THE BLOG

A Democrat's Case For "No"

05/17/2010 05:12 am ET | Updated May 25, 2011

The President: "Would you feel the same way if you were making $40,000...? Because that's the reality for a lot of folks. I mean, it is very important for us ... to listen to the folks that we get letters from -- because the truth of the matter, John, is they're not premiers of anyplace, they're not sultans from wherever. They don't fly into Mayo and suddenly decide they're going to spend a couple million dollars on the absolute, best health care. They're folks who are left out." (President Obama at the recent health care summit)

President Obama's statement perfectly encapsulates why I and many others are Democrats - our commitment to our fellow citizens who lack the resources to protect their families from misfortune. Sadly, I believe if we apply that standard to the proposed health care legislation, a Democrat should oppose this bill. Though superficially attractive, the bill's benefits to the uninsured are likely to be temporary, while its costs - even to its beneficiaries - will be large and lasting.

We Democrats have been swept up in a straightforward narrative of health care reform. For almost seventy years, we've been fighting entrenched industry interests to provide universal access to care - a benefit enjoyed by the citizens of all other developed countries. In the Administration's formulation, we're -- finally -- on the brink of a historic victory.

However, as with many long wars, we the combatants have ignored the transformation of the landscape - a transformation that has rendered our initial goals and our methods for achieving them hopelessly outdated.

First, over those 70 years health care has evolved from a rarely utilized service to the largest industry in our economy, as our physical and emotional well-being has become increasingly medicalized. The share of resources now devoted to care has impeded growth in our standard of living, especially for our middle class. Everyone knows that the US spends an astounding 17% of our GDP on care; but how many realize that over the past five years, we've spent 28 cents of every dollar of income growth? Our government's existing health care obligations account for much of America's deteriorating fiscal prospects, with all its negative implications for our future well-being.

Second, there is extensive evidence that the poorly structured incentives of our insurance-based system are themselves the cause of our health care inflation. Yet, continuing our Party's almost unquestioned conflation of health insurance with health care, the central feature of the proposed "reform" is further extension of our flawed insurance-based system.

Third, every other developed country is struggling with the cost of its universal health care system to such a degree that fundamental reform will almost certainly prove necessary to insure long-term sustainability. It is true that the US spends far more on health care than the universal care countries today; but it is absurd for us to ignore the lessons of the high rate of cost growth in these countries - growth that in some cases exceeds our own.

Fourth, despite the Administration's recent heated rhetoric, most of the entrenched health industry interests are quietly or openly in favor of this bill. Should the bill become law, I suspect we will look back at it as an industry bailout. Why? For the health insurance industry, the legislation not only guarantees tens of millions more customers, but also requires participation by the low-risk young and healthy. For hospitals, the legislation will reduce the cost of providing low-compensated care, by turning currently uninsured customers into full-paying private insurance ones.

But even if the health care landscape has shifted, doesn't the promise of adding 30 million uninsureds to the insurance safety net make the bill worthy of Democratic support? Only if we insist on looking at health care as an island, separate from everything else affecting American families. How else can Democrats in the depths of a recession support a massive tax increase on middle-class job creation (which is the effect of a corporate mandate)? How else could we justify diverting even more of middle class income to support our broken system of care, further starving families of funds for all their other needs? Most uninsured Americans lack insurance only temporarily; how many of them would trade lesser lifetime job prospects and lower disposable income for the short-term retention of health insurance?

Despite the bill's new subsidies to those who can' t afford whatever health insurance Congress deems to be adequate, the additional health spending in this bill heavily rests on private money - specifically the money of the currently uninsured who will be required to buy insurance. With health care now so expensive, the Government can't afford to fund the premiums for the ever-growing number of the uninsured. So it's requiring them - those $40,000 a year families - to share the costs.

The bill's subsidies may well provide some affordability benefit - but without meaningful reductions in the price of care, these are likely to be only temporary salve. How? Look at Medicare's history; its lack of real financial discipline has helped drive up care costs, leading to ever-greater premiums and out-of-pocket paid by its beneficiaries. So even with the government paying almost all of their bills, today's seniors pay a higher share of their income for health care than seniors did before Medicare.

Our current system of financing health care is also extraordinarily regressive - and the bill's mandate will make it even more regressive. Surprised? Consider corporate funded health insurance; the $15,000 annual premium for family coverage is a small share of the cost of compensation for the CEO, but a massive share of the compensation cost for the $40,000 a year employee. The Administration's own economists admit the obvious: regardless of who writes the premium check, it's the employee who's really funding the entire cost. Tack on Medicare taxes and out-of-pocket expenses, and the $40,000 a year employee is bearing health costs equal to 30% of his true cost to his employer; does this seem like a progressive system of funding worthy of extension?

For all the traditional liberal support for Medicare, even this cornerstone of government health care financing has a regressive effect, transferring resources from younger, poorer Americans to older, more financially secure ones. And the odds of the implicit "generational pact" ever being made good for today's younger people recedes daily; Medicare now has $74 trillion of unfunded liabilities, which this "reform" does nothing to fix.

And for the least well-off Americans? Expanding the eligibility for Medicaid may make legislators feel better, but with doctors abandoning the program, does this approach seem like a sustainable solution for their care needs?

The President is right that reform is urgent, but it must be real fundamental reform that alters the underlying structural incentives driving excessive health spending and prices. The true emergency is the growth of health care spending, which last year alone rose at a rate 6% above the rate of general inflation. Trying to control the cost of health insurance without meaningfully changing the incentives in health care is like trying to control gas prices by focusing on gas stations instead of oil markets. Yet without effective action against galloping care price increases, it will prove impossible for our nation to sustain real health security to our citizens.

For all its hat-tipping to cost control ideas, the legislation does little to curb health inflation. Its most important source of savings is $500 billion of unspecified Medicare cuts. If these savings should somehow be realized, shouldn't they be used to prop up this functionally insolvent program, rather than "fund" a new subsidy? Of course, does anyone expect these savings to be realized, when the same Congress debating their inclusion was also debating how - not whether - to repeal $250 billion of previously legislated Medicare cuts? If the legislation had any real prospect of controlling health care spending, would the pharmaceutical industry be funding the "yes" campaign?

We Democrats should not be requiring the middle class to spend ever more of their declining wealth on health care until we address the issue of why the $2.5 trillion we're already spending isn't sufficient. Does anyone doubt that the excess care, administrative waste, and undisciplined pricing in our current spending alone could fund all needed care for those now without it?

And while the anecdotes of Americans suffering without access to essential care tug at our heart-strings, remember that the accounting trick at the core of this legislation ("balancing" ten years of revenue and six years of benefits to produce "deficit neutral" results) means it will be four years before any additional Americans would be added to the insurance rolls. We have time to get this right.

What about the argument that Democrats should take what we can get now, in the knowledge that the bill's many failings can be fixed later? As the above makes clear, I'm not certain that what we are "getting now" is actually a positive for many uninsured Americans. Further, the bill will cement the inefficiencies and unaccountable practices in the health industries through yet more health spending; so it will be even politically harder later to get agreement on fixes, much less real reform.

The Republican Party's approach to health reform has been so hypocritical and obstructionist that it borders on the unpatriotic; all Democrats would like to see our well-meaning Administration have a political boost at the expense of a cynical opposition. But that win is likely to be achieved at real cost to many Americans - including many families getting by on $40,000 a year. We need to take the President at his word: this should be about doing what's right not what's political. With a very heavy heart, this Democrat suggests a "no" vote.