Saturday, December 19, 2009

The Tragic Sense of Health Insurance Reform

Frank Pasquale

It looks like there are now 60 votes behind the "The Patient Protection and Affordable Care Act", and the set of amendments to it released today. For the sake of this post, I will assume that this Senate bill will basically be the template for health insurance reform.

Given all the twists and turns of this debate, I'm sure there still will be some important changes (even though holdout Sen. Ben Nelson has been promised a "limited conference" in exchange for supporting it). But today's announcement does strike me as a turning point in the debate. It's time to reflect on a growing divide between "realists" in the Democratic party and more idealistic progressives.

Democratic Divisions

Ed Kilgore of The New Republic describes the divide over the Senate bill as follows:

[O]n a variety of fronts (most notably financial restructuring and health care reform, but arguably on climate change as well), the Obama administration has chosen the strategy of deploying regulated and subsidized private sector entities to achieve progressive policy results. . . . [T]his is not the same as the conservative "privatization" strategy, which simply devolves public responsibilities to private entities without much in the way of regulation.

[I]n the health care reform debate, the Obama administration pursued legislation that utilized regulated and subsidized private for-profit health insurers to achieve universal health coverage. This approach was inherently flawed to "single-payer" advocates on the left, who strongly believe that private for-profit health insurers are the main problem in the U.S. health care system. The difference was for a long time papered over by the cleverly devised "public option," which was acceptable to many New Democrat types as a way of ensuring robust competition among private insurers, and which became crucial to single-payer advocates who viewed it as a way to gradually introduce a superior, publicly-operated form of health insurance to those not covered by existing public programs like Medicare and Medicaid.

Now that the public option compromise is apparently no longer on the table, and there's no Medicare buy-in to offer single-payer advocates an alternative path to the kind of system they favor, it's hardly surprising that some progressives have gone into open opposition . . . . To put it more bluntly, on a widening range of issues, Obama's critics to the right say he's engineering a government takeover of the private sector, while his critics to the left accuse him of promoting a corporate takeover of the public sector.

Glenn Greenwald is one of the most forceful progressive voices on the issue, offering a multifaceted indictment of dominant Democrats' coziness with a series of corporate interests:

The health care bill is one of the most flagrant advancements of . . . corporatism yet, as it bizarrely forces millions of people to buy extremely inadequate products from the private health insurance industry -- regardless of whether they want it or, worse, whether they can afford it (even with some subsidies). In other words, it uses the power of government, the force of law, to give the greatest gift imaginable to this industry -- tens of millions of coerced customers, many of whom will be truly burdened by having to turn their money over to these corporations -- and is thus a truly extreme advancement of this corporatist model.

One finds this in far more than just economic policy, and it's about more than just letting corporations do what they want. It's about affirmatively harnessing government power in order to benefit and strengthen those corporate interests and even merging government and the private sector. In the intelligence and surveillance realms, for instance, the line between government agencies and private corporations barely exists. Military policy is carried out almost as much by private contractors as by our state's armed forces. Corporate executives and lobbyists can shuffle between the public and private sectors so seamlessly because the divisions have been so eroded. [links omitted]

If one judges the bill purely from the narrow perspective of coverage, a rational and reasonable (though by no means conclusive) case can be made in its favor. But if one finds this creeping corporatism to be a truly disturbing and nefarious trend, then the bill will seem far less benign.

Chris Hedges concurs (in his book Empire of Illusion), dismissing "proposals to require insurance companies to use more income from premiums for patient care or link payment with reported quality" as "unworkable." He favorably cites physicians John Geyman and Steffie Woolhandler, who think health reform as it now stands is a doomed effort to keep a failing system on life support. Yet many on the left are standing behind the Senate bill, embracing it as what Sen. Harkin called a "starter home" with a good foundation for future additions.

Realism and Idealism in an Increasingly Ungovernable Nation

There has been a lot of talk about a Niebuhrian "Christian realism" in Obama's foreign policy--a willingness to deploy force and otherwise questionable means to accomplish worthwhile ends. The health reform bill strikes me as another iteration of these endlessly complex, ethically ambiguous moments. The political opposition to the public option has been so intense that those pursuing universal coverage have been forced to bargain with (and even become identified and intertwined with) the very entities they are trying to force to act responsibly. In this topsy-turvy world, where an anti-system opposition refuses to responsibly deal with problems that most developed nations addressed decades ago, Democrats and the Obama administration must cut deals with moneyed interests (whose influence over politics grows apace as a "conservative" judiciary continues to gut campaign finance regulation).

