Flawed Health Reform Could Hurt Dems in 2010—Part I

Senate Majority Leader Harry Reid (D-Nev.) (R) hugs Sen. Chris Dodd (D-Conn.) during a news conference after the Senate approved a motion to bring healthcare reform legislation to a full debate on the floor of the Senate on November 21, 2009.   (Photo by Brendan Hoffman/Getty Images)

By Roger Bybee

Many progressives appear to know little about the latest proposed Senate health reform bill, other than that it's not single-payer. This two-part piece will try to remedy that. Part I will address the most fundamental inadequacies of the bill currently being debated.

Democrats' timid, defensive approach to healthcare, which began by ignoring a single-payer, "Medicare for all" plan, could result in a political train wreck for the Democrats in 2010, while doing little to address Americans' health problems.

The party has generally failed to authoritatively frame the issue in clear moral terms, instead deploying cloudy policy-wonk phrases that are meaningless to the general public. Democrats have refused to vigorously push a "public option" that could possibly compete with private insurers and thus hold down premiums. Instead, regardless of what version eventually emerges from Congress, the power and profits of insurers will be immensely strengthened, making the task of structural reform far more difficult in the future.

WHY THE DELAY?

The Dems have delayed implementation of most features of reform, even though 45,000 Americans die annually due to lack of insurance, according to a recent Harvard Medical School study. The uninsured only receive belated treatment or vastly inferior care; a new study reported that those without insurance are "nearly twice as likely to die" after treatment as those who have insurance.

So why are Democrats waiting until 2013 or 2014 to apply some of the most important provisions of their (increasingly watered-down) health plan? Perhaps they are afraid of the potential for widespread public disappointment and disillusionment and want to delay that as long as possible.

But people will eventually realize the limitations of what's called "reform" when the legislation's essential features start to seep through the media. To wit:

MANDATORY PURCHASE OF UNRELIABLE PRIVATE INSURANCE

"Private health insurance is a defective product. We know from our studies of bankruptcy that the majority of Americans who face medical bankruptcy start their illness with private health insurance but are bankrupted anyway by gaps in coverage, like co-payments, deductibles and uncovered services," argues Dr. Steffie Woolhandler of Harvard Medical School. No less than 62% of personal bankruptcies are caused by medical costs.

Thus Business Week accurately concluded back in August that "the insurers have already won." As Dr. Woolhandler explains, expansion of coverage without effective cost controls is likely to be a short-lived victory:

What’s happened in the past when bills like this have passed in the states is that they run out of money very quickly, healthcare is simply unaffordable, and then you start to see the coverage expansions cut back. The subsidies shrink, the Medicaid shrinks, and then you’re back at square one, where you’ve spent a lot of money and not made any progress.

AFFORDABLE PREMIUMS?

Very little discussion has been devoted by the media to the all-important question of whether premium levels will be set at genuinely affordable levels. First, for-profit insurers will continue to have the power to arbitrarily jack up their rates for most Americans whenever they feel like it, whether it is in retribution for regulations they wish to undermine or a drop in their returns from the stock and bond markets (which account for more than 40% of their revenues.)

Second, under the Senate Finance Committee plan drafted in large measure by former Wellpoint insurance lobbyist Liz Fowler working hand-in-glove with Chairman Max Baucus, premiums for under a "silver"-level plan would be unaffordable to most families.

For example, the Washington Post reported that a family of four earning $54,000 would pay premiums of $5,300. But before the family would derive any benefits from those premiums, they would have to pay a $5,000 deductible. In other words, the family would be exposed to
$10,300 in annual health costs.

Third, even the more generous House bill, described in depth by Carol
Miller in at excellent piece at CommonDreams.Org on Nov. 16, would set a deductible limit of $1,500 (which is high, but far lower than the Senate Finance Bill) but would also allow a variety of cost-sharing schemes, with a staggering limit of $10,000 per family annually.

While we don't yet know the details of the final Senate bill to be unveiled by Majority Leader Harry Reid, there is very good reason to worry about the bill's content as the Senate heads into debate.

It may take a while to sort out the final bill Democrats hope to enact, but when the public finally has a chance to sift through all the details of the final health bill (the Senate bill still has to be reconciled with the House bill, now weighed down by the fanatically anti-abortion Stupak amendment), they will see that the insurers get tens of millions of new customers thanks to some$465 billion in public subsidies so that fellow Americans can buy insurance, and untold additional billions in revenues.

GIVEAWAYS TO BIG PHARMA

Despite Obama's campaign-trail blasting of Republic concessions to the drug industry—no federal negotiation of soaring drug prices and a ban on reimportation of drugs from Canada—the White House conceded on these very points.

Dr. Woolhandler observes:

The pharmaceutical industry, frankly, is thrilled with this bill. And despite all their squawking, the health insurance industry is pretty happy, too. You know, Wall Street has rewarded them by driving up the value of their stocks. And I think any fair and honest reading of this bill would say that it’s a tremendous victory for the health insurance industry.

PATHETIC, PUNY PUBLIC OPTION

The option will not be open to all Americans like the "Medicare Plan E" concept proposed about a month back, but will enroll only an infinitesimal 6 million. Hence the public option will never be able to achieve its rationale for exerting positive pressures on the premiums and practices of private insurers.

The public option will have to compete with well-established
private, for-profit insurers (United HealthCare alone has 70 million
customers), and will likely have to negotiate rates with doctors and hospitals rather than a formula of Medicare rates plus 5%.

By now, it is increasingly apparent that the public option is likely to function as a dumping ground for older, sicker patients, and thus will have higher, not lower premiums than the for-profit firms so skilled in "cherry-picking healthy patients. And the Senate plan will permit reactionary states like Mississippi—precisely those states with the most appalling health conditions—to opt out of the plan.

FREEZING INEQUITIES INTO PLACE

The Democratic reform plans institutionalize different tiers of care for people based on their ability to pay. Apparently no longer feeling it necessary to hide America's shameful secret, the Democratic plans openly create "basic," "enhanced," "premium," and "premium-plus" levels of benefits.

These tiers of coverage fundamentally repudiate the notion that healthcare is a basic human right to which all Americans are equally entitled.

Please visit Working In These Times tomorrow (while taking a break from your Thanksgiving celebrations) for Part II, which will focus on health reform's electoral implications for Democrats in 2010—based on the assumption that some band-aid version of reform will actually be signed into law, of course.