Christie Says Health-Care Costs to Bankrupt New Jersey Without Concessions

By Terrence Dopp
Bloomberg
January 13, 2011

New Jersey Governor Chris Christie said health-care costs “will bankrupt” the state unless it requires workers to pay more for medical coverage.

Christie wants all public employees in New Jersey to contribute more than the current 1.5 percent of salary toward their health benefits.

“We have to have a plan where everyone has some skin in the game,” Christie said. “Right now 1.5 percent is just something we can’t afford. Everyone knows that but they won’t say it.”

http://www.bloomberg.com/news/2011-01-13/christie-says-health-care-costs-to-bankrupt-new-jersey-without-concessions.html

“Health care bills are going to bankrupt the government.” New Jersey Gov. Chris Christie is but the latest of conservative politicians to sound this alarm. You would think that they would recommend truly effective policies to bring escalating health care costs under control. But no. They merely wish to shift health care costs from the government, in this case, to their own public employees.

Virtually all economists agree that employer-sponsored health plans actually are paid for by the employees in the form of forgone wage increases. Gov. Christie’s proposal to shift the costs to the employees is not merely a nominal transfer of the payment responsibility; it is a true shift because he is not going to replace the forgone wages.

In trying to contain health care costs we need to look at our entire health care spending, not simply how it is distributed between public and private payers. Reducing government spending on health care by shifting it to others does not reduce total health care spending, except in one very important regard. Making health care unaffordable rations health care based on the inability to pay – the most inhumane form of rationing, and one that is uniquely American.

The claim that health care costs will bankrupt the government is a false claim since we have one of the lowest total tax burdens of all industrialized nations. A very modest increase in tax revenues would solve this problem. On the other hand, passing health care costs onto already financially-strapped employees will surely increase the rate of personal bankruptcies.

I am especially appalled by Gov. Christie’s use of the old standby argument that patients need “more skin in the game.” It creates visions of patients who are out of money and are forced to turn to their own skin to barter for the health care that they desperately need – only to learn that skin is not accepted at banks or currency exchanges.

By Austin Frakt
Kaiser Health News
January 11, 2011

The problem is health care costs. They’ll cause budgetary distress with or without health reform. The CBO’s estimates, both of them, show it clearly. Health care costs have been the source of budgetary woes for decades, and there’s no end in sight under any realistic scoring of any serious health reform proposal.

One way to get serious is to embrace the cost control provisions of the new law and to protect them from the likely efforts of future policymakers to undo them. In this, I agree with health economist Henry Aaron, who wrote about the health reform law:

“[T]he bill contains, at least in embryonic form, virtually every idea for cost control that any analyst has come up with. … The most practical cost-control strategy that is now available to Congress is to accelerate the implementation of these provisions, not to stymie them.”

http://www.kaiserhealthnews.org/Columns/2011/January/011111frakt.aspx

And…

A Milestone in the Health Care Journey

By Ronald Brownstein
The Atlantic
November 21, 2009

“I’m sort of a known skeptic on this stuff,” (Jonathan) Gruber told me. “My summary is it’s really hard to figure out how to bend the cost curve, but I can’t think of a thing to try that they didn’t try. They really make the best effort anyone has ever made. Everything is in here….I can’t think of anything I’d do that they are not doing in the bill. You couldn’t have done better than they are doing.”

http://www.theatlantic.com/politics/archive/2009/11/a-milestone-in-the-health-care-journey/30619/

Comment: 

By Don McCanne, MD

Austin Frakt’s voice is now added to those of Jonathan Gruber , Henry Aaron and others who claim that every cost control measure is in the Patient Protection and Affordable Care Act (PPACA). Yet they left out the most effective measure of all – single payer – the one that wasn’t even granted a seat at the table.

Over 30 percent of our national health expenditures are diverted to administration. That is almost twice the percentage of administrative costs in Canada – a nation with a single payer system. If we were to adopt the administrative efficiencies of Canada’s single payer system, we conceivably could recover about 14 percent of our national health expenditures, not in just the first year, but in every year to follow. Even if we were to recover only 10 percent, think of what that would amount to over the years.

