As we said this morning, the fact that Obama’s new healthcare initiative is being announced with buy-in from unions, big pharma and health insurers is a bad, bad sign. It’s an indication that the status quo won’t be seriously disrupted, and that at best the plan will make modest changes around the margins.
Unfortunately, the US healthcare system is such a mess that radical disruption is what’s called for.
Paul Krugman, however, thinks all the lobbying is a good thing. He writes in a NYT op-ed that the new scheme marks the death of “Harry & Louise” the fictional TV couple that helped killed healthcare reform under Clinton.
The ads helped kill the Clinton health care plan, and have stood, ever since, as a symbol of the ability of powerful special interests to block health care reform.
But on Saturday, excited administration officials called me to say that this time the medical-industrial complex (their term, not mine) is offering to be helpful.
Six major industry players — including America’s Health Insurance Plans (AHIP), a descendant of the lobbying group that spawned Harry and Louise — have sent a letter to President Obama sketching out a plan to control health care costs.
Krugman admits that we should maintain our scepticism, but he says this is “tremendously good news.”
If Tim Geithner introduced financial market reform that had been signed, sealed and delivered by the major Wall Street banks, would Krugman consider that “tremendously” good news? Highly doubtful. And for good reason: When entrenched industry groups sign onto major reform, it’s because they know the reform will bolster barriers of entry. They know it won’t devastate their profit base.
Anyway, we know that the reform won’t kill anyone’s profits, because the savings will only result from shaving 1.5% per year off the rate of growth in health care costs. In other words, the cost of health care will continue to spiral higher… just a little slower than it otherwise might’ve.
And there’s no indication that the slower growth will result from competition or any market-based changes that would encourage consumer to seek the best price and services. Instead it will be based on employing more “evidence-based” decision making, looking at what treatments work and which ones don’t. Sounds real nice, but this can’t be the core of serious reform. And if it’s just more centralization of decision making, we’ll be surprised if it even achieves the modest goals laid out.