Healthcare: Going back to Massachussets?

July 29, 2009

James Pethokoukis – James Pethokoukis is a Reuters columnist. The views expressed are his own —

Time for a political reality check. Government-run public health insurance that competes with private plans — a Democratic dream since President Truman suggested it in 1945 — may not be dead for now on Capitol Hill, but its vital signs are awfully faint.

Of course, many proponents are hoping to use the congressional August recess to rally the grassroots and the netroots for one final push come September. And maybe that will work.

But it’s more likely that Democratic leaders in Washington will use the break to tell the outside-the-Beltway crowd the cold truth: If they want something that can be legitimately called “healthcare reform” to pass in 2009, they need to quit wasting time, energy and money on the fading dream of a public plan and instead work to get other key elements passed.

And what might those elements be?

Analyst Daniel Clifton of Strategas Research makes an educated guess. He thinks President Obama may get the chance to sign an $800 billion (over 10 years) bill that would contain features such an individual mandate to buy health insurance, subsidies up to 300 percent of the poverty limit to purchase a regulated plan through a health insurance “exchange”, and an expansion of Medicaid.
Obama might even get his commission that would try to determine what Medicare pays doctors and hospitals — now that the Congressional Budget Office has determined it would pretty much be powerless.

As one lobbyist put it: “I would see this as mostly a symbolic victory (for Republicans), as the Dems can get most of what they want without calling it a public option. Frankly. it’s pretty close to the Massachusetts model.”

Ah yes, the Massachusetts model. The state passed sweeping reform in 2006 under Governor Mitt Romney. What would a similar approach mean for America?

Well, there would be a lot fewer uninsured people. Massachusetts has halved the number of people without health insurance, with just 2.6 percent not currently covered.

But the reform has been far less successful bringing down costs. For starters, original cost estimates for Commonwealth Care projected the program would cost $400 million in 2008 and $725 million in 2009. The actual numbers were $628 million in 2008 and $869 billion for this year.

Moreover, health insurance premium costs continue to rise at a rapid clip of 9.4 percent a year, compared with 7.7 percent for the United States on average. As the Urban Institute found: “Health spending in Massachusetts is higher than the United States on average and is growing at a faster rate. Furthermore, health insurance premiums are growing even faster than health care costs in the state.”

So America might find itself in 2012 with lots more people covered, but in an ever more expensive system. And President Obama might find himself doing what Romney’s Democratic successor, Governor Deval Patrick, is doing: cutting back the subsidies that allow poorer residents to buy insurance.
The state is also considering moving away from from fee-for-service medicine, where doctors are incentivized to perform lots of pricey procedures rather than focusing on results.

But Obama and Democrats might also make this argument: We expanded coverage and now it’s time to finish the job by getting costs under control. And the only way of doing that is … a public insurance option!

Indeed, the Urban Institute makes the same argument that Team Obama surely would: that the presence of a national plan would force insurers to compete with a plan with strong bargaining power and, as an arm of government, a powerful financial interest in containing costs.

What’s happening in Washington isn’t the end of healthcare reform, it’s  merely the end of the beginning.

18 comments

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We need Canadian style, one payer universal health insurance. More generally we need social transformation toward European style welfare state with strong trade-unions, employee rights protection etc.

Why? Because quality of life in continental countries of Old Europe is 500% better than here. And taxes are really not much higher – as some Republicans like to point out. If – as market fundamentalists claim – our system makes us to grow faster, why is European life quality so dramatically better?

Posted by Jan Kaminski | Report as abusive

Being Canadian, I listen to arguments up here about privatizing healthcare to improve our overall service level. South of the border, I’m watching just the opposite, the fight to publicize it. I think their is an option that no-one has discussed. Privately funded, public hospitals.

Government run facilities could run as low profit entities and bill private health care. What this creates is a stabilizer in the health system. Most hospitals in the US are run as for profit entities and they intend to make the highest profits possible. So, they bill insurance as much as they can. With a public hospital, you drive down the costs for the same services, thereby increasing demand for lower cost services across the board. Insurance companies will use these hospitals more to save money, and could be required to offer a program whereby people could buy a low cost insurance plan that is only valid at the public hospitals.

There are many ways to tackle this problem, but only a few have been discussed in any great detail. Being Canadian, I can assure you one thing. Our system has it’s benefits, such as not paying for critical healthcare if you survive long enough to access it. However, our healthcare system (in New Brunswick anyway) only moves quickly if you are nearly dead. So, point I want to make is, don’t settle for what we have.

