Faint Praise

President Obama wanted health insurance reform in the worst way. And at the rate things are going, he is likely to get it.

Let's review the bidding -- first the substance, then the politics. America spends 15 percent of its GDP covering far less than the entire population, while other wealthy nations cover everyone, more effectively, for about nine percent. We under-insure tens of millions of others by leaving big loopholes in what's covered. More than half of Americans who file medical bankruptcy nominally have insurance.

Why is our system so massively inefficient? Because it is run by and for private insurers, aided and abetted by for-profit drug companies and hospitals. Even if we insure more people, as President Obama hopes to, a fragmented, profit-oriented system dominated by these interests simply cannot yield the most efficient use of health outlays.

By contrast, a comprehensive system with a national health budget naturally looks for the most efficient way to spend health dollars. That means much greater investment in prevention, and in the comprehensive use of proven treatment protocols for the easy stuff that makes a big difference in heading off more expensive treatments later on, such as childhood asthma, high blood pressure, and diabetes. It means a more sensible breakdown of primary care doctors and specialists. It means not saddling med school grads with hundreds of thousands of dollars of debt, which turns them into profit machines rather than healers.

Private health insurers cannot get us to this outcome because they maximize their profits by targeting the young and the healthy, and avoiding the sick, the old, and the risky. They invent preposterous concepts such as exclusion of people with "pre-existing conditions." Hendrik Hertzberg recently observed that we are all born with a pre-existing condition -- mortality. In theory, HMOs were supposed to increase prevention and collaboration. But they rapidly deteriorated into merely a system where large panels of doctors are approved providers if they accept the HMO's fee schedule, and physicians are under pressure to cut costs and see ever more patients in ever shorter appointments if they wish to maintain their incomes.

The "staff model" group practice -- where doctors are salaried and a medical team of generalists and specialists works in close collaboration -- is our closest equivalent of national health insurance, but it is being crowded out by the cherry-picking practices of the insurance industry. The exceptions invariably provide the best and most efficient care, such as the Cleveland Clinic and the Mayo Clinic.

The press commentary on the cause and cure of medical inflation has largely missed the point. The problem is not that "hospitals" and "doctors" in general make or charge too much money. The problem is feast coexisting with famine. The current system gives hospitals incentives to target the services that produce the most reimbursement at the least cost, such as complex cardiac interventions. So cardiology departments are gold-plated, while money-losing emergency rooms are threadbare. To make matters worse, specialty day-surgery hospitals, often owned by doctor-entrepreneurs, divert profitable patients from hard-pressed local general hospitals.

There is also a misallocation of resources according to medical specialty. As reimbursements are cut by insurers and by Medicare, primary care doctors are squeezed; likewise OB/GYNs, psychiatrists, and pediatricians. Meanwhile, some specialists such as oncologists (who are permitted to personally profit from the sale of cancer drugs), surgeons, dermatologists, and others, are still making out just fine. And standard practices and charges wildly vary by region.

The bottom line is that these structural problems cannot be fixed by what is likely to be approved by Congress as the Obama plan. Obama hopes that heavy reliance on new electronic record-keeping can somehow reduce medical inflation. But this is not where the problem (or the solution) lies -- because the plan builds on the existing insurance industry, with all of its inefficiencies. The candid Doug Elmendorf, director of the Congressional Budget Office, recently testified that the design of the Obama approach did nothing that would fundamentally change the pattern of medical cost inflation.

Putting the best possible gloss on Obama's approach, its inclusion of a public option will gradually move more and more people to a Medicare-style system; its much tougher regulation of private insurers will yield at least some of the efficiencies that we could get through true national health insurance, it will ban some of the worst practices such as exclusion for pre-existing conditions, and its "play-or-pay" feature for employers and subsidy of the near-poor will bring insurance to most Americans.

That is the best possible outcome. But it is not the likely one. That brings us to the politics.

President Obama set the terms of this legislative battle by proposing to work with, not against the insurance and drug industries. That added one lead weight to his feet. Then he added a second lead weight by trying to make the affair bipartisan, inviting Republicans to collude to produce an unacceptably weak plan. (Let's seek what kind of bastard child emerges from the collaboration between the unreliable Democrat Max Baucus of the Senate Finance Committee and his Republican counterpart, Chuck Grassley.) Obama also waited until very late in the game to take his case to the country.

