Obama, Health Care Reform, and Corporate Chicanery: Capitulating the Battle and Losing the War

Image via Wikipedia

So health care reform is virtually over, the chance for progressives to win out and to really cut costs and inject competition into the health insurance market has passed, and the corporations won out again. As noted below, I was despairing earlier today, but after reading Bob Cesca's latest piece at Huffington Post, I feel slightly better. His main point is that, despite being truly, utterly pissed off about how things have transpired in the health care debate, there is too much still at stake to actually "kill the bill." To wit:

Yet I can't help but to believe that killing reform will only heap an even larger failure on top of losing the public option, the Medicare buy-in and so forth. Only this time, it won't be a failure limited to an ideological or political routing. The failure of health care reform will invariably mean at least another decade (if not two decades) of a desperate health care system in crisis. Another decade or two of medical bankruptcies and deaths due to a lack of insurance -- exponential premium hikes and rescissions. You know the list.

If I stop being pissed off long enough to take a good look at what remains in both the Senate and House bills, there aren't necessarily fool-proof solutions to these problems, but there are regulations, subsidies and reforms that will ameliorate a significant chunk of the present crisis. For example, the Senate bill will reduce the cost of insurance for a family of four earning $54,000 from around $19,000 per year to around $9,000 per year.

[snip]

Do progressives really want to tell working-and-middle class families of that they're not allowed to get a $10,000 annual break on their insurance payments? If you're okay with that, I admire and respect your integrity, but I just can't be a part of it. Objective reality dictates that there's no other path at this point but to support the bill and to subsequently endeavor to fix it.

So incremental reforms it is, but at least 30+ million additional Americans will have insurance coverage, despite having to pony up the cash to buy that insurance themselves. Let's hope those subsidies come through, and that they're generous...

But the larger issue here is a sense that our President is selling us out. He could have drawn a line in the sand and fought harder for the public option, rather than pay lip service to it to appease the liberal base. He could have fought for pharmaceutical reimportation from Canada to help save the US taxpayer over $100 billion over the next 10 years, as he had when he was a Senator, however he brought his considerable political weight down on the side of killing that reform effort in order to preserve his backroom deal with the pharmaceutical companies to preserve their profits as long as they did not work to destroy reform. Beyond health care reform, the sense that Barack Obama is not living up to be the President we voted for is also apparent in the "financial reform" efforts I wrote about earlier today, and Cenk Uygur writes passionately about that sense, laying out a concise summary of all that is disappointing about our President thus far. In brief:

But I don't put the civil liberties and the wars in the same equation as the other issues I mentioned. Why? Because it's one thing if I disagree with your policies and principles, if they are genuinely held. Ok, that's a sad day for me but doesn't necessarily indicate that you're wrong or unprincipled (no matter how much I might disagree with you). What I mind is the give-aways to corporate lobbyists that have nothing to do with your principles and have everything to do with politics and money. What I mind is when you sell out the American people to protect corporate America. I hate it when the Republicans do it and pretend to be for the little guy. And I hate it when this administration does it and pretends to be for change.

There was always going to be buyer's remorse when a huge portion of the voting public places their hopes and dreams in one man who must work within the system that is presented to him, however I don't think anyone expected the remorse to be quite this sharp, on so many issues of such great importance to our country. I hold out hope for a change from Obama, but hope is fading fast these days.

UPDATE II: Health Care Reform to be Killed?

Updates below...

Today is a tough day across for liberals.  Whether that is a positive development in you opinion or not, health care reform is something that, if done right, could help so many people in so many ways that any setback in the reform movement should be cause for concern among many. The health care bill in the Senate has been diluted by special interests (read: moneyed interests) and their lackeys in Congress to the point where it appears to be more beneficial to the American people to simply start over with a fresh bill. Howard Dean, one of the foremost experts on health care in American politics today, argues to kill the bill too:

"This is essentially the collapse of health care reform in the United States Senate," Dean said. "Honestly the best thing to do right now is kill the Senate bill, go back to the House, start the reconciliation process, where you only need 51 votes and it would be a much simpler bill."

Ah yes, the specter of reconciliation rears its controversial head again. The main bone of contention amongst liberals is that the cost-saving measures (the public option, for instance) have been either weakened to the point of irrelevancy or stripped out entirely, so that enforcing a universal mandate for Americans to purchase insurance without adequately affordable options beyond private insurance will anger many citizens (and voters). A development on that level could be disastrous for the country's health care system and,in an electoral sense, for the Democrats more generally. The Obama Administration is interested in getting a bill passed, no matter what the cost, to ensure an electoral "win" for the President on his signature domestic initiative, health care reform, but the repercussions of a bad bill getting passed could reverberate for many years. As I had written earlier, if the reform bill falls too heavily on young people's pocketbooks, then you can be sure that their allegiance to Obama's policies will be quite fleeting, and in fact could result in a backlash. Let's hope that cooler heads prevail, and the rush to pass something doesn't overwhelm the desire to enact a more-perfect bill.

