Health Care

Health Care for America Now, a new $40 million campaign to push for universal health care coverage in 2009, kicked off today with a press conference at the National Press Club.

I tend to be skeptical about any campaign with the word "Now!" in it, but early signs suggest this will be a smart effort. Huffington Post has a good write up:

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The work of Health Care For America Now was first made public late last week. But the group, with Elizabeth Edwards as a figurehead, offered expanded insight into the details of its campaign during a meeting on Monday. In addition to spending $40 million -- $1.5 million of which will be put behind an initial ad buy (national TV, print, and online) -- the group will be sending organizers to 52 cities, blasting out emails to 5 million households, airing spots on MSNBC and CNN and submitting op-eds to major papers (officials hinted at the New York Times piece to come).

In addition, the campaign is going to take advantage of Moveon.org's massive data files to reach out to like-minded supporters and officials promised to work in Democratic and Republican districts alike.

"We'll have an organizer in the district of every Blue Dog Democrat," said HCAN campaign manager Richard Kirsch of the conservative Democrats.

"The focus of the campaign," he added, "is on national legislation. "This year, however, it is also a referendum: do you support quality, affordable, health care for all, or an alliance with the private insurance industry?"

Kirsch stressed repeatedly that the effort was legislative, not political. And, as such, the campaign will not offer direct criticism of John McCain's health care policy. Nor are there plans, at this point in time, to coordinate with Barack Obama -- who has stressed that he will make health care legislation a priority in the White House -- or Ted Kennedy -- who is reportedly set to relaunch a Senate effort to achieve universal care.

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And Ezra Klein notes how different this campaign will be from the last effort:

... shortly before the Clinton plan came out, the Democratic National Committee asked Heather Booth to build their field campaign for the Clinton heath care plan. So Democrats did have a field operation, I asked her last year. She laughed at me. "No," she said. "No." The problem wasn't just that the DNC couldn't get its act together, but that no one on the Left could. Labor was exhausted and angry after the NAFTA fight. The AARP was keeping its powder dry so they could bargain for more gains right before the legislation passed. Organizations like MoveOn, Campaign for America's Future, and Democracy for America didn't exist. "There really wasn't a unified effort on the progressive side," said Booth. "Everyone was fighting for their portion of a bill so strongly that it was hard to fight for something overall. And so we got nothing."

The political paralysis did not extend to reform's opponents. The Health Insurance Association of America raised and spent $50 million ($69 million in 2008 dollars). The NFIB flooded Congress with hundreds of thousands of letters, calls, and visits from angry small business owners. The Chamber of Commerce, the Business Roundtable, the Manufacturers Association of America, and anyone else you can think of was organizing, spending, and attacking.

So it's of both enormous practical and symbolic significance that, in 2008, the first major health reform coalition with serious money and a genuine pressure plan is on the left. ....

Here's the first ad:

That's Henry Aaron of Brookings who had the best testimony at this week's House Budget Committee meeting on the Pete Peterson-funded jihad against Social Security and legislation that would create a commission to come up with a proposal to cut Social Security. Aaron summarizes the case against this legislation as follows:

The bill mischaracterizes the source of [projected, long-term] deficits. They derive entirely from projected increases in national health care spending, not from problems peculiar to government health care or entitlement spending.

Materially slowing the growth of Medicare and Medicaid apart from general health system reform is impossible, unless the nation reneges on its commitment to assure the elderly, disabled, and poor health care roughly comparable to that available to the rest of the nation.

The specification of 'issues to address' and 'policy solutions' in section 3 of H.R. 3654 is unbalanced. For example, the draft bill specifies as a 'policy solution' limits on entitlement spending, but does not mention as a 'policy solution' curbing in tax expenditures that putatively serve the same general objectives as direct spending, but benefit different groups.

The draft bill virtually invites 'game playing,' as policymakers could avoid hard choices by manipulating long-term projections with artful assumptions, scoring methods, or other tactics for avoiding hard choices. Such practices were used extensively to subvert the Gramm-Rudman-Hollings targets in the 1980s. H.R. 3654 could actually obstruct desirable action to address projected long-term budget deficits.

