Patient Centric Health Care Reform

Where Is Health Care Reform Going?

Conflict over health care reform, between Republicans and Democrats, and within the Democratic Party itself, make it less likely that an effective program will be enacted in the near future.

 

In addition, the proposals being considered and that have engendered the fighting, all fail in terms of what might be deemed the most important aspect of reform- getting escalating costs under control. While universal coverage is an important goal, runaway spending on health care is a major threat to the American economy with a potentially disastrous impact if it is not quickly addressed. Whether there is a public option for health insurance or an “insurance cooperative” to provide coverage, does not matter if serious cost constraints are not included as part of any legislation.

 

The Republicans have not offered any realistic ideas to date to control escalating costs. Thus far, the Democrats have offered pie in the sky, saying that electronic health records and preventive care will produce significant savings. (Though they may improve care, potential savings are far in the future.) Use of a Medicare Advisory Board to cull major savings from Medicare and Medicaid (MedPAC) is also not an answer, as it would likely have to cut flesh rather than fat from these programs in order to deliver the sums that are needed. Taxing the wealthy to find enough money to fund reform is not a course many politicians are eager to embrace.

 

There is however, a fiscally responsible way to shape health care reform; a path that would not require any new government spending or increase in taxes, and that would not add to the budget deficit or national debt. Though this may sound impossible, an appropriate program could be implemented if Congress were willing to take on the health care system’s stakeholders, particularly the insurance industry, organized medicine and the trial lawyers. This would likely entail bloody, hand-to-hand combat, or worse, which is why politicians have been reluctant to go this route.

 

Administrative costs are estimated to consume 15% to 25% of health care spending- $500 billion at 20%. The Congressional Budget Office projected unnecessary medical care at about 30% of health care expenditures, or up to $830 billion. Even if these figures are off by 10% or 15%, there is a huge amount of money within the health care system that can be harvested to fund universal coverage and a reform program. It will take strong grass roots pressure and political courage from Washington legislators to enact a plan that antagonizes the stakeholders by reducing their payout, but it is the fiscally responsible way to go. Our children and grandchildren would benefit greatly from this course of action.

   

Ideology Over Consequences

Legislation cannot be developed and enacted rationally when some of the people’s representatives don’t understand or don’t care about the consequences of their actions. This dilemma was evident in the recent drawn-out contentious attempt by Congress to raise the debt ceiling. The right-wing Republicans willing to let America default on its debt obligations unless they got their way, refused to heed the warnings of mainstream economists, Wall Street and the bond rating agencies about how default would impact the nation. If reducing the budget deficits and national debt were the primary objectives of the Tea Party movement, default would have actually made this more difficult to achieve, as it would have resulted in increased government spending.
The reasons are clear and the thinking straightforward. America currently pays its creditors about $250 billion yearly on the $14 trillion of short and long term government debt. A default would have caused a downgrade in the U.S. credit rating which is now at the strongest level and considered virtually risk-free AAA, to AA or possibly even lower. The interest rates that the government would have had to pay to fund its debt would have risen as a result of this, an increase in the yearly costs to the federal government of at least $100 billion.
In addition, borrowing costs for state and municipal governments would have gone up with a downgrade in US debt, delaying or cutting various projects, reducing services and forcing these entities to lay off more workers. Private companies would have also had to pay more to borrow money, driving them to halt expansion and funding of new programs, with dismissal of employees and freezing of hiring. Consumers would have also been faced with higher interest rates on mortgages, credit card debt and consumer loans, reducing their spending and impacting the economy. This would all have meant an increase in unemployment, a drop in the GDP and a return to recession. There would also have been less taxes collected so government revenue would have dropped, further increasing budget deficits and the national debt. And with more people unemployed, government would have had to pay out more in benefits.
Thus because of the rightwing unwillingness to compromise on the debt ceiling, government spending would have risen significantly, contrary to their expressed objectives. And the overall economy would have been damaged even further.
At this point, it is possible that a lowering of the nation’s credit rating may occur even without a default, because of the problems this time in raising the debt ceiling and the uncertainty this has engendered about the future. Good going guys.

