OF FABLE AND FACT IN HEALTH CARE
Several sightless men approach an elephant, feel a single part and develop remarkably mistaken ideas of what it is. Each man argues steadfastly that his mistaken perception is correct. Ultimately, one man correctly identifies the elephant after proper evaluation of all its parts. The fable's moral: Knowing a part may make a fine tale, but wisdom comes from understanding the whole. Today's health policy debate parallels this story because we continually focus on piecemeal strategies without recognizing the fundamental problem.
Across the country, governors and state legislatures are trying to expand coverage through higher taxes and mandates. Federal policymakers attempted to fix an already insolvent Medicare program with a $500 billion prescription drug expansion. Special interest groups representing patients for insurance coverage mandates, doctors for malpractice reform and advocates for pharmaceutical price controls are all masterminding isolated strategies. Unfortunately, each plan fails to address the key problem and often exacerbates other symptoms.
Few acknowledge that the fundamental issue is three federal policies enacted over the past 50 years: the 1954 Tax Reform Act, Medicaid and Medicare. These three policies are responsible for today Â‘s fragmented and unsustainable system and increasingly jeopardize our economic future and our population's health.
The Tax Reform Act of 1954. Enacted during a time of wage freezes during World War II, this policy allows employee "fringe benefits" (including health insurance) to be excluded from taxable income. This $200 billion annual tax subsidy is extremely regressive, benefiting higher income individuals and incentivizing them to overconsume at the expense of middle- and lower-income taxpayers. Ironically, this subsidy is partially financed through taxes paid by the working poor who cannot afford health care for themselves and their families. In addition, since the passage of this act over a half century ago, a competitive global economy has developed that increasingly puts U.S. businesses at a global disadvantage due to the cost burden of providing health care to their employees.
Medicaid. In 1965, Medicaid was enacted to improve financial access for certain categories of poor citizens. Unfortunately, many deeply impoverished citizens don't fit into any category and are ineligible for the program. Because states can't deficit spend, Medicaid's mandated joint financing scheme also creates severe budget crises for state governments. As a result, Medicaid now exceeds the cost of primary and secondary education as the largest item in many state budgets.
Medicare. Medicare was enacted in 1965 when those over the age of 65 constituted the single poorest segment of the population. Today, however, seniors over 65 are the single wealthiest segment. Ironically, this entitlement program is financed largely by taxes paid by those still working, some of whom cannot afford health care for themselves. To make matters worse, Medicare's total unfunded liability is now over $65 trillion and its trust fund will become insolvent in 2018. Our reliance on other countries to finance this staggering debt gives our competitors leverage to dictate our financial future, risking our independence and self-determination.
The combination of these three policies has led to a convoluted and unsustainable system. The U.S spends more than double per capita for health care compared to almost all industrialized counties, yet it ranks near the bottom in all population health indicators. Our skewed government spending has forced competition to be based on shifting costs, increasing bargaining power, and limiting services. This kind of competition does not create value for patients - but generates inefficiency, poor quality and higher administrative costs.
To increase value we must first have clear objectives for our public resource investments in health care. The Archimedes Movement (www.joinam.org), headed up by former Oregon governor John Kitzhaber, is the first to define such goals and attempts to change the way we view health and health care financing and delivery. More specifically, he highlights the policy discrepancies and inconsistencies resulting from those federal policies and proposes a set of principles on which a new system should be based. Only by comparing the status quo to a new vision will we be able to determine the best path forward. The Archimedes signature bill for the 2007 Legislature is The Oregon Better Health Act (Senate Bill 27) which would request federal approval to end our convoluted ways and begin laying out a plan for a sustainable Oregon system.
As with all public resources, a finite amount of health care resources are available for a seemingly infinite need. We must understand that if nothing is done, three federal policies will continue to jeopardize our population's health and our economic future. Much like the fable's sightless men, current proposals may make for fine political debate, but a viable solution will only come from seeing the whole. Oregon legislators would be wise to stop focusing on piecemeal strategies and see the big picture by passing The Oregon Better Health Act.
Mike Bonetto is a senior vice president for Clear Choice Health Plans in Bend and is former executive director of the Oregon Health Policy Commission and a former health policy advisor to the Oregon Senate Republican Caucus.