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The Financial Crisis and Health Care
The financial markets are gyrating. The world economy is teetering. The U.S. government is making a $700 billion or more bailout to avert a worldwide disaster. No surprise, health care has become a side show. Or has it? Not only does this upheaval actually make health-care reform more pressing, it makes comprehensive reform--change in the way health care is paid for and how care is organized and delivered-- more realistic and feasible.
"Socialism" has come to Wall Street. For more than 60 years, Republicans have criticized as "socialized medicine" any reform proposal that gave government a central role in funding health services or in regulating providers.
The charge has always been false. True socialism requires governmental ownership of the means of production. No health-care reform proposal, even the most ardent single-payer plans, ever suggested the government should employ doctors, or own hospitals, pharmacies, home health-care agencies or drug companies. Moreover, in the current system, the government already pays for more than 40 percent of the health-care bill. With a Republican administration leading the takeover of Freddie Mac, Fannie Mae, American International Group Inc., and the purchase of housing securities, it hardly seems credible to criticize health-reform plans as socialized anything.
The phenomenal failure of Wall Street dramatically changes the appetite of the country for regulation and for shoring up the safety net. With trillions of dollars evaporating in this crisis, millions of middle-class Americans face the prospect of losing their homes and jobs, and witnessing a dramatic contraction of their retirement savings. In response, the public will desperately want financial security, and health care is a critical element of that.
This financial crisis also means Americans may be more willing to forgo gold-plated comprehensive insurance that covers everything with few restrictions. Under the threat of losing everything, Americans may feel content with the guarantee of a decent plan that covers cost-effective treatments with some restrictions on choice and services to save money. This should enhance the chances for a bipartisan deal on health care.
With politicians and regulators committing $700 billion in a single week, spending a few hundred billion to make the health-care system cover everyone more efficiently and at higher quality begins to look like chump change. This upfront spending can create the infrastructure--such as systematic measurement of quality and patient outcomes--for serious health-care cost savings. After the last several weeks, health-care investment appears more reliable--and politically palatable--than bailing out bankers and other gamblers.
The huge increase in the federal debt that these bailouts will entail intensifies the pressure to rein in health-care costs. This favors comprehensive rather than incremental reform.
Before the financial crisis, the most likely options for controlling government health-care costs involved tinkering around the edges--striking a new deal between Medicare and physicians on their pay, initiating more demonstration projects in paying for performance and efficiency, and assessing comparative effectiveness of new tests and treatments.
While absolutely valuable, these policies are far from certain to control health-care costs--and it will be five or 10 years before they are likely to generate savings. Paradoxically, only more radical changes in the health-care system are likely to actually save money and improve care--and more quickly. For instance, the Wyden-Bennett health-care bill--which proposes more extensive changes than either Barack Obama's or John McCain's proposals--is the only health-care legislation scored as budget neutral by the Congressional Budget Office. The CBO said that in the first year of full implementation, the expenditures would equal revenues, and in subsequent years the Wyden-Bennett bill would generate a surplus because it would save the health-care system money. The Lewin Group, a health-care policy research and management consulting firm, estimated that within a decade this plan could save as much as $1.4 trillion. No other health-care legislation comes close.
Some will find this comprehensive reform unpalatable because it removes employers from health care altogether. As the economy stagnates, this may be absolutely necessary to keep employers afloat. Facing a rising deficit, more comprehensive reform that can really control costs begins to look more realistic than a few untested adjustments here or there.
The dean of health-care economists, Victor Fuchs of Stanford, has long maintained that we will get health-care reform only when there is a war, a depression or some other major civil unrest. It's beginning to look like we might just have all three.
While the financial crisis has appeared to knock health care off the national agenda, in the strange chemistry that is American politics, it may in fact make comprehensive health-care reform more politically feasible, indeed maybe even absolutely necessary for fiscal stability.
Ezekiel Emanuel is an oncologist and chair of the Department of Bioethics at the National Institutes of Health. He is the author of Healthcare, Guaranteed: A Simple Secure Solution for America.
