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Health Care Reform: No Magic Bullets

Armen Hareyan's picture

Wishful thinking leads many well-meaning reformers to imagine that we can accomplish universal coverage in a single stroke. Writing in the December 31 edition of the New Republic, political scientist Jacob Hacker suggests that by declaring “healthcare for all” we can achieve universal coverage and , simultaneously, kick-start the economy. How do we do it? Easy - just spend as much money as possible as quickly as possible.

“In fact,” Hacker writes, “we have a magic bullet.”

This sentence stopped me. To my mind, the word “fact” just doesn’t belong in the same sentence with the phrase “magic bullet,” certainly not when we are talking about something as complicated as national healthcare.

Nevertheless, Hacker, who is an intelligent, highly-respected healthcare reformer , is dead serious. Just spread the money around, he says, and everyone will be happy - particularly the lobbyists who might otherwise object to any attempts to cut spending and eliminate some of the waste in our bloated system.

“Buy off the opposition,” Hacker advises. “Britain's health minister was once asked how he had gotten doctors on board for the National Health Service. His reply: ‘I stuffed their mouths with gold.’ Money may not change everything, but it does make it easier to win friends, or at least divide and placate them. . . .”
The problem with the Clinton healthcare plan Hacker explains is that “it didn't include enough handouts to appease interest groups.”

Still, I cannot help but wonder: Does “stuffing their mouths with gold” mean “stuffing health care legislation with pork”? Is that really the most prudent way to design an affordable, sustainable, and effective health care system?

But according to Hacker, Americans don’t want to hear about affordable; nor are they interested in eliminating waste. “Most don't believe our nation spends too much on health care; they believe they spend too much.” In other words Americans are distressed that their own bills are so high. The fact that Medicare spending is sky-rocketing, and that eventually we all will have to pay the piper, is, apparently, beyond the grasp of the average citizen. The notion that unnecessary, often unproven and usually over-priced drugs, devices, tests and operations can be hazardous to our health is just too hard to understand.

Granted, the fact that “more care is not better care” is counter-intuitive; certainly it runs against the grain in a culture that adores “More.” Still, there are indications that the public is catching on. These days, many patients are beginning to ask their doctors - “Do I really need this extra pill? I’m already taking four others every day.”

But Hacker implies that they are not catching on fast enough: “The way to get reform [now] is to give Americans what they want,” He argues, “better coverage at lower cost, made possible in the short term by a major infusion of new federal dollars.” In a recent speech, he made it clear that the infusion will depend on deficit spending. He makes no provision for pausing to ask whether that borrowed money will buy us more effective care. That’s the problem with deficit spending; it always seems like play money.

Moreover, Hacker ignores the fact that just throwing cash at the economy will not stimulate constructive growth. For years, the Japanese stayed warm by burning money. This did not solve their problem. You cannot stimulate economic growth unless you invest in something of lasting value. As I have argued in an earlier HealthBeat post, we will not add to the health or the wealth of the nation by pouring money into a broken health care system. Think about it: would we spend millions to repair a bridge that we knew was structurally defective?

Today we know that our healthcare system is clogged with hazardous waste: one out of three of our healthcare dollars are squandered on care that provides no benefit to the patient - and too often, exposes her serious risks. Before we mandate health insurance for all, we must make the structural reforms needed that ensure that we are building a safe, effective healthcare system. Otherwise, we are delivering captive customers to for-profit insurers, drug-makers, device-makers, and hospitals - funding the very industries that will fight meaningful structural reforms.

Nevertheless, Hacker argues, full speed ahead: “The faster everyone is in the system, the faster money flows into people's pockets, and the sooner reformers start reaping the political rewards.” Good for the reformers. But what about the patients? Sometimes reformers seem so caught up in the politics of “winning” that they momentarily forget the purpose of the game. In this case, it is not economic stimulus, or placating the opposition; it is not creating customers for insurers or political rewards for reformers. The goal is better health for all Americans.

To his credit, Hacker makes it clear that he believes that the political capital that reformers accumulate by pleasing everyone ultimately will allow them to take a hard look at the “the difficult but essential task of controlling long-term health spending.”

In other words, after lining the pockets of the lobbyists, and assuring the American people that they can have all the health care they want—for less than they are spending now—then you break it to them that, in fact, we cannot afford runaway health care spending.

The Congressional Budget Office Report—A Different Approach

The alternative is to tell the public the truth upfront. For eight years our government has lied to us. Truth-telling would be a refreshing change, and I believe that the American public is up to the challenge.
The Congressional Budget Office (CBO) recently released two reports that are eye-opening in their honesty. Universal coverage, CBO advises us, will involve “tradeoffs.” Americans will have to share more of the costs of their healthcare and/or accept “tighter management” of what is covered.

