According to Forbes, health care costs increased 8% per year from 1993 to 2007. Inflation over that same period was less than 5%. If "Hillarycare" or some other reform had passed in 1993, it's possible we could have kept costs even with inflation. We all could have saved several hundred billion dollars.
Health care costs are predicted to rise 6.2% per year until 2019. But considering the 8% rate of increase in the abovementioned 14-year period, I fear that's a low estimate. So, if we delay health care reform again (until another new, charismatic Democrat is elected President after Jeb Bush), we could pay an even steeper price and lose several hundred billion dollars more. That's what's at stake. That's our money that the health care industry is fighting to keep for itself. We can't blame them for trying. But we must blame Congress for not listening to us. Last week, doctors and other advocates of a single-payer health insurance system were not included among the "stakeholders" invited to testify before the Democratic-controlled Senate Finance Committee. When they stood up in the audience to protest, Sen. Max Baucus [D-Mont] ordered them escorted out by police, then laughed about it, along with John Kerry and other Democrats.
Bury Harry and Louise
By Joshua Zumbrun
May 11, 2009 | Forbes.com
WASHINGTON, D.C. -- When the Clinton administration attempted major health reforms in 1993 and 1994, industry groups rose up to crush them. The Health Insurance Association of America funded a series of ads featuring Harry and Louise, a generic American couple of the future, grumbling about the bureaucratic nightmare their health care had become.
This time around, President Barack Obama is trying to get the health care establishment on his side. Six of the biggest players in the industry came to the White House on Monday to pledge to reduce the rate at which U.S. health expenses are increasing. (See "The 1.5% Solution")
Obama, always predisposed to symbolism, drove the point home: "Harry and Louise, who became the iconic faces of those who opposed health care reform in the '90s, desperately need health care reform in 2009."
Standing behind him as he made the remarks were the leaders of the Advanced Medical Technology Association, the American Medical Association, Pharmaceutical Research and Manufacturers of America, the American Hospital Association and the Service Employees International Union--trade groups representing medical technology companies, doctors, pharmaceuticals, hospitals and labor.
Also in attendance was the head of America's Health Insurance Plans, which was formed from a merger of the Health Insurance Association of America and another insurance lobby. The very group that ran the famous Harry and Louise ads is now onboard for reform.
What's changed? In 1993, national health expenditures were around $900 billion a year, or about $3,500 per person, according to the government's National Health Expenditure Accounts. By 2007, that had risen to $2.2 trillion, or $7,400 per person.
Left unchecked, the next decade is shaping up to be a rough one for Harry and Louise. If current trends continue, annual health expenditures would grow to over $4 trillion a year in about a decade. That'd be about $12,000 per person.
Monday's pledge is to slow that growth, so that in a decade we're spending $600 billion less a year than we otherwise would be. But where those savings will come from is unclear.
Some specific savings have been identified by the White House, such as unnecessary re-admissions to hospitals. Almost one-fifth of hospitalizations under Medicare occur for people who had been discharged from the hospital within the month. Doing a better job the first time they're in the hospital could save $25 billion over the decade.
Changes to Medicare Advantage plans could reduce overpayment by $177 billion over the next decade. The plan also calls for "pay for performance" plans. Currently a doctor would be reimbursed at a certain rate for each X-ray and procedure, which creates an incentive to order up a lot of unnecessary tests.
With a "pay for performance" plan, a doctor would receive a fixed rate for, say, fixing someone's knee, eliminating the incentive to order up lots of unnecessary test. This could save $12 billion over 10 years.
The industry has pledged to reduce the growth in costs by 1.5 percentage points a year, which works out to saving $2 trillion over 10 years. The savings identified thus far are a fraction of that.
[I think we can put that promise in the same category as, "Profits from Iraq's oil will pay for reconstruction." - J]
More important to the industry groups is ensuring that they have a seat at the table. In 1993, the Democrats had control of both houses of Congress, but there were 57 Democrats. With the defection of Pennsylvania's Arlen Specter to the Democratic Party, and assuming Al Franken prevails in the still-unresolved legal battle for the open Senate seat from Minnesota, there will be 60 Democrats.
Sen. Max Baucus, D-Mont., the chair of the Senate Finance Committee, says he's determined to move health care legislation this year. "Health care reform is my top priority and I look forward to working with these stakeholders as we consider a health care reform bill in the Finance Committee in June," says a statement from Baucus. "I'm confident that together with doctors, hospitals, patient groups and industry experts, we will determine the best ways to get health-care costs down, improve patient care and build the health care system that Americans deserve this year."
[Um, excuse me, but what about the 300 million stakeholders called the American people? Who in Washington is listening to them? Take your pick: poll after poll after poll shows increasing numbers of Americans fed up with our health care system and would support either a single-payer health insurance system, or, as Obama has proposed, an expanded role for Medicare, and/or a federal "national health insurance exchange." A majority of Americans, to their credit, are also willing to pay higher taxes if it means insuring every American. In addition, 60% of members of the National Small Business Assocation supported a "federally funded, government administered health care system financed through taxes." Even 59% of U.S. physicians surveyed in 2008 supported a single-payer system, not to mention the 124,000-member U.S. College of Physicians. So... who's more important, these stakeholders, or the ones making all the money off the current system? Whose voices are more important? - J]
By jumping on board, the health care industry hopes to stop the proposals it feels would be most damaging. (Ultimately, if people are paying less for health care, then someone--the doctors, or the hospitals, or the insurers, or the drug companies, or the tech firms--will probably receive less.)
Insurers, for example, are particularly worried that the government would introduce a government health insurance plan that could damage their business. It may be dismaying, then, for them to hear Sen. Charles Schumer, D-N.Y., talk about Monday's announcement. "This commitment to cost-cutting is a good-faith gesture by the health care industry, but it does not mitigate the need for a public plan option in the upcoming reform bill," says Schumer.
The health industry will not really have any accountability to make the cuts pledged Monday. But they've clearly decided that this time, when it comes to health care legislation, it's better to be on a freight train than in front of one.
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