Teton Transplant

I frequently hear that the Republican party is the party of “no” when it comes to solving the health care problem. Well, let’s review the situation in Washington.

The House Republicans have a 10-step plan that has been on their website for many months. They have introduced a bill for each of the 10 steps. Unfortunately, with one exception, none of the bills have ever made it out of committee. Apparently the legislator most responsible for leaving these bills languishing in committee is Representative Eileen Cody, Chair of the House Health Care and Wellness Committee.

The House Democrat’s plan? It’s “under construction” according to their website as of February 6th. (See screen shot below.)

Here is the irony, the only bill in the House Republicans’ Plan that has made it out of committee was HB 1383. Signed by Governor Gregoire into law in 2006, it allows the state to offer health savings accounts to state employees. According to Representative Doug Ericksen, a primary author of the House Republicans’ 10-step plan, the administration has refused to implement it, laying the blame to an incompatible computer system among other things. So four years and still no health savings account option for state employees.

I asked Ericksen what, if anything, is likely to get done this legislative session on health care. Not a lot it appears. He said a bill that will put more pressure on the administration to implement health savings accounts for state employees has made it out of committee.

The only other health care-related bill that has made it out of committee is HB 3015, which would authorize the Insurance Commissioner to enter into compacts with other states to permit the sale of small group health benefit plans across state lines. Ericksen says this is fine as far as it goes, but is too lenient in his view, since it is only optional. He would prefer to see a more forceful bill.

Here is the screen shot from the House Democrats’ website as of February 6th, 2010:

Some have argued that the reason Massachusetts’s voters rejected Obamacare (through their vote for Brown) was that they already have “their healthcare”.   As this Cato Institute Study by Aaron Yelowitz and Michael Cannon points out, most of them already had health insurance before RomneyCare, and are now paying more for it.   RomneyCare has only added about 5% more people to the insurance rolls, and insurance rates have gone up faster than the average in rest of the nation.   I’m told it is political suicide for a politician to admit a prior policy mistake, but it would be sure nice to see Romney (and Brown and other supporters) admit it.  How about it Romney? Just about every other leadership effort you have touched has turned to gold, but you missed with this one. Isn’t it time to admit the essential structure of Romney-care — fining people if they don’t buy insurance — doesn’t do anything to solve the problem with rising health care costs and indeed makes it worse?

Every time I pull out my credit card with the higher cardholder reward I fill a twinge of guilt that I am costing the retailer a bit more for the transaction — more than I benefit by the customer reward — and realizing also that I am doing my part to drive up retail prices for everyone. This article by Ron Lieber for the New York Times discusses some of the damaging effects of consumer rewards.

Health insurance is similar in the way that individuals optimizing their personal situation results in greater costs for all.  Once someone or their employer has paid their premium, they have no incentive to economize their use of health services, and their doctor advising them has a strong economic incentive to over-prescribe procedures (both for revenue and tort-avoidance reasons).  The foregoing is mitigated somewhat by co-pays and deductibles.  The result, which we have observed over the last several decades, is that health services are over-consumed, insurance rates increase the next year, and the cycle starts over.  There is nothing in Obama care that addresses this fundamental problem.  In fact, it seems designed to acerbate it.

I just returned from CES 2010, the annual conference in Las Vegas that showcases the latest developments in consumer electronics.  The Seattle Times has covered the conference extensively.

At the conference, a presenter on digital health developments made the point that, more and more, telemedicine and other technology will replace human interaction with doctors.  He said this will be necessary because there simply are not enough doctors to cover the baby boom generation as it ages.

It is no secret that extensive compilation and sharing of digital health data creates significant privacy challenges.  What may be surprising to some is that the privacy problem is not caused by the inability to keep electronic data encrypted and secure.  We can do that pretty well if we don’t need to share the data extensively.  The problem arises because we share parts of our information with so many people – doctors and nurses yes, but also pharmacists, insurance providers, employers to a certain extent, loved ones.  Moreover, much of what could be considered health information can be gleaned from all of the other electronic data that is gathered about us.

As we get deeper into the digital age, more and more of our life is recorded in “the cloud,” and that data is always accessible to someone.  This includes virtually everything we purchase (including, for example, the payments we make to hospitals and the prescription drugs we buy) and every place we go (including a doctor’s office, a rehab clinic, the gym, the emergency room).  Telecom companies know where our cell phone is at any given time.  Many of our assets – bank accounts, mortgage records, stock portfolios – only exist in an electronic entry somewhere.

One presenter recommended Privacy Rights Clearinghouse, a website that compiles information about privacy rights in the digital age and recommends ways to protect them.  For example, don’t give your pharmacist or insurance company permission to share your purchase data with other insurance companies.  (Databases of this information exist and some insurance companies share them with other insurance companies to help screen insurance applicants.)

Certainly we will apply technology and pass numerous laws to maintain our privacy and the security of our assets.  But I think addressing the problem will require more than just a matter of using passwords and signing release forms.  Socialization and establishing new mores is vital.  As technology changes society, our shared values and conventions need to change along with it.  What was once considered no big deal – say, sharing someone’s birth date – is now a big deal, and becoming more so all of the time.

If you missed Washington Policy Center’s 2009 Small Business Conference last Tuesday you can see a video of some of the panel discussions here.  You can subscribe to WPC’s weekly email letter at the same link.

I was able to attend several sessions of the conference, including the panel discussion on health care.  The panel spent a lot of time talking about ways to increase competition among health insurers.  I would have appreciated more discussion about the moral hazard problem inherent in insurance — a primary cause for increasing health costs.  I sat by State Senator Randi Becker (2nd District, Eatonville).  Senator Becker is a retired health care worker and understand’s the system’s problems well.  Add her to the short of list of state politicians to look to for solutions to the health care mess.  I have previously posted about another one, State Representative Doug Ericksen (42nd District, Ferndale) who understands the health care system well and puts health savings accounts at the top of his list of solutions.

