'Blue-Dogging' Health Care

One of the traits that people prize most in dogs is loyalty. However, the question then becomes loyalty to whom or what?

In the case of the "Blue Dog Caucus," the group of Congressional Democrats that has emerged as the major player in health care reform, it appears that its loyalty is first and foremost to its big campaign contributors -- the health insurance firms and the drug companies. The general claim that they make is that they are worried about the fiscal consequences of health care reform, but when it comes to specifics, they are most opposed to the very elements of the reform package that are most likely to be successful in driving down the overall cost.

It is easy to figure out why the GOP is united in opposition to the primary plans being debated in Congress. (Some members of the GOP have proposed an alternate plan, but, overall, the party’s bottom line on the plans currently being considered by the Democrats is NO.) The GOP hopes that if the plan fails, so will the Obama presidency. Sen. Jim DeMint of S.C. pretty much came out and said so ("It will be his Waterloo").

What the Blue Dogs are up to is harder to figure out. The main answer I come up with is the campaign contributions. For example, Mike Ross (D-AR), who has emerged as the Blue Dog leader on health care, got more than twice as much campaign money from health care professionals as any other source in the 2008 election campaign. Above all, dogs are loyal.

Probably the most important tool on the table for controlling health care costs is the public option. Essentially, it will let individuals buy into Medicare early. Medicare is a FAR more efficient system than the private health insurance system. For each dollar that is spent on Medicare, more than 98 cents goes to paying for actual medical costs.

At the major health insurance companies like United Health Care (UNH), Aetna (AET) and Humana (HUM), less than 80% goes to pay for doctors and hospitals. The rest of the money goes to overhead -- principally trying to get lots of people to apply for health care coverage and then to weed out the ones that are more likely to get sick. These companies also spend a lot of money on trying to figure out if someone had an undisclosed pre-existing condition, so they can deny coverage to people who thought they were insured when they actually get sick and file a claim.

The health insurance industry is rightly afraid of the public option, because it is a much better mousetrap and will eventually lead to the industry having a much smaller, supplemental role (equivalent to the current medigap policies offered to supplement Medicare) rather than being a huge industry.

The Blue Dogs also want the public plan, and/or Medicare to increase the payment schedules for doctors and hospitals in rural areas. That is hardly a recipe for holding down costs, even if it does help solve the problem of not enough doctors in some areas.

Congress has large Democratic majorities in both houses, so ultimately if health care reform does not come about, it will be their fault, and I suspect that the voters will punish them for it. The current path we are on is not sustainable. If nothing is done, more and more people will lose their access to health insurance. In 2007, 46 million Americans were without health insurance coverage.

Since health insurance is largely tied to employment in this country (until retirement), it is highly likely that the number of uninsured right now is well north of 50 million U.S. citizens, given the number of jobs lost over the last 18 months. That is one in six Americans. If one considers that everyone over the age of 65 is already covered (in a "socialized single payer system," by the way), it is more like one in five people in this country has no health insurance.

That does not count the huge number of people who are woefully underinsured. The current system also affects those lucky enough to have good insurance. We will never know for sure how many people would like to strike out on their own and form their own companies, but they (or a family member) have a pre-existing medical condition. For them to quit work and start their own firm could be financial suicide, since they would most likely have to do without health insurance, or the premiums would be so high as to be unaffordable.

As the graph below shows (from the Economix blog), the U.S. spends far more than any other advanced country in the world on health care as a percentage of GDP, and while it has been going up in most countries, it has been going up much faster here. Considering that we have a much higher GDP per capita than most of the other countries on the graph, our absolute spending on health care dwarfs that of other countries. Yet on every major measure of health care outcomes, such as life expectancy or infant mortality, the U.S. ranks mediocre at best.

The projections are that if nothing is done, by 2025, we will be spending 25% of our GDP on health care. The last effort at health care reform in 1993 failed, but the political pressure and the movement of people into HMOs was able to slow the growth as a percentage of GDP for awhile. A rapidly growing GDP also helped in that regard.

However, then the health care spending cancer came out of its temporary remission, and started to soar again. The graph only goes through 2007, but it is likely that with the shrinking of the overall economy, health care's share has soared again.

The bottom line is that we need a strong public insurance option, one that will have the clout to figure out which treatments work best and to promote preventative care. Without it, the country is on the road to bankruptcy. The gap between what we pay and what the rest of the world pays for health care is sapping the country’s competitiveness and, yes, even preventing entrepreneurship. One can understand, but lament the political games being played by the GOP, but one must seriously wonder about what the Blue Dogs hope to accomplish.

