Health Care Revisited

It seems a very long time ago that I last commented on health care reform. I felt I had exhausted the topic and so I have let it rest. But today’s nice article by David Leonhardt in the New York Times reminds me that reform rumbles on, and is having a number of odd consequences.

The most interesting problem surfacing is with the so-called “mini-med” programs offered by the likes of McDonald’s. The fast food chain offers its employees a “benefit” that costs $730 a year, for which they get a grand total of $2,000 in coverage. There is a richer plan that costs $1,660 and provides $10,000 of coverage. Neither of these plans amounts to much if you get really sick. The main objective is to provide some minimal benefit to people who are basically well. If they get really sick, tough. The country is full of these plans. They are totally insufficient for anything but the barest minimum, yet count as health care coverage in the existing pre-reform system.

The unintended consequence of the reform process is that these plans fail to meet the minimum requirements – as they should – and need to be replaced by something resembling proper coverage. The problem is that the cost of decent coverage would blow a hole in the budget of the employers providing these derisory plans. So drastic is the damage to profits that McDonald’s announced it was dropping coverage entirely, leaving its 30,000 hourly wage workers completely uncovered.

This is, of course, absurd.

The underlying and more intractable problem, is that our health care system is mainly funded as if health care is an employee benefit. It is thus a major cost for employers. Over the years this aspect of the system has inspired the need to provide employers with tax breaks in order to stop them simply abandoning coverage as a way to boost profits. Once McDonald’s went public with its decision to drop coverage the Obama administration was forced to open up loopholes in the new law to soften its impact in similar cases. Opponents of the reform immediately jumped in and argued that this was an example of how bad the reform is and that it should be shelved.

This, too, is absurd.

Our issue, once again, is the half hearted approach we took to reform.

Our system is irretrievably broken. It is very high cost. It provides those with means and adequate coverage access to very high quality medical treatment. It also completely underserves the majority of regular people. The result is a litany of bad results, poor health services, shorter lifespans, higher incidences of illnesses, higher error rates, misdiagnoses, and general waste. Our system has become a major burden on the economy and is likely to have an even worse impact in the future.

Both households and businesses are ill served by the current system. Households because they get inadequate service at high cost, and business because they carry the cost of coverage as a labor cost. This labor cost discourages job creation. This, obviously, is not in our best interest at a time when every job created is extremely valuable.

Into this mess came Obama. His reaction was typically understated. He sought to reform with a minimum of disruption. What he failed to realize was that the system is so riven through with faults that even a minor reform, such as the effort to bring mini-med programs up to a basic level of coverage, creates a major problem to businesses who operate on thin margins and have hourly wage workforces. So minimum disruption is very hard to achieve. In fact it may well be impossible.

As each step towards reform is taken we will expose more weak links and kluged responses. The edifice is rotten. It was cobbled together to avoid the responsibility for a thorough overhaul. The result is a high cost, low result, system that should be tossed out and replaced with a totally revamped alternative modeled on one of the very successful and lower cost foreign versions. This would require political will. Since we don’t have any of that I will not hold my breath.

Needless to say, though, this is only the beginning. As the current system unravels in the face of the puff ball reform being foisted on it, we will all realize we have been laboring under a massive illusion: our old system was not the envy of anyone but those who profited from it. Everyone else in the advanced world has made more progress and have better systems. We linger in that old dream that anything made here is, inevitably, better than anything made elsewhere.

As far as I can tell there is no perfect solution to the provision of health care. Inevitably the specter of rationing enters the calculation. Difficult decisions have to be made as to the efficacy of high cost treatments that provide only ameliorative or temporary results. This is especially true of end of life care. As I have mentioned many times do not be confused over that word “rationing”. All economic systems ration. Even free markets. Rationing is simply another word for allocation, and markets allocate via prices. If you cannot afford something you don’t get it. That’s allocation. That’s rationing by another name. The only issue, therefore, is how to ration.

And since health care is a universal requirement, and has many of the features of a “public good” – disease prevention being paramount amongst them – is makes little or no sense for the system to rely on business provided benefits. Health care should not be a component of labor costs. Removing it from the business realm would reduce employer costs, help create jobs, and make our businesses more competitive. That seems like it should fit on any right wing business oriented agenda. That it doesn’t is because the implication of removing the burden from the private sector is that it is moved to the public sector. Health care would have to be funded out of taxes rather than wage offsets and tax credits. It would be transparent and not hidden. And it would be cheaper. But it would be public, and that is too difficult a hill to climb for our right wing politicians.

So we are stuck with yet another kluge. A monumental fudge. An avoidance of the fact staring at us in that face: our current system is a joke. A very expensive joke. The minimal disruption of which threatens to bring the whole house of cards down.

Just for once I wish this country had the courage and will, or the imagination, to be bold.

We fudged bank reform. We fudged health care reform. We fudged stimulus.

For some reason we are hell bent on being mediocre.

I wonder why that is.