Steve Klingaman

Steve Klingaman
Location
Minneapolis, Minnesota,
Birthday
January 01
Title
Consultant/Writer
Bio
Steve Klingaman is a nonprofit development consultant and nonfiction writer specializing in personal finance and public policy. His music reviews can be found at minor7th.com.

MARCH 24, 2010 8:53PM

Four Things About Health Care Reform

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President Obama signing health care reform into law 

 Photo: nowpublic.com

            So we have a bill that the left and right can agree to hate.  We have a bill that leaves huge numbers of people out of the safety net, that doesn’t even come close to universal coverage.  We have a bill that many see as unconstitutional. We have a bill with no viable financing mechanism.  We have a bill that will take up to seven years for its benefits to kick in.  We have a bill that people will try to reform from the moment of its passage.  Others simply clamor for repeal.  Sound familiar?

            I'm not talking about health care reform.  I am talking about the original Social Security Act as it was passed in 1935. 

            There are four things I believe we can say about the new health care reform bill, and most of them are deeply informed by our experience with the Social Security Act that was signed into law on August 14, 1935:

  1. The Patient Protection and Affordable Care Act is only a start down a gradual, iterative path to reform.
  2. The act will be challenged in court, and that battle will ultimately be decided by the U.S. Supreme Court.
  3. The bill fails to deal with the intractable problem of cost control, but some clauses in the bill represent germs of strategies that could have real impact over time.
  4. Broad-based behavioral changes are required for reform to work.

Taking It Point by Point           

  1. The Patient Protection and Affordable Care Act is only a start down a gradual, iterative path to reform.

            Point #1 holds most closely to the example of Social Security.  The PPACA is nothing but a start.  It in no way resembles any kind of final vision of what health care in America is going to look like in years to come.

            We seem to have this idea that Social Security sprouted fully formed, like Botticelli’s Venus.  Nothing could be further from the truth.  Here are a few things to know about Social Security in 1935 (thank you, Wikipedia): 

  1. Nearly half the working population were excluded from coverage.  This group included farmers, seasonal workers, part-time workers, wives, widows, teachers, nurses, and many other job categories.  The result, according to Jill Quadagno, author of The Color of Welfare: How Racism Undermined the War on Poverty, was the exclusion of most women and people of color.  Interestingly, nowhere on the Social Security Administration’s own website about the history of the program does any reference to such disparities appear.
  2. The first Social Security payroll taxes were not collected until two years after passage of the act.
  3. The first monthly Social Security check, sent to Ida May Fuller of Vermont, was not issued until 1940, five full years after the measure was passed.  This was still two years ahead of the original target date of 1942.
  4. The initial effects of the act were minimal.  The first check, a lump-sum payout, paid to Ernest Ackerman, was for 17 cents.
  5. The funding model evolved during the first five years of the act’s life from one based on payment from a reserve, or trust fund, (which never materialized) to that of pay as you go, the model we have today.
  6. Calls for reform of the measure (as opposed to repeal, which were also heard) occurred within a year of the bill’s passage.

            After the first five years under Social Security, the program stayed more or less the same during the 1940s, where the preoccupations of government revolved around World War II.  But the 1950s marked the beginning of three decades of transformational change to the program.

            Using the analogy of the Social Security Act offers a pretty clear guide as to what we might expect with health care reform.  It also tends to confirm the claims of President Obama that the initial enactment marks the watershed moment of change; thereafter, incremental change takes over.

2.  The act will be challenged in court and that battle will ultimately be decided by the U.S. Supreme Court.

Once again, the experience of Social Security enactment offers some illustrative antecedents.  The most common challenge today, the one claiming that it is unconstitutional for the federal government to require the purchase of a “product,” is the most likely premise to gain traction given that at least 13 state attorneys general have already signaled a readiness to sue on this basis.

            Challenges to Social Security in the two years following its enactment stand eerily reminiscent of the present combative moment.  In Steward Machine Company v. Davis, (1937) challengers to the law alleged that “the federal government was essentially forcing each state to establish an unemployment-compensation fund that would meet its criteria, and that the federal government had no power to enact such a program,” according to Wikipedia.  The argument did not prevail, in part due to the Court’s acknowledgment of the extremity of the economic crisis facing the nation.  Even so, it was a 5-4 ruling.

            Helvering v. Davis, decided the same day, held that the federal government had the authority to enact Social Security as a program to promote the general welfare of the public, and that a Social Security tax on employees and employers was constitutional.

