Congress Health Care Is Not Real Reform

Posted on Jan 28, 2010

A copy of this interview is available at the PNHP website.

The PNHP recently interviewed Dr. David Himmelstein and Dr. Steffie Woolhandler, co-founders of Physicians for a National Health Program (PNHP), about the health bills emerging in Congress and the status of the movement for single-payer Medicare for All. Both are faculty members at Harvard Medical School and primary care physicians at Cambridge Hospital in Massachusetts. The telephone interview took place on Nov. 30, several weeks before the Senate adopted its version of the bill. On the eve of the Senate vote, PNHP called for the defeat of the bill, saying it would do more harm than good and that it would make genuine reform more difficult in the future.

PNHP: What’s your assessment of the health legislation that is emerging in Congress?

David Himmelstein: The bills are largely a sideways move. They will have very little impact on resolving or stabilizing the health care system. They improve things for some people and make things worse for some people.

For example, some poor patients or near-poor patients would benefit from federal subsidies for private insurance or by getting Medicaid, which they’re presently not eligible for. That would be an improvement.

However, patients who remain uninsured – and there will be at least 17 million of them – would probably see the resources available to them dwindle, because the bill takes part of its funding out of the hides of safety-net hospitals. Part of the proposed Medicare savings is derived from decreasing the funding for hospitals that care for a lot of poor, uninsured patients. So, for the remaining uninsured, the safety net would be even more threadbare than it is now.

Another example of an adverse impact: young people who have private coverage today would have to pay higher premiums because of the limits on premium differentials on age.

Almost no one would see an improvement before 2013 if the House version is passed, or 2014 if the Senate version passes. One thing is certain: the bills would entrench the insurance industry and pharmaceutical industry even further in their control of the health care system.

Steffie Woolhandler: I guess the way I’d summarize it is that some patients would be better off, some would be worse off, but what is completely clear is that this is not a solution.

DH: The private health insurance industry would be very much strengthened with $500 billion in new money coming their way, much of it in the form of public subsidy. And the pharmaceutical industry, similarly, would be getting more money – again, much of it from the public treasury. So those industries would be financially stronger.

PNHP: But aren’t the private insurers and Big Pharma complaining about the bills? Doesn’t that suggest there’s something positive for patients in them?

DH: The pharmaceutical industry hasn’t been complaining much, really – only a little around the edges. In fact they’ve been running television ads in some places supportive of the administration’s proposals. As for the insurance industry, they’ve traditionally taken the tack that they’ll never settle for half the pie. They always want the whole thing. They want the $500 billion in government subsidies without any of the very modest incursions on their business practices that are in the bills today.

PNHP: To what extent does the national legislation follow the Massachusetts model?

SW: I think the national plan is like Massachusetts. If anything, the national plan is a little bit worse, in that in during the first three years of the reform in Massachusetts, the insurance exchange offered only nonprofit subsidized plans. The national bill will mostly offer for-profit plans, maybe exclusively so.

The other thing is that the Massachusetts plan went into effect right away, so whatever benefits it contained were actually there at the beginning – you didn’t have to wait three or four years for them to kick in.

Yet another difference, according to press reports here, is that the subsidies in the national bill are likely to be lower than they are in Massachusetts. I haven’t seen the details on that, but that’s what’s being reported. The subsidies in the national bill will be less than what we presently have in the state.

DH: Keep in mind also that Massachusetts started from the vantage point of having the lowest uninsurance rate in the country. The 2006 reform cut it roughly in half. We also had and still have a tradition of quite generously funding the safety net in the state, although that’s been cut back as part of the state legislation. So the access to care was better in Massachusetts than almost anywhere else in the country before the reform.

We won’t be starting from nearly as good a position nationally, so what we arrive at on the national level is certainly not going to be as good as what we’ve got in Massachusetts.

That said, on the ground in Massachusetts things are not so rosy. We still have more than 300,000 people uninsured in our state and face grave difficulties in getting care for them. In fact, access to care for them is worse now than before the reform was passed, because the institutions that provide care for the uninsured have seen very sharp funding cuts.

We’re now beginning to see cutbacks in coverage because of the very high costs of implementing the plan. Some 30,000 immigrants – these are legal immigrants – have seen their rights to care sharply cut. Co-payments have risen and premiums are continuing to rise quite sharply in the state. A number of patients who were entitled to free care under the old Massachusetts free care system now face quite steep out-of-pocket costs.

