Cross-posted from New Deal 2.0.
Yesterday, Speaker Boehner issued what Robert Bob Borosage of Campaign for America's Future correctly labeled extortion: "Give us trillions in cuts in Medicare and Medicaid or we blow up the economy." Boehner's threat to tie the lifting of the debt ceiling to trillions of cuts in spending would force huge cuts in Medicare and Medicaid.
Actually, there are no health care cost savings in the Ryan-Boehner budget, just cost shifts. The Ryan budget cuts Medicare by shifting more than $6,000 a year to each senior who benefits from it. It shifts Medicaid costs to state taxpayers by cutting federal funding to states for the program.
While the extremes of the Ryan-Boehner budget have been widely decried, the underlying assumption behind their Medicare privatization plan is too often accepted by a broad array of health policy advisers. The Ryan budget assumes that the problem with health costs is that consumers don't pay enough out of pocket for care and that plans are too generous. Unfortunately, that's also been the view of some Democratic health policy advisers. White House officials backed the taxation of higher cost health plans in the Affordable Care Act (ACA), and others like former Clinton OMB Director Alice Rivlin support a less draconian version of Medicare privatization.
But the reason that health care costs so much in the United States is not that we consume too much health care; it's that we pay too much for what we consume. As Uwe Reinhardt and three other health economists summarized succinctly after comparing the prices we pay and the amount of health care we use in the United States with other developed countries, "It's the prices, stupid."
For example, we make one-third fewer doctor visits a year than people in other countries but we pay an average of $59 for an office visit, compared with $31 in France. Our doctors make a lot more money than their colleagues in other countries. Adjusting pay across countries by purchasing power, U.S. doctors get paid about two times as much as in others. A Congressional Research Service analysis found that specialists in the United States are paid about $50,000 a year more than would be predicted, even considering the higher level of wealth in the United States.
We go to the hospital a lot less, too, and when we're there we don't stay as long. But we pay a lot more. The average hospital stay costs us $3,181, compared with $837 in Canada. We do get a lot more MRIs in the United States, more than twice as much as other countries, and we also pay a lot more for each scan: an average of $1,200 compared to $839 in Germany. And as everyone knows, the price of brand-name prescription drugs is much higher in the United States than other countries.
Why do we pay so much more for the same product? The biggest reason is that other countries understand that health care is a public good, not a commodity. Markets can't control health care prices, since it is health care providers who decide what care is delivered. When providers determine both demand and supply, market economics don't apply.
Even in the United States, with all the political pressure from the doctor, hospital, and drug lobbies, we can see how a public insurance entity does a better job of controlling prices than private insurance. Medicare sets prices and pays $500 for an MRI, less than half the $1,200 U.S. average. Even with its older patients, Medicare pays $2,200 for an average hospital stay, almost 50 percent less than the U.S. average.
Private insurance companies not only fail to control prices, they add costs. The private insurance companies that Ryan wants to hand Medicare over to are the primary reason that we spend more than four times as much on administrative and insurance costs in the United States as other countries.
Which brings us to another market-driven argument that underlies the Ryan proposal and other conservative nostrums for controlling health care costs: that because Americans have insurance they are not prudent purchasers of health coverage. Again, the international comparison should put this to rest, as in all those other countries, with much lower health spending, everyone is fully covered. In these countries, the only prudent purchaser is the government, which is responsible for getting lower prices. As it is, the amount that Americans pay out-of-pocket for health care is already a lot more than consumers in other developed countries, even accounting for our higher incomes.
The Obama budget plan begins to address the root causes of high health care costs by increasing the authority of a new public entity designed to control what Medicare pays for health care. The President contrasted his budget approach with that of the Republican budget in his April 13th budget address at George Washington University, saying:
"Their plan essentially lowers the government's health care bills by asking seniors and poor families to pay them instead. Our approach lowers the government's health care bills by reducing the cost of health care itself."
The centerpiece of Obama's plan to control Medicare costs is to add additional powers to a new body established under the ACA called the Independent Payment Advisory Board (IPAB). The IBAP will function as a kind of military base closing commission for Medicare. If the growth in Medicare costs exceeds a target amount, then it would institute cost control measures that would go into effect unless Congress intervened. Since cutting eligibility and benefits are not part of the IPAB mandate, cost savings would have to come from the actual drivers of cost: the prices paid for services and the way health care services are delivered.
Obama's budget proposal would strengthen the IPAB's current authority, although the details of how to do that have not yet been specified. As you can imagine, it is already a target of attack from health care providers who are finding a sympathetic ear among both Republicans and Democrats in Congress. It's also a favorite target of the right, which calls it "Obama's death panel."