The result? The insurance and drug industry lobbies say they support Obama. They just happen to oppose all of the details that would make the reform meaningful. The bill that (barely) cleared the House Energy and Commerce Committee on Friday keeps alive a somewhat stripped down public option. It bans exclusions for pre-existing conditions. And it requires employers to provide at least standard insurance or pay a tax. But the proposed tax is far less than the cost of the insurance, shifting some costs onto government. And it remains to be seen whether the remaining teeth in the House bill can survive what will surely be a weaker Senate bill. The Democratic Blue Dogs remain sunshine patriots on health reform if there is a risk of increasing costs to business; and the Republicans have defined defeat of health reform as a strategy of handing Obama a disabling symbolic defeat.

Given the partial progress by the House, it seems almost churlish to criticize Obama for not having set the bar higher in the first place. The liberal commentariat has bent over backwards to find things in the bill to like.

The estimable Hertzberg writes, "The American health-care system is bloated, wasteful, and cruel. Under the health-insurance-reform package now being bludgeoned into misshapen shape on Capitol Hill, it will still be bloated, wasteful, and cruel -- but markedly less so." Yes, but the consequence will be that medical inflation will likely drive us to further cuts in care, further speed-ups on primary care doctors, and further cost-shifting to patients and taxpayers.

The New York Times, in another classic of faint praise, editorialized, "It seems hard to believe that over the long haul the introduction of electronic medical records will not save substantial money." Actually, it is quite easy to believe. This editorialist must be extremely healthy. If he or she has been to the doctor lately, the medical records are already computerized and "charts" are electronic, not hand written. The problem is not the technology but the insurer-dominated system in which it reposes.

The behavior of Harry & Louise, the Republicans and Blue Dog Democrats is so odious that it's hard not to put in a kind word for Obama. Paul Krugman was never a fan of the Obama approach. His latest column is a general tutorial on why we should thank government for the fact that health insurance functions at all. He declines to say anything nice about the Obama bill, but concludes, very graciously, with more faint praise: "Now Mr. Obama basically proposes using additional regulation and subsidies to make decent insurance available to all of us. That's not radical; it's as American as, well, Medicare."

In my book, Obama's Challenge, I argued that our new president should devote all his effort in his first year to getting the economy back on track. Then, armed with the gratitude of the people and an increased majority in Congress, he should offer a much more robust health reform such as single payer after the first mid-term election. It would be a huge mistake, I contended, to tackle the Mount Everest of domestic reform as a novice.

Well, President Obama didn't take my advice (not the first time.) I can only join my fellow progressive journalists in hoping that something like the House version of the bill survives. But the likelihood is that whatever finally makes it through this session of Congress will reinforce and further bloat the current disaster of a health insurance system rather than fundamentally changing it. And if the decent elements of the plan are blocked, Obama should have the courage to pull the bill and take his case to the people.

As Shakespeare wrote, "Lilies that fester smell far worse than weeds." The satisfaction of a Rose Garden signing ceremony is not worth it, if the plan is more thorn than rose.

Robert Kuttner is co-editor of The American Prospect, a senior fellow at Demos, and author of Obama's Challenge.

Comments

[patursi]

The allopathic system is not based on science. The system is expensive because the system makes people sicker and sicker. It's the field...the environment...the food and chemicals that we put into our bodies that allows illness. It's not an attacking germ or disease. When the body is out of harmony, dis-ease sets in. In my garden, I had very few Japanese beetles...my neighbor had hundreds. In my garden, the plants that were attacked by beetles were plants which were newly planted or stressed. It is the same with humans. Healthy plants and healthy people will remain healthy. All alternative and truly healing practices are squelched with threats of jail or, actual murder. I am 73, work full time and I do NOT use allopathic medicine, yet carry my medicare insurance for mechanical injuries. I could care less about expanding a sick system which has been documented to kill over 900.000 people per year. Why expand a killing system? Let's have a choice of true health care...not killing care.

