Healthcare - Thoughts on Improvement

As I asked yesterday, what is the end goal of "reforming" the healthcare system in this country? I still haven't heard a good answer to that question, but I read an interesting article by David Frum in the Atlantic yesterday, entitled "How Republicans Can Fix American Health Care."

While he discusses a lot of things associated with the Medicaid expansion, for the purpose of this post, I'm only going to discuss market reforms. I'm not going to debate whether it is a good idea to expand the social safety net (which I believe it is a good idea, but I also respect the undeniable fact that opinions differ as to this).

For those who are unfamiliar with Mr. Frum, he was a speechwriter for George W. Bush and the author of the regrettable phrase "Axis of Evil." Notwithstanding several flaws of his, he is a thoughtful conservative who has productive contributions to our debates, I believe. A few excerpts from his Atlantic article:

It’s generally reckoned that half the people who gained coverage under the Affordable Care Act did so via Medicaid expansion. The Republican ACA alternative would undo that expansion. Unlike the many regulatory changes Republicans had in mind, such a stripping away of an existing benefit is easy to understand—and a natural target for political payback. No surprise then that the senators flinched.

Well, we will see if they continue to flinch, but OK.

In that third week in March in 2010, America committed itself for the first time to the principle of universal (or near universal) health-care coverage. That principle has had seven years to work its way into American life and into the public sense of right and wrong. It’s not yet unanimously accepted. But it’s accepted by enough voters—and especially by enough Republican voters—to render impossible the seven-year Republican vision of removing that coverage from those who have gained it under the Affordable Care Act. Paul Ryan still upholds the right of Americans to “choose” to go uninsured if they cannot afford to pay the cost of their insurance on their own. His country no longer agrees.

As I've asked before, if I forego a necessary medical treatment because I cannot afford it, is that a triumph of the free market or a human tragedy? I suppose, as the lawyers like to say, "it depends." Anyway, continuing:

The Republican health care plan has been derided as a tax cut plan masquerading as a health plan. The rest of the plan is a mess, it is argued, because Republicans’ highest priority is to lighten the ACA’s tax load on upper-income earners.

This is a refreshingly frank assessment of the modern Republican party. Its priority is to "lighten the . . . tax load on upper-income earners." I suppose we're all entitled to our priorities, but doesn't it seem rather strange that approximately 51% or more of the federal government is dedicated to a proposition that only materially benefits roughly 2% of the population? Perhaps that is why many people don't listen to much from Republicans: because over and over again, these "proposals" have been nothing more than tax cuts for the wealthy paid for with either (a) cuts to the social safety net, or (b) debt that we pass along to our children. Anyway, I'm ranting. Let's see what else Mr. Frum states:

That statement of the problem also points the way to some solutions.

If Republicans are most offended by the way the ACA is paid for, then instead of repealing the whole ACA, they should concentrate their energy on changing its financing. 

If we agree that the goal is to provide universal health care, and we're only arguing about how to pay for it, then I'm listening. I do doubt, however, that federal Republicans much care to provide universal healthcare, given their positions and proposals. However, if we are going to discuss how to finance universal healthcare, I have no loyalty to the present way we do so.

The surtaxes on rich are pitifully inadequate to the job of financing the ACA’s expansion of health coverage. 

Excellent point! I notice that Republicans' insistent refusal to ever raise taxes for any reason has given liberals a too-easy out when proposing their utopian schemes: "we'll just pay for them with taxes on the wealthy." Because Republicans always block taxes on the wealthy, the public rarely sees that this is inadequate to pay for what liberals advocate and the public seems to want. But, if the surtaxes on the rich that are in Obamacare are insufficient to pay for the services it provides, where does the money derive?

That comparatively small revenue stream forces the architects of the ACA to pay for their ambitions in other ways. The most important of those ways is the invisible internal redistribution within the ACA, from young to old and from middle-income to lower income. Healthy young people in the individual market pay much higher premiums than they would have to on a pure risk-adjusted basis. Their excess premiums contribute to reducing the premiums paid by people in their 50s and 60s. Likewise, the ACA offers generous subsidies to lower-income people, but steeply fades them out for workers in the $40 to $50,000 range, who are not poor but who cannot easily afford insurance at market prices either.