The authors of PPACA were aware of this administrative waste, but because they elected to leave the fragmented system of private insurers and public programs in place, they focused narrowly on the administrative costs of the private insurers, which is only a fraction of the administrative costs of our system. They decided to allow the insurers to continue to use 15 to 20 percent of their revenues for administrative functions and profits. Since some were already functioning at this level – especially the non-profits – the net savings is almost negligible. More importantly, this did not address any of the other administrative excesses – especially the huge administrative burden placed on the providers of health care.

There are other important cost-saving features of a single payer system that were also left out of PPACA. These include very effective tools such as the monopsonistic power of a single buyer, global budgeting, negotiated rates, bulk purchasing, and preventing over-utilization of excessive capacity through separate budgeting of capital improvements. These measures, along with the permanent administrative savings, truly bend the cost curve down to more sustainable levels.

Austin Frakt asks the right question. Is anybody listening?

The CBO Is Telling Us Something. Is Anybody Listening?

By Austin Frakt
Kaiser Health News
January 11, 2011

The problem is health care costs. They’ll cause budgetary distress with or without health reform. The CBO’s estimates, both of them, show it clearly. Health care costs have been the source of budgetary woes for decades, and there’s no end in sight under any realistic scoring of any serious health reform proposal.

One way to get serious is to embrace the cost control provisions of the new law and to protect them from the likely efforts of future policymakers to undo them. In this, I agree with health economist Henry Aaron, who wrote about the health reform law:

“[T]he bill contains, at least in embryonic form, virtually every idea for cost control that any analyst has come up with. … The most practical cost-control strategy that is now available to Congress is to accelerate the implementation of these provisions, not to stymie them.”

http://www.kaiserhealthnews.org/Columns/2011/January/011111frakt.aspx

And…

A Milestone in the Health Care Journey

By Ronald Brownstein
The Atlantic
November 21, 2009

“I’m sort of a known skeptic on this stuff,” (Jonathan) Gruber told me. “My summary is it’s really hard to figure out how to bend the cost curve, but I can’t think of a thing to try that they didn’t try. They really make the best effort anyone has ever made. Everything is in here….I can’t think of anything I’d do that they are not doing in the bill. You couldn’t have done better than they are doing.”

http://www.theatlantic.com/politics/archive/2009/11/a-milestone-in-the-health-care-journey/30619/

Austin Frakt’s voice is now added to those of Jonathan Gruber , Henry Aaron and others who claim that every cost control measure is in the Patient Protection and Affordable Care Act (PPACA). Yet they left out the most effective measure of all – single payer – the one that wasn’t even granted a seat at the table.

Over 30 percent of our national health expenditures are diverted to administration. That is almost twice the percentage of administrative costs in Canada – a nation with a single payer system. If we were to adopt the administrative efficiencies of Canada’s single payer system, we conceivably could recover about 14 percent of our national health expenditures, not in just the first year, but in every year to follow. Even if we were to recover only 10 percent, think of what that would amount to over the years.

The authors of PPACA were aware of this administrative waste, but because they elected to leave the fragmented system of private insurers and public programs in place, they focused narrowly on the administrative costs of the private insurers, which is only a fraction of the administrative costs of our system. They decided to allow the insurers to continue to use 15 to 20 percent of their revenues for administrative functions and profits. Since some were already functioning at this level – especially the non-profits – the net savings is almost negligible. More importantly, this did not address any of the other administrative excesses – especially the huge administrative burden placed on the providers of health care.

There are other important cost-saving features of a single payer system that were also left out of PPACA. These include very effective tools such as the monopsonistic power of a single buyer, global budgeting, negotiated rates, bulk purchasing, and preventing over-utilization of excessive capacity through separate budgeting of capital improvements. These measures, along with the permanent administrative savings, truly bend the cost curve down to more sustainable levels.

Austin Frakt asks the right question. Is anybody listening?

Brown Unveils Budget Plan With Extensive Spending Reductions

California Healthline
January 11, 2011

(Gov. Jerry) Brown’s proposed budget would reduce spending by about $135.7 million by enacting changes to Healthy Families, California’s Children’s Health Insurance Program.

