What real comprehensive healthcare reform looks like

Submitted by Edward Harrison of Credit Writedowns.

I have had pretty much no computer access where I am so I apologize for not getting into the debate in the comments from my last post on healthcare.  I wrote this article as an update to that post.  The opinions here reflect only my view and have no reflection whatsoever on how Yves perceives the situation on healthcare.

Yesterday I wrote a healthcare polemic which was mostly designed to discuss the politics of healthcare for the President. The essence of my argument was that Barack Obama has not shown enough willingness to fight for specific policies he espoused on the campaign trail. In a poor economic environment, this weakens him politically, as is being made clear on the issue of health insurance reform.  I hope my language was sufficiently over-the-top to get my point across.

Today, I want to talk more about the substance of the debate. I have to say upfront that when it comes to the actual policies of healthcare, I am probably more conservative than Democrats are but I do believe serious reform is necessary today.

Let me offer some upfront tactical points. Then I will couch the debate in terms of the social-psychological backdrop and how the Obama strategy fails to address it before offering a strategy of my own. At the end, I have a number of links to good posts on the issue from both conservatives and liberals.

The wrong tactics

If you recall, Hillary Clinton outlined her early 1990s health care initiative in excruciating wonkish detail only to have her political enemies use this detail to pick her plan apart. Hillarycare was torpedoed because opponents of her initiative had a lot of ammunition with which to work. Team Obama seems to be fighting this same battle. They are employing a strategy in which cost reduction was the initial selling point of his reform platform. Moreover, Obama and his administration offer little in upfront detail about actual healthcare goals in order to prevent a recurrence of 1994.

But, this is not 1994.  And reducing system-wide costs that trickle down to individuals is not  a selling point that engenders any visceral or emotional response from  voters. Furthermore, I have been dismayed, as have many in America, that Congress and the President seem to have concocted plans for reform before taking the debate over healthcare to the public to inform themselves as to what we want. The draft legislation came first and then the town hall debates.  In fact, these debates never would have occurred had the President had his way with a vote before Congress’ summer recess. This seems very high-handed. Why didn’t we have town hall meetings followed by drafted legislation?

The social psychology of economic depression

We are in a deep economic contraction and people are afraid. What Americans want is economic security, not cost reduction.  Obama must offer a healthcare plan that provides increased economic security to the majority of Americans if he wants greater public support. 

Most people in America are satisfied with their health insurance and their health care.  As they see it, no change is necessary there. Telling people the healthcare system in France, Britain or Canada is just as good as ours and we should switch to their model is a losing proposition.

On the other hand, Americans do feel a general sense of economic insecurity. The unemployment rate and foreclosure rates have risen astronomically. Meanwhile, houses, the main asset for most Americans, have declined in value tremendously, as have stocks. Americans are poorer both in terms of income coming in the door and wealth on their balance sheet. No wonder, the word depression is used to describe a major economic downturn.

And there is an increasing sense of anxiety about paying large out-of-pocket expenses despite having insurance. Here, I am talking about money for specific visits and procedures that one has to reach into one’s pocket and pay out here and now. That’s the kind of ‘cost’ that gets people’s attention – abstract system-wide costs, not so much.

Getting people onboard for reform

Given this array of forces bearing down on average Americans, healthcare reform must have increasing economic security for the insured as as the principal rallying call. We need to allay people’s sense of fear and anxiety by demonstrating that change will make them more secure economically. This is what insurance is all about: reducing economic risk. And right now, given other money problems, most people feel the risk reduction they are receiving is not adequate.

So, reduction of out-of-pocket expenses for those already insured must be the principal selling point of any reform. Mind you, I believe universal coverage is the most pressing need.  But, quite frankly, telling people we need to give something to other people in a time of economic distress is not the sort of thing that makes one want to jump up and shout.

Beyond just reducing the risk associated with out-of-pocket expenses, there are other issues of insecurity – the risk of losing coverage or paying more money when losing or changing a job, the risk of dropped coverage due to pre-existing health conditions, and the risk of exceeding yearly or lifetime caps.  If the healthcare plan that the President and Congress present to the American people can credibly claim to reduce these risks to those already insured, we would be more likely to accept reform on other issues which I am about to address.

To recap, most Americans like their health care, but feel there are significant gaps in their health insurance.  Obama has made a savvy move in switching the debate of late from care to insurance. In reforming American health insurance, four issues will gain widespread support:

  1. Capping per visit and yearly co-payments fees.
  2. Allowing every worker to remain with the same health insurance provider and paying largely the same premium had they remained with the same employer regardless of employment situation.
  3. Preventing health insurance companies from dropping coverage for pre-existing conditions.
  4. Providing all employees with a health insurance policy option without annual or lifetime caps and making the caps explicit for other options.

