On Health Care Reform

One of my four readers asked if I'd considered writing a post on health care reform in the U.S.  I don't know that I will say anything that hasn't been said elsewhere, but here we go ...  et voilà:

The health care issue in the U.S. is so difficult for four reasons.

The first reason is economic, and really a no brainer:  The real costs of health care are hidden.  People wrongly think (because it seems that way day-to-day) that they are getting something for nothing.  Because the costs are hidden, the system generates services that are constrained by normal cost considerations.  This was driven home to me two Sundays ago when I picked up a prescription for my son, who has bad acne.  The clerk at the pharmacy handed me the prescription and said, "That'll be twelve hundred dollars...." before realizing he had been reading the "actual cost" information rather than the co-pay information.  Incredible but true -- the actual cost of a one-month supply of this stuff was $1,217.  My co-pay was $10.  I rather think, as much as I love my son, that if I had to pay the actual cost, he would be using over-the-counter acne medicine, or some cheaper medical treatment.  But if, God forbid, the insurance company refused to pay, I'd go off cursing the evil, profit-mongering health care companies.  Demand will always go up for services seemingly priced so very much below actual cost.  Hence the reason health-care premiums have skyrocketed over the past 15 years.  Even when employers off-load more of the cost to workers (thus making the impact of health costs more directly felt), without some day-to-day, service-to-service price signals, people will just want, and take, more and more health care, even if, like my son's acne medicine, some of it can probably be done without.

The second reason has to do with the unique nature of what's being "consumed" by "customers" of health care.  Being badly sick or wounded is horribly frightening.  Death petrifies most people.  Next to money, our physical well-being is so critical to our overall sense of happiness that it overwhelms most rationality.  The power of modern medicine seems closed to magical or mystical, and how much would we pay for magic?  I was going to die, and now I'm going to live -- how much is that worth, anyway.  The intensely emotional nature of decisions about our health care would skew our rational economic behavior even if the system itself could send accurate price signals.

The third reason is political, the subject, really, of a full week of lectures when I teach my intro Political Science class.  By virtue of the weak party system; the fact that legislators are elected on a local, not national, basis; increasingly "safe" districts and thus increasing powerful incumbents; the primacy of the committee and sub-committee system in Congress; and the increased importance of special-interest funding in Congressional elections, those same special-interests are able to exert an oversized influence on legislative outcomes.  Since there's big, big money to be made in the health care industry, and many existing parties with an interest on seeing the present system continue, the odds of Congress ever enacting a truly effective health care reform bill is practically non-existent.

The fourth reason is sort-of political, but really beyond that:  The massive distrust of government that has engulfed the right wing and, less obviously, subtly infiltrated the center and left as well.  The federal government is inexorably involved in the health care system today, and any effective reform requires the federal government (or the state governments under a program of federal design) taking on a larger role.  But because a solid minority of citizens believes the government is a dishonest, corrupt, self-serving, power-mad meddler that wants nothing more than to stomp out all individual freedoms, any "government" program for health care starts at a huge disadvantage.  The reason we're at that point deserves another post, which hopefully I'll get to some day, but for now let's leave it there.

So there you have it -- it's a big, ugly, multifaceted mess.  The economics are screwed up, people's emotions get involved, huge moneyed interests want to keep their piece of the pie, and many are distrustful of the government's competence and motives.

Could Obama have done anything differently that might have made things go better?  Some have suggested that he should not have been so willing to work with Congress, or so willing to compromise with the Republicans.  But these criticisms ignore the respective flip sides:  Obama can't pass legislation alone, only Congress can, so working with Congress was a necessary evil.  And Obama came to office believing that he should try to change the nasty, vitriolic awfulness that passes for discourse in Washington, D.C.  He wasn't wrong, in my opinion, for trying to compromise, for even though he's reaped the wrath of Republicans on this issue (and may ultimately have to assemble his party and push something through), he has managed to stay above the nastiness fray in a way that's refreshing.

My one criticism would be that his plan is not bold enough.  If you are going to address this issue, and have such a huge prolonged fight about it, do something big.  From what I can tell, the current plan just nibbles around the edges.  It doesn't really do much to contain costs (and, disappointingly, does almost nothing to further medical malpractice reform which, I believe, could have swayed moderate Republicans to support the bill).  In fairness, Obama had a tough, tough road, and his pragmatism may, in the end, have been the best path.  But we won't have a real solution until, unfortunately, the system starts to collapse around the heads of the middle class.  The current plan, in my view, just puts that day off a few years.