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Political Strategy for a Permanent Democratic Majority

Health Care Industry Has Huge Stake in Reform

E.J. Dionne, Jr.’ “Harry and Louise Have Changed” in today’s WaPo explores the strategic implications of the fact that comprehensive health coverage for all Americans means “fifty million new customers” to the industry. It is an important point, and one which gives significant leverage to the reform movement. Not that the insurance companies won’t fight the public option, forced coverage for pre-existing conditions and other specific reforms with a multimillion dollar ad campaign. However, as Dionne explains:

Many have expressed amazement that the interest groups historically opposed to fixing the health system seem ready to work with the reformers. Their public-spiritedness reflects enlightened self-interest: The health system is so unstable that even the drug industry and the insurance companies are worried that it will crash on top of them.
Health-care reform could bail out these interests by adding the currently uninsured — fast approaching 50 million people — to their customer base and by preventing more individuals and employers from dropping insurance altogether…Leaders of the health industry know that unless more government money flows into the system, they will suffer along with everyone else.

It’s a survival issue, and they know they need government help to stay afloat. They will fight the public option, but they know that some form of expanded government health coverage is inevitable. Still every health insurance company, hopes to get a share of the 50 million new customers. Dionne says the real fight in congress will be about cost containment, and he concludes “So by all means, let’s welcome the drug and insurance companies to the health-care bargaining table. But let’s also remember that they are sitting at that table as a matter of urgent necessity.”
Lisa Girion riffed on the same topic in the Sunday L.A. Times, explaining that

The customer base for private insurance has slipped since 2000, when soaring premiums began driving people out. The recession has accelerated the problem. But even after the economy recovers, the downward spiral is expected to continue for years as baby boomers become eligible for Medicare — and stop buying private insurance.
…The industry’s real trouble begins in 2011, when 79 million baby boomers begin turning 65. Health insurers stand to lose a huge slice of their commercially insured enrollment (estimated at 162 million to 172 million people) over the next two decades to Medicare, the government-funded health insurance program for seniors

Meanwhile John Harwood reports in The New York Times “The Caucus” that a new “sense of inevitability” about health care reform has taken root, as key political leaders and interest groups begin an earnest search for consensus. Regarding funding for reforms, Harwood adds:

No one has spelled out how to finance the roughly $1 trillion over 10 years for an overhaul that would provide care to the uninsured. But two recent Obama White House shifts have made that easier.
First, Mr. Obama vowed to find another $200 billion to $300 billion in savings from Medicare and Medicaid, beyond the $300 billion or so already proposed. That would leave lawmakers needing about $500 billion in higher taxes.
Second, Mr. Obama signaled that he could support acquiring part of that money from limiting the existing tax exclusion for employer-provided health benefits — a concept he criticized Senator John McCain, Republican of Arizona, for proposing in the 2008 presidential campaign. Taxing only the most lavish 10 percent of benefit plans would raise an additional $336 billion in income taxes, according to the nonpartisan Tax Policy Center.

Via Consortium News, Alternet leads today with an article by Robert Parry, “119 Million Americans Want a Public Health Option — Why Aren’t Politicians Listening?” Parry discusses Republican Sen. Chuck Grassley’s assertion at Politico that,

“As many as 119 million Americans would shift from private coverage to the government plan,” Grassley wrote in a column for Politico.com. That migration, Grassley said, would “put America on the path toward a completely government-run health care system. … Eventually, the government plan would overtake the entire market.”
Grassley’s logic is that so many Americans would prefer a government-run plan that the private health insurance industry would collapse or become a shadow of its current self. That, in turn, would lead even more Americans entering the government plan, making private insurance even less viable.

Wait a minute. Polls indicate millions are happy with their current insurance, so where does the 119 million figure come from? Are they so happy with their current plan that they would be willing to switch to a public plan just for kicks? Perhaps Grassley’s argument is based on some other factor. In one of the more revealing graphs, Parry also notes,

…Grassley’s various political action committees have collected nearly $1.3 million in donations from the industries related to the health insurance debate, according to OpenSecrets.org. Grassley’s top four donor groups were Health ($411,956); Insurance ($307,348); Pharmaceuticals ($233,850); and Hospitals ($197,137). Eighth on Grassley’s donor list were HMOs at $130,684.

