Obama Co-Opts Second Term

President Obama has indicated he has no interest in a second term.

He already told Montana residents that he prefers their bears, moose, and elk to the bull in Washington. Now he has signaled that short-term bipartisan wins are more important than long-term gain in his signature issue, healthcare reform. And we all know what happens when you kick up a firestorm over a huge future-of-the-country type issue and don’t deliver anything meaningful to ease the pain: you go down as the worst president in history (sorry, GWB).

Kathleen Sebellius, Obama’s Health and Human Services (HHS) secretary, told CNN that a public insurance option was “just a sliver” of overall healthcare reform [1], and that it was “not the essential element”. State run co-ops will do the trick, she insists.

Obama himself waffled before that, saying, “…the public option, whether we have it or we don’t have it, is not the entirety of health reform.” The White House has two-stepped since then, insisting the public option must at least be part of the House bill (H.R. 3200) to pass. This of course ignores the reconciliation process between the Congressional bodies after that. But whatever. Have some butter and syrup with those waffles?

Chinese Insanity

In short, the President has hinted he is willing to let a broken free market continue to reign and completely implode, rather than offend Republicans or Blue Dog Democrats. They will, of course, eat him alive in D.C. cannibalistic fashion when their desired neutered bill does nothing to ease healthcare costs or access.

Now, the Chinese definition of insanity is “doing the same thing over and over, expecting a different result.” During the world's last giant economic slump, there was Herbert Hoover. Faced with the Great Depression, he trusted private corporations to drive the nation’s recovery voluntarily, the “laissez-faire” method. This led Business Week to ask in 1931:

"Do you still believe in Lazy-Fairies? To plan or not to plan is no longer the question. The real question is who is to do it?"

Free Market Healthcare To The Rescue?

Now, I’m all for a free market economy—but corporate America’s profit-driven motives do not an economic or health stimulus make.

Take the giant government bailouts so far. Give the banks $700 billion, not much happens except they make record profits. Buy back toxic mortgage assets, and the taxpayers are stuck with worthless real estate IOUs. Bail out long-dead US car manufacturers and you get, well, government-owned automotive dinosaurs. Give the taxpayers cash directly, however—through Cash For Clunkers—and you generate the first successful economic stimulus of the century.

Sorry, proposing more free market insurance in the form of impotent co-ops does not solve a free market insurance-generated problem.

Wait, I think we’ve been here before. Oh yes, in 2002 then- HHS secretary Tommy G. Thompson announced $40 million in grants [2] for state high-risk pools (insurance option for the individually uninsurable, which 32 states offer), “as part of the Bush Administration’s broad strategy for expanding access to health care for the more than 40 million Americans without health insurance.”

These grants were intended to expand access and increase affordability (sound familiar?). Instead, states used them to temporarily regain pool solvency. So 178,000 total enrollees across the country still pay 125-200% of usual individual premiums and most risk pools remain closed to new applicants. Substitute “state-run co-op” for “state high-risk pool” and you have a crystal ball.

Power To The People

Perhaps the government might want to incentivize taxpayers to help themselves instead? Help For Health anyone? Let’s look at what didn’t work here.

Way back in 1986 Congress passed the Consolidated Omnibus Reconciliation Act (COBRA) to allow affordable insurance portability when employees leave employers (wait, this sounds like an access and affordability fix again!). Congress was concerned about the high number of uninsured Americans. Twenty-three years later, what do we have? Sixteen million more uninsured, skyrocketing insurance costs, and the government subsidizing 65% of COBRA’s lethal bite for recently laid-off workers.

So what have we learned here? First, apparently the “subsidize small, dysfunctional, expensive, and impotent state-run programs” strategy doesn’t work. Second, requiring private insurers to extend access to more taxpayers for even a limited time (COBRA is typically 18 months) gives them carte blanche to fast-track premium increases onto the exponential scale.

OK, so co-ops don’t work. Why are they even under consideration as a “compromise”? Regulating private insurance doesn’t work either. Why is this the Republican mantra (besides all the insurance lobby cash finding its way into their pockets)?

More importantly, why are Washington and much of the uninformed population base in a murderous tizzy over the only type of reform that HAS been shown to work worldwide? Set up a government program to enrich the lives of taxpayers and they will enrich themselves. Seniors are making darn sure their Medicare won’t be messed with.

Why Insurance Is REALLY So Expensive

We haven’t even tackled the real reason premiums are reaching for the stratosphere. Hint: it isn’t what health insurers like to parade in front of public plan proponents.

The myth is that because Medicare and Medicaid reimbursement rates are so low, providers have to charge more to private insurers and the uninsured. Reality? Well, it’s all about anti-competitive forces. You see, the greater the market strength of a given provider [3] (say, a large health system), the more it has insurers over a barrel. They literally force higher reimbursement out of them, regardless of cost to provide care, quality care or better outcomes. Meanwhile the little guy (your solo physician) gets squeezed.

Of course, providers large AND small get paid on quantity of “care” — patients better plan on lots of imaging studies and procedures during their medical visits. If doctors screw up and have to do it all over again? More charges! We could call this the No Provider Left Behind program. All of this drives up costs while leaving our healthcare outcomes to eat other developed countries’ dust.

And we haven’t even considered the insurance administrative cost of cherry-picking members, post-claims underwriting (rescission), and executive bonuses. Add the two forces together and you have one heck of a lot of wasted spending.

Why Waste 44 Years Of Infrastructure?

This means that just regulating insurers isn’t going to solve the problems US healthcare faces. Government plans already pay providers less, so they have that aspect tuned up. Medicare’s streamlined administration costs 78% less [4] than that of private plans (see why in “Anatomy of a Public Plan [5]”). It is also piloting payments based on quality and coordination of care, not quantity of procedures. Moreover, its customers love it.

Medicare has two drawbacks. First, it makes it too easy for providers to charge for however many types of services and equipment they want. Second, it’s based on Ponzi economics (shrinking pool of current taxpayers paying for a growing pool of seniors drawing their prior “investments”). Both these flaws are relatively straightforward to fix. Reimbursement for quality and coordination of care is in the works (Blue Cross Blue Shield of Massachusetts [6] already pays 25% of its providers this way), and pay-as-you-go premiums are the industry norm.

Now why would we waste 44 years of Medicare administration by trying to reinvent a broken private sector wheel?

2^nd Term Hedge

So Mr. President, your capitulation on healthcare reform tells me you’ve really had enough of Washington bull. But just in case you change your mind about running in 2012, you might want to ensure you don’t give:

1) The Blue Dogs in your own party and the Republicans fueling ignorant chain mails a reason to vilify and ostracize you, and

2) Americans suffering and dying in extreme healthcare debt a reason to loathe you.

Government-run plans have found success across all other industrialized countries, both cost- and health outcome-wise. As a hip young leader you can understand the Nike slogan: Just Do It.