avatar
Can We Have Universal Health Care?





Can we have universal health care?

The Prospects for Universal Health Care under Barack Obama

 

By Roger Bybee

 

Barack Obama aspires to be a “transformative” president, with his hopes particularly fixed on America finally achieving a universal health care system.

 

But would his health plan go far enough to fundamentally transform a health care system which has been dominated and distorted by for-profit insurers who maximize profit by rationing care to patients, restricting doctors’ choice of treatments, and raising premiums? Of course, the outlines of Obama’s plan will be profoundly changed by the legislative process, and it may be virtually unrecognizable once a finished product reaches the presidential desk. But the Obama plan is a valuable starting point for discussing what is likely to succeed, and what is likely to fail, in health care reform.

 

BUILDING AROUND OR DISPLACING INSURERS?

President Obama has outlined a plan for universal coverage, cost restraints, and extensive choice for American health consumers, along with new regulations on for-profit insurers. However, the insurers will continue to claim a major role in the healthcare system.

 

While avoiding the risks of a direct collision with the tremendous power of the health insurance industry, the Obama plan also thereby incurs huge liabilities. It fails to adequately address the problem of effective cost controls needed to sustain coverage for all Americans, so that passage of his bill would set off a perpetual tug of war between insurers’ ever-rising premiums and the increasingly expensive goal of universal coverage. Further, leaving private insurers in place largely forfeits the massive savings in insurers’ excess administrative costs that could help to fund universal health care and other priorities.

 

On the positive side, the Obama plan also offers a public, Medicare-style option that some advocates of his proposal view as the potential incubator of a single-payer system if sufficient numbers of Americans gravitate away from private insurance. If he can get this provision included in legislation that can pass both houses, it will set off a high-stakes struggle given private insurers’ powerful incentive to strangle such a dangerous competitor. The for-profit insurers will also be working to circumvent new regulations which could force them to provide treatment for all potential enrollees and limit their administrative overhead. Some experts expect that the insurers will attempt to turn the public program into a dumping ground for high-cost patients and will easily manipulate new regulations on other pernicious practices, triggering a new round ofbattles with health consumers and Congress. Eventually, these struggles could conceivably erode insurers’ legitimacy and exhaust all alternatives short of a single-payer system that dethrones the insurance industry.

 

DIMENSIONS OF HEALTH CARE CRISIS

 

To evaluate the Obama plan and the nature of the battles it will generate, it is first necessary to grasp the scope of the health care crisis.

·     Some 47 million Americans were already lacking health insurance before the meltdown, the sharp increase in unemployment is rapidly adding to their ranks.

 

·     Half of all personal bankruptcies are caused primarily by medical expenses. In 76% of these cases, the family breadwinner initially had insurance coverage.

·     Workers’ out of pocket health-care spending soared 87% since 2000, according to Families USA, going from $135 to $248 per month for family coverage.

·     Per-capita health care spending reached $6,697 in 2005, more than 40% higher than any other nation. Yet despite this astronomical level spending, health care outcomes in the US ranked an appalling 37th overall in World Health Organization figures.

·     The combined profits of the nation’s largest insurance companies and their subsidiaries increased by over 170 percent between 2003 and 2007. For-profit insurers have become increasingly unpopular, with approval ratings lower than even the much-despised tobacco companies.

·     The fastest growing component of health care is health insurers’ administrative costs Most relevantly at a time of massive government outlays for various bailouts and a much-needed public employment program, the health care system wastes somewhere between $350 billion (the estimate of Harvard Medical School’s Dr. Steffie Woolhandler) and $650 billion (the figure derived by Princeton economist Uwe Reinhardt) of all spending on excess administrative costs imposed by private insurers. While insurer-driven excess administrative costs account for about 31% of all US health spending, total administrative costs for the public Medicare program are just 2%. Just to America’s north,  Canada’s system, which substitutes a single public entity in each province for the insurance industry, spends about 12% on administration.

 

 

 

 

THE POST BAILOUT CONTEXT

In addressing the multi-dimensional health care crisis, Obama seemingly faces a much more favorable political context because of the controversial $750 billion bailout of major investment banks and insurers like AIG. Working Americans became acutely aware that they were struggling for survival without the same instantaneous government attention to their economic and physical health.  

