Cato Blog, Jan 16, 2009
Prominent health economist Victor Fuchs has an article in this week’s New England Journal of Medicine that all who care about freedom and health care reform should read. He discusses the array of forces that could be — and in my view, should be — employed to stop health care reform this year:
First, many organizations and individuals prefer the status quo. This category includes health insurance companies; manufacturers of drugs, medical devices, and medical equipment; companies that employ mostly young, healthy workers and therefore have lower health care costs than they would if required to help subsidize care for the poor and the sick; high-income employees, whose health insurance is heavily subsidized through a tax exemption for the portion of their compensation spent on health insurance; business leaders and others who are ideologically opposed to a larger role of government; highly paid physicians in some surgical and medical specialties; and workers who mistakenly believe that their employment-based insurance is a gift from their employer rather than an offset to their potential take-home pay. These individuals and organizations do not account for a majority of voters, but they probably have disproportionate influence on public policy, especially when their task is simply to block change.
Second, as Niccoló Machiavelli presciently wrote in 1513, “There is nothing more difficult to manage, more dubious to accomplish, nor more doubtful of success . . . than to initiate a new order of things. The reformer has enemies in all those who profit from the old order and only lukewarm defenders in all those who would profit from the new order.” This keenly observed dynamic, known as the “Law of Reform,” suggests that a determined and concentrated minority fighting to preserve the status quo has a considerable advantage over a more diffuse majority who favor reform but have varying degrees of willingness to fight for a promised but uncertain benefit.
Third, our country’s political system renders Machiavelli’s Law of Reform particularly relevant in the United States, where many potential “choke points” offer opportunities to stifle change. The problem starts in the primary elections in so-called safe congressional districts, where special-interest money can exert a great deal of influence because of low voter turnout. The fact that Congress has two houses increases the difficulty of passing complex legislation, especially when several committees may claim jurisdiction over portions of a bill. Also, a supermajority of 60% may be needed to force a vote in the filibuster-prone Senate.
Fourth, reformers have failed to unite behind a single approach. Disagreement among reformers has been a major obstacle to substantial reform since early in the last century. According to historian Daniel Hirshfield, “Some saw health insurance primarily as an educational and public health measure, while others argued that it was an economic device to precipitate a needed reorganization of medical practice. . . . Some saw it as a device to save money for all concerned, while others felt sure that it would increase expenditures significantly.” These differences in objectives persist to this day.
That last item speaks to a divide among left-leaning health care reformers that was discussed by Drew Altman in a column at the Kaiser Family Foundation web site:
We could be headed for a new schism in the debate about health reform. Not the
familiar gulf between advocates of the market and government, or the predictable one between deficit hawks and spenders, but a new one that crosses traditional partisan and ideological lines between advocates of long-term reform of the health care delivery system, and immediate help for the uninsured and insured struggling with health care costs. This new rift is most likely to develop if tight money and a crowded agenda force the focus to shift from comprehensive to incremental reform and choices need to be made about what goes into a smaller, cheaper legislative package. It’s a rift that could stand in the way of progress on health reform if care is not taken to avoid it.For one group, I will call them the “Delivery System Reformers,” true health reform lies in making the actual delivery of care more cost effective over the long term. Delivery System Reformers champion health IT, comparative effectiveness research, practice guidelines, and payment incentives to encourage more cost-effective care such as pay for performance . . . . Indeed some delivery reformers believe it would be a mistake to put more money into the current system through expanded coverage until more fundamental changes in the system are made.
The other group, I will call them the “Financing Reformers,” is focused on an entirely different set of problems. Its major concern is the problem of the 46 million Americans without health insurance coverage and the serious problems all Americans are having today paying for health care and health insurance . . . .
The health reform field is like a Venn diagram with circles that intersect (though not by a lot).
As an example of those conflicting priorities, Fuchs himself writes, “If the current health care reform initiative is limited to questions of coverage, without serious attention to cost control and coordination of care, the ‘crisis’ in health care will continue to plague us for years to come.” (Almost sounds like something a member of the Anti-Universal Coverage Club would say.) I would add that conflicts between delivery-system reforms and financing reforms (e.g., covering the uninsured) only arise when dealing with command-and-control approaches to reform.
Neither Fuchs nor Altman intended their articles to be used as a guide to block health care reform. But since Messrs. Obama, Baucus, Daschle, and Wyden have already given us a fairly clear picture of the shape their proposed reforms will take, free-market advocates should scour both articles in their entirety for useful tips on how to beat back the next great leap toward socialized medicine.
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