Obama Healthcare Reform

If you watched the President’s infomercial on ABC you began to get a sense for how difficult this is going to be. While Charlie Gibson tried to press for details from the Prez, it was pretty clear that he wasn’t going to commit to anything – at least until the Congress gets something on the table. The lessons learned from the Clintons’ failure a decade ago, i.e., don’t try to cut a deal in the back room – the subject is so inherently political that Congress must be involved early in order to get their buy-in. It may be that Obama’s strategy is to let the House and Senate battle like Hutus and Tutsis until they both collapse from exhaustion and he can pick up the few pieces of agreement that may have resulted. I’m not too optimistic and my guess is that not many of our fellow citizens are either. The Prez is spot-on when he says that the cost of doing nothing with a broken system is unacceptable. That’s where the agreement ends.

The reality is that there are no dollars to be reallocated unless someone (or probably everyone) agrees to take a big haircut. Watching the new head of the American Medical Association and CEO of Aetna grit their teeth on national television was something to behold. Neither the physicians nor the insurance companies are about to cede any ground on how much of the pie they get. Patients will always believe that they are entitled to the sun and the moon – this is to be expected since we pay through the nose through both insurance premiums as well as taxes that fund Medicare/Medicaid. If my 88 year-old dad needs a cardiac stent , I’m all for it. If your dad does, that’s wasteful spending. Good luck reconciling that in the context of public policy.

As to the public plan option – no doc is going to agree to do all of the preventive care if they’re not getting paid fairly – just check-out how much they complain about Medicare reimbursement rates today and imagine how a broad-base public plan is going to drive down costs – cutting payment rates. Establishing teams of providers lead by better paid primary care physicians and moving away from fee-based procedures by specialists? Makes sense. Good idea to shift to outcome-based healthcare? Absolutely. But you can imagine those cardiologists, radiologists,  orthopedists, and neurologists trying to suppress the gag reflex at the prospect of shifting dollars away from them and toward nurse practitioners and physician assistants. When pigs fly my fellow Americans.

The only dollars that could be “found” currently reside in the pockets of the insurance companies. Americans claim to like what they have and the thought of giving up ground to provide a way for insurance to others is a deal killer. The fact is that keeping what they have is a mirage due to escalating premiums and out-of-pocket expenses and reductions in coverage. Worried that the Big Brother government is going to start making decisions about your medical care based on cost containment? That’s already happening – Big Brother is named Blue Cross, United or Wellpoint.

Here’s my crystal ball – there’s too much money at stake with insurers and providers. The Death Star of lobbying efforts includes $100 million from the U.S. Chamber of Commerce, $10 million of AMA contributions to congressional candidates since 2000 and $35 million from medical insurers and pharma companies in the first quarter of 2009 alone represents an irresistible force that will distort this round of reform – just like the last efforts. Over 70% of Americans want to see foundational change in the healthcare system but very few (at least of those that are insured) want to see the way in which they receive care changed. In other words – we want more for less. That isn’t going to happen and the lobbyists for the folks that are making a living as a part of the healthcare food chain know it. If Obama is lucky, he may win some incremental change around the edges – but that’s about it.

Ultimately, there will be an economic and operational train wreck in the next 15 years that will result in a complete overhaul and a single-payer system. By then Medicare will be irretrievably bankrupt, employer-based healthcare insurance will be twice as expensive and available only to a fortunate few. Hospitals will be shutting their doors, unable to continue to bear the costs of over half of the population using the ER as their primary care and your own doctor will stop accepting Medicare altogether. Healthcare is not a commodity that responds to normal free market motivations. So long as we try to manage and market it as if it does, true reform will remain off in the distance.

Harry and Louise

The Obama administration announced yesterday that it has been in discussions with a consortium of key players in the healthcare industry including insurance companies, hospitals, providers and pharma pledging to cut $2 trillion in costs over the next decade. BHO described this as “a watershed event” that could represent the first real and collaborative effort to fix the trainwreck that is the U.S. healthcare system.

You may remember the couple at left, Harry and Louise, the henchmen of the insurance lobby that has since morphed into the American Health Insurance Providers (AHIP) trade group. Their role was to either “talk sensibly about” or “submarine” the efforts of Hillary Clinton and Harold Ickes back in 1993 – depending upon your point of view.

What could possibly get this group to join hands in common cause? The reality that with the direction that the wind is blowing, if you don’t play nice and get a seat at the table now, you might find yourself on the outside looking in. At minimum, the last thing any of these groups want is to be legislated right out of the for-profit business.

Before we start celebrating, however, we have to ask the obvious question. Is this gift a Trojan horse? After all, several of the organizations that sent that letter have in the past been major villains when it comes to health care policy.   – Paul Krugman

As NY Times Op-Ed columnist and Nobel Prize winning economist Paul Krugman reminds us, “What the rest of us call health care costs, they call income.” To say that we should all be a bit cynical about the motives of the healthcare-industrial-complex would be an understatement of epic proportion. You certainly can’t accuse Obama of being timid in his willingness to take on big challenges.

Regardless of where you sit politically, there is consensus that the way that we pay (or don’t) for healthcare is an enormous albatross around the economy in general and virtually every individual and business in the country. Can the patchwork of interests be knitted together without resorting to a federally managed and delivered single-payer system? Kind of depends on whether Harry and Louise will work with Barack or if they’re going to be snakes in the grass.