You Have No Idea What Health Costs
If You Did, You Might Just Want Real Reform
By Ezra Klein
Washington Post: Sunday, September 20, 2009
The most important health-care document released this week was not Sen. Max
Baucus's Healthy Future Act. It was the Kaiser Family Foundation's 2009
Employer Benefits Survey.
While the proposal by Baucus, chairman of the Senate Finance Committee,
outlines a direction for policy, the survey, which polls employers about
health benefits to assemble a detailed look at the actual cost of health
care, fits it squarely in our pocketbooks.
The truth is we all pay, and much more than we recognize, for health care.
For many, it's among the largest investments we'll make, on par, even, with
the money we spend on a house or tuck away for retirement. But while it's
easy to track our stock portfolios as they tank along with the market, our
outlay for health care is less obvious. Employers pay some, and so do
individuals, and taxpayers. And some even hides behind the deficit. As such,
few of us see the full picture. But to make sense of the proposals for
reform, getting a grasp of the cost is critical.
The average health-care coverage for the average family now costs $13,375,
according to Kaiser. Over the past decade, premiums have increased by 138
percent. And if the trend continues, by 2019 the average family plan will
cost $30,083.
Three years of slightly above-average health insurance will cost a solid six
figures.
Those are numbers to marvel at. Those are numbers to fear. But they are not
the numbers that loom in the minds of most Americans. And therein lies the
problem for health-care reform.
About 160 million Americans receive health coverage through their employers.
In general, the employer picks up 73 percent of the tab. This seems like a
good deal. In reality, that money comes out of wages.
As Ezekiel Emanuel, who advises Office of Management and Budget Director
Peter Orszag on health-care policy, has pointed out, health-care premiums
have risen by 300 percent over the past 30 years (and that's after adjusting
for inflation). Corporate profit per employee has soared by 200 percent.
Hourly earnings for workers, adjusted for inflation, have fallen. The wage
increases have been consumed by health-care costs.
Another 80 million Americans are on public plans, mainly Medicare and
Medicaid. Those costs are paid by taxpayers. And about 46 million Americans
are uninsured. The costs for their care are shifted to the insured: This
raises premiums for the average family by $1,100 each year, according to an
analysis by Ben Furnas and Peter Harbage of the Center for American
Progress.
Imagine if people who touched a hot stove felt only a small fraction of the
pain from the burn. That's pretty much what's happening in our health-care
system. It hurts enough that we would prefer it to stop, but the urgency is
lost.
That's the dilemma for Washington wonks trying to fix this mess: They look
at the numbers and see health-care costs crushing our economy, overwhelming
our government, swallowing our wages. But the public isn't feeling it.
Virtually no one cuts a $13,375 check for health care. Most pay 27 percent
of it, or even less. The surest way to cut health-care spending would be to
make people shoulder more of the burden directly, as opposed to hiding it in
taxes and lost wages. But that's about as popular as a puppy pot roast.
Thinking Long-Term
Health-care reform concentrates on the people in acute distress: the
uninsured and the underinsured and the poor few who've been left to the
cruel chaos of the individual or small-group insurance markets. The public
insurance option -- if it comes to pass -- would be open to only these
groups, and the bill's hefty price tag is almost entirely devoted to helping
them afford coverage. But what about the rest of us?
The problem for the White House has been that the proposed health reform
policies meant to help the average American aren't specific. They're not a
cash transfer or a new insurance card. These are the "curve benders,"
policies meant to cut long-term health-care costs. The problem is they're
abstract, speculative and, at times, even unpopular.
The White House's favorite curve bender is called "comparative effectiveness
review" -- a fancy way of saying "evidence." Study after study has shown
that we waste an incredible amount of money on medical interventions that
just don't work. If we can figure out which ones those are, we can stop
using them and save money by not buying what we don't need. That may work.
But the evidence will take a long time to amass, and we don't yet know what
it will show. What if it finds that some brand-new and incredibly expensive
treatments are wildly effective? That could raise spending. Industry
stakeholders, however, had little interest in waiting around to find out:
They made such a fuss that Congress quickly inserted a provision promising
that the government wouldn't use any of this evidence in deciding what
Medicare and Medicaid would cover. Because God forbid government programs
rely on evidence.
The favorite proposal of liberals is the public insurance option. If the
public plan were open to all Americans and partnered with Medicare, it could
negotiate deep discounts with health-care providers. The Lewin Group, a
health industry consultancy firm, and the Commonwealth Fund, a
liberal-leaning health-care advocacy organization, have both estimated that
this sort of plan could save the average American 20 to 30 percent on
premiums.
Of course, providers don't much like the sound of that because they would
see 20 to 30 percent less revenue. And insurers don't much like the sound of
that because they could not compete with that sort of buying power.
Republicans and centrist Democrats have banded together to weaken the public
plan and maybe even remove it altogether. President Obama now promises that
the public plan would be open only to the uninsured and wouldn't offer any
advantages over private insurers. It won't, in other words, be allowed to
save people money.
Conservatives favor the idea of taxing health-care benefits and popularizing
"high-deductible health plans." In short, if people have to pay more for
health care, they'll use less of it. This is true, but as you might expect,
quite unpopular. The Finance Committee's bill would tax insurers who offer
high-cost plans, but we'll see whether that survives once people realize it
would raise the price of their insurance.
'Reform' = Wonky Tweaks
If Americans felt the full burden of health-care costs, they'd likely be
clamoring for all these policies, and maybe more. They'd want
transformational change. But they don't feel those costs, and so they're
resistant to change. Obama continually promises that most Americans will
notice no changes in their existing coverage, and all the bills reflect that
vow. So what's left? How do you reform a system you cannot change?
