The Compromise that Satisfies no one?

The issue is presented to the public as complex and divisive, with differing opinions on the various nuances threatening to undermine the whole process. I am of course speaking of healthcare reform. Odds are, five years from now you won’t have the same coverage you have (or don’t have) now. Congress, under pressure from President Obama, is gearing up to reform U.S. healthcare in a big way. The previous Democratic administration also attempted this, namely through then-first-lady Hillary Clinton. But the situation today is far different than that of 1993. This time the important players — doctors, insurance companies, pharmaceutical manufacturers — seem to be on board.

Why is this such a big issue? As the years chug forward, fewer and fewer Americans have health insurance, and therefore cannot afford good medical care. Nearly 46 million Americans have no insurance, and 25 million more are underinsured. One major reason for this crisis is that many employers have stopped offering insurance to employees because of the high cost. In the United States, total health care spending was $2.4 trillion in 2007 — or $7,900 per person — according to an analysis published in the journal Health Affairs. The United States spends 52 percent more per person than the next most costly nation, Norway, according to the Kaiser Family Foundation.  Yes, you read that correctly. The U.S. spends half-again what the so-called ”expensive, socialized” Scandinavian countries spend!

There’s little debate that health care reform is necessary — President Obama, Republican and Democratic members of Congress, the American Medical Association and America’s Health Insurance Plans, which represents the insurance industry, all have agreed the system needs to be changed, although they disagree on how to do it:

On the Left: Single-Payer

Single-Payer, the solution that exists in much of Northern Europe and was attempted by Hillary in 1993, is the sort of fundamental reform desired by many Americans, including healthcare groups like Nurse’s Unions. This solution would eliminate private insurance companies, replacing them with a government-sponsored plan. This plan would collect premiums from individuals, and pay for care at any medical facility. Essentially this plan brings together the best of socialism and capitalism – the goverment manages the financial aspect of healthcare, while private providers – doctors, hospitals, etc – remain independent in providing care. Other perks of single-payer include, well, a single-purchaser: one who can lobby for lower prescription drug prices. Most importantly, single-payer eliminates the administrative/bureacratic costs associated with multiple insurance companies and myriad plans – a significant proportion of current medical costs.

On the Right: Tax Breaks

House Republicans have proposed individual tax breaks for buying health insurance and “pools” of states and small business to get lower-cost health care plans. They also proposed increasing incentives for people to build health savings accounts, allowing dependent children to stay on parents’ policies until age 25 and encouraging employers to reward employees for improved health.

Obama’s Compromise: A Government Plan and Incentives

A central point of the president’s plan is to create a government-sponsored health insurance program alongside private plans that would be an option for all Americans, similar to how Medicare is now an option for Americans over age 65. He has also said he’d “like to see” prohibitions against insurers discriminating against people with pre-existing conditions, and incentives for people to use preventive services and wellness plans. Obama said he’s already identified “hundreds of billions of dollars” worth of savings in the federal budget that could help finance health care reform, such as rooting out waste, fraud and abuse in Medicare and Medicaid. He’s also proposed reducing tax deductions for high-income Americans. If you receive high-quality health insurance from your employer, Obama said, his plan won’t change that, and you can still keep your insurance and your doctors.

Responses:

In particular, Republicans don’t like the idea of having a government-sponsored health insurance program for all Americans. They fear employers would opt for the government-run insurance over private insurance because the government option would most likely be less expensive, but Republicans say it would also be lower quality.  Republicans say that if Obama gets his way, there’s a good chance your employer will stop buying the private insurance you have now and instead opt for the less-expensive government plan.

While many Democratic lawmakers believe in the President’s plan, many on the left advocating single-payer feel betrayed that the main driver of high costs – the myriad of private plans and companies – is being left in place. They believe, that this compromise will do little to nothing to ease costs, and that without cost reduction, the public plan proposed by Obama will not be able to pay for itself, stifling attempts to balance the deficit.

In the end, neither side gets what they want. Is this turning into the compromise that satisfies no one and improves little?