 

The bailouts brought to the surface the normally invisible stream of government subsidies and support flowing daily to Corporate America. At the same time, the corporate bailout has served to re-legitimate the nearly-extinguished notion that ordinary citizens are also entitled to count on their government will serve protect their economic security, The virtually unchallenged release of $750 billion into the coffers of immensely powerful banks seemingly produced a loud, unified outcry among working Americans:” Where’s our bailout?”  The solid bulwark of “free market” and “free trade" ideology, so successful over the past three decades in turning back popular demands for economic justice and in shrinking the sphere of democratic decisionmaking as global corporations assumed more power, suffered a huge setback. The question of the day is no longer about the morality of government intervention in the economy; almost overnight, he question instead shifted into whose interests would the government intervention serve?

 

 

With the current economic crisis deepening anxieties across the US, Americans want to be certain that their health coverage does not contain any loopholes that are revealed by insurers precisely at the moment they most need coverage. They desperately want assurance that they will have certain access to quality care, regardless of their employment situation. They want health care to be affordable as their flat or declining wages make them increasingly less able to absorb more co-payments, deductibles, and other out-of pocket costs. They would like to be able to choose their own doctors, now impossible under many health plans. In short, they want health care as an inalienable right of all Americans.

THE OBAMA PLAN

Obama’s plan tries to address these concerns through a model of “guaranteed affordable choice” adapted from the work of Prof. Jacob Hacker of  UC-Berkeley.  The Obama version of the plan presents Americans with three choices: “keeping the insurance you have,” signing up for new competing private insurance plans created through National Health Insurance Exchanges that form new pools of enrollees, or enrolling in a new Medicare-style plan. The new health insurance plans are intended to hold down cost increases by existing insurers.

 

The GAC plan calls for initially limiting the individual mandate to purchase insurance to children, and then extending it to adults once costs are reduced through such measures as information technology and better management of chronic diseases such as diabetes and high blood pressure. The Obama plan also suggests regulations insisting that insurers devote an overwhelming share of their income to the provision of care. Obama’s proposal pointedly calls for an end to the widely-hated practice of insurers disqualifying people because of “pre-existing conditions.” Two leading forces in the health insurance industry—the 1,300-member Health Insurance Alliance of America and Blue Cross/Blue Shield—have stated that they would accede to the elimination of pre-existing conditions in exchange for a requirement that all Americans be covered by an insurance policy.

 

 

Obama’s call for reducing health care premiums through the spread of information technology and enhanced management of chronic diseases such as diabetes and high blood pressure are perceived by health specialists as desirable for improving the quality of health care, but few see them as likely to generate the significant savings needed to substantially fund the health plan. Obama has estimated that his new plan will require about $100 billion to get off the ground, but disease management sometimes proves to be costly and the expanded use of information technology has not yet yielded clear-cut savings.

 

 

DEMOCRATIC LEADERSHIP ON HEALTH

In Congress, the development of the Obama plan will include such key players as Sen. Ted Kennedy (D-Mass.), chair of the Committee on Health, Education, Labor, and Pensions, Max Baucus (D-Montana), chair of the Senate Finance, and HHS Secretary-nominee Tom Daschle. Unfortunately, initial indications are not very encouraging. Kennedy, although approaching sainthood in the hearts of many liberals and progressives as he simultaneously battles cancer and wages a fight for health care reform, is reportedly leaning heavily on the dismal Massachusetts state plan signed into law by Mitt Romney. The Massachusetts plan imposes an individual mandate to purchase insurance, and subsidies stop at about the $29,400 income level for a family. The plan has failed entirely to cover substantial numbers of the uninsured, while leaving single working mothers with the choice of paying some $4,200 in insurance carrying a sizable $2,000 deductible, or incurring a hefty fine.

 

Baucus, now working on his own health plan, gained lasting notoriety among Democratic colleagues over passage of the drug lobbyists-drafted Medicare Part D bill when he and Sen. John Breaux—who was later rewarded with a $2 million job as director of the drug industry’s main lobbying group—were selected by the Republicans as the Democrats with whom they wished to negotiate provisions of the bill.  The resulting bill infamously banned the US government from negotiating fair drug prices with the major pharmaceutical corporations, leaving Americans forced to pay nearly twice as much for their pharmaceuticals as do their Canadian neighbors to the north.

