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The Can’t-We-Do-Better Blue Dogs

July 22nd, 2009 . by economistmom

In today’s Washington Post, Harold Meyerson complains that the centrist “Blue Dog” Democrats have a “can’t do” attitude when it comes to health care reform:

[O]ur government used to actually pave roads, build bridges and allow for secure retirements by levying taxes on those who could afford to pay them. To today’s centrist Democrats, this has become a distant memory, a history lesson they cannot grasp. The notion that actual individuals might have to pay to secure the national interest appalls them. In the House, the Blue Dogs doggedly oppose proposals to fund universal coverage by taxing the wealthiest 1 percent of the nation’s households…

Centrist Democrats’ opposition to health reform verges on the incoherent. A caucus (the Blue Dogs) formed ostensibly to promote balanced budgets now disapproves of the proposed taxes that would cover the expenses of the new programs. The congressional centrists say, commendably, that they want to squeeze more economies out of the system, but they oppose giving more power to an agency that would set the payment scales for physicians…

[A]ct on behalf of the nation as a whole, even if it means goring Wall Street’s or Wal-Mart’s oxen? Perish the thought. Pass a health-reform bill that will cover 45 million uninsured Americans and slow the ruinous growth of health-care spending? Not if somebody, somewhere, actually has to pay higher taxes. Hey, we’re America — the can’t-do nation.

But Harold misunderstands.  It’s not that the Blue Dogs don’t want to do a major health reform that could both expand coverage and reduce health care costs (save money) at the same time.  It’s that they do want to do all that, in a fiscally-responsible and economically-wise way–yet so far, they haven’t really seen a specific plan that would achieve all that. The Blue Dogs are asking: “can’t we do better?”

How could we do better?  Harold’s colleague, Steven Pearlstein seems to have some ideas, even with his column that argues that “imperfect health reform” is better than no reform.  Steven hints that the President doesn’t seem to be pushing the “tough choices” that would make a real difference in containing health costs–and that we can’t really estimate (with any precision or faith, just yet) how large this difference would be:

[I]n trying to build public support for reform, President Obama has made promises that will make it even more difficult to bring all the pieces together into an effective and viable reform plan.

Let’s start with the promise, repeated often by the president and written explicitly into both House and Senate proposals, that if you like the insurance you have, you can keep it. But if we’re aiming to fundamentally restructure the system, is it really credible to say that we can have all the good parts of the old one with none of the bad parts?

We know, for example, that people like to decide for themselves what medical care they will consume and send the bill off to their insurer. And doctors and hospitals like being paid for whatever they do, no matter whether it is needed or is the most cost-effective treatment. We also know, however, that moving away from “fee-for-service medicine,” as it is called, is the key to taming runaway health spending and improving health outcomes. That will be a better system, but it will be a different one, and it won’t come unless it is pushed and prodded into being by the government…

[L]ong-term cost savings…might come from restructuring the way doctors and hospitals are paid or moving patients from solo practitioners to clinics that make better use of nurses and coordinate care among a variety of specialists. There is a general consensus among health-care experts that these are the reforms that will finally “bend the curve” of ever-increasing health-care spending, and CBO Director Douglas Elmendorf made headlines the other day by telling Congress that lawmakers had not been aggressive enough in embracing these reforms…[but at the same time t]here isn’t enough knowledge to say with any precision how much would be saved and when the savings would materialize.

…and Steven points out that there are much smarter ways to raise revenue to pay for health care reform than the darned surtax idea–if it weren’t for the President’s darned campaign promises:

One way to pay for universal coverage, of course, would be to tax those who are likely to benefit most from slowing the growth of health insurance premiums, such as workers who already get their health insurance tax-free. But Obama has also boxed himself in on that issue by reiterating his promise never to raise taxes on anyone who makes less than $250,000 a year. Having a little flexibility on that issue would go a long way to putting together a final package.

A CNN story explains that centrist Democrats are frustrated with the House health bill:

WASHINGTON (CNN) – New questions about the fate of the health care bill were raised Wednesday as some fiscally conservative Democratic House members said Congress is not close to reaching an agreement…

“We are making progress; however, we have a long way to go,” Rep. Mike Ross, D-Arkansas, a leader of the fiscally conservative “Blue Dog Coalition,” said in a written statement.

One of the Blue Dogs’ concerns is ensuring that any change to the health care system does not add to the federal deficit…

“Some of the issues that the Blue Dogs have put forth are issues that we all are concerned about,” [House Speaker Nancy Pelosi] told reporters. “We want to squeeze as much savings out of the system as we can before we seek any [new tax] revenue. [But] you can only go so far.”

So it’s not that the Blue Dogs are saying “no can do”… It’s really that they believe that we can do (and should do) better.

5 Responses to “The Can’t-We-Do-Better Blue Dogs”

  1. comment number 1 by: Anandakos

    Madame,

    It seems to me that what we should be looking at is comprehensive catastrophic coverage paid for by mandated participation with subsidies for financially limited people. Such a plan should be government run and cover all costs over some figure per year, say $5,000, with a large lifetime maximum benefit.

    The great danger to society with our current privately financed and provided system is that insurers have enormous incentives first to avoid and if unsuccessful at that to drop people who suffer from a long chronic and life threatening illness. Most of these illnesses have a genetic component or are the result of environmental toxins, and “preventive medicine” can not do much to avoid them. It can give early detection which often results in lowered overall costs, but it can’t PREVENT them.

    So the truth is that there should be NO private involvement in such catastrophic coverage. The incentives to cheat and abuse the patient are too overwhelming for ordinary human beings to resist. That’s especially true given the morally suffocating corporate “go along to get along” milieu that pervades health insurers.

