What We Need to Hear Tonight
September 9th, 2009 . by economistmomNotice I didn’t say “what we want to hear tonight.” But what we really need to hear is a little honest talk, from our courageous leader. Talk like…
this (from a CNN-Money column by Alan Auerbach and Bill Gale, emphasis added):
President Obama says reforming health care is central to the task of getting the government’s long-term financial problems under control. And he’s right.
But fixing the health care system, even if it brings down costs, is not enough.
Obama and other policymakers need to pay more attention to a fundamental conflict underlying the health care debate: People want the federal government to do much more than they are willing to pay for through their taxes.
As a result, the nation faces not only a growing health care crisis, but also a related long-term fiscal problem — a sizable and growing imbalance between the federal government’s future revenues and spending. And the pending health care reform proposals could even make the fiscal problem worse, if expansions of coverage outweigh achievements at cost saving…
As yet, it is unclear how such cost-saving might be achieved via health reform…
This is a difficult problem. It is not hopeless, but it is far too large to be addressed through narrow measures alone, such as taxes on those with very high incomes or on soda consumption.
The necessary changes will affect all Americans in significant ways, and so they will require broad-based support from the American people. Achieving such support could begin with some frank talk about the costs, as well as the benefits, of health care reform, and the size of the long-term gap that health care reform alone cannot solve...
…and this (from Steven Pearlstein’s column in today’s Washington Post, emphasis added):
What makes reform such a difficult puzzle is that the fundamental policy goals of universal coverage and cost containment are inconsistent with the political instincts to assure Americans who already have health insurance that they will be able to keep everything they already have, to assure that nobody will get a tax or cost increase and to assure those in the health-care industry that there will be no reduction in their income. Obama’s mistake so far is not that he left it to Congress to hammer out the details of competing reform plans, but that he failed to give Congress political cover by helping people understand that there can be no gain from reform without at least some fairly apportioned pain.
Deals negotiated with doctors, hospitals, health insurers and drug companies represented a good running start on the path of shared sacrifice, but the president failed to follow through with other key players…
While there are no silver bullets in health-care reform, there are plenty of promising ideas on the table [if we just had the courage to choose to follow through on them]…
After a summer that exposed a virulent strain of public cynicism and distrust, the president’s challenge is to rededicate himself to restoring faith in government and rekindling the “yes we can” spirit that swept him into office. And at some point he needs to look straight into the eyes of those who would have him fail and promise to do whatever it takes to break the partisan stranglehold and make health-care reform a reality.
…and this from Bruce Bartlett, who joined Capital Gains and Games yesterday (congrats to Bruce but even more to the rest of his CG&G team for getting him!) and who already beat me to the punch today in terms of quoting from Steven’s column (although I bet I emailed my kudos to Steven first–last night at 1 am!):
I think Democrats were not completely clear about what their ultimate goal was at the beginning of the process. Obama talked a lot about bending the curve and reducing health costs during the campaign. Had he proposed legislation that did only that he might well have gotten a bill with bipartisan support. But there would no payoff for liberals in such a bill. They want universal coverage.
This has led to the muddled mess we are in today that Pearlstein identifies. Obama has tried to achieve both universal coverage and reduce costs at the same time and that’s not really possible without a total government takeover of the health system.
At the same time, it is unfortunately the case that Republicans have never had anything they hoped to get out of health reform, so there has never really been any possibility of making a deal with them. It’s hard to think of anything Obama could offer Republicans that would induce them to support any health reform. Their only interest is in maintaining the status quo even if it means defending Medicare, a program most House Republicans actually voted to abolish in April…
and even more like this–Bruce’s post yesterday about tax reform, not just because (as Bruce emphasizes) the previous experience with the process of tax reform in the 1980s should serve as a model for how any major fiscal policy reform should be pursued, but because an honest rethinking about tax policy is an essential part of well-designed health care reform as well.
So I’ll be listening between the lines of the President’s address tonight hoping to hear something that sounds at least a little like what Alan, Bill, Steven, and Bruce have said. Something that gets beyond perpetuating the myths and rhetoric that suggest that the “right size of government” is the government spending that benefits ME only and the “right level of taxes” is the amount that doesn’t raise any of MY taxes. Something that recognizes that the “right size of government” is that which we as a (civilized) society are willing to pay for, and the “right level of taxes” is that which pays for the government spending that we as a (civilized) society want to do.
I would like to hear “Medicare as we know it is not affordable. If we wouldn’t spend $500k of our own money for 6 months in the hospital with a terminal illness, we shouldn’t spend $500k of other taxpayers’ money either. We need a new system that encourages patients to draw the line sensibly on medical expenses. The government should not and will not pay for treatment that does not provide sufficient benefit relative to the cost. This may sound unfair, but it’s less unfair than impoverishing future generations to pay for our futile hospital stays.”
The first politician of either party to say this will get my vote. All we’ve heard so far is that the government wants to give you all the medical care you want and someone else will pay for it. Right.
Re: the “right size of government” is that which we as a (civilized) society are willing to pay for, and the “right level of taxes” is that which pays for the government spending that we as a (civilized) society want to do.
Right. As I repeat often, each of us should arrive at our policy preferences based on (1) what trade-offs are associated with policy alternatives (which is determined via research and analysis and for we are usually dependent on analyses by experts) and (2) our values/morality and priorites (which set of trade-offs — and thus which policy — best fits our personal values/morality and priorities). Unfortunately for America, all too often (and increasingly) partisan experts and others who advocate or oppose some policy based on their personal factors #1 and #2 do not make a good-faith effort to represent the trade-offs. They (and all of us) should be vigilant against bias and should certainly make an honest effort at laying out an accurate picture of the trade-offs and then making the case for why one set of trade-offs (and thus one policy option) is better than another. Experts in particular (and political leaders, too) have an ethical obligation and civic duty to do so, rather than, in effect, substituting their own value judgments and priorities for those of each citizen in their audience, arrogantly and self-righteously (and often self-servingly) assuming that the policy they prefer is “best”, and that the means (misleading people about the trade-offs and denying the public the chance to apply their values and priorities in choosing among the actual trade-offs) justify the (supposed) ends.