Two other reform issues to be addressed

With the issues established that will get most Americans onboard, reform can turn to other agenda items.  The first issue is clearly the lack of insurance for tens of millions.  This is an issue which is easy to demagogue due to stereotypes about just who has no insurance in the United States (illegals, Blacks, Latinos, the extraordinarily sick, or the young and healthy).  But the true purpose of health care reform has to be insuring all those working in America and their families against large and unexpected healthcare expenses and to promote universal basic preventive care.  If we pass a health care bill without substantially all Americans being covered against catastrophic healthcare loss, you can deem the legislation a failure.

However, there is one other issue of importance as well. James Pethokoukis had a good blog post yesterday “A healthcare plan to save Obama’s presidency” which encapsulated this idea. First he agrees that universal coverage is necessary.  But, he also adds an important bit regarding our employer-based system.

Make health insurance mandatory and subsidize those who can’t afford it. (That’s the blue part.) But at the same time dismantle employer-based health plans, which prevent consumers from understanding the true costs of their healthcare decisions. In any case, employer plans are just an accident of history. (That’s the red part.)

The simplest way of dismantling them, according to an analysis by McKinsey, would be to make the money spent on health insurance by employers available as cash, tax free, to employees. "Insurers would then compete for customers with policies that offer better value for the money," according to McKinsey. "The combination of invigorated supply and demand is the only healthcare reform plan that will avert the economic disaster that otherwise awaits us."

A Purple Plan for the centrist – or purple — president many Americans thought they were voting for. It would bolster the president’s popularity, lift American spirits and help restore the economy.

If I run a business in the United States in competition globally, why should I be forced to provide healthcare to my employees unlike businesses in no other country.  This clearly puts American businesses at a disadvantage and is a legacy of a system that needs to end.

What’s more is dismantling the employer-based health insurance system would have a huge stimulative effect on the economy and financial assets.  Every listed company in the United States would instantly be worth more and have more money available to provide for investment.  But, of course, the devil is in the details because this measure would effective be a tax cut for business.  Where is the revenue to support this cut?  If the President and Congress could find a legitimate way to recoup this revenue that makes the health care initiative relatively deficit neutral, there would be bipartisan support for such a provision.


The healthcare debate has been a fiasco.  It was begun without any input from the American people. Obama and many in Congress even attempted to pass legislation before the summer recess when serious debate could happen.  We saw this tactic under Bush when Hank Paulson tried to fast track the TARP legislation.

As a result, the debates have often not been very substantive and have degenerated into an emotional demagoguing of this key issue. Better messaging would be nice as well.  What’s in it for me?  And what are your goals in passing this legislation?  These are two questions neither Obama or many in Congress can answer.

Below are twenty articles I found informative. They run the gamut from very conservative to very liberal (Patrick Buchanan to Robert Reich, if that gives you a better flavour). I am adding them here for your attention as well.  Comments are appreciated.

  1. Why We Need Health Care Reform – Barack Obama, NYTimes.com
  2. Obama Goes Postal, Lands in Dead-Letter Office: Caroline Baum – Bloomberg.com
  3. Economist’s View: Swiftboating Health Care Reform
  4. Robert Reich’s Blog: How Tough is Our President?
  5. Populist Right Rising – Patrick Buchanan
  6. The inevitable socialisation of health care financing – Willem Buiter 
  7. Economist’s View: "Public Option versus Co-ops: The Market Test"
  8. Clive Crook – Obama took wrong turn on health
  9. The Swiss Menace – Paul Krugman
  10. Ara Darzi and Tom Kibasi – In Defense of Britain’s Health System – washingtonpost.com
  11. Fareed Zakaria – When Only a Crisis Brings Reforms – washingtonpost.com
  12. Obama’s teflon melting as outrage over healthcare heats up – Marshall Auerback
  13. Economist’s View: "A Public Option Isn’t a Curse or a Cure"
  14. On why I can’t get in to see my doctor – James Fallows
  15. You Do Not Have Health Insurance – James Kwak
  16. A Canadian doctor diagnoses U.S. healthcare – Los Angeles Times
  17. Unconscionable Math – Taunter Media
  18. Hospital Savings – Salaries for Doctors, Not Fees – Series – NYTimes.com
  19. Charles Krauthammer – Why Obamacare Is Sinking – washingtonpost.com
  20. My whopping $32 emergency room visit in the land of socialized medicine
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About Edward Harrison

