AIG

If you are legally obligated to pay someone a bonus, even if the company basically goes bankrupt, is it really a bonus?

The recession hits home

No, I didn't lose my job. But walking down Montana Ave. this morning, every block seemed to have one or two empty store fronts.

A Down Payment on Health Care Reform

You may have heard that President Obama's budget proposal includes a $630 billion "down payment on health care reform." What does that mean? As far as I can tell, the $630 billion is just a placeholder for potential spending as part of health care reform, the shape of which is unclear right now.

This could be smart. When Congress debates different health care proposals, cost might be less of an issue, since this pot of money will already have been set aside. But other than that, this "down payment" seems meaningless.

Here is what the budget propals says about the "down payment":

The Budget establishes a reserve fund of more than $630 billion over 10 years to finance fundamental reform of our health care system that will bring down costs and expand coverage. The reserve is funded half by new revenue and half by savings proposals that promote efficiency and accountability, align incentives toward quality, and encourage shared responsibility. In addition, the Budget calls for an effort beyond this down payment, to put the Nation on a path to health insurance coverage for all Americans. However, additional funding will be needed. This effort must be open, and must consider all kinds of approaches as part of this process. Some major strides have already been made in the American Recovery and Reinvestment Act of 2009 [AKA the stimulus bill], including $19 billion for health information technology, $1 billion for comparative effectiveness research, and subsidies for the newly unemployed to maintain their health insurance. These initiatives put the Nation on the path toward health reform.

The key phrase is probably "a path to health insurance coverage for all Americans." That is a rather watered-down goal, in my opinion, leaving a lot of wiggle room.

Atul Gawande's Path Dependency Thesis

Writing in The New Yorker in January, Atul Gawande makes a case for a pragmatic approach to health care reform. The thesis of his article, "Getting There From Here", is that reform of the health care system must build on what already exists, because so many people depend on the current system. A single-payer system, in particular, would be too much of a break from the current system either to win approval, or to work smoothly:

Yes, American health care is an appallingly patched-together ship ... but hundreds of millions of people depend on it. The system provides more than thirty-five million hospital stays a year, sixty-four million surgical procedures, nine hundred million office visits, three and a half billion prescriptions... There is no dry-docking health care for a few months, or even for an afternoon, while we rebuild it... If we get things wrong, people will die. This doesn’t mean that ambitious reform is beyond us. But we have to start with what we have.

Gawande calls the need to start with what we have "path dependence," and he argues that every major universal health care system around the world was built this way.

His article has generated some strong opposition within the single-payer movement, including one essay entitled "Et Tu, Atul?" that argues (unconvincingly) that Gawande is a shill for the insurance industry, and another entitled "Gawande's pseudo-pragmatism".

This second article, written by Don McCanne, MD, and published by the single-payer advocacy group Physicians for a National Health Program (PNHP), argues that it is possible to make the switch to single payer without "dry-docking health care":

Of course, pragmatism is the theme of Gawande’s article. He cites path dependency as the natural model to achieve reform. Use what we have, and build on it to bring us closer to our goals.

But what is it that we do have? We have an expensive, dysfunctional health care delivery system that needs extensive repair along with adoption of efficiencies so that we can pay for it. Within the health care delivery system, we need to build on what is working, and replace that which isn’t.

But what else is it that we have? We have a health care financing system that is wasting tremendous resources, while impairing access to much needed health care, and exposing individuals to financial hardship or even financial ruin. Gawande’s major error in framing is that he conflates our health care delivery system with our health care financing, as if they were one and the same. Since we need to build on our existing delivery system, he includes as a given that building on our current fragmented financing system is an integral part of the process.

...

The pragmatic approach to financing reform is to follow a path dependent program that works, and discard those that don’t. With improvements, Medicare would work well for all of us; private health plans would work for those of us who are relatively healthy and have good incomes, like Dr. Gawande.

McCanne makes some good points. I don't think it has to be one way or the other. Couldn't we get to a single-payer system by allowing government-funded insurance (either Medicare or a new, broader program) to compete with private plans and prove itself? In fact, this seems to be what President Obama is proposing.

