An Admission Of Failure

By now, you've heard about the kerfuffle over the recent request by WellPoint Insurance in California for a whopping 40% increase in rates. Not being the CEO or CFO of WellPoint and not having studied their financial position carefully, I can't judge the fairness of this request.

However, little noticed in this request is an admission that insurers have failed to keep up, despite the bushels of money they've extracted from the pockets of the American working public.

Her testimony, and other statements she and other WellPoint executives have made, suggests that insurers can't profitably manage through periods of high unemployment. They can't price policies in a way that keeps healthy young people in the same pool as older people, producing a mockery of the very point of indemnity insurance. Despite a decade of unobstructed consolidation, which was sold to regulators as a way to control healthcare costs by creating mega-insurers like hers, her industry can't control healthcare costs.

In other words, the only way an insurance company can effectively make profits on private health insurance is to sell policies to enough healthy people to cover the costs of the older and sicker.

To put it analogously, the only way a car insurer could make money is to issue car insurance to people who don't drive.

Insurance of any kind is a bet: enough people will feel uncomfortable without it that they'll purchase peace of mind to cover those who really need help with their bills. As an insurer, if you keep up, and you'll make money. Don't keep up, and you'll lose.

So here's the thing: if insurance companies are losing customers as people lose their jobs and can't keep up, why aren't the costs of medical care coming down proportionately?

It's true, we as a nation are getting older, and sicker. We have an obesity crisis across the land that's had reverberations in diabetes, colon cancer, strokes and heart disease, ad infinitum, ad nauseum. A sicker nation means more spent on healthcare, and as we've learned in Econ 101, a higher demand forces prices higher.

But a higher demand does not force costs higher and there's the rub. It's no coincidence that the AMA has opposed a public option because the government would be the 800 pound gorilla in the room that would force everyone, from insurers to patients to doctors, to take account of its actions.

There's only one way to lower prices on a supply-and-demand basis. If you can't lower demand, then obviously the thing to do is to raise supply: bring more availability to the market place to increase competition, which will lower prices across the board and will create a market force that will dampen down the costs of medical care.

Add to that the influence (or spectre, depending on how paranoid you get) of the Department of Justice subpoenaing your billing records or the IRS auditing your tax returns to ensure compliance with cost-cutting programs, and medical costs will quickly come down.

In truth, classic economic theory practically demands a public option, with a mandatory buy-in, which will create market forces to bring prices down. This is not unheard of in American society: we did it with our power utilities until they were deregulated, and we were fine with putting together an infrastructure that could be privatized eventually, even if the privatization became a mess after Republican greed got its mitts on it.

At Loggerheads

There's an interesting dynamic at work in a nation where nearly 8 in 10 people agree on something: a public healthcare option.

It may not even come to a vote, despite the fact that it has more than enough votes for it to pass.

You know, that stupid "60 votes to avoid a filibuster" rule that has clogged up legislation for hundreds of years (OK, the vote total has come down in that time, but still...):

The Senate Democratic Leader, Harry Reid - and a majority of Members of the Senate - support the inclusion of public health insurance option in the Senate's health care reform bill. The debate over where the Senate of the United States stands on this question is now settled. The Senate - like the American people, the House of Representatives and the President - supports a public option.

What is not settled is whether the majority will be allowed to have an up or down vote on a health care bill that includes a public option.

The question is: will any of the Democratic Senators join with the Republicans to prevent an up or down vote on a bill containing a public option - one that is supported by the overwhelming majority of the American people?

Two words for ya, Bob: Joe Lieberman (I-Insurance Company Stooge)

It ain't happenin', Bob. Simple as that. Lieberman represents Connecticut and as insurers go, so goes Connecticut. He'd be cutting his nose to spite his face and rather than retire somewhat gracefully, Joe is hellbent-for-leather to show he still has stroke in this new Senate.

His ego is too big to write the check you want him to, Bob. I'm sorry.

This requires now that Olympia Snowe step up and vote her conscience, just like she (sort of) did in committee.