If the health care package goes down to defeat, or is so watered down as to be reform in name only (a very likely outcome at this point) health insurance stocks will soar, and the drug companies will be very attractive. Both have been beaten down to value levels on fears that their oligopolies will be broken up and they will no longer be able to suck the life out of the economy. With a failure or an effective failure of health care reform, these companies will do very well, but the country will be in terminal condition.

Comments

[levin70:]

To the OP

There is a reason that private companies spend on G&A. They spend significant sums on fraud detection and prevention. They happen to do a much, much better job at it than medicare does. Not only that, but you introduce a medicare type system that mandates reimbursement at lower rates than what the system charges those in private policies, and those private policies go away. What's the problem with that - well then, 20% of the hospitals and 20% of the doctors go away with them. They don't want to make less than what they are making now and having to work twice as hard to get reimbursed 300 days later than private paying suppliers.

Imagine a gov't run program to devlier healthcare that turns into the DMV.

Yeah, because thats exactly what I want.

Jul 29 03:01 PM

[klarsolo:]

And the private healthcare programs are so efficiently run, they charge 10 % more year in and year out. Wow.


On Jul 29 03:01 PM levin70 wrote:

> To the OP
>
> There is a reason that private companies spend on G&A. They spend
> significant sums on fraud detection and prevention. They happen to
> do a much, much better job at it than medicare does. Not only that,
> but you introduce a medicare type system that mandates reimbursement
> at lower rates than what the system charges those in private policies,
> and those private policies go away. What's the problem with that
> - well then, 20% of the hospitals and 20% of the doctors go away
> with them. They don't want to make less than what they are making
> now and having to work twice as hard to get reimbursed 300 days later
> than private paying suppliers.
>
> Imagine a gov't run program to devlier healthcare that turns into
> the DMV.
>
> Yeah, because thats exactly what I want.

Jul 29 03:31 PM

[Machiavelli999:]

"The general claim that they make is that they are worried about the fiscal consequences of health care reform, but when it comes to specifics, they are most opposed to the very elements of the reform package that are most likely to be successful in driving down the overall cost."

This is probably the best quote. Most of the people here don't even care about the details of health care debate. Its enough to yell "COMMUNISM! SOCIALISM!" to get you on their side. But if you look at some of the things that the Blue Dogs are against its thing that would stop give aways to the insurance companies. Yes, I said GIVEAWAYS.

In 2003, under a Republican administration and Republican Congress the Republicans passed the Medicare Modernization Act which made it illegal for Medicare to bargain for lower prices for its beneficiaries. It also locked in a bunch of subsidies for the insurance companies. The current proposals that Blue Dogs are against would reverse all that.

So, while pretending to be for fiscal responsibility, the Blue Dogs are actually about ensuring the profitability of insurance companies at the expense of the taxpayers. The same thing can be said for the Republicans by the way.

Oh and there are no incentives right now for efficiency in the system nor will there be if there isn't reform.

Jul 29 03:39 PM

[Machiavelli999:]

"Imagine a gov't run program to devlier healthcare that turns into the DMV."

We already have socialized healthcare for seniors. Its cheaper and run better than the private plans. If you don't believe me, why don't you propose to the seniors that they can get off of the horrible socialized Medicare plan and switch to the awesome private insurance plans and see how many will take you up on that offer.

Jul 29 03:41 PM

[LeoTheDog:]

No, imagine a government run program like the Marine Corp. Or, on a more realistic level, a government run healthcare system like TRICARE (an existing government run healthcare program deemed good enough for our soldiers and the "finest available" according to Bill Kristol).

Oh, and under the guise of "fraud and abuse" they spend money seeking ways to not pay legitimate claims too....


On Jul 29 03:01 PM levin70 wrote:

> To the OP
>
> There is a reason that private companies spend on G&A. They
> spend significant sums on fraud detection and prevention. They happen
> to do a much, much better job at it than medicare does. Not only
> that, but you introduce a medicare type system that mandates reimbursement
> at lower rates than what the system charges those in private policies,
> and those private policies go away. What's the problem with that
> - well then, 20% of the hospitals and 20% of the doctors go away
> with them. They don't want to make less than what they are making
> now and having to work twice as hard to get reimbursed 300 days later
> than private paying suppliers.
>
> Imagine a gov't run program to devlier healthcare that turns into
> the DMV.
>
> Yeah, because thats exactly what I want.

