAs”) to bring  market forces to bear to reduce medical expenses.  Republican law makers who have supported market-based reform and greater benefit portability, such as Rep. Paul Ryan, might well have supported such a bill.

Unfortunately, instead of workable, well thought out reform, we have the current mish-mash of unworkable proposals.  I have heard one well-thought out argument for Public Option, as I mentioned above, but I have not heard anything of similar merit from anyone who is officially charged with promulgating and advocating for this legislation.

While opponents’ criticism have not always been on the mark, “Death Panels” anyone, they do not have the burden of proof here.  Additionally, even where some of their points are flawed as presented, there are valid reasons related to underwriting and liability as to why you generally can’t buy insurance across state lines, they present general concerns that are valid.  ERISA plans can, in effect since they are not bound by state insurance laws, “buy insurance across state lines” and this should be carried over into any reform of health care.

Additionally, the dismissive attitude towards those coming out to Town Halls to oppose this, particularly senior citizens,  is unbelievably wrong headed, politically tone deaf and counter-productive.

These people are genuinely afraid of change to a system, Medicare, which many of them have paid into and relied on since 1966.  They can’t make other plans at this point.  While its fine to laugh at signs like, “Keep Government away from my Medicare,” this misses the the point:  these protesters don’t want to see a system they have supported for 43 years (and now rely on) stripped away and hollowed out to create a new, untried program for people who still have other options.  As the elderly are a prime constituency for the Democratic Party, this negative attitude towards these people and their fears seems to be political suicide.

Indeed, the generally dismissive attitude toward the burgeoning Tea Party/Liberty movement reflects both arrogance and ignorance.  There is a genuine fear on the part of many Americans, because of the acts of both the Obama and the Bush Administration, that the Federal Government is accumulating too much power as against the people and the states.

While these people oppose “socialized medicine” they also, as you do, oppose “wars of choice.”  Instead of trying to reach consensus with decent people who are trying, many for the first time, to assert their rights as citizens of our Republic, people like Speaker Pelosi vilify them as Nazis, crazies and dupes.

This is hubris that will likely meet its nemesis at the polls in November of 2010.