Until Midterm Elections...

Scott versus Scott

Welcome to our blog. Here we will debate the days most serious topics and allow users the chance to discuss the topics as well. The range of topics will vary, but one thing will remain certain, the debate will rage on. Scott Lesinski is a proud conservative and Scott Jones is a proud liberal. However, the roles will switch on some topics. Stay tuned.

Scott Lesinski is currently an actuarial associate for a large human resources and insurance consulting firm in Saint Louis. He is also an avid student of US history and enjoys following current events, with an eye to their contextual relationship to the past. He is also, in fact, a former student of Mr. Scott Jones. Scott is working toward his FSA credentials, which is akin to earning a PHD in Actuarial Science.

Scott Jones is currently a high school social studies teacher at a high school in suburban St. Louis, MO. He teaches World History, AP American Government and Senior American Foreign Policy. He has a BS. Ed. (Secondary Social Studies) from the University of Missouri - Columbia and a M.A. (History) from Southeast Missouri State University. He is currently working on a dissertation in character education to earn a Ph.D. in Educational Psychology.

Thursday, March 25, 2010

It's Not Going To Fail

Health reform is now almost completely law. Many Democrats finally realized that their electoral prospects will be better if they can point to a real accomplishment. Polling on reform -- which was never as negative as portrayed -- shows signs of improving. And I've been really impressed by the passion and energy of this guy Barack Obama. Where was he last year?

But reform still has to run a gantlet of misinformation and outright lies. So let me address three big myths about the proposed reform, myths that are believed by many people who consider themselves well-informed, but who have actually fallen for deceptive spin.



The first of these myths, which has been all over the airwaves lately, is the claim that President Obama is proposing a government takeover of one-sixth of the economy, the share of G.D.P. currently spent on health. For those who don't understand this, see your employer-provided health insurance plan.

Well, if having the government regulate and subsidize health insurance is a ''takeover,'' that takeover happened long ago. Medicare, Medicaid, and other government programs already pay for almost half of American health care, while private insurance pays for barely more than a third (the rest is mostly out-of-pocket expenses). And the great bulk of that private insurance is provided via employee plans, which are both subsidized with tax exemptions and tightly regulated.

It seems as if the conservative spinners want to argue against government intervention in health care, but none of their proposed plans has any removal of the current tax subsidies and exemptions in the health care economy. I have heard only George Will – and he’s not in Congress – propose truly radical ideas of nuking the employer-based tax credits and exemption. The conservatives in the House and Senate don’t seem to have the political will to enact real reform.

The only part of health care in which there isn't already a lot of federal intervention is the market in which individuals who can't get employment-based coverage buy their own insurance. And that market, in case you hadn't noticed, is a disaster -- no coverage for people with pre-existing medical conditions, coverage dropped when you get sick, and huge premium increases in the middle of an economic crisis. It's this sector, plus the plight of Americans with no insurance at all, that reform aims to fix. What's wrong with that? This reform fixes this problem.

The second myth is that the proposed reform does nothing to control costs. To support this claim, critics point to reports by the Medicare actuary, who predicts that total national health spending would be slightly higher in 2019 with reform than without it.

Even if this prediction were correct, it points to a pretty good bargain. The actuary's assessment of the Senate bill, for example, finds that it would raise total health care spending by less than 1 percent, while extending coverage to 34 million Americans who would otherwise be uninsured. That's a large expansion in coverage at an essentially trivial cost.

And it gets better as we go further into the future: the Congressional Budget Office has just concluded, in a new report, that the arithmetic of reform will look better in its second decade than it did in its first.

Furthermore, there's good reason to believe that all such estimates are too pessimistic. There are many cost-saving efforts in the proposed reform, but nobody knows how well any one of these efforts will work. And as a result, official estimates don't give the plan much credit for any of them. What the actuary and the budget office do is a bit like looking at an oil company's prospecting efforts, concluding that any individual test hole it drills will probably come up dry, and predicting as a consequence that the company won't find any oil at all -- when the odds are, in fact, that some of the test holes will pan out, and produce big payoffs. Realistically, health reform is likely to do much better at controlling costs than any of the official projections suggest.

Which brings me to the third myth: that health reform is fiscally irresponsible. How can people say this given Congressional Budget Office predictions -- which, as I've already argued, are probably too pessimistic -- that reform would actually reduce the deficit? Critics argue that we should ignore what's actually in the legislation; when cost control actually starts to bite on Medicare, they insist, Congress will back down.

But this isn't an argument against Obamacare, it's a declaration that we can't control Medicare costs no matter what. And it also flies in the face of history: contrary to legend, past efforts to limit Medicare spending have in fact ''stuck,'' rather than being withdrawn in the face of political pressure.

The conservatives in Congress get this, despite the public declarations. Why else would none of the actually proposed Republican plans include the removal of Medicare – and Medicaid for the matter – from the health care sector? Again, George Will proposes more radical plans, but he doesn’t have to worry about reelection. Another factor that conservative spinners miss. This isn’t as unpopular as they think. Propose removing Medicare and see how November turns out.

So what's the reality of the proposed reform? Compared with the Platonic ideal of reform, Obamacare comes up short. If the votes were there, I would much prefer to see Medicare for all.

For a real piece of passable legislation, however, it looks very good. It wouldn't transform our health care system; in fact, Americans whose jobs come with health coverage would see little effect. But it would make a huge difference to the less fortunate among us, even as it would do more to control costs than anything we've done before.

I understand that conservatives will not see these issues the same way. For them, all government programs fail. All of them. They have a blind spot to where the government works well and better than the private sector. These assumptions can not be changed. What did change is the electorate. In November 2008, the people spoke. If the people are as upset with the health care package as conservatives claim, then the voters will send Republicans to Capitol Hill with a 2/3 majority in both houses. And that is not going to happen.

