The Congressional Budget Office (CBO) reported last week that the healthcare plan currently being debated in Congress would likely cause federal expenses related to healthcare to increase. But it did not report that the plan would cause average per-patient costs to increase across the entire healthcare market, as opponents of healthcare reform are alleging. In fact, that philosophical point has not been disproven by any budgetary analysis to date.
Douglas Elmendorf, the CBO director, told Congress last Thursday that reform proposals currently under consideration would likely increase costs for the federal government. He never said they would fail to bring costs down across the market as a whole; nor did he, for that matter, comment on whether the federal cost increases would materialize if costs did, in fact, come down in the marketplace.
He did specify, however, due to the potentially inflammatory nature of the testimony he gave, that “The point I made earlier this morning is that it raises future federal outlays more than it reduces future federal outlays.” Elmendorf’s testimony, therefore, means nothing more than that there will be a cost to the federal government for fixing healthcare.
Pres. Obama and Congressional leaders have made it clear they intend to cover all those cost increases, so that the budget deficit does not rise. There has been a bizarre and obsessive debate about the perils of “socialized medicine”, with comparisons being made to the Canadian or British healthcare systems, which are entirely managed through a government health system. No such plan has been proposed or is being debated.
Pres. Obama’s plan is specifically designed to foster competition, efficiency and resilience in the marketplace and in no way involves socializing care. In a very disturbing abdication of their duty, mainstream media outlets have virtually ignored this part of the story: Pres. Obama has vowed not to sign any bill that involves government-managed care or an inflation of federal deficits, but media have continued to call forward any opponent of the reform plans, in order to continue airing the irrelevant debate between laissez-faire pro-business groups and the notion of nationalized government-run care.
Republican opponents of healthcare reform legislation have openly stated their determination to derail Pres. Obama’s proposed reforms, aimed at bringing “quality, affordable care” within reach of all Americans. Yet they have refused to address the moral issue of patient deaths: no less than 22,000 people died in 2006 as the direct result of treatment denied for lack of coverage, as reported by the Urban Institute.
As many as 299,000 died due to complications from undertreatment resulting from inadequate insurance coverage or other variations on medical error or undertreatment. Since then, the official count of the uninsured has expanded by 13%. There were 46 million uninsured at the start of 2007, and there are now 52 million uninsured, by the official count.
It is unclear whether a substantial number of undocumented immigrants are included in that count. Their number could mean that as many as 65 million residents of the US—legal or otherwise—have no healthcare insurance of any kind. One Republican opponent of the legislation, Sen. Jim DeMint, has said he wants to kill the bill in order to undermine the president, saying it would be Obama’s “Waterloo”. Such politicians are clear about their lack of interest in the hundreds of thousands of innocents who die each year due to the failings of the current system, and they admit their words are designed to play politics and oppose reform.
One of the key areas they have decided to manipulate the truth of the facts at hand is regarding the meaning of the CBO report last week showing federal government healthcare spending might increase by $200 billion. While this is what mid-term federal spending projections indicate (the plan is actually to see $200 billion each year, beyond what is currently funded, for the 6th through 10th years after the reforms kick in—what is in debate is how to fund that $200 billion per year).
If the $2.3 trillion American healthcare system continues to increase in cost at current rates, it could be costing Americans over $3 trillion within 10 years, even if no new patients are added to the insurance rolls. It could consume more than the entire current GDP within a generation.
Every year, millions of households go into bankruptcy in part due to the out-of-control costs of healthcare. Yesterday, a White House spokesperson said 68% of bankruptcies now have a healthcare cost component, and of those, 75% relate to patients that hadinsurance. Elmendorf told the Senate budget committee that “federal outlays” would not be significantly reduced by the reforms on the table.
It should be noted: Pres. Obama has bold aims for healthcare reform, but he is not aiming for anything as liberal as the House bill; it has always been expected some major spending would be trimmed in the conference committee to resolve House and Senate measures. What needs to be repeated: Elmendorf did not say CBO was projecting that either the House bill or Barack Obama’s framework proposals would increase “costs over time” for healthcare as a whole, across the market, patient by patient.
Yesterday, it was reported that the average family is spending $29,000 per year to buy healthcare insurance. In many cases, if not most, that family will not actually consume $29,000 worth of actual care. The figure raises the question as to whether insurance companies are, like banks over-dependent on subprime mortgages and mortgage-based financial derivatives, in over their heads, unable to sustain the kind of profits they are accustomed to reporting, if they actually return to functioning like insurance companies and take in less per patient than they are obliged to pay out.
Are patients being fleeced, point-blank, at the very root of their healthcare spending? Maybe. What is clear is that costs are escalating at rates that are economically and morally horrifying. What Obama promised to do, by way of comprehensive healthcare reform, is bring costs down across the board, so that care is more affordable in general and the market as a whole is not dependent on unsustainable rates of price increase.
If the government has to add $200 billion to its overall healthcare “outlays” in future years, in order to make coverage available to 50 million more people, through a more competitive public-private healthcare market, that $200 billion is nothing compared to the wild escalation of costs projected to occur across a multi-trillion-dollar healthcare market. Elmendorf did not make any assertions about the potential for comprehensive reform to reduce the rate at which healthcare costs are escalating.
Already, hospitals have agreed to lower costs in order to avoid dealing with the fiscal black-hole of uninsured emergency cases. Drug companies are negotiating ways to lower costs as well, so their market can be expanded by millions, while the costs per patient can come down. Even insurers have signed on to the principles of reform, as laid out by Pres. Obama.
The AMA, which defends doctors’ interests, and which has spent much of the last century opposing every major reform to the healthcare system aimed at providing government-backed coverage, constraining insurers’ practices or reducing costs, has now signed on to the House version of healthcare reform. So, who is crying “socialism” and “too expensive”?
Faux fiscal conservatives in the Republican party, who are planning to use this issue as a way to sabotage the policy agenda of Pres. Obama. On an issue that involves life or death situations for tens of thousands of Americans, these members of Congress, who backed George W. Bush’s $1.7 trillion tax cuts and his $1 trillion war in Iraq, without paying for either, are lying about the nature of the reform plans before Congress, in order to undermine the president politically.
What we have seen, actually, in this intense round of negotiations on healthcare reform, is a White House willing to work with members of both parties, to hear concerns about escalating federal deficits and work to craft a solution that is “deficit neutral” and does not “socialize” medicine. As a result, the White House plans for healthcare reform to 1) not be too expensive and 2) support and expand on the market-based system, making it work better.
Concerns are mounting that the effect of this campaign of sabotage and distraction, aimed at undermining the best-case proposals being offered, will be to produce something incremental and insufficient, which will not in fact control costs over the long term and will not in fact make coverage available to the tens of millions of uninsured Americans.
As the Washington Independent reports:
“Something will pass,” said Julius Hobson, former lobbyist for the American Medical Association and now a senior policy analyst at the Washington law firm Bryan Cave. “It’s not going to be what everybody’s looking at right now, but the president will sign something in December … The drive is there to do something, and they will.”
The ’something will pass’ position has many worried, because it could lead to the best opportunity for major healthcare reform in half a century being squandered on something totally insufficient to address the major causes of the healthcare crisis. Failure to achieve substantive reform that brings costs down per patient and brings everyone into the healthcare system, will lead to huge numbers of deaths and bankruptcies and will continue to the trend that is threatening the entire federal budget.
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Originally published July 22, 2009, at CafeSentido.com
The Poet Economist 