Brown’s budget also proposes $1.7 billion in cuts to Medi-Cal, California’s Medicaid program.

http://www.californiahealthline.org/articles/2011/1/11/brown-unveils-budget-plan-with-extensive-spending-reductions.aspx

And…

Labor is out-organized at budget protest

By Michael J. Mishak
Los Angeles Times
January 10, 2011

If today’s budget protests are any indication, organized labor needs to get, well, organized.

After Gov. Jerry Brown unveiled his budget, a handful of labor leaders gathered on the north steps of the Capitol to talk about the concerns of workers and recipients of In-Home Supportive Services and other programs that would see steep cuts. They didn’t get very far.

George Popyack, of the American Federation of State, County and Municipal Employees, was explaining how shifting state services to local governments could compromise quality when he was drowned out by hundreds of students descending on the steps for a separate demonstration in support of single-payer healthcare. Reporters and a camera crew turned to observe the students, who were chanting through bullhorns and banging drums.

“Well, we just lost the camera,” Popyack said.

http://latimesblogs.latimes.com/california-politics/2011/01/if-todays-budget-protests-are-any-indication-organized-labor-needs-to-get-well-organized-after-gov-jerry-brown-unvei.html

For report on the single payer rally by Erica Mu of KALW (audio and transcript):
http://kalwnews.org/audio/2011/01/10/could-single-payer-be-future-healthcare-california_782712.html

California Health Professional Student Alliance (CaHPSA):
http://www.cahpsa.org/CaHPSA/Lobby_Day.html

California’s budget crisis is a disaster. The draconian budget cuts will especially impact the state’s health and human services programs, including Medi-Cal and the Children’s Health Insurance Program. The good news is that California’s health professional students are not going to put up with it. They showed up by the hundreds to demand the enactment of a single payer system.

The future of our health care system is in good hands.

By David Brooks
The New York Times
January 6, 2011

Over all, there is a strong likelihood that the current health care law will face an existential threat over the next five years. Each party should be preparing contingency plans.

After the trauma of the last two years, many people wish the issue would go away. But it’s not going away, especially since costs will continue to rise.

When the crisis comes, Democrats will face an interesting choice — to patch the Obama system or try to replace it with something bigger. The administration may want a patch, but by a ratio of nearly 2 to 1, according to a CNN poll, Democratic voters would prefer a more ambitious law. Liberals could logically say that the mistake was trying to create a hybrid system, rather than moving straight to a single-payer one.

http://www.nytimes.com/2011/01/07/opinion/07brooks.html?ref=opinion

And…

ObamaCare Repeal: GOP Should Be Careful What It Wishes For

By Robert B. Reich
The Wall Street Journal
January 7, 2011

Nonetheless, there’s a great irony in the Republican assault. The federal government wouldn’t be nearly as vulnerable to these political and legal obstacles had the health-care law been built upon the framework of Social Security or Medicare — public insurance financed by payroll taxes — as many Democrats had initially urged. Not only are these programs enormously popular — “Don’t take away my Medicare!” was a rallying cry among some conservative populists during the debates over the health-care law — but they also rest on a more widely accepted relationship among the individual, the government and the market.

Americans are accustomed to paying for public insurance through their payroll taxes. Such payments aren’t viewed as federal mandates that encroach upon individual freedoms, or as payoffs to private companies likely to make even more money from mandatory purchases of their products, but as well-deserved entitlements.

Set against this background, the current Republican attack on mandatory coverage is curious because it raises the essential question of how society would otherwise spread health-care risks. If successful — either in Congress or in the courts — a Republican victory could turn into a Pyrrhic one by opening the way to the alternative model, based on the system Americans seem to prefer: payroll taxes and public insurance.

http://online.wsj.com/article/SB10001424052748704723104576062350518299650.html

Comment: 

By Don McCanne, MD

Above are yet two more examples of a common theme. Conservative New York Times columnist David Brooks and liberal Berkeley Professor Robert Reich both imply that the opposition to the government mandate to purchase expensive private health plans may drive us to a much more logical and effective solution for financing health care: single payer (public insurance financed by taxes).

