T.D.C.o.t.E: The Mendacity of Hope

by Dollars and Sense

The Dull Compulsion of the Economic (xvii)

A series of blog postings by D&S collective member Larry Peterson

The Mendacity of Hope: Obama's Healthcare Speech

President Obama's speech to Congress on healthcare has been generally well received since it was delivered Wednesday evening. Commentators have focused on the President's charisma, of course, as well as his intelligence; but what was different this time was a pronounced hint of determination in the face of considerable adversity: and this is something we've yet to see from the young president. But the question then arises: what is there for Obama to be resolute about?

The speech featured the submission of a comprehensive presidential plan (which had been hitherto lacking: the president has been content, up to now, with letting members of Congress write the competing bills). The main feature of the plan consisted of a deal--some would say with the devil--with the insurance companies, pharmaceutical companies and for-profit healthcare providers: in return for losing the right to drop insurance for preexisting conditions, jack up deductibles and out-of-pocket expenses, and discriminating against customers based on age or even geography, individuals would be mandated to purchase health insurance, or face a financial penalty. Employers, too, would have to offer insurance policies to their employees, or pay a stipulated amount into the insurance fund (the so-called "pay-or-play" provision). Subsidies and exemptions would be provided for small businesses and the indigent, and a fund would be established to protect individuals with preexisting conditions who, under the plan, wouldn't be eligible for coverage until 2013.

Such a plan would control costs in a definitive way in only one regard: it would force some thirty million people or so to purchase insurance (a good amount of these are children, and will be covered by their parents). And the savings to the system that would accrue from the proper funding and even avoidance of expensive emergency-room treatment of uninsured persons would indeed provide some offset to the relentless upward pressure in healthcare costs. But there was almost nothing else in the speech about containing costs, especially over the long term, as the population ages and the financing of Medicare(not to mention Medicaid) becomes a serious problem in its own right. Instead, the President played with the politics of the public option and spoke of offsetting the entire cost of the program--set at $900 billion over 10 years.

Regarding the public option, the president brought it up merely to offer it as a potential sacrifice for measures that have yet to be put articulated--never mind put forward, especially by Republicans--as presumably equally valid means to one specific end: the controlling of health care costs. And on financing the program--providing all the subsidies and exemptions for many of the tens of millions who will be absorbed into the system--Obama claimed that all of the $900 billion should be capable of being offset by savings to the system that will be the result of the cutting of huge amounts of waste in the system. Many say that he won't be able to come up with even half of this figure.

So what's wrong with all this? First of all, the idea that the insurers should be compensated for dropping some of the most despicable policies in America is absurd: the denial of preexisting conditions and so on has become a national scandal that should simply have been abolished outright. But such policymaking fits into the Obama notion of change very well: look at the banks, for example (and it's interesting: of all the things that aroused ire over the health care plan, pundits have yet to acknowledge that its timing, coming right after the bailout of the banks, may have played a major role in enhancing the negative connotations the program was capable of arousing, precisely because it is--somehow--a "government" program, and, as such, open to the sort of gaming that has come to characterize the banking bailout).

Then there's the question of cost control. The reason why no Republicans or conservative Democrats have sought out the President's open door is because there simply is no clear way to even hope to control costs in the shorter-term other than through the implementation of a robust public option, or, even better, a single-payer system. Again, like with the banking system, we are in completely unchartered territory, and the signs of systemic health do not look promising. Obama said that he was reluctant to embark upon more ambitious measures like single-payer because he feared that potentially major disruptions involving nearly one-fifth of the economy were simply unacceptable to Americans. But he himself has acknowledged that the health care system as we know it is turning into an unsustainable drag on the economy. So--how do you combat an unsustainable drag, which is only getting bigger by the year? By implementing policies that more than anything else are chosen because they do not cause disruption? And this while disruptions--in finance, the labor market, you name it--are becoming the order of the day in so much of the rest of our daily lives?

So where cost control is concerned, Obama seems to be asking us to trust him and the legislators he's reaching out to (some/most of whom, no doubt, are raking in wads of cash from big pharma, the insurance lobby and for-profit hospitals). It is conceivable that, although Obama pointedly didn't mention this in the speech, a "trigger" mechanism of some sort may be built into legislation, perhaps mandating some kind of public option if costs aren't sufficiently contained. But maybe not; and at this point, given all the prior hemming and hawing, it's hard to trust the administration on this score, never mind the Blue Dog Democrats Obama is looking to sway. It's quite possible that the establishment of heath care co-ops is as far as the latter will go, and who's to say that they won't demutualize or something even if costs are--relatively speaking--constrained for a few years, once/if things get back to "normal"?