Even if every other Democratic Senator, plus Bernie Sanders (who will), voted for any form of public option in even this limited fashion, Lieberman wouldn't admit an up or down vote if you held a gun to his head.

Even his colleague from Connecticut, Chris Dodd, is sweating bullets over this issue, and while Dodd will likely have the cojones to vote this forward to burnish his populist credentials (his only announced opponent for his 2010 re-election, Linda McMahon, has been hammering him mercilessly for being yoked to big government), he has to be very careful and find whatever political cover he can.

The realpolitik of the situation is this: 80% of Americans want some form of public health insurance coverage. Nearly 60% of Senators want it.

Somehow, we on the ground here have to get thru to Senators we might be able to sway from the Republican party. That's precious few, to be certain. Perhaps Susan Collins of Maine, maybe George Voinovich in Ohio (based on job losses, Ohio has an unemployment rate inching up towards 11%) could be arm-twisted, but even then, every single Democrat besides Lieberman would have to be cracked into line.

That's going to be hard. Support for a public option in the Blue Dog Democrat states is only 54%.

So close, yet so far...

Day Of Rage

I'm in a real pissy mood, and my attention span is for crap, mostly because I've not slept much these past few weeks, last night being a sort of final straw for my equanimity.

So I'm going to break from my traditional analytic posts and head off into the Eschaton-like world of slam-dunking shit and letting you folks hash it out in comments:

Item 1 -- Skinny baby denied health insurance by company that advised sterilization to woman

Item 2 -- 17-Pound, 4-Month-Old Baby Denied Health Insurance for Being Too Fat

Item 3 -- Why are some middle-class women denied health insurance coverage if they had C-Sections?

Item 4 -- Rape Survivor Denied Coverage for "Pre-existing Condition" Shares Her Story

Pretty disgusting, isn't it? Private insurers prey on the most vulnerable among us, denying coverage to sick people.

Funny, because I thought the whole point of health insurance was to try to prevent you from getting even sicker...

Fairness

I was walking around my neighborhood at six AM today, and sort of mulling life, as my iPod died on my walk. I had a thought, rather a series of thoughts, and wanted to share them with you on this, Yom Kippur.

I guess this train of thought was triggered by watching LinkTV's presentation of an address by author and journalist T R Reid regarding his world tour surveying healthcare abroad.

(SIDE NOTE: If you can give, this is a good time to donate to LinkTV, a network dedicated to bringing you perspective and analysis of the news that you won't get from mainstream media)

Reid consistently pointed out that, logically, it is impossible to frame the current healthcare crisis as anything other than a moral question: Is the healthcare system fair? What is the ultimate responsibility of a government to its people if not to ensure they have long and productive lives?

He has a point: for all the flaws inherent in other country's healthcare systems, most notably the long waits for elective procedures in Canada's Medicare system, they are at their lowest common denominator, fair. The length of time a rich person waits under Canada's Medicare system (which was LBJ's model for his eldercare system) is the same as for a poor person.

It is, at heart, an ultimately fair system. Yes, if a rich person can afford to, he or she can opt to fly to the States and pay for knee surgery or to see an orthopedist, rather than wait a couple of weeks in Canada. But Canada also doesn't extend this triage function to life-threatening conditions: if your heart is on the fritz, you get seen immediately, rich or poor.

Fairness. It never has to be justified. But unfairness does.

And somewhere in the dark of the night of my sleep, this thought nagged at me, and I began to have an insight into human beings.

When we behave badly, we have to rationalize ourselves. We have to justify that behavior. We have to make excuses.

Fairness is inherent. Fairness is obvious. Fairness needs no excusing.

Just like getting up off the couch and taking a four mile walk needs no rationalization. It needs nothing other than "I wanted to stretch my legs."

Sitting on that couch for another hour, that requires rationalizing. That requires excusing: "It's raining. I'm tired. It's cold."

Or to put it another way, when was the last time you had to explain to a cop why you were going under the speed limit?

