Beware the Sound Bite
Posted By: Steven Lipstein 
Date Posted: December 21st, 2009 Category: Reform
As we enter the final weeks of deliberations over health care reform and the United States Senate finishes work on legislation, the news media will attempt to capture the essence of last minute revisions, and politicians will attempt to convince us that the final version of the bill is either good or bad for the American people. We must beware the sound bite.
The majority of proposed health care reform legislation is about health insurance coverage. Our government will spend between $800 and $900 billion over ten years to provide coverage for about 30 million presently uninsured people. Half of the 30 million will receive coverage through expansion of the Medicaid program, and the other half through creation of an individual mandate and a health insurance exchange for people to buy coverage. With the individual mandate, the government will provide a subsidy to individuals (based on income and family size) to make the coverage affordable.
Where will the $800-$900 billion come from to pay for this new health insurance coverage for 30 million of our fellow citizens? In the Senate bill, the money will come from: a) additional Medicare payroll taxes on individuals earning above $200,000 and couples earning above $250,000 per year; b) a tax on elective cosmetic surgery; c) a tax on “Cadillac” health insurance plans; d) reduced Medicare payments to providers of health care services; and e) fees charged to health insurers, pharmaceutical companies and makers of medical devices.
Sound Bite #1: Health Care Reform Means Government Controlled Health Care
This is not true. The proposed legislation will increase the number of people covered by Medicaid, raising the poverty threshold for eligibility to 133%, and extending coverage to childless adults who are presently not eligible for coverage in many states. And, many more of us will soon become eligible for Medicare as the baby boomers reach age 65. These public options will grow in numbers, but that does not imply a degree of government control beyond what we have today.
Sound Bite #2: Health Care Reform Will Cause Everybody’s Premium To Go Up
I wish I could give a straightforward “yes” or “no” explanation to this sound bite. Unfortunately, talking about health insurance means talking about “pooling risk”, which in its simplest form presents us, the American people, with a math problem. The goal is to guarantee access to health insurance for the rich and the poor, for the young and the old, for the employed and the unemployed and for those who are healthy as well as for those who have pre-existing medical conditions. To do this, we all need to be in insurance “risk pools” so that the cost of health care can be spread over the largest number of people possible. If only sick and elderly people are in the risk pool, and the young and healthy are not, the premiums will go up beyond what many would consider affordable. However, if young and healthy people are required to be in the risk pool (this is called an individual mandate), then the cost of caring for the sick and the elderly can be spread over many more people and premiums will not go up beyond what is considered affordable.
The debate in Congress is over how to create and enforce an individual mandate. There will be a financial penalty for those who do not comply. However, many insurance companies worry that if the penalty is not high enough, it may be cheaper to pay the penalty than to buy health insurance.
The current estimates are that after health reform, 18 -25 million people will still be without health insurance: those who are not documented citizens, plus those who elect to pay the penalty rather than buy insurance coverage.
Sound Bite #3: Health Care Reform Does Not Do Enough To Control Costs
The proposed legislation is a beginning. It will provide a “starter set” on various approaches to cost control. Each idea is complicated and likely will have unintended consequences. The list includes: a) productivity improvement; b) taxes on “Cadillac” insurance plans; c) simplification and standardization of electronic forms and billing; d) migration from “fee-for-service” to “bundled” payments; e) comparative effectiveness research; f) an Independent Medicare Advisory Board (IMAB); g) an Institute of Medicine (IOM) Study of geographic variations in cost per Medicare beneficiary; h) meaningful use of electronic medical records; i) value-based purchasing; j) an insurance exchange where competing plans can be more easily compared; and k) negotiation of drug prices.
We must remember that as the government moves to control health care costs, the current level of government and private sector spending on health care is the revenue that supports the nation’s health care economy – one sixth of our total economy and one in five American jobs. If funding for health care is pulled back too quickly, not only will our nation’s economic recovery be stalled, but our nation’s doctors, hospitals, health professionals and medical suppliers will not have sufficient time to adjust to lower levels of revenue.
Sound Bite #4: Health Care Reform Does Not Fix Many Problems
True enough. There are many challenges that will remain even after health reform. Many of my colleagues are disappointed that the proposed legislation does not include medical malpractice liability and tort reform. Others point out that there remains a national shortage of physicians especially in the primary care disciplines of internal medicine, family practice and pediatrics. And, compensation disparities among physicians remain skewed in favor of the procedural specialties.
Is it reasonable to expect a single piece of legislation to remedy all that ails the American health care system? Or, is this the best that can be done at this time given fiscal constraints and political realities? On these questions, there will continue to be disagreement and more public debate.
Sound Bite #5: Health Care Reform Will Increase the Federal Budget Deficit
The method of “scoring” the budget impact of any proposed legislation is misleading to the American public. The Congressional Budget Office (CBO) calculates revenues and expenses over the next ten years, and if new revenues over that ten-year time frame are equal to new expenses, they report that a proposed piece of legislation will not add to the federal budget deficit. Often, CBO does not opine on the budget impact after 10 years.
In the case of health care reform, it is true that generation of new revenues to pay for health care reform will begin in 2010 with higher taxes, fees and reduced Medicare payment rates. And, none of that new money will be spent until 2013 when coverage expansions begin. Some allege that this “mismatch” of the timing of revenues (over 10 years) with expenses (over 7) misleads the American people. There is concern that after 2019, the expenses will exceed the revenues and add to the deficit.
History shows that this could happen. Back in 2004, Congress passed and President George W. Bush signed into law the Medicare Modernization Act, providing prescription drug coverage for seniors, and costing $400 billion over ten years. At that time, there was no attempt to increase taxes or reduce government spending. The $400 billion was simply added to the federal budget deficit and these new costs were paid for with new federal government debt.
Republicans and Democrats alike have added to the federal debt over the course of our lifetimes, without having the new revenues to pay for the new expenses at the times they enacted new spending programs. By the year 2000, our elected officials had figured out a way to get our federal budget to breakeven, though we have now fallen back into deficits after 9/11, the wars in Iraq and Afghanistan, and a deep recession.
As Americans, we will once again need to figure out how to get our financial house in order, but let’s not allow the sound bites to scare us unto a state of inaction on health care reform. Adding 30 million people in our country to the ranks of the insured is a good thing to do. Guaranteeing access to affordable health insurance coverage is a good thing to do. And, writing into law, a “starter set” of health care cost control initiatives is a good thing to do.