Health Care

The Conundrums in Health Care Reform

The political furor over health care reform, and especially the media coverage, may be triggered by right-wing agitprop; but the cynical distortions – death panels! – fed by hard Republican partisans are not responsible for eroding public support. Health care reform will always be a tough sale. Three-quarters of Americans believe we need serious reform; yet two-thirds of those who voted in 2008 have insurance and say they’re satisfied with it. If the President is going to win this fight, he and his people have to unravel this conundrum – and economic logic can help.

People have plenty of complaints about their health care. They don’t like the waits they face to see their doctors, they really don’t like paying the world’s highest insurance premiums and co-payments, and they’re not insensitive to the plight of 50 million uninsured -- and the possibility they someday might join them. Yet most of us are deeply risk-adverse about real changes in these arrangements, and the reasons are as basic as they get: We naturally place infinite value on recovering from some terrible, future illness or injury, and so far the current arrangements have kept most of us and our children alive and even reasonably well. So, if the critics’ outlandish claims contain even a small kernel of truth, many of us can (and will) imagine that under the right circumstances, it could cost us the care we might desperately need.

There’s another, equally powerful factor at work here. Health care places most people in the uncomfortable position that economists call “radical information asymmetry,” which means that one party knows much more than the other about something important to both. We feel sick but we don’t know what’s causing it or what to do about it – so we go to a doctor or hospital staffed with people who do have the precious knowledge and skills necessary to make us well again. This genuine sense of ignorance about a matter of potentially life and death importance greatly intensifies our risk adverseness about changing the arrangements under which those all-knowing doctors and hospitals now take care of us. And since we all know that some illness or injury will eventually threaten or end our lives, it’s not a hypothetical concern.

This information asymmetry complicates health care reform in other ways. We can’t shop for the best medical deal or make independent judgments about whether we need one procedure or two, so we have to depend on doctors we know, who have obvious incentives to “sell” us as many expensive services as their Hippocratic oath allows. That’s why proposals to end the tax deductibility of employer-provided insurance probably wouldn’t much affect rising costs: Even with greater incentives to shop for less expensive care, we still lack the knowledge to make intelligent choices.

The policy conundrum for the President is that unless he can reform these arrangements, the pressures that have been driving up health care costs for decades will end up denying care for many more of us. But there’s little reason for most people to support cutting health-care costs, since people know that cutting costs in most areas usually means getting less – and in this case, getting less could cost them their health.

That’s why the action has been shifting from health care reform to insurance reform, by which Washington means new guarantees that insurers must maintain coverage for any serious condition any of us might face, and set premiums without reference to people’s current or past health. Most insurers are willing to go along, so long as Washington also requires all of us to buy their coverage. But their caveat presents another political obstacle ripe for demagoguery, since somebody would have to pay for the subsidies that tens of millions of us will need to afford that coverage.

Insurance reform may be the only change that almost everyone would welcome. But it also will increase costs further, which will eat away at coverage. Moreover, it does nothing about the major forces most responsible for driving up costs – the inexorable aging of the boomers, and the proliferation of new, very costly medical technologies to treat the common conditions that mostly befall older people, especially cancers and heart disease.

It’s obvious by now that there just aren’t any easy answers. The “public option” would probably force insurers to squeeze more efficiencies out of the ways they conduct their business, as could private, non-profit insurance cooperatives. But those efficiency savings would be one-shot deals that can only give us a few years of breathing room – like the shifts to HMOs and PPOs did in the 1990s – before the same problems reemerge.

As to the larger forces, we can’t do anything about the aging of the population, and the only way to control the costs of new technologies is to limit people’s access to them or slow down their advances. And no one is prepared to suggest that, since we all can imagine someday needing a recent breakthrough to preserve our health.

There is another option: Accept that we place unlimited value on gold-plated health care and be prepared to pay for it. Eventually, that will drive us to new, broad-based taxes to finance gold-plated care for everybody. Since that’s not a topic which our politics can handle today, it looks like we all should prepare ourselves for many more years of debates over health care reform.

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The Generational Health Care Debate

Note: a version of this essay ran in today's Roll Call. You can see it here.

