The 2012 Election, A Health Care Debate?

America’s interminable election process kicks into gear once again. We are hardly over the 2010 mid-term election cycle and we are already plunging into next year’s presidential election campaign. It never ends. Which is why our governance is frayed around the edges. With everyone constantly running for election our representatives hardly have time to give thought to major issues let alone ponder creative solutions. Every action. Every appearance. Every sound bite. And every smile is geared to the next election. Getting sensible legislation enacted is entirely secondary.

Thus today’s announcement from Obama that he is running for re-election next year immediately ends any chance of getting much done and plunges us instead into the usual pablum riddled world of positioning, wriggling around, and avoidance of controversy. Apparently he is telling those of us who backed him last time around that major changes takes time to solidify. Presumably this implies he has made such changes, and now wants to protect this legacy by sitting out the next four years to abate the Republican efforts to undo it.

I am not going to waste your valuable time by expressing my evaluation of the extent of the change, or its relationship with his promises. Suffice to say I am one of those who view Obama as a timid, bland, and very ordinary president who failed to roll back the Reagan/Bush legacy in any meaningful or lasting manner.

The worldview of our elite remains free market, low tax, and pro-business domestically, coupled with a pugnacious and militarist foreign policy. We are still engaged in a variety of foreign wars. We have returned, predominantly, to pre-crisis economics. And we are actively discussing downsizing government at both the state and federal levels, despite the questionable need to do so. This is a conservative agenda. It is not a progressive agenda.

The exception, of course, is health care.

And this is now the focal point of the fight.

The health care reform passed last year is weak and riddled with inconsistencies. It leaves too much latitude for the insurance companies and fails to restrain costs as much as it ought. It elides the central issues of limiting unnecessary service, producing better outcomes, and injecting efficiency into our hopelessly inefficient system. It succeeds in broadening coverage and restraining costs. Indeed the best way to evaluate it is as a long term cost reduction program: by that token it is serviceable.

Yet it is under constant attack from the right. And its various compromises make it an easy target fro disgruntled doctors, consumers, and anyone else whose lives will be altered by its multitude of effects.

The Republican backlash has been irrational and intentionally false. There has been talk of rationing, death panels, and all sorts of other nefarious government coercion. There has been nothing by way of an alternative.

Until today.

With the unveiling of the Republican plan for Medicare, the battleground for 2012 is now clear. The details are still sketchy, which is a constant feature of all Republican plans, but the general scope is discernible. The GOP wants to abolish Medicare as a defined benefit program and replace it with a defined contribution plan. The will limit the government’s cost, but undermine service drastically.

The essence of the GOP plan is that they eliminate Medicare as an entitlement. That entitlement status implies that the government provides coverage despite costs, and thus the consumer has no worry about whether procedures fall inside or outside the plan. This is why it is analogous to the old defined benefit retirement plans that have now disappeared.

In the new GOP version, elderly people would receive vouchers they could use to purchase private insurance. The level of service they would receive would then depend on the plan they sign up with, and thus fall prey to all the usual issues related to private insurance. More to the point: the value of the vouchers would be decoupled from the rise in cost of services, so eventually the cost of plans would fall more on the ability of the consumer to pay. The clear implication is that many elderly would quickly see a deterioration in the plan they could afford, and thus the services they could purchase. The rich would be relatively immune. The poor would see their health care quality diminish rapidly. This intention is confirmed by another component of GOP plan: the elimination of Medicare, which is the health care plan for the poor. This plan would be replaced by simple transfer of annual federal grants to each state. Then each state would be responsible for providing whatever care it could from those grants. An early understanding of the size of the grants suggests the intention is to reduce, vastly, the level of service the poor receive.

As an exercise in budget outlay reduction the GOP plan seems to have validity. By gutting health care for the elderly it reduces federal costs. It does nothing to restrain health care costs in general. There are no plans to rein in the excesses of the private sector, or to reduce the trajectory of increasing cost of services. Coupled with the tight control proposed on the value of vouchers this means, inevitably, that there will be a widening gap between what the government helps pay for, and the actual market driven cost of service. Hence the diminished service prospect I mentioned above.

So the battle lines are drawn. The Republicans seem to be saying they want to eliminate Medicare and replace it with a subsidy for the private sector. That subsidy will cover some, but not all, of an elderly person’s costs. So, inevitably, their level of service will go down. This is especially true of high cost end of life procedures that the private sector will have a hard time pricing efficiently at any premium less than exorbitant.

How Obama reacts to this will play a large role in defining his campaign. The vigor with which he resists will either energize or demoralize the base of his support. His track record is very poor so far. His two major reforms have been in health care and finance. Neither were radical. Both were fudged before the fight in order to mute opposition. In neither case was the opposition calmed. So in both cases Obama managed to negotiate away principled positions before the negotiations even began. He has a depressing habit of caving in before the fight, as his current attitude towards deficit reduction, and the supposed need for budget cuts shows so vividly.

A vapid president running for re-election against one of a bunch of extreme right wingers intent on trashing America’s already threadbare safety net is not an appetizing prospect. It does, however, highlight the extent of the rot in our discourse, and the impoverished nature of our policy thinking. Never could our lack of leadership be more evident. I hope I have missed something. Otherwise, whoever wins, our economy is not in good hands.