Ms Lowden has provided a great source of material for comedians, but the real issue is the belief among many that the free market can provide appropriate health care solutions.

A pure free market health care system would, in my opinion, result in lower cost of health care – probably much lower.  The trade off is that it would exclude some care from those who could not afford it – or chose to spend their money on other things.

What Sue Lowden is really saying, is that Americans should only get the health care they can afford.  If you have chicken pox and a chicken, and you find a doctor (and pharmacist) willing to trade the chicken for the zovirax, no problem.  But if you have chicken pox and no chicken, well that’s poor planning on your part.  If you get cancer, or need dialysis …

Americans, to their credit, generally reject this kind of health care system.  They believe health care should not be only for the wealthy.  So there are public hospitals and Medicaid and other systems in place so that if someone shows up at a hospital with a broken leg, or a gunshot wound, or failing kidney, they receive treatment regardless of their wealth or insurance.  Health care has become a common good, like roads, where people cannot be excluded from its use.

Except, apparently, to Republicans like Sue Lowden.

The view from down under is that the US needs to decide whether health care is a common good or a private good.  The current system treats health care as a common good in usage but a private good in payment.  That is not only the root of its problems, but is ultimately unsustainable.

From the White House, the rhetoric was ecstatic.  A victory for the American People!  A new season in America!

The left wing was a bit more subdued, saying the reform doesn’t go far enough but is certainly better than nothing.

Meanwhile, the bill signed into law was not even health care reform.  No extension of Medicare (the socialist health care system so loved by those it covers – including the tea partiers).  No change in the way health care is delivered.  No government takeover of anything.  Not even a public option.

It was just a bit of health insurance reform, tightening up the way insurers can deal with insured and mandating insurance for those without.  Sure there are some pilot programs which are likely to result in some cost reduction over time, and a few other initiatives, but at its core the bill is insurance reform.

It was nonetheless a major political win for President Obama, largely because of the way the Republicans fought it tooth and nail.  If they had decided to work with the President on reform, it would have been over much quicker, probably would have been a better bill, and the Republicans could share the credit.  Instead, believing that making Obama fail is their best chance to win re-election,  Republicans decided to demonize a reform package that looked remarkably similar to the ones proposed by Republican presidential candidates (including John McCain and Mitt Romney).

The view from down under is that the over-the-top Republican rhetoric makes them look petulant, obstructionist, and petty.

Still, I kind of admire their way with words.  Laying the cornerstone of a socialist utopia on the backs of the American people – that is truly a work of art.

The argument for tort reform is that  frequent malpractice claims and high awards have forced doctors into prescribing extra, and unnecessary, tests and procedures in order to reduce their potential exposure in a lawsuit.  Therefore reforming the malpractice system should reduce those unnecessary activities and reduce costs.

This assumes that these extra procedures are, in fact, unnecessary and add nothing to the value of health care received.  It also assumes that many malpractice claims are based on the desire of plaintiffs to ‘hit the jackpot’ and not on genuine malpractice.

Some on the left wing argue that this is far from proven.  Ezra Klein notes that Texas, which enacted tort reform in 2003, also has the city with the highest medicare costs per enrollee (McAllen).  Indeed Texas as a whole has one of the highest medicare reimbursement rates per enrollee, even adjusting for age, sex, and race.  (As a Texan who enjoys my vegetables battered and fried, I wonder if there is a bit of cultural self selection there).  So the link between tort reform and cost reduction looks tenuous.

In order for tort reform to have an impact on medical costs, it must either reduce the number (or type) of tests and procedures being prescribed, or reduce malpractice premiums (which would then be passed on to consumers).

This sounds like a theory that can be tested, and this afternoon I was wondering if there is any data which could tell us if tort reform has a meaningful impact on health care costs.

Turns out there is.  A recent study looked at the differences in tort reform enacted by various states and correlated that against the costs of employer sponsored health insurance plans over an eight year period.  They looked at four different kinds of tort reform:

• caps on pain and suffering awards;
• collateral source reforms (reducing payouts if plaintiffs have already received insurance or other payments);
• joint and several reforms (limiting ability of plaintiffs to sue a deep pocket for the full amount even if they are only partly at fault); and
• caps on punitive damages.

The authors concluded that the first three types of reform lowered insurance premiums of self insured plans by 1-2% (caps on punitive damages had no impact).  That sounds like a good outcome and should provide encouragement for further tort reform by the states.

However, for fully insured plans (HMOs) there was no decrease in premiums as a result of tort reform.  The authors conclude that HMOs are already doing a good job of monitoring care and avoiding unnecessary activities.

The Congressional Budget Office looked at this study as well as a number of other studies done in the last decade, and have concluded that enacting the four reforms above would likely reduce the total health care costs of the government by 0.5%.