I am a banking and finance specialist at the economic consultancy Global Macro Advisors. Previously, I worked at Deutsche Bank, Bain, the Corporate Executive Board and Yahoo. I have a BA in Economics from Dartmouth College and an MBA in Finance from Columbia University. As to ideology, I would call myself a libertarian realist - believer in the primacy of markets over a statist approach. However, I am no ideologue who believes that markets can solve all problems. Having lived in a lot of different places, I tend to take a global approach to economics and politics. I started my career as a diplomat in the foreign service and speak German, Dutch, Swedish, Spanish and French as well as English and can read a number of other European languages. I enjoy a good debate on these issues and I hope you enjoy my blogs. Please do sign up for the Email and RSS feeds on my blog pages. Cheers. Edward http://www.creditwritedowns.com


  1. Flow5

    first, all paper work needs to be standardized.

    Then the Lawyers as Legislators are a conflict of interest.

    Why doesn't Congress pass tort reform?

    Why don't they cap medical malpractice?

    If Obama wants to find a place to save money, reduce health costs, improve care, i.e. really tackle health reform, then take the money from the lawyers.

    Don't take the money from the doctors. We will need more of them. And we already have too many lawyers.

  2. Edward Harrison

    yes, tort reform is an issue I didn't cover but which has inexplicably been absent from the debate.

    Obviously, streamlining will be a big issue in the future, but this can really only be done through a single insurer option and I just don't think that's on the table here.

    A friend recounted a tale yesterday where her 5-year old dying of cancer and she was bombarded with bills from 19 different doctors and providers. Her thought was: all that paperwork has to be expensive and I'm paying for it somehow.

  3. Anonymous

    "If I run a business in the United States in competition globally, why should I be forced to provide healthcare to my employees unlike businesses in no other country. This clearly puts American businesses at a disadvantage and is a legacy of a system that needs to end."

    This may be true. What you fail to consider, however, is that through the current system where employers subsidize employees' health care (there really is no health insurance, per se) is that it gives companies enormous power over its employees. Many, many people remain with current employers (especially large ones) mainly because they don't want to lose the plan they have vs. what they'd get would be able to get should they start their own company or go to a smaller company.

    So yes, employers want the cost savings but that doesn't mean they in return are willing to break the "health plan chains" that keep many Americans shackled to their current jobs.

  4. Edward Harrison

    Anon, the lock that companies have is something I am well aware of. However, I am more concerned with what health insurance reform provides for individuals than companies.

    Nevertheless, getting rid of the burden of providing health care would be a huge boon to companies, so large that I believe they would support it.

    I should also point out that the absolute number of different health care plans would be reduced significantly if they weren't tied to a specific employer. That reduction in overhead would be enormous.

  5. Catawissa Gazetteer

    I'm sure that I'm just speaking for me but, I want to know just exactly where the government gets the authority to be involved in healthcare, period. From licensing doctors to regulating drugs to interfering in the insurance business; the federal government has no Constitutional authority to do any of this. Oh sure, they've probably found some convoluted legal justification, but I mean real Constitutional authority, as it was understood by the Founders.

    The simplest way to effectively reform healthcare would be to allow the free market to do it for us. I am willing to take the chance that some doctors and pharmacuetical companies may provide bad treatment; after all, it happens with government interference, too. The internet has given us the ability to research our options quite effectively. I usually am nearly as well informed as my doctor on any problem that I may have before I go to see him. I don't need the government invovled in my medical decisions or my life.

    Thanks for your time.

  6. TulsaTime

    If nothing is done about increasing the supply of health care providers, hopefully before providing universal coverage, then government will do the usual job of making everything worse. Basic low level prevention and care is what the nation needs, but that will not enrich providers.

    We need a 'bubble' low level care providers. But since low level will not bring high cash flow, it will never happen.


  7. Anonymous

    "If I run a business in the United States in competition globally, why should I be forced to provide healthcare to my employees unlike businesses in no other country.

    Is there some Federal law that requires an employer to provide health insurance? I thought health insurance was an optional benefit extended to an employee, and even in states like Massachusetts, which has a state mandate, could be avoided just by paying the fine, which may be more cost effective. And is every US business "in competition globally"? McDonald's may be international, but that doesn't mean much to a local franchise.

    The simplest way of dismantling them, according to an analysis by McKinsey, would be to make the money spent on health insurance by employers available as cash, tax free, to employees.