Don’t be afraid of taxes to pay for a public system. Just $0.25/gallon will raise tens of billions of dollars for healthcare with little difference to the public. Please don’t whine about your gas prices, we pay over $4/gallon on a cheap day, and when gas was high, we paid over $6/gallon. Twenty-five cents won’t kill you.

Perhaps a regional health board that approves healthcare pricing. Companies would have to justify what they charge to this board and would need it’s approval for it’s complete pricing structure. If there is no justification for the increase, they can’t raise the price.

Limit liabilities for the doctors and hospitals for simple honest human error. If a doctor gives a person a certain treatment based on what he/she is presented with for information and it turns out to be wrong, why be able to sue for an honest mistake? Doctors pay horribly high insurance for this. Limiting liability for good doctors will drive costs down as well. If the doctor is a true risk to their patients and has a history of poor care, then hang them out to dry.

There is a way to make this happen. You just have to ask yourselves what you really want. If a socialist program is what you want, there has to be government involved and you have what comes with government intervention. If you want private, you will at the mercy of the almighty buck, and you will be merely a customer and be evaluated on your ability to pay. Neither in it’s pure form is a palatable option in my book.

Find a solution, there is one. You live in the richest country in the world. There is no justifiable reason why you can’t have healthcare for all.

Posted by Howard Small | Report as abusive

A public option is similar to a public education: you can attend a public unversity such as University of Minnesota, University of Texas or UCLA, or a private unversity such as Duke, University of Chicago or Cornell.

At the highschool level, one can go to a public highschool such as Marina High in California, or Exeter in Massachussetts.

Both public and private schools co-exist very well. Why can’t the same be said regarding public and private insurance?

Posted by HN | Report as abusive

You obviously have no idea of how the european system works. In sweden your average Joe pays about 65% of his income in various taxes… and you are STILL not guaranteed to get the health care you want/need (and it’s not free either). The whole system is completely socialized (with elected politicians running the hospitals) and waste huge amounts of money.

The average family in Sweden has no savings at all, because the punishing taes makes it impossible to put some money aside, meaning you are completely reliant on government hand-outs if you get sick, lose your job etc. It’s a great way to stifle initiative and an efficient economy.

Posted by Robert Steen | Report as abusive

I totally agree. We need the European Style.

Posted by John Sears | Report as abusive

There’s no comparing European quality of life to American quality of life because they live their lives differently than many Americans.

We live to work, they work to live – stress factors certainly come into play. Cities are set up for walking, so most people get some physical activity in walking to the market, walking to dinner, etc. They eat less garbage and enjoy their food giving their body the chance to say “I’m full” rather than jamming it down their throats in 30 minutes.

Certainly, there are plenty of exceptions to this on both sides of the Atlantic… but the points is that a country’s health isn’t decided by the availability of inexpensive healthcare. Quality of health and life in America and Europe is a combination of many factors including lifestyle choices made by it’s people.

Posted by TK | Report as abusive

If the Government is so good at running healthcare then why is Medicare is such great financial shape? I’m sorry but I don’t trust these guys to manage anything of any consequence…you don’t really think taking away the incentives to be the greatest healthcare system in the world will fix anything…just cram another 46 million people into the already over burdened system and see what happens to the quality of life!!!

Posted by Lefty | Report as abusive

I think before any “universal health care” should be considered, the subject of illegal aliens should be addressed. At the moment any illegal going to an emergency room will in fact be helped. There must be a way to help them, identify them, and send them back to whence they came before this healthcare program can be enacted.

Most private colleges have not the quality of ivy. There are thousands of private colleges, good quality private colleges that can compares with public colleges are just about hundreds. And the good private colleges, it has need based financial aid so the cost in these colleges are not higher than public schools. Does private health insurance provide need-based fee to normal people? If not, that will be expensive and poor quality like poor quality private colleges. We need an europe style health insuance.

Posted by John | Report as abusive

Assuming that all of the current furor is about cost, then digitizing medical records, form standardization, cutting (or eliminating) insurance company overhead and other currently proposed measures are baby steps in the right direction and will have some financial payoffs. Hats off and thanks to the Obama administration for a willingness to address the issue.

Alas, but ultimately no system, Massachusetts’ experiment or the current federal proposals will flatten the long term cost curve without addressing the fundamental and primary factor – the increasingly unhealthy state of America. And even with a frank, concerted effort far beyond what is currently being discussed on the federal level, positive results won’t show up for years to come.

