In health care reform, as in health care itself, discovering a cure becomes difficult if one misdiagnoses the disease.
Republicans failed (again) in their repeal of Obamacare because they imagined the Patient Protection and Affordable Care Act as the problem with American health care. Surely it remains a problem. But the problem, as the deservedly derided act’s name points out, involves affordability. This issue of cost, exacerbated by Obamacare, predated its enactment.
Americans spend more than $3 trillion on health care annually. This amounts to more than $10,000 per person and constitutes between one-in-six and one-in-five dollars spent within the economy. No country spends anywhere near on health care what we spend. In fact, just three countries — China, Germany, and Great Britain — spend more on everything in a given year than we spend on just that one thing.
If Americans lived longer than Methuselah and looked like the spawn of Charles Atlas and Lindsey Vonn, then an argument for dramatically increased spending might persuade. But we live no more or less than other people in similar countries and increasingly look like the offspring of mid-’70s Elvis and early-’80s Orson Welles.
Our spending on health does not make us healthier. It infects the economy with a constant cold that prevents it from performing to its capabilities. When Ronald Reagan inveighed against 70 percent top income-tax rates, the IRS devoured about one in five U.S. dollars. Today, doctors, insurance bureaucrats, malpractice lawyers, and various hospital camp followers gorge themselves on roughly the same portion of that pie. For the American economy to take flight, Americans must untether themselves from the enormous weight of medical expenses.
Senators Graham and Cassidy offered a bad argument to advance a good bill. By eliminating Obamacare’s taxes on medical devices, procedures, and plans, allowing consumers to determine what benefits they deem essential in abolishing the “10 Essential Health Benefits” rule, and lifting “community rating” that strongarmed insurers into offering similar rates to people with different lifestyle choices and at different stages of life, the bill appeared as though it could realistically curb medical inflation, which rose seven percent last year.
But the bill’s backers obsessed over fixing Obamacare rather than health care. Such means of persuasion predictably resulted in pros and cons lined up along party lines, with a few Republican critics opposing the legislation. Perhaps the hyperpartisan times, and the meager time to win over the public, doomed Graham-Cassidy independently of all that.
When not pointing out Obamacare’s vices, Graham and Cassidy spotlighted the virtues of their back-to-the-future big idea of block grants, innovative when Jack Kemp applied them to housing in the ’80s or when Newt Gingrich applied them to welfare in the ’90s but sounding today like Bill Belichick calling for Tom Brady to operate in the single wing. Its sponsors imagined the problem of health care as one of federalism. If only states closer to doctors and patients spent the money, then our problems dissolve.
The block grants, in a “laboratories of democracy” way, sought to replace one-size-fits-all with innovation and experimentation. This seemed likely to improve the current situation. But one wonders why the bill’s sponsors made this the centerpiece of their marketing campaign. Block grants, though popular within wonkish Washington, strikes no normal person as the “Eureka!” idea eradicating our health-care woes. When moved from an idea in the background to the one in the spotlight, block grants came across as a non sequitur.
Conservatives lament that the last, best chance to repeal Obamacare failed this week. But Obamacare and our bloated, expensive health-care system will fail next week — and the week after that. So, reports of the death of health-care reform remain premature.
Hunt Lawrence is a New York-based investor. Daniel Flynn is the author of five books.
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