Political Gridlock and a Centrist Third Party

The columnist and author Tom Friedman and I have many similar opinions about the American political system. In a recent OpEd column in the New York Times titled “100 Days,”

Friedman noted- “maybe it’s just my friends, but I find more and more people completely disgusted by [the current situation in Washington] and looking for a serious Third Party candidate who could run in 2012 and deliver the shock therapy to the corrupt, encrusted two party duopoly now running the show in American.”

Friedman is right on the money, and I mean on the money. His suggestions coincide with the arguments in my new book, Resurrecting Democracy. While Friedman issues the call to arms, we also need a strategy. Resurrecting Democracy describes how to form this new party, expand its membership and heighten its power in order to advance the nation’s interests. It also specifies the obstacles that would have to be overcome to bring its vision to fruition.

Friedman’s article recounts the crisis that currently exists in Washington. Our most pressing problems include unemployment, the budget deficits and rising national debt. But the Republicans and Democrats have been unable to craft viable solutions. The government’s borrowing power must be increased in order to fund the debt before America defaults in early August. Yet the two parties are unwilling to compromise to get it done. Hopefully, a last minute effort will be successful.

Officeholders attempt to keep their bases happy by making promises that are impossible to fulfill. And they refuse to ask their constituents to undergo any pain or sacrifice even though the nation’s economic path is unsustainable. Friedman asserts that Congress today devotes its energy to fund-raising virtually full time, while legislating sporadically. The president is able to get things done mainly during first 100 days of his term. Afterwards, he focuses on campaigning instead of addressing contentious issues that are of critical importance to the country.

According to Friedman, America needs to spend, cut, tax and invest all at once in order to stop the nation’s decline. However, the Republicans and Democrats can not come together to pass the necessary legislation. This is because of their ideological constraints that won’t permit a pragmatic approach to problems.

In order to break the political logjam that now exists, Friedman believes a third party is required, as do I. To bring about significant change in Washington, this party would not even have to win in 2012. Its platform could force the Republicans and Democrats to alter their own platforms and agendas. Otherwise, they would face the possibility of more and more voters defecting from them in subsequent elections.

The Republicans only want to cut spending and will not consider any measures that raise revenues. The Democrats want to minimize spending cuts and address the deficit with increased taxes on the wealthy and corporations. However, both of these strategies are needed to bring the deficits and national debt under control. At the same time, it is also important to confront unemployment and lagging economic growth. This could be accomplished with a short term stimulus package which might tackle the nation’s crumbling infrastructure and bring us up to a competitive level with Europe and Japan. And this stimulus could also fund improvement in America’s educational system to allow our young people to compete in today’s global economy.

 A third party of the center would reject ideological fixes for the nation’s problems. It would not see compromise as a dirty word and would use common sense to devise answers to the crises at hand. The party could quickly gain popular support by the use of the Internet and social media. Money could be raised as well in this fashion. This would free party members from pressure by the lobbyists and special interests when generating legislation. The new party would be able to rapidly mount a challenge to the two established parties and their entrenched practices and ideologies. It would drive them to move from the right or the left towards the center, and to act in ways that benefit America instead of their own parochial interests. While a third party will have to contend with powerful opponents working to make it still born, it is these same adversaries who are responsible for the political paralysis in Washington. Many American voters realize this and with the available new technology, the votes and dollars will be there to support a pragmatic centrist answer. In fact, my new book, Resurrecting Democracy- A Citizen’s Call for a Centrist Third Party, provides a recipe for how to get this new party off the ground and make it a player in Washington. The political stew envisioned will be tasty for America’s citizens, but may be too hot for partisan Republicans and Democrats.

