Health Care Reform


Why are Americans so worked up about health care reform? Statements such as “don’t touch my Medicare” or “everyone should have access to state-of-the-art health care irrespective of cost” are, in my opinion, uninformed and visceral responses that indicate a poor understanding of our healthcare system’s history; it is current and future resources and the funding challenges that America faces going forward. At the same time, we all wonder how the healthcare system has reached what some call a crisis stage.

Let’s try to take some of the emotion out of the debate by briefly examining how health care in this country emerged and how that has formed our thinking and culture about health care. With that as a foundation, let’s look at the pros and cons of the Obama administration’s healthcare reform proposals and the concepts put forth by the Republicans.

health care reform

We can all agree that access to state-of-the-art healthcare services would be good for this country. Experiencing a serious illness is one of life’s major challenges, and facing it without the means to pay for it isn’t very comforting. But as we shall see, once we know the facts, achieving this goal will not be easy without our contribution.

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These are the themes I will touch on to try to make some sense of what is happening to American health care and the steps we can personally take to make things better.

  • A recent history of American health care – what has driven the costs so high?
  • Key elements of the Obama health care plan
  • The Republican view of health care – free market competition
  • Universal access to state-of-the-art health care – a worthy goal but not easy to achieve

what can we do?

First, let’s get a little historical perspective on American healthcare. This is not intended to be an exhaustive look into that history, but it will appreciate how the healthcare system and our expectations for it developed. What drove costs higher and higher?

To begin, let’s turn to the American Civil War. In that war, dated tactics and the carnage inflicted by modern weapons combined to cause ghastly results. It is not generally known that most deaths on both sides of that war were not the result of actual combat but of what happened after a battlefield wound was inflicted.

First, evacuating the wounded moved at a snail’s pace, which caused severe delays in treating the injured. Secondly, many injuries were subjected to wound care, related surgeries, and amputations of the affected limbs, resulting in massive infection. So you might survive a battle wound only to die at the hands of medical care providers who, although well-intentioned, interventions were often quite lethal. High death tolls can also be ascribed to everyday sicknesses and diseases without antibiotics. In total, 600,000 deaths occurred from all causes, over 2% of the U.S. population then!

Let’s skip to the first half of the 20th century for additional perspectives and bring us to more modern times. After the Civil War, there were steady improvements in American medicine in understanding and treating certain diseases, new surgical techniques, and physician education and training. But for the most part, the best that doctors could offer their patients was a “wait and see” approach. Medicine could handle bone fractures and increasingly attempt risky surgeries (now largely performed in sterile surgical environments), but drugs were not yet available to handle serious illnesses. Most deaths resulted from untreatable conditions such as tuberculosis, pneumonia, scarlet fever, measles, and related complications. Doctors were increasingly aware of heart and vascular diseases and cancer but had almost nothing to treat them.

This fundamental review of American medical history helps us understand that until recently (around the 1950s), we had virtually no technologies to treat serious or even minor ailments. Here is a critical point we need to understand; “nothing to treat you with means that visits the doctor, if at all, were relegated to emergencies, so in such a scenario, costs are curtailed. The simple fact is that there was little for doctors to offer and, therefore, virtually nothing to drive healthcare spending. A second factor holding down costs was that medical treatments were paid for out-of-pocket by an individual’s resources. There was no such thing as health insurance, and certainly, no health insurance paid by an employer. Except for the very destitute lucky to find their way into a charity hospital, health care costs were the individual’s responsibility.


What does health care insurance have to do with health care costs? Its impact on health care costs has been and remains, to this day, absolutely enormous. When health insurance for individuals and families emerged as a means for corporations to escape wage freezes and to attract and retain employees after World War II, almost overnight, a great pool of money became available to pay for health care. As a result of the availability of billions of dollars from health insurance pools, money encouraged an innovative America to increase medical research efforts. More Americans became insured through private, employer-sponsored health insurance and increased government funding that created Medicare and Medicaid (1965). Also, funding became available for expanded veterans’ health care benefits. Finding a cure for almost anything has consequently become very lucrative. This is also the primary reason for the vast array of treatments available today.

I do not wish to convey that medical innovations are a bad thing. Think of the tens of millions of lives saved, extended, enhanced, and made more productive. However, with a funding source grown to its current magnitude (hundreds of billions of dollars annually), upward pressure on healthcare costs is inevitable. Doctors offer, and most of us demand and get access to the latest available healthcare technology in pharmaceuticals, medical devices, diagnostic tools, and surgical procedures. So the result is that there is more health care to spend our money on, and until very recently, most of us were insured, and the costs were largely covered by a third party (government, employers). Add an insatiable and unrealistic public demand for access and treatment, and we have the “perfect storm” for higher and higher healthcare costs. And by and large, the storm is only intensifying.

Now, let’s turn to the key questions that will lead us into a review and, hopefully, a better understanding of the healthcare reform proposals in the news today. Is the current trajectory of U.S. healthcare spending sustainable? Can America maintain its world competitiveness when 16%, heading for 20% of our gross national product, is spent on health care? What do other industrialized countries spend on health care, and is it even close to these numbers? When we add politics and an election year to the debate, information to answer these questions becomes critical. We must spend some effort understanding health care and sorting out how we think about it. Properly armed, we can more intelligently determine whether certain healthcare proposals might solve or worsen some of these problems. What can be done about the challenges? How can we, as individuals, contribute to the solutions?

The Obama healthcare plan is complex – I have never seen a healthcare plan that isn’t. But through a variety of programs, his project attempts to deal with a) increasing the number of Americans that are covered by adequate insurance (almost 50 million are not) and b) managing costs in such a manner that quality and our access to health care are not adversely affected. Republicans seek to achieve these same basic and broad goals, but their approach is proposed as being more market-driven than government-driven. Let’s examine what the Obama plan does to accomplish the abovementioned objectives. Remember, by the way, that Congress passed his dream and began to kick in starting in 2014 seriously. So, this is the direction we are currently taking as we attempt to reform health care.

The plan requires everyone to have health insurance to cover the cost of this expansion, and a penalty will be applied if we don’t comply. It purportedly sends money to the states to cover those individuals added to state-based Medicaid programs. Several new taxes were introduced to cover the added costs, one being a 2.5% tax on new medical technologies and another increasing taxes on interest and dividend income for wealthier Americans.

The Obama plan also uses evidence-based medicine, accountable care organizations, comparative effectiveness research, and reduced reimbursement to health care providers (doctors and hospitals) to control costs. The insurance mandate covered by points 1 and 2 above is a worthy goal. Most industrialized countries outside of the U.S. provide “free” (paid for by individual and corporate taxes) health care to most, if not all, of their citizens.

However, it is important to note that several restrictions may cause many Americans to be culturally unprepared. The primary controversial aspect of the Obama plan is the insurance mandate. The U.S. Supreme Court recently decided to hear arguments about the constitutionality of the health insurance mandate due to a petition by 26 state attorneys general that Congress exceeded its authority under the commerce clause of the U.S. Constitution by passing this element of the plan. The problem is that if the Supreme Court should rule against the mandate, it is generally believed that the Obama plan as we know it is doomed. This is because its major goal of providing health insurance to all would be severely limited if not terminated altogether by such a decision.