1. Make people buy the benefit themselves, and tax them if they don’t
2. Tax the provider (drug and instrument manufacturers) who will pass the costs on to the consumer
3. Include statutory requirements to cut back subsidies to the program if it increases the deficit (knowing that subsequent legislative sessions will remove the requirement once the entitlement is firmly established)
4. Shift costs to the states
5. Commit to future reductions in Medicaire spending growth that aren’t realistic and won’t be in fact  implemented.

As this morning’s opinion in the Wall Street Journal explains, the  Senate Finance health care proposal uses all of these methods, and more.  It’s classic legislative obfuscation of costs that makes people think they are getting something for free, when in fact they are paying for it indirectly.  It’s a sham.  Americans will eventually figure it out.  The crucial question is when.

Every table in the Sheraton Hotel ballroom in downtown Seattle was filled last night for the Washington Policy Center’s Annual Dinner. The keynote speaker was Ben Stein, author, lawyer, economist, actor, and a speechwriter for the Nixon administration. He reminded us that Nixon proposed a health care plan during his tenure. Stein noted that Nixon’s plan was based on private rather government-sponsored insurance, and that it would have provided subsidies to low income individuals and small businesses. In many ways it was similar to the current proposals, although it contained no individual mandate. We have learned a lot since Nixon proposed his plan, and I think it would be subject to many of the same defects of the current proposals, the two most significant being that the moral hazard problem is not sufficiently addressed and the government defined benefit would drive the system towards a high degree of regulation. You can read about Nixon’s plan in his own words here.

Washington’s Policy Center’s website is a great resources. You can find their publications on health care policy here.

I received a postcard a few days ago that screamed “Why is Whole Foods CEO fighting progressive health care reform?” It was from an organization called Health Care for America Now and it warned me that Whole Foods is looking to locate in my neighborhood soon. I had the urge to look over my shoulder for lurking real estate executives in trench coats, scoping out sites for the new store.

The reference was to CEO John Mackey’s Op-Ed in the Wall Street Journal where he dared to suggest that, even though “we clearly need health reform,” we should be moving “toward less government control and more individual empowerment.”

The postcard wailed, “[Mackey] went so far as to say that health care is not a right in America.” Silly Mr. Mackey. He must have mistook the very debate he was participating in as evidence that there is no right to health care in America (other than the right to be treated in emergency rooms regardless of ability to pay, which every person in American has by statute).

Health Care for America Now’s website urges people to “get angry,” and lists the lies (yes lies!) that are being told about proposed health care reforms. To my horror I realized I am one of the lying liars who tell them since I believe there is a pretty good argument for several of the propositions on their lie list. And forgive my mendacity for not agreeing that “health care reform will be fully paid for,” that “a majority of reform will be paid for by finding savings and cutting waste within the current system,” or that “nothing in any health reform bill being proposed . . . would ration care,” all propositions that are “The Truth” according to Health Care for America Now’s web site.

Is anyone else sick of this manner of debate? There are gross examples of this same poor behavior on the right. Let’s not waste more valuable debating capital arguing about who started it. I don’t know a conservative person (or anyone for that matter) who doesn’t believe that the government has a role in ensuring that everyone has health care, including assisting those with low incomes and catastrophic/chronic diseases. Everyone recognizes that rising prices must be checked. No one favors continuing the status quo. The debate is about how we get there, and it should be an honest one about the trade-offs.

Don’t we all aspire to live in a world where objectively presented facts and thoughtful argument carry the day? One ought to be able to put forward a reasoned argument in good faith without being subject to thinly-veiled boycott campaigns. What do you say we turn our ears from the shrill voices, hold up and engage the reasoned ones.

See John Mackey’s more complete statement of his proposal on his blog here, and his weekend interview with the Wall Street Journal here.

I braved the rain last Tuesday evening (Sept. 29^th) to attend the health care town hall in Bellevue hosted by State Representative Doug Ericksen. There were about 35 people in the audience. Ericksen talked freely and with specificity about how the system works, current laws that affect it, and legislation that has been proposed to change it, some of it by him. He believes that government has a role in subsidizing low income individuals, assisting those with chronic and catastrophic conditions, ensuring greater transparency, guaranteeing portability and promoting access. Everyone in the audience seemed to agree with him.

Some solutions he supports on the federal level are: federal tax credit to individuals to purchase health insurance, eliminate the employer tax deduction, tort reform, increase health savings accounts, and allow purchase of health insurance across state lines. Some solutions he supports on the state level are: allow purchase of plans across state lines, change state mandates to allow a core (more limited) benefit plan, transform Washington’s Basic Health Plan (an insurance program for low-income people not eligible for Medicaid) into a premium-subsidy program for ages 35 to 64, repeal two percent tax on insurance premium for HSAs, give small employers and self-employed individuals a tax credit for providing insurance. These proposals, and a few others, are spelled out in more detail on his slide deck presentation, available here.

Interestingly, all of the state proposals mentioned were in bills introduced in the last legislative session that never made it out of committee. Most never received a hearing. I would like to see more public debate between those state legislators that supported the bills and those that didn’t. And I would like to chance to hear more of Ericksen’s ideas and proposals. During the meeting, there were references to the need to control costs, but little discussion about the moral hazard problem that is a major factor in creating it. A few quick words with him after the meeting revealed that he has also thought about that issue, but none of his proposed solutions take a direct aim at it.

Erickson has led town hall meetings in Bellingham, Richland and Yakima, and has scheduled future events in Burlington (Oct. 5) and Spokane (Oct. 7 and 17).