This post originally appeared in the Chicago Tribune.
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Health is an important aspect of our lives and skimping is not advised, even in a sick economy. Here's another tip to get better and affordable treatment: treat yourself overseas. The cost advantage is usually 40-70% and we get all types of treatments from dentistry to heart surgery to surrogate mothers. This site is where I got the info about overseas medical treatment: http://www.medicaltourismco.com. They also have a blog on the site where they list all info about prices, hospitals, surgeons etc. It is reported that out of the 1 million Americans that will receive health care abroad in 2008, 40% will be opting for dental services and 23% for cosmetic surgery. According to industry reports, dental services and India top the list of most popular procedures and locations for health travel.
We all know that Medicare is over-promised and the real reason it's not being fixed is because benefits will have to be cut to save it from bankruptcy. It could literal become the ENTIRE budget leaving money for nothing else if not fixed. And the sooner we cut it the more Medicare there will be for those who use it in the future.
Hence the line we always hear from do-nothing politicians when someone tries to fix it "I won let them cut your benefits I'm 'protecting' Medicare". Which is political double-speak for: "I'll say something you like thinking you are stupid enough to vote for me while letting Medicare lumber down the tracks toward total destruction". So those who want to fix Medicare are up against do nothing politicians who can't stand to cut....who spout politically correct nonsense about "protecting" Medicare.
In my opinion, Obama can't pass the tax increases he wants to create his new big government health care program. The out of control deficits, now being passed by a democratic party controlled congress will swamp his ability to create large new deficits for health care. And most likely he wont give us the tax breaks he's promised 95% of America just like he never introduced a tax cut bill he promised the people of ILLinois if they would send him to the senate. But he's still running around promising tax cuts to America if they will vote for him.
In my opinion, Obama and the Democratic majority in Congress will be able to pass whatever tax increases they want to fund their big, new government health care program. I agree with the article....Republicans won't have an argument against it - assuming they have enough Senators left to count.
The federal budget is huge and finding the money to do what the Democrats want is going to be a matter of cutting what they don't want....like military spending and corporate tax breaks.
Plus, increasing taxes on the top 5% income group will raise more money the the remaing 95% were paying, so a tax cut for them will be easy.
Massive tax increases will not solve his problem in funding massive increases in government. They will ultimately lead to less income for the government, higher inflation for the workers, and more unemployed because we already have the highest or second highest corporate tax rate in the world. The jobs will flow out of America if the new taxes flow in. The present and continued deficits will continue to spiral out of control as this democratic congress of two years has proved it has no stomach for controlling spending. The money Obama would spend on socialism will all go to pay the interest on the ever-massively expanding debt. And as our debt expands, the risk to those who lend to us will go up. So they will demand higher and higher interest rates thus causing a crushing inflation on the US as we seek to keep borrowing to fund our out of control government.
If Obama is smart.....he will stand up against Reid and Pelosi as they seek to pass a far left socialist tax and spend agenda. I don't think he's smart. I think he has the brain power but doesn't use it. It's going to be rubber stamp time with the occasional whine about how congress isn't doing what he wants it to do.
I think I'll be sending more money to the pacific rim where economies are emerging from socialism and expanding their economies.
Hey Zeke--great piece. Come visit us again down at UC.
US Politicians treat this as if they are inventing the wheel at the thought of reforming healthcare. They aren't. There are many countries with universal healthcare. They have many sources to which they can draw information from. What works. What doesn't. What was tried & failed. The country attached to the north border -- Canada. U.K. and other countries people are speaking of in other comments.
US Government talks about it like they are third world when it came to time we did not have enough flu vaccine. Canada had an ample supply to be able to provide to US to help out. I recall the comment it would take to long to test it. Same with prescription drugs. As if the CDN government would allow their citizens unregulated drugs.
