It is early November and that means it is time to deal with the fall-out from the pivotal races that took place in the days and weeks leading up to early this week. Of course by this I mean that we should all be celebrating the SF Giants’ devastating annihilation of the Texas Rangers. 1 million people showed up for their victory parade yesterday in SF. Go Orange and Black!
And speaking of pivotal races that end with winners that are primarily orange, John Boehner is our new Speaker-elect of the House of Representatives. One of the first things out of Boehner’s mouth after the election was “The American people are concerned about the government takeover of health care. I think it’s important for us to lay the groundwork before we begin to repeal this monstrosity.” He was, of course, referring to the Patient Protection and Affordable Care Act (ACA) that became law this year and promised sweeping changes in our country’s approach to providing health insurance.

After a few months where the focus had moved squarely away from health reform and towards the election, jobs and taxes, healthcare is back on the front burner. President Obama is already raising the white flag a bit, signaling that he is prepared to negotiate on some of the items in the ACA that are considered controversial.
The problem with all the rhetoric is that it quickly turns into support for those provisions that any decent-minded person should want–no exclusions for pre-existing conditions, inclusion of young adults on parent’s plans, etc.–but creates divisiveness about those provisions that reduce payments to providers, force a greater burden on states and employers and require individuals to carry health insurance. In the end, it becomes an “I want something for nothing” debate that is painfully damaging to our economy. There is no way we can expand coverage to more people and not figure out how to pay for that by removing cost elsewhere. In fact, given the fragile state of our healthcare economy, it is impossible not to remove cost regardless of whether we get something new in return, including coverage for those not currently getting it. No one really argues that it would be great if everyone had health insurance. Very few want to pony up and pay for it.
Let’s be honest with ourselves. States are going bankrupt under the crushing weight of Medicaid and have done very little on a systemic basis to manage costs or quality in that system.

The federal government is paying for Medicare for a massively increasing population (about 10,000 people are aging into Medicare every single day). Medicare was established in 1965 when the average lifespan was 70 years old. Today the average life span is 78 and we have done nothing to adjust age of eligibility to address the age wave (tsunami?) that has reached our shores.
Providers are too often focused on how to make more money by delivering more services than are necessary and our system of malpractice laws further amplifies that problem by encouraging a defensive medicine mindset.
Patients take little responsibility for their own health, have little understanding of the cost of their own healthcare and are reluctant to engage in preventative medicine unless they are paid to do so.
Employers struggle to provide benefits but are looking wistfully at the options that may enable them to dump their plans so they can put their employees into the public insurance pool. Yeah there’s a fine for failing to provide insurance to your employees, but its cheaper than paying for benefits.
Meanwhile, drug and device manufacturers too often create products and services that add cost to the system while delivering little value in terms of better outcome.
I’m sure I’ve missed someone’s bad behavior. In totality it’s a prescription for disaster.
The Republicans certainly have a point that there are problems with the ACA. It could be vastly improved on many counts. The problem is that they are offering no helpful alternatives. We can’t just let the “good” provisions stay in place, producing more cost and take out the things we don’t like, such as taxes or limitations on certain payments. There is no way that we can sustain our economic viability as a nation if we do not find meaningful and probably somewhat painful solutions to our healthcare crisis. So, Mr. Speaker-elect: if you don’t like the ACA, what is your suggested alternative? I sincerely hope you have one other than repeal.

To put the problem in perspective, consider this one anecdote: everyone talks about how employers costs have risen 8% per year on average over the last 10 years. What is buried in the fine print is that individual employees’ share of insurance costs, NOT including increased copays, deductibles, etc., has increased by 10% per year on average since 2000. Workers’ contribution to their health insurance has grown 147% from $1619 to $3997 over that period while inflation has averaged 2.6%. In Q3 2010, median weekly earnings of the nation’s 101.4 million full-time wage and salary workers were $740 (not seasonally adjusted), according to the U.S. Bureau of Labor Statistics. This means that the average full-time worker is paying out 5.4 weeks of salary just to cover a portion of their health insurance, not including any other out of pocket costs. According to the Commonwealth Fund, even those families that enjoy generous insurance now are likely to see the cost of those benefits escalate. The typical price of family coverage now runs about $13,000 a year, but premiums are expected to nearly double, to $24,000, by 2020. That equals nearly a quarter of the projected median family income in 2020.
Furthermore, the cost of repealing the ACA and doing nothing in its place is catastrophic to our national economic security. The Commonwealth Fund folks also note that if nothing changes, the cost of the U.S. health care system will rise from $2.6 trillion in 2009 to $5.2 trillion in 2020, using 21 percent of the gross domestic product. During that same period of time, The Urban Institute predicts that the number of uninsured individuals will increase from about 49 million today to between 57 million and 66 million and that every single state would see its Medicaid costs rise by an average of 75%.
The problem with our politicians is that they spend so much time representing various interests that they never work together to take a serious strategic look at what is a serious economic crisis. It is complicated to be sure, but partisan behavior and putting off the inevitable (some form of healthcare system reform) is a gross violation of their fiduciary responsibility to our citizenry, in my opinion. It would be a lot better if Boehner were saying, “let’s work together and fix this thing so we can all live with it; yes, it will be hard, but we have to get this done right” instead of “let me show you where I’m going to shove the dagger on the first day I show up for work.” And I’m not picking on just Boehner (I don’t want anyone to think I am prejudiced against orange people). President Obama is also going to have to belly up to the cooperation bar and recognize that many are justifiably unsatisfied with what his healthcare minions have wrought.
In actual fact, it is unlikely that the ACA will be repealed in its entirety, but the opportunity to effect meaningful health reform could die the death of a thousand cuts if no one will stand up and take accountability. Worse, the next major election cycle is only 2 years away (at which point I hope the Giants will be carrying home their third World Series trophy) and none of those guys in Washington wants to be standing when the music stops in the healthcare musical chairs game. I am guessing this means that true healthcare reform will be at a standstill until 2013, which means we will have another 3 years to demonstrate to the world how inefficient our healthcare system really is.

I know that some people have heard me say that my favorite quote from this year was from actress Carrie Fisher’s one-woman show. In it she said, “Things are getting worse faster than I can lower my expectations.” Who knew that Princess Leia was a healthcare economist?