    I don’t know what the annual premium for such a catastrophic coverage would have to be to make the system self-financing. But with the inclusion of millions of young people with good health and low probability it should not be more than a few thousand dollars per year.

    An ideal health care reform plan would start with that, in order to remove the specter of financial Armageddon from families having a member who fails ill with one of these conditions. It’s a double-whammy: if the patient dies not only is her or his family bereft it is also often bankrupt. To allow this is insane public policy.

    I would also include children’s doctor visit coverage in the Federal mandate.

    While such catastrophic coverage should be provided by a single-payer, there is certainly a place for optional privately provided coverage for prepaid medical services; that’s essentially what “doctor visit” coverage is. People should have the choice to buy a “Cadillac” pre-paid plan if they want to do so, BUT the law covering such private plans should be changed in three ways.

    First, no private provider should be allowed to deny coverage for “pre-existing conditions”.

    Second, the only reason for termination of coverage by the provider should be non-payment of premia for a certain minimum period. I don’t have a number of months; that’s what Congress is for.

    And third, the “discount” agreements between insurers and providers which result in lower costs for covered patients than those not in such voluntary plans should be limited to the percentage of bills which are not paid by the uninsured. It costs exactly the same for a hospital or doctor’s office to provide a particular procedure to an insured patient as it does to an uninsured one. The only gain to the provider is a guarantee of payment, so essentially the existing “agreements” are mafioso-like “offer(s) you can’t refuse” which rip off providers for the benefit of billionaire CEO’s like Richard Scrushy.

  2. comment number 2 by: Brooks

    President Obama and many others seem to be presenting a “rock soup” argument* in their rhetoric advocating healthcare “reform”, arguing that the package of (1) cost-containment measures and (2) expansion of coverage is needed to “bend the curve” of future federal spending on healthcare.

    The supposed cost-control measures of which he speaks, such as medical IT and comparative effectiveness research and dissemination, that will supposedly produce substantial net savings (despite the upfront investment) could be implemented without expansion of coverage, as could the offsets in the budget that the Obama Administration is proposing.

    Given the our enormous, unsustainable long-term fiscal imbalance we already face, if one advocates such means of cost-containment at all, he should advocate them independent of whether or not we expand coverage, unless their effectiveness (in bending the cost curve and containing federal spending on healthcare) is largely dependent on expansion of coverage for some reason. If their effectiveness would be largely independent of whether or not we expand coverage, then one would take as a given that we should adopt and implement these changes, but moreoever, whether or not we decide to implement these cost-containment measures, we should consider whether or not to expand coverage separately, on its own merits (budgetary and economic effects; desired level/forms of wealth redistribution; etc.) rather than implying, as Obama and many supporters of this “reform” seem to, that the entire package is desirable and even necessary to “bend the curve” of future federal spending on healthcare.

    So my questions are:

    1) To what extent are the savings that can be achieved via those cost control measures (medical IT; development and dissemination of comparative effectiveness information; changes in provider and patient incentives; even a public option) dependent on expansion of coverage? In other words, what would be the difference in future federal spending on healthcare if we implement these measures without expansion of coverage vs. with expansion of coverage (Anyone have links to analyses or expert commentary on this question?)

    2) If the answer to #1 is “not much”, then isn’t it misleading for anyone to present them together as a necessary package to contain future federal spending on healthcare (to “bend the curve”)?

    3) Also, if the answer to #1 is “not much”, then what are the budgetary and economic effects of expanding coverage, with or without those cost-control mechanisms.

    * The “rock soup” analogy: A story I was told a long time ago of a traveler who arrives in a village with nothing but a pot. He sets himself down in the center of the village, gathers some rocks, fills his pot with water, and builds a small fire. As the water boils, villagers approach him and ask what he is cooking. He tells them “Rock soup, the most delicious soup in the world. I’ll be glad to share some with you. It’s made with these rocks I’ve gathered, although for it to be really good, I should add some high quality beef, fresh vegetables and the finest spices.” The villagers readily offer to provide these other ingredients, anticipating the delicious “rock soup”.

  3. comment number 3 by: Brooks

    Another analogy re: the above: Unless the savings from those cost-control measures (medical IT; comparative effectiveness; etc.) are highly dependent on expansion of coverage, Obama’s rhetoric resembles the following:

    Obama: We aren’t getting any Vitamin C in our diet. On our current course, we’ll get scurvy. We need to start eating a breakfast every day of bacon, sausages and orange juice.

    Citizen X: But eating bacon and sausages every day will be bad for our health (we’re already obese and have dangerously high cholesterol). Why do we need to eat the bacon and sausages every day?

    Obama: Did you not hear me?? We aren’t getting any Vitamin C and we’re going to get scurvy on our current course! The status quo is unacceptable! We need to have this bacon, sausages and orange juice breakfast every day.

  4. comment number 4 by: Brooks

    Re: the above, yes, I’m aware of cost-shifting from the uninsured to the insured (including to those insured by the government), and aware of the fact that in some cases preventive care saves money (although apparently not in the aggregate*). If someone wants to make the case that those or other dynamics mean that federal spending on healthcare would be lower with expansion of coverage than without, please go ahead (with sources of analyses).

    * See http://content.nejm.org/cgi/content/full/358/7/661 regarding the net cost impact of preventive care, and also, if we broad our scope from impact on healthcare spending to impact on overall spending, we should not that longer lives means higher spending on Social Security, Medicare, etc.

  5. comment number 5 by: Phiscal

    The blue dogs are right. Cut costs first, then expand coverage.

    Give patients good information, and a substantial slice of any cost savings they generate by shopping, we can cut medical costs in half. Then not only is there plenty of money to expand coverage, expanding coverage will cost much less.