The Economix of Health Care

http://www.nytimes.com/2010/03/10/business/economy/10leonhardt.html?emc=eta1

http://economix.blogs.nytimes.com/2010/03/09/health-care-reform-and-the-doc-fix/?emc=eta1

http://www.washingtonpost.com/wp-dyn/content/article/2010/02/25/AR2010022504074.html?referrer=emailarticle

It was a privilege for me yesterday to be part of a "coffee" with the honors undergraduate students here at the university. "Health Care" came up as an issue they wanted to talk about, so we did.

When they asked me for my position on the subject, we basically shared that, overall, we don't need 1178 pages to fix two major problems: nobody should be denied health care insurance (no matter their prior medical history) and nobody should be terminated from medical coverage because the "insurer" has paid too much (parenthetically, what is "too much"?) in claims. This could, actually, be accomplished in one page.

Instead, we have a massive bill(s) that is so "inclusive" that there is something in it for almost everybody to be against.

We have attached David Leonhardt's article and his "Economix" post both authored on 3/9 so the information is current. In addition, we have attached the Washington Post "transcript" that Leonhardt refers to.

Leonhardt's perspective is that President Obama's overall plan is a "... terribly mixed back." It would not come close to eliminating Medicare's long term budget deficit. It would reduce the deficit only if a future Congress did not tinker with the various taxes and spending cuts scheduled to be phased in over the next decade, and what are the odds of that?

On the other hand, the plan would make progress in all sorts of areas. Insurance exchanges would create more competition. A Medicare oversight board would gain authority over reimbursement rates. Hospitals that committed certain medical errors would face financial penalties.

Leonhardt: "So which matters more: what the plan does, or what it fails to do? It's a tough call, and the answer depends on what you see as the alternative to the current plan."

Leonhardt mentions Paul Ryan, a top Republican on the House Budget Committee, as someone who has produced a reasonable alternative to the Democrats' plan (see attached). So, there are "reasonable" Republicans.

What's the bottom line to this bottomless pit? Right now, it is a bill that would spend $950 billion over 10 years to help the uninsured and small business employees buy insurance. Initially, the bill relies on accounting gimmicks to cover these costs. Most important, the insurance expansion does not start until 2014, holding down the 10 year cost. The taxes and Medicare/Medicade cuts in the bill are then big enough to pay for the bill. In the second decade the Congressional Budget Office (CBO) projects the bill would cut about $1 trillion from the deficit.

This is where we are.

Now, there is a separate issue related to health care that has to do with what is known in D.C. as the "Doc Fix". Leonhardt addresses this in his "Economix" blog (see attached) where he explains that in the 1990s the Clinton Administration (along with a Republican Congress - please note) passed a law cutting Medicare Payments to doctors. As one might imagine, this did not sit well. In the years since that law was passed, both Republican and Democratic Congresses have overridden that legislation. Officially, the law says these cuts will take place. The current health care bill(s) don't fix this problem.

"Something" should have been done by now. Paul Krugman, who understands the politics of the situation, and has some influence on those who are charged with passing health care legislation, actually thought we would have a new health care law before 2009 ended. We don't.

What happens next is anybody's guess.