It is instructive to look at smoking and tobacco use. Progress has been made and American’s smoking rate has been cut by over half from its peak. But the process has required two generations (over 40 years) since it became a public health issue, a “take no prisoners” battle against well funded special interests, reams of studies linking smoking to health issues, an enduring public health campaign, strong support from the health care community, economic incentives in terms of product taxes and insurance surcharges, a multitude of lawsuits against tobacco companies, countless regulatory interventions on the local, state and federal levels and a begrudging acceptance amongst Americans that it wasn’t their God-given prerogative to smoke themselves and the people around them into a hospital and early grave.

Wow, all of that just to get people to do something (or not to do something) that is in their own best interest.

Posted by bill butler | Report as abusive

One major difference HN is you get to choose which college or university you want to attend. Your health care company is often chosen for you by your employer without any consent or choice available to you.

Posted by CJ | Report as abusive

“Why? Because quality of life in continental countries of Old Europe is 500% better than here.”

Please back up this claim. I have no reason to believe this whatsoever. In my experience I have found it to be comparable to, but not exceeding, quality of life in the US.

Posted by James | Report as abusive

Many people aren’t aware but the government already has and does run some healthcare and they are terrible at it. It is called VA care. VA care is in shambles and has been for a long time and it treats many veterans of this country terribly. From Walter Reed Army Medical Center to the latest individual case at an air force base where Colton Read, 20 lost his legs during a standard gallbladder surgery and it is reported the tunder federal law the Reads cannot sue. Holding no one accountable. Just like in the government run housing of Fannie mae and Freddie Mac where no one in charge has been held accountable.

Political manipulations and popularity contests don’t belong in the fundamentals or administration of basic quality healthcare.

you want healthcare? Go get it. Demand fair access for you to be able to get it yourself and stop whining and begging for someone else to do it for you. Ask for the playing field to be fair but if you ask for government entitlements and privileges of using other peoples’ resources for your own personal greedy use when you don’t do a darn thing to deserve it, because you think you’re that special, then you deserve what you will get from government run health care (no control of your life saving options). Government run organizations are rarely honorable institutions and are too often politically volatile in nature and lazily implemented with little regard to quality service.

What is this European quality of life that is so far superior that you talk about Jan Kaminski? Some people just so long to worship kings and queens and die at their dictatorial feet. Without evidence or reason you are just another hot air bag like Obama, Bush and the rest of congress.

If European quality of life is so great how come they are moving to implement more non-traditional European style policies with the election of political candidates such as sarkozy (elected during a reportedly battered French economy), Berlusconi (elected during a reportedly stagnating economy) and Merkel to mention a few. How come there are many European residents speaking about government run healthcare not allowing them to receive life saving treatment because they “don’t qualify.” One wont be able to say, no no I worked hard I have good insurance and I want the best tests. The answer will likely be, “there are no best tests, everyone gets the same”, likely not able to even demand one, as everyone gets the same. From that type of liquored up bum on the corner who yells at everyone that passes and urinates and defecates on the sidewalk and in people’s yards and never does a darn thing to help anyone in the community to a person who helped teach and inspire students at the schools across the country or a person who helped create inventive devices such as temperature controlling equipment to bring millions of people comfort in their homes and offices. Under government run healthcare everyone gets the same low-quality, dictated to care. The bum gets government run healthcare and the teacher and industrial producer get the bum style healthcare. But the people in power will be allowed to get the best for themselves and their family you can bet on that. It’s called class system. Privilege will no longer come from the recognition of hard work it will come from how popular you are, what color you are, what family you are from.

Did you know Obama stands against school of choice and insists on citizens to send their children to public schools but sends his own children to private schools?

Did you know that Obama and congress would not be part of this government run healthcare system?

