Wednesday, April 7, 2010

What's the fuss with Healthcare? (A Converstion)


After decades of arguing and arm-twisting, the passage of a new healthcare reform plan is being welcomed with something less than a grand “hoorah!”. The Patient Protection and Affordable Care Act (PPCA) was signed into law on 23 March amidst everything from cheers to resentment, and even a score of death threats to federal representatives (yay, we are so diverse!). In the past few days there have been public challenges to the Act’s constitutionality and open accusations of socialism, despite the fact that few people on either side of this issue actually seem to know what is in the new bill.

I want to think out loud on this and get some feedback from other people as i try and make sense of it, so whether its support or scolding criticism you offer, feel free to respond - it's just politics after all!


I mostly support the new healthcare reform, though I am disappointed on a few points and I’m suspicious of others. And yet, overall, it seems to be progressive and necessary, and not unconstitutional. I hear a lot of opposition to one degree or another, but few if any of the arguments have really been convincing. Given the level of opposition I’ve got believe that there are at least a handful of reasonable protests, so if I miss something please just yell at me and tell me what the issue is.

I am not sure how familiar you as the reader are with the bill, but the major talking points are something like this (based on re-evaluated CBO report):

  • The bill expands affordable healthcare coverage to 32 million people

  • The initiatives and requirements established set the cost at approximately $940 billion (USD2010) over 10 years, but in doing so actually reduce the federal deficit by $143 billion over the first 10 years of the plan and (theoretically) another $1.2 trillion over the second ten years.

  • It forbids discrimination of private health insurance coverage based on pre-existing conditions (applies to children in August, and to all adults by 2014), and allows dependent children to remain on their parents’ health insurance plan until age 26 (basically aimed at reducing costs of out-of-work college grads)

  • Creates a state-based Health Insurance Exchange program, partially funded by the federal government for the first five years.

  • Reforms Medicare Advantage, Medicaid, and a lot of other stuff, and with the reconciliation bill H.R. 4872 fills some gaps and mods other programs.

  • The bill creates an “individual mandate” that requires every citizen and legal resident to be enrolled in a health insurance plan (except for those experiencing financial hardship, whose income is below certain levels, who have religious objections, etc.), or to pay a “tax” if they choose not to enroll and do not meet any of the exemption criteria.

  • Good summary of PPCA here: Kaiser Foundation or CBS News (1) and CBS News (2)

The new reform system ultimately falls somewhere between “health insurance” and “health care”. The distinction is in more than semantics – the two systems function in different ways and with different goals, and the keystone is the individual mandate. The basic idea of insurance is that you join a risk pool, pay into the pot and then, if something expensive or unexpected happens, that pool pays for your expenses. It’s catastrophic coverage. The principle of a health care plan is that in exchange for paying into the system, you get payments for predictable events like tests, scheduled checkups or prescriptions. What we have pulled out of the so-called “debate” of past year is a compromise; instead of everyone paying a public tax to receive universal coverage for catastrophic or predictable events, we’ve created an individual mandate to require the same thing but through scores of private providers.

What came out of this argument were two clearly labeled and divided opinions of public health policy: One side suggests that healthcare is a RIGHT, and the other claims that it is merely a PRIVILEGE in our society. Both sides have a handful of talking points to support their positions, but they are often general and loaded with unspoken assumptions. I am willing to grant for the sake of debate that healthcare may not be a human right, strictly speaking, which suggests that it is universal and must be assured to all individuals in any case. However, I do believe that it has become a civil right that should be made available, affordable and accessible to all members of our society. More specifically, I believe that its unavailability compromises the access of members to other social goods that are essential to participating in the public and “political” sphere. In order to understand where I’m coming from on this, we need to take a step back to the bigger picture to clear up some assumptions ... (if you've read Walzer, just bear with me)...

A political entity is fundamentally the agency of a social compact, in which a group of individuals (i.e. all Americans) pool their resources, surrender certain rights (like killing, stealing, retribution - shifty vigilante stuff) and agree to operate within the resulting conditional authority of the political body, so that all members of the community may be afforded greater protection and opportunities. We then afford certain basic rights and liberties to all members, so that they may be considered as equal in the political sphere; that is to say, they have the same say in how the political body regulates the relationships of its members, actors, parties and other forces (other "social spheres”), as does any other single participant. It is a matter of power and of status.