UPDATE: Timothy Noah of Slate has a key writeup of what health care reform's failure could mean for the American public, and it's not pretty, as contrary to what many have come to believe (myself included) the reform bill would have effects beyond the uninsured:

A reasonable summary would be: health reform would make life easier for just about every person who needs to buy his or her own health insurance. It would also reassure those of us in the lucky 59 percent who didn't have this problem but could easily imagine acquiring it, especially amid the current economic turmoil. That's just about everybody. Health reform lends, says Hacker, the "security of knowing there's somewhere to get insurance outside of employment." Should it fail to pass, you would not have that security.

As I've mentioned before, it's difficult to put a price on the security that comes with knowing that even if you were to lose your job you would be able to have health insurance at a relatively affordable price (that's what the subsidies are for).  This bill may not be everything liberals want, but this is still farther than the American people have ever come before, and the effect passing it would have would be humongous.  We can tweak it later, once 31 million fewer people are uninsured.

UPDATE II: Okay, now I'm depressed.  Glenn Greenwald of Salon argues that Obama is simply using the intransigence of the Senate, and especially Sen. Joe Lieberman, as a foil to enact the handout to the health insurance industry he always intended.  The argument is that the Democrats will reap the benefits of the healthcare industry's deep pockets for campaign donations down the road if they help out the industry now by not reforming too much.  Sad, sad, sad.  Industry is poised to win again against the needs and desires of average Americans.  Are we entering a new Gilded Age, or have we already been in one for the last decade or more?  More on that theme presently...

Health reform will save the insurance companies money...by not allowing them to deny coverage anymore?

Indeed, this is perhaps the most backhanded assist to the insurance industry I've seen yet from the Congressional Budget Office's scoring of the health care bill's costs:

"Compared with plans that would be available in the nongroup market under current law, nongroup policies under the proposal would have lower administrative costs, largely because of the new market rules," notes the CBO. "Administrative costs would be reduced by provisions that require some standardization of benefits -- for example, by limiting variation in the types of policies that could be offered and prohibiting 'riders' to insurance policies (which are amendments to a policy's terms, such as coverage exclusions for preexisting conditions); insurers incur administrative costs to implement those exclusions." (emphasis added)

So by not allowing the health insurers to deny coverage, either through rescission or through not insuring people with pre-existing conditions, the Senate health care reform bill will actually save the insurers money. This situation is similar to when the government increases tax rates, but in reverse; when tax rates are higher, more tax revenues will be received than before. But some of that additional revenue will inevitably be lost through individuals and firms hiring tax lawyers and specialists to find loopholes in the tax laws that they can exploit so as to pay less in taxes than they would otherwise. Thus, the effect of the tax increase on revenues is reduced.

In a similar vein, by disallowing rescission and non-coverage due to pre-existing conditions, the Senate bill will thereby remove the incentive of the insurers to save money through denying care. The denial of care costs the insurers money as they have employees devoted to analyzing health claims for discrepancies that can be used against the policyholders. Imagine if those employees could be employed in jobs where they actually helped make care more efficient, or user-friendly? This small item in the CBO report provides a window into the structurally anti-patient health care system we have in this country.

Kids, time to support your forebears

The original concept of this blog was to discuss the major political and social issues that face my generation, the generation which has been defined by researchers Morley Winograd and Mike Hais as the "Millenials," born between 1982 and 2003 (I don't quite fit in that category, being an '81 baby, but I'm definitely not a Gen-Xer!) While previous postings may have strayed from that theme somewhat, today is a different type of day.

Following yesterday's posting regarding health care reform, a timely article by Jim Angle at Fox News (no, not kidding) caught my eye. Probably the most underreported aspect of health care reform is that for a reform effort to be successful, it must rely in large part on the participation of the roughly 18 million young, healthy, uninsured people to buy into the health insurance market. As Angle reports

the health care reform bills in Congress require insurance companies to cover pre-existing conditions and prohibit them from charging sick people any more than others. That would force up insurance rates unless healthy young people buy insurance and in effect dilute the impact of older, less healthy people.

By having millions of previously uninsured, healthy, younger people start paying premiums while not using as much care as those who are sick or older, the insurance companies (and a public option, if it comes to fruition) would be able to mitigate the additional costs they will incur through expanding coverage.