            The trickiness of the contra argument as advanced by the state AGs today revolves around the concept of compulsion to buy a product.  Helvering touched on the same quandary, as it challenged that the federal government was engaging in an unconstitutional insurance program.  And many see insurance as a product. And so on, and so forth.  Now we just need a Court that can pass the reasonable person test, and that is a contention that reasonable people might challenge after the Citizens United decision, but there are ample precedents to justify the federal government’s interest in compulsive participation.  These include, on the most basic level, the draft, federal income tax, and most directly, Medicaid/Medicare taxes.  More specific precedents can also be cited:  the federal government requires the purchase of flood insurance for people residing in flood-prone districts as, essentially, a condition for receiving emergency flood aid.  And unfunded emergency medical care is funded with—you guessed it—federal dollars or indirect federal subsidies.

            Behind all this lies an age-old states rights argument that rears its ugly head from time to time. Nonetheless, arguments such as these require the adjudication of reasonable jurists.  We’ll see.

  1. The The bill fails to deal with the intractable problem of cost control, but some clauses in the bill represent germs of strategies that could have real impact over time.

An editorial in the New York Times that appeared on November 15, 2009 offered one of the better discussions of this issue.  (By the way, if you haven’t been keeping track, the Times has published 35 editorials on health care reform since March 8, 2009.  They are available here.)  The editorial held that the Senate bill contained nine cost containment provisions that presented the possibility of meaningful cost containment over time, especially if administered with a serious commitment to achieving the overall goal.  That, of course, is an open question.  We have already seen Congress repeatedly gut the Social Security Trust to fund discretional (and sometimes reckless) spending.  But many of the bill’s provisions work directly on the market.  We already know some of them.

            The tax on Cadillac plans is designed to rein in plans that cost more than $21,000 per family.  And you know what?  No plan should cost $21,000 per family.  Other methods, like forced productivity gains, an independent commission to develop and reward best practices, and pilot projects to move Medicare away from fee-for-service payments may fire the first shots in a revolution against runaway costs.  Or not.  But, I agree with the Times that the bill does contain certain elements that could bring down costs if the letter and spirit of their provisions were to be followed and enforced.

            On a side note, the former head of the Congressional Budget Office, Douglas Holtz-Eakin, recently questioned the entire premise of the CBO vetting of the health care bill, saying, “Fantasy in, fantasy out.”  He thinks the bill will cost an additional $562 billion over the first 10 years.  His contention might attract more serious attention if the group he heads, the American Action Forum, wasn’t a front group for the former Republican senator from Minnesota, and major league Bush apologist, Norm Coleman.  It is almost enough to make you question the impartiality of the CBO under Bush.  (Heavens!)  Still, Holtz-Eakin’s recent Op-Ed piece in the New York Times offers another little glimpse into the future of the opposition to the PPACA.

4.  Broad-based behavioral changes are required for reform to work.

According to the groundbreaking documentary Food, Inc., 1 in 5 health care dollars are spent on care for type 2 diabetes, a preventable condition. Another buck and a half is spent on other preventable conditions associated with lifestyle.  This means that roughly half of all health care dollars are spent on conditions that we can in part prevent.

            Not only have we, up until now, not cared, but we have actively worked as a political economy to undermine the basics of good health.  Our entire federal food policy is skewed towards supporting commodity crops that are the foundational ingredients in unhealthy, processed, industrial food—or, in Michael Pollan’s words, food-like substances.  In addition, we can’t even muster support for gym class.  At the same time, the CDC reports that 68 percent of American adults are overweight or obese.

            If we don’t eat right, exercise, quit smoking and quit poisoning the environment, no amount of money spent on health care will make us healthy.  In our minds we are a nation of freedom lovers, innovators, mavericks—patriots in tricorn hats even—but in our habits we are couch potatoes.  Two diseases, diabetes and heart disease, can pretty well run up our medical bills into the stratosphere.  But we have no national consensus on the causation of those diseases.  We are paralyzed by the Big Gulp.

            I don’t say this as a nag or a crusader.  The majority of people in the U.S. have much less of an interest in freedom of speech than they do the freedom to eat whatever they please.  But increasingly, a dawning awareness is telling us that we are nothing but marks for a food industry that is more adept at killing us slowly than feeding us.  This topic all comes down to the cost of a McDonald’s hamburger, fries, and supersized Coke versus the cost of whole foods.