Commissions never solve complex problems unless members of Congress are prepared to address the underlying source of those problems.

In an earlier post, I noted that the tax subsidy for employer-sponsored health insurance is strangely absent from the focus of Entitlement Crisis advocates. Over at the OMB Watch Budget Blog, Craig Jennings adds:

... this oversight isn't limited to tax subsidies health insurance. No one seems aware of the other massive entitlement programs like the $100 billion housing subsidy that helps higher-income families buy homes (Filers earning more than $100,000 represent 11% of all filers, but they see 60% of the benefit.).

This general blind spot for tax breaks as subsidies has a deleterious effect on the What To Do About Entitlements conversation, because it disguises the scope of the impending health care crisis. The CBO projects that federal spending on Medicare and Medicaid will be 9 percent of GDP in 2035, causing heart palpitations for the budget-minded. Yet, in that same year all health care spending will capture 31 percent of GDP double today's rate.

Crafting policies aimed at reducing per-unit costs of health care would not only allow all Americans to access more and higher-quality health care, but it would also help avert the a doomsday debt scenario (AKA The Entitlement Crisis®). And as long as we neglect to consider the health insurance subsidy part of the federal health care system, this solution will remain obscured.

Matt makes a good point in his last post when he notes that Alice Rivlin in more recent public statements has put the focus on rising health care costs. Similarly, Bill Galston—who, like, Rivlin signed on to the Brookings-Heritage-AEI entitlement crisis proposal—appears to be losing some of that old-time DLC religion. In the current issue of The American Prospect, Galston calls for a federal government that commands "an increased share of gross national product .... to provide new forms of insurance against economic risk and volatility" and notes that "universal health insurance would give us a fighting chance to restrain the rate of growth in medical costs ...."

That said, both Rivlin and Galston have yet to really break with their bad company at AEI and Heritage. At the end of his TAP piece, Galston says that "we will need a new approach toward the large entitlement programs—especially Medicare and Medicaid—that drive so much of the long-term increase in the federal budget" and then goes on to outline the Brookings-Heritage-AEI proposal. Similarly, Rivlin, in her op-ed, still relies too heavily on outdated and ineffectual crisis rhetoric about "entitlements." Instead of saying, as Rivlin does, that "no candidate is facing the fiscal time bomb of health-care entitlements," why not say: "no candidate is proposing adequate solutions to reduce the spiraling costs of health care, costs that reduce our nation's economic competitiveness and growth." The latter more accurately defines the problem, and better points toward the solution. It's also more likely to be heard by a public that is much more concerned about health care (consistently in the top three of issues) than the deficit or "entitlements" (the top issue for a mere 1-2 percent of the population, despite the mighty efforts of political pundits and inside-the-beltway policy mandarins).

The most important piece of proof for me that Galston and Rivlin haven't broken with the old ways is how they misdescribe health care entitlements as consisting solely of Medicare and Medicaid. In fact, the 2nd biggest health care entitlement isn't Medicaid, it's the $200+ billion tax break for employer-sponsored health insurance. The health insurance tax break costs around $30 billion more than Medicaid and, if my recollection is correct, is increasing at a faster rate than either Medicaid or Medicare. It's also, unlike Medicare or Medicaid, a regressive tax subsidy that provides more benefits for the wealthy.

Responding to a recent comment by Libertarian Finlander, I noted that I didn't necessarily have any theoretical objections to a national value-added tax, but that I wanted universal health care first. After writing my response, I ran across this interesting post by TPC's Howard Gleckman on some recent proposals to combine a VAT with health care reform:

... Ezekial Emanuel and Victor Fuchs ... [would] create a European-style Value Added Tax and use the huge slug of new revenue for health care vouchers, which people would use to help buy insurance.

