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Oct 18 / Jonathan

Health care reform: who’s your daddy?

This piece by Robert Reich lays out the worst problems with the current health care legislation. He’s right, of course, but it seems to me a safe assumption that the administration will cave on whatever they need to in order to pass a bill and claim victory. I could be wrong, of course—maybe Obama’s tough talk will turn out to be more than just talk. I doubt it.

Why Obama Has to do What Letterman Did: Refuse to Pay Hush Money

Last January, as I understand it, the White House promised Big Pharma, big insurance, and the American Medical Association the moral equivalent of what Joel Halderman allegedly demanded of David Letterman: hush money. The groups agreed to stay silent or even be supportive of healthcare reform, as long as they were paid off.

But now that it’s time to collect, the bill is larger than the White House expected, and it’s going to fall like an avalanche on middle class Americans in coming years. That means an ugly 2012 election (read Sarah Palin).

So the President has to do what Letterman did: Refuse to pay.

Big Pharma is on the road to getting its deal: not only 25 to 30 million more paying customers, but also a continued ban on Medicare using its bargaining clout to reduce drug prices, a bar on genetic drug manufacturers introducing similar biologic drugs until the originals have been on the market at least twelve years, and no public insurance option to negotiate low drug prices.

Big insurance is on the way to getting what it wants: 25 to 30 million more paying customers (many of them young and healthy), a requirement that almost all businesses “pay or play,” and no competition from a public option.

Doctors (that is, the American Medical Association) are on the way to getting what they want: Instead of a temporary patch on scheduled decreases in Medicare reimbursements to them, a permanent fix that would change the reimbursement formula altogether and reward them $240 billion over the next ten years.

But when they all get paid off, who will do the paying? Middle-class Americans who are already in a financial squeeze — whose wages are lower, adjusted for inflation, than they were thirty years ago, and whose jobs are disappearing. They’ll face still higher premiums, co-payments, and deductibles; and they’ll pay higher drug prices, Medicare premiums, and taxes to cover the rest.

That’s because these payoffs make it next to impossible to contain the wildly escalating costs of health care.

The only thing in the emerging bills that’s related to cost containment is a proposed excise tax on so-called “Cadillac” insurance plans, costing over a certain threshold amount (the threshold is now up for grabs). But because the costs of health care are likely to rise faster than inflation, whatever threshold, the middle class will get socked again.

So Obama has to forcefully weigh in with Nancy Pelosi and Harry Reid as the two try to cobble together passable bills for each chamber — demanding real cost containment.

The three big ones: (1) A true public option (better yet, one that allows anyone now holding private insurance to opt into). (2) Authority for Medicare to negotiate low drug prices. And (3) Lower Medicare reimbursement rates to doctors (in other words, no “doctor fix”).

In addition, the so-called “medical exchanges” in the emerging bills (as well as the public option, which hopefully will be included) should give preference to pre-paid heathcare plans, like Kaiser Permanente, whose doctors are on salary and have every incentive to keep people healthy rather than charge for more services and tests.

But if Obama doesn’t weigh in and say “no” to the hush money for Big Pharma, big insurance, and the AMA, America’s middle class will get walloped. And if the walloping starts before 2012, Sarah Palin or some other right-wingnut populist will wallop Obama, and then will wallop America.

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