Jul 29 03:47 PM

[cyclingscholar:]

What a JOKE.......Probably the most important tool on the table for controlling health care costs is the public option. Essentially, it will let individuals buy into Medicare early. Medicare is a FAR more efficient system than the private health insurance system. For each dollar that is spent on Medicare, more than 98 cents goes to paying for actual medical costs."
========================

Medicare and medicaid fraud is the primary reason why medical care costs, all of a sudden upon creation of these programs in the 1960s, medical costs began to rise faster than the rate of inflation.


==============

Jul 29 03:47 PM

[Machiavelli999:]

The sad thing is all the Republican congressmen understand that what Obama is proposing will work and that is what they are most afraid of.

Bill Kristol once wrote that the government program that Republicans should be most opposed to are the programs that will work. Because if people see that a certain government program is working then they would be open to more government programs.

So, the main reason that Republicans are against this is not communism or socialism or free markets. That's just the BS they feed to fools who make up the majority of the commenters here at SA. Sadly, the Republicans themselves aren't fools. They are very smart and they don't want this to pass. And they will use whatever scare tactics are available to stop this.

Jul 29 03:54 PM

[klarsolo:]

It's getting tiring to hear the same old criticism that every government run entity is awful on every level. Yeah, I know, just look at the DMV. Yes, and? Plenty of private businesses suck just as much.

If this is the whole extent of your argumentation against the public option, why don't we take this a few steps further and advocate the privatization of the fire department, and police, and the military as well. And then, one day, maybe we can privatize government altogether.

Imagine the efficiencies!

Jul 29 04:15 PM

[Donald Johnson:]

Who at Zacks wrote this nonsense? It looks like a term paper from a high school junior. It's naive, dishonest and makes Zacks look like a tool of the DNC.

I'm wondering whether Zacks knows this has been published under it's byline? And I'm wondering whether SA knows who wrote it. That its featured on SA's front page is amazing.

Jul 29 05:53 PM

[klarsolo:]

Maybe you could elaborate a little more on why the article is nonsense in your opinion without resorting to very general adjectives such as "naive" and "dishonest". Without stating any reasons your message is on the same intellectual level as a fight between pre schoolers: "You suck" - "No, you suck", etc.

On Jul 29 05:53 PM Donald Johnson wrote:

> Who at Zacks wrote this nonsense? It looks like a term paper from
> a high school junior. It's naive, dishonest and makes Zacks look
> like a tool of the DNC.
>
> I'm wondering whether Zacks knows this has been published under it's
> byline? And I'm wondering whether SA knows who wrote it. That its
> featured on SA's front page is amazing.

Jul 29 06:16 PM

[Paul Price:]

Comrade Obama's election came because he promised to tax "the top 5%" to pay for benefits for the bottom 95%.

Now he is failing because it's obvious he needs to tax the 85% of people who have health care to pay for the 15% that don't.

Jul 29 09:06 PM

[klarsolo:]

I take Comrade Obama over Sith Lord Cheney and his hand puppet Bush any day.


On Jul 29 09:06 PM Paul Price wrote:

> Comrade Obama's election came because he promised to tax "the top
> 5%" to pay for benefits for the bottom 95%.
>
> Now he is failing because it's obvious he needs to tax the 85% of
> people who have health care to pay for the 15% that don't.

Jul 29 09:51 PM

[crapdetecto...:]

In reply to this comment:
> We already have socialized healthcare for seniors. Its cheaper and
> run better than the private plans. If you don't believe me, why don't
> you propose to the seniors that they can get off of the horrible
> socialized Medicare plan and switch to the awesome private insurance plans and see how many will take you up on that offer.

Of course it's cheaper to buy.. BUT IT's COSTS ARE NOT BEING BORN BY THE INSURED SENIORS and WE LOVE IT. Note: The unsustainability of this "business model" is why reform has become an government priority! Mandatory insurance for all is the "cover" the administration needs to promote its agenda. In order to provide insured care vs ER care for the uninsured, the 8 out of 9 Americans who have insurance must 1. pay more, and/or 2. get less. Of course health care benefits should be taxed as income because it IS income. But this is bad timing in a recession and a vote loser by all accounts.

Jul 29 10:34 PM

[pockyclips ...:]

We want things to change, but we want them the same.
We are idiots! Look at the way the poll questions are framed.

Jul 30 08:22 AM

[NEH:]

What a waste of time and money this all is ... why can't we just legalize assisted suicide, legalize medical marijuana, tax tax tax booze and cigarettes, and force schools to show videos of what happens to people who smoke, kinda like the DARE thing? I'd like to abolish insurance companies. Period. I favor direct payment to doctors etc for their expertise. It would also reestablish the doctor patient relationship.

