Against the health care bill, and why...
I've gone back and fourth in my support for the health care reform going through Congress right now, but I'm now pretty firmly in opposition.
I will say though that I think that in many ways the reform legislation will bring about some modest improvements over the current situation, but I don't think that the reforms going through Congress are going to lead to significant long term improvements, and these reforms will likely make meaningful improvements in the future even more difficult.
I think that the basic approaches taken by both the House and Senate are just fundamentally wrong. Indeed I think that the guiding principles laid out by President Obama were fundamentally wrong.
When President Obama laid the foundation for reform he said that one of the key factors guiding reform should be building on the existing framework that exists in America, which means building on the employer based health insurance system.
I viewed that as a mistake right off the bat.
One of the primary goals of reform should have been elimination of the employer provided insurance system. Elimination of the employer based insurance system would have garnered significant support from businesses and employees, and could have laid the groundwork for the adoption of a single payer system in a way that would have been clearly understood as providing a benefit to a large number of people. Everyone, whether they have insurance or not, knows that not having your insurance tied to your employer would be better than having it tied to you employer. Everyone knows that employers not having to hassle with insurance is better for employers.
But here is the key issue. The legislation coming from Congress is most fundamentally off track in that it more tightly integrates the private insurance industry with government. The result of this legislation is going to be to make us more dependent on private insurers, to increase the revenues of the private insurers, and to more tightly integrate private insurers into the fabric of Washington. All of that means that its going to make any meaningful reform in the future more difficult, and that is the most fundamental reason to be opposed to this legislation.
By requiring employers to provide insurance this legislation makes the system more reliant on employer provided insurance.
By requiring everyone to buy insurance from a private insurance company this legislation makes private insurance companies more powerful, despite the regulations put on them.
By not including a meaningful government run competitor to private insurers the most powerful cost control mechanism is surrendered.
By focusing on "competition" and "markets" the legislation only makes standardization and streamlining more difficult.
By heavily regulating private insurers instead of providing public alternatives the private insurers become more tightly integrated into the fabric of government.
The legislation does call for steps to be taken to streamline processes and to standardize forms and payment methods, etc., but on the other hand focuses on increasing competition in the insurance industry, which means encouraging more different carriers to exist in a market which just makes standardization and streamlining more difficult.
I find it ironic that the Republicans have made so much noise over this legislation, because really this could just as easily be a Republican bill. The fundamentals of the bill are reliance on "markets" and the private insurance industry.
The reality is that the profit margins in the insurance industry aren't huge. They run roughly 2.5%-3%. So even if we eliminated all profits and nothing else changed, it wouldn't bring costs down that much, and fundamentally, using competition as the driving force of cost reduction can primarily only affect profits. Higher competition theoretically leads to lower profits margins, but attacking the profit margins isn't going to get much.
The bigger gains are to be made in the areas of system wide streamlining, efficiency gains, and behavioral changes, and these types of gains are best made through the use of government run and/or single payer systems.
My view of the on issue is basically this: In areas of an economy where systematic integration is minor or relatively unimportant, competition and diversity in the market place are good things. However, in areas of the economy where systematic integration is heavy and critical, monopoly systems are superior.
In fact, computing is a perfect example. The reality is that Microsoft established a virtual monopoly in the personal computing and business computing markets, especially in America. Lots of people complained about this, including myself, for a variety of reasons, but the truth is that the rapid and relatively smooth adoption of computing in America from the 1980s to today was only possible because of Microsoft's virtual monopoly.
The fact that everyone was using the same operating system, the same core productivity software, etc., made computing more successful. Monopolies inherently make standardization easier for obvious reasons. What if there had been 20 different operating systems each with about 5% to 10% of market share, and there had been 20 or 30 different widely used word processes and spreadsheet applications, etc. each with their own proprietary file formats, unable to open each-others files, (actually there were for a brief period until Microsoft consolidated the market) etc.
That would be a nightmare of inefficiency. What the health care reform bills do is they remove the anti-trust loopholes for the insurance industry and they keep the state-line rules in place, thereby seeking to encourage the development of dozens or even hundreds of new insurance companies.
Instead of trying to preserve or promote "competition" in the insurance markets to drive down profits, they should be encouraging consolidation to improve standardization, and of course the ultimate consolidation is single-payer.
And there were a few little things that really annoyed me as well, for example the methods of paying for the bills. Neither bill, in my opinion, did a good job of paying for itself. I do agree with the cuts to Medicare, that program has to be financially shored up, and this was a good opportunity to do it. The bills do some of it, but of course not entirely. The tax on indoor tanning was a good idea, but it seems highly out of place since its the only such tax in the Senate bill.
These bills were the perfect opportunity to put in "vice taxes", on things like"junk food", e.g. on sodas, candy, certain condiments, and things like Twinkies, etc. That way the bills would have made more sense, by attacking the health care issues on multiple fronts, both the causes of health problems (everyone agrees that our nation's obesity is a leading cause of our higher costs) and the problems with delivery. They should have put in a provision to identify foods and other products (cigarettes etc.) that are unhealthy and to tax them as a means of paying for the health care system. I would even be in favor of taxes on lifestyle products and services that are identified as particularly likely to cause harm or be unhealthy, such as stake boards, skydiving, etc. and I do many such activities, but I would rather see taxes applied there as long as they are modest (10% or less) because it makes sense to tax the things that are the causes of increased health care costs in order to pay for health care reform and services, and it involves choices, such that if people's behaviors do change, then the taxes collected would go down in relation to the reduced need for services, instead of taxing things that have no direct relationship to the need for services.
The regulations implemented under the bill will all have a cost to them, but since all insurers will be bound by these same regulations, implementing them won't really hurt the bottom line of the insurance companies, they will just pass the costs on to consumers in the form of higher premiums and fees. And this is where the compromise weakened cost control aspects of the bill really come into play.
Some of the benefits of the bill are the following:
Access to Affordable Coverage for the Uninsured with Pre-existing Conditions
Free Prevention Benefits
No Arbitrary Limits on Coverage
Protection from Rescissions of Existing Coverage
Prohibits Discrimination Based on Salary
Clear Summaries, Without the Fine Print
Yes these are all good things, but they all have a price. Without some external force all insurers will just raise prices in order to pay for these benefits.
The reality is that the profit margins of the insurance industry simply aren't the area where meaningful cost savings are going to come from. It was a mistake to make the legislation so focused on attacking the profit margins of the insurance industry, it was a mistake to increase our reliance on the employer based insurance system, it was a mistake to not fundamentally direct the health care delivery system away from a profit driven model.
In every country where they have been successful at providing both universal and lower cost health care, they have done so by removing profit motive from the delivery system. Nothing in the Senate bill even moves in that direction, and the House bill only does so with the weakest of steps.
The health care problems in this country, especially as they relate to cost, are never going to be solved until the issue of profit motive in the system is addressed. These bills don't address it, and indeed they do some things that will increase the role of profit motive in decision making and in the future design of the health care system, and it is for those reasons that, despite a few good individual items in the bills, I am ultimately opposed to them.