    And how would this be accomplished? Make a cash payment in lieu of employer-supplied health insurance be a selectable option by the employee, per Federal mandate? If so, would the cash payment not be equal for all employees? Does anyone see a problem with that?

    Or maybe should we just outlaw private insurance once a government organized system is in place? The Canadians tried that once.

  8. Slug

    Catawissa Gazetteer said:

    "The simplest way to effectively reform healthcare would be to allow the free market to do it for us."

    The free market excels mostly at aggregating capital, not at protecting disadvantaged participants in the system.

    William Black makes a good comparison to the situation in China where baby milk was sold that was just talc and melamine, killing 50 infants. He's comparing this to products in the banking sector, but his point was that the bad products drove out the good, since the good products could not compete on cost with the bad. With a lax or nonexistent regularly environment like China, you should expect toxic and hazardous products, and for the system to reward these producers of bad products.

    Are you such a free market fan that you would roll back the 40 hour work week, child labor laws, etc? Or is health care a special case?

  9. Carlosjii

    Let’s just give everyone the health care program Congress has voted for itself and be done with this crazy quilt of private-public-for-not for-profit crap we have now – each with its own special interest group very invested in their own position.

    0Bama so far is a failure – probably in large measure due to Rahm’s game plans.

    Health insurance provided by employers began in WW 2 as companies producing war materials used it as an incentive to attract employees. This stuff is not written in the Constitution – it’s a now perverted hodge-podge of policies etc.

    My friend works for a non-profit home health care agency. She is up against for-profit home health care agencies that routinely give kickbacks to the referring hospital personal AND doctors who are regularly able to direct patients to particular agencies. The patients everyone wants are the Medicare ones. The little sisters of Eternal Grace or something who have been running the place since the 1800’s are CLUELESS. As Casey Stengel said “you can look it up.”

  10. redst8r

    @edward, you said:
    What’s more is dismantling the employer-based health insurance system would have a huge stimulative effect on the economy and financial assets. Every listed company in the United States would instantly be worth more and have more money available to provide for investment. But, of course, the devil is in the details because this measure would effective be a tax cut for business.

    Huh? But the described process does no such thing. It specifically transfers the health benefit cost from an insurance company to the employee. Where exactly is the cost savings to the company? Further, once the first years costs are given to employee's how are subsequent years costs to be determined. And if the employee is now dependent upon the employer for this new benefit (in exchange for the old benefit) will they be more content?

    I actually agree with the concept but as a small business employer I'm not sure this execution works in the details. Would it be better to eliminate the benefit and/or remove the tax exemption from employers and add a wage based tax which can be rebated via refundable tax credits to individuals so they can obtain their health care? In effect this charges employers for health care via the wage based tax while spreading the benefit via a refundable tax credit to all employees.

  11. Catawissa Gazetteer

    I am a fan of the free market, a free market regulated by the understanding that there is a God and that He has created rules that we are supposed to follow. I understand that this will not guarantee that everyone will follow those rules, however I believe enough will, especially in America, that the free market will work as intended. I don't mind some very small level of government intrusion into the market, but only enough to insure an even playing field. This is what the Founders intended. My complaint with the system as it is structured today is that government long ago ceased to be a referee and decided to stand in the place of God Himself.

    And yes, I have no problem with getting rid of the 40 hour work week and most child labor laws. I am quite aware of why they were enacted and understand the reasoning. Like most intrusions into the market by the government they have been abused and have far exceeded their original mandate.

  12. Catawissa Gazetteer


    Regardless of what happened in China I still would like an answer to my original question: Where does Congress get the authority to regulate healthcare or for that matter, child labor or adult labor? I cannot find any authorization for any of this in the 17 powers granted Congress in the Constitution. The Founders never intended Congress to have these sorts of powers. These kind of laws fall under the jurisdiction of the states, if anyone. That is why the Founders wrote the 10th amendment.

  13. skippy

    @Catawissa Gazetteer,

    Look your ethos and ideology are your own and I have no issue with that, but there are lands were your feelings are shared. Africa for one has many states/countries were every man is his own and as such is responsible only for him self. Take a visit or holiday you may actually like it.

    Skippy…not being flippant either, there is a place for all of us on this planet, just not always where we are born.

  14. Anonymous

    "Insurers would then compete for customers with policies that offer better value for the money,"

    Edward Harrison,

    Enough theory! All it takes is some phone calls to test the viability of market base health insurance. Pretend you are interested in buying a policy using some preexisting test cases such as having a spouse with past breast cancer or a parent with a down syndrome child. Or try a sixty year old man with repeated heart attacks.

    What I think you will find is that private health insurance companies are only interested in you if you can be a low risk form of cash flow.