 

While promising that “nothing would be off the table” in weighing reform possibilities, Baucus recently held a Senate Finance Committee hearing that excluded any advocates of single-payer health care, He also recently declared, "We are Americans; we’re different from Canada, we’re different from the United Kingdom." Presumably, Baucus was referring not to the American "difference" in terms of the much poorer health outcomes at vastly higher costs in US, but to the uniquely dominant role that for-profit entities occupy in the American system.

 

There is reportedly a strong likelihood that the Kennedy and Baucus plans will be merged, although neither office responded to inquiries on this point.

 

Health and Human Services Secretary-nominee and Obama’s designated health-reform pointman Tom Daschle is far better liked and trusted than “Bad Max” Baucus. But Daschle’s perspective on the health care system tends reflects the perspective of a former political consultant for large corporations, the position he took after his narrow 2002 defeat. Daschle’s also co-authored a book on health reform and is widely regarded as a skillful leader and deeply knowledgeable on health care. But in a 5/14/08 interview with American Prospect, Daschle issued a call to “streamline the tremendous bureaucracy”—referring not to private insurers with about 31% in administration and other overhead but to the federal Daschle blithely asked, “And I would ask the question, if you think our banking system today is reasonably regulated, why not try the same model for our health-care system?government where Medicare has 3% administrative costs. Even more stunningly,” Daschle’s comment reflects both his support for an unaccountable Federal Reserve-style board to administer health care and a preference for a relatively minimal level of regulating powerful private interests, an approach which exploded on Wall Street in September.

 

The rest of the Senate majority—apart from progressives like Russ Feingold of Wisconsin, Barbara Boxer of California, Bernie Sanders (of Vermont Independent, Sherrod Brown of Ohio, and a handful of others—has hardly been alert or principled on health-care issues. For example, even with their slight majority advantage last session, the Democrats lacked the will to repeal the costly 13% bonus that the Medicare Advantage program gives to private insurers while simultaneously undermining Medicare. However, the Democrats maintained both internal discipline and an uncharacteristic thematic unity in the battle for adequately funding the S-CHIPs health program for children, perhaps a sign that they learned some lessons from the 1993-94 debacle.

 

GRASS-ROOTS ACTIVISM:

At the grass-roots level, it appears that the Obama plan will have a far more advanced and enthused infrastructure of organizations carrying out local and national auctions than did the Bill and Hillary Clinton effort of 1993-94, when labor and progressives were still reeling from wounds inflicted by Clinton’s ramming through of the regressive NAFTA trade deal. Health Care for America Now, a vast coalition of 30 national groups, including the AFL-CIO, SEIU, La Raza, US Action, and other consumer, health, and labor groups has already taken shape. HCAN promises to promote  “a bold new solution that gives you real Health Care for America Now choice and a guarantee of quality coverage you can afford: keep your current private insurance plan, pick a new private insurance plan, or join a public health insurance plan.”

 

However, HCAN has gotten off to a rocky start with reform allies promoting a single-payer system because of HCAN’s insistence that Americans prefer keeping private insurance in any reform plan, which single-payer supporters perceive as counter-productively reinforcing the myth of private insurers’ popularity. HCAN contends that polling and focus groups conducted for its predecessor, the Herndon Alliance, show that the GAC plan is more popular than the single-payer plan, with the “keep the insurance you like” feature resonating particularly well. However, the Herndon Alliance/HCAN finding seems to directly conflict with to a CBS poll conducted September 2007 found that 55 percent preferred “having one health insurance program covering all Americans that would be administered by the government and paid for by taxpayers,” compared with 29 percent who chose “keeping the current system where many people get their insurance from private employers and some have no insurance.”

 

Moreover, economist Robert Kuttner, in his recent book Obama’s Challenge thoroughly demolishes the credibility of the focus groups and polls conducted by the Herndon Group. While embracing the “more robust” plan originally advanced by Hacker as a valuable transitional step toward a single-payer plan, Kuttner describes himself as “appalled” by the manner in which the Herndon Group’s “pollsters put a subtle thumb on the scale in the way they worded the descriptions of various approaches that were read to focus groups.”

