This morning I was having my morning coffee in the Impressionist Wing of the stately Mead manor in glamorous Queens, and noticed that the butler had folded the restfully pink pages of the FT over to the latest story on the health care debacle now unwinding in Washington.
“Any particular reason you want me to see this, Jeeves?” I asked.
“Well, sir,” he said, “this is one of those issues that people are talking about. Perhaps you should consider it for your web log, sir.”
I’m putting this in because I want to make sure Matthew Yglesias understands how these things work. Information has a way of ‘trickling up’ even at the Mead manor; the housekeeper often overhears the chatter of the kitchen maids and the grooms. She will sometimes pass this on to Jeeves — and if he thinks it is important, he will—respectfully of course—pass it on to me. This, for example, is how I learned about the ‘hop-hop’ music that so many young people seem to follow today.
In any case, the flailing health care reform effort on Capitol Hill perfectly illustrates the difficulties that surround American policy making as the ‘blue model‘ implodes and we struggle to plan our future at a time of rapid social and technological change.
The American health care system today does a lot of things very well, but it has two basic and intractable problems. Not enough people have secure enough access to the system and the system’s costs, already very high in comparison to costs internationally, are on course to explode as the number of older Americans rises sharply in coming years and as the availability of new treatments drives an acceleration in spending per person. The first problem creates a strong ethical reason for reforming the health care system, and the second, sooner or later, will require that we do something. While there are some synergies between the two problems–bringing everyone into the insurance system will raise revenues and rationalize health care delivery (fewer emergency room visits, more and better preventive care)–on the whole, solving the first problem by enhancing universal access tends to raise the cost of the system overall. And to the degree that government subsidies are used to make health care more affordable, the increase in cost will directly affect the state and federal budget picture, with costs that are certain to grow dramatically.
There are some cultural problems at work. The United States is a very diverse country; developing a single health care system for the U.S. is less like developing a national health care system for Sweden or Slovakia or Spain, and more like trying to develop a single health care system for the whole European Union. I suspect that if the Europeans were trying to develop a single, EU-wide health care system, they would be struggling as hard as we are to design and pay for something that would cover hundreds of millions of people with very different income levels, expectations and priorities. We are also an optimistic, death-denying culture. This has its good points, but it does make us culturally predisposed to throw a lot of money and resources into attempts to hold death at bay long after rational hope has been exhausted. We are also culturally inclined to avoid hard choices and decisions. All the children are above average — and all the patients should get everything they want when they want it.
Politically, we are something of a consensus society. That is, our federal constitution was designed to require a very wide domestic consensus before Congress can enact sweeping legislation. The heavy representation of small states in the Senate (Wyoming has as many senators as California) frequently checks the will of the larger and more urban states. The bicameral congress, the system of frequent elections in the House, the two-thirds requirement for treaty ratification and the committee system all sprinkle sand in the legislative gears. Beyond the constitutional constraints, custom and tradition have gradually developed non-constitutional but very real barriers to sweeping change — like the system of senatorial courtesy which often gives even individual senators a veto over presidential appointments or the filibuster itself, which can require a super-majority on most issues. All this ensures that American deliberations over large and important matters will turn into complex bargains among many interest groups. That, from the standpoint of our founding fathers, wasn’t a defect of the system. It was one of the features that they hoped would make the system stable and durable.
The Blue Legacy
When you put all these factors together, it’s not hard to see why a reform effort that addresses one sixth of the largest economy in the history of the human race would likely bog down in a frenzy of horse-trading against a background of partisan bickering. But there is an additional factor at work, one that may just turn health care reform from difficult to impossible. That is the collapse of the blue model I wrote about yesterday: the implosion of the post-Second World War social and economic model that (at considerable cost) produced two generations of relative security and stability in American life.
The health care system we have in place today is a legacy of the blue decades. Tax exempt private health insurance paid by employers worked much better in an era of lifetime employment than it does now. Large, oligopolistic or monopolistic companies could afford to pay generous health care premiums. Blue Cross and Blue Shield were regulated quasi-monopolies who provided the bulk of the insurance in a very stable way. Costs in the health care system like costs in the economy overall were more set by government-overseen bargains between large stakeholders than in a classic free market way.
The problems of the health care system today stem in part from the erosion of the blue model overall. Lifetime employment is a thing of the past for most people who don’t work for government. This makes private health insurance more precarious and, because workers are often tied to their employers by health insurance, it increases the economic cost of health care by reducing the freedom of workers to change jobs and increases the costs of unemployment to workers who lose insurance benefits as well as income when laid off. Again, government excepted, employers no longer have either the pricing power to raise their prices to cover increased health care premiums or the bargaining power to hold health care premium increases to an affordable level. The health insurance market itself is fragmenting as new players enter the market and the old Blue Cross becomes just one among many competing firms.
Meanwhile, partly because such a high proportion of its income comes from government (Medicare, Medicaid, health care for employees of federal, state and local government) the health care system has remained internally blue. That is, it is economically inefficient with a cost structure that lacks transparency and is full of cross subsidies and unexamined (and often perverse) incentives. The workforce is much more heavily unionized than the national workforce, and the guilds (associations of doctors and other professionals) continue to exert powerful influence over entry to the profession, the definition of professional roles and responsibilities, and pay. All this combines to ensure that health care costs are rising faster than the general price level. Private actors in this system (like insurance companies and chains of for-profit hospitals) are often more engaged in arbitrage and gaming the inefficiencies and contradictions of the system than in adding value.
