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Robert Reich

Robert Reich

Posted: October 19, 2009 07:50 AM

Lessons From Letterman in Health Reform

What's Your Reaction?

Last January, as I understand it, the White House promised Big Pharma, big insurance, and the American Medical Association the moral equivalent of what Joel Halderman allegedly demanded of David Letterman: hush money. The groups agreed to stay silent or even be supportive of healthcare reform, as long as they were paid off.

But now that it's time to collect, the bill is larger than the White House expected, and it's going to fall like an avalanche on middle class Americans in coming years. That could mean an ugly 2012 election (read Sarah Palin).

So the President has to do what Letterman did: Refuse to pay.

Big Pharma is on the road to getting its deal: not only 25 to 30 million more paying customers, but also a continued ban on Medicare using its bargaining clout to reduce drug prices, a bar on genetic drug manufacturers introducing similar biologic drugs until the originals have been on the market at least twelve years, and no public insurance option to negotiate low drug prices. (Big Pharma did agree to $80 billion of cost cuts over the next ten years, to be sure, but its hush money payoffs far exceeded that sum.)

Big insurance is well on the way to getting what it wants: 25 to 30 million more paying customers (many of them young and healthy), a requirement that almost all businesses "pay or play," and no competition from a public option.

Doctors (that is, the American Medical Association) are on the way to getting what they want: Instead of a temporary patch on scheduled decreases in Medicare reimbursements to them, a permanent fix that would change the reimbursement formula altogether and reward them $240 billion over the next ten years.

But when they all get paid off, who will do the paying? Middle-class Americans who are already in a financial squeeze -- whose wages are lower, adjusted for inflation, than they were thirty years ago, and whose jobs are disappearing. They'll face still higher premiums, co-payments, and deductibles; and they'll pay higher drug prices, Medicare premiums, and taxes to cover the rest.

That's because these payoffs make it next to impossible to contain the wildly escalating costs of health care. And 25 to 30 million additional Americans will be covered.

The only thing in the emerging bills that's related to cost containment is a proposed excise tax on so-called "Cadillac" insurance plans, priced over a certain threshold amount (the threshold is now up for grabs). But because the costs of health care are likely to rise faster than inflation, whatever the threshold, the middle class will get socked again.

So Obama has to forcefully weigh in with Nancy Pelosi and Harry Reid as the two try to cobble together passable bills for each chamber -- demanding real cost containment.

The three big means of containing costs: (1) A true public option (better yet, one that allows anyone now holding private insurance to opt into; (2) authority for Medicare to negotiate low drug prices; and (3) lower Medicare reimbursement rates to doctors (in other words, no "doctor fix").

In addition, the so-called "medical exchanges" in the emerging bills (as well as the public option, which hopefully will be included) should give preference to pre-paid heathcare plans, like Kaiser Permanente, whose doctors are on salary and have every incentive to keep people healthy rather than charge for more services and tests.

But if Obama doesn't weigh in forcefully and say "no" to the hush money for Big Pharma, big insurance, and the AMA, America's middle class will get walloped. And if the walloping starts before 2012, Sarah Palin or some other right wing-nut populist will wallop Obama. And after she or he wallops Obama, America will get walloped even worse.


Cross-posted from Robert Reich's Blog

 
 
 
 
 
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08:32 PM on 10/20/2009
As a retired nurse I feel the only way to fix Heath Care and take it back from Big Pharm and Big Insurance is to have a single payer system. I feel that anything less is not sustainable. A Public option lets Big Insurance skim the cream off the top so the public program will have the sickest and highest risk clients and that will bankrupt the system. There is no way to muzzle big Pharm and big Insurance as we have tried repeatedly in the past but they keep coming out fatter and richer each time we pass legislation to "make them be responsible" to their clients. We need to dump the current system not try to fix it. The HMO's make out big on the current reimbursement system but the Doctors who try to actually care for clients are going under. If the cuts are made I will loose both my Doctors are they have all ready filed bankruptcy.
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Mike Hihn
Political Writer
08:59 PM on 10/20/2009
>>>>As a retired nurse I feel the only way to fix Heath Care and take it back from Big Pharm and Big Insurance is to have a single payer system. I feel that anything less is not sustainable

There are only tree countries with single-payer. North Korea, Cuba and Canada.