You ask the wonks. People often complain about the length of bills. But you
don't need many pages to explain a public plan, or set up a death panel
(kidding!). Rather, the bulk of these bills amount to hundreds of small
tweaks and fixes that make this corner of the health-care system a smidge
more user-friendly, or that transaction a tad faster. Rather than saving
hundreds of billions of dollars with a single dramatic intervention that
transforms the system, they provide for the accretion of modest savings and
small efficiencies.
For instance, despite all the fire over the co-op plan, it gets two pages in
the Finance Committee's bill. Pages 75 to 110 are all devoted to delivery
system changes that are meant to make the system a bit more efficient but
that no one has ever heard of. "Value-based purchasing" alone gets six pages
in the bill. The "National Pilot Program on Payment Bundling" gets another
five.
Melinda Beeuwkes Buntin, a researcher at the Rand Corporation, and David
Cutler, a health economist at Harvard, recently estimated the savings that
could be attained by "modernizing" the system over the next 10 years. The
changes they examined weren't dramatic. Replacing paper records with
computerized files, making it easier for people to comparison-shop across
insurers, "bundling" payments for the treatment of a single illness rather
than shelling out separately for each doctor visit -- that sort of thing.
Added up, they equaled a startling $2 trillion over 10 years. That's a lot
of money for policies that have received virtually no attention in the
debate.
And yet, this is the quiet promise of health-care reform. The grand theories
might fail. They often do. But making the system a bit better, a bit quicker
and a bit more agile -- we can do that. And until the stove gets hot enough,
it may be all we can do.
***
http://www.nytimes.com/2009/09/22/opinion/22herbert.html?th&emc=th
The Hard and Bitter Truth
By BOB HERBERT
NY Times Op-Ed: September 21, 2009
President Obama is in the uncomfortable position of staring reality in the
face in Afghanistan. Reality is not blinking.
The president's handpicked point man in the war zone, Gen. Stanley
McChrystal, wants more troops and a stepped-up commitment by the United
States that would lock us into the conflict indefinitely, with nothing like
an exit strategy in sight, or even a conception of what victory might look
like.
Mr. Obama himself has banged the war drums loudly, having already increased
the number of U.S. troops in Afghanistan and declaring just last month that
the war is absolutely essential to American security, that it "is
fundamental to the defense of our people."
Among the many problems for the president on this front is the sobering fact
that most ordinary Americans do not seem to agree. A recent Washington
Post-ABC News poll found that 51 percent of respondents believed the war has
not been worth its costs, and only 26 percent favored sending more troops.
That does not bode well for an expensive and debilitating conflict that is
about to enter its 9th year and would go on for untold years to come if the
president decides to double down on America's military commitment.
Senator John McCain gave us a compelling insight into these matters in a
foreword that he wrote about Vietnam for David Halberstam's book, "The Best
and the Brightest":
"War is far too horrible a thing to drag out unnecessarily," he said. "It
was a shameful thing to ask men to suffer and die, to persevere through
god-awful afflictions and heartache, to endure the dehumanizing experiences
that are unavoidable in combat, for a cause that the country wouldn't
support over time and that our leaders so wrongly believed could be achieved
at a smaller cost than our enemy was prepared to make us pay.
"No other national endeavor requires as much unshakable resolve as war. If
the nation and the government lack that resolve, it is criminal to expect
men in the field to carry it alone."
The only thing that needs to be updated about Mr. McCain's comments is that
we now regularly send women as well as men off to war.
In the case of Afghanistan, we're sending them off to fight and possibly die
in support of a government that is incompetent and riddled with corruption
and narcotics traffickers. We're putting them in the field with Afghan
forces that are ill trained, ill equipped and in all-too-many instances
unwilling to fight with the courage and tenacity of the American forces. And
we're sending them off to engage in a mishmash of a mission that alternates
incoherently between aggressively fighting insurgents and the admirable but
unachievable task of nation-building in a society in which most Americans
are clueless about the history, culture, politics and mores.
In a confidential assessment of the war prepared for President Obama,
General McChrystal wrote: "The weakness of state institutions, malign
actions of power brokers, widespread corruption and abuse of power by
various officials and [the American-led NATO force's] own errors have given
Afghans little reason to support their government."
A friend of mine who lives in South Carolina sent me an e-mail about a young
serviceman in civilian clothes whom she and her husband noticed as he talked
on a public telephone in the Atlanta airport last week. He was 19 or 20
years old and quite thin. His clothes and his shoes were worn, my friend
said, but the thing she noticed most "was the sadness in his eyes and his
sweet demeanor."
The young man was speaking to his mom in a voice that was quite emotional.
My friend recalled him saying, "We're about to board for Oklahoma for the
training before we move out. I didn't want to bother Amber at work, so
please tell her I called if you don't think it will upset her too much. ...
I miss you all so much and love you, and I just don't know how I'll get
through this."
At the end of the call, the serviceman had tears in his eyes and my friend
said she did, too. She wrote in the e-mail: "I stood up and wished him good
luck, and he smiled the sweetest smile that has haunted me ever since."
As President Obama tries to decide what to do about Afghanistan, reality is
insisting that he take into account the worn-down condition of our military
after so many years of fighting in Afghanistan and Iraq, and the soaring
budget deficits and sky-high unemployment numbers here at home in a country
that is hurting badly and could use its own dose of nation-building.
Mr. Obama, in the face of these daunting realities, is said to be
re-thinking his plans to ratchet up American involvement in Afghanistan. One
can only hope.
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