HR 676: An Incomplete Grade

So keep in mind as you read the following that I just devoted over 2,100 to the positive side of HR 676.  But I don’t have blind love for it.  It’s the most credible path towards an American single-payer system that we’ve seen, but it’s not a cure-all.

Going back to my original principles for universal health care, HR 676 takes care of access, no problem.  But there are still questions about cost savings, physician supply, dealing with the economic realities of putting the insurance companies out of business, and determining quality that are sketchily answered in some cases, not at all answered in others.

None of these issues are unsolvable.  But all of them will need to be considered – and perhaps worked into the bill – before HR 676 can get a grade other than “incomplete” on providing quality health care for every American.

1.)    The purse-strings are still held by politicians

As mentioned when we discussed the VA, just because a medical system is being well-run, well-managed, is innovative and provides excellent care doesn’t mean its funding is easily predictable.  Too often, the VA get used as a political football, with its funding held captive to the budget reconciliation process in Congress.

Medicare and Medicaid, particularly over the last 8 years, have faced similar problems.  Each year, the president proposes a new budget for the Department of Health and Human Services – the cabinet agency that runs Medicare and Medicaid.  If we’re lucky, the budget roughly allows for reasonable per year growth, but includes some incentives to lower cost (and by “lucky” I mean “this never happens”).  If we’re unlucky, the budget attempts to keep spending even or a little below compared to the previous year by targeting specific programs and discouraging their use.  And if we’re spectacularly unlucky, the OMB hacks and slashes like it’s a scene out of Braveheart.

Then a big showdown occurs between Congress and the President.  Deals are struck.  Some programs are kept, some are not.  Some cuts are kept, some are not.  And then they turn their attention to another part of the budget until it can pass as a whole.

Although this is the normal way for government to do business, it opens up any number of political reasons why the recommendations of the National Board of Universal Quality and Access created by HR 676 may need to be overruled or delayed.  When you consider the frequency with which ideology has trumped good policy, the National Board may be placed in a situation where their influence over promoting quality care and a sustainable level of national health care spending is sidetracked or minimal.  How good are their recommendations if there’s no money to fund them?

A more aggressive approach would be for the National Health Insurance program to be budgeted one or more years before the current year, similar to what the VA has lobbied for in recent years.  When the 2012 budget is sent from the President to Congress, it would confirm numbers for 2012 for Medicare for All, but would give hard numbers for 2013 and 2014.  This will allow such a complex system time to plan and target savings so it actually hits that number.

Additionally, HR 676 might well set a floor for national health spending based on percentage of GDP – a number that’s free from political posturing.

There are a number of different options, but something needs to be done to insulate a national health insurance system from the shifting of political winds.

2.)    Where are all the doctors?

Let's say we’ve finally done it – extended access to health care to everyone in the country!  But what happens the day after the bill is phased in, when people try to get an appointment with a primary care physician?  Judging from what’s been happening in Massachusetts, we would quickly hit the full implications of our national physician shortage.

An NPR story from early in 2008 has the details:  “Since the reform law passed, the Holyoke Health Center has been inundated with calls from newly insured people seeking a doctor. More than 1,600 people are on its waiting list; Spain [Dr. Jacqueline Spain] says it takes about four months to get a first appointment.”

There are lots of good suggestions on how to address this – from loan forgiveness for those doctors wishing to pursue primary care, to more equitable reimbursements between primary care and specialist physicians, to increasing the number of nurse practitioners in the workforce and compensating them accordingly.

But none of those suggestions are in HR 676.  That’s an unfortunate oversight of a factor that will weigh so heavily in the successful of establishment of Medicare for All.

3.)     You broke [the insurance industry], you own it.

HR 676 wouldn’t outlaw private insurance companies.  Some of them would continue to exist, offering supplemental insurance for procedures not covered by the comprehensive Medicare for All benefits.  Some of them would convert into non-profit HMOs with clinics and health care providers on salary.  Some of them would convert fully to a non-profit administrative agency to help process claims.  Some of them are insurance companies that are already diversified into other sectors – life insurance, auto, property, etc. – and they’d be able to shift some of their workforce into those other sectors.

And the rest of them are out on the street.  It’s a hit of tens of thousands of jobs.

Bonds will be sold to finance the conversion of those companies wishing to become non-profits, but some companies will decide the business model doesn’t make sense – it’s time to close up shop.  Those middle-class people employed by the insurance industry will be taken care of – with up to 2 years of unemployment benefits and first priority for job retraining in the new Medicare for All system.  That made sense when HR 676 was first introduced in 2003.  An entire industry going under would have been largely unthinkable and required such a strong response.  Suffice to say, this year is different. Why are we being so generous to those employed by the insurance industry but not by the other industries that have been rocked by the economic recession?  It's time to take another look at this section, and adjust it for 2009.