Good behavior is what it is: Bonnum commune communitatis. Bad behavior needs to be explained, excused and forgiven.

Back to healthcare then: what rationalizations would the corporatists give for the current state of healthcare in America? That it makes a profit for the shareholders of insurance companies?

Is that fair? Is it fair that the CEO of Oxford or CIGNA or Blue Cross earns a fat little bonus at the end of the year while people without insurance, some 700,000 each year, are forced into bankruptcy and 200,000 people die of treatable and preventable illnesses, all because insurance companies have to protect that precious little dividend and that precious little stock price at the expense of a healthier citizenry?

This is not about socializing medicine, either. For example, America generally operates under the German healthcare system, developed by Otto Von Bismarck over a century ago. Private doctors, private insurance, private hospitals, except costs are controlled. For example, Japan, which has 3,000 health insurance providers, cap administrative costs at 1.5% of premiums, meaning insurance companies have to spend 98.5% on insuring patients. Canada caps costs at 6%, and that's with a government health insurance.

American insurance companies bank 20% of premiums as "administrative costs". That's an awful lot of forms to fill out! And the Japanese spend about $3,500 per annum on healthcare and insurance. Americans spend $7,500.

And no one in Japan files bankruptcy because of medical bills.

Fairness. It never has to be explained, it never has to be justified.

It only has to be experienced.

To Your Health

The broad outlines of the Obama healthcare package are coming to light. I'm not sure I like them much:

It's hard to believe that only three months ago, health care advocates worried that President Barack Obama would drop the health reform issue from his first-year agenda. Now, with an August deadline to pass a bill, a compromise that once seemed unimaginable is considered quite possible, both sides say.

Congress this week begins a two-month sprint to pass legislation overhauling the health care system — an aspiration that has eluded generations of American politicians. The task is exceedingly complex and faces the legislative equivalent of an Ironman triathlon, tested at every stage by monied interests, political alliances and an estimated 13-figure price tag.

My beef with it?

It's too complex and in politics, complex means it's too easy to hide the loopholes in.

Think about the laws we pass in this nation for a moment. Take speeding laws: if you exceed the speed limit, in the judgement of the officer who is issuing the ticket, you've broken the law. A traffic court may overturn this, but it's unlikely that anyone is going to get away scott free with every ticket issued.

The rule is simple: There's a defined limit. You exceed it. You pay a price.

Now, take a look at the tax code, one of the most complex systems known to mankind.

Does everyone pay their fair share? No, not even nominally, much less in practice.

Here, we're talking about people's lives. Here, we're talking about creating a bureacratic nightmare the likes of which we can't even begin to fathom.

Government does some things better than the private sector. Take mail delivery. If FedEx or UPS had the same mandate as the USPS (deliver mail to whomever in the United States mail is addressed to) we'd all be paying enormous sums of money to fund the rural delivery system. Government can make it cost effective enough that it costs 44 cents...and that's AFTER FedEx and UPS have skimmed off the most profitable portions of the delivery system: overnight mail and commercial parcel deliveries!

Government is the only organization sufficiently scaled to handle insuring 300 million people. Period.

This entire bill should be scrapped. We should have a single-payer health insurance where everyone knows what they will pay when they visit a doctor (nothing), doctors can still afford million dollar homes (they do in England) and you don't have to argue with an insurance bureaucrat with regards to being treated. If the doctor finds a test medically necessary, there won't be some beancounter sitting over his shoulder, timing the procedure.

Maybe this is a first step in that direction. And maybe it's unnecessary.

Healthcare: A God Given Right

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.

The Framers of the Constitution relied heavily on their own prior declarative thoughts when devising the laws of our land, yet were curiously silent with regard to the "life" portion of our rights.

We ought to fix that.

We have guarantees that, no matter how destitute you are, your liberties will be protected. We have an army and police forces that will protect, serve, and defend your property, no matter how meager. We guarantee you access to an attorney should you run afoul of the law or your neighbor.