The Democrats
Democrats come at this monster from three different perspectives. Third Way Democrats–intellectuals who know that the blue model is in terminal decay but want to achieve the old goals with new methods–are looking to rationalize the system for long term cost control while extending coverage. These guys are strong in the opinion magazines and the think tanks–and have President Obama’s ear on many matters. True Blue Democrats represent blue constituencies including both labor unions still attached to the old system of union-negotiated private employer health insurance, government workers and institutions with a stake in the system, and many of the institutions and interests within health care itself: union employees of the system, for example. Democratic reform efforts are uneasy and unstable compromises between two fundamentally opposed sets of interests: technocratic visionaries and machine politicians. In nineteenth century terms, it is an unstable coalition between Mugwumps (idealistic ‘goo-goos’ or good government reformers) and Tammany Hall. Now add in the final element: the overlay of ‘bought Democrats’ responsive to the financial strength of trial lawyers and other special interests deeply concerned about very specific elements of the system and the reasons for the incoherence, messiness and instability of the reform process begin to become clear.
Democrats may or may not get a bill through the Congress this session; their chances have been precipitously and steadily dropping since the summer but it remains the case that if the Democrats can agree on a bill they can get it through both houses and the President is likely to sign anything the Congress will pass. We will see what happens on that front, but it is already perfectly clear that no bill that gets through this Congress will actually solve the nation’s health care problem. Some features of the still very complex and undefined legislation would be distinct improvements over the status quo; others are likely to make real reform both more necessary and more difficult down the road by entrenching powerful interests around unsustainably expensive policies. It is, I think, impossible to draw up a comprehensive balance sheet for the bill. The bill itself is too complex; the health care system is too complicated, too poorly understood and has too many moving parts to be able to analyze the various impacts of the bill; and, finally, technological changes coming down the pike will affect health care costs in unpredictable ways. I find it interesting that the closer we get to the endgame, the less Democrats defend the bill in terms of its impact on society as a whole, and they more they argue over whether passing or dropping the bill will do more damage to Democratic hopes in the fall.
Generational Justice
Given all this uncertainty, I come down against the current health care reform effort on the grounds of generational justice. It looks to me as if the program attempts to shore up an unsustainable system by forcing young people to buy insurance at inflated premiums. Young men in particular get the shaft, with most of them paying significantly more for compulsory health insurance than they would on an accurately risk-adjusted basis. Roping young and healthy people into the system is essentially how reform advocates hope to offset the cost of extending more care to the uninsured. The young will subsidize the middle aged and the old. This seems an odd and self-destructive way for Democrats to reward the constituency whose votes and turnout were largely responsible for the recent shift in Democratic electoral fortunes — but the blue social model is hungry and the beast must be fed.
If the health care reforms were establishing a sustainable system, the cross-generational subsidy would not be an issue. That is, if today’s young people would enjoy the same health benefits at the same low prices when they achieve the heights of middle aged and senior glory that we current geezers now get, then the proposed insurance system might be burdensome, but it would be arguably just. The cost of health care would be ‘smoothed out’ over your life cycle; you pay into the system when you are young and you get it back when you are old. Unfortunately this is far from the case. The costs of health care are still slated to rise faster than the general price level indefinitely into the future; by the time today’s twenty-somethings hit their fifties and sixties, the current system will not be able to offer them the same access that their parents and grandparents now have at anything like the same price level. The kids will be forced to pay into systems which won’t be there for them when they need it.
This is the Bernie Madoff approach to social policy, and it is wrong. Even from the point of view of partisan Democrats, it represents the destruction of the party’s long term hopes in the interest of a short term ‘win.’ Young people may be politically disorganized and many of them are inattentive to the news, but they are not stupid. Sooner rather than later they will realize what has been done to them–and they won’t be happy. They won’t just lose faith in the specific politicians who imposed this system on them; they will lose faith in the social model it was intended to rescue and the ideology used to promote it.
Democrats are right to note that our health care system needs reform. But keeping the health system as blue as possible is exactly the wrong way to go. Over the weekend I’ll be blogging about literary and faith matters, but Monday’s blog will return to health care with a look at what the country really needs to make our health care system work.
Meanwhile, a piece of good news about how our society works — here at stately Mead manor if not necessarily out there on the brutal streets. As I reflected this morning on the costs of the health care program to the young, I thought of asking one of them for an opinion. I had Jeeves summon James, the driver, into the breakfast nook among the Monets. “Is anything wrong, sir?” James asked nervously.
“No, no,” I reassured him. “I just wanted to get your opinion on health care. From the horse’s mouth, so to speak.” James looked nonplussed and quizzical; I explained how the system would work and that he would be paying higher premiums to ensure that I would not face daunting increases. “What I want to know, James,” I said, “is do you mind?”
“No sir,” he said staunchly. “Not at all. Anything to help out, sir.”
“Thank you,” I said. “That will be all.”
So perhaps I was wrong; perhaps younger voters will stick with the Democrats even when they understand that they are being required to pay for a system which is likely to crash when they need it the most. Certainly this kind of loyalty is an inspiration to us all. Perhaps I’ll have a memo drafted explaining all this to the interns once James lets me off at the Mead GHQ later in the day. One can never really do too much for the little people.