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Obama’s reform: no cure for what ails us

Observations: U.S. Health Reform

By David U. Himmelstein and Steffie Woolhandler
British Medical Journal, March 30, 2010

As the applause fades for President Obama’s health reform, David Himmelstein and Steffie Woolhandler fear that the new law will simply pump funds into a dysfunctional, market driven system

It was a stirring scene: President Obama signing the new health reform law before a cheering crowd, and a beaming vice president whispering in his ear, "This is a big fucking deal." As doctors who have labored for universal health care we’d like to join the celebration, but we can’t. Morphine has been dispensed for the treatment of cancer – the reform may offer a bit of temporary relief, but it is certainly no cure.

The new law will pump additional funds into the currently dysfunctional, market driven system, pushing up health costs that are already twice those in most other wealthy nations. The Medicaid public insurance program for poor people will expand to cover an additional 16 million poor Americans, while a similar number of uninsured people with higher incomes will be forced to buy private policies. For the "near poor" the government will pay part of these private premiums, channeling $447 billion in taxpayer funds to private insurers over the next decade.

Unfortunately, private insurers win in the marketplace not through efficiency or quality but by maximizing revenues from premiums while minimizing outlays. They pursue this goal by avoiding the sick and forcing doctors and patients to navigate a byzantine payment bureaucracy that currently consumes 31 percent of total health spending. The health reform bill’s requirement that uninsured people buy insurers’ defective products will fortify these firms financially and politically.

Meanwhile insurers will exploit loopholes to dodge the law’s restrictions on their misbehaviors. For instance, the limit on administrative overheads will predictably elicit accounting gimmickry, for example by relabeling some insurance personnel as "clinical care managers." While insurers are prohibited from "cherry picking" – selectively enrolling healthy, profitable patients – they’ve circumvented similar prohibitions in the Medicare health maintenance organizations (HMOs). The ban on revoking policies after an individual falls ill similarly replicates existing but ineffective state bans.

Sadly, even if the reform works as planned, 23 million people will remain uninsured in 2019. Meanwhile the public and other safety net hospitals that uninsured people rely on will have to endure a $36 billion cut in federal government funding.

Moreover, many Americans will be left with coverage so skimpy that a serious illness could lead to financial ruin. At present, illness and medical bills contribute to 62 percent of all bankruptcies, with three-quarters of the medically bankrupt being insured. The reform does little to upgrade this inadequate coverage; it mandates that private policies need cover only 70 percent of expected medical costs. The president has often promised that "if you like your current coverage you can keep it." Yet Americans who now get job based insurance will be required to keep it – whether they like it or not. And many who receive full coverage from an employer will face a steep tax on their health benefits from 2018.

Soaring costs and rising financial strains seem inevitable, despite claims that the reform will "bend the cost curve." Computer vendors have trumpeted imminent cost savings for half a century (see, for instance, a video made by IBM in the 1960s, available at http://bit.ly/cckdtB). Prevention, though laudable, does not generally reduce costs. Windfalls from prosecuting fraud and abuse have been promised before. The new Medicare advisory board merely tweaks an existing panel. Without an enforcement mechanism, stepping up comparative effectiveness research cannot overcome drug and equipment makers’ promotion of profligate care. Existing insurance exchanges where patients can compare and shop among private plans haven’t slowed growth in costs for public workers nationally or in California. And the mandated experiments with capitated payment systems are warmed-over versions of President Nixon’s pro-HMO policies and subsequent failed initiatives to fix America’s health cost crisis through managed care.

Experience with reforms in Massachusetts in 2006 – the template for the national bill – is instructive. Our state’s costs, already the highest of any state, grew by 15 percent in the first two years after reform, twice the national rate. Moreover, capitated physician groups had costs at least as high as those who were paid on a fee for service basis. Meanwhile, after initial improvements in the state, access to care has begun to deteriorate, and the state has begun to cut back coverage.

Overall, President Obama’s is a conservative bill, drafted in close consultation with the drug and insurance industries. Its modest salutary provisions – such as an extra $1 billion a year for community health centers and the expansion of Medicaid – mirror measures that have been passed even under Republican regimes. Its central tenet, that the government should force citizens to buy coverage from a for-profit firm, was first proposed by Richard Nixon when faced with the seeming inevitability of national health insurance in 1972. Similarly, Mitt Romney, a favorite of conservatives, embraced the Nixon approach as Massachusetts governor in 2006, a stance he has now abandoned. Democrats, having retreated from their traditional push for national health insurance, freed Republicans to move still further to the right.

Throughout the reform debate we, and the 17 000 others who’ve joined Physicians for a National Health Program, advocated for a far more thoroughgoing reform: a non-profit, single payer national health insurance program. We will continue to do so. Our health care system has not been cured or even stabilized. For now, we will continue to practice under a financing system that obstructs good patient care and squanders vast resources on profit and bureaucracy.

Passage of the health reform law was a major political event. But for most doctors and patients it’s no "big fucking deal."

David U. Himmelstein, M.D., is associate professor of medicine at Harvard Medical School and Steffie Woolhandler, M.D., M.P.H., is professor of medicine at Harvard Medical School. They are also co-founders of Physicians for a National Health Program.

Cite this as: BMJ 2010;340:c1778