Challenge to Health Bill: Selling Reform By DAVID LEONHARDT

July 22, 2009
Economic Scene
Challenge to Health Bill: Selling Reform By DAVID LEONHARDT

WASHINGTON — What’s in it for me?

On the subject of health care reform, most Americans probably don’t have a good answer to the question. And that, obviously, is a problem for the White House and for Democratic leaders in Congress.

Current bills would expand the number of insured — but 90 percent of voters already have insurance. Congressional leaders say the bills would cut costs. But experts are dubious. Instead, they point out that covering the uninsured would cost billions.

So the typical person watching from afar is left to wonder: What will this project mean for me, besides possibly higher taxes?

Barack Obama was able to rise from the Illinois State Senate to the presidency in large measure because of his ability to explain complex issues and then to make a persuasive argument. He now has a challenge worthy of his skills.

Our health care system is engineered, deliberately or not, to resist change. The people who pay for it — you and I — often don’t realize that they’re paying for it. Money comes out of our paychecks, in withheld taxes and insurance premiums, before we ever see it. It then flows to doctors, hospitals and drug makers without our realizing that it was our money to begin with.

The doctors, hospitals and drug makers use the money to treat us, and we of course do see those treatments. If anything, we want more of them. They are supposed to make us healthy, and they appear to be free. What’s not to like?

The immediate task facing Mr. Obama — in his news conference on Wednesday night and beyond — is to explain that the health care system doesn’t really work the way it seems to. He won’t be able to put it in such blunt terms. But he will need to explain how a typical household, one that has insurance and thinks it always will, is being harmed.

The United States now devotes one-sixth of its economy to medicine. Divvy that up, and health care will cost the typical household roughly $15,000 this year, including the often-invisible contributions by employers. That is almost twice as much as two decades ago (adjusting for inflation). It’s about $6,500 more than in other rich countries, on average.

We may not be aware of this stealth $6,500 health care tax, but if you take a moment to think, it makes sense. Over the last 20 years, health costs have soared, and incomes have grown painfully slowly. The two trends are directly connected: employers had to spend more money on benefits, leaving less for raises.

In exchange for the $6,500 tax, we receive many things. We get cutting-edge research and heroic surgeries. But we also get fabulous amounts of waste — bureaucratic and medical.

One thing we don’t get is better health than other rich countries, whether it’s Canada, France, Japan or many others. In some categories, like emergency room care, this country seems to do better. In others, like chronic-disease care, it seems to do worse. “The fact that we spend all this money and don’t have better outcomes than other countries is a sign of how poorly we’re doing,” says Dr. Alan Garber of Stanford University. “We should be doing way better.”

So far, no one has grabbed the mantle as the defender of the typical household — the opponent of spending that creates profits for drug companies and hospitals at no benefit to people’s health and at significant cost to their finances.

Republicans have actually come out against doing research into which procedures improve health. Blue Dog Democrats oppose wasteful spending but until recently have not been specific. Liberals rely on the wishful idea — yet to be supported by evidence — that more preventive care will reduce spending. The American Medical Association, not surprisingly, endorses this notion of doing more care in the name of less care.

Mr. Obama says many of the right things. Yet the White House has not yet shown that it’s willing to fight the necessary fights. Remember: the $6,500 tax benefits someone. And that someone has a lobbyist. The lobbyist even has an argument about how he is acting in your interest.

These lobbyists, who include big names like Dick Armey and Richard Gephardt, have succeeded in persuading Congress to write bills with a rather clever feature. They include some of the ideas that would cut costs — but defang them.

One proposal would pay doctors based on the quality of care, rather than quantity, but it’s a pilot project. Doctors who already provide good care may well opt in; doctors providing wasteful but lucrative care surely will not. The bills would also finance research on which treatments are effective. But Medicare officials would not be prevented from continuing to spend taxpayer money on ineffective treatments.

In reaction, some people who should be natural supporters of reform have become critics. The Mayo Clinic — one of Mr. Obama’s favorite models of care — says the legislation fails to “help create higher-quality, more affordable health care.”

On Thursday, Mr. Obama will visit another example he likes to cite, the Cleveland Clinic. Its successes capture what real reform would look like. Like Mayo, the Cleveland Clinic pays its doctors a salary, rather than piecemeal, and delivers excellent results for relatively little money.

“I came here 30-some years ago,” Delos Cosgrove, a heart surgeon who is the clinic’s chief executive, told me. “And I have never received any additional pay for anything I did. It never made a difference if I did five heart operations or four — I got paid the same amount of money. So I had no incentive to do any extra tests or anything.”

This is the crux of the issue, economists say: the current fee-for-service system needs to be remade. The administration has made some progress, by proposing a powerful new Medicare overseer who could force the program to pay for good results and stop paying for bad ones.

But even a strong Medicare plan won’t be enough. Reform will need to attack the piecemeal system in numerous ways. Among the most promising, which Mr. Obama has resisted, is a limit on tax subsidies for the costliest health insurance plans. This limit would give households and employers a reason to become smarter shoppers.

Above all, reform can’t revolve around politely asking the rest of the medical system to become more like the Cleveland Clinic.

In recent weeks, polls have shown that a solid majority of Americans support the stated goals of health reform. Most want the uninsured to be covered and want the option of a government-run insurance plan. Yet the polls also show that people are worried about the package emerging from Congress.

Maybe they have a point.