The "Conservative" Solution to Healthcare Reform

Thanks to David Brooks, the secret's finally out. The "conservative" solution to healthcare reform is rationing and a tax increase. First, a tax on middle class workers who are fortunate enough to get health insurance through their jobs:

There was a long table of 13 experts, and a vast majority agreed that ending the tax exemption on employer-provided health benefits should be part of a reform package.

They gave the reasons that experts - on right or left - always give for supporting this idea. The exemption is a giant subsidy to the affluent. It drives up health care costs by encouraging luxurious plans and by separating people from the consequences of their decisions. Furthermore, repealing the exemption could raise hundreds of billions of dollars, which could be used to expand coverage to the uninsured.

The thing about money is that it's fungible. If you believe that a tax break gives too big of a windfall to the affluent, you don't have to remove or limit it for the middle class. You don't even have to modify it for the affluent; you can instead, for example, bump up their marginal tax rate, or create or increase some other tax. Any significant tax increase "could raise hundreds of billions of dollars" - that doesn't of itself make one tax increase superior to another.

Given that Republicans have been happy to spin the possible planned expiration of tax cuts as a "tax increase". With a complicit, pliant Democratic Party, they giddily slashed taxes even while running up record budget deficits. By their own measure, this proposal is a tax increase - yet they're being allowed to avoid addressing their hypocrisy, or being asked to explain why this is different. We can't cut a subsidy to "Medicare Advantage" insurers that allows them to stay in business against the more efficient Medicare and we can't tax the income of hedge fund managers as income, but we can impose a massive tax increase on working Americans? And, quelle surprise, David Brooks is along for the ride.

There are some real problems to the status quo. Having health insurance tied to employment makes our nation's workers less mobile, and less likely to become entrepreneurs (particularly past 40), than they otherwise might be. The tax break has historically led some employers to offer more generous healthcare plans in lieu of pay raises. Even if you qualify for COBRA coverage, the cost of continuing health insurance after leaving a job can be prohibitive. (Even with the stimulus package subsidy, I know workers who can't afford COBRA.) There are a lot of good reasons to end or phase out the tax break. But at the same time, some people proposing eliminating the tax exemption have other goals in mind. Such as poisoning the middle class on the idea of healthcare reform on the grounds that it will cut their wages and perhaps also inspire employers to switch to less comprehensive plans. Even John McCain recognized the need for a tax credit to help balance out the effect of this tax increase, although that's not an elegant solution.

Brooks' endorsement of rationing was raised in that quoted passage - the idea that health insurance separates "people from the consequences of their decisions". It's sloppy thinking of Brooks to confuse that issue with his desired tax increase, unless he also believes that his tax increase will result in the broad loss of employment-based health insurance. The issue of utilization of healthcare is separate from the issue of how we pay for insurance. Brooks elaborates about the various health reform proposals,

But there is almost nothing that gets to the core of the problem. Under the leading approaches, health care providers would still have powerful incentives to provide more and more services and use more expensive technology.

Brooks could direct that criticism at himself. Except I think he has something in mind - a Newt Gingrich-type reform that makes people (other than himself) responsible for paying most of their own medical bills. When you're making six to seven figures a year, as Brooks does, it's not a big deal to pay a doctor $150 or so for an office visit, or to pay $50 or more for a needed medication. If you can't afford it, well, tough. I'm sure Brooks would argue that it's not rationing, because anybody who comes up with the money can still buy medical services, but that type of solution revolves around the idea that "responsible" healthcare consumers will choose to keep their money in their pockets (assuming they even have enough money to choose medical treatment over non-treatment.) His goal is to "save" money by denying care.

Brooks' conclusion is close to imbecilic:

Health care reform is important, but it is not worth bankrupting the country over. If this process goes as it has been going - with grand rhetoric and superficial cost containment - then we will be far better off killing this effort and starting over in a few years.

If healthcare inflation weren't absurdly high, with projected Medicare and Medicaid costs becoming prohibitive in the not too distant future, we wouldn't even be having this discussion. Putting off reform to the future in the hope that responsible politicians will suddenly emerge from the woodwork is beyond naive - disagreements aside, and as bad as things may look, there's never been a time when we had political leaders more capable of addressing this issue with reforms more likely to pass. Brooks isn't trying to punt in the hope that future leaders will do better - he's in the role of Lucy, hoping to snatch away the ball.

Brooks also ignores two huge culprits in healthcare inflation: end of life care, and the treatment of chronic illness. It may well be that an elderly person will "choose" to die, being unable to afford treatment that would extend care, but we as a society have difficulty telling the elderly that they're on their own for their life-saving treatments. When can we expect Brooks' column on how his proposed rationing will impact the elderly? Also, people with chronic diseases often require expensive medical treatments and medications on a recurring basis. Even when the needed medications are generic, costs can add up quickly. Brooks is going to tell, for example, insulin-dependent diabetics, people with end-stage renal disease, and AIDS patients, "Sorry, if you can't afford insulin, dialysis, or anti-retrovirals on your own, you need to find some place to curl up and die, preferably where I don't have to see it happen"? These are the consequences Brooks' approach dictates;¹ when can we expect a direct, honest column addressing these issues?
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1. There are, of course, no easy answers. The present approach is largely, "Don't set limits, spend vast amounts of money, and hope that technology eventually produces a series of miracle cures." Even if we assume that the public is ready for a rational, painful discussion of these topics... I used the words "rational" and "painful" - do I really need to add, "Our political leaders are not"? Note, these issues are not resolved by national health care plans, although the costs seem to be better controlled. Management of chronic illness is an area that is probably also best suited for government sponsored research, as the huge profits are in managing a chronic disease, not in preventing or curing it, so that seems to be where private research dollars go.