Posted by: Jeff | March 22, 2010

Health Care Reaction

Photo Credit: White House

After nearly a century of trying, Progressives passed comprehensive Health Care Reform by a 219-212 margin last night in the House of Representatives.  Since the Senate already passed this version of the bill in December, the House took this unprecedented step in two stages.  First, passage of the bill without amendment, which President Obama is expected to sign into law in the next day or two.

Second, the House passed a series of quick amendments changing the language of the original Senate version.  These changes were agreed upon by House and Senate Democrats over the past few months, and are the product of a process called Reconciliation that will end when the Senate votes on final approval of the original Senate bill as amended by the second vote in the House.

Kind of complicated, but it’s actually pretty routine for bills that affect the budget.  And convenient, as it only requires a simple majority vote in the Senate.  There has been some confusion on this point, as Republican legislators have been quick to condemn Majority Leader Harry Reid for not granting a vote in the Reconciliation process.  However, there will indeed be an up or down vote on the legislation as amended – there simply won’t be a vote on closure of debate (which requires a super-majority of 60 votes in the Senate).

So we get a vote by both Houses of Congress on comprehensive health care reform, and majority support for the bill in both.

For a great analysis of the Reconciliation process, I recommend Jonathan Chait at The New Republic.

President Obama was understandably excited after the vote in the House.  From his statement:

Tonight, after nearly 100 years of talk and frustration, after decades of trying, and a year of sustained effort and debate, the United States Congress finally declared that America’s workers and America’s families and America’s small businesses deserve the security of knowing that here, in this country, neither illness nor accident should endanger the dreams they’ve worked a lifetime to achieve.

It’s a remarkable achievement for a President criticized by some for inaction and ineffectiveness.  Politically, it bodes very well for Democrats preparing for a tough 2010 midterm election.  But beyond politics, I believe this is pretty good policy as well.

Last night President Obama laid out the basics of the plan:

If you have health insurance, this reform just gave you more control by reining in the worst excesses and abuses of the insurance industry with some of the toughest consumer protections this country has ever known — so that you are actually getting what you pay for.

If you don’t have insurance, this reform gives you a chance to be a part of a big purchasing pool that will give you choice and competition and cheaper prices for insurance. And it includes the largest health care tax cut for working families and small businesses in history — so that if you lose your job and you change jobs, start that new business, you’ll finally be able to purchase quality, affordable care and the security and peace of mind that comes with it.

This reform is the right thing to do for our seniors. It makes Medicare stronger and more solvent, extending its life by almost a decade. And it’s the right thing to do for our future. It will reduce our deficit by more than $100 billion over the next decade, and more than $1 trillion in the decade after that.

So this isn’t radical reform. But it is major reform. This legislation will not fix everything that ails our health care system. But it moves us decisively in the right direction.

This is what change looks like.

This is all true, but it isn’t very detailed.  And it doesn’t acknowledge that yes, there will be drawbacks to reform for some.

A friend of mine wrote last night to express concern that many of his professors at medical school – all doctors – are skeptical about reform and worried about a bevy of negative externalities that will result from passage of the bill.  Specifically, they’ve expressed concern that the bill will result in decreased Medicare funding and overcrowding at hospitals.

Medicare has been a flashpoint for debate, but demand on the existing health care infrastructure is probably an issue that got glossed over in the wonky policy debate on costs and coverage.  I have to admit that I’ve mainly been focused on two variables – expanding coverage and decreasing costs, both of which this bill does well.  Regarding other externalities such as crowding, I haven’t previously thought a lot about some of them but have some initial thoughts:

Regarding Medicare funding, I think there’s been a lot of spin that has distorted what the bill actually does. The bill curbs growth in Medicare expenditures in the future, but doesn’t cut pre-existing Medicare funding. In other words, it puts a limit on how much further Medicare spending can grow in order to maintain the financial stability of the entire Medicare program (upon which many physicians and hospitals depend).  I don’t think curbing growth like this is necessarily a bad thing. One of the goals of reform has been to make things more competitive, offering seniors an alternative to Medicare in the private market by eliminating denial of coverage for pre-existing conditions. So theoretically more seniors will be opting into private plans anyway.

The bill does limit the number of add-ons that Medicare recipients will be able to opt into going forward. It seeks to streamline Medicare in that sense, getting rid of some of the frills to ensure that the nuts and bolts remain covered indefinitely. As it was going, Medicare was quickly becoming financially insolvent – it was going to run out of money in the budget by 2029. This bill doesn’t completely solve the problem – but it does extend Medicare’s solvency by a decade or more.

Chart: White House

That said, the greatest thing about the Medicare provision is that it now makes preventive medicine free for seniors covered by Medicare – which hopefully curbs costs elsewhere throughout the system.

Regarding crowding at hospitals, etc., I hadn’t really thought about this previously. It might happen to some extent, as demand will certainly shift to new areas of health care provision (i.e. away from urgent care and toward regular consultations).  One of the goals of the bill is to decrease the number of Americans that use Emergency Rooms as primary care sites. Since the ER can’t deny an individual on the basis of insurance, that’s where uninsured people tend to go. Now they’ll be able to utilize preventive and regular physicians, which should defray emergency costs (and wait times) for all Americans that need to use the ER.

This may put a strain on preventive and general practice doctors, but it should also result in a general improvement in overall health of at-risk populations. Which means less doctor visits, readmissions, etc., and a possible subsequent decrease in demand back toward equilibrium.  I expect that hospital administrators will need to reconfigure staffing needs a little bit in the medium term, but it is a slow implementation process, and we won’t likely see a huge immediate shift – it will be a gradual transition over the next 5-10 years.

I can imagine that there will eventually be a rise in things like cardiac checkups and stuff – but hopefully that comes hand in hand with a decrease in people checking into the ER with heart trouble.

In the end, an additional 30 million Americans have access to potentially life-saving insurance, and we’re going to decrease the federal deficit by $130 billion or more over the next ten years. So I think it is a win, but I’m sure there are negative changes too. But from where I’m sitting, the positive outweigh the negative by a wide margin.

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Responses

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  2. […] First reaction is here. […]


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