My TPC colleague Len Burman, who comes at the problem from the perspective of tax reform as well as health care reform, would go yet another step. He’d create a VAT of about 15 percent to fund these health vouchers. But Burman would also use the VAT revenue to reform and simplify the income tax.

He’d set two individual rates—say, 15 percent and 25 percent—and eliminate the personal exemption, the standard deduction, and most itemized deductions. He’d also dump the exclusion for employer-sponsored health insurance and vastly simplify retirement savings incentives.

Burman’s VAT would not only help pay for private insurance, it would also finance Medicaid, veterans health, and the share of Medicare that is now supported through general revenues (about $200 billion in 2009).

Burman is hardly the first policy maven to push the VAT. Yale professor Michael Graetz backs one of roughly 10 percent to 14 percent. However, Graetz would use the VAT revenue to eliminate the income tax for nearly all taxpayers—those earning less than, say $100,000. The TPC’s Bill Gale has also suggested a VAT, but as an additional source of revenue rather than as a replacement for the income tax.

These proposals are all worth a look, but a U.S. shift to a VAT is a much longer-term proposition than (hopefully) health care reform that gets costs under control and expands coverage to all Americans.

Some interesting stuff in this new Kaiser Family Foundation poll:

• During the last five years, one of out every five Americans reports having been contacted by a collection agency because of medical bills. Some 17 percent have used up all or most of their savings and 12 percent have been unable to pay for basic necessities because of medical bills.
• Almost one in five (18 percent) decided to stay in one job, rather than take another, mainly because the job they held at the time offered better health care benefits.
• Asked to name the two issues they would most like to hear presidential candidates talk about, 22 percent named health care as the first issue (it was third after economic issues and Iraq); and 18 percent named it as their second issue. Poverty didn't manage even half a percent as a first or second issue, but was named as a second issue by 1 percent of Democratic registered voters. The budget deficit/national debt was named as a first issue by two percent, and a second issue by one percent.
• More Americans want to hear candidates talk about reducing the costs of health care and health insurance (40 percent) than about expanding health insurance coverage for the uninsured (31 percent), with an even wider gap (46-25) among independent voters.

And my favorite finding: Five percent decided to get married "mainly to have access to their spouse's health care benefits", and another five percent decided to get married so their spouse could have access to their health care benefits.¹ Which got me thinking, this might be a good follow-up to the "married people earn more money" billboards that have been popping up in urban neighborhoods (including mine):

For the most recent debunking of the idea that rising health care costs are due to the retirement of the baby boomers and other demographic factors, see this great summary by Maggie Mahar of a recent speech by Princeton's Uwe Reinhardt.

"... what will drive costs in coming years, will come, not from the demand side of the equation, but from the supply side," says Reinhardt, repeating his theme. We can be certain that, without some significant reforms, suppliers will continue to invent new products for every age group, charging us more and selling us more -- using whatever methods it takes, from direct-to-consumer advertising to promises of near immortality and perpetual youth (just as 120 can be the new 80, 55 can be the new 35!)—if we just swallow enough pills and replace enough body parts. ....

Back in August 2007, the Bush Administration issued a bizarre policy directive designed to keep states from using the Children's Health Insurance program to provide coverage to uninsured kids in working and middle class families. According to The Hill, GAO has now ruled that the directive violates federal law:

The Bush administration’s limits on expansions of the State Children’s Health Insurance Program (SCHIP) are unlawful, according to Congress’s investigative arm.

The Centers for Medicare and Medicaid Services (CMS) unlawfully bypassed congressional review when it issued a directive to states in August alerting them that federal authorities would seek to restrict raising the income eligibility level for the program, the Government Accountability Office (GAO) concluded in a report issued Thursday.

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[The Administration] stood behind its policy but declined to elaborate on its legal rationale.

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I love that last bit.