But abstractions can only go so far in describing this bill. I just want to give a counterintuitive spin to two bits of journalism on health reform, to prefigure what I'm sure will be months and years of unintended consequences (some good, some bad) flowing from this bill.

1. Pilot programs: Atul Gawande has pointed to a hodgepodge of pilot programs in the Senate bill as one of the best reasons to support reform efforts. Like many physicians, Gawande is attracted to the organic development of "best practices" in cost control, instead of top-down imposition of a general theory:

Where we crave sweeping transformation . . . all the current bill offers is those pilot programs, a battery of small-scale experiments. . . . The bill tests, for instance, a number of ways that federal insurers could pay for care. Medicare and Medicaid currently pay clinicians the same amount regardless of results. But there is a pilot program to increase payments for doctors who deliver high-quality care at lower cost, while reducing payments for those who deliver low-quality care at higher cost. There’s a program that would pay bonuses to hospitals that improve patient results after heart failure, pneumonia, and surgery. There’s a program that would impose financial penalties on institutions with high rates of infections transmitted by health-care workers. Still another would test a system of penalties and rewards scaled to the quality of home health and rehabilitation care.

Other experiments try moving medicine away from fee-for-service payment altogether. A bundled-payment provision would pay medical teams just one thirty-day fee for all the outpatient and inpatient services related to, say, an operation. This would give clinicians an incentive to work together to smooth care and reduce complications. One pilot would go even further, encouraging clinicians to band together into “Accountable Care Organizations” that take responsibility for all their patients’ needs, including prevention—so that fewer patients need operations in the first place. These groups would be permitted to keep part of the savings they generate, as long as they meet quality and service thresholds.

The bill has ideas for changes in other parts of the system, too. Some provisions attempt to improve efficiency through administrative reforms, by, for example, requiring insurance companies to create a single standardized form for insurance reimbursement, to alleviate the clerical burden on clinicians. There are tests of various kinds of community wellness programs. The legislation also continues a stimulus-package program that funds comparative-effectiveness research—testing existing treatments for a condition against one another—because fewer treatment failures should mean lower costs.

There are hundreds of pages of these programs, almost all of which appear in the House bill as well. But the Senate reform package goes a few . . . steps further. It creates a center to generate innovations in paying for and organizing care. It creates an independent Medicare advisory commission, which would sort through all the pilot results and make recommendations that would automatically take effect unless Congress blocks them.

None of this is as satisfying as a master plan. But there can’t be a master plan. That’s a crucial lesson of our agricultural experience. And there’s another: with problems that don’t have technical solutions, the struggle never ends.

I agree with all of this, but I want to add one more dimension to the "neverending struggle"--the very interest groups that are supposed to be reined in by pilot programs are likely to do their best to alter, influence, or limit those programs over the coming years. One need only look at the sad and convoluted history of gainsharing pilot programs (merely adumbrated here) in order to get a sense of how, as the "rubber hits the road," various lobbies will be storming veto points in order to undermine experimentalists' efforts. This is not to say that pilot programs are a sham--I am about to publish a book chapter with the subtitle "A Plea for Pilot Programs as Information-Forcing Regulatory Design." I just want to temper the technocratic optimism at the heart of Gawande's worldview with a touch of the skepticism driving progressives like Greenwald and Markos Moulitsas.

2. Cuts in Medicare Home Health Care: Now here is an aspect of the bill that I at first felt offended by. Doctors, insurers, hospitals, and pharmaceutical companies all appeared to be making at most modest concessions in the final bill. But home health care, staffed by some of the most vulnerable workers, was to be slashed. If anything appeared to fit the Greenwald storyline of rapacious private interests shifting public burdens onto the unfortunate, it seemed to me, these cuts would fit the bill.

Yet once one digs in a bit to this story, more complexity emerges. According to one of the speakers on this podcast of the Diane Rehm show, over half of the "extraordinary patient" payments in the program are made in Miami-Dade County alone. It's hard to get upset with a long overdue crackdown in the Ponzi State. Many other apparent abuses were mentioned in the podcast, as well as in this discussion on the NYT website. After sorting through all the commenters' underlying empirical data, I may still come back to my original diagnosis of brutal, bareknuckle pluralism as the driving force behind home health care cuts. But I can't justify that level of cynicism currently.

