• WisBusiness

Wednesday, September 2, 2009

President Obama's health-care plan may stall, but problems won't go away


By Tom Still
A friend who sells new cars, and who is happy to see the "Cash for Clunkers" federal rebate program end, described the somewhat creepy procedure used to permanently disable the engines of the trade-in vehicles. After draining the oil in the aging trade-in, the dealer was required to pour in a solution of sodium silicate and run the engine at 2,000 RPMs until it wore down, seized up and turned into unsalvageable scrap metal.

If there are federal death sentences for cars, can "life-or-death" committees for elderly patients be far behind?

The question is mostly in jest; no one should seriously believe that health-care reform will lead to government-ordered euthanasia in nursing homes. But many Americans judge proposals to expand federal influence over their lives based on their impressions of how other federal programs have worked, whether it's the IRS or a one-time car rebate.

If 690,000 clunkers have been scrapped and dealers have yet to be paid for the discounts on the new cars they sold, what does that say about the ability of the feds to reimburse doctors, hospitals and clinics for millions of medical procedures across America every day? Perceptions matter, and it's no wonder so many people are skeptical.

Those perceptions help to explain why President Obama may not get his wish to reform health care during his first year in office, especially now that the non-partisan Congressional Budget Office has reported the White House plan could cost twice as much as estimated. Most Americans won't trade the devil they know for a more expensive demon that may not work.

But what are the costs of doing nothing? Health care in America suffers from multiple ailments, most of which won't go away even if the Obama plan and others like it fail. Some examples:

* Many employers wonder how long they can continue to underwrite the health insurance costs of their employees. Over the last decade, employer-sponsored health insurance premiums have increased 119 percent, according to national statistics.

* About 700,000 Americans are forced into bankruptcy each year because of medical bills.

* National health spending is expected to reach $2.5 trillion in 2009, accounting for 17.6 percent of the gross domestic product. By 2018, national health care expenditures are expected to reach $4.4 trillion—more than double 2007 spending.

* National competitiveness is being hurt. Because U.S. health-care costs are so high, due in large part to huge administrative costs, our competitors have an advantage when it comes to producing goods and services. Japan is a ready example. In "The Healing of America: A Global Quest for Better, Cheaper and Fairer Health Care," author T.R. Reid notes that Japan spends about $3,400 per person per year on health care versus $7,000 in the United States. That is despite the fact that Japan's population is older and sees doctors at three times the American rate.

What's the solution? First, let's acknowledge America already has government-run health care in many ways. More than 46 percent of all medical service in the United States, or about $1 trillion per year, is paid for directly by taxpayers who finance Medicare, Medicaid, the Veterans Administration hospitals and state-run programs such as Wisconsin's BadgerCare. Private insurance covers 42 percent, and the rest is paid out of pocket.

In some ways, the American system is more "socialized" than those in many countries often cited as examples to avoid. While many of those nations have universal coverage, it's often provided through private doctors, hospitals and insurance plans.

Some of the best-managed private plans in the United States cost about $3,500 per person, per year. What are the practices that make them efficient? Why are some states -- Wisconsin included -- ranked high in terms of health-care quality and others are dismally low? Are insurers beginning to move away from denying coverage to people with pre-existing conditions, a step that many reformers believe is essential? Can a "public option" government plan force real competition without destroying private plans?

Examining those questions and leveraging America's built-in penchant for innovation may provide much-needed answers. The Obama plan may not pass this year, but the "clunker" that characterizes parts of American health care must be traded in, sooner or later.

-- Still is president of the Wisconsin Technology Council. He is the former associate editor of the Wisconsin State Journal in Madison.

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