Doctor’s orders

House Democrats introduced the Affordable Health Choices Act earlier this month, intent on achieving the dual goals of extending coverage to 47 million uninsured Americans while reining in long-term liabilities associated with Medicare and Medicaid, which threaten to overwhelm the federal budget in the coming decades.

And a similar healthcare reform bill is in the Senate.

While the House and Senate versions are ostensibly subject to bipartisan negotiation, both possess certain key components.

Both proposals would virtually make individuals obligated to obtain and employers compelled to provide insurance under a universal mandate; otherwise, they would be subject to financial penalties. The House proposal would bar insurance companies from denying coverage or charging higher premiums based on pre-existing conditions and health status, and lifetime limits on what the policy would pay would be eliminated.

As for the cost, the House calls for at least $550 billion of the estimated $1 trillion price tag to be covered by surtaxes on the wealthiest of Americans – those with annual incomes exceeding $280,000 and couples with a combined income more than $350,000 – and the remainder by yet-to-be-revealed cuts in Medicare and Medicaid spending.

Not surprisingly, the issue has proven considerably contentious, with Congress assuming positions roughly along partisan lines.

Republicans maintain that the proposals amount to a government takeover of health care, destined to result in systemic inefficiencies and rationing. Democrats, on the other hand, insist that it’s possible to extend universal coverage while reducing costs and without contributing to the ballooning federal deficit.

Neither interpretation proves a particularly accurate portrayal of the issue. Instead, both parties seem intent on selling their own particular brand of snake oil.

Republicans ignore that health care is already being rationed – by price. By some estimates, health-care costs account for 60 percent of all American bankruptcies. And with the uncontrollable rise in costs (exceeding general inflation by 2.5 percent annually), clearly individuals, businesses and governments alike are being squeezed.

On the other hand, Douglas Elmendorf, director of the Congressional Budget Office, warns that none of the current bills reign in long-term cost inflation, and actually contribute to future federal deficits.  

The fundamental issue at hand is that health care is a scarce good. The United States already spends more on health care per capita than any other country in the world, yet seems to only receive an equal or possibly even lesser return on its investment. True reform, then, lies with not spending more, but spending smarter.

Americans must stop clinging to the Neverland fantasy that they can receive the most expensive, high-tech care for any and all ailments and not have to pay for it. The United Kingdom’s National Health Service, for example, does not cover treatments exceeding about $49,000 per life-year saved.

Likewise, eliminating tax exemptions on employer benefits to reflect the true cost of care could curb excess consumption and encourage more prudent patient behavior.
If efforts to reform health care in this country are to amount to anything more than an exorbitantly expensive expansion of coverage, Washington will be forced to make politically unpalatable choices.

Though it may prove a tough pill to swallow, it’s just what the doctor ordered.