The Politics of Health Care Reform In A NutShell

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NutShellRx.jpgIn a nutshell, the Republicans cannot permit a Health Care Reform bill to pass. The Democrats must pass health care reform to hold their majority in government. That is the politics of Health Care Reform in its simplest form. Following are the reasons why this has become such a pivotal political issue.

To understand why this is a pivotal political issue, we must first understand why health care reform is an issue, at all.

In 2008, health care spending in the United States reached $2.4 trillion, and was projected to reach $3.1 trillion in 2012. Health care spending is projected to nearly double to $4.3 trillion by 2016. Total health care spending currently represents 17 percent of the gross domestic product (GDP). (Keehan, S. et al. "Health Spending Projections Through 2017, Health Affairs Web Exclusive W146: 21 February 2008.)

By comparison, health care spending accounted for 10.9 percent of the GDP in Switzerland, 10.7 percent in Germany, 9.7 percent in Canada and 9.5 percent in France, according to the Organization for Economic Cooperation and Development in 2004.

Rising health care costs result in more Americans living without health insurance. (The Henry J. Kaiser Family Foundation. The Uninsured: A Primer, Key Facts About Americans without Health Insurance. 10 November 2004)

The U.S. spends far more than any other industrialized nation on health care. Yet, those other nations insure everyone, while America has 46 million uninsured, a number which will grow as health insurance costs rise.

Premiums for employer-based health insurance rose by 5.0 percent in 2008. In 2007, small employers saw their premiums, on average, increase 5.5 percent. Firms with less than 24 workers, experienced an increase of 6.8 percent. (The Henry J. Kaiser Family Foundation. Employee Health Benefits: 2008 Annual Survey. September 2008. )

The annual premium that a health insurer charges an employer for a health plan covering a family of four averaged $12,700 in 2008. The annual premiums for family coverage significantly exceeded the gross earnings for a full-time, minimum-wage worker ($10,712). A minimum wage worker without employer insurance would face a staggeringly higher amount that that afforded employers.

Since 1999, employer-based health insurance premiums have increased 120 percent. Cumulative consumer inflation rose only 44 percent and cumulative wage growth rose only 29 percent during the same period. (The Henry J. Kaiser Family Foundation. Employee Health Benefits: 2008 Annual Survey. September 2008.)

Average out-of-pocket costs since 2000, for deductibles, co-payments for medications, and co-insurance for physician and hospital visits rose 115 percent. (The Henry J. Kaiser Family Foundation. Employee Health Benefits: 2008 Annual Survey. September 2008. )

A study by Harvard University researchers in 2005 found that 50 percent of all bankruptcy filings were partly the result of medical expenses. (Himmelstein, D, E. Warren, D. Thorne, and S. Woolhander, "Illness and Injury as Contributors to Bankruptcy, " Health Affairs Web Exclusive W5-63, 02 February , 2005.)

This number has no doubt risen with the advent of the current economic decline and rise in unemployment.

Retiring elderly couples will need $250,000 in savings just to pay for the most basic medical coverage. (Fidelity Investments, Press Release, March 6, 2006. ) Many experts believe this figure is conservative and that $300,000 may be a more realistic number.

The U.S. has an estimated $480 billion annually in unnecessary and excess spending compared to Western European nations which have universal health insurance coverage. The costs are mainly associated with excess administrative costs and poorer quality of care. The United States spends six times more per capita on the administration of the health care system than its peer Western European nations. (McKinsey Global Institute. Accounting for the Cost in the United States. January 2007)

The Democrats:

The Democrats ran in 2006 and 2008 on providing health care reform, if elected. It was a central theme of their campaigns. They spoke of the devastating consequences of rising health care costs for the uninsured, for the insured, for employers and employees, for retirees, and for the government's national debt and fiscal management. A majority of Americans in every polling on the subject indicate they want universal health care insurance.

It is a relatively simple proposition for Democrats politically. Pass health care reform, or, failing that, make absolutely sure that the public understands that it was Republicans who defeated it. In either case, politically, the Democrats prospects are improved for the 2010 and 2012 elections.

However, as this Rasmussen poll demonstrates, the major hurdle for Democrats is demonstrating to the independent voters that their health care reform legislation will end up lowering health care costs, or, at the very least, preventing costs from rising in the future. Given the math deficiency of the American public, it is difficult to imagine how Democrats will be able to prove to the public with numbers, that health care costs will not rise with their reform. A fact not lost on Republicans opposing health care reform, as we shall see.