Today’s Wall St. Journal ‘Review and Outlook’ section has a more thougthful critique, “Obama’s Health Cost Illusion,” which notes:

Now the White House — especially budget chief Peter Orszag — claims there is new cause for hope. The magic key is the dramatic variations in per patient health spending among U.S. regions. Often there is no relationship between spending and the quality of care, according to a vast body of academic research, most of it coming out of Dartmouth College. If the highest spending areas could be sanded down to the lowest spending areas, about 30% in “waste,” or $700 billion each year, would be saved. More than enough to pay for ObamaCare. Or so the theory goes.
But — how? Mr. Orszag’s ideas include more health information technology; emphasizing prevention and healthy living; rejiggering reimbursement policies so doctors and hospitals are paid more for quality care; and funding federal research that compares the effectiveness of medical treatments. These are the lovable bromides of all politicians, and some of them may or may not improve health overall. But there’s scant evidence that any of them will ever save real money.

Most worrisome of all, former Secretary of Labor Robert Reich writes in Salon today that “Big Pharma and Big Insurance go on the attack: Lobbyists are working behind the scenes to kill the public option in the healthcare bill. And they’re succeeding.” Says Reich:

So they’re pulling out all the stops — pushing Democrats and a handful of so-called moderate Republicans who say they’re in favor of a public option to support legislation that would include it in name only. One of their proposals is to break up the public option into small pieces under multiple regional third-party administrators that would have little or no bargaining leverage. A second is to give the public option to states where Big Pharma and Big Insurance can easily buy off legislators and officials, as they’ve been doing for years. A third is to bind the public plan to the same rules that private insurers have already wangled, thereby making it impossible for the public plan to put competitive pressure on the insurers.

Reich’s challenge ought to send reform advocates to the barracades:

This is it, folks. The concrete is being mixed and about to be poured. And after it’s poured and hardens, universal healthcare will be with us for years to come in whatever form it now takes. Let your representative and senators know you want a public option without conditions or triggers — one that gives the public insurer bargaining leverage over drug companies and that pushes insurers to do what they’ve promised to do. Don’t wait until the concrete hardens and we’ve lost this battle.

One comment on “Health Care Industry Has Huge Stake in Reform

  1. Len Charlap on

    There are so many errors in the above I hardly know where to start. Well, there’s John Harwood’s statement, “No one has spelled out how to finance the roughly $1 trillion over 10 years for an overhaul that would provide care to the uninsured.”
    This is simply false. Medicare for All (HR676) clearly points out where the money will come from. Here is a brief explanation. Note that the savings are per YEAR. You have to multiply them by 10 to compare with the 10 years figures in the article.
    Myth – “It will be very expensive to get good health to everyone.”
    Fact – Actually there’s a way we can have better universal health care at no more than we are now paying (see 5. below). Here are the facts (cf. http://www.pnhp.org):
    1. We waste $100 – $200 Billion a year on the high overhead of insurance companies.
    2. We waste $200 – $400 Billion a year on doctors filling out forms for insurance companies.
    3. I don’t know the compliance cost of patients fighting with insurance companies, but it must also be in the 100’s of Billions.
    4. We pay the highest drug cost in the world to drug companies that spend twice as much on profit and three times as much on “marketing” as they spend on research. This is about another $100 Billion each year.
    5. Because of the above, we could give Super Medicare (few limitations, no co-pays, no deductibles and complete drug, dental & mental coverage) to everyone at no more cost per person than we are now paying.
    Other countries with single payer systems get better health care as measured by all the basic public health statistics and they do it at less than half the cost per person. If we build on our rotten system, we will get a health care system with rotten foundations.
    O.K. then J. P. says, “Polls indicate millions are happy with their current insurance, so where does the 119 million figure come from?”
    Where are these polls? Here is a question from a Washington Post – ABC poll:
    “Which would you prefer: the current health insurance system in the United States, in which most people get their health insurance from private employers, but some people have no insurance, OR, a universal health insurance program, in which everyone is covered under a program like Medicare that’s run by the government and financed by taxpayers?”
    62% favored Medicare for All; 33% were opposed. That’s pretty decisive. And this is with the facts suppressed. Other questions in the poll show that the 62% supporting the universal program mostly believe it will cost more when it will cost less. They believe they won’t be able to pick their doctor when Medicare allows much more freedom than most private plans. They believe there will be long waiting times when this is a myth. And still they support a universal plan like Medicare for All by 2 to 1.
    Then there’s all this nonsense about the public option, a uniquely bad idea, but I already posted a reply to that here a few days ago.


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