Hmmm. Interesting. I can sympathize with this. My family's health insurance premiums, as I've made known, are rather oppressive. To the degree that someone in my position was getting beaten up with rising and inflationary taxes in 1978, today we're getting beaten up with rising and inflationary health insurance premiums, co-pays, etc. But, let's talk about how we pay for subsidies for those who buy their insurance on the market:

The ACA needs a replacement funding stream that yields more revenue and that taxes more broadly. This was the deal that Republicans should have demanded in 2009-2010. It will be harder to achieve today (because with ACA an accomplished fact Republicans now have less to trade), but it still should be their goal. One way to achieve that more difficult goal is to propose funding streams that are not only larger than the surtaxes on high incomes, but that Democrats and liberals will find even more attractive. I’ve long urged a carbon tax as a way to fund health-care expansion. President Trump’s abrupt and unconsidered call for a federal internet sales tax raises another possibility. The U.S. has entered a revolution in retailing that threatens literally millions of jobs. The continuing de facto subsidy to online shopping looks even less justifiable now than ever. Why not a federal tax set to some averaging of state sales taxes on physical stores? Such a tax would raise far more than $35 billion and would equalize the playing field between retailers in a way that helpfully slows the creative destruction of retailing jobs.

Interesting.

At the same time, Republicans should also welcome higher excise taxes on choices that raise healthcare costs: on alcohol, on processed sweeteners, on marijuana where it is legal. (My own wish, and I recognize how impossible this is, would be to tax bullets as well, but that too radically challenges present political dogmas.)

I am certainly listening now, however my skepticism remains as to whether federal Republicans actually want to stabilize the health insurance market and enable people to buy insurance thereon. Part of me honestly believes that they really don't care and just want to cut taxes. However, I will not allege bad faith against them and I will try to take them at their word that they actually want to improve healthcare for the majority of people in this country.

Of course, in addition to how we pay for healthcare, it is also important to address how much we pay for healthcare. Regrettably, again, I have not seen any cost-controlling measures in either GOP "plan" presently on offer other than "free market, something, something, something, lower prices."

The future of health-care cost-cutting in America is top-down cost-cutting, not bottom-up. It’s the providers who will have to be squeezed, not the consumers. 

If healthcare policy is driven by a desire for providers to make money, this will never happen. It does remain to be seen how it will shake out.

To hazard a generalization, America over-invests in medicine, but under-invests in public health. No country on earth does a better job of saving premature and underweight babies than the United States. Few developed countries do a worse job of ensuring that pregnancies come to a full and healthy term. 

Agreed.

 It’s precisely the party less beholden to the medical-industrial complex that is better positioned to act as America's rational health cheapskates.

Also agreed. Which party this is remains to be seen, but as of right now, it looks like both parties are rather beholden to the medical-industrial complex.

As the health-care industry becomes ever more closely tied to the public sector, the GOP—as the party of the private sector—should accept the responsibility to become the party of skepticism about the claims and perquisites of that industry. If the GOP is to be the party of seniors, it cannot also be the party that rationalizes every price demand of the pharmaceutical sector.

Well said. Mr. Frum does have to end on a big "however," though:

A future in which health-care anxieties trouble Americans less will be a future more open to arguments on behalf of entrepreneurship and free enterprise. Economic risk-taking will become more attractive, not less. 

Stated another way, there is no magical tipping point beyond which the country slips irrevocably into socialism, notwithstanding the hysterical screeching of Hannity, Limbaugh, et al.

It may not be a coincidence that the Republican drought in presidential voting since 1988 has coincided with the years of most intense national debate over whether all should have health insurance. It’s very possible—and I personally think likely—that Republican chances at the presidency will improve once a vote for the GOP ceases to be a vote against health coverage for all.

I can't really argue with that. It's hard to vote for someone who promises to make health care more expensive for me.