This idea in itself should not really be a contested point, as it is among the fundamental principles of democracy and other forms of representative government. This is why we demand equal protection under the law, equal pay for equal work between the sexes and races, and equal say in elections – “one person, one vote”. It is why we protest when we are discriminated against for factors beyond our control, and why we object to the power of corporations in our politics. It is also why we as a nation created institutions such as Social Security – so that each member of our political community would be assured a basic (financial) security and the ability, at least in principle, to retain access to the body politic and remain an equal member of it. Laws that protect our rights not only assure us certain powers, but also assure us each the status of an equal citizen.


Now, it makes sense for healthcare to be seen as a political good for couple of big reasons:

1) The first is a matter of effective public policy; the common health cannot be effectively managed or protected if not everyone is participating, or able to participate in health treatment. When it comes to communicable diseases like Avian Flu or H1N1, this even becomes a security concern. Our government may not really have the authority to force every individual to get specific preventative treatment, but it does have the authority to regulate particular key interstate markets [^1] (consider the coal market in the 1930’s), to create a new service, and to make that service available to citizens and residents, especially when it is beneficial to the majority of Americans.

2) Consider a hypothetical social contract: wouldn’t we each want the opportunity for healthcare if we were in a position where we could not otherwise afford it in an open market, especially when we know that each and all of us will need medical treatment in our lifetimes? Some of you may suggest that, like negotiating in any contract, you may not wish to agree to a condition that you do not expect to serve your needs. If so, consider two things: a) is it rational, or in your own interest, to expect that you or your dependents will always have the resources needed to afford private, free-market insurance and receive personal healthcare?, and b) is it reasonable or just to say that others who cannot afford such care do not deserve it?

3) As I suggested above, access to affordable healthcare does affect an individual’s membership status in the political community. Even a cursory glance at independent surveys supports this. For instance, a 2005 Harvard Law study found that about 50% of all declared individual bankruptcies reported that healthcare costs were a substantial contributing factor. About 70% of those declaring bankruptcy even had insurance at the time of their initial medical expenses, but had significant gaps in coverage or lost their coverage. A study in Health Affairs (2006) found that large medical debt, even among insured people, presents nearly as high a barrier to healthcare access as having no insurance [^2].True story. A recent study by the Kaiser Foundation indicates that reports of rising healthcare costs as a “barrier to needed care” have risen at an average rate of 1 million reports per year between 1997 and 2006, and that the total number of reports rose to 39 million in 2006.

What does it say about a person’s status as an “equal” member of society if he/she can be killed by a common illness or long-term injury that could otherwise be remedied or prevented if they could afford treatment? That doesn’t seem like security.

What’s more, but our government already recognizes the need for healthcare in the most impoverished demographics through Medicaid. Unfortunately this program becomes incredibly cost inefficient, such that nearly three-quarters of Medicaid funding goes to the top one-fifth who have the greatest need for remedial treatment. We then have four solutions: a) reform the program for a short-term fix to symptoms of an ineffective healthcare system, b) increase funding without addressing the cause of expenses, c) repeal Medicaid and leave the poor suckers to deal with it on their own, or d) develop and utilize a practical market for widespread preventative treatment.


There have been very public protests against the PPCA that accuse it of being “Unconstitutional!” Now, I’m all for protests and arguing that the federal government is overstepping its constitutional restraints in certain cases, but this frankly is not one of those times. I’m willing to entertain arguments to the contrary, but so far I haven’t heard any that are solid and sound. Most people accusing the government of socialism point to the individual mandate. The finer points of this will be worked out in the courts in the coming months years, but in principle this does not seem totally out of line. The justification is actually in the ban on discriminating against pre-existing medical conditions.

Health insurance providers have traditionally held the right to reject applicants who have pre-existing health conditions, citing potential costs to the provider. It is the free market after all, and companies looking for a profit should be able to negotiate contracts on their own terms – basic cost-benefit stuff. But saying this is the way it ought to be already supposes that healthcare should only be subject to the market forces and individual circumstances (this is the “privilege” side). As I’ve already argued, healthcare access has political consequences. When individuals are effectively refused access to healthcare because of pre-existing conditions, then their political access may also be jeopardized because of factors beyond their control. It is not often their fault or responsibility, but they are held responsible and denied coverage and care.