We don't provide the same protection for your life, however. We don't guarantee you a doctor. If we guarantee you any care, it's emergency room care and the hospital will still sue you for money until they've bled you dry.

Why?

I could get into the whole "well, you know, back in those days the doctor was the local chap who applied leeches and leeches were free" argument, and accept that the Founders were men without vision.

Not impossible. Just unlikely.

I don't think the Founders, as they could not with the Second Amendment, could foresee a day when we'd have advanced diagnostic tools, nuclear medicine, the ability to delay death for decades.

In the 1700s, you were lucky to live until forty if you were a man and fifty if you were a woman. Why worry about maintaining your health if all it would do is give you a few weeks?

They didn't have antiseptics (Joseph Lister wasn't born until the 1820s). They had pain-killers after a fashion...basically, rum... microscopes were a relatively new thing as was the concept of microbiology and bacteria and viruses causing human diseases (remember the whole "leech" thing?). Antibiotics weren't even on the horizon. Sterilization and pasteurization were half a century in the future.

Who needed healthcare coverage?

Well, now we do. And as the Delcaration of Independence requires government "to secure these rights," the only solution to this perplexing problem is the most obvious and simplest one. As well as the most patriotic.

National health care.

A Dream Realized

It's too early to open the champagne or to even assess the package, but we've taken a big step as a nation:

Late last week President Barack Obama and Democratic congressional leaders agreed to use "budget reconciliation" if necessary to jam a massive health-care bill through Congress.

Most Americans probably greeted this news with the glazed eyes and yawns that should rightfully accompany any discussion of "the federal budget process" longer than 30 seconds. But this decision is a deeply troublesome attempt to circumvent the normal and customary workings of American democracy.

It's a radical departure from congressional precedent, in which budget rules have been designed and used to reduce deficits, not expand the size of government. And it promises bitter divisiveness under an administration that has made repeated promises to reach across the partisan divide.

If we can ignore Sununu's posturing and calling for a whaaaaaaaaaaaaaaaambulance, on balance what this means is that some form of national health coverage will be in place within the next few weeks.

Undoubtedly, it will piss everyone off, which means either it is stellar piece of legislation or a complete bonehead bill.

National health care is long overdue in this nation. For too long, health insurance and healthcare has been both overpriced and underservicing the needs of the people of this country, unless you were rich enough (or worked for or with a large enough organization, which is diametrically opposed to American capitalism) to afford premium coverage.

Health insurers knew they have a captive audience and treated us all monopolistically. You went to work for an employer: take it or leave it.

Healthcare decisions effectively became the domain of your employer, who picked and chose coverage not based on what was best for you, but for his or her bottom line. By extension, your health care plan was next determined by the actuaries and bean counters at the insurer, not the doctor you saw. Their decisions guided not only his courses of treatments, but in some cases even forced him to tailor his diagnosis to get you out of his office faster, not necessarily healthier.

Doctors are not innocent in this scam, to be sure, although their guilt is not one of conspirator but of expeditor. The doctor or hospital must look to their own bottom line, knowing that their revenue stream is determined by two factors: limited time (who can work 25 hours a day?) and limited reimbursements.

Therefore, the faster they can churn patients out, the more money they can earn. This is not conducive to good healthcare, much less preventive healthcare. What doctor is going to waste precious revenue-earning time with you, discussing diet alternatives or recommending a good heart monitor? "You're fat, lose weight, next?"

Sununu's problem is two-fold: one, he sees national healthcare as socialized medicine (as if somehow our free enterprise model is helping anybody), and two, he's watching a parliamentarian trick used against his party.

Here's how that works: normally in the Senate, a bill must pull a supermajority. Sounds stupid and it is, but because of the filibuster rule, a simple majority is no longer sufficient to determine the will of the people.

The filibuster is the subject of a very long post in its own right, and I can't do justice to it here. Suffice it to say I feel it is necessary when something as controversial as committing the resources of this nation to a foreign objective is at stake, but quite unnecessary when 51 Senators determine, after 218 Representatives, that something as fundamental to the "life, liberty and pursuit of happiness" of the American people is at stake.