The battle being fought over Medicare is, like every other economic issue that faces the nation, a matter of power and a test of our democracy. We can control health care costs and improve the quality of care by addressing the root causes: our market-driven health care system pays too much for care and rewards quantity over quality. But changing the way we finance and pay for health care will mean putting the interest of consumers over the power of the industry lobby. For the doctors, hospitals, drug companies, medical device manufacturers and insurance companies, a dollar saved is a dollar lost in revenue.
The firestorm of popular opposition to the Ryan Medicare plan is because he chose to side with industry over seniors. But with Boehner threatening to hold the economy hostage, and a health industry that has enormous lobbying clout, the future of our nation's national health insurance system for seniors and the disabled remains in grave doubt.
U.S. Health Care Costs: Background Brief - KaiserEDU.org, Health ...
Snapshots: Health Care Costs - Kaiser Family Foundation
Health care costs a hefty price tag for Pentagon - Yahoo! News
The 2011 Statistical Abstract: Health Expenditures
Experts offer tips on tackling health care costs - Business ...
Robert D. Finney, Ph.D.
The process is deliberately slow, then the next step is their supervisor, unless you know the system and or the people you rarely get beyond that point. All too many times the fastest intervention was filing for a hearing in court and with the courts backed up even fast tracking was a hinderance.
I do not trust private insurance companies to do the right thing, something not mentioned or discussed by Borhner, Ryan or Cantor who seemingly assume everything will go swimmingly.
Obama's plan addresses the cost of care, something the GOP will not address.
The Ryan plan merely shuffles things around, transfers trillions of dollars to private health industry companies, hospitals, doctors and pharmaceuticals.
The Ryan vouncher plan places Americans at great risk without recourse, saves nothing but does mightily enrich their base, corporate America.
Boehner, Ryan and Cantor, try representing Americans and not corporate America.
Other than that it's time America got rid of all of you in 2012.
There can be no reasonable debate when the debate starts with an ultimatum.
Whats the GOP is doing is dangerous.
The health care industry has been blaming us consumers for all the ills of the system since the beginning of so-called managed care thirty years ago. After years of cutting benefits to the bone, now they're shifting more of the charges for health care directly to us and calling it cost-cutting. I call it backbreaking. What a sweet deal for insurance companies, collecting huge monthly premiums but paying out very little due to high deductibles. And now poor people will be required by law to buy these cheapo, worthless insurance plans that give them nothing. And they call it reform.
While we're on the subject, it makes my blood boil when I hear people, especially Democratic politicians who are supposed to be our allies, call comprehensive health coverage "cadillac health plans." I heard Nancy Pelosi spit that one out a few times. It's meant to denigrate the very idea of people having plans that provide comprehensive benefits, as though that were a shameful thing, as though it's dishonorable to have sufficient insurance to keep us from poverty in the event of catastrophic illness. What the...?
But the Recent Health care reform mandates a certain level of coverage, which time will tell if its comprehensive enough.
And the Poor, as well as the Business they work for, will get alot of help paying for these plans.
Its not perfect, but its a great step forward
Health care reform, in my view, was a huge leap backward. The advantages are puny. Maybe the most significant advantage is that covered people will get to pay the insurance-negotiated discounts instead of the exorbitant regular prices, but if you're poor or struggling then $5,000 might as well be $5 million; discounts don't make much difference. And the health reform law is an enormous disadvantage because it cemented the dominance of the for-profit insurance industry over our lives well into the future.
SPECIFIC RECOMMENDATIONS:
1) Take the handcuffs off of ARNP’s and allow them to practice and prescribe independent of physician oversight.
2) Eliminate Part B of Medicare in healthcare facilities and begin the transition to hospital based physicians providing 24/7 medical care.
3) Implement national staffing ratios for RN’s in ICU’s, telemetry floors and med-surg units.
4) Implement RN ratios in rehab, skilled nursing, and nursing home facilities.
5) Implement a 25 cent tax on fast food, junk food, and high calorie foods.
6) Begin the movement to community based health care systems.
7) Mandate the use of Intensivists for any facility with more than 20 intensive care unit beds.
8) Require the CEO of any healthcare system to have an RN license.
The practice of medicine has to be changed. We need to create a community based primary care provider system which is rewarded for keeping patients out of the high cost medical centers, and a medical center physician/provider core which is NOT rewarded for keeping people IN the hospital. We should do away with payments for providers in the secondary and tertiary systems and make them employees, working regular shifts and providing care/interventions/diagnostics around the clock. Trying to force an around-the-clock care system into a 9-5 business model is inefficient and wasteful. Malpractice rates can be adjusted based on the performance of the entire medical staff, thus creating an empowered peer review process which would demand excellence.