But many single-payer advocates, such as PNHP, are actually supporting something much more radical. HR 676, the "United States National Health Care Act," which PNHP endorses, would make it illegal to sell insurance that competes with the government program. It would also force all hospitals to become non-profit entities.

The bill has 42 cosigners in the House of Representatives, and there's nothing wrong with what they're proposing, except that it is a pretty radical change. In other words, it ignores path dependency, and therefore it has almost no chance of passing.

Healthy San Francisco - a model for Los Angeles?

Healthy San Francisco is the name of the innovative program San Francisco developed to provide affordable health care for uninsured residents.

Healthy San Fransisco is not complete health care insurance. It instead provides a baseline of care. One of the solutions that San Fransisco came up with to limit costs is to only cover health care within city limits. Participants are given a "medical home" at one of the participating clinics (there were 27 in July, 2008). Members pay a fee four times a year, as well as small co-pays, and have access to: preventive care, prescription medicines, specialists, urgent care, mental health care, etc. (Vision and dental are not included.)

The law was passed in 2006 and went into effect in 2007. It is being rolled out slowly, starting with the poorest residents. Eligibility was recently to people making up to 5 times the federal poverty level. (According to the San Francisco Chronicle, that means just over $54,000 for one person and just over $110,000 for a family of four.) As of July 2008, 24,000 of San Francisco's estimated 73,000 uninsured residents were enrolled.

The program is free to the poorest residents; eligibility and prices are based on income so that it is affordable for all who qualify. The program is paid for by participant fees, a state grant, and fees from employers. San Francisco requires businesses with more than 20 employees to cover employees' health care costs. The employer contribution can go to private insurance or Healthy San Francisco.

Creating a Health Care Effectiveness Clearinghouse

Some ideas are just no-brainers. The idea of an independent agency to study the comparative effectiveness of different treatments is one of them. It will improve health care by promoting more effective treatments, and it will lower costs by reducing the use of expensive but relatively ineffective treatments.

So it is great news that the stimulus bill "will, for the first time, provide substantial amounts of money for the federal government to compare the effectiveness of different treatments for the same illness," according to The New York Times.

Under the legislation, researchers will receive $1.1 billion to compare drugs, medical devices, surgery and other ways of treating specific conditions. The bill creates a council of up to 15 federal employees to coordinate the research and to advise President Obama and Congress on how to spend the money.

The program responds to a growing concern that doctors have little or no solid evidence of the value of many treatments. Supporters of the research hope it will eventually save money by discouraging the use of costly, ineffective treatments.

It is a sign of the difficulties any health care reform will have that this program is opposed by pharmaceutical and medical-device lobbyists and (by extension) some Republicans.

LA Greens Health Care Event - Feb 18 @ 7pm

At the LA Greens meeting this week, we'll be tackling the issue of health care. There is reason to be hopeful that a national universal health care plans is within reach, and I think the Greens should be part of that conversation.

I'm going to post some notes from the research I've been doing for that meeting on this blog. First, here is the blurb I wrote for the LA Greens event:

LA Greens Health Care Event - Feb 18 @ 7pm
In 2008, the census reported that more than 45 million Americans lacked health insurance. With the economy continuing to worsen and unemployment rising quickly, that number is likely to be significantly higher this year. Universal access to affordable, high quality health care has never been more important.

The national Green Party platform states, "Health care is a human right, not a privilege," and calls for Canadian-style single-payer universal health care. Greens believe single-payer systems are the best way to guarantee this human right.

In his campaign, Barack Obama promised to pass health care reform that will "provide affordable, accessible health care to all." The president's plan relies on new options and regulations, but individuals and businesses will continue to buy their own health care insurance.

With his election, the United States is as close to passing health care reform as it has been in a decade. But is President Obama's plan the right way forward? On Wednesday, February 18, the LA Greens will debate President Obama's health care plan.

The Los Angeles Greens meet the third Wednesday of every month at 7PM at The Peace Center, 8124 W. Third St., Los Angeles, CA 90048.

Meetings are free (donations accepted) and open to the public. Children are welcome. Free parking is available behind the building.