Government, Courts, and the World of Work

With all of the major health care reform proposals now on the table and President Obama having now weighed in, a consensus seems to have emerged on about 90% of the outstanding issues.  However, the continuing disagreement on the remaining 10% may ironically increase costs and make matters worse, at least for the foreseeable future.

Its clear that there is basic agreement on consumer protection.   If enacted, it is likely that the law will provide a basic benefits package that will cover prevention and wellness, which many employers already offer.  Carriers will not be able to discriminate based on a pre-existing condition and will not be able to cancel policies when people get sick.  Out of pocket expenses will be capped and life time limits will be eliminated.  And for the first time, nearly every American will be required to have health insurance.

An insurance exchange will be created, thus creating a pool of consumers who are expected to leverage the group buying power.  Private carriers will sell within the exchange, which will be regulated either statewide or nationally.  It is likely that some modest form of “public” or nonprofit option will be available but limited to people who can not obtain insurance through an employer, Medicare or Medicaid.  Small business may have this option available to them as well, capped at about 5% of the overall consumer market.

People who cannot afford to buy insurance will receive a subsidy. Employers who do not offer insurance to their employees will contribute to the subsidy either directly or indirectly, with exemptions for small business.  

There is wide disagreement on how to fund the subsidies but a mixed bag of taxes will probably be approved.  Debt-spending is certain.  More importantly, however, there is little agreement on how to control health care inflation.

While universal coverage will increase demand for health care, there is no agreement on how to rationally allocate health care resources.   Government regulation of how providers get paid, and for what services, has raised the emotional issue of rationing, even though Medicare already does that.  Others say giving the insurance industry this power is no better - although that’s how HMOs already operate. 

Americans are ambivalent.  Most are covered under an employer plan.  Employers shop for the  coverage, negotiate the insurance and offer it to employees on a take-it-or-leave-it basis.  The employer subsidizes the premium 80% on average.  The employee contribution is often unnoticed through incremental deductions from a paycheck.  At the point of service, the employee pays about 10 cents for every dollar of health care that is consumed.  This, ironically, is socialized medicine and Americans understandably love it. The illusion is that employer-sponsored health care can be consumed as virtually a free resource with little or no incentive to maintain heathly lifestyles or to consume wisely.

Similarly, Medicare and Medicaid are single-payer, government health care programs.  Understandably, people love these programs too, particularly Medicare, even though tens of billions of dollars are spent on over treatment every year.  The illusion here is that as a public entitlement, health care is virtually inexhaustable.

In short, at least on some level, most Americans believe that health care is a basic public entitlement, like “free” public education, and that limitations imposed either by government or corporations is unfair, illegitimate, or both.

The consensus reform, therefore, increases and expands the health care entitlement through universal coverage but has only a modest impact on cost control, primarily through pilot programs, because there is no agreement on what additional role, if any, government or the insurance industry should play in allocating the supply of health care.  

Because this fundamental political and philosophical issue apparently cannot be resolved at this time,  it is almost certain that the nation will be in the throes of another heated debate about escalating health care costs, inflation, business and personal bankruptcies, and stagnating wages a decade from now, maybe sooner.  A more imminent crisis is certain to realign interests, with the added irony that the players may have changed places by then.  It’s conceivable that the folks who are decrying big government now may be the ones begging for a government bailout then, and that the folks who are calling for unlimited universal coverage now will be the ones calling for entitlement reform.

The greater irony may be that a decade from now, it could be the Republican party afterall that will actually complete the nationalization of  health care.Â

This entry was posted on Friday, September 11th, 2009 at 2:28 pm and is filed under Legislation. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.