    In my current state of residence, it is illegal for an employer to deny coverage due to preexisting conditions but not so for individual policies.

    For me, employer base health care offers more security than having to purchase it outside a risk pool

  15. Andrew Foland

    re point 3: not allowing coverage to be dropped because of preexisting conditions

    This is the sort of reform that sounds great and fair and important but as a practical matter is actually totally useless. As long as insurers are allowed to charge differently for preexisting conditions, they will simply raise the price of insurance to some non-viable number. (Insurance company's) Problem solved.

    The justification for a free market is that (under a longish set of presuppositions of varying correspondence to reality) it is believed to most efficiently allocate capital to economically productive enterprises.

    Taking care of a sick child with a preexisting condition is not an economically productive enterprise. But it is a desirable one.

    That's why the free market is simply an inappropriate solution to the problem.

  16. Don

    Let me ask everyone a question: Do you consider price and discount when buying Tylenol and Pepcid? I answer in the affirmative.

    Here's another question: Do you consider price when considering brain surgery? I answer in the negative.

    Therefore, I suggest splitting health care costs into two categories:
    1) Medical goods that a consumer could price and shop accordingly on.
    2) Medical goods that a consumer cannot price and shop accordingly on.

    Once you do this, you can split up medical costs into:
    1) Costs subject to a deductible.
    2) Catastrophic Costs.

    And, further, you can say the following:
    For 1) You don't want third party payers, since you want the consumers to shop for the best price.
    For 2) You can have a third party payer. In fact, you can have one: the Federal Government.

    Now, here's Milton Friedman's plan:

    "A more radical reform would, first, end both Medicare and Medicaid, at least for new entrants, and replace them by providing every family in the United States with catastrophic insurance (i.e., a major medical policy with a high deductible). Second, it would end tax exemption of employer-provided medical care. And, third, it would remove the restrictive regulations that are now imposed on medical insurance—hard to justify with universal catastrophic insurance.

    This reform would solve the problem of the currently medically uninsured, eliminate most of the bureaucratic structure, free medical practitioners from an increasingly heavy burden of paperwork and regulation, and lead many employers and employees to convert employer-provided medical care into a higher cash wage. The taxpayer would save money because total government costs would plummet. The family would be relieved of one of its major concerns—the possibility of being impoverished by a major medical catastrophe—and most could readily finance the remaining medical costs. Families would once again have an incentive to monitor the providers of medical care and to establish the kind of personal relations with them that were once customary. The demonstrated efficiency of private enterprise would have a chance to improve the quality and lower the cost of medical care. The first question asked of a patient entering a hospital might once again become "What’s wrong?" not "What’s your insurance?"

    I would add a Democratic Party addition to this plan: You could relate the deductible to income.

    That's my plan. Everyone covered.

    I would add the following: I've no idea what the correct amount of money that we should spend on health care should be. That's why I would like some portion of our medical bills to be subject to our own choice.

    Don the libertarian Democrat

  17. "DoctoRx"

    Ed-nice post though no one will agree w all points.

    I agree re catastrophic coverage/economic security as a theme. I do NOT agree re prevention other than re infectious diseases.

    Perhaps not mentioned by you or the commenters so far is the importance of having all consumers of healthcare pay the same price. Right now, the insurers have a win-win game in that only they make deals with hospitals and MRI clinics etc to charge fairly. Walk in with high-deductible or no insurance and you get charged outrageous amounts. Simple legislation limiting maximum charges to a modest amount above minimum discounted group rates for any US citizen (resident?) would solve the problem with no cost and minimal effect on the bottom line.

  18. Catawissa Gazetteer

    So far, I've been questioned about child labor and it has been suggested that I find a country more in line with my beliefs. Yet, the question of Constitutional authority has not been answered.

    My beliefs are very much in line with those of the Founders. They believed in a very limited role for the Federal government, as do I. It would seem that my country has abandoned its founding principals. I only seek to return to it what it rightfully owns. I am not the one trying to change my country, the progressives are.

    Andrew Foland said:
    "The justification for a free market is that (under a longish set of presuppositions of varying correspondence to reality) it is believed to most efficiently allocate capital to economically productive enterprises.

    Taking care of a sick child with a preexisting condition is not an economically productive enterprise. But it is a desirable one.

    That's why the free market is simply an inappropriate solution to the problem."

    As I stated in a previous post, I, like the Founders, believe in a free market governed by the Natural Law (God). Following the Natural Law, one would save the child because one has a moral obligation to do so. The child has a right to life which means that I would have a duty to protect his right.