In the longer-term, though, the gamble grows more desperate: so many of the things that make the US healthcare system so very expensive, and at the same time so ineffective--the proliferation of specialists to the detriment of general practitioners, the emphasis on treatment of diagnosed conditions to the detriment of preventative medicine, the ludicrous sums spent in the last year of life (and especially to the extent that the latter command outsized levels of pharmaceutical and technology spending), the malpractice premiums, the ever-duplicated paper trail that wends between insurers, hospitals and bureaucracies, and even the President's beloved medical information-technology (also unmentioned in the speech) initiatives--there are no proposals to harness any of these for the sake of cost control. I suppose the President feels that to tinker with any of them would risk interfering with the sacred marketplace. But these factors play a big part in pushing costs up. And though, as noted before, the individual and company mandates may mitigate against the upward spiral somewhat, it is a crap shot at best, and more likely a desperate--even irresponsible--gamble to assume that these mechanisms alone will contain costs in anywhere near effective a way so as to convert the healthcare sector from being a drag on the economy to being a sustainable source of growth (not to mention turning it into a system that actually improves the health care indicators, and, by extension, the productivity--and well-being--of the people).

And even if some kind of public option finds its way into legislation, there is a further worry: President Obama himself made a very unfortunate comparison on Wednesday when he spoke of the public university system as a successful--and popular--check on higher-ed costs. But, as we all know, in education the public alternative has been becoming less-and-less available as public costs follow those of their private competitors upwards: hardly a felicitous precedent for a public option that stands to be much, much weaker, in terms of its financing, than public universities. And then there's the question of quality: will quality decline for those who choose the public option, especially seeing that the funding is set to be so delicate? Will there be huge waiting queues like those we've endured here in Massachusetts for those forced to go on a system that doesn't have the capacity (remember the relative shortage of GPs here) to absorb the newcomers anyway?

One other proposal was left unmentioned during the speech: the removal of the tax exemption for businesses that insure their employees. Presumably Obama is looking to his supporters amongst unionists here, seeking to appeal to their worst instincts to prevent them from demanding payback for getting him elected by insisting on single-payer. But this exemption, which has wrought so much havoc on pay scales in this country for so long, will presumably be allowed to distort them unabated. In a time of economic contraction like we're seeing, the continued drag on wages already reeling from the crash seems destined to hinder economic recovery--and screw up innumerable lives--in a major way. Surely Obama sees that?

But, at the end of the day, the dirty little secret about American health care is that it uniquely sets different parts of the population against each other. And it does so in a way that is the inverse mirror image of that which is supposed to hold sway under competition: seniors with Medicare, the insured with employer-provided, tax-exempt healthcare, and the uninsured who must subsidize both, but who risk the running up of huge bills which fall on the insured (and increase their bills) if they can't stay out of the system, are all induced to get what they can out of the system at the expense of other groups. And the insurers and providers are all too eager to assist in this game, ordering expensive tests for some, denying those they can, and hoping that those left by the wayside won't form a common cause to overturn this rotten system. So far it has worked, and it looks like it will work again, whether or not a health care bill is passed.

On Monday, on what is euphemistically known as "Labor Day" in the US, I was with thousands of demonstrators on Boston Common, rallying for healthcare reform. It was very strange. I, like many of my comrades there, found myself cheering for two opposed policies whenever they came up: single-payer and the public option. It was almost surreal, to use the cliche. What were we demonstrating for? The same thing, I suppose, that President Obama was calling up his commendable resolution about: the perceived necessity of a fudge. Obama is a unique political figure in that he has corralled his undisputed charisma to advance the agenda of discredited--but, in the eyes of the administration, indispensable--elites by putting a somehow positive spin on a palpable sense of his supporters that things are bad and getting worse--intolerable, even. This is the "hope" he speaks of with seeming conviction. That his most important policy stance--the one on which he has said he will risk his presidency--is so obviously defective, from so many standpoints, reveals in a particularly stark way the despair with which he must, in lucid moments, view his signature emotion.

Labels: Barack Obama, health care reform, insurance industry, Larry Peterson, Medicaid, Medicare, pharmaceutical industry, public option, single-payer, the dull compulsion of the economic

 

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9/11/2009 05:27:00 PM