Millennials, young Americans under 28, provided President Barack Obama most of his popular vote margin over John Mc Cain in 2008. Now their belief in the need to involve the federal government in comprehensive health care reform may become the President's most powerful argument in persuading Congress to deliver on that campaign promise this year. But to do so the President will have to overcome some serious differences between members of older generations in both parties, and in both houses of Congress, on just how accomplish that task.

The Senate is almost equally divided between members of the Silent Generation, born between 1925 and 1945 and Baby Boomers born between 1946 and 1964. Recent elections have raised the percentage of Boomers in the lower house to almost three fourths of all members.Of course, partisan allegiance and local politics play an important role in determining a legislator's voting decisions. But the differing perspectives of these two "leadership generations" have already influenced each house's approach to the policy debates on a number of issues so far this year and are likely to do so again on health care this summer.

Democrats in the House of Representatives, for all of their ideological posturing, are actually led by members of the Silent generation, including Speaker Nancy Pelosi (1940), Majority Leader Steny Hoyer (1939), Democratic Whip James Clyburn (1940), Dean of the House John Dingell (1926), and committee chairmen such as John Conyers (1929), Pete Stark (1931), Ike Skelton (1931), Charles Rangel (1932), John Murtha (1932), James Oberstar (1934), Dave Obey (1938), Henry Waxman (1939) and Norm Dicks (1940). The parents of the "adaptive" Silent Generation protected, some would say smothered, members of this generation during the traumatic childhood events of their youth-the Great Depression and World War II. As a result members of the Silent generation are often risk averse as adults and tend to prefer the of bi-partisan compromises that John McCain, a Silent born in 1936, talked about so often during his campaign.

By contrast, almost all of the House Republican leadership is from the Baby Boomer Generation. Boomers are the latest incarnation of what William Strauss and Neil Howe, the originators of generational theory, call an "idealist" generation. Members of this generational archetype tend to believe deeply in their own personal values and seek to use the political process to implement their personal ideological convictions for the whole nation to follow. Because the Boomer generation has been divided about equally between the two ideological poles and parties(half of them voted for Obama, half for McCain in 2008), America has experienced political gridlock for the past four decades.

Boomers have spent a lifetime rebelling against the Silent Generation's belief in institutional allegiance and compromise and will find themselves once again having to accommodate the older generation's sensibilities if they actually want to pass legislation such as health care reform. Democratic Boomers will need to find common cause with the Silents in their party, while Republican Boomers are likely to emphasize their ideological differences from their Democratic counterparts. Republican Boomers will want to demonstrate their ideological commitment to lower taxes and a less active federal government. Moderate Democrats from the Blue Dog and New Democratic caucuses, who share some of these concerns with Republicans, are likely to be more willing to compromise on these issues with their Silent Generation leaders than liberal Boomers might want or be willing to.

In the Federalist Papers, James Madison said that the Senate would be a "necessary fence" against the "fickleness and passion" of members of the House of Representatives. Either George Washington or Thomas Jefferson was reputed to have called the Senate a "saucer" designed to "cool" House legislation. Whether the Senate was meant to be a fence or a saucer, in this Congress it often operates as a generational bulwark against the increasingly hot passions and partisan bulldogs who serve in the U.S. House of Representatives.

The Senate has already played this role during this session of Congress. In the debate on the President's Recovery Act, Silent Generation Senate leaders forced the House to accommodate some of the demands of the Senate's most moderate members. During the course of that debate, House Democrats were able to prevail in the name of party unity on their Senate counterparts to accept a "recission rule" in the budget resolution that would allow Democrats, if they so chose, to ignore the Republican minority and pass health care reform with only 51 votes. But even after that agreement, Silent generation Montana Senator Max Baucus (1941) has been determined to find a bi-partisan bill that his Republican counterpart and Silent, Charles Grassley (1933), can support. Meanwhile, Senator Chris Dodd (1944), thrust into the health care debate due to the illness of Senator Edward Kennedy, has played the very typical role of those born on the cusp between both generations--seeking to find a solution that leans more to his ideological beliefs, but one which still contains an element of compromise for the other side.