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CBO knows that given the amount of waste in our system, we can cut spending without lowering the quality of care. But CBO also realizes that this won’t be easy. Over at Health Care Policy and Marketplace Review, Bob Laszewski offers an excellent summary of the CBO report:

"1. There are no one, two, or even ten silver bullets. There are literally dozens of steps that will likely have to be taken in order to achieve the savings necessary to make our system more cost and quality effective.

"2. The politically easy stuff won't get it done. Democrats and Republicans have said that things like prevention, wellness, and wider use of health information technology can free-up the savings we need to make our system affordable even while we dramatically expand the number of citizens covered. But the CBO confirms that these less politically problematic “cost containment lite” proposals won’t be enough: '… approaches - such as the wider adoption of health information technology or greater use of preventive medical care - could improve people’s health but would probably generate either modest reductions in the overall costs of health care or increases in such spending within a 10-year budgetary window.'

"3. Really controlling costs will be very hard and will require some courageous and politically problematic actions: 'Those problems cannot be solved without making major changes in the financing or provision of health insurance and health care. In considering such changes, policymakers face difficult trade-offs between the objectives of expanding health insurance coverage and controlling both federal spending and total costs for health care.'

“When you read through the reports,” Laszewski observes, “it becomes clear that there are things we can do that will help but really be a drop in the huge health care bucket.

“For example,” he notes, the Baucus Health Plan makes a big deal about saving money from ‘waste, fraud, and abuse.’ But such efforts are estimated by the CBO to save a relatively inconsequential $500 million over ten years.”

By contrast, if Medicare updated its assumptions about how often diagnostic imaging equipment is used, from 50 percent of the time to 75 percent of the time - and reduced fees paid to physicians accordingly - federal outlays would be cut by $1.9 billion over the same ten years.

For even greater savings, CBO estimates that if Medicare required that drug-makers pay a minimum rebate on drugs covered under Medicare Part D (using the Medicaid rebate policy as a model) the government would save $110 billion by 2019. If Medicare raised the age of eligibility to 67, it could save $85.6 billion.

All in all, CBO outlines 115 discrete options to either alter federal program or affect the private health insurance market in ways that would contain spending while lifting the quality of care.

Note: these are options, not recommendations. Some are politically more palatable than others. While some reforms yield only small savings, together they could make an enormous difference.

If you read the entire report, what becomes clear is that healthcare reform that we can believe in cannot be achieved with a single stroke of the pen. It will, as Laszlewski suggests, take more than one piece of legislation. National health reform will become a process—a political process—that will require time, thought and courage

Some suggest that, when it comes to healthcare reform, the Obama administration has only a narrow window of opportunity. Today, the economic meltdown has left Americans feeling insecure, ready for government to take charge, ready for charge. If the administration hesitates, the national mood may shift. Those who call for universal coverage Now say that the Clinton administration moved too slowly, and while they dragged their feet, the window closed.

The truth is that the white collar/ blue collar recession which created such anxiety at the beginning of the 1990s eased before the end of Clinton’s first year in office. By the time he presented his plan to Congress, in November of 1993, “the American people found that they weren't feeling so scared anymore,” observes the American Prospect’s Ezra Klein: “Thus their status quo bias once again overtook their feelings of insecurity. The initial calculus of the Clinton plan was that Americans would be more afraid of their health coverage being changed by recession than reform. As the recession eased and unexpected economic changes looked less likely, reform grew scarier, and thus the ‘fierce urgency of now’ that animated the 1991 discussion over health reform dissolved before a bill had even been presented”

Unfortunately, President-elect Obama need not worry that the recession of 2008 will end too quickly. The Bush administration dug a very deep hole; it will take years to repair the damage. Economists say that unemployment may hit 8 percent by the end of 2009; some say that eventually 10 percent of Americans could find themselves without jobs.

In the meantime ask yourself: “Who would benefit most if we race to pass sweeping national health care legislation next year?” The answer is anyone who wants Congress to pour money into our healthcare system—without regulating that system. The lobbyists representing the nation’s for-profit insurers, drug-makers, device-makers and even of our highest-paid health care providers are salivating at the prospect of 45 million new customers, many arriving on the scene with government subsidies in hand.

If we take too much time thinking about how to spend our health care dollars wisely and selectively, we might put too much emphasis on safety, quality, and cost-containment. Those who profit from what we euphemistically call a health care “system” prefer the current laissez faire chaos which allows them to sell whatever they like, at whatever price they like, without being constrained by too many rules.

But as recent experience on Wall Street has demonstrated, games need rules - particularly when billions are at stake. The smell of money attracts vultures.

Reprinted from http://www.healthbeatblog.org/ and written by Maggie Mahar