Health Care Reform - Proclaim Victory and Go Home

Call it a victory, and move on. They couldn’t do it in Vietnam, can’t do it in Afganistan, but they’re doing it in health care.

Not that nothing has been done. I don’t agree with the crowing politicos that this is the change of the millennium, but getting 30 million people into the health insurance system is clearly important. I wouldn’t call it a progressive move so much as an anti-regressive move. How America has tolerated this for so long shows the innate pathology of the system and of our politics, the weakness of government and the strength of the corporations with no consciences. Since this is the heart of the health reform legislation, I’d call this not health reform, but inclusion reform. It will be important.

But it’s a lot like the financial bailout. We’ll change some current conditions, but we need to remember, it was the system that got us into this, our set of institutions and practices. We will get more inclusion, but the high-cost low-efficiency high-profit low-fairness system that got us into this will remain. Them that has is them what will get more. More meat on the bones, but the bones still hopelessly misaligned.

What I’m talking about is not the failure of the public option. I thought the public option could have been very helpful, but the main event was always the Health Insurance Exchange. If there had been a good and viable and extensive HIE, one of the pillars of the current system -- the health insurance companies-- would have had to do their business in a different way. They would have had to compete, with their competitive drives redounding to the benefit of the public. (For more details on this, see http://buddshenkin.blogspot.com/2009/09/understanding-health-insurance-exchange.html.)

The key is this. There are two ways of running a system responsibly, competition and regulation. Most American industries have a combination of both, some more regulated and some more competitive, but most a mixture of both. How do corporations operate within these systems? What it wants to do, what it fights to do, plots to do, is to escape both and either. Any self-respecting corporation will espouse the holy cause of competition and try to escape it to become a monopoly. What any self-respecting industry wants to do is to capture the regulators and make rules that favor business rather than the public. That’s what they are born to do. The role of the government is to prevent both from happening. Capturing the regulators and crushing and excluding the competition is the strategic function of the corporation.

The health insurance companies have not been heavily regulated, despite their claims that they have been, and 90% of the population have had a choice of health insurance companies so sparse that they qualify as either oligopolies or monopolies. That has been part of the tragedy of the health insurance industry. How much will this be changed now? In the service of increased coverage, some important regulation will be introduced – excluding prior conditions, excluding rescissions, etc. That’s not nothing. But the essential conditions of competition will not be introduced, because HIE will apply to so few applicants for insurance, maybe a couple of million. There will be some increased regulation as mentioned, but only a couple of provisions, really. In the end the system will not be essentially changed.

As an employer of about 150 people, I was hoping to cut some exorbitant health insurance costs, and to be able to offer my employees a better insurance plan than we have now, with more choice and value. Now, we’re frozen for the foreseeable future, and the present sucks. Our people would like to choose, but I can’t offer them a choice, because there are very few insurance companies I can contract with, and all of them insist that I make them exclusive to Bayside, so I have to choose one only. I can't choose Kaiser and others, it's either/or. It’s not if you like your present insurance you get to keep it; rather, you’re stuck with your present insurance like it or not. Thanks a lot.

How would anyone be violated if we could just choose freely in a market, where the prices and services were clear to see? Ah, but then the monopoly would be violated, the companies would not be in control. The health insurance industry beat that back, little by little, until nothing was left. They have the money, they have the influence, and the goddamn Senate sucks.

In addition, as a company that is still small but not very small, I think we will be required not only to cover our employees, but also to offer to pay for 65% of our employees’ families’ insurance. Probably the cost of each individual policy will increase, and our corporate responsibility to provide health insurance will massively increase. To me, it’s very discouraging.

Other Notes on the Legislation

The new legislation will establish some pilot projects on Accountable Care Organizations, and boards for assessing comparative effectiveness of treatments. These are bureaucratic arrangements designed by the health policy intellectuals that I am very pessimistic about. They will lead to regulation rather than competition. Not worth the big fight that health reform entailed. Minor.

The nurses have signed on to reform because they got what they wanted, support for more training (jobs and power!) and independent nurse clinics without the need for their nemeses, doctors. Nurses are on the move!

Other big winners are Community Health Centers. They will get $6.5 billion – billion – over five years for increased operations, trying to go from serving 15 million people to over 30 million. They will get $1.5 billion – billion – just for construction. Plus they will be getting over $800 million from stimulus funds to introduce IT.

Many of a liberal persuasion will be tempted to applaud the new money for the CHC’s. Not me. The alternative ways of funding care for the poor are (1) to establish and support various clinics, such as CHC’s, and (2) to give the poor funding to obtain care in the mainstream system. Notice that we are dealing with “separate but equal” arguments here. We at Bayside are providers for Medicaid and every private insurance company you can shake a stick at. Where would our patients and potential patients rather go? Now, that’s good competition.

I say, give me a level playing field. But what the legislation does is give gobs of money to the CHC’s and starve us in the private sector. Not only do the CHC’s get all that money, they get paid two or three times what we get per visit, as they always have (outrageous!) But also, Medicaid eligibility is expanded, and the dreadfully low payments to doctors will not be raised, according to the Senate bill. (The House bill actually raises payment to the level of Medicare – that’s right, even though Medicare rates are quite low, Medicaid is considerably lower! But I doubt the House Medicaid levels will survive the conference committee.)

Thus, the private sector will continue to be excluded from serving the poor, simply because they won’t be able to afford to do so. The CHC’s, on the other hand, will be funded separately and thus relied upon. The die is thus further cast – there will be separate systems for the poor, clinic care. Forget the vision of Medicaid, to serve everyone with the same system. Gone. Two classes of care, more than ever. Those of us who try to serve all with one class of care, adios!

Well, these last are just my personal observations of some of the less noticed aspects of the legislation. There are others I won’t mention, all tending in the same direction.

This is what the systems now allows to be done. So what can the Democratic Party do? Proclaim success and move on. It’s pathetic, really.

Budd Shenkin