Facing growing public skepticism and falling approval ratings as a result of his push for nationalized health care, President Obama told a group in Virginia last week that he didn’t want, “the folks who had created the [health care] mess to do a lot of talking, I want them to get out of the way so we can clean up the mess.” It was a remark meant to rally the base to Obama’s side, and shore up his flagging poll numbers on the issue. Obama may have thought he was chiding Republicans in making the comment. But even a cursory look at the “mess” in the American health care system shows that on the issue of who is responsible, the president’s remark is as wrong as it was arrogant.
Health care experts across the spectrum can agree that there are three main problems with the health insurance industry in America today: community rating, which forbids insurance companies from charging premiums based on an individual consumer’s health status; the practice of defensive medicine, under which doctors order numerous costly and often unnecessary tests to cover themselves against the possibility of malpractice lawsuits; and employer-based coverage. Each of these problems, which together contribute most to the “mess” in health care delivery, were all either brought into existence, or are perpetuated by Democrats.
Employer-based coverage came about during World War II as a consequence of the National War Labor Board’s decision to institute wage and price freezes in an attempt to prevent production shortages due to labor unrest or inflation. The NWLB exempted fringe benefits like pension plans and health insurance from the freeze, meaning employers could compete for the dwindling pool of skilled workers by offering ever-increasing health insurance coverage. Workers grew accustomed to receiving health benefits as a condition of their employment, and the system of employer-provided health benefits became an American institution.
Although the NWLB decision may have sprung from the best of intentions at a time of war, it grew from the progressive tendency toward control. The consequence for today’s health care debate is that generations of Americans were separated from the cost of the medical care they received. As costs grew, and businesses were forced to cut back on benefits while increasing the employee's cost share, workers began to feel the increase in costs for the first time. Two of the main drivers of those cost increases have been the practice of defensive medicine, and community rating.
Doctors know that every test they fail to order could be the one that leads to an expensive malpractice lawsuit. So they order test after test after test, providing themselves cover from the trial lawyers, and ratcheting up the cost of routine care. According to a study by the American Medical Association (.pdf), which has now signed on to President Obama's efforts to take over the system, the federal Department of Health and Human Services put the cost of defensive medicine at between $70 and $126 billion in 2003. That number is almost certainly higher today.
Now consider that former Democratic National Committee chairman Howard Dean, one of the strongest proponents of nationalized health care, appeared on This Week with George Stephanopoulos this past Sunday trumpeting Congressional Budget Office numbers putting the cost of the current House bill at $60 billion per year. Simply getting a handle on defensive medicine by controlling the trial lawyers could save better than two times the cost of the Democrats' "reform." If Democrats were serious about getting costs under control, they would jump on curbing malpractice lawsuits.
But Republican attempts to reign in the trial lawyers have been resisted for years by Democrats in Congress and the White House. Trial lawyers are a huge source of campaign cash for Democratic politicians, and they are not about to bite the hand that feeds them. Patients, the uninsured, and true health care reform will just have to wait while Democrats continue milking their cash cow. When it comes to finding the mess-makers in health care, President Obama need look no further than Democrats and their trial lawyer friends.
Where Democrats have tried their hand at regulation, they have only managed to make the health care mess bigger. Community rating is a system dreamed up by state regulators that was designed to fix perceived inequities in the health insurance industry. Democrats at the state level didn’t like the fact that health insurance plans were priced according to risk. Sicker people who were more likely to use insurance were charged more for comparable coverage than healthier ones.
In a misguided attempt to level the playing field, community rating regulations forbade insurance companies from charging rates based on risk. Now, smokers pay the same rate as non-smokers. Exercisers pay the same as non-exercisers. This is despite the demonstrable fact that smokers and the overweight tend to have worse health outcomes, and so require more health care services. Insurance companies must make up the relative loss they take on these policies, with the result that everyone’s rates go up.
With the exception of New Hampshire and perhaps Pennsylvania, the list of states that mandate some form of community rating on health insurers reads like a list of the bluest of the blue states: Connecticut, Maine, Maryland, Massachusetts, New Jersey, New York, Oregon, Rhode Island, and Washington. These states, long controlled by liberal Democrats, were present at the creation of skyrocketing health insurance rates.
And since Democrats at the federal level forbid a true nationwide market in health care coverage by limiting the pool of available plans by the state the consumer lives in, consumers must buy plans that meet their state’s minimum standards, no matter whether they need or intend to ever use the covered services. This increases costs and limits choice. That seems to be just the way Democrats want it, as they have beaten back every Republican effort to open up the health care market to allow consumers to purchase plans from other states based on need rather than minimums. Maybe the president should have addressed these Democrats when he spoke of silencing those who have created the health care “mess.”
Congress now plans to bring community rating to the federal level, at President Obama’s urging. At his recent town hall meeting in New Hampshire, President Obama alluded to this component of his plan when he told the audience, “Under the reform we're proposing, insurance companies will be prohibited from denying coverage because of a person's medical history. Period.” That means that insurance rates could not be based on a consumer’s health status. The Wall Street Journal says this proposal, “blows up the individual insurance market, by making it far more expensive for young, healthy or low-risk consumers to join pools—if they join at all.”
President Obama wants to silence the critics of his health care nationalization because he is losing the debate, fair and square. Americans have empowered themselves with information and questions for the president and their representatives. So far, the proponents of change have been unable to provide satisfactory answers. Rather than try to cast blame, and ignore the clear history of the health care problems he claims to want to solve, the president should pull back his health care plans and listen to Americans’ concerns.
If he did so, his poll numbers would instantly improve and he would be able to design a health care reform that addresses actual, not perceived problems. But if the President is more interested in assigning responsibility for the current situation, he should convene a meeting of his fellow Democrats and tell them to stop using health care insurance and delivery as a laboratory to test out their misguided social experiments. Or else, he should tell them to clean up their own mess.
Cross posted at Acticons.