Canada -- people do not go bankrupt or lose their house due to medical. Just did a search (Ontario) to find fees to citizens. Under $20,000 - pay $0. Between $20,000 to $200,000 - pays $300 - $900 per annum. Lists chiro & physio -- not paid. List eye test not paid for people between 20 - 65. Drugs for seniors over 65 PAID. No decision between food or drugs each month. Government sets cost to pharmacies for drugs. Same as doctors.
Knowing these countries have this -- I can't wrap my head around why US doesn't. Let Washington live without healthcare for a year -- they would turn there arse around real quick.
meeded, in case you haven't noticed, US politicians don't like to work that hard.....figuring out what works and what doesn't.
Thanks for lifting my spirits. I'd all but given up thinking healthcare was on it's way, and that was one of my biggest expectations from an Obama administration. Of course I knew we'd get it eventually. The system is doomed to crash if nothing is done, but you've given me hope that it might be sooner rather than later.
I've never understood why people accept the need to pay taxes for police, fire and military protection, but balk at funding healthcare which is just as vital as any of those necessities. What a relief it must be in other countries with healthcare, to never have to worry about being able to get a checkup, or having to declare bankruptcy due to a medical emergency.
Ezekiel, I think you left out the psychological benefit of our having universal healthcare...
No longer would 1/2 million people every year go bankrupt because of healthcare expenses. (and I would suppose there are another 3 million who live in fear of going bankrupt.....This would also alleviate home foreclosures. With Universal Healthcare, we would know the coverage and the cost...Right now, it is a crap shoot...Think about a $300 lab bill for routine tests, and then the insurance pays $20 based on usual reasonable and customary rates... It petrifies me to go near a hospital without health insurance...and I am a nurse and cpa...
I am so glad you wrote this article and posted it here, thanks again!
So in the end we might just finally get US health care reform for the WRONG REASONS- the economic imperative to act.
But at least we will finally get it. As a pragmatist I'll take it .
Dr. Rick Lippin
Southampton, Pa
"True socialism requires governmental ownership of the means of production."
Only by the definition of communism.
:-)
Seriously, Dr. Ezekiel, I think you can not see the forest for the trees. A lot of the issues you are talking about have nothing to do with the problem and are all sideshows from previous political battles that were all fought to prevent ANY health care reform, at any cost. And still, you are fighting them as if they were of any interest in the current situation. Well, the final bill is coming in and it ain't pretty. What it does, for sure, is to make many points you make mote.
Many countries went to government run or 'single payer' health care for most of it's people out of crises like war and economic depressions. Canada's government run health care system started in the 1930's in it's hard hit western/prarie provinces, also hurt by the economic Depression and droughts in the USA at that time. Perhaps our current economic crises may finally bring the issue to the table to reduce overall costs to individuals, corporations and health care providers, save money for our government and most importantly make sure everyone has access to quality health care.
"Some will find this comprehensive reform unpalatable because it removes employers from health care altogether."
The fact that US employers are often burdened with healthcare costs for their employees, that employers in most other countries do not need to pay, is a major cause of US firms' lack of competitiveness in a global market. It contributes to the export of jobs overseas.
Sixty years ago, when my country - Great Britain - nationalised its healthcare, the health minister famously talked of "stuffing the doctors' mouths with gold" to get them to accept the new system. I think it will be a damn' sight more expensive for the US to achieve the same, but if ever there were a time to do it, it is now. Good luck!
"The fact that US employers are often burdened with healthcare costs for their employees, that employers in most other countries do not need to pay, is a major cause of US firms' lack of competitiveness in a global market. It contributes to the export of jobs overseas."
That is nonsense. If you have ever been to Germany you would know that health care costs to employers are a lot higher than in the US. And still, German companies can hold their own in a global economy. If your argument were to be correct, it would simply mean that Americans are whiny losers in comparison to the Germans.
Which actually might be true.
:-)
Germans employers would not be whining about the cost would they, not the good old people who gave the world fascists,,,,, All employers whine about paying employees anything at all...
I agree with you entirely... But I also think that employers here are totally disgusted with an industry that raises its rates 8-10 % per year and this is an essential service....Imagine if these people ran the auto industry, the price of our cars would have doubled in the last 8 years...
