The Republican Healthcare Plan
I suppose the good news is that the party of nihilism actually came up with an alternative healthcare plan. But that’s it for the good news. It’s all down here from there. The CBO has scored the GOP proposal, and the results are not good. See Jon Cohn and Ezra Klein for the gory details. In a nutshell, the plan would not deal with the problem of the uninsured at all – ten years into implementation, 52 million people would be uninsured.
OK, but it saves money by insuring fewer people, right? Wrong. The Republican plan will reduce the deficit by $68 billion over the next ten years. The Democratic plan will cut the deficit by $104 billion over this period. So, let’s sum up – the Democratic bill covers 12 times as many people and saves $36 billion extra!
Republicans are trumpeting that premiums are lower, and that’s true – but it’s barely significant for the vast majority on employer-based insurance (0-3 percent reduction for insurance through large employers). There is no comparison to make here, as the CBO’s estimates of the impact on premiums of the Democratic plan are not done yet. But I can probably guess the direction! Another point worth noting – one of the reasons premiums fall in the Republican plan is because there will be less medical care provided, not because the cost of provision is lower. Oh, I almost forgot – Republicans would still let insurance companies penalize people (refuse or drop coverage, charge exorbitant premiums) for pre-existing conditions.
Perhaps I absolved them of the charge of nihilism too soon…
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It also makes abortion more available.
Ridiculous. And in the meantime the teabaggers (sanctioned this time by the House Republicans, not just Glenn Beck) are storming the Capitol lawn with pictures of Holocaust victims.
Government intervention in healthcare is the cause of the industry’s problems. Removing government is the answer.
Prudence over ideology, please Cathy.
MM: I speak with experience not from imagination.
No, Cathy, you do not, for all successful health insurance systems either use single-payer models or regulate private insurers pretty much like utilities. These systems can deliver health care that is universal, or high quality (certainly as high, in aggregate terms, as the US), and for substantially less cost.
I find it peculiar that people in Catholic circles continue to rely on un-nuanced laissez-faire liberalism, especially given the century-old tradition in Catholic social teaching on the problems with unfettered free markets.
“the Democratic bill covers 12 times as many people and saves $36 billion extra”
And costs 1.2 trillion. Compared with the Repubs price tag the Dem is horrible.
Plus to back Cathy up the current govenrment involvement in financing makes billing a nightmare. And I speak from 4+ years of writing billing medical software.
Colin: all studies show that the main driver of inusrance cost is size. Single payer works well because the risk pool is huge, and it is relatively easy to administer. Part of the reason the US system is a nighmare to administer is because there is a plethora of insurance companies that are very lightly regulated. The proposed reforms won’t fix the problem, but improved regulation will make it a bit better.
And read the CBO report on the Democratic bill. Why do people find it so difficult to distinguish the increase in spending on the subsidies from the overall impact on the budget? Let me say it again: the cost is more than covered by the other aspects of the bill which either increase revenue or redeuce costs elsewhere. There is a net saving of $104 billion over 10 years. That’s not me, that’s the neutral CBO.
And by the way, yes, – the upfront cost is around $80 billion. That military budget is close to $700 billion – and that will not be paid for by cutting it in future years. Catholics believe healthcare is a right, and war is to be avoided. What does that say about spending priorities?
MM:
If the government is so proficient at managing and regulating systems, why is Medicare, and Social Security, on the verge of bankruptcy? Foreign countries will be paying for our healthcare with the bill proposed by the Democrats.
I am a Catholic who beleives in the theory of this country’s founding fathers. They wrote the constitution based on the Natural Law of God not tyrannical law. I find it peculiar that you would rather force your fellow citizens into tyranny. What does that do for human rights?
“all studies show that the main driver of inusrance cost is size”
Care to link a few?
“Part of the reason the US system is a nighmare to administer is because there is a plethora of insurance companies that are very lightly regulated.”
No what we have in America is the worst of both worlds: A heavily regulated medical sector with insurance companies and doctors so lost in the morass of regulation and paperwork that it is impossible to track the cost of filing a claim.
“The proposed reforms won’t fix the problem, but improved regulation will make it a bit better”
Adding more regulation doesn’t help. The regulation IS as much a part of the problem.
“Let me say it again: the cost is more than covered by the other aspects of the bill which either increase revenue or redeuce costs elsewhere.”
Then let’s make the adjustments BEFORE we try to cover everybody so these savings can be realized. The Dems are trying too much too fast and projected costs have historically been much lower than actual costs.