But how this inter-generational interplay between the two houses and the two parties will actually play out in the health care debate will depend on how much President Obama uses his instinctive knowledge of what Millennials want to convince the Congress to get something done. Born in 1961, on the cusp between the Baby Boomers and Generation X, the President's generational style is hard to pin down. Liberal Boomers appreciate his idealism and commitment to economic equality.On the other hand, like many Gen Xers, Obama has sought to distance himself from the divisive, ideological debates of the recent Boomer past. At the same time, Obama's political behavior does not square with the harsh and cynical approach of clear-cut Gen Xers like Sarah Palin. Whether it's because of his unique upbringing in Indonesia and Hawaii, removed from the debilitating debates of the 1960s; or whether it's because his chief speechwriter is a precocious Millennial; or because of his intellectual tendency to search for consensus, President Obama's political style consistently seems to capture the very traits that his loyal Millennial supporters most admire.

Millennials are not interested in letting ideological posturing stand in the way of "getting stuff done," as Obama likes to say, especially in an area as crucial as health care. Like the members of other generations, virtually all Millennials (90%) believe that it is time that health care is made more accessible and affordable for all Americans. However, only a third of Millennials, in contrast to about half of those in older generations, are concerned about the impact of greater governmental involvement in the health care system (36% vs. 47%). And, Millennials are far less likely than older generations to prefer once again deferring health care reform to avoid higher taxes or larger deficits.

The fundamental question that members of Congress from each generation, and each party, will need to answer during this summer's health care debate is just how much they want to accomplish as opposed to scoring political points or pursuing ideological agendas. It's a classic question to which members of the Silent Generation are likely to respond with offers of compromise, even while Boomers on both sides of the aisle insist on what they consider to be non-negotiable principles. For Millennials, however, the answer is clear--reform the nation's health care system now as the next step in delivering on the kind of "change we can believe in" that their leader, Barack Obama, promised and now asks Congress to deliver.

The Courage, Cunning and Shortcomings of the Administration’s Health Care Plans

The Administration’s new health care initiative has the distinctive “yes, but” quality of the Obama banking and housing plans: The focus is correct -- here, address sharply rising health care costs before moving on to guarantee universal coverage -- even as the details fall short and the proposed execution remains up in the air.

Let’s start by recognizing the political courage and cunning involved in the way the White House is framing the issue. Facing growing unease about forecasts of years of stupendously and dangerously large budget deficits, the President has faced up to the prime driver of those deficits: It’s two programs vital to his core support -- Medicare for retirees and Medicaid for lower-income Americans. He did so certainly knowing full well that most liberal parts of his political base see universal insurance as the number one priority.

The cunning lies not in a naïve delusion that measures to slow the pace of health care cost increases from a gallop to a brisk trot will attract bipartisan support. It is sadly evident that the Republican strategy for the party’s short-term revival pivots on the President’s failing, and GOP leaders will not countenance support for Administration measures whose passage voters will greet as notable achievements.

Rather, the President’s cunning lies in his apparent, long-term strategic view. First, he appears to know that the economic recovery on which his larger agenda probably depends could hit the rocks in a year or two, unless he can bring down the long stream of huge, expected deficits. His only option here is to slow health care cost increases, starting with the public programs whose costs he can influence most directly. He also seems aware of the danger from certain other forces that could make his presidency look a lot like George W. Bush’s. For example, he may recognize, as we have argued for several years, that slowing cost increases for employer-provided health care coverage is vital to relieving financial pressures on businesses which, under Bush, drove down wages even as productivity rose. And unless President Obama and his team can figure out how to contain those costs, the end of his second term, like Mr. Bush’s, could also see the insolvency of a vital American institution -- in this case, Medicare and Medicaid. And like Bear Stearns and Lehman Brothers, Medicare’s insolvency would trigger cascading effects across the country and the economy, and about which he could do little in the time he would have left.

The best way to avoid such a string of setbacks and an ignominious end is to recognize and address the problem -- so unlike Bush -- before it becomes a crisis.