 

HCAN did not respond to Dissent’s request for a response.

INSURERS REPLACE AMA AS STATUS QUO DEFENDERS

The continued plummeting of the economy in the final stage of George W. Bush’s reign has only widened and consolidated the belief that large-scale government intervention was imperative to stimulate the economy and create massive numbers of jobs. At the last such similar during the Great Depression, the American Medical association’s fierce opposition forced Franklin Delano Roosevelt to drop health care in his landmark Social Security Bill for fear of the entire package being defeated.

 

But now, in sharp contrast to 1935, the AMA is a shadow of its former self as doctors have gravitated to specialist organizations. Doctors are no longer the primary barrier to health reform as when they blocked Roosevelt from promoting health care reform as part of the New Deal and when the AMA mobilized a grass-roots campaign to trounce Harry Truman’s reform proposal in the late 1940’s, blasting it as “socialized medicine.” In fact, the medical profession has gone through a stunning change in perspective because of the intrusive and costly bureaucracy imposed b y private insurers. An Indiana University poll, released April 2008, showed that no less than 59% of US doctors now favor a “single-payer” health care system like those in Canada, Taiwan, and other nations, where for-profit insurers have been replaced by a public entity paying medical claims and negotiating rates.

 

However, private insurers have taken the AMA’s place as the most potent barrier to fundamental reform, and this immensely complicates Obama’s reform agenda. First, the health-insurance industry has virtually bottomless lobbying resources and a rich trove of campaign contributions to influence politicians of both parties, making the passage of any meaningful reform without their approval extremely difficult. As a gesture of compromise, the Health Insurance Association of America and Blue Cross/Blue Shield agreed to permanently drop the use of “propr conditions” to disqualify applicants, along with other reforms, in exchange for a mandate for all Americans to purchase insurance.

But a vexing set of fundamental problems will surely come attached to accepting the central but highly inefficient and intrusive role of for-profit insurers in the US system. As Obama himself stated, “If I were designing a system from scratch, I would probably go ahead with a single-payer system.”  Given the private insurers clout, this design would have considerable public support: a 2005 Business Week poll found that "67 percent of all Americans think it’s a good idea to guarantee healthcare for all U.S. citizens, as Canada and Britain do, with just 27 percent dissenting." Very similar results were found in AP-Yahoo and NY Times/CBS polls in 2007, and an Oct. 2003 survey by the Washington Post and ABC News.

However, Obama and his team, along with many reformers, have concluded that private insurance must remain at the heart of even a reformed system given what are considered “political realities.” But building around—rather than uprooting the for-profit insurer—may carry another set of risks. These items include:

·       Potentially reduced political support for reform that falls short of “maximum strength” change, with the imposition of often-unaffordable “individual mandates” to purchase insurance. While Obama currently would defer a mandate for adults until premiums are brought under control, such mandates will eventually be necessary to make Obama’s plan work.  As economist Robert Kuttner puts it, "Universal social insurance signals government help. A mandate signals government coercion." Thus, Obama’s plan can easily be portrayed by its opponents as the imposition of an expensive new cost rather than the extension of a desperately-sought social right.

·       The Guaranteed Affordable Choice plan would not assure patients the free choice of doctors if they remain with a private insurer who limits their option. A free choice of insurers is far less salient to most Americans than a free choice of doctors.

·       An inability to effectively restrain costs that will inevitably compromise any system’s ability to sustain the promise of universal care. As Dr. Marcia Angell of Harvard Medical School states, the goals of universal coverage and cost controls are inextricably linked: "Though well-intentioned, plans like these [Massachusetts and California] all have the same fatal flaw. They offer no workable mechanism to control costs, mainly because they leave the private insurance industry in place. Yet, soaring costs are the fundamental problem; lack of coverage follows from that." Similarly, economist Dean Baker declares, "Basically, anyone who is not serious about controlling health-care costs is not serious about providing universal coverage. It’s that simple." 

·       The continued swallowing of the increasingly burdensome excess administrative costs imposed by the for-profit insurers that could provide the funding for universal care.  