Health Care Reform and Fiscal Responsibility

Health Care Reform and Fiscal Responsibility

    Robert A. Levine, MD

    Federal spending will outstrip revenues this year by $1.7 trillion according to the Congressional Budget Office, the result of programs to combat the nation’s economic morass, including the stimulus package, the bank bailouts, rescue of the automakers and other actions. This is the largest deficit since World War II and represents about 12% of America’s GDP. The national debt will hit $12 trillion this year and continue to rise, with interest payments alone costing $565 billion. Estimates of the cumulative federal budget deficits for the next decade run between $4 and $10 trillion. With a wave of anxiety about heightened federal spending rippling across the nation, this would appear to be an inopportune moment to propose further expenditures for health care reform. Indeed, opponents of the major reform initiatives, including stakeholders in the system and free market advocates, have stoked this unease, emphasizing the adverse effects a trillion or more extra dollars for health care might have on the nation’s long term financial stability. And scare tactics used to sway the public and legislators against tampering with the health care system warn about “socialized medicine” and government control of medicine, about disruption of doctor-patient relationships and the inability of patients to get timely care. The repetition of these unsettling predictions reinforces people’s natural aversion to change, favoring a continuation of the status quo.

    What these adversaries to reform have neglected to mention is that the current system is inordinately costly and doesn’t work; that health care spending now consumes 17% of America’s economic output and is still climbing; that the unfunded liabilities of Medicare and Medicaid (obligations of the federal government and the taxpayers) are estimated to be in the trillions to tens of trillions of dollars; that over 60% of personal bankruptcies are due to medical debts; that the legacy costs of America’s businesses (mainly health care obligations) make them less competitive and contributed to the downfall of U.S. automakers; that Medicare’s hospital trust fund is projected to go broke in 2016; that continued unfettered health care spending will lead to disastrous economic consequences. And that in spite of all the money spent, America does worse than virtually every other developed nation on outcome measures (such as life expectancy and infant mortality).

     There is no question that major changes to the health care system are required. It is also well known (but unmentioned) in Washington that reform with universal coverage could be realized without any additional spending by the federal government, businesses or individuals, and without any tax increases, if legislators were willing to take on the stakeholders and free-market proponents. (This would also curtail runaway costs.) Unfortunately, the modifications needed to accomplish these goals have not been included in the proposals so far being considered. The Senate and House committee members who are involved have been focusing on measures they believe are politically attainable, not those that will best solve the existing problems and guarantee future viability for the health care system. In fact, the plans being entertained will undoubtedly require major revisions at some point down the line. (It has been rumored that the president and Democratic leaders are so driven to have health care reform enacted, they would be willing to settle for a flawed program.) The debates by legislators over how to pay for reform and whether to have a public plan competing with the private insurance companies fail to adequately consider cost constraints and overlook a source of funding that is right before their eyes; the health care system itself.

    A position paper by the Congressional Budget Office last year noted that approximately 30% of health care spending, about $700 billion, was consumed by unnecessary care. And between 15% and 25% ($440 billion at 20%) goes for administrative costs. Unnecessary care is driven by the financial incentives physicians have to increase the volume and intensity of their services. The more procedures and tests they do, the higher their incomes are. Whether or not they are ethical practitioners, it would take saintly individuals to ignore these financial rewards when making decisions about patient care. (Defensive medicine, ordering tests to protect against malpractice suits, and inadvertent duplication of tests, also play a small role in unnecessary care.)

    If reform legislation aggressively attacked unnecessary care and health care’s administrative costs, universal coverage and restructuring of the system could easily be paid for without additional funding. It would be a win-win situation for both the federal government and health care consumers, though some stakeholders would suffer losses (the same stakeholders who have been responsible for the calamitous escalation in health care costs). In these economically turbulent times, fiscal responsibility demands that funding for health care reform come from waste within the current system and that reform measures control future cost inflation. No new taxes would be needed and there would be no increase in the budget deficit if comprehensive reform were financed in this fashion.