Allow me to quote from the CBO analysis:
CBO anticipates that the combination of provisions in the amendment would reduce average private health insurance premiums per enrollee in the United States, relative to what they would be under current law-by 7 percent to 10 percent in the small group market, by 5 percent to 8 percent for individually purchased insurance, and by zero to 3 percent in the large group market.
The CBO preliminary analysis of the Democratic bill didn’t contain an estimate of its effect on premiums, but given the experience of states that have enacted similar provisions, I’d say the effect would be for them to increase. Also, the Democratic is funded largely through tax increases. I somehow expect the Republican bill lacks this feature.
So, the Democratic bill provides more coverage, but will raise taxes and premiums to do it. The Republican bill will lower premiums and won’t raise taxes, but won’t increase coverage all that much. Both bills will have a comparable effect on the deficit. If those are the choices, which do you think the American people would prefer?
Colin: all studies show that the main driver of inusrance cost is size.
No, they don’t (really, any statement that “all studies show” something is almost inevitably going to be false). The fact that Singapore spends about half per capita of Canada on health care would seem to be a counter-example to this (Singapore is much smaller than Canada, and doesn’t have single payer).
I am, however, disappointed that the Republican bill appears not to allow for interstate health insurance. Just doing that could reduce the number of uninsured by 12 million without adding a dime to the deficit (and it would also help lower premiums for those with insurance already).
Blackadder, you seem to think the healthcare of tiny Singapore is the answer to all problems. It isn’t. Given that the US is not going to dismantle the current system and bring in single payer, its best model is Switerland or the Netherlands, which is heavily regulated private insurance.
And yes, most studies show that size matters most for insurance premiums. Size means a larger risk pool, lower administrative overhead, and a better ability to bargain with providers.
Cathy:
Not sure where to start. Social security is nowhere near bankruptcy. It is actually quite healthy. Medicare is another story – it is indeed unsustainable. But what do you know this? You know this because you can see it on the government budget. You might not realize that the rise in healthcare costs in medicare is far lower than the rise in private sector medical costs. Indeed, if insurance premiums had risen “only” as much as medicare spending since 1970, they would be a third lower today! People don’t realize this because they don’t see it. They don’t realize that they are paying for it with lower wages.
Also, I disagree with you that the US founding fathers were influenced by natural law – at least as understood by Catholic theology rather than the Scottish Enlightenment. They believed too much in the primacy of the individual over the common good.
On the premium issue, although the analysis has not been finalized, I refer you to this paper by Jonathan Gruber, one of the leading experts in healthcare.
Bottom line: it looks like premia in the exchange would be about 25 percent lower than wouldn have been the case without reform.
Gruber also talks about Massachusetts, showing “an enormous reduction in the cost of nongroup insurance in the state: The average individual premium in the state fell from $8,537 at the end of 2006 to $5,143 in mid-2009, a 40 percent reduction, while the rest of the nation was seeing a 14 percent increase.”
On interstate insurance: I am also surprised the GOP didn’t jump at it, but – at least in the current regulatory environment – it’s a lousy idea. Why? Because you would get a race to the bottom where all inusrance companies run to the state with the least protections. Who do you think would lose out? Of course, if insurance companies were regulated at the federal levle, then this could be done.
MM: The reason that healthcare reimbursements for Medicare is lower than for private insurance is that government limits the reimbursements paid from Medicare. To recoup their costs, the providers charge more to the private insurance companies. This will get worse with government-run healthcare.
I do not agree with your views and your information sources are politically biased.
As far as helping the common good, individuals could participate at a better rate if they had more freedom from a tyrannical government. Democrats want a bigger government, therefore I do not agree with their policies. These policies force participation without choice, therefore they are examples of tyranny.
Cathy,
What redeeming social purpose does $200 billion annual profit for health insurance companies serve? Why have these companies?
Gerald:
Without profits, how does a company invest in the future of the company, pay investors, pay operating costs, pay wages… Companies need profits to be self-sustaining. People talk as though profits are a dirty word. If my employer did not turn a profit, I might not have a job.
This could be the reason for the large federal deficit. The leaders of this country do not know how to abide by a budget.
Cathy: yes, that’s one reason medicare is cheaper, but since we seem to agree that healthcare costs are running out of control, then tell me what exactly your problem is with this?
The second part of your argument is that providers charge more to private insurers in response. Perhaps they do. But they also charge higher rates because they have to pay for the insured. And more fundamentally, they charge higher rates because of the nature of the industry. We have moved to a model whereby the income of healthcare providers is lined to treatment ordered, not the well-being of the patient. Doctors make money prescribing treatment, insurance companies fork over the money, and premiums increase. The cheapest healthcare in the US is in places where you do not have this model – where doctors either draw a salary or pool their resources, breaking the link between personal income and treatment.