·       The potential for for-profit insurers to use highly sophisticated marketing techniques to attract younger, healthier patients and employ denials and delays in treatments to older or sicker patients. This could result in the Medicare-style public plan becoming a “dumping ground” for costlier patients, thereby driving up costs for the program. However, it is also clear that many reformers will be working to make the public program an embryonic form of single payer system, so this is sure to be a central arena for conflict.

PAYING FOR REFORM

Obama has proposed modest tax increases for employers and workers in cases where the employer does not presently offer coverage. He would also extend subsidies—estimated at about $100 billion in the first year—to those unable to afford insurance on their own. In the context of enormous fiscal demands on the US Treasury at a moment of declining tax revenues tied to dramatically slower economic activity, the prospect of reducing the enormous administrative waste generated by 1,500 separate insurers gains a new urgency. According to Harvard’s Dr. Woolhandler, about 50% to 60% of these administrative costs are drawn from public dollars. Thus, administrative savings generated by a single-payer option could provide the funding needed for a universal health plan and prevent health care from being ensnarled in a rivalry with other imminent priorities like a public-works job program and clean energy efforts.

 

The compelling need to rid the US system of such unnecessary administrative costs gained additional weight as Obama felt pressured by the recession to defer the rollback of Bush tax cuts for those earning over $250,000. Until the Wall Street crash, Obama had been counting on the repeal of those cuts for the richest 1% to supply much of the funding for his health care plan. At the same time, Obama has made it clear that vast expenditures for the bailouts and for public-works programs will not lead him to defer action on health care reform, whose urgency has only been heightened by the severe economic downturn. “It’s not something that we can put off because of the [financial] emergency,” Obama declared Dec. 12. “This is part of the emergency.”

 

In response to media questions about launching an expensive health program at a time of mounting deficits and shriveling revenues, “I ask a different question,” Obama explained. “How can we afford not to?”  At some point the confluence of urgent budgetary priorities may become overwhelming, and Obama could be forced to seriously consider a single-payer plan simply in order to make up the needed funding.

 

THE OPPOSITION

 

Any substantive health reform plan is certain to face filibuster threats in the Senate, where the vast majority of Republicans are hard-line conservatives from the South who view universal health care both as a dire political  threat to their party’s future and potentially harmful to dependable sources of campaign funding in the health insurance, pharmaceutical for-profit hospital industries. The pharmaceutical corporations, with legions of lobbyists and plentiful campaign contributions, will align closely with insurers, with Big Pharma chiefly fearing that reform would bring government-negotiated prices.

 

With the Republicans’ ranks slashed to 42 by the 2008 election, the tiny surviving handful of GOP moderates  ( e.g.,Olympia Snowe and Susan Collins of Maine, and George Voinovich of economically-devastated Ohio, could will feel intense pressure to break ranks and yield the two votes needed to end a Republican filibuster.

 

 

But the hard-Right majority of Republicans in the Senate appears destined to wage an all-out war against any plan proposed by Obama, following a presidential campaign where John McCain and running-mate Sarah Palin invoked the specter of “socialized medicine” against the Democrat’s health proposal. (The “socialized medicine” charge proved to be a foam-rubber sword wielded against the Obama plan, as Harvard Prof. Robert Blendon’s polling showed that a majority of Americans actually felt favorable towards the supposedly terror-inducing concept.) Tellingly, Senate Republicans in December’s lame-duck session brazenly dismissed the dire warning of Vice Dick Cheney labor, that rejection of the Big 3 bailout would permanently cement the Republicans’ identity as the party of Herbert Hoover.

 

The Republicans appear ready to follow the game plan offered during the Clinton health care fight by neoconservative writer William Kristol, who highlighted the Clinton plan as “a serious political threat to the Republican Party.” While also offering pro forma criticisms of the Clinton plan’s content, Kristol stressed the vital importance of denying the Democrats the chance to enact an historic benefit to middle-class Americans, akin to Social Security and the post-World War II GI Bill. Passage of the Clinton health plan, Kristol thundered, would “relegitimize middle-class dependence for ‘security’ on government spending and regulation,” and thereby “revive the reputation of …the Democrats…as the generous protector of middle-class interests.”  Republican leaders responded to Kristol’s message by repudiating all reform initiatives and even engaging in “reverse lobbying,” with GOP congressmen pressuring business groups to terminate any support for reform, as Theda Skocpol recounts in Boomerang.