Tragic Aspects of Reform

The personal is always political, and rarely is this more the case than in health policy. As with abortion and the draft, the law of health care financing directly impinges on the body of the citizen, determining fundamental opportunities for individuals. Despite all of my reservations and disappointments, in the end I am for this bill for a very personal reason: I cannot imagine how my family would have afforded treating my mother's ailments over the past decade without the private and public insurance she has continually been covered by.

Earlier this year, I had hoped to be a larger part of the academic legal debate on health reform. But my mother broke her back in early September after falling off a scale in her bathroom, and I am her primary caregiver. Attending to her has taken up much of my free time since then. It's hard to explain how much pain this incident has caused her, and how it has disrupted her life. All I can say is that I cannot imagine how stressful this incident would have been if she were one of the 46 million uninsured. Without question, her 3 weeks in the hospital, four weeks in rehabilitation, and related care, would have bankrupted her (and nearly bankrupted me). Millions of people may end up in such a situation--without coverage, battered by fate, and broke--if progressives in Congress stand on principle (or dubious constitutional arguments) and torpedo the bill.

Nevertheless, I also realize that this immediate victory, like 2009's stabilization of the financial system, may be a Pyrrhic one for the Democratic Party. It entrenches the power of one more sector of America's overweening FIRE industries (finance, insurance, and real estate). I've recognized the potential of private insurers to rationalize health care, but that potential is rarely realized. I am very worried that just as "GM hired a thousand lawyers, and Toyota hired a thousand engineers" in response to the Clean Air Act, private insurers will plow new revenues attributable to an individual mandate into endless lobbying to hollow out the terms of "minimum creditable coverage." They will certainly devise clever tricks designed to drive away the 5% or so of the population that accounts for 49% of medical expenses. If pervasive regulatory capture occurs, the "reform" will be an albatross around the necks of Democrats for years.

"In their determination to avoid Harry and Louise, they’ve become Thelma & Louise." That's the verdict on the Obama Administration from a Democratic strategist tweeted by horserace reporter extraordinaire, Chris Cillizza. Although it's a characteristically snide and smug observation from The Village, I think this bon mot has some chance of coming true. Like most of the conventional wisdom excrudescing from Beltway pundits, it's less a reflection of reality than a narrative our entrenched political class enacts. The "politics of reform" will be endlessly refracted in DC media celebrities' halls of mirrors, where a 24-hour news cycle is always hungry for "backlash." The lazy conventional wisdom has already coalesced around a narrative of Obama-as-Icarus, perpetually mistaking his cautious incrementalism as a seamless web of socialism.

The real tragedy here lies in a struggle for the soul of the Democratic party--between idealists like Greenwald, Hedges, Woolhandler, and Kos, and the DLC/Brookings "realists" who've dominated the official Democratic response to the financial and health care crises. The sclerotic Senate's supermajority rules have put the realists in the driver's seat, and idealistic progressives have been left with little more than the power to refuse the bill that Reid & Co. craft. Idealists want an FDR-style rejection of what TR called the "malefactors of great wealth," and they also want to see the millions of Americans without health insurance coverage given some semblance of a safety net beyond the bankruptcy courts. But we cannot have both. As Martha Nussbaum writes in The Fragility of Goodness (speaking generally about such quandaries),

We are considering [a] situation[], then, in which a person must choose to do (have) either one thing or another. Because of the way the world has arranged things, he or she cannot do (have) both. . . . He senses that no matter how he chooses he will be left with some regret that he did not do the other thing. . . .

Aristotle speaks of a captain who throws his cargo overboard in a storm in order to save his own and other lives. The man sees all too well what he must do, once he grasps the alternatives. . . .And yet he was also attached to that cargo. He will go on regretting that he threw it into the ocean--that things turned out so that he had to choose what no sane person would ordinarily choose, throw away what a sane person would ordinarily cherish.

By passing this reform bill, Democrats will jettison whatever "populist" credentials they once had, opting instead for an early-twentieth-century "progressive" vision of technocratic alliance between corporate and government experts. However many disastrous missteps the FIRE industries make, this is the only arrangement that the media will credit as responsible governance. We'll commence an endless argument (read: notice and comment rulemaking and subsequent administrative adjudications) over what constitutes an adequate baseline of coverage, what is the fair share of revenue for middlemen like insurers, and what regulatory infrastructure can best vindicate the entitlements (and impose the burdens) specified by the bill. But the fundamental victory of reform--the national commitment that no one should have to choose between death or bankruptcy when confronted with a serious illness--will also endure. The tragic paradox is that the Democrats can only achieve this great cultural and ideological victory by becoming identified with the very interests that only they are willing to confront.

X-Posted: Health Reform Watch.

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