The progress (if that’s the right word for it) of healthcare reform legislation (if that’s the right word for it) in the Congress is the story of the day:
WASHINGTON — As the battle over health care lurches toward a conclusion, President Obama is confronting an increasingly sharp divide on the Democratic left, with liberals in the Senate and the House split on a critical question: How much of what they want is enough?
In the Senate, where time is running out for Democrats to meet the president’s deadline of passing a bill by Christmas, liberals signaled on Tuesday that they would hold their noses and vote for a version of the measure that would strip out some of their most cherished provisions, including an expansion of Medicare and the possibility of a government-run insurance plan.
But the House seemed unwilling to fall in line. The majority leader, Representative Steny H. Hoyer of Maryland, said flatly on Tuesday that the House would not “simply take the Senate bill” and adopt it unchanged.
I continue to have little doubt that something called healthcare reform will be enacted by the Congress. It’s becoming increasingly doubtful that the Congress will have accomplished anything meaningful by doing so.
I would divide the objectives of healthcare reform legislation into three categories: things we need to do, things we should do, and things we’d like to do.
We need to control or, even better, reduce the costs of healthcare while preserving or improving outcomes. That we need to control costs is manifest. The dirty secret of healthcare expenditures is that all that needs to happen for healthcare to become unaffordable for most Americans is for healthcare costs to grow at the general rate of inflation. That’s the short version of what has happened over the period of the last 25 years.
The reasons for preserving Medicare and Medicaid are as sound now as they were for creating the programs 40 years ago. Medicaid is necessary for both pragmatic and ethical reasons. Without it the poor would become increasingly sick and when the poor are sick, the rich get sick, too. That’s why we’ve had public health departments over the period of the last 150 years.
Without the subsidies that Medicare provides the elderly would be penurized by their healthcare expenditures and forced from their homes. There is no imaginable level of income, level of investment, or type of investment that would change that. It’s cheaper for them to take care of themselves for as long as is possible than it is for them to become Medicaid recipients or institutionalized. It is also more dignified and humane.
Medicare is actuarially out of balance by an amount in the tens of trillions, larger than any foreseeable level of growth will enable us to pay for without significant pain. The report of the Social Security Trustees should be an eye-opener:
As we reported last year, Medicare’s financial difficulties come sooner—and are much more severe—than those confronting Social Security. While both programs face demographic challenges, rapidly growing health care costs also affect Medicare. Underlying health care costs per enrollee are projected to rise faster than the earnings per worker on which payroll taxes and Social Security benefits are based. As a result, while Medicare’s annual costs were 3.2 percent of Gross Domestic Product (GDP) in 2008, or about three quarters of Social Security’s, they are projected to surpass Social Security expenditures in 2028 and reach 11.4 percent of GDP in 2083.
The projected 75-year actuarial deficit in the Hospital Insurance (HI) Trust Fund is now 3.88 percent of taxable payroll, up from 3.54 percent projected in last year’s report. The fund again fails our test of short-range financial adequacy, as projected annual assets drop below projected annual expenditures within 10 years—by 2012. The fund also continues to fail our long range test of close actuarial balance by a wide margin. The projected date of HI Trust Fund exhaustion is 2017, two years earlier than in last year’s report, when dedicated revenues would be sufficient to pay 81 percent of HI costs. Projected HI dedicated revenues fall short of outlays by rapidly increasing margins in all future years. The Medicare Report shows that the HI Trust Fund could be brought into actuarial balance over the next 75 years by changes equivalent to an immediate 134 percent increase in the payroll tax (from a rate of 2.9 percent to 6.78 percent), or an immediate 53 percent reduction in program outlays, or some combination of the two. Larger changes would be required to make the program solvent beyond the 75-year horizon.
The projected exhaustion of the HI Trust Fund within the next eight years is an urgent concern. Congressional action will be necessary to ensure uninterrupted provision of HI services to beneficiaries. Correcting the financial imbalance for the HI Trust Fund—even in the short range alone—will require substantial changes to program income and/or expenditures.
The situation is actually worse than the trustees are portraying it as. The increased healthcare spending mandated by healthcare reform in its present form will cause Medicare to go broke even sooner. The history of subsidized healthcare in the United States is that increased utilization results in cost increases disproportionately higher than the increased utilization and the measures in current legislation to reduce costs are mostly a combination of accounting sleight of hand and wishful thinking.
I shouldn’t have to defend the notion that we need to preserve or improve outcomes but I’ll make a brief stab at it. It’s terribly difficult to compare outcomes across national boundaries but the outcomes of healthcare in the United States are, at the very best, not materially better than those in other OECD countries who are spending a fraction of what we’re spending on a per capita basis. The most optimistic assessment we can make is that we’re achieving decreasing returns to marginal expenditures, that is, we’re seeing a little less improvement for every dollar we spend than we did for the dollar before.
A healthy labor force is a more productive one. If we allow outcomes to decline in the name of cost control, we’ll threaten our economic future.
We should ensure that more Americans have access to healthcare. It is a scandal and an outrage that so many Americans have no or inadequate access to healthcare and current legislation, focused as it is on healthcare insurance, does relatively little to expand access in areas that are already underserved.
That those without healthcare insurance have poorer outcomes than those with insurance is manifest. The statistics are widely available and I won’t both to cite them again here. The shame falls on the society as a whole but it falls most squarely on medical professionals themselves. Under the Emergency Medical Treatment and Active Labor Act of 1986 hospitals and ambulance services are legally required to provide care to anyone needing emergency healthcare treatment regardless of citizenship, legal status or ability to pay. Additionally, physicians are ethically required to provide care to the poor. I recognize that this idea is somewhat controversial among physicians. Over the years the ethical obligation has transmogrified from a personal one for individual physicians to accepting Medicaid to being affiliated with institutions that accept Medicaid.
I won’t expand on this at length but that’s inadequate. All ethical obligations are personal rather than institutional and it’s patently absurd to insist that the janitor and the physician, both affiliated with institutions that accept Medicaid, share the same level of ethical obligation.
However, the necessary implication of that obligation is that physicians must charge some patients more than others. That’s a primary cause of the opacity of medical billing.
The list of things we’d like to do is almost limitless.
In my view the Democratic progressive caucus of the Congress made a miscalculation. They calculated that it was easier to get the healthcare reform that they wanted by emphasizing universal coverage over cost control. Everybody likes something for nothing, right? Events have apparently determined otherwise. Republicans have, in my view, acted irresponsibly in denying that there was any urgent reform needed. Some Democrats have, correctly in my view, been able to distinguish between what we need, what we should do, and what we’d like and have emphasized the need for cost control.
I think the White House miscalculated, too. As I see it they considered the Clinton Administration’s experience with healthcare reform and determined that they could get all of the results, the political mileage, and none of the pain by getting Congress to cobble healthcare reform legislation quickly before opposition could mobilize. The miscalculation was two-fold. First, Congress does nothing quickly and, indeed, opposition has mobilized. Second, giving Congress its head and putting healthcare reform through the Congressional sausagemaker has resulted in incomprehensible legislation that reforms very little. Unless things change they’ll get no results and the pain of failure, too. The President’s polling numbers are the lowest they’ve been since he took office.
The irresistible force of universal coverage has met the immovable object of insolvency and the result is nothing.