If someone is a professional daredevil with a history of failed attempts and picking fights in shifty bars, then that is one thing. But “pre-existing conditions” include anything from asthma to cancer, and in 9 states this can even include a history of domestic abuse – as the victim! A 2007 survey reported that 12.6 million non-elderly Americans were discriminated against because of a pre-existing condition between 2006 and 2009 [^3]. A similar caveat is “rescission”, in which such an insurance provider can cancel a plan when patient costs get too high. Imagine a scenario where a client is diagnosed with cancer and their treatment drags out for months, and includes expensive medication and tests. And then they get booted from their insurance coverage. This policy was legal in 45 states before the passage of the healthcare bill, including in California.

The need to exclude pre-existing conditions in health insurance seems obvious if we are aiming for a functional and just healthcare system. The immediate consequence is that, without a government managed single-payer program, and without an individual mandate, people could simply buy “insurance” after a diagnosis or catastrophic injury, and companies/government would have to accept them at default rates and a standard premium. Imagine…. (courtesy of Eric Zorn)

Operator: Acme Auto Insurance, how may I help you?
Man: I just came out of a store and found that someone plowed into my car and took off. The entire back end is crushed.
Operator: I'm sorry to hear that, sir. What's your policy number?
Man: Oh, you can tell me that later.
Operator: Sir?
Man: After I buy my policy, you can tell me the number. And you can tell me where to send the repair estimate--

This little conundrum might not immediately cause a systemic failure, but eventually the only individuals participating would be them sick folks with the most severe health costs. Providers would naturally have to raise their rates across the board (otherwise it’s back to discrimination!) until even those people with traumatic health issues couldn’t afford them, and THEN the system would collapse.


The argument that healthcare is not a right is specious off the bat. Emergency healthcare already is a recognized civil right in almost all cases. Imagine you stumble into a hospital with a potentially fatal condition or injuries to all sorts of body parts. The law actually requires that you be treated whether you can afford it or not. This applies to you and to everyone else, legal citizen or not. Indeed the alternative is that the EMTs arriving at the scene require you to produce cash or credit, evidence of insurance coverage and legal documentation of your citizenship before helping you out of your burning car that is at that moment seriously considering a dramatic explosion. If a person ultimately can’t pay the enormous medical fees, then the cost is passed on to other patients and other clients who can pay, and to the wider public through taxes.

So to be clear, what you as the antagonist probably mean to say is that certain qualified healthcare – perhaps preventative – is not a “right”. Let’s assume you haven’t fully bought my “civil right” idea for the sake of argument; if these outrageous costs of the uninsured are being passed on to the rest of us, then don’t we as a political community have the authority to require individuals to have health insurance, or to participate in the collective healthcare system so long as they can afford it? And if they wish not to participate, do we not have the authority to require at least a small tax to cover some of their likely costs? We would end up paying into a larger pool for healthcare preemptively instead of indirectly later on so that we are each assured health services that we all will need at some point.

We already pay a universal tax for Medicare and Medicaid, and these have already passed their tests for constitutionality. And these are fully-fledged government health programs. This newest plan involves far less government direction or management, and indeed keeps with the American tradition of relying on the private health insurance system as the foundation of public health.

Lastly, Congress has the authority to regulate interstate commerce for the well being the greater national union and all of its members as granted by the Constitution (Article I, Section 8, Clause 3). The regulation of national health insurance markets arguably falls under this umbrella, as costs for healthcare transcend state lines and affect all Americans. If we are to truly reform the healthcare market, it cannot be done with a patchwork of state-by-state provisions. However, there is admittedly a rather sticky point with the federal government taxing economic inactivity, and requiring an individual to engage in a contract with a private company. But again, this could easily be avoided with the provision of a “public option” for a separate government insurance plan, for which there is plenty of precedent for taxation.

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[1] Carter v. Carter Coal Co., 298 U.S. 238, 290 (1935) and Sunshine Anthracite Coal Co. v. Adkins, 310 U.S. 381, 395 (1940)
[2] Health Affairs, 25, no. 2 (2006): w89-w92
[3] Commonwealth Fund Biennial Health Insurance Survey, 2007