Monday, October 19, 2009

Health Reform in America – Why It Should, Could and Probably Won't Happen

A super belated installment of my article in Zahranicna Politika. It was meant to be a "US Health Reform 101" for readers outside the US who may not be familiar with the problem. Of course a few things have changed since the time it was written but the conclusion still rings true, especially when one looks at the Senate Finance Committee bill.

Health Reform in America – Why It Should, Could and Probably Won't Happen

The story of US health reform is a complicated one and a thorough analysis of the topic is beyond the scope and scale of this column. However, it has become increasingly difficult to ignore given the prominence it has risen to in the last few months. Not only has it become the number one domestic issue that the president, lawmakers, lobbyists, news reporters and policy analysts are occupied with, but it is also quickly becoming the gauge for the Obama administration's success and potentially one of the determinants of the mid-term Congressional elections (in November 2010) and the next presidential election (in November 2012). Even more broadly, it has been a fascinating study in the functioning (some would say, malfunctioning) of the US political system and its many quirks. In short, for anyone interested in US politics, there are many reasons to care about health reform.

So what is all the fuss about? Why all the talk about reforming a system which is defined by spectacular innovation and some of the most advanced treatments and therapies? The standard answers to that question typically involve three aspects of the system: access, cost and outcomes. Quite simply, with all its high technology and innovation, the US health system leaves many people uninsured, and despite being the most expensive in the world, it produces worse outcomes. Specifically, while almost a fifth of non-elderly Americans don’t have any health insurance, the cost per capita is roughly twice that of most developed countries, and yet life expectancy is remarkably below average while infant mortality is astonishingly high. Underneath all these characteristics lies the fact that health care in America is an amalgam of disjointed systems of financing and delivery with little coordination of care, no incentives for prevention and wellness and plenty of room for duplication and errors.


If this brief description of the complexity of US health care and its flaws in and of itself doesn’t make it obvious how much of a fool’s errand trying to revamp the system is, consider the fact that during the last reform effort, led by Hillary Clinton, the backlash from all stakeholders was so strong that for the last 15 years most lawmakers treated health care like a bag of toxic waste they wouldn’t touch with a ten foot pole. And yet, given the ambitious nature of Obama’s agenda, it seemed almost natural that he would try to find the Holy Grail.

Interestingly, despite the obvious difficulty of the task and the discouraging historical precedent, as recently as in June, there was a widespread sense of confidence on Capitol Hill that this time around things are different and something will get done. For starters, in the 15 years since the last attempt, healthcare spending has ballooned 160%, while the ranks of the uninsured have swelled from 41 million to 47 million. In fact, according to the CNN exit polls from the presidential election, while the economy was the number one issue for the vast majority of voters, healthcare ranked as number one for as many as did the issues of terrorism and Iraq. Even more specifically, two thirds of voters said they were worried about health care costs (and 60% of them voted in favor of Obama). In addition to having an apparent mandate and greater urgency, the new Democratic administration was also equipped with an expanded Democratic majority in both chambers of Congress - the first time such power alignment occurred since 1993. Perhaps more importantly, unlike in 1993, there seemed to be an agreement among key stakeholders, including the for-profit healthcare industry, about the need for reform. This was a major difference from the Clinton era, when the lobbying and advertising efforts of the health insurers, pharmaceutical manufacturers and doctors killed reform in its infancy. The new administration, trying to prevent Clinton’s mistakes, kept the process as open and collaborative as possible so as not to ignite hostile opposition from any of the key groups, instead making deals with each of them. The premise was that if we can fix the system and expand coverage, all of the participants will benefit and should therefore contribute in their own ways towards making the overhaul affordable. In short, for a very long time it seemed like the stars were aligning for the impossible to occur.

In hindsight, it was only a question of time when the fairy tale would turn into a mean fight. Once the committees in Congress started drafting bills – there are 3 of them in the House of Representatives and 2 in the Senate with jurisdiction over health care – the details got in the way of noble goals. The reality is that while most agree on the need for reform, there are numerous starkly different ideas about both how it should be accomplished and paid for – and each of them has a different set of proponents and enemies. The obvious goal is to find a solution that upsets the smallest number of participants – which isn’t very consistent with the objective of revamping 16% of the US economy. To make matters more complicated, the differences of opinion do not necessarily fall along party lines, rendering the Democratic majorities in Congress largely useless. As an example, a major portion of the debate has been around the possible introduction of a government-run health insurance option that would compete with private health insurers. While progressive democrats perceive this as an essential part of the reform, the conservative block of the party is vehemently against it. Recognizing the complexity of these diverging interests, Obama has been smart in keeping his demands as vague as possible and instead putting out broad parameters for reform – it has to expand coverage, improve quality and save money. This strategic vagueness, however, didn’t prevent the opponents of reform from poking holes in the proposals and the proponents of different solutions from engaging in hostile debates.

And so here we are in August and the whole reform effort appears to be on life support. Why? If reform fails, history books will probably trace its death to the August congressional recess. The recess is a month-long break during which lawmakers typically go back home to meet with their constituents. Early on in the month it became clear that having a bunch of health care proposals sitting around for a month was like leaving a carton of milk on the table for a few days. The news became quickly dominated by reports of contentious town hall meetings in which lawmakers encountered anger and even violence, often fueled by outrage over the supposed attempt to nationalize healthcare and over particular provisions in the health care bills, some of which were completely made up. The famous example was the rumor that Obama’s reform would create government-run “death panels” that would determine which patients are worth living – which turned out to be a gross misrepresentation of actual proposals to include funding for voluntary end-of-life counseling. Another example of populist hysteria was the accusation that the reform will force preferential hiring of homosexual hospital administrators and includes funding for sex change operations, when in fact none of the proposals include any such language. Absurd or not, these protests have a good chance of making lawmakers uneasy about their support for reform especially if they are Democrats in conservative districts or states and thus vulnerable in the next election.

So does this mean that health care reform is dead? Probably not entirely. Obama has made the issue so central to his domestic policy that a complete failure could harm the future prospects of both his party and his own. However, given the lack of legislative will and mounting opposition in the electorate, the most viable alternative is to settle for some smaller incremental changes such as expanding some public programs like Medicaid to cover more poor people and children and pay for it by cutting spending in a few targeted areas. This would be very far from a comprehensive reform of financing and delivery of care, and it will certainly anger the progressive Democratic base. However, faced with the prospect of getting nothing at all, the progressives will likely take whatever “reform” they can get. In the end, it seems quite possible that this will all have been yet another exercise in the realpolitik in the US legislative process and perhaps another lesson for those who believed in Change: it’s slow, painful, full of compromise and ultimately not very satisfying.

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