If so many individuals across the political spectrum believe that single payer is likely the inevitable outcome then why aren’t we taking a more serious look at it right now, before people are dragged, screaming and kicking, and then locked into the private insurance exchanges?

Carrying the metaphor further, their screaming should die down by the time they are transferred to the paupers’ prisons.

Metaphors are often used to appeal to the emotions. In this instance, it certainly isn’t humor. There is nothing funny about a government mandate that forces you to buy an overpriced private insurance product that takes away your choices in health care.

So which emotion? Depression? Anger? Rage? We have just seen once again the potential for tragic consequences of the latter. Please. Let’s fix our health care financing system before we’re all in a rage.

Buckle Up for Round 2

By David Brooks
The New York Times
January 6, 2011

Over all, there is a strong likelihood that the current health care law will face an existential threat over the next five years. Each party should be preparing contingency plans.

After the trauma of the last two years, many people wish the issue would go away. But it’s not going away, especially since costs will continue to rise.

When the crisis comes, Democrats will face an interesting choice — to patch the Obama system or try to replace it with something bigger. The administration may want a patch, but by a ratio of nearly 2 to 1, according to a CNN poll, Democratic voters would prefer a more ambitious law. Liberals could logically say that the mistake was trying to create a hybrid system, rather than moving straight to a single-payer one.

http://www.nytimes.com/2011/01/07/opinion/07brooks.html

And…

ObamaCare Repeal: GOP Should Be Careful What It Wishes For

By Robert B. Reich
The Wall Street Journal
January 7, 2011

Nonetheless, there’s a great irony in the Republican assault. The federal government wouldn’t be nearly as vulnerable to these political and legal obstacles had the health-care law been built upon the framework of Social Security or Medicare — public insurance financed by payroll taxes — as many Democrats had initially urged. Not only are these programs enormously popular — “Don’t take away my Medicare!” was a rallying cry among some conservative populists during the debates over the health-care law — but they also rest on a more widely accepted relationship among the individual, the government and the market.

Americans are accustomed to paying for public insurance through their payroll taxes. Such payments aren’t viewed as federal mandates that encroach upon individual freedoms, or as payoffs to private companies likely to make even more money from mandatory purchases of their products, but as well-deserved entitlements.

Set against this background, the current Republican attack on mandatory coverage is curious because it raises the essential question of how society would otherwise spread health-care risks. If successful — either in Congress or in the courts — a Republican victory could turn into a Pyrrhic one by opening the way to the alternative model, based on the system Americans seem to prefer: payroll taxes and public insurance.

http://online.wsj.com/article/SB10001424052748704723104576062350518299650.html

Above are yet two more examples of a common theme. Conservative New York Times columnist David Brooks and liberal Berkeley Professor Robert Reich both imply that the opposition to the government mandate to purchase expensive private health plans may drive us to a much more logical and effective solution for financing health care: single payer (public insurance financed by taxes).

If so many individuals across the political spectrum believe that single payer is likely the inevitable outcome then why aren’t we taking a more serious look at it right now, before people are dragged, screaming and kicking, and then locked into the private insurance exchanges?

Carrying the metaphor further, their screaming should die down by the time they are transferred to the paupers’ prisons.

Metaphors are often used to appeal to the emotions. In this instance, it certainly isn’t humor. There is nothing funny about a government mandate that forces you to buy an overpriced private insurance product that takes away your choices in health care.

So which emotion? Depression? Anger? Rage? We have just seen once again the potential for tragic consequences of the latter. Please. Let’s fix our health care financing system before we’re all in a rage.

By Don McCanne, MD

Instead of contemplating a health care Quote of the Day today, let’s take a moment to consider what each of us might do to harness the energy behind the forces that would destroy social solidarity, and bring us all together in efforts to heal our social problems such as our sick health care system that leaves so many suffering and dying.

Instead of contemplating a health care Quote of the Day today, let’s take a moment to consider what each of us might do to harness the energy behind the forces that would destroy social solidarity, and bring us all together in efforts to heal our social problems such as our sick health care system that leaves so many suffering and dying.