Obamacare, Executive Summary
Ever since 1965, effective legislative control of Medicare and Medicaid has rested in the Senate Finance Committee. The Health Subcommittee of the House Ways and Means Committee has seemingly equal power, but the difference between a two-year term and a six-year one makes a difference after forty years, in terms of collective memory and experience. It has not been explained why President Obama is in such a rush to pass healthcare reform, but he is, giving it a higher priority than two wars and the worst depression since 1935. All of the health committees of the House have completed their bills and partisans have been hectoring the Senate Finance Committee to get on with the job. But this committee of highly genial and courteous friends have five hundred more amendments to review together, and they are doing their job. If the President applies too much pressure, he will have to deal with the entire Senate, who cherish each others' privileges. This little comedy has turned much more serious since the Senators have come to realize that 90% of the trillion-dollar cost in ten years is generated by upgrading and streamlining the Medicaid program, which had received scarcely any attention up to then.
The soaring goals of the program are to extend health insurance to all Americans, and to rescue impending Medicare insolvency by making all healthcare costs grow at a slower rate. To accomplish universal coverage, mandates are proposed, with financial penalties for non-compliance. Mandating that more employers provide health insurance for employees seemingly is insufficiently broad. Mandating that all individuals obtain coverage to avoid fines is broad enough, but compliance is likely to be resisted, particularly if equal tax exemption is not included. Equalizing the tax preferences solves several problems, but two remain: it raises the revenue cost considerably, and it undermines the whole reason for employers to offer group coverage. That might well begin the process of unraveling the employer-based system, but it is still difficult to believe that millions of people would permit this cost burden to be put on them when they see that others retain it and enjoy substantially lower costs. In fact, the President was willing to be seen as a quibbler rather than agree that mandatory insurance was a tax. He almost certainly had in mind the Constitutional provisions about equal justice under the law.
Because of demography, Medicare is certain to become insolvent in a few years, unless something major is done. Nevertheless, it seems unnecessarily expansive to propose mandatory universal standardization under regulation of all health care for everyone, in order to reduce the costs of Medicare. At some point, achieving uniformity becomes dictatorial, and certainly narrows the scope for competition in the industry. Probably the major factor in alarming elderly Medicare recipients that their benefits will be the main way of paying for achieving solvency is that neither they nor the administration seem to see any alternative. When they learn of the costs of reforming Medicaid, they will be even more alarmed about impending Medicare benefit reductions.
Indeed, the discovery of how wasteful and impaired the Medicaid program has become begins to suggest that this problem alone should be teased out and throughly studied before making these problems more difficult in the name of uniformity. There is, unfortunately, a serious Constitutional issue in the Tenth Amendment, and the pettier political problems are tangled. There is a legitimate question whether this performance demonstrates that the state governments are simply incapable of running these programs, balanced against the warning that mixing them up with other issues could make the problem too big for even the federal government to handle. It is not completely fanciful to compare it with the problems of King George III, who discovered that America was just too big and the communications just too difficult to manage across an ocean.
Myriads of other issues have been raised in healthcare reform debate, and most of them can be dismissed as micromanagement. The possiblity is real, however, that the sort of intensive study and review which this topic requires, will turn up other issues like the Medicaid program, so large an issue that it is far better to begin by isolating it and testing its premises from top to bottom.
Essentially, this is what people mean when they advise the President to press the reset button and start over at another time. Whether he takes this advice or not, we offer twelve suggestions that would be comparatively simple to implement, but have a disproportionately positive effect. They can be disputed as to value, but not on the basis of simplicity to explain, simplicity to implement. For example, to offer only catastrophic (high-deductible) insurance rather than the whole package from first to last dollar. To extend the tax preference to all who are mandated to comply with it. To state an additional standard of unique proven value for patent protection of new drugs. To legislate a reversal of the unfortunate 1982 Maricopa decision of the U.S. Supreme Court. To reconstitute the PSRO program in its original form, and several other small technical rules that would have disproportionate effect. And to mandate some progress in Malpractice reform.
And then get on with the business of conducting the two wars which are going badly, repair the financial system of the country from near-paralysis, and make some progress in Iran, North Korea and other aspects of foreign affairs. Otherwise, with the President making a speech every day, often in a foreign country, the public will begin to wonder who is running this one.
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