Unfortunately, the current healthcare proposals do very little to address this problem. This is largely why the US pays twice as much as other countries in healthcare per capita, but nothing to show for it. And people don’t realize they are paying for it in lower wages. So in sum, the proposed reform will lower costs relative to the status quo, but the US will still be an outlier.
One more point on why medicare is cheaper: a lot of it has to do with less overhead. Private insurance comapnies make money by screening people out, and that is costly. Medicare is simply run far more efficiently than private alternatives, and this is the typical experience with single-payer systems all over the world. Sorry if that goes against your ideology.
I can’t even address your silliness about “government tyranny”. All I can say is that you are coming from a political position that is far removed from Catholic social teaching.
Social Security, on the verge of bankruptcy?
No. Social Security needs some long term corrections. We are aware of this because no other social insurance program in the world projects out as far in the future as Social Security does. And no private, commercial insurance program can show financial health anywhere near as far, including the Knight of Columbus and (sorry, Henry) GCU Insurance.
I find it peculiar that you would rather force your fellow citizens into tyranny.
A free people, under universal suffrage (save those of us in voteless DC) using representative government to enact a social program doesn’t guarantee the merit of the program, but it is not tyranny. I think you have a fundamental misunderstanding (if not hostility) to the American system of government.
MM:
My point about Medicare reimbursements is that government underpays providers. Government reimbursements for Medicare patients do not even cover costs. (The government steals from them.) Therefore, providers operate at a loss with Medicare reimbursements and make up the difference elsewhere.
I don’t need you to address my comment about tyranny and would suggest that you worry about your own actions in regard to Catholic social teaching. I do not answer to you.
Waiting for a response :-)
Saw a post on dotCommonweal referencing the same Ezra Klein:
http://www.commonwealmagazine.org/blog/?p=5226
Shows just how uninformed (and purely ideological) a lot of this debate is.
Cathy: underpays by what criteria? Please see what I wrote earlier about the way healthcare is charged for in this country – it is a recipe for inefficiency and price-gouging. And insurer is supposed to negotiate with the provider, not to pay everything demanded – that is part of the problem. The incentives are all wrong and it all boils down to the fact that nobody understand who is ultimately paying for it all – the wage-earner in the form of lower wages.
And no, you don’t answer to me, we both answer to God, and I would therefore suggest you put more stock in Catholic social teaching than in the thought of a group of 18th century Protestant liberals.
And what exactly do you mean by leaders not being able to abide by a budget? If you had influence over fiscal policy, what exactly would your advice be?
Kurt:
I do not have a hostility to the American system of government. I also understand the current system of government. I do not agree with how the current administration seeks to change our current system by seeking to enact laws that contradict the United States Constitution. I also do not agree with how our leaders are abusing this system – that is my problem with the status quo and the Democrats’ healthcare bill.
Colin, are you still here? :)
I disagree with you that the health insurance industry is over-regulated. As with the financial services industry, it is not regulated enough. Insurers should not have the ability to refuse coverage, to deny coverage, to drop coverage, or to chrage exhorbitant premia based on so-called “pre-existing” conditions. There should be mechanisms in place to prevent cherry-picking of healthy patients.
What you are really talking about is the administrative burden created by the crazy patchwork of private-sector health insurance. It’s a nightmare. You don’t see this in Europe. If you have a presciption in France, you go to a pharmacy, hand over the paper, get the medication, pay up, and go. It’s as painless as buying a magazine. You don’t have the endless waits and the phone calls to check on obscure insurance rules. If you go to a doctor in Europe, you get seen, and (depending on country) either don’t pay anything or pay a small co-pay. None of this back and forth over whether or not the doctor takes your insurance, none of the endless paperwork, none of the constant need to keep track of your payments lest the insurance comppany cheat you, either by incompetence or deliberate challenge. And it’s a lot cheaper too. A lot.
As for your final point, I quite simply disagree. Covering everybody is a moral issue that is more important and more urgent than the cost issue. If you want to cut spending, I have some suggestions – starting with the military!
MM:
I read your notes about Medicare and do not agree with them.
If our leaders knew how to follow a budget, we would not be following a policy that encourages deficit spending. Paul Ryan of Wisconsin proposed a bill to address healthcare and the federal budget. People have ideas that are not being heard.
I believe in the US Constitution because it allows me to practice as a Catholic and allows protestants to worship in America as well. I would suggest that you appreciate the sacrifice that others have made to provide that freedom to you as well.
My disagreement with the Democrats’ healthcare plan and my appreciation for the United States Constitution , does not place me at odds with Catholic Theology.