As a note, certainly there can be good-faith disagreement among experts, political leaders and others about what the trade-offs are, but my point is that everyone should be honest and reasonably objective in laying out what the trade-offs are (and discussing/debating accordingly) rather than distorting and skewing the trade-off picture to support their policy preferences and please partisan audiences.
oops, that should have read:
“the means (misleading people about the trade-offs and denying the public the chance to apply their values and priorities in choosing among the actual trade-offs) are justified by the (supposed) ends.”
I owuld love to see that debate as well but it cannot be done on healthcare alone. As I have said elsewhere, I would love a different budgeting process, the starting point would be a discussion aobut what percentage of GDP we wish to spend on government, meaning what percentage of our total income are we willing to give to government through various forms.
We could then discuss what we want to spend the money on and how we plan to raise it. Unfortunately, the discussion never happens at the macro level.
To bring this to the current debate, the notion of Medicare savings paying for health care reform is a perfect example of this. Money and savings are fungible. They are not targeted. Thus, the discussion of whether health care is paid for is fundamentally silly since any money or savings that pay for it could instead pay for something else.
I suspect that most citizens would be fairly horrified by the current govenrment share of the economy. Maybe I’m wrong and people would want the government share to be 5 or 10 points higher than it is today (meaning taxes/takings, not outlays)
While I’m on or reaosnably near the topic, let me push on a question of language in most of the quotes above. To most journalists and commentators “reform” is synonomous with universal health insurance. It is not much of an argument to say Republicans don’t want reform when you mean they don’t want universal insurance. This is a perfect example of using imprecise language to score rhetorical points.
If “reform” or its close cousin “real reform” means universal or substantial expanstion of coverage, then we should say so. In my view, there are many things we could do that would be classified as reform, some of which Republicans are steadfastly against (universal coverage) and some of which Democrats are steadfastly against (liability reform)
Sorry for multiple posts but trying to keep them focused. On the issue of cost reduction/slowing the rate of increase, this seems like a problem that could be boiled down to first principles and subject to analysis.
Let’s start with the notion that health care costs are like anything else price times quantity and that, over time, both price and quantity have been increasing. My sense is that price has been increasing faster than quantity but I don’t know this to be true and comparabilty of treatment over time is a real challenge in this regard.
To reduce total system costs, one either needs to decrease price or decrease quantity (from some baseline). Quantity in this market is largely driven by price and availability. Price is artificially depressed by a two step payment process (insurance) and therefore quantity is assuredely higher than in a “self-paid” equilibrium.
Universal coverage makes the quantity problem worse without a doubt. How much worse is in question and depends on issues of the long0term value of prevention (which Brooks has posted on many times). For the sake of argument, let’s say tha tthe quantity cost of adding about 15% to the number of people with insurance is somewhere between 2 and 5 percent (because these people recieve services already to a degree).
The bigger issue by far is price. Price is accelerating, not because of “outlandish” profits from pharmaco’s, hospitals, doctors, or insurance cos but because the cost of any given treatment continues to accelerate and, with no price mechanism the consumer sees, there is no incentive to have hard discussions about different courses of treatment on cost effectiveness.
There is no reason to believe this trend is going to continue unless government controls price to the level where it reduces innovation or innovation favors lowering the cost of existing courses of therapy over developing new ones. This however would only happen if companies had confidence that price would not fall further in respoinse as the ROI on this type of investment is based on higher margins (profits). Were I a company, I would not have confidence in this outcome, given the current party in power.
Thus, in my view, there are only three viable options to reduce total health care spending trajectory…(1) reduce quantity through rationing (the approach of most “socialized” systems); (2)reduce price/margin sufficiently to depress the pace of innovation from the baseline, (3) put a price mechanism back int he hands of the decision maker(the consumer/patient). That’s it. Anyone who claims they can slow the growth of health care costs without doing one of the three thrings above is, in my view, spinning at a minimum.
To Brooks’ point above, there is no remotely adult discussion about any of this. Were I king of the world, I would vote for 3 and get there by wlloing national competition, and allowing for “minimalist” policies (e.g., no Federal or state minimum requirements). I would also tax health care benefits provided by employers in order to correct the two step pricing problem. I recognize as a consequence of the above, some people would go bankrupt paying for health care (because they made “bad” choices about what to buy including buying nothing at all). I find such a state far preferable to combinations of 1 and 2 but that is just me.
A national debate on principles first would be helpful if we ever hope to “bend the curve”
Hmmmm…lots of typos above but one argument mistake. The paragraph that begins “There is no reason to believe that this trend is going” should begin “There is no reason to believe that this trend is not going”
Steve,
Re: the term “reform”, you might get a kick out of my Official 2007-2008 Political Glossary (a.k.a., The Official 2007-2008 Guide to Euphemistic Political Bullsh*t) at http://swordscrossed.org/node/1721 . Most terms and definitions are still as relevant and accurate (IMHO) today as they were two years ago when I posted the “glossary”. “Reform” is among the terms defined there in terms of intended meaning (What they want you to think it means), actual meaning, and political objective.
Also, re: something we discussed on other threads — setting (and trying to get Congress to comply with) targets for fiscal responsibility — see this week’s Economist http://www.economist.com/opinion/displaystory.cfm?story_id=14419176 and http://www.economist.com/businessfinance/displaystory.cfm?story_id=14419200