To add to Shawn's point, it's very good that most left-leaning fiscal policy people are keeping their distance from the Brookings-Heritage joint campaign to destroy the welfare state. But these folks haven't advanced the compelling counter-narrative about health care costs coming out of CBO. Here's what CBO thinks will reduce health care costs:

The evidence suggests that efficiency gains in the health care system are possible: Spending in high-spending regions could be reduced without producing worse outcomes, on average, or reductions in the quality of care. Policies that reduce spending in high-spending areas, however, will not necessarily lead to increased efficiency unless the reductions target ineffective or harmful treatments. The report briefly explores policy options that could reduce geographic variation, including:

* Increasing the “bundling” of services in payments to providers (such as those that have been implemented in the Medicare program for payment for hospitals), which could help to curb current incentives to provide more intensive services that produce only modest or no improvement in health.
* Enhance incentives to provide care consistent with accepted guidelines for low-cost, highly effective care, thus helping to change patterns of medical practice in places that now are characterized by lower-quality, higher-cost care.
* Generate more information about variations in practice patterns and the relative cost-effectiveness of different procedures for different populations as a way to help reorient inefficient practice patterns toward greater efficiency, especially if greater oversight or changed financial incentives led to increased pressure to use this sort of information.

Translation: make health care worth the price America's paying, and get rid of the bad practices and treatments that are gouging consumers, employers and the public.

Advice on talking about health care and progressivism, from Isaiah Poole's blog at Campaign for America's Future:

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When I suggest that progressives appear to have a mandate for radical change in how health care is delivered in this country, [pollster Celinda] Lake is quick to correct me. What we have, she says, is "a mandate for reform," not a mandate for sweeping change. "It's a mandate to fix the problem."

That's because a majority of people are personally happy with their own health insurance. They haven't come face to face with the struggles of the 47 million people who are uninsured, or the millions of others who find that their insurance leaves them in the lurch when it comes to a serious illness or a pre-existing condition.

But those voters know that something needs to be fixed, and "people do not want market solutions" offered by conservatives, Lake says. "They don't want to be left on their own" to deal with the insurance companies and other business interests involved with health care.

A winning message on health care with voters is choice, Lake says: "You have a choice of keeping what you have or moving to a new system."

That is the essence of the "Health Care for America" plan advanced by Yale University professor Jacob Hacker and backed by Campaign for America's Future. Elements of that plan are in the presidential campaign platforms of Sen. Hillary Clinton and Sen. Barack Obama.

The real threat on health care, Lake says, is that through a combination of scare-mongering by conservatives and imprecise framing by progressives, "voters might be convinced to do nothing."

When I asked Lake if she agreed that as far as the majority of the public was concerned, conservatism as an ideology was dead or dying, Lake said, "I think it's on the ropes, to be sure."

But she cautioned that "it's not as if we have an established brand" to replace conservatism.

The challenge is for progressives to respond today as conservatives did in 1980, with an ideological framework that not only diagnoses the problems the country faces but offers a coherent alternative that speaks to the concerns and aspirations of working-class people.

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The conservative approach to increasing health insurance coverage centers around health care tax credits. President Bush proposed creating one in past budgets and a credit is central to John McCain's health care plan. Even Hillary Clinton proposes health care tax credits as part of her plan to require individuals to purchase coverage.

Via Tax Vox, I noticed that Urban's Stan Dorn has a recent report out that cautions against overreliance on tax credits. Dorn examines the performance of the one health care tax credit that is currently on the books, a credit that pays 65 percent of insurance premiums for workers who lost their jobs due to trade. Dorn notes that only 15 percent of eligible workers get the credit, and that about one-third of all spending on the credit goes toward administration. While increasing the value of the credit would help increase participation, other problems would remain, including complexity, a requirement that workers pay premiums in full because receiving credits, and limited coverage options.

Responding to a comment on my cross-posting about auto insurance mandates and uninsured rates at Talking Points Memo, I note that it’s important to know how states enforce the mandate. A commenter implied that there is almost no down side to going without auto insurance—especially if one is “judgment proof”.

Driving without insurance can be very costly. States impose penalties including license suspension, hefty fines, vehicle impoundment, and jail time.