Jul 30 08:57 AM

[dcsohl:]

Three years ago, we were down at the bottom.
www.cnn.com/2006/HEALT.../

5 out of 1000 US babies die in their first 24 hours. The only "industrialized" nation to fare worse was LATVIA. And we were tied with Hungary, Malta, Poland and Slovakia.

I doubt much has changed in the last three years.


On Jul 29 02:43 PM anarchist wrote:

> Where on the list of neonatal survival is the U.S.? Probably down
> below Tajikistan and Kazakstan, certainly below any of the
> Industrialized Nations.

Jul 30 09:54 AM

[finmah@yaho...:]

I find it amazing that in a financial column there is partisan prose concerning how much govern involvment there should be in mandating health insurance for all. The basic objective of this so called "reform" is to adulterate the free market- otherwise you would not have to "mandate" it and have it conscripted into law.

In the free market there are policies that are one tenth the cost of your average Cobra or group insurance - 1/10! That is with one simple fact you have a 10000 deductable. Here (like a 2000 deductable in auto) you have a free market - take insurance against what you cannot afford. Look at the vision market unbelievable drop in fancy eye doctors - go to Walmart for glasses.
But in some states you are forced at tax time to disclose and be penalized if you are being assessed in a free market Under the new government programs that wishes to include societies outlying costs as people fly in from around the world and throw their passport in the trash can.

This national effort is using the insurance scheme to back people into socialized medicine. I thought people distrust politicians - these creators of the bill will not be subject to this risk pool of a "ship of fools". Everything will be political - who you know what hospitals contribute to whose campaign etc.
It couldn't get more political when viagra and sex change operations are reimbursed and hearing aids are not.

It is classic since we have a politicians that sends their kids to private schools and works against charter school funding.

What is so hard about showing the consequences of this reform by pointing to foreign countries that already have done this? What are their issues and why the rush?

Jul 30 10:08 AM

[One Eyed Guide:]

Good article except that it overstates the benefits of the public option: The public option is not necessary to drive down administrative costs and reduce excess profits in insurance companies.

The requirement that people cannot be denied insurance or have rates adjusted due to health issues eliminates the excess profit making potential of health insurers and reduces them to being processors and bundlers of services. This will greatly increase the efficiency of the system.

Because the government is the most efficient distributor of money (they eliminate the middleman by printing it) the public option is the lowest cost but may not be the best option for many people due to opportunity for insurance companies to offer special bundles of services.

Jul 31 09:17 AM

[klarsolo:]

It won't if they have leeway to jack up rates 10 % or more year after year, as they have in the past.


On Jul 31 09:17 AM One Eyed Guide wrote:

> Good article except that it overstates the benefits of the public
> option: The public option is not necessary to drive down administrative
> costs and reduce excess profits in insurance companies.
>
> The requirement that people cannot be denied insurance or have rates
> adjusted due to health issues eliminates the excess profit making
> potential of health insurers and reduces them to being processors
> and bundlers of services. This will greatly increase the efficiency
> of the system.
>
> Because the government is the most efficient distributor of money
> (they eliminate the middleman by printing it) the public option is
> the lowest cost but may not be the best option for many people due
> to opportunity for insurance companies to offer special bundles of
> services.

Jul 31 04:18 PM

[Henry Buttal:]

dcsohl and anarchist,

Again, see my earlier post. Don't quote CNN, look at a breakdown of statistical analysis by Doctors and researchers.

Most of the differences are actually reporting anomalies ( a premature baby in the U.S. gets access to the best care, will be put on life support - if the baby dies, it is counted as an infant mortality. That same baby dies in another country, and the child is under 500g in weight, it counts as a stillbirth whether it lived or not, and this isn't included in the mortality statistics). I want my kids and grand kids being born in a country worried about life, not about statistics. This isn't new and hot off the press, by the way, it is a known statistical variance since the 90's.

In the U.S., it also doesn't make any difference whether the baby is an illegal alien or not. Some countries don't count non-citizens in their mortality calculations.

Of course, it is a lot easier to complain about healthcare rather than look at the facts. We have great reporting, and an open society, so we know the issues. A significant part of the mortality problem is societal success, and excess. If you remove the obesity factor, the U.S. looks even better!

If you are an illegal alien, you are counted in the statistics too. And illegal aliens lower the overall longevity calculations. But they still get better care than they would in, say, Mexico.

Are there issues with the current system that could be improved? Sure.

But don't think too hard about these things, just read the front page and do what the "enchanted" press tells you...

Aug 03 12:08 PM