Wednesday, July 1, 2009

Getting to a Higher Place on Health Care

A opinion piece by Dee Dee Myers in Vanity Fair throws new light on the health care debate as it affects real people. In this case, a famous person--Myers was White House Press Secretary in the first few years of the Clinton administration and has been a DC fixture ever since--who nonetheless finds herself and her family (including Todd Purdum, the well-known VF writer) on a treadmill. As she observes:

What’s more, by the time we work through our annual deductibles, as well as items that aren’t covered or are reimbursed at only a fraction of their actual cost, our pricey insurance covers about a third of our actual costs. And like so many people with or without employer-sponsored care, we worry that if any of us gets really sick, we’ll lose our coverage altogether. No wonder people hate insurance companies.

Who knew? I mean, first off, most people probably figured that a blue-chip company such as Conde Nast, which publishes Vanity Fair, would surely provide health insurance to its employees. But evidently not--a point confirmed, in passim, by Dan Baum, the ex-New Yorker writer, who Twittered that he had never gotten health insurance either, when he was on staff at The New Yorker, another CN property.

But secondly, it doesn't do families a whole lot of good if they buy health insurance that turns out not to cover very much, and could be yanked, in any case, if it does cover too much.

Thirdly, such a system doesn't do much good for health care, because it takes away the incentives to make health care better. And that's the real problem--we are in a health care rut.

To put it another way, we are on a low Indifference Curve on health care.

Economists have a concept called the indifference curve,to describe consumer preferences, and their tradeoffs. For example, if you like milk and cookies, how much of one or the other makes you happy? What ratio between the two goods? As the above figure shows--thanks, Wikipedia!--anywhere you go on Curve 1, for example, you are equally happy. More milk and less cookies, more cookies and less milk, and so on.

Obviously indifference curves are an artificial construct, but they do get across the point that consumers have different bundles of preferences that yield up different levels of satisfaction. Now of course, you might like more milk and more cookies, in which case, to be happy, you might have to jump to Curve 2, or even Curve 3, as your consumption increases.

And so to health care. Right now, the American people are at a certain Indifference Curve on health care, where affordability of health care, on the demand side, and available care, on the supply side, are fitted on to one curve. So far, at least, I am not making an argument, one way or the other, I am just observing that at this precise moment, consumers, and the government, have access to X amount of health care.

And the point of this blog is to argue that we do not have enough health care. Not that we aren't spending enough, but instead, that we aren't getting enough. Who knows what the true cost of health care would be if we made full use of all the technologies available to us?

So the real goal is not to move up on one Curve, it's to jump to a higher Curve.

To be continued...

In the meantime, Dee Dee and her family are stuck:

So am I for reform? You damn betcha. Major. Comprehensive. Reform. Any plan that is eventually passed by Congress—and signed by the president—will include certain provisions. For starters, it will prohibit insurance companies from denying coverage to people with pre-existing conditions—or raising their rates or dropping them if they get sick. It will also seek to insure many, if not all, of the nearly 50 million Americans who are not currently covered—and that means some kind of government subsidy for those who couldn’t otherwise afford it. It will be “deficit neutral,” meaning that the $1 trillion–plus price tag will be offset with some combination of spending cuts and “revenue” hikes.

Beyond that, the devil is in the details, and he’s still out there dancing. The plan could include an individual mandate, an employer mandate, or both. It could provided subsidies to lower-income individuals, or small businesses, or both. It could tax certain health benefits, or soda and alcohol, or both. It could include a “private option,” or an “insurance exchange,” or both. I’m hopeful that that plan that emerges from all this will make life better for my family. Maybe not as better as it could. But better enough that I will almost certainly support it. And that makes me an easy mark, low-hanging fruit in this ongoing debate.

The trick for the Obama administration will be convincing the not-so-low hanging fruit that reform will be good for their families. At the moment, the public is split down the middle, according to a new report by Democracy Corps, an organization headed by Stan Greenberg and James Carville, both veterans of the Clinton health-care wars. They point out that when the country last took up this issue, 16 years ago, people quickly decided whether the president’s plan would help or hurt them, and their judgement became the “most important predictor of support or opposition to health-care reform. In this round, it is already an important predictor of support for reform, even before the specifics of the plan for reform have been made clear.”

In order to win, then, the president and his allies in Congress need to flesh out the details of the plan, so they can explain to people how, exactly, “reform” will help them. Throughout the campaign, Candidate Obama promised an annual cost savings of roughly $2,500 per family. Will the plan achieve that? And in recent months, President Obama has said that reform will lower costs for consumers and providers, for employers and individuals, and for the government. Substantially, over time. He needs to continue to make the case. Seniors worry that “reform” may come at the cost of the Medicare coverage they count on and trust; they need to be reassured as well.

Team Obama has its work cut out for it. But in at least one important way, the wind of change is at their back: The public is increasingly convinced that the status quo is unsustainable and unacceptable. If we do nothing, health costs will continue to soar, while millions more Americans will lose their coverage. Insurance companies will continue to cherry pick healthy customers, while taxpayers foot the bill for everyone else. Individuals, businesses, and the government will be bankrupted by the unsustainable burden.

Some families might be better off. But they’ll be few and far between.

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