Arriving at the Beginning

Brian Klepper

Posted 11/12/12 on Medscape Connect’s Care & Cost Blog

The most striking aspect of the election was that it decisively clarified the philosophical preferences of most Americans. And because the outcome was largely determined by minorities, women, and the young, it appeared to be a much broader and more independently-minded vision than most pundits have given the electorate credit for. That unexpectedly portends big changes.

Peggy Noonan’s analysis in the Wall Street Journal quotes a brutal summation by conservative activist Heather Higgins:

A majority of the American people believe that the one good point about Republicans is they won’t raise taxes. However they also believe Republicans caused the economic mess in the first place and might do it again, cannot be trusted to care about cutting spending in a way that is remotely concerned about who it hurts, and are retrograde to the point of caricature on everything else.

Those on the far right expected that rank-and-file Americans would come to agree that Democrats have embraced a freeloader society that is largely responsible for our economic woes. It wasn’t that the majority didn’t get a chance to hear them out. On TV ads, Romney outspent Obama by 19 percent – $472 million to $396 million, respectively. It appears that most voters heard and rejected the right’s point of view.

And, in fact, the majority’s perspective is more in line with the facts on the budget deficit’s underlying drivers. A straightforward analysis by the Center for American Progress shows the contributors to the current $6 trillion deficit. The recession accounts for about 26 percent. The Bush tax cuts are responsible for 20 percent and that Administration’s other actions, like the wars in Iraq and Afghanistan, contributed another 40 percent. The Obama Administration’s stimulus package accounts for 6 percent and their other spending policies make up another 8 percent.

From 2007 to 2010 — roughly the start of the recession through the early the recovery — total spending has grown from $10,000 per needy adult, to $15,000. Unemployment isn’t the only reason. Programs now have looser eligibility rules, opening them up to more folks.In other words, there’s no question that safety net entitlements are a big part of our long term fiscal crisis, but they’re not the cause of our current dilemma. That’s not to say that “handouts” haven’t significantly increased during this Administration. They have. As an Atlantic review of a recent study by University of Chicago professor Casey Mulligan recounts:

Mulligan argues that dependence on handouts may have kept some people from seeking work.

That’s possible. But there’s also an argument for the value of safety nets. This from the same Atlantic article:

A study by the Center for Budget and Policy Priorities found that the number of Americans living in poverty grew just 0.6% from 2007 to 2010. Without the government’s help, it would have grown by 4.2%. 

In other words, in a time of severe economic distress, programs for the poor kept millions of Americans from sickness and hunger.

Of course, dismissing our budgetary woes as the result of liberal giveaways is spin that tries to divert attention from deeper structural problems with the status qruo. Health care spending is the largest driver of the US government’s budget growth. Between 30 percent ($765 billion/year) and 55 percent (almost $1.47 trillion/year) of total US health expenditures provides no value, because the care or administration is unnecessary, inappropriate, or egregiously priced. (There are culprits in every health care sector: brokers, health plans, physicians, health systems, drug/device firms.) We spend huge amounts on the wrong things, and these wasted funds are unavailable for other needs.

The morning after the election, Ezra Klein pointed out in the Washington Post that, whatever his failings, Mr. Obama had passed three momentous pieces of legislation: the health care reform law, the Dodd-Frank financial reforms, and a series of tax increases. He observed:

On their own, passing and implementing any of these laws would be a huge achievement for a presidency. The three of them together are a record and pace of domestic change unmatched by any recent administration. But they were an odd sort of change: Change that wouldn’t happen until – and arguably unless – Obama secured a second term. 

For anyone who pays for or is involved with health care, then, the President’s re-election and the Democrat’s continuing Senate majority mean that the reform law’s uncertainty is now over. It’s contentiousness notwithstanding, the law will move us forward, though it will be refined and amplified in many ways. It’s many provisions will push us toward universal coverage, toward individual coverage through the exchanges, toward greater empowerment of primary care, toward changes in how care is guided, delivered and paid for.

The Affordable Care Act is not altogether good or bad but an imperfect mix, the result of a well-intentioned Herculean effort to address very real and significant problems in our current system, forged in a legislative environment that openly invites special interests to influence policy in exchange for money. Around $1.2 billion in campaign contributions changed hands on this one issue in 2009, more than on any piece of legislation in US history. The non-partisan Congressional Budget Office estimates that, in its present form, PPACA will cost $938 billion and save $138 billion over the next decade, or something less than 2% of current national health care expenditures. While not cheap, the reform law’s provisions could significantly and positively influence the way that US health care works.

Perhaps the insights of Robert Caro, the two-time Pulitzer prize winner for his biographies explicating political power, are of value here. In an NPR interview this weekend, he compared the health care reform law’s progress to Lyndon Johnson’s challenge with the civil rights bill, noting:

I myself think this health insurance bill has a lot of major flaws. But I think it’s going to be a lot easier to go back and fix it now that we started with that major bill.

More than any national election in memory, this one appeared to offer the clearest referendum on our national path. For all their misgivings, America’s voters chose to move forward with significant change. Much is still unknown about how this will play out in health care, but the nation voted to try to get beyond our current morass. Nothing is guaranteed or will happen overnight. But to me, it looks like a good start.

About Brian Klepper

Brian Klepper is a health care analyst and the Chief Development Officer of WeCare TLC onsite clinics.
This entry was posted in Analytics, Health Care Cost, Market Dynamics, Medical Management, Policy/Law/Regulation, Politics, Quality, Reform and tagged , , , , . Bookmark the permalink.

One Response to Arriving at the Beginning

  1. bev M.D. says:

    It’s ironic that the big players in health care tried so hard to maintain the status quo by opposing the bill, when the status quo is agreed by all to be massively wasteful. Hopefully we will all benefit, even the players, when health care is more efficient. The narrow perception of ‘winners’ and ‘losers’ just exposes that these players are in the industry for the wrong reasons in the first place……

    And I agree with you about the law. We all recognized from the beginning that it wasn’t perfect, but to overcome the inertia in any way possible was the critical first step.

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