And there's the rub. Rather than letting health insurance stand or fall on its own merits, in the conference to resolve discrepancies in the annual budget Democrats can slip it in as a budget resolution, and it passes with a simple majority.

Tricky, to be sure, but whatever it takes, this is necessary. To delay this vital need of the nation a year longer or more until even the most hard-headed conservative "gets it" is both deadly and economically dangerous.

So John?

Shut up.

A More Direct Challenge

You may recall, if you followed politics at all in the 1990s, there was a move afoot on the part of the Gingrich revolters to reform how government worked.

What happened up to that point was that the Federal government would distribute funds to states targetted for very specific goals. These were called "categorical grants". Gingrich and his orc minions proposed to change this to a "block grant" system, whereby a state would be given a chunk of money and directed to spend it as it saw fit. In a perfect world, there would have been substantially no difference between the two methods. Ideally, they would solve the same problems and be the same amount of money, with the state having a bit more discretion in how it could target money it received.

But, well...politicians, money...you can see where this headed.

There's an interesting dynamic afoot here, and I want to study it from the ground up with you for a moment.

Little noticed outside of New York City (and even then, amidst the Obamathon, only among wonks here) was the release of an emergency budget proposal by Mayor Mike Bloomberg.

Much of the hoopla over this budget stemmed from the loss of an entire graduating class at the police academy, cutting back on night-time fire coverage, as well as the suspension of a property tax rebate, an increase in property tax rates, and a 5¢ surcharge on all plastic bags.

All to close a $4 billion budget gap to $1.3 billion. Presumably, smoke and mirrors would take care of the rest. Actually, I know what will take care of the rest, but that's a different post.

Little noticed in the budget proposal, which will have to go to the city council for approval, was an item that would eliminate a program that has been around for over 100 years: public child dentistry.

Remember when you had to present a note from your dentist, once a year, certifying that you had been seen and were under his care? Some kids couldn't afford private dentists, and since these notes were mandatory, the city stepped in and established dental clinics around town for indigent (and sometimes, just lazy) kids to be checked up.

Even in the depths of near-bankruptcy thirty years ago, this program was considered sacrosanct. We could close down firehouses, reduce police presence, cut back on garbage pickup (which used to be daily), find myriad ways of saving a buck or two, but childrens' teeth were deemed essential.

This is a good thing, by the way.

Now, not so much. I pondered this rather curious earmark in the budget proposal. One day it hit me: with a President Obama, children's health insurance would be mandatory, meaning that these dentists would essentially be working for the Federal government now. He was kicking the ball upstairs.

I filed this away: city councils are notoriously slow, partly around Christmas time and PARTICULARLY ahead of an election year, to start mucking around with unions.

Comes today, this item:

ALBANY - Faced with a worsening economy, Gov. Paterson wants to slash school aid, shrink health care funding and hike public college tuition, the Daily News has learned.

The governor, who will propose $2 billion in budget cuts Wednesday, also wants public employees to go without raises for at least a year, sources said.

About $1.4 billion of the cuts to this fiscal year's budget would come from education and health care.

"Aha," says I. That cut in children's health aid, roughly a half billion dollars, would mean severe cuts in the Federally mandated children's health care program, Child Health Plus.

CH+ is funded by Medicaid, as part of those block grants I told you about earlier. You might recall the ruckus in Congress last year over renewing S-CHIP. This is that program.

Essentially, Patterson is setting up to kick Bloomberg's ball one step further up the ladder, to the Federal Government, to the Obama administration.

See, neither of these draconian budget adjustments will take effect, should they even be passed, until next summer, 2009.

Plenty of time for Obama to write, introduce, and pass his version of national healthcare. Plenty of time for the Federal government to pick up the ball.

My suspicion is we'll be seeing this same scenario repeated across the nation, as mayors and governors collaborate to kick their mandated spending programs back up the ladder to the Federal government.

For policy wonks like me, these are salad days indeed!