The health care fix

Universal care, yes; a plan like Canada’s, no. What Obama wants.

The health care fixIf there is one thing Barack Obama has emphasized as he pushes for a sweeping reform of the U.S. health care system this summer, it’s that it should not end up looking like Canada’s. Obama took the prospect of a Canadian-style “single payer” system—in which the government acts as a national insurance provider—categorically off the table. “There are countries where a single-payer system works pretty well,” he said in a speech to the American Medical Association on June 15. “But I believe—and I’ve taken some flak from members of my own party for this belief—that it’s important for our reform efforts to build on our traditions here in the United States. So when you hear the naysayers claim that I’m trying to bring about government-run health care, know this: they’re not telling the truth.”

And yet. In speeches and television ads, Republicans are warning of Canadian-style health care coming to America, and digging up stories of Canadians who suffered through long wait times or sought out care in the U.S.—as warnings of what’s in store if Obama gets his way. Kingston, Ont., resident Fran Tooley found herself the subject of a speech on the U.S. Senate floor by Republican leader Mitch McConnell. The senator had read that Tooley had to wait a year to see a specialist for three painful herniated discs in her back. “Americans don’t want to end up like Fran Tooley,” McConnell said on June 8. “They like being able to get the care they need, when they need it. They don’t want to be forced to give up their private health plans or be pushed onto a government plan that threatens their choices and the quality of their care.”

What Obama says he wants is a “public option”—a government-sponsored insurance plan that individuals could choose to join if they were unsatisfied with their private insurance plan, or if they could not afford one. How it would be paid for remains to be fleshed out—it would likely involve a combination of taxpayer dollars to get it started, premiums paid by individuals and businesses who choose to join, and taxpayer subsidies for those who can’t afford to. The public option would help achieve Obama’s two main reform goals: reducing out-of-control costs and achieving universal coverage in a country where 45 million remain uninsured. Obama reasons that a public option would be cheaper than private plans because it would be a non-profit operation, and because its sheer size would allow large economies of scale to lower costs; additional savings could come from piggy-backing on administrative infrastructure already in place for the public health plan for senior citizens, Medicare.

But critics of a public option say it is merely a “back door” to a single-payer plan. On Tuesday, the two largest groups representing health insurance companies wrote to senators warning them that such an option would “dismantle” America’s traditional insurance system. “A government-run plan—no matter how it is initially structured—would dismantle employer-based coverage, significantly increase costs for those who remain in private coverage, and add additional liabilities to the federal budget,” said the letter from the heads of America’s Health Insurance Plans and of the Blue Cross Blue Shield Association.

At a press conference on Tuesday, Obama dismissed their argument. “Why would it drive insurance out of business?” the President asked. “If private insurers say the marketplace provides the best quality health care, why is it the government, which they say can’t run anything, suddenly is going to run them out of business? That’s not logical.” But asked whether he would push a public option as a “non-negotiable” feature of a health reform bill, the President left himself room to manoeuvre. “We are still early in this process. We have not drawn lines in the sand other than reform has to control costs and has to provide relief to people who don’t have insurance or are under-insured,” he said. “Right now our position is that a public plan makes sense.” However, he acknowledged that insurance companies have a “legitimate concern if the public plan was simply eating off the taxpayer trough so that it would be hard for private plans to compete.”

Dennis Smith, a senior fellow in health reform at the Heritage Foundation, a conservative think tank in Washington, said it is hard to imagine that a public plan would not siphon off taxpayer dollars. He accused proponents of the public option of deceptive rhetoric. “When the debate first started, people were very upfront and said, yes, our objective is to get to single-payer,” says Smith. “Now they have come to realize the American public doesn’t want that. Now they are trying to hide what they are trying to do and are saying the public plan will compete with everyone else.”

However, Christina Romer, chair of the White House Council of Economic Advisers, has told Congress that the government-run health insurance agency that President Obama hopes to create would “never” rely on public money after it is established. As with all sweeping policy reforms, the devil will be in the details, analysts say. “A public plan is not necessarily a drain on the treasury,” says Karen Davenport, director of health policy at the Center for American Progress, a liberal think tank in Washington. “We don’t yet know what the plan will be. It may well not be publicly subsidized. It may have to price its premiums to meet the same reserve requirements as private plans. It would have certain economies of scale and advantages of lower administrative costs. But private plans will have different advantages.”

Obama has asked Congress to work out the details and present him with a bill to sign into law by October. It’s a short timeline for a massive reform—but Obama wants to move quickly while he enjoys public support, arguing that the growing costs of health care are weighing on the economic recovery. He noted that Americans spent over $2 trillion a year on health care—almost 50 per cent more per person than the next most costly nation—and that within 10 years, one out of every five dollars will go toward health care. He has said the bill should achieve universal coverage, but should not contribute to the already jaw-dropping U.S. government deficit, which is US$1.7 trillion for this fiscal year.

For now, public opinion appears to be on Obama’s side. A New York Times/CBS News poll conducted in mid-June found that 72 per cent of those questioned supported a government-administered insurance plan that would compete for customers with private insurers. Twenty per cent said they were opposed. The public option also has strong support in the U.S. House of Representatives, where Democrats enjoy a healthy majority and Speaker Nancy Pelosi is committed to the cause. “I’m saying we will have a public option in the House that will be real,” she said on June 19. “If it’s not real, it’s no use doing. And if we don’t do a public option, I’m not sure that we have as effective a public health care reform as we wish.”

But the Senate is a different story. There is weaker support there for a public option, and anxiety about deficit spending and government’s ever-expanding role. The Congressional Budget Office sent chills through senators when it announced that one bill that would subsidize health insurance for poor people would cost US $1 trillion and still leave 37 million people uninsured, while another plan under consideration would cost US $1.6 trillion. Centrist Democrats have expressed doubts that a public option could pass in the Senate. There is a strong possibility that an eventual Senate bill would shun a public option in favour of a system of regional- or state-level health co-operatives owned by members. Critics say they would not have the same bargaining power or economies of scale as a public plan to bring down costs.

Obama has also identified a series of other reforms he wants to see in the health care legislation, among them a ban on insurance companies rejecting people based on pre-existing conditions. He has also called for a variety of new spending, for such initiatives as preventative care, as well as for a major effort to analyze the effectiveness of treatments and tests. As part of his budget passed a few months ago, the President also put aside $635 billion over 10 years into a Health Reserve Fund. More than half of that is supposed to come from limiting tax deductions for the wealthiest Americans. He is also looking for a variety of spending cuts in existing government health spending. However, he has not heeded calls to support capping malpractice awards in a country where litigation leads to expensive “defensive” medicine, such as the ordering of extra tests and treatments.

Whether the public option will survive the legislative sausage-making process—and how hard Obama will fight for it—will probably only become clear sometime in the fall when lawmakers begin the arduous task of reconciling House and Senate bills. “That is when we will see the administration get heavily involved to get a compromise they will be happy with,” said Davenport. But Obama remains confident that he can succeed in reducing health care costs and achieving universal health coverage, something that eluded Bill Clinton a decade ago. Already, the President has won an agreement from the pharmaceutical industry to reduce its draw on the health care system by $80 billion over the next 10 years by offering lower prices for seniors’ drugs. At a June 22 press conference announcing that deal, Obama was buoyant enough to revive an old saying from his presidential campaign. “Yes, we can!” he said. “We are going to get this done.”

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