Wednesday, October 21, 2009

Showing Signs of Ill Health

In terms of US health care reform, the Obama administration keeps warning about the dangers of "letting the perfect become the enemy of the good" and not doing anything. But, the Economist reminds us, there is such a thing as squandering a good opportunity by half-assing it.

I've avoided posting on this topic because I live in Canada and am quite happy with my health care. It is, however, on my mind. My father is the hardest-working man I know and the cost of his insurance is bleeding him dry. Maine is dominated by two insurers, neither of whom are particularly enthusiastic about insuring lobstermen, who have an off-season and do dangerous work in insalubrious conditions. As a result, the cheapest insurance he can get costs over $500 per month, which is a lot for a working man and small business owner, and makes it impossible for him to do things like grow his business, hire part time help, or save for retirement. His hope is that his premiums will not go up again before he is old enough to get social security. It's not much of a surprise though that around 30% of the state is uninsured.

The main problem is that premiums have risen faster than the rate of inflation. In the last decade, the average health insurance premium in the US has gone up by about 138%: more than doubled. Next year, even without any government tinkering, premiums are expected to go up by about 10%. One would imagine that, ten years from now, the poorer states would have a considerably larger chunk uninsured than they do now, but states like Alaska already have about 1/3rd of the population without health care. That was the national rate when Canada decided to scrap private insurance altogether. When the general population in the US reaches that point, I would guess the public will start clamoring for a single-payer plan like we have in Canada. So far, the insurance companies have not healed themselves, and it's seemingly not in their interest to do so. Perhaps it would be better for liberals to leave the system alone to self-destruct on its own.

I can't entirely explain the rising costs, although again, I would imagine it's not much different from rising tuition costs in universities- just having insurance footing the bill inflates the price unnaturally. One potential fix would be to charge insured people to pay out of pocket for things like stitches, ear drops, set bones, and similar minor medical care. One could guess that getting a cast for a broken leg would not cost $4,000 or so if people actually paid out of pocket, and haggled over the bill. This suggestion has been made, usually by people talking about "catastrophic insurance". Nobody in the government is taking it seriously.

The problem of rising health insurance costs is serious and real, in spite of the groups, like Dick Armey's Freedomworks, that send me mailings insisting "we" resist all attempts to reform the system. I don't consider a society that cannot even address its own problems to be healthy, and I don't consider the alternative to be de facto socialism. I suppose I'm in the minority.

But, one can see how doing a half-assed job could make things a lot worse. The argument people make for half-assing it is that doing so gets the ball rolling and further tweaks can be made later. The argument against it is that, when your party controls the federal government, you don't need to half-ass it. The Economist is clearer than I can be on this point:
A "braver president could have demanded far more. The worst flaw in the Finance Committee’s bill is its failure to address the way that providers of health care are paid. Most payments to doctors and hospitals are made on a “fee-for-service” basis—which means that, unconstrained either by medical necessity or value for money, the industry’s revenues rise with every test it does, procedure it carries out and prescription it writes. Yes, the bill provides funds for research into electronic record-keeping, comparative effectiveness research and other good things. But it should mandate these practices, not just encourage study of them. None of the five different bills that have been passed by various House and Senate committees and are now on the way to being melded into a single compromise version includes anything like the sort of root-and-branch overhaul that would see health care paid for by results.
Nor do any of the bills do anything much to tackle the other big distortion in health-provision—tax exemption for employer-provided private health-insurance. By subsidising the health plans of those lucky enough to have them, this encourages over-consumption and amounts to a distorting taxpayer-funded subsidy for the well-off. The latest bill merely sets a very high cap (of $8,000 per person, or $21,000 for a family) on this exemption, and the House of Representatives will try to water down even this feeble effort at the behest of the unions whose members enjoy some of the most lavish policies. It may also dilute the administration’s only really good proposal, for a committee of experts empowered to order changes to the way Medicare payments are made. Finally, the bills make no attempt to address the matter of greedy lawyers forcing doctors to practise expensive “defensive medicine” for fear of being sued to kingdom come."
I think that about covers it. I would also like to see an end to one more unnatural distortion: not being able to carry your insurance across state lines or sell it across state lines.

The Economist realizes that the problems are real, serious, and if left unchecked will threaten social stability in the United States. Working people like my father can't move, quit their jobs, or develop their own businesses without fear of losing their health insurance. The arguments for resisting all reform out of hand basically amount to ideology over pragmatism.

Actually, the ideology/pragmatism divide might get us at the differences between American conservatives and conservatism everywhere else. Because, ultimately, the Economist is a conservative newspaper, in the British sense. But it takes about three messages in response to this article before an American conservative accuses them of being "SOCIALISTS", simply for recognizing the need for root and branch reforms (instead of the mushy hole-plugging being proposed) to the health care system in America. The problem is that real, pragmatic reforms would piss off both liberals and conservatives; so instead, we get ideology over pragmatism. Again.

It's not exactly ideology either- it's pandering to ideology. With Obama, you get something worse than doing nothing because he's too much of a coward to upset the ideologues. Instead, he wants to split the difference- throwing out genuine reforms if the Democrats would think them too "right wing", or if the Republicans would think them too "socialist"- instead, we get a few band-aid reforms that fix nothing while giving the illusion of fixing things. The approach is called "post-partisan", but it's more like whimpering, "please, don't hit me".

Meanwhile, the GOP has seemingly jumped the shark, and the US sure could use a lot more Tories; or just anyone who will push for necessary social evolution balanced by fiscal conservatism with the end goal of social stability. It's amazing how rarely Americans even talk about social stablity. As a history geek, I am a strong believer in social stability because the alternative is so much worse than people ever imagine. Social collapse is ugly, destructive, and violent; and it's always a real possibility with this species. It is also worse than making a few reforms that remind you of socialism. I simply fail to see how a country that cannot act to resolve issues like a growing uninsured population, an alarming unemployment rate, a collapsed industrial base, ecological devastation, and a remarkable disparity between the rich and the poor will continue to endure as a functioning democracy. The inability to respond dynamically to new problems is more characteristic of empires in decline.

In general, I am not an advocate of sweeping overhauls of social institutions, but instead believe that incremental changes prevent "the people" from tipping over cars in the streets. In this case, however, the idea that any changes whatsoever amount to a threat to the character of the nation is reactionary and delusional, and should be ignored. Moreover, the people who are in power right now- the Democrats, although I know it's hard to remember- have promised the populace that they will make root-and-branch reforms to improve the system. If they, instead, fix a few spare parts and send the machine running off down the road to break down again, it will be further proof that neither the government nor industry in America can respond dynamically to solve problems, and it will further rend the social fabric.

Moreover, if the Democrats half-ass it and drop the ball, at a moment in which they have all the power and the opposition party has become somewhat irrelevant, it will amount to a betrayal of people like my father, who are hoping against hope that the system will be improved. If American industry continues failing to respond to incoming problems or to plan for the long term- and they have failed, triumphantly!- and the American government simply cannot respond to real problems in any dynamic way... well, at some point, there really won't be much reason to take the country seriously as a going concern.

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