How the Healthcare Debate Got Hijacked

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If we let these powerful interests get their way, we’ll see more outlandish increases in premiums, and millions more people being denied care.

How Corporate Media, Sellouts in Congress and Industry Bigs Have Hijacked the Health Care Debate

By Joshua Holland, AlterNet. Posted July 29, 2009.

If you can frame the terms of a debate, you’ve gone a long way towards winning it before you’ve begun. Tragically, Republicans, the health care industry and business-friendly Blue Dog Democrats have largely been able to do exactly that, with a substantial assist from the corporate-owned media.

They’ve successfully focused the health care debate on the short-term costs to the federal government’s bottom line, obscuring the potential impact that a meaningful realignment of the health care system would have on the economy as a whole. In so doing, opponents of reform have hoodwinked much of the public into believing that investments in America’s national health care system will wind up costing individuals more than they’d gain from the effort.

In fact, they’ve done such a good job that much of the discourse has revolved around what is arguably one of the least relevant aspects of the proposals being debated in Congress: whether they “cost too much” or are “deficit neutral” in terms of their impact on the federal budget over the next 10 years.

Much of that discussion has been fueled by a series of estimates issued by the Congressional Budget Office (CBO) — estimates based on incomplete drafts of the legislation now moving through Congress. Yet by and large the mainstream media have dutifully repeated the spin without mentioning that the critics are touting the CBO’s preliminary projections as definitive and final.

Even worse, a study of cable news reporting by the media watchdog group Media Matters found that when the CBO issued a follow-up to an earlier, more pessimistic projection of the bill passed by the Senate Health, Education, Labor and Pension (HELP) Committee, it went all but unreported by the cable news networks. CBO projected it would cost $611 billion, while an earlier estimate — which was dissected eight ways to Sunday by the same cable networks — suggested it would run an even trillion.

There are also benefits contained within the proposals that are impossible to score in limited budgetary terms. For example, if the House bill were passed as it stands today, it would all but eliminate health-care related bankruptcies by capping the amount of out-of-pocket expenses with which a family or individual can be burdened. A group of researchers from Harvard studied over 2,300 bankruptcies filed in 2007 and concluded that more than 6 in 10 were due to medical causes. What is it “worth” to our society to ease that kind of pain? It’s not in the purview of the CBO to say.

That’s just one of several reasons why the budgetary impact over 10 years of a program of long-term reforms is such a poor metric for judging its value. First, the very same preliminary CBO estimates that are being used to gin up fear of a budget-busting boondoggle that will saddle our grandkids with debt for generations to come also suggest that the proposals would extend health coverage to tens of millions of uninsured Americans. Why such a significant improvement in the health and economic security of so many real people should be expected to come at no cost to the government’s balance sheet is a mystery.

Second, it fundamentally obscures the actual terms of the debate in Congress. Leaders in both the House and Senate have promised that the final legislation will be fully-funded — “deficit neutral” — and the battle lines have in fact been drawn not only around what form the final bill will take, but also how to pay for it. 

Moreover, the narrative is based only on the impact of the proposals on the federal budget in isolation, all but ignoring the larger effect that fixing the system (if done right) might have on the economy as a whole. Under consideration are various proposals designed to rein in the spiraling cost of health care across the entire system.

So these are not sunk costs, but investments that analysts expect will have a significant pay-off. A study by David Cutler of Harvard and the Rand Corporation’s Melinda Beeuwkes Buntin estimated that just three elements within the larger proposals offered by Democrats so far — all of which come with start-up costs in the beginning — would result in $550 billion in savings to the larger health care system over the next 10 years (PDF).

Those kinds of savings are desperately needed over the longer term — the status quo, if allowed to continue on track, threatens to undermine the competitiveness of American business and leave more and more people without coverage (researchers have found that fast-rising premiums, more than any other factor, has driven the decades-long growth in the number of uninsured Americans).  And skyrocketing premiums force employers to squeeze wages, which impacts communities’ tax revenues and deprives the economy of consumer dollars.

So the more salient question is: how can we possibly afford not to fix the current system? In 1960, we spent less than 5 percent of GDP on health care and all but a small number of working-age Americans had access to care. Today, health care spending represents around 17 percent of our economic output, and about one in six lack coverage. And, according to virtually every projection out there, it’s only going to get worse unless we make substantial reforms soon.

In 2007, the U.S. spent an average of $7,290 per person on health in total (both public and private care). The average costs in other wealthy countries — generally with better outcomes — was $2,964. Here’s a graphic representation of where we’re likely to go in terms of costs if we leave things as they stand

 (click for larger version)

As economist Josh Bivens of the Economic Policy Institute wrote, the non-budgetary effects of fixing the system “will pay off big for American families in the form of lower premiums, co-pays, and space for wage growth.”

