Why Is Healthcare Reform So Difficult? David Davenport Crystal Serenity February, 2011

Washington, D.C.

The Difficulty The Difficulty

Heated Rhetoric, Complex Issues 51 Million Uninsured? –About 11 million are noncitizens –About 16 million adults eligible but not insured –About 7 million kids eligible but not insured –Another 9 million have incomes over $66k So real number closer to 16 million

Heated Rhetoric, Complex Issues WHO says US life expectancy #42 in world? --Remove homicides --Remove traffic fatalities --Remove traffic fatalities Were Number One

The Difficulty The Difficulty

The Science & Technology Are Rapidly Changing

Economics Are Becoming Unsustainable

2008 John F. Cogan Hoover Institution 1/10/09

But Costs Difficult to Manage #1 cost driver is technology and improved healthcare #1 cost driver is technology and improved healthcare There is also waste, perhaps as high as 20-25% but difficult to squeeze out There is also waste, perhaps as high as 20-25% but difficult to squeeze out

Waste To Be Eliminated 3 rd party payor problems (moral hazard) 3 rd party payor problems (moral hazard) –$5 of every $6 paid by someone else Regulatory cost Regulatory cost Malpractice, lawsuits Malpractice, lawsuits Tax policy drives employer plans Tax policy drives employer plans

Different Political Philosophies

The Equality vs. Liberty Narratives From the French Revolution: Liberte, egalite et fraternite From the American Revolution: life, liberty and the pursuit of happiness

The Liberty Narrative Equality of opportunity Equality of opportunity Limited role of government Limited role of government Individual freedom and choice Individual freedom and choice

The Equality Narrative Equality of outcomes Equality of outcomes Government oversight Government oversight Limits on free markets and individual freedom to institutionalize equality Limits on free markets and individual freedom to institutionalize equality

Healthcare Reform in the 60s

Healthcare Reform in the 90s

Health Care Reform in 2010

What Would Happen In Ordinary Times? American people dont generally support major overhauls American people dont generally support major overhauls With 15% uninsured and 80% + happy with their healthcare, felt need for overhaul isnt widespread With 15% uninsured and 80% + happy with their healthcare, felt need for overhaul isnt widespread So work on individual pieces of problem So work on individual pieces of problem

But These Were Not Ordinary Times President Obama wanted to spend his political capital on this President Obama wanted to spend his political capital on this Both Congress and Senate were in his party Both Congress and Senate were in his party Tough economic times create greater support for more safety net Tough economic times create greater support for more safety net

Obamacare: Will It Survive? Repeal highly unlikely Repeal highly unlikely But Congress may alter it in other ways But Congress may alter it in other ways Constitutional challenges are real Constitutional challenges are real Public is ambivalent Public is ambivalent

Repeal and Replace For individuals National market, portability National market, portability Preexisting conditions Preexisting conditions Tax relief and subsidies for uninsured Tax relief and subsidies for uninsured

Individual Fixes for System National market National market Information/accountability for choices Information/accountability for choices Change tax incentives Change tax incentives Reform medical malpractice laws Reform medical malpractice laws

Why Is Healthcare Reform So Difficult?