[tegrat]

Maybe Obama is shooting for the worst legislation possible as a way to get everyone pissed off and active and educated about single-payer financing. Nah, I'm over-thinking this.

[UKOH]

As you rightly point out, the evil in the current system is not the lack of a public option, or even a single payer system but the run-for-profit system of insurance.

You say " ... preposterous concepts such as exclusion of people with "pre-existing conditions." While I totally agree (I am excluded because of pre-existing conditions myself) if you look at this as an insurance industry matter, not a health matter it makes a whole lot of sense.

The basic premise of the insurance industry is monetary compensation against the risk of some insured against even happening. You pay a premium against a statistical calculation of the probability of the event happening. The basic rule is that the probability cannot be 100%. If you know you are about to be laid off, for example, you cannot get insurance against unemployment. Also if you are diagnosed with an illness that will prevent you from working you cannot get disability insurance. Both of these would be certainties so are uninsurable. The same is true with pre-existing conditions as there is a certainty that they require treatment.

Therefore, as you point out, the solution is to remove insurance concepts completely from health care. It is a basic human right in any country that calls itself civilized.

[TheBurdicks]

Excellent.
Health care is a right and a basic responsibility of government. To deny equal access to care to a large segment of our society is cruel and unacceptable in the 21st Century. The ER is the least efficient provider of primary care.
There is no role for profit in the delivery of health care. All funding must go directly to the provision of health care. When profit is involved, there is an inappropriate emphasis on expensive interventions, which maximize profit.
The only meaningful way to bring health care costs under control is to focus on preventive medicine. A disproportionate share of cost of health care is the result of obesity, sedentary life style, and stress. The abysmal health situation of many Americans must be addressed through education, lifestyle modification, and restrictive taxation of health threats like tobacco, alcohol, fast food, gasoline, etc.
The only answer is socialized medicine in a coordinated system of Nationalized Universal Health Care.
Dwight Burdick, MD, FACEP

[Quitcherbichin]

Can you provide the chapter and verse in the Constitution that states that health care is a "right"? As columnist Rich Hrebic eplains "A right is not a guarantee that the government (i. e., other people) will provide you with something for free. We have the right to religious expression, but that doesn't mean that the government pays for the construction of a church. We have the right of peaceful assembly, but the government doesn't promise to supply your transportation. You have the right to keep and bear arms, but don't expect the government to provide you with a free firearm and bullets. What makes something a right is not whether the government can force someone else to pay for it."

[oldngrumpy]

Your "small government" by the constitution argument hasn't been valid for decades. It is getting extremely old, and your own hero claiming it to be "just a GD piece of paper", and his subsequent actions to prove it, leave you at a bit of a disadvantage. Article 1: sec. 8 has been the most often cited clause (common good) against your weak assertions. Why are you so adamantly opposed to anything that is good for America if it doesn't conform to your narrow vision of government? I think it is about fear and greed.

[indy100]

Can you provide the chapter and verse in the Constitution that states that police protection, fire prevention and paramedic treatment, public schools, public libraries, public parks, public (but governement owned) streets, public water supplies, animal control, code enforcement, planning and zoning........... are a "right"?? I seem to have missed that section, and yet we as a society have decided that those are all either necessary or desirable for civilized life. And they're all provided by the government! We have the right to "life, liberty and the pursuit of happiness"; maybe the intent was the pursuit of a DECENT LIFE for everyone.

[AJLester]

You’re right, President Obama should pull the bill, but I disagree on where he should take his case. The insurance industry’s barrage of negative advertising and lobbying juggernaught will negate any effect that an outraged public might have on Congress.

No, Obama should take his case to employers. They’re the ones who’ve been paying the escalating tab of medical costs through double-digit premium inflation. If corporate CEOs aren't aware, Obama could remind them of how insurance companies, as managed care middlemen, built huge profits at the expense of American employers, while offering nothing toward true cooperation, lower costs, or better service. He could also remind them that every contract renewal signed by employers (whether they have any choice or not) sends a clear message to insurance companies: “Keep up the bad work.”

