Will DC "Reformers" Create a Health Care System as Skewed Towards the Rich as the Rest of the Economy
Princeton health care economist Uwe Reinhardt recently recalled asking Victor Fuchs, a colleague, "When will we ever have universal health insurance in the U.S.?" Fuchs' answer: "Not until World War III, a Great Depression, or a major epidemic that threatens everyone."
In other words, Fuchs believed that it would take a catastrophe before Americans might finally realize that we are all in one boat together: Wars, natural disasters and economic upheaval can create great solidarity.
We may not have long to wait for that moment. Despite President Obama's best efforts, it is all but inevitable that this recession will deepen. As the president recently warned, this is not an "ordinary, run-of –the-mill" recession. In the worst-case scenario, the meltdown could lead to a "lost decade" of growth.
At this point, America's middle-class finds itself on the edge of a cliff. As unemployment rises, it will become apparent how quickly an upper-middle-class family can find itself part of the middle class -- no longer able to afford private school, skiing vacations, or, in the worst case scenario, the payments on a mega- mortgage. Meanwhile, middle-class families risk slipping quietly into the nearly invisible lower-middle-class -- a group often referred to as "the working poor."
Rising insecurity should mean that the push for health care reform will build. But the recession cuts both ways: it also means that government tax revenues will shrink, leaving fewer dollars for the subsidies we will need if we hope to cover everyone. Conservatives will say that we simply can't afford health care reform.
Already, despite much talk of bi-partisanship, the debate over the fiscal stimulus passage makes it clear that conservatives are not in a compromising mood. New York Times columnist Paul Krugman pointed out that "centrist" Republicans have joined conservatives in stripping the stimulus package of $80 billion worth of programs that included "much needed spending on school construction," help for the unemployed, Food Stamps and aid for cash-strapped sates -- "the measures that would do the most to reduce the depth and pain of this slump" for those who will be hit hardest. The version of the bill that cleared the Senate cut more than $50 billion from programs that specifically help children such as Head Start, school construction, education for disadvantaged children, and prevention programs
"How did this happen?" Krugman blames, "President Obama's belief that he can transcend the partisan divide -- a belief that warped his economic strategy." The Princeton economist points out that "many people expected Mr. Obama to come out with a really strong stimulus plan, reflecting both the economy's dire straits and his own electoral mandate. Instead, however, he offered a plan that was clearly both too small and too heavily reliant on tax cuts. Why? Because he wanted the plan to have broad bipartisan support, and believed that it would. In the end, they barely escaped a filibuster with 61 votes. What does this mean for health care legislation?
There is a real danger, Uwe Reinhardt confides, that politicians will settle for universal coverage that continues to ration care according to ability to pay -- leaving us with a sharply tiered system. This, Reinhardt says, is what he thinks will happen, "unless we, the more affluent, step forward to tax ourselves."
On the question of opening our wallets in order to cover everyone, the most recent Kaiser poll on health care reform conducted less than two months ago, is not encouraging. It shows that “the public is split down the middle in its willingness to sacrifice financially in order to cover more individuals: roughly half (49%) say they are not willing to pay higher insurance premiums or taxes, while a similar percentage (47%) say they are. There are big partisan differences here, with most Democrats (59%) saying they are willing to pay, most Republicans unwilling to pay (67%), and independents divided (49% willing, 47% unwilling)".
When asked whether the economic meltdown makes reform more or less likely, the answers again split along partisan lines: "more than three-quarters (77%) of Democrats think health reform ‘is more important than ever' due to the economy, while six in ten (62%) Republicans believe the nation "cannot afford to take on health reform now."
Let me be clear: I agree that we cannot afford to subsidize care for all at current, wasteful levels of spending. But all families, rich or poor, should receive the same level of evidence-based medicine. (Beware of reformers who talk of "a health care plan for every pocketbook.") And I worry that Republicans will trim government subsidies to a point that we wind up, as Reinhardt suggests, with two or three classes of health care.
This, after all, is what we have today. On the lowest tier, Medicaid pays health care providers significantly less than Medicare pays for the same procedure . On the next tier, Medicare pays primary care providers such small sums that, in cities like New York, many physicians are refusing to take new Medicare patients. On the top tier, patients pay health care providers whatever they choose to charge.
I am not suggesting that all physicians are underpaid under Medicare: in 2005, while Medicare paid only $82 for a 30 minute visit with a PCP, it paid $206 for a 30-minute colonoscopy. Most of the care that Medicare patients receive is at least as good as the care they will receive under commercial insurance. We need to redistribute the dollars that Medicare pays to doctors -- paying for value, not volume. But we do not need to increase total payment.
Physicians who take Medicaid patients, by contrast, are grossly underpaid. And this is a major reason why Medicaid offers "subpar" care. Care-givers are stretched too thin and have too little support. Just two examples from an earlier post: One study reveals that while 77.2 percent of new mothers received timely postpartum care under commercial insurance plans, only 40.7 percent of those on Medicaid were lucky enough to receive the needed follow-up. Another recent study in the Journal of the American College of Surgeons found that patients who undergo colon cancer surgery in hospitals where more than 40 percent of patients are on Medicaid have a higher risk of death.
A Lopsided Economy -- How Wealth and Income are Distributed
We are, after all, accustomed to living in a sharply tiered society. American families play and work in separate pods, defined, to a large degree, by how much we earn. We send our children to different schools, shop in different stores, live in separate towns, and vacation in different places, segregated by what we can afford. And this, Reinhardt has suggested, is why we are the only developed nation in the world that does not have universal health insurance. We lack "social solidarity."
In other countries, the majority of the citizens are middle-class, and they identify with each other. When it comes to healthcare, the French are willing to pay for high quality, universal coverage because they feel that nothing is too good for another Frenchman. Sadly, in the U.S. we do not feel that way about each other.
As Reinhardt reminded his audience at the conference last week, in our economy the lines separating us are stark. Consider how the nation's wealth is distributed:
--The richest 1 percent own 34 percent of total wealth
--The richest 20 percent own 85 percent of aggregate wealth
--The remaining 80 percent own just 15 percent of the nation's wealth
"This isn't a middle-class country," Reinhardt observed after presenting these numbers. "It's not even a democracy; it's an aristocracy.”
Wealth and power have become consolidated in the hands of a few because, over the past 29 years, income has been distributed so unevenly, allowing the wealthy to speculate on real estate and high-flying stocks. Since the early 1980s those who could afford to play this high stakes game have bid prices ever higher, and as a consequence, their net worth has soared.
Despite the stock market crash of 2000, the real estate bubble kept the wealthy afloat: indeed from 1995 to 2004, the wealthiest 25 percent of the nation saw their net worth (assets minus debt) double while the middle class made meager gains.