Providers have the option of rejecting Medicare reimbursements as long as they are willing to reject all Medicare patients. I know of at least one hospital where 70% of dollars come from Medicare, Medicaid, or other government programs. They are surviving. If Medicare funding were so insufficient, we would so more providers surrender it.
As advance notice, I likely won’t be engaging in much debate in this thread. I’ve addressed much of this psuedo-knowledge before, and I’ve grown tired repeating myself over the past three or four years.
Cathy,
“Companies need profits to be self-sustaining.”
You are correct: Companies DO NEED profits to operate. BUT, with regard to the health care system itself, there is NO NEED for health insurance companies. Their very presence in the health care system constitutes the central problem we are trying to address. They are the unwelcome elephant in the room.
Health insurance companies embody the most inefficient and expensive way of providing health care service. Why? Because their organizational purpose (profit) is in direct contradiction to the purpose of the health care system itself (health care). There is no way to reconcile this contradiction except through an irrational acceptance of inefficiency, higher cost, and the dehumanization of human needs.
A single-payer system exercises the same functions as a private health insurance system without having to be burdened by administrative, merchandizing, and U.S. regulatory costs. Even more, a single-payer system is not driven by stockholder demands for healthy profit margins. When viewed objectively, the private health insurance system is a dehumanizing force by virtue of its intrinsic logic.
If one would put the ideology of the market place aside, the sanity of the single payer system would become obvious. The health insurance system in the U.S. cannot work efficiently or cost-effectively. It is a dead weight, pure and simple, and one that is totally unnecessary.
MZ, I sympathize greatly!
Cathy, are you aware that deficit spending is exactly what is needed in a recession?
As for the other stuff, I object strong to your American exceptionalism. the US is no more “free” than most other countries in the world, especially those that have chosen democratic forms of government. I can practice freely as a Catholic in most countries of the world.
Mr. Campbell:
Let’s abolish all insurance companies and eveyone can pay out-of-pocket healthcare costs.
I do not agree with how the current administration seeks to change our current system by seeking to enact laws that contradict the United States Constitution
Cathy, you need to take that matter up with Chief Justice Roberts.
I did see an interesting release from a tea bag group saying their board of director voted to litigate the constitutionality of health care reform because “There is absolutely NO paragraph, word or phrase in the Constitution that can be streached far enough to allow the federal government to have any say whatsoever over health care delivery or health care insurance for any individual (except for Federal employment, in or out of the military, or those in Federal incarceration).”
It would seem that if their lawsuit is successfully, Medicare would also fall.
Reading the whole paragraph from the linked Klein post is instructive:
So while it’s true that individual premiums have fallen in Mass., they’re still 70% higher than the national average — they’ve only become less outrageous. Why? It turns out that the 2006 bill was the second half of a health care reform effort that startin in the mid ’90s in Mass. Back then, the state passed a law requiring guaranteed issue and community rating: that health insurance companies have to accept people regardless of their health condition, and that they had to charge them according to their zip code not their individual health. This drove up the cost of health care insurance in the state drastically, with the result that healthy people dropped coverage, driving up the cost even more by making the pool worse.
In 2006, Mass. passed law requring that everyone buy health insurance, and requiring that health insurance policies hit certain minimum levels of coverage. If you didn’t buy the required insurance, you had to pay a hefty fine. By forcing healthy people back into the insurance market, this started to drive costs down again. However, it seems unlikely, given the rate of change so far, that this will drive them down to below the national average. We can be virtually certain from these results that the cost of medical coverage will go up significantly under the current Democratic proposals, it’s just a question of how much.
MM:
Your note on deficit spending is only one economist’s theory. Productivity is needed to get us out of a recession or a depression. Government spending does not always equal productivity. Sometimes the spending can hinder it.
I appreciate my freedom here in America and will not hide from that fact. I am also willing to stand up for that freedom. I also thank god for it almost everyday. If you object, I am happy that you are free to do so!
“I disagree with you that the health insurance industry is over-regulated. As with the financial services industry, it is not regulated enough.”
Having seen it from the inside we will have to agree to disagree. Half of what I did as a programmer for billing rules was because of Medicare and other govt regulation.
“Insurers should not have the ability to refuse coverage, to deny coverage, to drop coverage, or to chrage exhorbitant premia based on so-called “pre-existing” conditions.”
While I agree in this area we need reform, I’m not convinced that a complete ban on the insurance companies having a say about who they cover is moral or logical.
Your point about the overseas healthcare doesn’t address my point. We don’t have a free market or a govt healthcare solution. We have right now the worst of both.
