Senate Begins Health Reform Debate

Today the United States Senate begins debate on the health reform bill introduced by Senator Reid.  Moving to debate was agreed to by the narrowest of margins and passage of the bill in the Senate is uncertain, as is passage of any combined bill that would result from a House/Senate conference.  Health reform has been a major political issue for decades and sometimes we all may weary of the discussions.  It is also easy to focus on a few contentious areas, such as abortion or a public option, and not continually re-examine the premises of reform and whether a particular bill meets the supposed objectives of reform.

“Reform” implies serious problems with the existing state of affairs which necessitate substantial remedial action.  The health care problems in America include lack of insurance coverage by a significant number of our citizens.  Lack of insurance is postulated to lead to less receipt of needed care.  The actual number of uninsured is uncertain.  As a Vita Advisors issue brief details, many of the uninsured are actually eligible for Medicaid but haven’t enrolled and many others likely can afford insurance but choose not to buy it.  The real number of people who want insurance but can’t afford it may be as small as ten million.  That is still a problem, if it leads to people not obtaining medical care.  Studies suggest that the uninsured don’t get as much care, but it is unclear whether even if insured these people would be healthier.  It might be nice to have clearer answers to these questions before we undertake a radical overhaul of the system or force everyone to have insurance.

The second major problem is cost.  Unit prices for health services and products have increased rapidly in recent years and utilization has also grown, leading to overall per capita health spending that has risen far faster than inflation or GDP.  These rising costs are perceived to be an issue for two major reasons:  federal, state and local governments are paying for more and more of health care and they can’t easily raise taxes or cut spending elsewhere to do that; and cost increases in the private sector lead to dropped coverage or shifting of the expense to individuals.  Few people seem happy with how much they have to pay for health care.

If we look at the Senate bill, it will increase access to care by increasing insurance.  How much that will improve people’s actual health remains to be seen.  And a substantial number of people will remain without insurance.  If the bill increases private sector premiums, it may actually become cheaper to pay fines than to buy coverage.  As currently designed, it seems quite likely that not only will this bill substantially raise government spending, but it will also increase overall national health expenses and private insurance premiums.  Almost everyone agrees that the bill will not significantly reduce the trend or amount of health spending.  So it has the potential to both increase costs and make access to insurance more difficult for some individuals.  Not quite what the goals of reform have been.

To pay for this legislation, substantial tax increases of various forms are proposed.  At a time of recession, this is not likely to encourage business and job growth.  At this point, as many academics and commentators have suggested, the most prudent course would appear to be to step back and start over with a clearer and more refined focus.  Addressing costs first and then access would seem to have a higher likelihood of success than the current path.