It is not a silver bullet for solving the problems in the US health care system, but is definitely worth pursuing as part of any comprehensive reform.

The view from down under is that this kind of theatre is necessary to govern in the US, which is kind of sad in a way, and kind of scary in another.

One thing is clear, it is not about policy – only politics.  As Ezra Klein pointed out, if McCain had been elected, and a similar plan were in front of Congress (like the one McCain championed in his campaign), would Democrats support it?  Would Republicans?

Despite the rhetoric from the White House, there is little hope that a bipartisan health care reform package will emerge from the process.

The last time the Republicans put forth their health care plan it was weak, marginal, and provided little other than tort reform.  It appeared to be a hasty answer to the charge that they were just being obstructive, and fortunately the plan sank into oblivion quite quickly.

Nonetheless, Republicans have deep differences with Democrats on what health reform means.  The Republican position on health care appears to be something like this:  we should let the ‘free market’ provide health care; but don’t cut Medicare (even though several Republican proposals do exactly that); and don’t remove the tax break for employee funded insurance (which would at least attempt to create a free market); and do allow interstate insurance programs (while continuing to allow wildly different state based standards); and ‘enhance’ the free market with a combination of vouchers, savings incentives, and tax credits.

That they have been allowed to get away with this as a ‘policy’ is bemusing, to say the least.

To Democrats, health care reform means making sure all Americans, or as many as possible, have health insurance.  The rest of the Senate bill is basically trying to pay for this, with a number of pilot programs that will probably reduce costs over time but whose ultimate impact is unknown.

When you consider that most Republican voters are not opposed to expanding insurance cover (in fact it was part of John McCain’s campaign platform) yet Republican leaders passionately oppose the Senate bill, it becomes clear that what the right wing really wants is for the President to fail so they can replace him with Sarah Palin.

Let’s be clear, neither side is really proposing health care reform, and despite the rhetoric that this is an historic ideological battle, the reality is that both sides are talking about fairly minor changes to an insurance based system supplemented by government health care for the elderly and poor.

With his summit, Obama is making one last effort at appearing to be bipartisan before pushing through a health care bill.  He cannot afford to head into the next election with no health care bill passed, but also doesn’t want to be painted as part of an arrogant left wing that can’t negotiate with Republicans.

The view from down under is that it is past time for Obama to stop delegating to Congress, and time to provide clear leadership.  The promise to publish the White House plan, which will undoubtedly have support of Democratic congressional leaders, is a good first step in that it moves the plan from being a Pelosi plan or a Reid plan to being an Obama plan.

If the Republicans offer to negotiate for a better bill, the Democrats will have won the public debate and will have a comprehensive health care bill passed soon.  Of course, Republicans know this, and because of their past rhetoric their logical course of action is to continue to obfuscate, try to scare people (death panels part deux?) and do their best to block all legislation.

Which, ironically, will make the final bill much more of a left wing reform bill and therefore more likely to have real impact on both the cost and availability of health care in America.

The bills have been watered down with compromises so much that much of the real reform the President wanted has been lost.  However, there is some substantial insurance reform: Extending coverage to millions of uninsured; restrictions on denying coverage; etc.

Perhaps the more important reforms longer term are the efforts in the Senate bill to control costs with provisions like pilot programs and bundled payments, and authorising the HHS secretary to implement reforms that will reduce costs longer term (without requiring legislation).  One major piece of cost control missing in the legislation is malpractice reform.  I believe the Republicans missed a golden opportunity for serious reform of medical malpractice.  A single Republican senator willing to back the plan if it included malpractice reform would have marginalized Joe Lieberman and Ben Nelson, and delivered a much stronger bill.

The view from down under is that the US health care system has committed itself to continue to be the world’s most expensive health care system, but the Senate attempts to ‘bend the curve’ are admirable.

This will be a surprise if you follow Charles Krauthammer, who says the bill will cost $1 trillion, or Sean Parnell (Sarah Palin’s replacement as the governor of Alaska) who estimates the cost at $2.5 trillion.  Of course, neither the Congressional Budget Office nor right wing commentators actually know the impact, so the argument is over whose assumptions to believe.  At least we’re no longer arguing about baby killing death panels.

The CBO estimates look at costs and income over a 10 year period.  Politicians know this, so the bills contain revenue raising initiatives that start immediately, with cost increases that don’t start for a few years – such as delaying insuring the uninsured for up to three years.  So the first few years are sharply positive, but once everything kicks in the impact is close to neutral or slightly negative.  It is a bit of legislative sleight of hand that tries to hide the cost by delaying benefits – which is wrong on both levels (but apparently a common trick used by both Democrats and Republicans for some time).