Bivens adds, “The reason is simple: health care is an area where the more costs are loaded up on the federal government, the more efficiently care tends to be delivered overall.” Bivens points out that although the U.S. spends far more than other advanced countries on health care, far fewer of those dollars are in the public sector, and suggests that the difference is a major reason why we get far worse results (in terms of access, life expectancy at birth, our chances of living until age 60 and most other meaningful metrics).

To illustrate the savings built into public-sector health spending, he goes on to cite an analysis by the Lewin Group of competing approaches to reform that measures the impact on both federal spending and overall health spending. The results are summarized in this graphic:

(click for larger version)

On the left, is Pete Stark’s, D-Calif., proposal for a single-payer system (one that closely mirrors John Conyers’, D-MICH., HR 676, which has 85 co-sponsors in the House). As you can see, while it extends coverage to everyone — which obviously costs money — it is the only approach studied that would also result in a reduction of health care spending overall.

In the middle is a hybrid along the lines of the House bill (the Lewin Group used a similar proposal promoted by the Commonwealth Fund). According to Bivens’ analysis, although “federal health spending [would] rise” as the system was first implemented, the “increases in federal spending … are accompanied by large reductions in spending by households and businesses. Net total health spending would rise by less than $18 billion, an amount that is more than explained” by new funding to cover the previously uninsured.

The right column, appropriately, shows the impact of Mike Enzi’s, R-WYOM., plan, a boilerplate conservative proposal based on offering tax cuts to those who purchase private insurance and slightly expanding eligibility for Medicaid. It does increase federal spending by slightly less than the other approaches analyzed, but in the process it also increases total health care costs more than the amount of tax dollars sunk into the plan, while insuring only the relatively small number of people who make just a bit more than the current cut-off for Medicaid.

But even that standard doesn’t tell the whole story. Looking only at how the current proposals impact health spending over a 10-year window ignores the longer-term impact they might have. For example, contained within both the Senate and House bills are provisions that would create more incentives for preventive care. Most analysts agree that prevention costs a lot less than waiting for people to develop serious illnesses and then treating them, as we now do, but those savings can only be fully realized over the long term. If a young obese person visits a doctor whom he or she might not have seen because of a lack of insurance, and as a result of that visit makes changes that prevent him or her from developing diabetes — with all its attendant complications — it will save the health care system a small fortune, but probably not for several decades.

Finally, there’s a sad irony to this whole discussion — one that few commenters have bothered to note. It is true that the potential savings contained in the proposals currently on the table are limited, but it is also true that the reason for that shortcoming is that Congressional leaders have ushered through a series of bills that are far less expansive than progressive reformers have long advocated, and that’s only been done to mollify the very same Dems and Republicans — those ideologically opposed to the effort and/or especially cozy with the “disease-care” industry — who are now complaining about the limited potential for savings (It’s enough to make your head spin).

Just consider the “public insurance option.” While progressives were promised a “robust” public insurance program that would be open to all comers, what emerged from the Senate HELP Committee and from the leaders of three House committees was a pale shadow of what had been touted during last fall’s campaign season. Instead of insuring as many as 130 million Americans as candidate Obama suggested his public option would, lawmakers restricted eligibility for the program in such a way that the CBO’s preliminary estimate suggested that just 10 million Americans would be enrolled in the public insurance plan by 2019. (That’s out of about 30 million who could buy insurance — either public or private — through the publicly-run insurance exchanges.) This was a nod to the power of the insurance industry — nothing more, nothing less.

In designing a (pretty good) system, but then tightly controlling who could gain access to it, the potential for cost-containment — through greater economies of scale, more bargaining power with providers and a decrease in the shuffling of paperwork that’s estimated to account for about 30 percent of our health spending — has been greatly diminished.

So, next time you see some congressional meat-puppet on TV discussing how much a plan will cost, or lamenting its limited potential for cost-containment, keep in mind that it’s his or her ideology that is directly to blame for those shortcomings.

 It’s only because of pressure from industry groups, Republicans and Blue Dog Dems that congressional leaders took single-payer off the table (and threw advocates out of the room) and gave us a limited public insurance option — a pale shadow of what reformers had been promised. Now, those same forces are bent on killing an already watered-down proposal. If they succeed, we can expect more human suffering, more outlandish increases in premiums, more people being denied care, an increase in the numbers of uninsured and a continued drag on the American economy.