Better course for health care

Published: March 23, 2010

Economic reality and common sense finally surfaced on a sea of distortion Sunday. The House passed a health care reform bill that should be viewed as the beginning of a more rational national health care system.

The reform bill does not, as its critics falsely claimed, turn over control of health care to the federal government. Rather, it requires Americans to purchase private-sector health insurance as the partial means of paying for eliminating some of the insurers' worst abuses. Foremost among those are routine denial of coverage for pre-existing conditions and arbitrary rules that allow them to drop coverage.

As the law's provisions are phased in, about 32 million more Americans will be insured. The package does not project truly universal coverage, but estimates that about 95 percent of all Americans will be covered by 2019.

According to the non-partisan Congressional Budget Office, the plan will cost the federal government $940 billion over 10 years while reducing the federal budget deficit over that period by $138 billion.

That's because the plan mandates cost-savings from most of the health care economy's major players. Hospitals will contribute $155 billion, which they will be able to do because the mandatory insurance requirements will result in them having to absorb far less uncompensated care. The pharmaceutical industry is in for about $85 billion, which it will be able to absorb because millions more Americans will have prescription drug coverage.

While railing against a supposed government takeover of the health care system, opponents falsely portrayed the reform as a threat to the most successful government-run health care enterprise in the nation's history - Medicare.

The plan includes no cuts to basic Medicare. And it would increase payments to primary-care physicians while paying for annual "wellness" visits to doctors. The Medicare "cuts" about which opponents have complained are in the Medicare Advantage program, alternative private-sector plans that typically include additional features.

Most important to millions of Medicare beneficiaries is that the reform gradually will close the infamous Medicare drug plan "doughnut hole." Rather than mandating the lowest possible drug prices from the pharmaceutical industry, the Medicare plan controls costs with the "doughnut hole." Enrollees must pick up the costs of all of their drugs at certain thresholds, often spending thousands of dollars before coverage resumes.

Critics complain that the measure is unwarranted government intrusion over health care, spending on which now comprises more than one-sixth of the national economy.

But, before reform, federal and other governments already cover more than half of $2.5 trillion that Americans spend annually on health care. They do so through the federal Medicare and state/federal Medicaid programs, state and federal Children's Health Insurance Programs, and veterans' health care programs. And that does not include additional billions that governments at all levels spend on employee health care.

The reform relates primarily to how Americans, their employers, the government and insurers will pay for health care going forward. It does not directly attempt to control the costs of health-care delivery by providers. And its biggest flaw is that it does not break the illogical reliance on employment for access to health care coverage.

But the history of most ground-breaking change in America is one of incrementalism. Social Security and Medicare were born amid controversy and false cries of socialism, yet have become bedrocks of the American culture and economy. Over time, the health care reform born Sunday likely will follow the same course and ultimately create a far more rational health care system that serves public health more than narrow economic interests.