The other thing worth saying is that the Massachusetts reform has done nothing for the vast majority of people who had insurance at the outset but were strained financially by the premiums and out-of-pocket costs. They continue to face great difficulty.

So, after an improvement in the first year in access to care in Massachusetts, things have now started to reverse. And the fiscal strains on the state and the program promise to make things even worse in the near future.

PNHP: How much has the Massachusetts reform cost? Is the plan financially solvent?

SW: That’s a very politically contested subject. The actual cost of the state reform is one of those very hot-button numbers. If you include the total cost to everyone in the state, public or private, you’re looking at a figure about $1 billion a year higher than it would have been without the reform. So public and private costs combined have been driven up health spending by more than a billion annually.

DH: The Congressional Budget Office estimates that nationally it costs $4,000 to insure someone, and I think that’s likely true in Massachusetts as well. The reform insured about 300,000 people, so you get a figure like $1.2 billion, but exactly where those costs have fallen is very difficult to track down because the state budget has obfuscated that enormously.

There’s also been a large dollop of federal money coming into the state in partial support for the plan. State officials claim, “We’ve only spent $300 million or $400 million a year on it,” but that excludes the federal funding. And, as part of the stimulus package, there was actually an increase in the federal matching rate for Medicaid – it went from 58 percent to 62 percent of every Medicaid dollar coming in from federal sources – and that wasn’t just for the newly insured, that was for all Medicaid patients.

So there’s been a large infusion of new federal funds that have helped to keep the plan afloat. Exactly how much of that is attributable to the reform is hard to track down. And as to private spending, we won’t have exact figures on that for another year or two, because the state doesn’t really track it and the feds won’t have their numbers out for another year or two.

PNHP: How do you reply to people who say, “Yes, the bill that’s emerging in Congress is flawed, but it’s a start and it can be improved upon later, just like Medicare was”?

DH: Historically, the way we’ve made progress in health reform has not been by incremental steps, but by major steps at propitious moments that often, in the ensuing years, get eaten away.

We haven’t actually been able to enlarge on many improvements in Medicare, and it has really been largely eroded since it was first passed, not pushed forward.

SW: Medicare has certainly been eroded since the late 1970s. After it was passed and the program took form, Congress actually extended Medicare to two additional groups in the 1970s – people with end-stage renal disease and people who have been totally and permanently disabled for more than two years. But in terms of what the program offers, it was never actually improved on, and even in terms of the number of people covered, there have been no improvements since the late ’70s, just an erosion of it.

DH: And whereas Medicare was a fully public program at the outset, the “private option” has been added to Medicare in the last few decades. It’s gone from being a sort-of-single-payer system for the elderly to being a public option program that is unfairly competed against by private insurers who receive extra government subsidies.

PNHP: But some people say that, politically speaking, the Obama administration needs to have a victory on this front, even if it is imperfect. It’s the administration’s momentum that’s important. What do you say to that?

SW: I think there’s two ways for the Obama administration to fail. One way would be to fail to pass any legislation, and the other would be to pass legislation that is worthless, that doesn’t solve the problem.

If you don’t pass legislation, at least you can blame the Republicans the next time around. If you pass something that doesn’t solve the problem, you’ve failed and plus you’re in much worse shape than you would have been otherwise.

DH: It’s like saying if Roosevelt had passed a fake Social Security bill, that that would have sustained the momentum of the Roosevelt administration. In fact, people would have eventually understood that a fake Social Security bill wasn’t real. Similarly, people will understand in 2014, when this bill finally comes into effect, that the Democrats passed a piece of legislation that was nearly worthless. To stake the future of progress on a piece of Potemkin-village-like legislation, a fake front, is a dangerous game to play.

PNHP: What’s your reaction to the Stupak amendment in the House bill restricting insurance coverage for abortion?

DH: It’s completely unacceptable as part of the bill and it signals several things. One is that the right has been perfectly willing to hold people hostage to its ideology, whereas progressives by and large have not. But the second is that, under any health reform, we’re going to have a huge fight to preserve the right to choose. That’s going to be true under single payer as well: we’re going to have to defend the right to choose over and over again and keep pushing on.

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