And canada's system has been ruled as an unconstitutional threat to life, because of Canadians dying on waiting lists up to a year or longer. Does a retired nurse have no concern about this?

http://www.hg.org/articles/article_698.html

That's not Glen Beck talking, It's the Canadian Supreme Court. It's not just the United States rejecting single-payer, it's also England, Germany, France and every civilized nation on earth, except Canada. (I don't see North Korea or Cuba as being civilized).

Oh yeah, Canadians women, age 50-69, are less likely than American women to have had a recent mammogram. That means they die. What good is "free" heathcare if there are no machines to detect YOUR cancer?

MEDICARE is cutting those doctors who are going bankrupt, but you want the same fools to control our entire healthcare system? What am I missing here?

http://PoliticallyHomeless.net "Those of us -- left, right and center -- who hold principle over partisanship."
06:16 PM on 10/21/2009
As a current health care professional I say 'let's reform Medicare/Medicaid first'. Not the entire health care system. There are many areas in need of improvement so why not try one or two smaller changes first to see how that goes?

Most primary care physicians who see Medicare/Medicaid patients are barely surviving due to the already low reimbursements. These patients are often the most ill with numerous health problems and take the most time and effort by the MDs to care for these patients. I know of several primary care physicians in my community who have families to support and are living pay check to pay check.

Implement a public option or single payer system as proposed by Obama and good luck finding enough doctors staying in business or intelligent young people interested in entering med school or any other health care profession.
05:43 PM on 10/20/2009
1) Legislate a forced transition of all health insurance companies to organizations along the lines of Kaiser Permanente.

2) Make medical school free to all qualified applicants, much as science graduate school is currently. Limit interns and residents to 10 hours of work in any consecutive 24 hour period and to 50 hours in any consecutive 7 day period. These two measures will end the pretentious martyr complex physicians currently have, which they use to justify outrageous fees.

3) End all subsidies to corn, tobacco, and sugar production (as well as incentives to not cultivate tobacco). This will end the indirect subsidy to high fructose corn syrup and the dangerous foods and beverages they engender, and end any public support of tobacco production (or non-production). It will also make feedlots economically unattractive and end the pollution, the coliform contamination of meat, and the antibiotic abuse they cause. This will also produce less fatty meat as well as encourage less meat consumption.

4) Allow importation of pharmaceutical products restricted only by compliance with all relevant FDA safety requirements. Remove any barriers to competition in the pharmaceutical industry. Allow companies that are unable to compete to fail.
02:04 PM on 10/20/2009
The drug companies are always going to make money and they do not need unfair advantages like restrictions on competition. There should be more regulation with clear restrictions to reduce direct to consumer advertising and a requirement that more of their budgets be directed to research. Since 1997 when the FDA relaxed restrictions on direct to consumer advertising, the drug companies have reconfigured for "quick hit" lifestyle drugs rather than tackling harder to treat medical problems.
If the government won't regulate the drug companies, then the only recourse will be additional $3B fines for false advertising claims. Of course, this puts the money in the hands of the lawyers and advertisers. That's were our pharmaceutical dollars go.
12:40 PM on 10/20/2009
While I agree with the health care comments I don't accept the "doomsday" scenario that Mr. Reich paints about the 2012 election.

With the current approval rating below 20% Americans know that the GOP just does not offer any alternative. However bad Obama is Palin would be infintesimally worse. Having experienced 8 long years of the disasters of the Bush administration Americans know that a Palin administration would make Bush seem like a respected moderate.

Americans couldn't be that stupid again. Could they? Could they???
01:41 PM on 10/20/2009
Why yes, UKOH. Yes they could be.
02:11 PM on 10/20/2009
UKOH,
"Palin would be infintesimally worse"