It’s an unacknowledged reality of our labor market that most people must drive to work. Public transit just doesn’t work in most places or for many workers; less than 5 percent of workers commute using transit and many of those people live in Manhattan, Chicago, Washington DC, and Philadelphia. Thus, loss of license or car as a penalty for driving uninsured has a very high cost and it's one most would avoid If they can.

There are certainly differences between auto and health insurance, yet there are still important lessons in the comparison.

CBO has another good health care study out, this one on the variations in domestic health care spending by region. The CBO Director's Blog has a good summary of it up, too.

The gist is that there are vast differences in health care spending by region, and they're essentially unjustified. They don't correspond with health care quality or the relative sickness of the population living there. People are spending more money, but essentially purchasing services of the same value as people who are spending less (AKA they're getting ripped off).

That's the main reason why cutting Medicare and Medicaid is the wrong way to reduce health care costs. It's like deciding to amputate a broken leg when all you needed was a cast- you're taking drastic measures when the problem could be contained in a much less harmful way. In fact, the report shows that Medicare has actually been more successful in slowing spending increases in high-spending areas, mostly because of certain incentives in its reimbursement packages. The report also suggests a couple of new ways Medicare could root out wasteful procedures and leave the good ones be.

The essential take away is that it doesn't make sense to cut Medicare and Medicaid under any reasonable circumstance. There's just no good reason to do it- unless you think that what's wrong with these programs is that they exist, or you think there are more important things than defending them and the millions of people they serve.

Senators Clinton and Obama are continuing the debate over how best to ensure that everyone has health insurance and access to care.

Some online analysts have raised questions about the effectiveness of mandates by reviewing car insurance mandates.

We have been spending some time looking at access to car insurance in our transportation research.

Car insurance is regulated by states. Only two states do not require drivers to maintain insurance – New Hampshire and Wisconsin. Yet, a recent report finds that nearly 15 percent of drivers across the nation are uninsured.

What happens in the two states without a mandate?

Wisconsin ranks 20th with about 14 percent uninsured, while New Hampshire has one of the lowest rates of all states at 9 percent. Other state rates range from 26 percent (Mississippi) to 4 percent (Maine).

Some writers have noted that California has a low-cost insurance option for low-wage workers. In that state, these writers point out, the uninsured rate is one of the highest at 25%.

We’ve interviewed some of the key actors implementing the California low-cost insurance option and find that there is a major problem with outreach and access. Most low-wage workers probably don’t even know about the option and the incentives don't seem to be structured in a way that encourages brokers to sell it.

A number of people are working on improving knowledge and use of the low-cost option in California, but we should not assume that low-wage drivers wouldn’t buy it—-if they knew about it.

So, what do we know? A mandate does not guarantee universal coverage in this case. And creating and implementing a lower-cost insurance option for low-wage workers will require creativity, careful implementation, and outreach.

EPI and the Campaign for America's Future have some good papers out on the cost savings that Jacob Hacker's universal health care plan would achieve. The $50 billion or so in savings just about equal the funding it'll take to implement the plan. That's good news for the insured, the uninsured and for the Democratic presidential candidates, who're using Hacker's plan as a template for their universal insurance plans.

Now, I hate to be a party pooper, but that's not the end of the story.

The U.S. overpays about $480 billion annually on its health care, according to this 2007 McKinsey&Company analysis (GDP in 2006 was $13 trillion). The vast majority of this results from failures within the health care delivery system, as opposed to the "payer" or insurance system. Robert Kuttner and the CBO, among others, have been making proposals that get at this side of the problem.

So while $50 billion is an unfathomably large amount of money, it's only scratching the surface. It's going to take a lot more than reforming insurance to make the US health care system as efficient as most European ones. It'd be worth it, though, because cutting back on health care expenses would free up lots of money in governmental budgets and in people's pocketbooks. Plus it's not right that people are selling more or less snake oil medicines, whether they're aware of it or not. And wouldn't it be nice if the places like the Concord Coalition had less to whine about?