Health Reform Update: What is the Senate Finance Committee Up To?

Slate’s Timothy Noah boils down the latest Senate Finance Committee Bill as follows:

It appears designed to achieve two contradictory goals: to lower the bill’s cost and to reassure the insurance lobby. These are achieved at the expense of extending and improving Americans’ access to health care, which some might say is the whole point of passing a reform bill. . . .

As Paul Krugman observes today, “relatively conservative [Senate] Democrats still cling to the old dream of becoming kingmakers, of recreating the bipartisan center that used to run America.” They may be at the center of the political spectrum in their states, but they’re ignoring the views of the “eighty-three percent of Americans [who favor] ‘creating a new public health insurance plan that anyone can purchase.'”

If there was only popular support behind the public option, perhaps the Senate would be properly serving some function of “political conservation.” However, a growing consensus of health law and policy experts sees the need for a public option as well. Tim Greaney has been making the case compellingly; here’s his latest installment:

In America, health care “delivery” (we should abandon the misnomer ‘system’) is a fragmented hodgepodge of autonomous doctors, hospitals, facility owners, and vendors of technology, pharmaceuticals and equipment. Their lack of interconnectedness and coordination is at the core of most of the quality and cost problems Congress is now confronting. Add to that the fact that “consumer” decisions are filtered through a triple layer of agency (i.e. their employers, doctors, health plans). Moreover, as a result of lax antitrust enforcement and providers’ relentless efforts to gain “leverage”, many hospital and physician markets are now tight oligopolies or de facto monopolies. And one more: information on quality, outcomes and cost is scarce, and in some cases, unobtainable. . . .

Which brings us to the public plan option. Does it correct the myriad market failures and assure an efficient health delivery system emerges? Not by itself. However, if we are going to rely on the market interplay between insurers and providers in many hundreds of markets around the country (like politics, most health services and health insurance are local), then we need some assurance that each market will have vigorous intermediaries negotiating for consumers. . . .

There is no quick and easy way to change health care delivery arrangements that are deeply embedded in institutions and habits. The radical course, I would think, would be to subsidize a vast expansion of health insurance without putting in place institutions capable of improving a badly broken system.

The leading “expert” argument against the public option now is money–or, to be more precise, the arcane scoring system employed by CBO to weigh every conceivable cost of most publicly oriented health reform against a selective account of its benefits to the federal bottom line. Let’s leave aside for the moment the general political bias of cost-benefit analysis, the specifically dubious calculation of “survivors’ costs,” and other contestable accounting methods. The bottom line here from a budget perspective is, as Nathan Cortez puts it, “The Less You Change, The More It Costs.” If you really want to see health care costs balloon out of control, follow the Baucus path toward subsidizing private insurers (along with a a fig-leaf “co-op”) to continue their present practices.

To understand those practices, I highly recommend Joseph White’s article Markets and Medical Care: The United States, 1993-2005. (This article should be to public intellectuals what Atul Gawande’s The Cost Conundrum has been for the informed public generally.) White exhaustively describes the role of the market in organizing health delivery over the time period, and concludes that one of its most important effects was to speed the consolidation of insurers and provider groups. Rather than leading to a clash of these titans, market forces led them to join forces against employers and consumers generally:

One might wonder why consolidation among insurers did not allow them to resist the providers’ demand for increased payments. The simple answer is that there were two concentrated parts of the market and one fragmented part. The insurers had to choose between fighting a full-pitched battle with the providers or exploiting their own market power vis-a-vis employers. Raising premiums to employers was a lot easier.

BaucusCare and ConradCare as they stand now are a recipe for advancing that dynamic well into the future.

PS: Timothy Noah has been doing some great articles on health reform, and here is his selection of “must-read” sources.

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