If I get ill here in America I get all the latest testing immediately upon arrival at the hospital or upon demanding such care. If government runs healthcare you will be treated like cattle as a number. You wont be able to demand testing and the best care because everyone gets the same… what the government currently in power says you get. However, congress and Obama will get to demand their best care. Because they dictate. See how that works. It’s called dictatorship. And that is not even touching on the ethnic cleansing style politics that can and likely will get involved with this insane government run healthcare pitch. You might think, “no they could and would never do that with someone’s health.” Yet, it happens with many basic needs such as it happens in government run housing, education, jobs… it’s often labeled as affirmative action or as simple as was recently was seen in the Ricci v. DeStefano supreme court case (your skin color precludes you from surviving – we the government are taking your achievements and giving them to a voting constituency that gives us votes). Watch it happen. Right now African descent is the flavor of the month for politicians seeking to bribe voting constituencies they see as giving them a boost in the polls but that demographic does and will change. california Democrats in particular are currently in an attempt to ship in a voting constituency from Mexico to expand their politcal support and therefore are advocating giving illegal aliens full coverage health insurance with your money. No matter what color or racial background you are affirmative action is racial discrimination and it will come for you. There is already talk of provisions in the healthcare bill that would implement affirmative action style politics into the funding of doctor programs and with the federal government involved that will only expand.

A lot of Americans like me don’t expect healthcare for nothing but we also aren’t going to be gouged and cheated, we want to pay our way and just want to be charged a fair price. Demand government stop predatory medical billing and encourage insurance growth and competition but Keep government out of the healthcare business and out of administering our healthcare system. We don’t want a dictatorship run by politics and tyrants!

Posted by Bry | Report as abusive

Also, I think that a correction needs to be made in the description of the Commonwealth Care program. I believe it should be 869 million (not billion).

Posted by James | Report as abusive

Guess what? European/Canadian medicine may be free, but it’s years behind American medicine in terms of technology and quality of care.
Example: There are more CAT scan machines in Connecticut then in the entirety of Canada. Now, where would YOU rather develop a brain tumor?

The problem with the American plan is not the system, but the way people abuse it. I work in a level 1 trauma center, and you would not BELIEVE the minor, trifling complaints people come to the Emergency Room for: bug bites, sniffles, mild fevers, prescription refills, nosebleeds…and the emergency room is the most expensive of care options.
Another factor is that many people who spend the most on healthcare brought it on themselves: by letting themselves become overweight or obese (which places harsh stress on every system in the body) or otherwise not taking care of their bodies; by not having regular checkups, etc etc. It is not the government’s–nor anyone else’s–responsibility to correct the damage that a free-acting citizen brought upon him- or herself.
Another statistic to round this off: 20% of Americans account for 50% (or was it 80%?) of healthcare spending.

Posted by Alexandra Bertagnolli | Report as abusive

Health care has to be paid for either by out-of-pocket expenses, through an insurance company, by the government (taxes), or a combination of the above. The bottom line is that insurance companies provide no added value – they don’t provide any health care. An insurance company simply collects premiums and then pays for health care after taking a profit and covering overhead expenses. The government (medicare) has a 3% overhead while insurance companies have a 30% overhead – who is able to spend more on health care? We should have a publicly funded, privately delivered health care system for everyone in this country – medicare for all.

The argument regarding the loss of innovation if the government is nonsense. Name the last drug, or procedure, or diagnostic modality invented by an insurance company – there isn’t any. Those innovations are discovered by pharmaceutical companies, medical technology companies etc. Insurance companies do nothing for innovation. Scared that the government would impede innovation? Do we have the most advanced military in the world? – yes, but did we need to pay an insurance company 30% overhead to pass onto the military industry? We pay taxes to the government and the Defense Department has been able to use contractors to finance the most technologically advanced military in the world. Similarly, taxes paid to the government paid directly to doctors, hospitals without the insurance middle man can finance a great health care system at a much cheaper price than the current system.

Single payer – medicare for all, now!

(and please include additional funding through consumption based tax of those that will use the health care system disproportionally as a result of choice – ie tobacco, alcohol, and calorie taxes; furthermore include medical tort reform)

I have so much to say, but it’s not worth it to say it.

Because sooner or later, the US make a swift move to socialized healthcare.

Just another step towards this country’s death and burial under the weight of the welfare/warfare state.

Posted by Ernie | Report as abusive

I am a registered nurse and I work in a not for profit hospital. We struggle to break even, because there are so many uninsured patients and government insured patients. We already have a form of socialized medicine those with insurance pay for those without it.

The government also pays us less money to treat medicare patients than it costs to care for them. And in thise year when my state is running a deficit the government as decided to cut reimbursement to healthcare, but not to limit services. Once again private insurance is left to make up the difference.

If you really want to cut healthcare costs you have to limit care. And another thing, the doctors in my facility do not make extra money if they order more tests. Parents and families are the people that insist that we run every test under the sun.

Posted by Registered Nurse | Report as abusive