Fixing Health Care: Expanding Coverage or Controlling Costs?

I must admit I'm not an expert of any sort in the health care field. But I saw a very interesting panel discussion on Thursday at a work conference, about the challenges and expected priorities of the early Obama Administration, and one panelist named Chris Jennings talked in depth about what meaningful health care reform would look like. Apparently Mr. Jennings has been at the center of the national health care debate for a couple decades now and was a prime architect of the 1993 Clinton plan, so it can be assumed he is well attuned to the political realities of the situation and the potential pitfalls to avoid. His thoughts piqued my interest, so I figured I would share them here.

Here's the crux of his argument:

Health care reform is crucial to rebuilding the economy; without it America is operating at a major disadvantage in the global economy. The guaranteed free health care other countries provide is money employers in those countries don't have to pay for their workers.

The health care crisis has two major components: the massive amounts of uninsured and underinsured individuals unable to get quality care, and the pervasive skyrocketing costs.

Liberals usually focus exclusively on providing universal care while conservatives focus primarily on driving down costs. But it is nearly impossible to fix one problem without making significant headway on the other.

In other words, if we expand coverage to everyone without some mechanism to rein in the exploding cost of adequate care, American health care will face overwhelming financial strain and the system will implode before too long. Likewise, lowering overall costs through "market reforms" while millions of people remain uninsured will result in a massive reverse adverse selection problem - those that really do need quality coverage will be those least able to get it. This structure is also unsustainable in the medium-long run.

Makes sense intuitively. I've always figured an intrinsic advantage of government-provided health care is a much lower overhead cost. Insurance companies now spend something like 30% of their budgets on administrative and marketing costs, around half of that with bureaucratic mazes designed to keep people from getting care the company doesn't want to pay for and the other half telling you to ask your doctor rather suggestively about the LATEST COOL NEW DRUG!!!. Meanwhile, the overhead of Medicare is something like 3%. Between that and the promising potential of negotiating with Big Pharma for lower drug prices, It seems pretty obvious to me which is more economically efficient. Why would we not want a single-payer system based on that?

So.....does anyone who knows more than myself about health care policy want to react to this?

Don't Bail Out Detroit!

For those who think American politics will be all rainbows and unicorns after Bush leaves, President-elect Barack Obama just sent a reminder that the Democrats have ridiculous constituencies to please, too. Although Congress passed $25 billion in favorable loans to Detroit's Big Three auto manufacturers in September, they're already begging for more. Today, Obama asked Bush to sign another $25 billion in loans before he leaves office.

Although some argue that these loans can give Ford, GM, and Chrysler capital needed to create cleaner cars, the question is why Honda, Toyota, and upstarts like Tesla Motors don't need similar favors. If we agree to live in a capitalist system, we have to agree to let failing companies fail. Period.

Note to the Democrats: If you are looking for a good policy that might save Detroit, think about fixing the health care system. Part of the problem is that the Big Three pay thousands more per car in health care and retirement costs than foreign companies. Then everybody wins.