“If you go to a doctor in Europe, you get seen, and (depending on country) either don’t pay anything or pay a small co-pay.”
You pay through the nose in taxes though. That money has to come from somewhere. 40% if memory serves.
“Covering everybody is a moral issue that is more important and more urgent than the cost issue. ”
Unless you bankrupt the country and cripple the economy. Then no one wins. All I’m asking is for the prudence to encat the reforms that will make those supposed saving appear. Then we can talk about spending it. Otherwise we are spending money we don’t have (which is neither prudent nor moral).
Having seen it from the inside we will have to agree to disagree. Half of what I did as a programmer for billing rules was because of Medicare and other govt regulation.
The fact that you are automating it should indicate to you how inexpensive it is unless you have such a God complex that you think YOU are the cause of high health insurance costs. I’m not sure I’ve seen a more apt example of a blind man describing an elephant.
Colin:
You and I agree on a lot. You stated your last paragraph perfectly. I would only add that asking other countries to finance our federal deficit risks our security as a nation – both financially and physically.
“The fact that you are automating it should indicate to you how inexpensive it is unless you have such a God complex that you think YOU are the cause of high health insurance costs. I’m not sure I’ve seen a more apt example of a blind man describing an elephant.”
You assume too much about the nature of my work. I didn’t “automate” as much as you think. I created applications to assist the user with the necessary steps. The user still had to know what they were doing (and most don’t because it is so complicated). You can’t automate purely arbitrary, constantly changing rules. One of the reasons why I left the industry.
Next time you might want to hold off slinging deragatory adjectives.
Cathy,
“Let’s abolish all insurance companies and eveyone can pay out-of-pocket healthcare costs.”
Could you explain the logic of this comment?
MM,
My point is not to say that we should adopt Singapore’s health care system. I think that something like that would be ideal, but I recognize that it’s highly unlikely to happen, just as it’s highly unlikely that we’ll get single payer. My objection was to you making an obviously false claim about what drives the cost of health insurance (since you’ve switched from saying “all” to “most” I take it you have implicitly conceded this point.
I don’t think allowing interstate health insurance would lead to a race to the bottom (or, if it would, the bottom is not so bad). However, if one is really concerned about this there are ways to modify the idea to cancel the danger. I’m actually a little mystified that the Democrats haven’t included an interstate provision in their bill as a concession to Republicans and conservative Dems. As best I can tell it would have all the same positive effects that a public option is supposed to have, plus others, and it doesn’t sound like scary socialism so it would be easier to get the Blue Dogs to go along with it. And concerns about a race to the bottom would be cancelled by having community rating, guaranteed issue, etc. as other parts of the bill. Perhaps you could call Harry Reid and explain it to him?
I should add that I don’t really get the argument that Medicare can afford to be cheap because doctors charge private insurers more. You don’t have to take Medicare if you don’t want to. If Medicare rates are so low, why wouldn’t doctors just quit taking Medicare patients?
The poor allowance many insurance co’s make for mental health care explains the teabaggers. It’s not their fault. The paranoia about the black/red going after their grannies could easily be treated. Arguing against universal health care is absurd, it’s a requirement for being considered civilized. Job-based insurance is an obscenity.
http://www.firstthings.com/onthesquare/2009/11/a-healthcare-problem-washington-may-have-missed
What he said. :-)
It is ridiculous that patients entering hospital in the USA often suffer more from the looming financial nightmare, all the uncertainties, than from their disease. Every treatment the doctor offers has to be watched with a suspicious eye — it may cost extra thousands of dollars. All this anxiety applies even to the insured, as Moore showed in “Sicko”, and how much more so to the uninsured.
The incredible voluminousness or hospital bureaucracy in the USA is a symptom of this battle of the insurance companies against the patients (which no doubt criss-crosses with several other battles). The body of the sick person becomes the place where the vultures gather.
The Italian ads for “Sicko” got is right: “If you want to be well in the USA, just don’t get sick!”
I cannot believe that some people think this mess accords with Catholic Social Teaching. We must have done a really bad job of catechesis.
I understand from a particpant in yesterday’s GOP anti-health care rally that the problem is that Obama is controlled by the Rothschilds.
Learn something new every day.
Can’t we all just agree that *whatever* kind of health-care “reform” passes, it will have the effect of further enriching those already rich, further empowering those already in power, to the detriment of the poor and the weak? I’m not convinced that, absent Gerald Naus’ proposal (which, of course, will never even be considered), there is any other possibility.
wj,
No. The House bill has much merit. Tens of millions of Americans who are now unisured will be insured. That is a good thing.