 

Now grudgingly forced to concede the need for reform, the majority of Republicans in 2009 will be promoting “market-based,” “consumer-driven” proposals along the lines of McCain’s campaign plan. But few Americans seem drawn to the further marketization of health care, as exemplified by Rudy Giuliani’s comparison of health to the market for plasma TVs.

 

WHICH WAY CORPORATE AMERICA?

Many reformers are persuaded that American business has largely abandoned its decades-old opposition to universal health care, having recognized that the burden of health care costs renders them uncompetitive with foreign firms enjoying low-cost health care. For example, reformers like Service Employees International Union President Andy Stern hailed the support of high-profile powerhouses like Wal-Mart CEO Lee Scott and the US Chamber of Commerce to support some form of national health care by 2012.

"Healthcare reform is very much linked to the broader economic issues that the country is facing," Todd Stottlemyer, president of the National Federation of Independent Business told the LA Times (11/18/08) "Our view is that there is the energy now to make this a top priority."
“Fifteen years ago, the federation, which represents about 300,000 small businesses, helped fight the Clinton administration’s proposed healthcare overhaul. Today, it is one of the leading champions of broad-based reform.”

Indeed, some corporate leaders are finally recognizing that health care reform is vital, at long last casting off the "free-market" blinders that kept them on a path toward potential economic suicide. "The people of the United States cannot effectively compete unless their government reorganizes our disastrously inefficient healthcare system that takes 15 percent of our GDP, compared with 10 percent in France and 8 percent in Japan, and provides less longevity, greater infant mortality, and generally less health than that of any other developed nation," warns Jeff Faux in The Global Class War

But Corporate America has been extremely successful in shifting the burden of ever-rising health premiums to American workers who lack significant leverage, calling into question the commitment of businesses to Obama’s reform plan, argues political scientist Marie Gottschalk of the University of Pennsylvania. Prof. Gottschalk points out that rather than suffering pinched profits, employers have succeeded in forcing their workers to absorb skyrocketing insurance premiums. “Spending on health care measured as percentage of after-tax corporate profits has declined steadily from 1986 to 2004, except during the 1998-2001 period [due in part to an overall drop in corporate profits hit by the dot-com and high-technology sectors in that period],” Gottschalk notes.  

At the same time, some major sectors of US business have abandoned their former roles as leading “corporate citizens” of the US and instead pursued what might be called a “secessionist” strategy where they have increasingly shifted production and other vital corporate functions outside the US, significantly reducing their stake in the fate of the US health care system.   Even America’s leading cheerleader for “outsourcing” US jobs to low-wage nations, NY Times columnist Thomas Friedman, now openly worries, "When I look around for the group that has both the power and interest in seeing America remain globally focused and competitive— America’s business leaders—they seem to be missing in action."  As Friedman admits, outsourcing has detached many CEOs from their historic self-interest in a well-trained and healthy U.S. workforce: "In today’s flatter world, many key U.S. companies now make most of their products abroad and can increasingly recruit the best talent in the world without ever hiring another American."

This secession from U.S. workers and communities by many American-based transnationals carries staggering implications, as Faux explains: "The CEOs and principal owners of corporations who have disconnected, or are in the process of disconnecting, their fate from America’s have no interest in paying more taxes to make the society they are abandoning more competitive."  Thus, the success of cost-shifting and the attractiveness of the secessionist approach suggest that the  business community is by no means united in feeling that passage of health reform is a critical priority, and are by no means a reliable ally of reform forces.

Nonetheless, the overall situation is in many ways propitious for health care reform: a committed president, Democratic majorities in both houses, and a public angered by corporate bailouts and feeling reciprocally entitled to government assistance aimed at ordinary citizens, all occurring against a stark backdrop of rapid economic decline and uncertainty.

But Obama’s plan as now outlined lacks effective, credible cost controls imperative to a universal system that will not be subject to erosion due to constant premium increases nor drained and distorted by the costly and insurance bureaucracy. As Robert Kuttner stresses, “the assumption that as single comprehensive system is out of the question puts America on a path that would combine nominal universal coverage with deterioration in what is actually covered, plus acceleration of cost-shifting to individuals.”




Leave a comment