is this what you meant to say? perhaps you meant "infinitely," which would make more sense in context of the rest of the paragraph?
12:18 PM on 10/20/2009
With all due respect Mr. Reich, until critics are willing to face the fact that the Baucus bill and strategy were crafted by the White House and that all the deals were White House deals AND call them on it, President Obama will not feel the heat. Cautioning that he will be defeated is avoiding the issue. He knows that he has no true competition which is why he feels that he can do other than the people's bidding. Why Mr. Reich are you willing to let him off the hook? why soft pedal? This is too important.
11:50 AM on 10/20/2009
As usual, Mr. Reich is right ... on the money.
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MadAs
Tuned-in science editor
11:23 AM on 10/20/2009
Yes, yes, but Obama's been told this for months. So, either he
1) thinks they can sell the table scraps to appease the starving masses (if so, he's not as bright as we think or is far wiser than are we the pundits),
2) is playing his own chess game with a checkmate we cannot foresee, or
3) hasn't gotten the word (not likely) or has been getting the word, but twisted by Rob E (likely)., and hence #1.
Take your pick: I'll take #3.
11:09 AM on 10/20/2009
Unless we truly take on reducing corporate influence in Washington (which goes far beyond campaign finance reform), we will continue to face situations where what's best for the majority gets usurped by the industry that's most affected. I say we shelve healthcare for 6 months and focus on passing legislation to reign in our brand of Capitalistic-fascism. Does anyone think Boeing builds plane parts in more than 20 states for efficiency reasons or that the health insurance industry donates so much to politicians of both parties for the betterment of the Joe Public? How can we pass meaningful "change" legislation for healthcare, energy, education or whatever without tackling this root cause problem?
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mickthebiologist
Field ecologist
10:06 AM on 10/20/2009
yup, i haven't been deceived by this system for many years. the cancer of corruption and decadence is terminal. stressed out, dumbed down, drugged up, malnourished.

i had to drop both of my daughter's health insurance last january. it was costing me $250 a month. i have worked only 3 of the last 11 months. one of my kids is bipolar and needs help, but the insurance i had dropped her mental health coverage when she turned 18 (so she will NEVER get help), and now i can afford nothing. i haven't had real health insurance for most of my life, but always covered my children. my kid struggles every day just to find enough resolve to do anything at all.

when i join at least 75 million other people in the streets, not just one time, but every day for weeks, then maybe i will see some small change from the petty bourgeoisie now living like dionysian freaks and slovenly parasites who constantly chant ayn rand mantras while the anything-but-great nation turns into a pile of goo.

i gave obama thirty days. it didn't take that long to see what is now obvious to everyone. the man is in charge of nothing. all the little nero's fiddle while rome is looted and burned. the rest of the world, long under the thumb of the military junta of the us of a, is laughing and waiting.

ever watch scavengers take a fallen corpse?
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missyme
Just me
12:33 PM on 10/20/2009
Mickthebiologist, I wish things were better for you and your kids but somehow I feel that you are losing faith. You can't do that. I believe that the President will sign a bill that is fair for the American People, not the greedy corporate scam artists. Don't lose faith. If we get something close to Medicare or the Public Option, it means that you and your children will have a fair chance at getting pretty good medical care.
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mickthebiologist
Field ecologist
01:07 PM on 10/20/2009
thanks for your kind words. perhaps there will be something for you, but i do not share your faith. i have none. this economic and political depression will get much worse, and perhaps never better, at least for 6 -12 years. i may live to see medicare, but will it have any value by then? things are much worse than you might imagine. although i never saw any value in capitalism, i did believe the govt. was the citizen's govt, but the last 25 years have revealed that myth for what it is.

