Health Care Reform: A Refresher, Part One

Try thinking back to your doctor in 1980. Can you picture your doctor; can you remember the level of care you received? Are you able to recall the level of care given to a friend or loved on in 1980; is it remarkably better than recent care you have received or witnessed? In 1980, approximately $1,102 per person was spent on health care. By 2005, that number was $6,697 per person, per year. The medical market was 9.1% of our economy in 1980, but climbed to 16.0% by 2005. All of this cost acceleration happened, over 25 years, without any real improvement in major health and wellness stats like life expectancy and infant mortality.

If you want a laugh, ask the “pro-business” types who have spent a year or more talking about why health care reform is a bad deal, what happens when a cost center explodes like that in a given business. With all of the current nonsense about a “debt crisis” invading the media (and by extension, the public), I thought it was time to refocus on the real sources of economic doom and gloom in our democracy. Our nation fought a one year battle, culminating in the package of groundbreaking (if incomplete) legislation remaking the medical marketplace. Now, as the federal government unveils the rules written in enforcement of that law, the nation needs to be reminded why the battle is fought, and what comes next.

Our medical marketplace, in the spring of 2009, was a laughable mockery of the consumer/producer relationship. The old notion of supply and demand worked as it always did, but at cross purposes from what was needed. In the U.S.’s paradigm, patients were not the consumers, that role being usurped by the insurance companies. The very existence of medical insurance has served to mask the fundamental problems of the U.S. system of medical delivery; the skyrocketing costs (created by government protections) of pharmaceuticals, a shortage of doctors, a lack of integration between specialists in the care of individual patients,  and a payment system for doctors that incentivizes the quantity of medical services over individual quality.

Only insurance companies, leveraging economies of scale, were able to be the true consumers in such an expensive game. They have (and continue to) purchased packets of reasonable customer outcomes from medical professionals and facilities. They do so at the price determined by the rules of supply and demand; a price that is increasingly out of reach for the average American. That insurance companies were becoming less and less popular with their own customers was evident in public opinion leading into the election of 2008.

Health Care Reform was the big ticket item for the 2008 campaign in the period between the primaries and the September financial crisis. At all times during the campaign, the subject remained at the top of voter’s minds, both Republicans and Democrats. The inflation I mentioned at the beginning of this piece was the driving force behind the political reality; everyone has seen their premiums and co-pays climb, and everyone has made a point of letting the politicians know. Extending from the election through the early spring of 2009, there seemed to be a building consensus of policy makers, media pundits, and even insurance industry executives, who felt that major action was not only needed, but imminent.

Then, major action happened. President Obama began the process by dealing the big pharmaceutical companies out of the argument. That industry had the most to lose from reform (because they are a major source of value-deficient cost increase), and Mr. Obama felt that moving them to the sidelines was  a move that ensured him breathing room. The President also made it clear that single-payer health options would not have White House backing; essentially dooming those plans before they got off the ground. Again, keep in mind that this process began from a sense of real bipartisan need, and did so with the liberal President taking two major steps in the direction of Conservative goals. As we move into the debate of the reform laws, those steps will seem more and more useless.

When Democrats began to propose concrete legislation in the late spring of 2008, and Republicans began to show their intention to stonewall any effort on the subject, the structure of the story that would dominate the year materialized. It was going to be a long cruel summer indeed, and winter would prove to be a harsh mistress as well. Part two of this exclusive Pigeon Post report will cover the political maneuverings of health care reform, and part three will look at the new rules, and what they mean for Americans.

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