Employers who've been beaten-up by health insurance companies (any who haven’t?) are a truly powerful force in healthcare reform debate. They hold the purse-strings. Imagine the impact of hundreds/thousands of major employers canceling their agreements with insurance companies and contracting with medical providers, either directly or through a public option.

Obama should stoke demand by employers for an alternative to insurance companies. True, lobbyists will have their way with Congress. Big Insurance will its way with the American public. But if major U.S. employers really are mad as hell and aren’t gonna take it anymore, they’ll choose not to buy what the insurance industry is selling and demand other options.

[oldngrumpy]

What many don't understand on both sides of this debate is that we already pay a significant tax burden for our health care. Larger employers are given a direct tax "credit" for up to $15,000 per employee for providing health care and the subsequent administration costs. Then the "income" that the employee expends for his share of premiums is deemed tax exempt. This amounts to a large reduction in collected taxes. You can bet your bottom dollar that employers are not coming out on the short end of this deal, or they would have been much more vocal than they have been. The losers are small business, and their employees, who can't qualify for the credit or the income exemption due to the limitations placed upon group plans by insurance companies who would rather not deal with the administration costs of less than 500 employees. The status quo is quite definitely not small business friendly, which is another reason for Republicans to back it to the hilt, no matter how much they pander to "small business" with rhetoric.

[indy100]

You're right in that employers don't come out on the short end of the stick, with the exception that every increase they get not only affects the employer but is also passed to the employee and that affects morale; which DOES directly affect the employer. Trust me, I work in Human Resources. You're also right that the current screwed up and broken system is very unfair to not only small businesses (my husband), but the self-employed (my father). It's also unfair to those who lose health insurance through divorce or job loss, or those that work for companies that don't even offer health insurance. It truly is often the employed and the middle class that are hurt the most by our current system.

[oldngrumpy]

I have trouble understanding why a public option is such a hard sell for proponents of reform. All we heard for decades from "conservatives" is that government is inefficient. Now we are told that private insurance can not compete with a government option. This sounds to me like endorsement of "single payer" system and the insurance industry should be grateful that those proposing such a change are not being given attention in the house.

Obama campaigned on change and it struck the right nerve with enough Americans to get him elected. Even so, change is scary when one is confronted with the nuts and bolts of what it means to them personally. Most are aware of the fraud and impersonal cruelty of the current system, but have not found themselves victims of it. Converts are made when they are involved in dealing with their carrier over a major illness or they are witness to the same. Anyone "happy" with their carrier should look at the horror stories of others as the "potential" that they face on a throw of the dice.

A public option offers the competition that has been lacking in a system dominated by the supply side. Competition has been the holy grail of the anti government wing of the conservative movement. That they would campaign against it now in some knee jerk reaction to government is telling of their motivations. How much is America willing to pay or suffer for a political ideal?

[eliane]

Health Care is a necessary service and should not have a profit attached to its services. Once we understand that and offer a service equally to all- many issues will disappear. The largest hurdle will be to convince the ones benefiting from the wealth of profits. Who will give up their greed, if an avenue has already been obtained. It is humanitarian to take care of all but, how many of us are willing to give up, inorder to do that? Sacrifices will need to be made -can it be done? Let us remember this for Canada has a public health system and we need to keep it working.

[Mardekan]

There will be big demonstrations again in Iran next couple of days against ahmadinejad's fake election. It is a complete police state in Iran and things are real bad there right now with thousands arrested, tortured and many killed. Please follow the story and support the Iranian people's fight for freedom.

[feliggerate]

The most compelling case for reform of the health insurance industry I’ve seen was on PBS’ Bill Moyer’s Journal Friday.

“With almost 20 years inside the health insurance industry, Wendell Potter saw for-profit insurers hijack our health care system and put profits before patients. Now, he speaks with Bill Moyers about how those companies are standing in the way of health care reform.” He was the top executive for PR at Cigna.

http://www.pbs.org/moyers/journal/07102009/watch2.html

Those of you who think that the health insurance industry has a quality product might change your minds. And think about how subjective all of the decisions of a health insurer are compared to other kinds of insurance. There's no debate about your death (life insurance) or whether your car was in an accident or your house burned down. The cost of the loss (risk) has been limited or fairly easily calculated. A life doesn't usually rest on the decision, and an adverse one can be challenged with other estimates or in court.