As I understand it, in 1966 when Medicare came live, the doctors mouths were stuffed....I think there are so many savings.... Remember Canada has malpractice insurance, but the occurence is about 1/2 the cost that it is in the US....because people know they will not be left to dry with the medical bills resulting from the malpractice...
Health care really needs to be part of the national dialogue. There is a huge crisis in terms of health care costs in the US. We currently spend 16% of our GDP on health care with the projection that it is going to rise to 20% of GDP: http://www.nchc.org/facts/cost.shtml
Other countries spend half of what we spend in terms of GDP and are able to cover all their people: http://www.pbs.org/wgbh/pages/frontline/sickaroundtheworld/countries/ I am talking about capitalist countries like Japan, Germany, and Switzerland, countries that are clearly not socialist.
One thing we could do is use smart health care cards for Medicare right now like Taiwan does for its system. They use data mining in Taiwan to determine if there is fraud going on in the system using their smart card billing system. We all know that Medicare is being ripped off big time. For example, if someone is getting billed for 15 wheelchairs or hundreds of insulin injections, it becomes a trigger for investigation in Taiwan and brings down their level of fraud. We could use the system here. We are so far behind other countries in terms of health care.
All the countries you mention have cost control, something the relevant lobbies in the US have been able to prevent. Japan, Germany and Switzerland are not socialist countries but they are social-democratic, meaning that the government does exert considerable active control over the cost of medicine and other public services.
That is a good thing. But it is also far outside to the left of the political spectrum of the US which right now has a hard time not to become a fascist state. The distinction between the US and these countries is not constitutional, by the way, it is entirely pragmatic. The US can do everything right or it can do everything wrong (which it does right now) within the means of its constitution. All it takes is for voters to replace the current political cast in Washington and we can be on our way to a solution. But until they do, nothing will change.
Yes, I understand about the active role of government in those countries as per my post about how Japan's system works below. And yes, I agree with you that we can eventually be on a way to a solution.
I am sorry but I do not think the fraud is as simple as you have indicated nor is it as bad as we would expect...and all of these socialized medicine countries do continue to route out fraud....
I can give you an extensive lecture in the capabilities of the Medicare system to prevent fraud. However, there is a question about all of the other insurance companies with double payments and fraud and the fact that the More these companies spend the more they reward the CEOs.... There are so many incentives that are just lame, like expecting a hospital to monitor and or alleviate the inefficient use of it's ER....
Medicare does have a fraud line....
Well I did write some outrageous examples of fraud only to illustrate a point. The Taiwan system is very good because they can flag subtleties right away and it is tied to the billing. That is, before any payments are released to a company or doctor that may be conducting fraud, they would have already flagged something questionable in the billing and it wouldn't be paid out in the first place without investigation.
However, I am open to learning new things and if you would care to provide some links for me to see, I would be glad to look them over.
I think health care reform is absolutely essential. It is amazing that the U.S. has resisted any comprehensive approach to health care for so long. My husband and I live in work in England, which has had a National Health Service for about 50 years. Labor could be displaced by the Conservatives, but no one would even think about getting rid of the NHS. It's like social security in the U.S., something that everybody takes for granted. People in Europe are genuine amazed that so many people in the U.S. don't have health care and that the government does not do anything about it.
I guess if we want to stop going broke we COULD try not being stupid with health care. But I'm betting we won't.
Finally someone saying the obvious. At the very least the tax payers who are bailing out Wall Street deserve universal health care to protect them during lay off periods caused by the crooks on Wall Street.
Bingo. Taxpayers fund Wall Street and Medicare, but do not have healthcare themselves....that is a real crock...
I am also seeing that existing benefits for the Wall Street Mafia will not be impacted by this bailout....Well that FROSTS MY CAKE JUST FFFF FINE....NOT....
I recommend the CBPP report on the Wyden-Bennett bill. http://www.cbpp.org/9-24-08health.htm
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