The Republicans

Politically, the Republicans are on a tight rope with this issue. If they permit the Democrats to give the American people what they want, universal health care insurance, the GOP gains nothing on the issue in the 2010 elections, and little, if anything in the 2012 election if the economy and employment are in better shape than they are today. Therefore, they have intense motive to mobilize opposition toward the passage of health care reform.

On the other hand, if health care reform is defeated, and if Republicans are the organizers of the opposition, it is the Republicans who will be labeled as having killed health care reform, and preventing a majority of voters from acquiring universal health insurance. (It should be noted that this same analysis was not lost on conservative Democrats, who have now closed ranks with their fellow Democrats on passing health care reform in just the last week).

Of course, not everyone who is opposed to health care reform is a Republican, and many who support health care reform universal coverage, oppose the deficit spending they fear will be incurred to provide it (latest CBO estimate is 237 billion dollars over 10 years).

It is clear from polling (Rasmussen, link above) that a majority of Americans too, are very concerned about the cost of health care reform, which is why Republicans have made cost the spearhead of their tactics to halt health care reform.

Analysis and Conclusion

America cannot afford to fail to pass health care reform. The facts and estimates of the economic and debt impact of not passing health care reform are devastating going forward, with the worst effects being felt in 2020 and continuing for decades thereafter.

Failure to rein in costs for the federal Medicare/Medicaid programs will mean growth in our national debt for decades to come, and at current levels of national debt, creditors will NOT be available for U.S. borrowing for decades to come.

This argument can be made regarding any spending programs which promote deficit spending. The national debt, which has more than doubled since George W. Bush and Republicans took power in 2000, then 5.65 trillion dollars and now approaching 12 trillion dollars, seriously limits our government's ability to spend its way out of political or economic difficulties. Americans no longer trust the Congress nor the government on fiscal management issues. And that distrust is precisely the mountain that stands in the way of Democrats and health care reform.

I frankly have doubts that health care reform can pass. The convergence of the public's opposition to deficit spending and the Republican's concerted effort to paint any health care reform package to the public as a mountain of new debt and higher costs for consumers, will likely prove to be too high a mountain for Democrats to climb.

And yet, the fact remains, without health care reform, consumers and our economy will suffer more crises coming closer together, heel upon heel, as the years go forward. Allowing health care inflation to consume 20%, then 30% and then 40% of the total annual economic activity in America will create the greatest chasm between wealthy and poor, between elites and the middle class, that will rival, or exceed, even that of the 1920's, which preceded the last Great Depression.

And the fact remains, that creditors will not continue to lend America trillions of dollars if America fails to get its fiscal house in order. And when the credit stops, America will be plunged into another Great Depression, with massive unemployment and the most severe cutback in government programs and services that our nation has ever seen. One need only look to California for a glimpse of what it will be like on a national level.

Outside the political boxing ring, the solution is straight forward. The high cost of passing health care reform is far lower than the growing costs of economic demise, if health care reform is not passed. Of course, this is only true if the following conditions are met:

  1. Health care reform lowers overall health care costs per patient, and per patient visit to the doctor, for decades to come. If that is the case, then the savings will become greater than the investment cost to put the health care reform and universal coverage in place, and the costs of health care will drop not only for the consumers, but, for the government's sponsored health care programs as well. If the government's health care costs drop, significantly over the next couple decades, then a halt to the growth of our national debt is possible.

  2. The federal government commits to reining in and lowering the cost of other programs which will permit a reduction in our national debt in coming decades, thereby reducing the interest on the national debt, which in turn can lower taxes, or at the very least, prevent their rising more, which is money that can be recirculated throughout our economy stimulating jobs and economic activity, going forward, and therefore government revenues.

  3. Our nation, after passing effective health care reform, then immediately addresses the other potential bankrupting challenges facing the nation like energy dependence on foreign oil, water scarcity in the West, national security and defense cost inflation, and education quality which promotes American employees filling American jobs, instead of the growing trend of foreign immigrants filling American jobs while Americans wait in unemployment lines.

It's a very, very tall order, and an enormous challenge for America. Putting a man on the Moon was significantly easier, politically, economically, and socially. I hope America can pass this test. If America can't, my daughter is learning to be fluent in Spanish and Japanese, and en route to getting her nursing degree, so that she can apply for a productive career position in one of the World's growing economies like Brazil, if need be. Freedom is all about having choices, and of late, America is appearing to reject choice when it comes to health care insurance, and a more sustainable economic future.

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This page contains a single entry by David R. Remer published on August 6, 2009 7:08 PM.

Conservative Attempts to Kill America was the previous entry in this blog.

$1.2 Trillion Wasted on Health Care is the next entry in this blog.

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