            No one can predict the short- or long-term future of health care reform.  None of the (sometimes wild) scenarios can be entirely ruled out.  But it is a reasonably safe bet that the law will stand long enough to become a permanent fixture in our landscape.  The only question is, will we improve it, the way we did with Social Security, to move it from crappy to great, or will we let it atrophy as the impulse of an anomalous moment in political time.

* * *

A note on sources:

Purists may deplore a pipsqueak blogger’s decision to use Wikipedia as a reference.  I know what they mean, and if I were writing for paid publication or a grade I would refrain.  I know Wikipedia is a short cut.  But the truth is, I like Wikipedia.  I like the brevity of its articles, its outlines, and, most of all, the fact that it is crowd-sourced.

            Wikipedia is often challenged on the basis of bias or misinformation.  But rarely are more “authoritative” sources challenged on the basis of bias or the information they lack—important topics like the discriminative effects of the early Social Security program.  Increasingly, academics of every stripe acknowledge that there are no unbiased sources.  So, if I get mine right off the vine instead of vetted by professional editors, that suits my status as a pipsqueak blogger, an underling in the hierarchy of a muddled media universe.  I, for one, am comfortable here.

            Grown-up writers who start with Wikipedia to get the lay of the land and then branch out to primary sources won’t end up too far from the mark, I would argue, as long as they have something to say in the first place and the good sense to make a good-faith effort to back it up with citations—and admit where they got their stuff.

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Comments

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You've done a great historical analysis of the road map lying ahead of us for health care reform. Thank you for this marvelous piece!
This belongs on the cover and deserves a much wider readership than OS. An excellent, intelligent analysis for even the least interested to grasp some real understanding of our history and our future. What marvelous reporting.
You never disappoint, Steve. I was hoping you would post something and once again, you've done so brilliantly. Thanks so much.
Oh, for editable comments! I meant to say that I hoped you would post something on this topic.
This is such a wonderful piece, Steve. I needed to hear that sweeping projects are often badly flawed but can be improved and expanded over time. We have much work to do, but liberals won a major showdown this week, and the momentum can carry the country a very long way.
perfect. thanks once again steve....xxa
BUMP. This needs to be read. By everyone.
Steve,
Thanks for illustrating the evolutionary process. Because I don't think this reform will bring down costs overall, it helps thinking it's just a step towards a less "third way" resolution. I think that eventually real world consequences will move us towards a single payer base system.

The diet part will be a slow change. There isn't much government can do beyond mild incentives. If we, the people pushed too hard, we, the other people would complain. I guess I would complain also, my chin glistening with ribeye steak fat and baked potato butter.

Wiki is generally a decent source, depending on the topic. The more established the history is, the more likely the validity of the entry. It's also a good starting point, as it can lead to knowing enough about a subject to know what to search for to find a stronger academic source.
Um, the same social security that now is an I.O.U. written by our congress because they looted it? Because if you give our Gov't free reign over huge monies they loot it and abuse it and pocket it everytime? As someone who may not receive SS which I've paid into forever because my elected representatives spent it, I don't see creating an even huger vat of monies for them to steal.
I saw Cartouche's linkon Facebook and came on over. Great article. Looking at the SS model - there just might be some hope.
This reform does do as much as is *politically possible* to put Medicare and thus US health care in general (which usually follows Medicare's lead) into a pathway to reducing health care inflation.

Contrary to the often repeated idea that the reform does little to bend the cost curve...in fact this reform sets up the conditions for powerful changes that will sooner or later have great effects on health cost inflation.

This isn't a guess, or an averaging of opinion.

The panel charged with specifically bending the Medicare cost inflation curve has explicit power to make reform proposals that will *automatically go into effect* unless Congress and/or the administration reject the proposals.

It's a rational way to remove the cost-reform process from the overly-political Congress. Congress still holds veto power, but it will many times allow the reforms to go into effect by not having a majority opposed.

In other words, real reforms will happen, and they will powerfully affect Medicare over time (by 2018 for example), and then health care in general also, as private insurers continue to follow Medicare's practices, as they historically do.

So, even though you can get opinion pieces that the reform does little to bend the curve, the reality known by those who spent the time and effort to look over the details is different.
Thanks everyone for your comments. And thanks, Hal, for your informed, policy-based, comment. We have seen a great deal of reform bashing from the right and the left on the basis of prospects for cost containment. Whether or not any germs of containment will come to fruition is an open question, as you point out. But it is good see someone else taking a few steps down this path when the media is silent in the sense of actual reportage on the topic of future prospects for cost containment.