The potential social and political benefits go far beyond avoiding Bush’s sorry fate. Most important, any realistic prospect for financing universal coverage depends on getting those costs under control. Otherwise, President Obama will likely find his Administration caught in the same vise that has immobilized health-care reformers for two decades, pressed between the social imperative to cover everyone and understandable resistance to paying for it from the majority of voters who are already covered. On the current path of medical cost increases, the taxpayers’ tab to pay for universal coverage would rise by five to seven percent every year, with damaging effects for other programs that the President would have to pare back to protect the new achievement.

Then comes the sticky matter of actually slowing down those increases. Earlier this week, the White House presented a roster of medical and insurance organizations who pledged together to support $2 trillion in cost reductions over the next decade. The main strategy is to attack “overuse and underuse” of health care. But it doesn’t include many details about how to do it. The administration’s program to computerize health care records over the next five years makes sense here, to help avoid wasteful or needlessly dangerous treatments. The hurdles will be very high, however, to actually putting in place a workable system covering tens of thousands of hospitals, clinics and doctors’ practices across the country.

The stimulus also includes $1 billion for prevention and wellness programs to improve diets, encourage exercise, reduce smoking and drinking, and detect cancers and other conditions early. Various studies have shown that some community-based intervention programs in these areas achieve very high returns, especially those aimed at young people. An analysis of several community-based programs to promote physical exercise, better nutrition and stop smoking, for example, found long-term reductions in diabetes, high blood pressure, heart and kidney disease, with a financial payoff of $5.60 in savings for every $1 invested. Large, long-term savings also were reported in a Michigan program that provides continuing education to prevent, recognize and treat athletic injuries, as well as a number of local programs that counsel low-income, first-time mothers on how best to care for their infants. But there also are many other programs that save little or nothing; and it could prove very difficult for Washington to identify and responsibly scale up those that work best.

The other large, promising approach, touted for several years by this writer and, of late, by OMB Director Peter Orszag, involves developing and applying data about what medical treatments work best, or work as well at less cost. The Dartmouth Atlas study of 2008, for example, found that the costs of treating older people for nine serious conditions, with the same outcomes in each group across five leading medical centers, varied by 30 percent to 45 percent based on where it was done. We could develop much more information in this area, identify those “best practices,” and mandate their use by health care facilities that accept federal money (which is almost all of them).

So the Administration’s health care focus, goals and priorities are right in the ways that matter. Now they need to provide a more detailed blueprint of how they intend to reach those goals and achieve those priorities.

The Economic Logic in President Obama’s Speech to Congress

President Barack Obama's superb address Tuesday night had an underlying, unifying logic which some may have missed, but which hopefully those reading this will recognize.  

First, on the financial and economic crisis, he embraced the three basic steps we have urged since last September: on top of a stimulus aimed at long-term investments and helping the states – that’s now done – there will be new requirements that banks getting help from taxpayers use that assistance to expand their lending, and new steps to keep people in their homes and bring down foreclosure rates. It’s just economic common sense – but that’s precisely what most of official Washington casually casts aside in favor of scoring short-term, political points. (Take a look at Gov. Bobby Jindal’s empty and sneering response to the President’s speech. His repeated citing of Katrina as a model for government action, by itself, should be a career-ending act).

The President also laid out a domestic agenda for the rest of his first term, and it looks like the most sweeping since FDR and LBJ. I suppose that personal blogs, by definition, are no place for humility, so here it is straight. The three cornerstone Obama initiatives -- slow down our fast-rising health care costs, expand energy conservation and our use of alternative fuels, and give everybody new chances to upgrade their working skills -- are the exact prescription laid out more than a year ago in my book, Futurecast: How Superpowers, Populations and Globalization Will Change the Way You Live and Work. It’s also been a regular theme of this blog and a series of papers issued by NDN.  

