Is the House Health Care Bill Better than Nothing?

Well, the House health reform bill -- known to Republicans as the
Government Takeover -- finally passed after one of Congress's longer,
less enlightening debates. Two stalwarts of the single-payer movement
split their votes; John Conyers voted for it; Dennis Kucinich against.
Kucinich was right.

Conservative rhetoric notwithstanding, the House bill is not a
"government takeover." I wish it were. Instead, it enshrines and
subsidizes the "takeover" by the investor-owned insurance industry that
occurred after the failure of the Clinton reform effort in 1994. To be
sure, the bill has a few good provisions (expansion of Medicaid, for
example), but they are marginal. It also provides for some regulation
of the industry (no denial of coverage because of pre-existing
conditions, for example), but since it doesn't regulate premiums, the
industry can respond to any regulation that threatens its profits by
simply raising its rates. The bill also does very little to curb the
perverse incentives that lead doctors to over-treat the well-insured.
And quite apart from its content, the bill is so complicated and
convoluted that it would take a staggering apparatus to administer it
and try to enforce its regulations.

What does the insurance industry get out of it? Tens of millions of
new customers, courtesy of the mandate and taxpayer subsidies. And not
just any kind of customer, but the youngest, healthiest customers --
those least likely to use their insurance. The bill permits insurers to
charge twice as much for older people as for younger ones. So older
under-65's will be more likely to go without insurance, even if they
have to pay fines. That's OK with the industry, since these would be
among their sickest customers. (Shouldn't age be considered a
pre-existing condition?)

Insurers also won't have to cover those younger people most likely
to get sick, because they will tend to use the public option (which is
not an "option" at all, but a program projected to cover only 6 million
uninsured Americans). So instead of the public option providing
competition for the insurance industry, as originally envisioned, it's
been turned into a dumping ground for a small number of people whom
private insurers would rather not have to cover anyway.

If a similar bill emerges from the Senate and the reconciliation process, and is ultimately passed, what will happen?

First, health costs will continue to skyrocket, even faster than
they are now, as taxpayer dollars are pumped into the private sector.
The response of payers -- government and employers -- will be to shrink
benefits and increase deductibles and co-payments. Yes, more people
will have insurance, but it will cover less and less, and be more
expensive to use.

But, you say, the Congressional Budget Office has said the House
bill will be a little better than budget-neutral over ten years. That
may be, although the assumptions are arguable. Note, though, that the
CBO is not concerned with total health costs, only with costs to the
government. And it is particularly concerned with Medicare, the biggest
contributor to federal deficits. The House bill would take money out of
Medicare, and divert it to the private sector and, to some extent, to
Medicaid. The remaining costs of the legislation would be paid for by
taxes on the wealthy. But although the bill might pay for itself, it
does nothing to solve the problem of runaway inflation in the system as
a whole. It's a shell game in which money is moved from one part of our
fragmented system to another.

Here is my program for real reform:

Recommendation #1: Drop the Medicare eligibility age from 65
to 55. This should be an expansion of traditional Medicare, not a new
program. Gradually, over several years, drop the age decade by decade,
until everyone is covered by Medicare. Costs: Obviously, this
would increase Medicare costs, but it would help decrease costs to the
health system as a whole, because Medicare is so much more efficient
(overhead of about 3% vs. 20% for private insurance). And it's a better
program, because it ensures that everyone has access to a uniform
package of benefits.

Recommendation #2: Increase Medicare fees for primary care
doctors and reduce them for procedure-oriented specialists. Specialists
such as cardiologists and gastroenterologists are now excessively
rewarded for doing tests and procedures, many of which, in the opinion
of experts, are not medically indicated. Not surprisingly, we have too
many specialists, and they perform too many tests and procedures. Costs:
This would greatly reduce costs to Medicare, and the reform would
almost certainly be adopted throughout the wider health system.

Recommendation #3: Medicare should monitor doctors' practice
patterns for evidence of excess, and gradually reduce fees of doctors
who habitually order significantly more tests and procedures than the
average for the specialty. Costs: Again, this would greatly reduce costs, and probably be widely adopted.

Recommendation #4: Provide generous subsidies to medical
students entering primary care, with higher subsidies for those who
practice in underserved areas of the country for at least two years. Costs:
This initial, rather modest investment in ending our shortage of
primary care doctors would have long-term benefits, in terms of both
costs and quality of care.

Recommendation #5: Repeal the provision of the Medicare drug
benefit that prohibits Medicare from negotiating with drug companies
for lower prices. (The House bill calls for this.) That prohibition has
been a bonanza for the pharmaceutical industry. For negotiations to be
meaningful, there must be a list (formulary) of drugs deemed
cost-effective. This is how the Veterans Affairs System obtains some of
the lowest drug prices of any insurer in the country. Costs: If
Medicare paid the same prices as the Veterans Affairs System, its
expenditures on brand-name drugs would be a small fraction of what they
are now.

Is the House bill better than nothing? I don't think so. It simply
throws more money into a dysfunctional and unsustainable system, with
only a few improvements at the edges, and it augments the central role
of the investor-owned insurance industry. The danger is that as costs
continue to rise and coverage becomes less comprehensive, people will
conclude that we've tried health reform and it didn't work. But the
real problem will be that we didn't really try it. I would rather see
us do nothing now, and have a better chance of trying again later and
then doing it right.