The CBO calculations are also only counting the cost to the government.  There should be further net cost reductions in the system, as the uninsured will be able to access health care more cheaply than going to emergency rooms, and insured Americans will no longer be directly subsidizing the uninsured through higher premiums.  However, these gains are likely to be overshadowed by continued escalation in health costs, which neither bill addresses with any vigour and in fact may make worse.

As Jeffery S. Flier, dean of the Harvard Medical School, explains in a great article in the Wall Street Journal:  “I find near unanimity of opinion that, whatever its shape, the final legislation that will emerge from Congress will markedly accelerate national health-care spending rather than restrain it.”  This is a result of the insurance based system obfuscating the cost of health care, and this lack of transparency means there are no individual incentives to control or even check health care costs.  Both the House and Senate bill do nothing to change those incentives.

Unfortunately, the very act of insuring the uninsured (however equitable it may be) will have as one consequence the reduction of the only group of people who actually have a keen stake in controlling their own medical expenses.

No matter what form the final bill takes, or even if it passes at all, one thing is clear:  the US will continue to enjoy the world’s most expensive health care system for many years to come.

But the US political system appears to have lost all capacity for meaningful reform.  The bills currently being debated are not much reform at all, and look likely to add to the overall cost and inefficiency of the system.

Part of Barack Obama’s campaign platform was comprehensive health care reform.  So after his inauguration and passing the economic stimulus package, the President called on Congress to develop a health care reform proposal to make coverage affordable to all Americans.  It seems odd that the President would not propose his own plan (like the one he campaigned on), instead of delegating that to Congress.  However, the last time a President proposed a health care reform plan (Bill & Hillary Clinton), the process was handled so poorly and the results so roundly criticized it kept health care off the legislative agenda for nearly 20 years.  Obama wants a bill passed, and the only way to do that in the current political environment is to let Congress figure out what it can pass, and sign it.

Congress responded with some grand rhetoric and then slipped back into their normal, self serving process of getting themselves re-elected.

The result will be a bill that adds more bureaucracy to the process, and does not address many of the important problems.  The current bills do nothing to control costs or improve quality.  There is plenty of data available to suggest that major reforms can improve both cost and quality.  For example, the evidence is fairly clear that a tax funded system is less expensive and with better health outcomes than an insurance funded system.  But of course that is “socialism”, despite the fact that it works well in almost every capitalist country in the world.

The only thing worse than passing this legislation is not passing it.  Reducing the number of uninsured is an important and worthwhile change, with positive flow on effects for all Americans.  If the final bill does not pass both houses of Congress, not only will millions of American continue to lack affordable medical care, but it will likely have the disastrous effect of once again pushing any health care reform out another 20 years.

The view from down under is that meaningful health care reform in the US will require one of two things to happen first: either the US political process is itself reformed; or the health care system reaches an unbearable crisis point.

The saddest thing is the amount of unnecessary human suffering that will occur before that happens.

What strikes me is that the proposal was introduced only when it looks likely the Democratic bill (in some form) will become law, and therefore the Republican alternative is unlikely to have much impact on the final form of the bill.

If the Republicans and Democrats had actually worked together, I believe the resulting legislation would have been better than either plan alone.  Instead, Democrats tried to bludgeon legislation through without (much) compromise, and Republicans resorted to disrupting town hall meetings and frightening citizens with nonsense about ‘death panels’.

The whole sordid process highlights the perverse incentives in Congress.  Crafting legislation to improve the lives of citizens is a secondary consideration to getting re-elected.

Republicans who try to work with the Democrats on valuable compromises are labelled by right wing activists as traitors, communists, and numerous names I won’t repeat.  They are called “RINOs” (Republican in name only) and targeted in their home districts by Political Action Committees funding right wing opponents.   Democrats are, frankly, behaving like bullies now that they are in nominal control of both houses of Congress, and seem more intent on payback than progress.

Credit to Olympia Snowe, R-Maine, who said this about her decision to support a compromise health care plan:  “When history calls, history calls, and I happen to think that the consequences of inaction dictate the urgency of Congress to take every opportunity to demonstrate its capacity to solve the monumental issues of our time.”

Whether she made the right call or not I’ll leave for you do decide, but the intention is admirable.

But when you throw party identification into the mix:

Talk about your stark contrast! 84% of democrats support, 88% of republicans oppose.

The poll then asked: Do you think the majority of the public favors or opposes health care reform? Before looking at the chart below, remember it’s pretty evenly split (52/48).

The democrats underestimate the amount of opposition, but the republicans really missed this one badly. 73% of them think the majority of Americans oppose reform. Makes you think the republicans are only listening to other republicans.

One final chart, without further comment. The question is: If Congress passes and the President signs a health care reform bill, do you think: