Health Care Has a Relapse
Time.com
March 2, 2002
"Costs are soaring. States are struggling. People are losing their coverage. Has Washington even noticed?" By Karen Tumulty
"For most children, a hug is all it takes to treat the bruise from a playground fall. But when Dalton Dawes collided with a classmate on his first day of preschool three years ago, the bleeding inside his shoulder would not stop. Dalton, an 8-year-old with fine blond hair and intelligent blue eyes who lives in North Carolina's Blue Ridge Mountains, is a hemophiliac. What prevents the mishaps of childhood from killing him is $2,000-a-week injections of a medication called Mononine. But no private insurer will cover Dalton, so his parents, Leonard Poe and Heather Dawes, held their income to $22,900--33% over the poverty line--to qualify for Medicaid.
"That worked until March 2001, when Dalton turned 7 and his Medicaid eligibility ran out. (For him to stay in the program, his parents would have had to earn no more than $15,492 a year.) Heather, a paralegal, tried to enroll him in the Children's Health Insurance Program (CHIP), a state-federal initiative that provides coverage to children of working families. But North Carolina had burned through all the money allocated to CHIP that year, so Dalton joined 23,000 other kids on a waiting list. By the time legislators found the $8 million needed to resume enrollment last September, Dalton was down to his last three weeks' supply of Mononine. After months of seeing her son's survival in the hands of politicians and bureaucrats, Heather could not stop thinking about 'how flimsy it all is.' She notes, 'They could decide to set it aside tomorrow again if they wanted.'"
"There's not much evidence, however, that anyone in Washington is paying attention."
John Engler, Michigan's Republican Governor:
"While there's conversation going on, it doesn't appear to us to be a very focused conversation or a very clear strategy to get something done."
<http://www.time.com/time/nation/printout/0,8816,214063,00.html>http://www.time.com/time/nation/printout/0,8816,214063,00.html
Comment: This Time article reviews some of the ample evidence that the health care crises is growing much worse. It ends on an unfortunate political note, suggesting that the Texas CHIP program is a "model' thanks to the efforts of a "compassionate conservative who was thinking about running for President." Well, that gentleman is now President, and he has already laid out his health care agenda. Sadly, it is clearly a regressive agenda that will further compound our health care deficiencies.
Washington does need to hear from us. Let's end our inaudible grumbling and speak up!
Kip Sullivan responds to Uwe Reinhardt:
Uwe Reinhardt (excerpt):
<< When the demand side started to force real price competition on the hospitals sector, it initially was driven into price wars that pushed many hospitals into the red. The only way to react to this threat is what the airlines did earlier: consolidate or slice up the market. >>
Kip Sullivan:
Uwe's comments are not inconsistent with mine. Uwe describes in more detail than I did the mechanism that the burgeoning HMOs used to provoke consolidation among hospitals. But that description does not contradict my argument, which is:
(1) it was HMO size -- not HMO brilliance at teaching doctors how to be better doctors -- that allowed HMOs to cut costs and take market share from the traditional insurers, and
(2) once the race to get big was unleashed in the insurance industry, it had to spread to the rest of the health care industry.
Uwe is correct that our choice in the 1980s was oligopoly versus regulation, not, as HMO advocates put it, competition versus regulation. My point was that the HMO gurus should have told us that. They didn't. They told us HMOs would compete on their ability to turn doctors into better doctors. They never warned us gigantism would become the Holy Grail of the entire health care industry.
Kip
Uwe Reinhardt:
Yes, Kip and I do not disagree. We just looked at the same elephant from slightly different angles. But it's the same elephant alright. I should dig out of my files and distribute to you all a remarkable document that emerged about a year ago from a one year soul searching effort by the California health care elite--virtually anyone there making over $200,000 a year off health care on one way or another. They concluded ruefully that the experiment with price competition a la Jackson Hole had failed in California and that a "new paradigm" (I love the term!) was needed to set things right. They called the new paradigm "cooperation." Kip and I would call it, less politely, "cozy oligopoly all around."
Germany uses that approach, but with one significant twist: the goverment hovers above the cozy deals hashed out by the private oligopolists in an Apache helicopter and swoops down with compulsory arbitration or sectoral budget caps whenever the cozy deals among members of the ologopolistic club bust preterdermined overall global spending budgets (a la Clinton health plan).
Eventually we will get there, too. In the meantime, we shall continue to march to Churchill's well-kown dictum: "In the long run Americans will always do the right thing--after exploring all other alternatives." It is our enthusiasm for the perpetual exploration of known things that makes us appear so cute in the eyes of the rest of the world. Of course, we proudly call it "research" and "entrepreneurship." That is cute as well.
Uwe