    I don't believe that a free market that functions outside of the Natural Law is truly free. Once the market imposes upon the rights of man it becomes oppressive. The right to freedom, whether of markets or people, does not come without responsibilities.

  19. DownSouth


    Thanks a million for the list of links.

    You gotta love the one by Patrick Buchanan. What he calls "overprivileged Ivy League brats seizing campus buildings and holding the dean hostage," Hannah Arendt hailed as one of the most inspirational happenings of the 20th century–a spontaneous "student rebellion almost eclusively inspired by moral considerations":

    Let us look briefly at the beginnings of this movement. It arose in the United States quite unexpectedly in the fifties, at the time of the so-called "silent generation," the apathetic, undemonstrative generation. The immediate cause was the civil rights movement in the South, and the first to join it were students from Harvard, who then attracted students from other famous eastern universities. They went to the South, organized brilliantly, and for a time had a quite extraordinary success…

    [Later it shifted to] Berkley with the Free Speech Movement and continued with the Anti-War Movement, and again the results have been quite extraordinary. From these beginnings and especially from these successes springs everything that has since spread around the world.
    –Hanah Arendt, Crises of the Republic

    The students who participated in this movement remind one of FDR, no, insofar as they broke with the mere power or money interests of their class and advocated for the powerless and the disposessed?

  20. Viva la Muerte

    God sayth, it is right for Govermnent to raise armies on borrowed money for mass slaughter, but it's not in the spirit of the Constitution for Him to meddle with health care.

    Take care.

    Yours fiendly

  21. RTD


    "Article I Section 8. The Congress shall have power to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States;

    To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;"

    Libertarian types may not like the general welfare or interstate commerce clauses, but they are, nevertheless, part of the Constitution.

  22. DocG

    The idea that "big government" is something to be feared or that "the government" is trying to take over the country is both undemocratic and laughable. Big government is what our democracy is all about. The government doesn't need to take over, because it's already the government's job to run the country. That is what governments DO. DUH!!!!

    Big government, aka representative government, aka government of the people, by the people and for the people, is what we are all about as a nation. This is the type of democracy our founders fought for. It's the type of government our greatest president fought a civil war to preserve.

    If you are suspicious of "big government" then I am suspicious of you, because that sounds to me like what a traitor would say.

  23. Hugh

    There is just so much wrong with this I don't know where to begin. Most Americans are not economists. They think like economists and they don't make decisions like economists. They want to know if healthcare will be there when they need it and can they afford it. We currently have an Iron Triad of private insurers, BigPharma, and the medical industry that are sending healthcare costs through the roof, leaving many with no affordable access, and dedicated to cutting off those who are currently insured precisely when they need access the most. This is not sustainable but nothing in any of the current bills or in your suggestions really changes any of this. You talk about co-pays but there is no restraint on sky-rocketing premiums. Limiting one but not the other means that any extra cost will just be funneled through the unregulated one. In a time of job losses or people who find a new job but at lower wages, what does access to their previous insurance do for them if they don't have the money for the premiums. And that whole notion about giving people the money and sending them forth to buy insurance is reminiscent of the calls to privatize Social Security. The most powerful argument in both cases is that it won't work. Most people simply don't have sufficient knowledge to make informed choices. By turning it into an individual process, they lose all bargaining power. And to top it off in many parts of the country there are only one or two major insurers anyway so the idea of competition between them is fiction.

    You repeat on the one hand that people in this country that have insurance are satisfied with their insurance but then contradictorily point out undependable that insurance is and how scared most Americans are about losing it. Well you can't be satisfied and terrified at the same time. And it is not that single payer systems in the rest of the industrialized world are as good as ours. It's that they're better even though they cost substantially less to run than our system. Obama is only being "savvy" in switching the debate from healthcare to insurance if you accept the current pejorative meaning of "savviness". Healthcare is about Americans. Insurance is about insurers and the medical industry. So when the debate became all about insurance, Americans knew it was no longer about them.

    As one blogger I know has said, keep it simple. Medicare for all. Americans know and trust this program. Despite all the righ wing rants, it and Social Security remain the government's two most popular programs. Even the clueless teabaggers disrupting the various townhalls wanted to keep Medicare even if they really didn't understand it was a government program. Medicare has been able to keep its own costs and costs in the medical industry down, something the private side has not. And people covered by Medicare or looking forward to such coverage think it does a good job even though it is dealing with an older, sicker population. Sure it has problems but most of these are a function of conservative attempts to hobble it, as with denying it the power to use its market share to negotiate lower drug prices.