With health insurance there is often debate as to whether treatment is necessary. The cost differential can be huge. The patient, the doctor, the hospital, can have choices. It's bad enough that these may be medical choices without conflicts of economic interest getting in the way.

Every denial of service boosts their profits.

[Brian Liu]

Actually the insurance industry in other countries are somewhat similar too. The fact of how Insurance Companies "discriminate" in the selection of people eligible to be insured is apparent. I guess the result will be that the healthier ones get more health covers while the less healthy ones continue to be "discriminated". The less healthy ones (often the less wealthy as well) will find it a burden to get the necessary medical care.


Regards,
Brian Liu
http://www.jobstaxi.com/people.php

[BLBass]

"And if the decent elements of the plan are blocked, Obama should have the courage to pull the bill and take his case to the people... The satisfaction of a Rose Garden signing ceremony is not worth it, if the plan is more thorn than rose. "

Dead on right, Mr. Kuttner. It would be a monumental act of political bravery for Obama to reject signing a too-compromised health reform bill. If any president were to make such a move, I have a lot more faith that it might be Obama than anyone else...but he's left me wanting on so many issues that I can hardly put a lot of trust in him to take that kind of step. I still think we could pull this off right. Unfortunately, if things go as they are now, I fear we may yet find out how Obama will react to a weak bill reaching his desk.

[DeloresT]

I respect President Obama, but I'm a lot concerned that he thinks that he can bring Republicans to the table on any issue. They have received their marching orders and they are moving lock-step. All that they want to do is "break" Obama, so that they can take back the presidency. It doesn't matter that they won't do anything when they are in office....they just want to stop the Dems (and the people are too busy trying to just live to pay attention to how they are being misled.)

[Balloonman]

Perhaps, PRESIDENT OBAMA wants INSURANCE heavily involved. New profits from the 47 million uninsured newly insured. We know liberal he is not. A joke. More CLINTONIAN. Not right of center but Centrist. he a closet Corporatist himself? Aside WALL STREET having no fears AND THE MILITARY AS OUR FOREGN POLICY safe and sound in his hands is he beholding to INSURANCE and LOBBY? Was his election reliant on big, big money, from profit first, second and third? People? Hello!? But PRESIDENT OBAMA is a man OF THE PEOPLE. On record, siding, working genuinely for the community. Emphasizing conciliating, bringing sides together, for benefit of everyone, starting in the streets of Chicago. Negotiating compromises working long term for the interests of the people. Unless I read those community organizing efforts overblown, that business as usual came out ahead of the people in his hood. Perhaps it isn't in OBAMA to stand tall on this HEALTH CARE thing, lead us to real reform. Get us near single payer with a PUBLIC OPTION has teeth in it. Nah. To say one thing mean another, or or not intend to follow thru, or do it in the first place, is not in his playbook. OBAMA is an honourable man. It's just the people he allows himself to hang with, brings in to lead us, for counsel, blueprints, and resolutions, that is why I am so suspicious. And more and more lately. Very disappointed. Sigh.

[tandrmcdonald]

I was going to disagree, then I re-read your post. You're right; it isn't Obama, it's the weenies he's brought into his administration. An unfortuante majority of his policy advisers are right out of the corporate world that has, through the Bush administration, wrought so much havoc on our country's economy.
The simple fact remains; we do not need the Republicans to pass a responsible, equitable health care reform bill. What we do need is for our Democratic legislators to grow a collective spine and vote the damnned thing through. If the Republicans don't like it... as we used to say when I was a kid...they can lump it.
The Republican party had the chance to join in crafting a responsible health care reform bill and didn't. It was so much more in their own interests to take the payoffs from the insurance industry. Now they're acting as shills for the insurance industry by employing brown shirt tactics at what are supposed to be town hall meetings designed to inform local voters about the issue. The Republican party has reached a new low. They should be ashamed. Are they? They don't even grasp the concept.
Gramma Rose

[oldngrumpy]

The factor that is forcing Obama to suck up to Republicans is the Blue Dog Democrats. These wannabe Republicans should be shamed out of their jobs at the first opportunity. We have been subjected to far too much corruption and wrong headed legislation from the dominance of the conservative movement in the last 30 yrs to accept the same from Democrats now that we have solid majorities by the will of the people.

