America's Bitter Pill: Money, Politics, Backroom Deals, and the Fight to Fix Our Broken Healthcare System

America's Bitter Pill: Money, Politics, Backroom Deals, and the Fight to Fix Our Broken Healthcare System by Steven Brill

The United States spends significantly more on health care than other countries, yet does not have better health outcomes. One way to look at this is a subsidy from the rich to the poor. Americans pay high prices for drugs to support research that benefits all the world. This could explain a small part of the problem. However, it gets much worse than that.

The roots of the American disfunction dates back to World War II. There were strict wage and price controls. To counter this, unions negotiated additional benefits, such as health insurance. This benefit was tax-free thus adding value. After the war, much of the world introduced government-run health care. However, the unions did not want to give up their health-care perk, and the government was loathe to offend one of their key bases. Eventually, the government did step in with Medicare and Medicaid. These programs were targeted to the poor and elderly and thus didn't interfere with union perks.

Then things got worse. The government health plans set low payment rates. Health care providers made up for this by setting ridiculously high list prices.set up ridiculously high list prices. Most people with insurance paid a lower "negotiated rate" that was still higher than Medicare rates. However, the only way to really get insurance is through an employer. Employer-provided insurance is tax free, while self-paid insurance is after tax. Self-paid insurance is also difficult to obtain as it requires individual underwriting, while employer provided insurance is a group policy for everyone. This leaves a number of intermediaries between the patient and the payment. For most people, this system worked relatively well. However, for those without employer-provided insurance could often be hit with ridiculous bills.

The many players makes reforming the health care system difficult. There are doctors, hospitals, health plans, companies, drug companies, medical device manufacturers, health laboratories and more. While it would be great to remove the "fat" from the system, attempts can often be passed on. Attempts to squeeze insurer profits may instead result in doctors getting paid less. Health care also suffers from the "crisis" mentality. Abstractly, it sounds great to reduce spending when somebody is near death. However, when your loved one is near death, you are willing to spend whatever is needed to possibly prolong the life even a short amount of time. 95% of the expense may be wasted, but how do you make sure you don't cut into the important 5% that will help?

This is the background for the quest for Obamacare that is detailed here. There had been a few tries before. Hillary Clinton tried a reform during Bill's term, but failed miserably. In Massachusetts, Mitt Romney led a successful health care reform effort with mandatory insurance. Obama campaigned against Hillary's failed effort. Yet, he set out a priority of reforming health care along the Romney model. This proved quite challenging. There were twin desires to expand health care and reduce costs that had to be balanced against impacting current care and companies. How can fat be reduced while still maintaining a robust system?

There was a lot of back-room wheeling and dealing involved. A lot of shenanigans were needed to get it into place. Unions didn't want "cadillac taxes" on expensive plans. Drug manufacturers rejected price controls. Reduced reimbursements were off the table. Eliminating the tax break for employer-provided insurance was also dropped. The primary benefit was an "exchange" to provide health care for individuals to purchase insurance. This included income-based subsidies as well as eliminated pre-existing condition restrictions. The insurance was better than what could have been obtained previously, however, still not nearly as good as what could be obtained by an employer.

The roll out of Obamacare was less than ideal. The web site was implemented by people that were more experienced in politics than software development. It essentially went through a "public QA" process for the first months after rolling out. The law was complex and contained numerous drafting errors. This left it vulnerable to lawsuits. Some of the regulations were not defined for years after the law passed. Is are health care system better than it was before then? Possibly. Is it cheaper? Probably not.