    I have already touched on this in previous comments but our poltical leaderships in both parties aren't up to facing and fixing the major problems of our times. We spend most of our time not tweaking good ideas but seeking to salvage what is the least worst out of hopelessly bad ones. Good dependable affordable universal healthcare is feasible in this country, but given the close connections between politicians and special interests, I don't see it happening now. Maybe in a year or two if and when we go into depression, I could see meaningful action if only to forestall social unrest. But until then I do not see real change, only inertia and the persistence in bad choices and worse policies.

  24. Anonymous

    The Google ID thing didn't work for me so I'm posting as Anonymous, but my name is Karen.

    Thank you, RTD. Catawissa, it doesn't sound as though you have read the Constitution, or the Founders' writings either, for that matter (e.g. the Federalist Papers).

    About Ed Harrison's idea to eliminate employer-based health insurance:

    Isn't that very unpopular, according to the polls? Certainly, eliminating the tax-deductibility of employer-provided insurance seems to be unpopular – and the many people who are afraid they might not be able to keep their current insurance under "Obamacare" apparently WANT their employer-based insurance.

    When people are afraid of uncertainty, they are also afraid of change, by and large. Except when the change is simple, and VERY obviously making them safer (no denial of insurance based on, or wait for coverage of, preexisting conditions).

    I think Obama's move to eliminate the end-of-life consultation thing (the "Death Panels") and the government option is smart, given that he'd already allowed the government option to be basically toothless.

    Eventually we will all figure out that the reform did nothing much about spiraling costs, and another reform will have to happen – but in the meantime we will have better health-insurance portability and hopefully universal coverage.

  25. homebody at heart

    My parents had employer provided private health care. Most of the comments from people who don't want "government" in their healthcare probably haven't experienced going through what I did with my mom. She died of pancreatic cancer and my dad had bypass surgery. I can still remember the discharge planner telling me that they needed to discharge my mom because they were a for profit company and they were losing money by keeping her there. My sisters and I could not believe what we were hearing since my parents had been with that health care provider for over 40 years (Kaiser). We had to be at the hospital on a daily basis for fear they would discharge her without us knowing or without regard to her condition. One discharge planner, who btw, are registered nurses, tried to discharge her without reading her chart. She had been scheduled for seeing a specialist the following day. I asked him what the initials "R.N." stood for after his name if he would discharge a patient without reading their medical chart. They constantly quizzed us on why we wanted her to be stabilized, etc. before going to convalescent care. They wanted to make sure that we knew she was terminal (we knew). Once she was in the "terminal" category I can only suppose that the level of care is different and I supposed that they felt it would make us more understanding of their not wanting to waste money for her medical care since she was going to die anyway. This is the reality of private health insurance. It is not the panacea it is being portrayed as by the politicians in the thrall of health insurance companies.

    I could go on also about how my dad was discharged too soon after his bypass surgery, only to have to call 911 a few evenings later (he spent about another 3 weeks in hospital after that). Oh, and he had to wait a week for his bypass surgery after they said he needed it because they didn't have room for him at their heart surgery hospital. (They didn't even want him to put pajamas on by himself because they thought that he could have a heart attack.) This is the reality of private health care insurance. I have experienced it up close and very personally and I am not afraid of government-provided healthcare.

    Am I satisfied with my own employer-provided healthcare? Well, as I am currently just fine, why not? But a couple of years ago when I had rotator cuff surgery, absolutely not. I was locked into the one and only physical therapy provider my insurance company had contracted with. My doctor wouldn't even provide additional visits since he said it was pointless if that was where I had to go… And as for how much the rates for health insurance has gone up every year, it is ridiculous.

    My sister is paying $400/month for insurance premiums and she has a $1200 deductible. When she goes to the doctor and pays $95 for the visit, the doctor told her he only gets 1/2 of it, the insurance company gets the other 1/2. I say, bring on the government provided health care. If you don't want to sign up with them, that is your choice no one will make you. Pay the private premiums or exercise your right to not. And, I really don't feel sorry for the doctors, or medical students who worry about how rich they won't become under government health care since any pay raises we will see will be eaten up by the increases in our private health care premiums. They can join the going broke club because we are all going to go there trying to pay our private health insurance premiums. (One of our consultants told me his premium is $600/month). To Sarah Palin, Catawissar Gazetteer and their ilk, you can take your rhetoric and well, you know what you can do with it…

  26. Anonymous

    Why is no one suggesting that we securitize and market this stuff?

    The whole benefit of those same companies dealing in anonymous securitized debt on the other side of their balance sheet could work just as well for liabilities (policy holders).