[dieselis]

80% aren't happy with their incline. They are scared that whats going to come out of DC is some piece of crap legislation. That make their incline go up and they get less. Which in all liklihood is the case. It can't be fixed. Their making a fortune keeping us sick before killing us. Ehuthansia isn't a bad idea. It's what their doing to us anyway. The glaucoma effect. Your made sick. No prevention or maintenance. 50% of diagnois are wrong. I had a herniated disc. I walked in the docs office. Couldn't lay flat on back or stomach and knee pain. Diagnois osteo arthiritis. 6mos later T11-T12 herniated disc. Then a botched surgery. They don't do this type of surgery at that Hospital today. A neuro surgeon and thorasic surgeon did the operation without the orthopedic surgeon. The orthopedic surgeon would have sent me to a spine center. They didn't tell me they didn't do the surgery. I'm in a wheelchair with a host of diseases and problems. It all could've been avoided. The neurosurgeon was going on vacation to Aruba. the 7600.00 dollars from my surgery covered it. Heck all I've been through. I'd of paid him $7600.00 not to do it. Hind sight is clearer than 20/20 vision.

[dieselis]

The above incidents happened in 1994 shortly after Healthcare was defeated. Insurance companies were paying docters not to treat patients. Not ordering cat-scans, mri's and other costly items would allow them to pickup huge bonuses. If there was a cheaper operation that might work they'd use it even if a more sound operation was necessary it would be negated because it cost more. My situation should have cost about 70,000 total. Which in turn probably would have returned me to work. I could've been working and paying taxes. Rather than draining the social security and medicare system. What should have cost 70,000 dollars. I've recieved aprox175,000 just in SSC payments. Medical cost I'm guessing its close to 500,000 dollars and thats under the actual. So 675,000 dollars as oppose to 70,000 and paying taxes. Taxes that would add up to aprox 100,000 dollars. You see how this is a National Security issue. Greed's destroying us from within. It cost everyone more in the long run.

[oldngrumpy]

Shifting costs from business to the taxpayer while protecting profits from taxation is the cornerstone of the Republican party. The motivation is the same as going to an unjustified war and hiring private contractors to perform duties that our military could do better and cheaper. How much evidence of criminal activity does America need before it declares the Republicans as murderous criminals against society? When will the corrupt politicians, bought and paid for by the corporations, be brought to justice and made to answer for their actions against America?

[ChelseaC]

Mr. Kuttner,
Well said.
President Obama should have listened to you, his former doctor and the PNHP.
http://www.pnhp.org/

This plan is just subsidizing a failing system--I don't support it--now how, no way.
I hope the bill does not go through and we start all over again.

[tomhuggan]

I've seen a lot of change in the 35 years that I've been working in the health care industry. I see many different sides to the story. My character in the media is the man in blue, the maintenance/janitor in the "scrubs" sitcom. Sprucing up and taking care of 300 million people's health will make WW2 look like a baseball game. It's a war against human nature, genetic nature, and time itself. It'll take major cooperation and effort from individuals, groups, companies, corporations and of course the nation's governments. I doubt if it'll work unless we can unite behind some new model of being an American. It's at least as troublesome to change our old freedom habits as it is to change our freedom-to-travel oil habits. It'll dig deep into who we are as individuals, and who we are as a nation.

[oldngrumpy]

It's easy to recognize when our country is being assaulted when ships are sunk or buildings fall. It isn't so easy to discern the same when the effects are economic, but make no mistake, we are being assaulted with the intention of bringing down our way of life. Few things are as threatening to the elite wealthy as a vibrant and productive economy.

These few members of our society must hide their intentions and actions behind corporate cloaks and must use subterfuge and deception to enlist the co-operation of enough of their victims to give the illusion of inclusion. They have no interest in free market principals or competition in the markets. They are the controllers of destinies and the puppeteers of nations.