4.)    I fought the insurance companies for this?

There’s bound to be some disappointment over the things that HR 676 will not be able to fix because it doesn’t address them – the physician shortage and the impact on the economy of a number of profit-generating companies shuttering their doors or converting to non-profit status.  But that’s OK, because we’ll save a third of the costs of our health care system by cutting out administrative costs, right?

Well, not exactly.  It’s a popular sound bite (here’s Bill Richardson saying, “Then you focus on how do you get rid of the 31 percent that is administration and overhead and HMO fat and insurance rip-offs. Thirty-one percent of the 2.2 trillion in our health care system is administration and overhead”), but it’s not what we’ll see in savings.

An analysis that I originally found on John Conyers’ Web site (unfortunately, they completely changed his Web site a few months ago, so I can no longer find anything) gets pretty specific on what would be saved by HR 676:
Administrative (paperwork, etc.)     $278 billion
Bulk Purchases
Prescription Drugs                       $87 billion
Non-Durable Medical Supplies     $13 billion
Durable Medical Equipment         $9 billion
Total Annual Savings                      $387 billion

$278 billion is no drop in the bucket.  It’s almost three times the total cost of the Obama health care plan – all in savings.  But it’s only a cut of 12%, not the much-heralded 31% we’ve all heard of.  What gives?

Well, the 31% administrative costs number comes from a 2003 New England Journal of Medicine article comparing the U.S. and Canadian health care systems.  Through their calculations, they came up with the 31% administrative costs number for the U.S. and 16.7% for Canada.  The main lesson isn’t that a single-payer system wipes out all administrative costs (as Bill Richardson’s quote implies).  Public coverage will still have some overheard and administrative costs to deal with.  They’ll be less, but they’ll be present.

It’s still some decent savings.  But without better cost-cutting measures in the bill, our health care spending is likely to be merely ludicrous compared to other countries, as opposed to positively outrageous.

5.)    “The money’s not here!”

Obviously, this program going to cost a lot (though not as much as the status quo).  Rep. Conyers has always been very good at laying out where the money will come from.  Unfortunately, he’s hit upon many of the sources of the income the President-elect intends to tap to move ahead on his entire legislative agenda.

Again, from that handy cost breakdown:

Payroll Tax (3.3% additional on employer/employee)     $538 billion
Stock Transfer Tax (0.25% on seller and buyer)             $150 billion
Reduce Corporate Welfare                                             $100 billion
Reverse 2001 and 2002 Tax Cuts                                  $251 billion
Tax Surcharge: 5% on Richest 5% of Taxpayers; 10% on Richest 1% $200 billion
Total New Revenue                                                $1,259 billion

Interestingly enough, the American sticker shock on this price tag is likely to be less now that we’re seeing $700 billion bailouts and trillion dollar deficits in our headlines every day.

In 2003, when our deficit was still relatively modest, it was plausible that you could recoup money from the Bush Tax Cuts and ending corporate tax loopholes and use that money to invest in health care.  The 3.3% payroll tax is still far less than employers and employees are spending on health care now.  The stock transfer tax has been an intriguing policy idea for a number of years, since the people who would have to pay the most – short-sellers and speculators – exert an oversized and often destructive influence on the financial markets.  That left the tax surcharge as the hardest fight to secure funding for Medicare for All.

Except the rest of the money’s not there for long.  If Obama is serious about education, about poverty, about tax cuts for the middle class, about doing something about global warming, then he’s already anticipating using the corporate loophole money and the Bush Tax Cuts.

So where does the money come from for Medicare for All?  There are no shortage of good ideas – Ezekiel Emmanuel in Healthcare Guaranteed suggests a value-added tax – but they’re not in the 2007 version of the bill.

This is not mere nit-picking.  These are some fundamental problems with our health care system or our funding of public programs that a National Health Insurance Program would find itself uncomfortably caught up in.  HR 676 has not yet been introduced in 2009.  Certainly, Congress observes a long tradition of reintroducing the exact same bill year after year only to have said bill reassigned to committee and die a slow death.  If Rep. Conyers and his co-sponsors address some of these fundamental issues with the bill, this year could be an exception.  If not, we’re likely to still be debating the merits of HR 676 in 2011… and 2013… and 2015…

(Photo credit:  Steve Rhodes on Flickr.)