For many years, health insurers have used certain methods to hold their costs down that were used at the expense of their customers, including denying coverage to people with "pre-existing conditions" ranging from mental illness and chronic conditions to the insurers denying coverage due to some rather more creative "conditions". Another tool of the insurance companies is called "rescission," a truly nefarious tactic of dropping a paying customer from their insurance plan when they need major or long-term treatment (think cancer, lupus, etc.) by claiming that the customer lied on their application form by not listing certain pre-existing conditions. What could those pre-existing conditions be? Some common ones are not listing occasional back pain or previous acne treatments in one's application for health insurance, although one would assume there would be some actual fraud caught once in a while...or is it? This from the Washington Post article above:

In the past 18 months, California's five largest insurers paid almost $19 million in fines for marooning policyholders who had fallen ill. That includes a $1 million fine against Health Net, which admitted offering bonuses to employees for finding reasons to cancel policies, according to company documents released in court. (emphasis added)

Rooting out pervasive fraud amongst the insurance customer base became such good business that a bonus structure was built on top of it for the most "effective" employees.

Now that the insurers will no longer be able to drop peoples' insurance coverage for pre-existing conditions and rescission will be largely curtailed under any sort of health care reform plan, the companies will need to find a new cost-saving mechanism, and it is the 18 million uninsured healthy young people they are targeting. It is the insurers who pushed hard for the universal mandate that every American must buy health insurance or be penalized; that provision ensures that the customer base will be swelled by the millions, and it also ensures that the low-cost segment of the population (younger folks) would be part of the system as well.

So why is it that young people are the ones being manipulated in this proposed new system? Naturally, it is the same as with any other political question; most younger people aren't paying attention, and furthermore, they aren't regular voters. When you have retirees threatening elected officials to "keep your government hands off my Medicare” those electeds sit up and take notice, since older folks vote in large numbers. On the other hand, federal legislators can then pull stunts like this with impunity:

"In most states, there actually isn't a limit on how much older people can be charged vs. younger people," said Anne Kim, director of Third Way Economics. "So in some states, older individuals pay six or seven times in premiums what younger people do."

But the Senate would take that down to 3-1. The House would make it 2-1.

That means older people will pay less but young people will pay more.

"If you limit the amount premiums can vary based on a person's age, that can result in premiums increasing by 50 or 60 percent for workers under the age of 30," said Robert Zirkelbach, a spokesman for America's Health Insurance Plans.

In fact, a study by the Urban Institute found that going to a 2-1 age rating would push up premium costs for the youngest adults by almost $1,100 to just under $3,000 dollars a year.

I have been without insurance a number of times in my life. I've see the premiums I could be paying under COBRA when I've left jobs that provided me with health care, and they were far beyond what I would consider affordable. It seems quite doubtful that many Americans in their 20s will be able to afford an extra $3,000 a year, but the politicians are betting that we aren't paying attention. And they are betting correctly.

Why isn't there an outcry from the younger generations that will have to pay taxes and/or premiums to support whatever reforms come out of Congress, successful or not, for the rest of their lives? Perhaps the intricacies of House/Senate committee deliberations aren't the most riveting dramas for young people to follow compared with the dramas unfolding on their Facebook pages, but this time it's personal. Perhaps there needs to be a youth lobbying organization, akin to the AARP for seniors; we have youth-oriented organizing groups like Rock the Vote, and Campus Progress (a group I must admit I'm not familiar with, but funded by the Center for American Progress, a liberal advocacy group) but seriously, we need LOBBYISTS! Until some serious campaign finance reform gets passed that creates public funding of elections, young people need to get into the Beltway and into the offices of members of Congress the same way the big players do, with issue advocacy and influence-peddling, combined with grassroots organizing. Lobbying is a four-letter word to me, but I see no other way to get our issues addressed fairly in a health care reform plan. The older generations and the insurance companies need us to keep health care affordable. Congress and the President need us to continue to vote for them. So why don't we use that leverage to get the changes we want and need in the reform bill? More to come on this later.

Reconciliation and Health Care Reform in the US Senate

The health care reform debate has taken up a lot of the country's attention over the last six months or so, and while it feels like every little step has been "momentous" (the votes of the individual committees such as Finance and the HELP committee in the Senate, the passing of the House health care reform bill a couple weekends ago) it is now, truly, game time.

The House of Representatives passed a bill that includes a bevy of essential health insurance reforms including requiring all who do not already have health insurance through either Medicare, Medicaid, employer-based health insurance, or individual private plans to purchase insurance. This is called an individual mandate, and it is a key element of reform, in that it is a central tenet of economics that in order to get people to do anything in large numbers, you must either offer negative incentives (the stick) or positive incentives (the carrot). So if all of those who are uninsured are going to be required to buy health insurance, how can we ensure that health insurance is affordable? Here is where the political/ideological sticking point that has held up reform for so long is located. One initial plan pushed by the progressive Democrats in Congress was for a single-payer plan, which is defined by Physicians for a National Health Program as "a system in which a single public or quasi-public agency organizes health financing, but delivery of care remains largely private." This maximizes the government's leverage in negotiating reimbursement rates with insurers so that efficiency is given priority and administrative costs are kept low (with executive compensation hopefully kept low too). Needless to say, the single-payer option was given a quick shove out the door by the Democratic leadership and those who receive large amounts of campaign contributions from the health care and health insurance industry.