Here, too, it’s just economic common sense, for a world being transformed by globalization.  The underlying logic of the President’s program springs from the fierce new challenges Americans face under globalization to their jobs and incomes. Globalization has made competition much stronger, and that competition leaves American businesses and their workers in a bind. Their costs have been rising very fast, especially for health care and energy, but intense global competition makes it harder for companies to raise their prices to cover these rising costs. The result is that the wages of most American stopped rising since about 2002, even as they became more productive. And most can’t find higher wages by getting new jobs, because before the current crisis began, the same forces had made this period the weakest for job creation since World War II.

The President understands that coming out of the current crisis isn’t enough, if we just return to another period of growth without wage gains or healthy job creation. He also understands another theme of Futurecast and NDN's work, namely that about half of Americans also need new skills if they aspire to jobs with a real future. That’s the basis for the third plank of the domestic agenda he laid out last night -- genuine, new access for young people to go to college or receive other, post-secondary training, and new opportunities for everyone else to upgrade their skills

President Obama’s first speech to Congress already ranks as the most serious and thoughtful presidential address on the economy in decades. Perhaps it took an historic crisis to break through the political cant and mental laziness that has gripped our economic agenda for so long. But the President is using this moment to put forward not only meaningful answers for the crisis, but serious, long-term remedies for much deeper economic problems which other politicians routinely ignore. That’s presidential leadership of the sort we haven’t seen since, well, FDR.

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Joe Garcia v. Mario Diaz Balart on "Al Punto"

Yesterday on "Al Punto", Univision's Sunday morning political show, challenger Joe Garcia (D) and incumbent Mario Diaz-Balart (R), had an animated debate on issues ranging from the economic rescue package and Iraq, to Cuba policy and the Colombia FTA. Both are running for the seat in the U.S. House of Representatives representing Florida's 25th district, which encompasses the western portion of Miami-Dade County, including the Everglades National Park. This heated race is a perfect example of what's happening throughout the U.S. - as the country becomes less hard-line Republican or Democrat, more and more "stronghold" districts and states shift into "tossup" territory. Southern Florida, previously considered a solid Cuban-American and Republican area, is changing due to changes in demographics and largely in response to the way the economic crisis has affected this state in particular. Joe Garcia painted Diaz-Balart's vote against the first economic rescue bill as "too little too late" after having had a history of voting with President Bush on all the bills that led to this current economic downturn, siding with "special interests". And Mario Diaz-Balart attempted to paint Joe was a well-versed man with no specific solutions...sound familiar? Yes, much like the Presidential race. On the issues:

On the economy: Mario voted against the rescue bill because he didn't want to give the banks a "blank check", to which Joe responded that he already had - voting to give banks the blank checks through deregulation and by allowing bills to pass that increased credit card interest rates up to 29%. Joe pointed out that while the rescue bill needed safeguards to keep people in their homes, the danger lay in doing nothing, and that he would have voted for the bill to take action to save people in this crisis.

On healthcare: Mario is against nationalized healthcare and proposed to leave insurance decisions in the hands of individuals. His proposal would be to allow for inter-state competition of health care plans. Joe on the other hand, supports Sen. Obama's plan to create a national system of health care. Unlike Mr. Diaz-Balart, Mr. Garcia pointed out the lack of health care in the Hispanic community in particular, and the importance of lowering costs and increasing competition.

On Cuba: Both candidates are firmly against participating in any diplomatic meeting with the Castro brothers, however, Mr. Garcia is for lifting the travel ban on families, and decreasing the restrictions on remittances to Cuba. Mr. Diaz-Balart is firmly against holding talks or contact with Cuba and against fully lifting the travel ban.

On Colombia: Both candidates are for the passage of the FTA. Mr. Diaz Balart noted that President Uribe has been incredibly successful at decreasing the murders of labor leaders and improving security in the country.

What One Hand Giveth...

Traditionally, Republicans have headed their campaigns with talk about taxes.  Democrats, they say, will raise your taxes, so vote for us. The McCain campaign hasn't been any different.  What is different this time around is that Barack Obama's tax plan is dramatically better for middle-income families. Accordingly, Obama's been hitting back.

His latest ad, "Taketh," lays the truth on thick. While John McCain's rhetoric about "tax credits for health care" may sound good, Obama points out the fine print: McCain's plan will levy a tax on employee health benefits for the first time ever.

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