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.
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