This health care bill is a reasonable, responsible plan. Don't let anyone tell you otherwise.

7 comments:

  1. I would like to add one thing...

    As I was reading the news today, I found that members of Congress - both Republican and Democrat - have been subject to threats, harassing phone calls, vulgar tirades and offices vandalized.

    Despite what you believe concerning the health care debate, this type of action betrays the health of our democratic republic. We can verbally debate and do it intensely, but at the end of the day, we are Americans. Any act of violence, whether actual or threatened, stifles the debate that is healthy for us.

    See my rant about the state of civic education in a previous post for what I believe to be the causes of these actions.

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  2. Scott,

    Maybe you didn't read my post in which I outlined all the regulations and new taxes this HCR imposes, but allow me to summarize.

    Right now, health insurers are required to spend 65% of premiums collected on benefits paid to customers. This leaves them 35% of premiums for all the expenses, salaries, and cash reserves that they hold for contingencies.

    HCR increases the percent of premiums spent on benefits to 85%. Most insurers already have a very slim profit margin, in the 4%-6% range, so in actuality, this new requirement will make it impossible for insurers to operate at a profit.

    Next, HCR imposes new mandates that insurers must insure any new person who wants to buy insurance with no exclusions for pre-existing conditions and no health status underwriting. This means that a healthy 45 year old male will have to pay the same as a 45 year old male with cancer. The only way insurers will be able to try to make this work will be to greatly increase premiums, thus making insurance in the private market much more expensive.

    Next, beginning in 2014 and ratcheting up until 2019, health insurers will be assessed billions in new taxes. This tax will begin at $8.1BN and be over $14BN by 2019. So in addition to the harmful new dictates that insurers spend 85% of premiums on benefits, they'll somehow have to come up with billions of extra dollars to hand over to the government to help pay for the new HCR.

    Now then, on the other hand of all of this, employers will have a new pay or play mandate, requiring them to offer insurance, or pay $2,000 per employee. Contrary to what you might think, $2,000 per employee is not as expensive as most employer provided coverage, so this new mandate will lead to employers forcing their employees into the insurance exchanges in the private market.

    However, due to all the new regulation on insurers, premiums will rise, as I've indicated.

    Enter the Individual Mandate. This is the main aspect of HCR that State Attorneys General are saying is unconstitutional. Regardless of its legality, this mandate will require all americans to buy health insurance, or pay a fine, which it turns out, is a pittance compared to the cost of buying insurance. This individual mandate will essentially lead to a new tax on all Americans.

    But recall, insurers are required to sell insurance to any body who wants it, regardless of pre-existing conditions. So in effect, if you don't have insurance, you'd be an idiot to go buy it now, just pay the measly fee ($95 ranging up to $695 over 3 years, starting in 2014). Then if something happens to you, go buy insurance.

    All of this amounts to a dictate that health insurers become, essentially, private sector welfare. Welfare is not an operable business model and within 5-10 years, there won't be any health insurers in business anymore, and even if a few were still hanging on, the premiums in these private companies are going to go through the roof as the companies struggle to remain viable.

    All of this is a government-induced perfect storm for what is really the goal behind HCR, the public option. The government will eventually offer insurance, and it will be billed as "competition" with private insurers to help bring down premiums. The government will be able to offer coverage at such greatly reduced rates because of its tremendous tax-resource base to subsidize the cost, and within a year or so, most americans will have public insurance.

    Once the government has everyone in the program, we will essentially have Universal, Single Payer healthcare, which was BO's ambition from the onset.

    So when you say that this bill isn't a government takeover, you're sticking your head in the sand. Just because there's not a public option in there now, doesn't mean that there won't be a government takeover in the next decade.

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  3. Jones,

    I want to throw something out there.

    You may or may not know, I work for Walgreens.

    You also may or may not know, Walgreens in the state of Washington is, as of April 16th, no longer accepting new Medicaid patients.

    Know why that is?

    Because the government doesn't pay them back!

    "Under its current pharmacy payment structure, Washington Medicaid is reimbursing Walgreens below its cost to break even on nearly 95 percent of brand name medications dispensed to Medicaid patients."

    I'm sorry, but this TERRIFIES me. I work for Walgreens as a manager and my fiance is going to be a pharmacist for Walgreens. When the government is responsible for reimbursing pharmacies for the entire country do you think things are going to change?! When the government is involved PHARMACIES DON'T MAKE MONEY! When we have a complete government takeover, what the hell happens to Walgreens? Our jobs? My family?

    The government is bad news, this bill is bad news, and you're living in a fantasy world man.

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  4. Something else, you mention that this reform fixes the problems in the private market for insurance, but you did not give any evidence that it will "fix" anything.

    What do you think this bill is going to do? They say we have this problem of 34 million uninsured americans (in reality the number of those who want but can't afford is 12 million). What, beside dictating that everyone go and buy insurance, does this reform do to "insure" those who don't have it?

    What I'm trying to say is, if this bill is so needed and so great, answer some of my assertions. Tell me whats so great about it. How will this HCR improve the quality of care?

    You and other liberals who seem so happy with this bill are so because now everyone will be covered...but what type of quality are we talking about? Just because you get a piece of paper that says you have coverage doesn't mean you get the care you need...just ask the Canadian Premier who recently got heart surgery...in Miami, Florida.

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  5. Jon, I am so sorry that you have to worry so much about your livelihood! This obamacare and the resulting huge government we will have is hurting America! I heard on Sean Hannity's show just now a quote,"The bigger the government, the smaller the citizen." I hope and pray we can repel this or stop it when we vote in November!

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