    That I could sign onto. Auction us off to the highest bidder in groups of 100.

    At least its honest.

  27. Jeff65

    Catawissa Gazetteer,

    Not to knock the founders, but the Constitution as originally written allowed for slavery and only male land owners could vote. It was written so that it could be changed, and it has changed. Time to start living in the present.

  28. Richard Kline

    So Hugh at 12:57, I agree with every word. I've gotten so tired of repeating that basic boilerplate reality that I almost don't even want to talk about the 'health care debate,' since it has precious little to do with health care and everything to do with keeping exisint profiteers profitable, the public be damned.

  29. Anonymous

    The wrong tactics…If you recall, Hillary Clinton outlined her early 1990s health care initiative in excruciating wonkish detail only to have her political enemies use this detail to pick her plan apart.

    Absolutely. Democrats should learn from Henry Paulson and the TARP. Offer just a couple pages, even just a couple paragraphs.

    yes, tort reform is an issue I didn't cover but which has inexplicably been absent from the debate.

    Hmmm…. I'm sure this isn't because the Democratic Party's largest single donor bloc (trial lawyers) doesn't want it.

    Yes, inexplicably absent…

  30. Anonymous

    "1. Capping per visit and yearly co-payments fees."

    Absolutely the opposite of the required remedie for the vast majority of Americans, at least the per-visit part. Obscuring the cost of medical care from consumers is not the solution. As a matter of fact, it is a major part of the problem. Most people above the poverty line are better served by catastrophic coverage with much lower premiums, using the premium savings to pay the costs out of pocket until they reach a high-deductible annual max, and then pay nothing after that. Add in refundable tax credits to cover all this so that the poorest people can get similar coverage as the middle class, and you've solved a massive part of the problem.

    "2. Allowing every worker to remain with the same health insurance provider and paying largely the same premium had they remained with the same employer regardless of employment situation. "

    Exactly. Dump the stupid depression-era policy of the company store for healthcare, and change the tax law so that healthcare is not the golden handcuff that employers use against their employees – but at the same time enable group coverage that is not dependent on your boss.

    "3. Preventing health insurance companies from dropping coverage for pre-existing conditions."

    So why would I bother to get insurance until I know I'm sick with something very expensive? I understand the problem with pre-exeisting condition and I'm very sympathetic for the vistims of it. I just don't see this as an easy answer.

    "4. Providing all employees with a health insurance policy option without annual or lifetime caps and making the caps explicit for other options. "

    "Employees"? Is it that difficult to get away from the outdated constraint that only employees should have private coverage?

  31. Anonymous

    The goal of health care reform has to be coming up with a system that can keep America solvent once the baby boomers retire. Everything else is bullshit from a good governance perspective.

    While promising people tons of benefits and no costs to them is a shrewd political way to sell any recommendation, its horrible statesmanship. The plan you outline is full of expensive benefits and low on cost controls, which means it will simply go bankrupt when the boomers retire.

  32. Keenan

    Ed: terrific post and comments. There are so many ways to reduce medical costs through prevention, diet, exercise, etc.

    Even generic drug prices could be cut in half if supplement mfgs were permitted to obtain the compounds and press the tablets.

    But FDA's byzantine procedures and its cozy relationships with the pharmaceutical corporations present barriers-or-entry to companies with the necessary expertise, but outside of the pharma industry.

  33. Edward Harrison

    There has been so much commentary here that I think I may work to put together a list of articles on the health insurance issue starting with this twenty.

    I would add the John Hempton article Yves linked out to today and Bob Herbert's article that Down South suggested.

    Probably this list will go up on Credit Writedowns sometime between today and Monday. I will update it if you send me suggestions.



  34. Francois

    Edward Harrison wrote:
    "tort reform is an issue I didn't cover but which has inexplicably been absent from the debate."

    Inexplicable? Hmm! Not exactly!

    "The New York Public Interest Research Group recently found that "the amount of money paid for malpractice claims in New York has actually fallen in recent years, and that the number of overall claims has remained 'remarkably stable.' "

    The data comes from the study, "Contraindication: New York's Medical Malpractice Insurance Hikes are Contrary to Payment Trends".

    Also, if one look at "Medical Malpractice Payments Hit Record Lows," released by Public Citizen, it tends to corroborate the findings by the NYPIRG. Public Citizen compared information about medical malpractice payments and patient safety estimates. A notable finding was that although medical malpractice payments were at or near record lows (for the year 2008), the low payout was not caused by fewer claims.

    Hope this helps

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