i do not criticize the govt. worker, they are, in my experience, good people who mostly try hard to do the right thing. but this is not a nation with a true govt., just a political shadow, hiding the country's diseases in the dark.
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TRex86
Enjoying life in West Ohio
06:26 AM on 10/20/2009
No argument with the public option, although Medicare for all (Unicare) would be far better. Likewise, negotiated drug prices would obviously slow down--maybe reverse--the accelerating costs of prescription drugs. Number three is more problematic. A large problem we physicians have experienced over the recent decades has been the proliferating overhead costs inflicted on us by the insurance companies, which impose a chaotic welter of rules that would make Franz Kafka proud. Indeed the anti-trust exemptions for these insurance monopsonies should be repealed as an essential part of reform.
We are squeezed between rising overhead and stagnant fees. We must spend more time filling out useless forms and employ more people to process our billing. As a result physicians have been in the same leaky boat as the rest of the middle class, no pay increase (inflation adjusted) for the last 35 years. HMO's have utterly failed to restrain the growth of spending (because the Nixon era law created for-profit entities, which have no incentive to be efficient--they gouge just like the rest of the for profit insurance sector).
My humble request is to sequence Reich's third proposal such that any cuts in physician reimbursement follow the demonstration of significant reductions in overhead costs from streamlining the system. As mentioned above, a single payer system is a straight shot to a highly efficient system. With other options it's going to be more difficult to accomplish those efficiencies.
03:39 AM on 10/20/2009
What I've been saying all along..the ones you don't want to get so much money are now going to get much more thanks to your efforts. Looks like we've given up on the med and drug profession here (understandibly) and are now down to harping on insurance who just passes the high costs on down. Oh and I'm afraid we're actually dealing with no cost containment. They'll just change out of those Cadillac policies quicker than Houdini could. BTW you don't want another election right now...and probably not later either. Enjoy!
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koolwoman
12:34 AM on 10/20/2009
If we don't get a healthcare public option, you can kiss the democrats good by for another 8 years. We are absolutely depending on the democrats to give us a public option . We hold all 3 branchs of government . If we can't do this now, then we will believe the old saw that " there's not a dimes worth of difference in the 2 major parties."
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billw8017
History looks like this
11:00 AM on 10/20/2009
The Supreme Court is securely in conservative hands. Ours may be the most conservative Supreme Court since FDR tried to stuff them in 1937. Oddly enough because it's just what you might expect, this makes a difference. The contrast between eight years of Democratic rule in 2000 and eight years of Republican rule in 2008 could not be more vivid.

As one of his last official acts, the former President vetoed the children's health initiative. Today, we are speculating that a public option MIGHT NOT pass this year. After our hopes were raised so high, this would be a serious disappointment, but going back to what we had ... ?

Certainly, we should pursue our best interests since we are due a share in what is our country. This is not totally from greed or even ambition, but because our hungry and unemployed citizens wish most of all for the opportunities and strength to serve our country. Given there is a conflict of interests between the most of us and each fraction, some hyperbole is a natural and gratifying response. There is real desperation out there.

I think of a definition of "adventure:" Somebody else having a hard time. Poverty is certainly an adventure and something of a soap. It has to be a hollow comfort, but in these hard times, the stricken are all heroes, both the problem and, as they come through, the solution, the real hope of America as a nation and a people.
12:31 AM on 10/20/2009
never give up
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billw8017
History looks like this
11:05 AM on 10/20/2009
Never. America will be restored one by one.
12:25 AM on 10/20/2009
Looks like we need another round of elections to clear out the "blue dogs" and then we may get the people represented in Congress. Al Frankin... welcome, loved your books... earn that seniority. It's better now because it was SOOOOO Bad with Bush... But the work isn't done. It just started last year.

We need to stop using Obama's name because it was never about one man... it's our job to let our elected representatives in House/Senate know what we want... They work for US! We the people disengaged and lost to big $$$... Obama needs to "refuse to pay" and we need to remind our public servants who they serve... Every day!
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1tourist
10:40 AM on 10/20/2009
So who is going to finance getting these public serving, conscientous legislators being elected?
11:56 PM on 10/19/2009
It makes no sense why healthcare costs are going up. I had to go the ER last year because of a little chest pain. Due to a history of heart disease in my family, they kept me overnight as a precaution and ran some tests. They discharged me in the morning saying I was perfectly healthy. Later they sent me a bill for $22,000! (Believe me, what they did shouldn't have cost more than a tiny fraction of that). Sure enough, my insurance company settled the bill with them for $315. Insurance companies have huge bargaining power with health care providers. In fact, they tell them what to charge for each treatment! So it's bogus that they cannot control spiraling costs, when they themselves set it. Had I no insurance I would have had to pay 70 times what they paid precisely because I have no bargaining power and they have it all. A public option will provide much needed competition, and just like Medicare it won't kill insurance companies. Certain things in life, such as healthcare, should not be for profit. Of course, conservatives will call me a socialist for that sort of comment, but call it what you will, this debate over healthcare is no different than that America had over the abolition of slavery, the civil rights movement, the right for women to vote, social security, medicare and many more battles that the progressives finally won.