So the compromise option for Democrats became what is called the "public option," perhaps you've heard of it? While there are many variations on what the public option would be, the main elements of the public option is to create a government-administered competitor to the health insurers, many of whom operate with virtual monopolies in many states. The public option would create a government-run insurance exchange where those who are currently uninsured (i.e. those who earn too much to qualify for Medicaid, those who are unable to purchase insurance currently due to "pre-existing conditions," or young people who are healthy) could purchase their newly-mandated insurance coverage. the most robust version (i.e. most cost-cutting version) would have what's called "Medicare plus 5," where reimbursement rates to health care providers would be set at Medicare rates plus 5% on top of that. The advantage of the public option compared to our current system is that it pools people together to have stronger leverage in negotiating rates with providers, as well as having lower administrative and executive compensation costs (compensation costs are significant, truly.) Without the Medicare plus-5 option, the public plan would be forced to negotiate its reimbursement rates separately from the much-larger Medicare pool, and therefore would not be able to save as much money, resulting in higher premiums for those under the program and more government subsidies to help people buy insurance, thus costing the taxpayers more money.

Sadly, yet predictably, the weaker public option passed the House, due to the entirely inconsistent arguments of "fiscally conservative" Democrats that the most robust public option would cost taxpayers too much money. To add insult to injury, a last-minute legislative offensive by anti-abortion Democrats inserted an abhorrent amendment adding major restrictions on abortion provisions to the health care bill, but that's a whole other topic. Suffice it to say that the amendment authored by Rep. Bart Stupak (D-MI) will hurt poor women the most, as if they don't have enough on their plates already.

So now it comes to the Senate, led by Harry Reid of Nevada, to debate health care reform. While the majority of Senate Democrats support the public option, there is a bloc of 4 who are holding things up by hemming an hawing about filibustering the health care bill if a public option is included. The filibuster (for those who haven't taken civics classes in a while) is a parliamentary tactic used by Senators to hold up votes on a bill, and indeed, all work in the Senate, indefinitely. The filibuster is a major obstacle to getting bills passed generally, and the way to end debate in the Senate is by 60 senators voting to invoke cloture of the debate. Despite the Democrats having 60 votes in the Senate (in truth it's 58 plus Joe Lieberman of Connecticut and Bernie Sanders of Vermont who normally caucus with the Democrats) the 4 holdouts mentioned before may not vote to pass healthcare unless the bill is heavily watered-down and/or the public option stripped out entirely. To prevent the from filibuster from killing the bill, Sen. Reid can use another parliamentary tactic to combat the filibuster called reconciliation, which is essentially to vote only on the parts of the bill that directly involve the federal budget. Reconciliation limits debate (i.e. filibustering is not allowed) and requires only 51 votes to pass, versus the 60 to end a filibuster. Using reconciliation would allow a much stronger bill to pass the Senate, as Sen. Reid can round up a group of strong Democrats to pass a robust public option without having to kowtow to the wishes of those senators who are bought and paid for by the insurance industry. The downside to reconciliation is that those parts of the bill that do not directly affect the budget could not be included in the health care bill and would need to be voted on separately, and that it would create an open war with the Republicans, who would accuse the Democrats and President Obama of violating their pledge of seeking greater bipartisanship.

That being said, we're at a major point of decision here; we've never been this close to comprehensive health care reform for all, and for the good of the country and our nation's future, if it takes reconciliation to pass the best bill possible, then I'm all for it. The Republicans have offered no serious reform bill of their own and have made it clear that they will stand united against anything that alters the status quo and/or is one of President Obama's legislative priorities. If the Democrats don't pass this bill, they're going to take massive losses in the 2010 elections, as former Gov. Howard Dean of Vermont predicted recently, and they will absolutely deserve those losses, as there is major support for health care reform in this country right now, with recent polls showing 72% of Americans supporting the public option. If we can't do it now, then when? Why must our health and well-being be subject to the profits of insurance companies? What is the price of inaction? With over 45 million uninsured in this country, it is huge.

Firedoglake, a premier progressive blog, has a petition set up urging Sen. Reid to pursue reconciliation to achieve the strongest bill possible for the good of us all. While my posting here elides over many of the nuances and difficulties inherent in trying to achieve major reform, and there's no guarantee that everything will get better once health care reform is passed, it's better to try and fail than wake up in the future and wonder what could have been. Please sign the petition, for the good of our country's fiscal future and future generations.