Two Aspirin Won't Cure Our Health-Care Problem
By Kevin Smith Sunday, March 7, 2010

In making the case for the urgency of health-care reform given the massive insurance rate hikes going on across the country, I wrote in my last column that the Republicans want to start over but there's nothing in their proposals to suggest that anything better is in the offing.

Some readers responded implying that I was unfairly dismissive of the Republicans' ideas. To those people: Thanks for reading the column. Thanks for caring enough to respond and for supplying the motivation to revisit Republican health-care reform.

The Republicans have some good ideas. For instance, I know a lot of doctors, and they'd all like to see medical malpractice reform. Medical malpractice suits are an excessive burden to doctors, prompting exhaustive testing (as much to assuage lawsuits as to form diagnoses), which increases expenses which, in turn, inflates insurance premiums.

But even the doctors I know concede that medical malpractice reform won't make much of a dent in controlling health-care costs, as the savings from lower malpractice insurance premiums are unlikely to be passed on to consumers.

The money physicians see (not unjustifiably) as having been unfairly withheld from them is likely to be taken as profit or reinvested back into their practices. We know this because medical malpractice reform has already been implemented in Texas and Missouri. Call your friends in those states and ask them how much money it's saved them.

Likewise, the proposal to let consumers buy insurance from companies across state lines sounds reasonable. But as a means to control costs, the Republicans promise more from the proposal than its implementation would deliver.

Newt Gingrich and John C. Goodman write in The Wall Street Journal that, "When insurers compete for consumers, prices will fall and quality will improve." It seems obvious. In practice, however, insurance companies don't like competing, and they don't suffer narrowing margins graciously.

The proposed reform would open up competition primarily for the most desirable consumers and likely at the expense of older consumers or those with pre-existing conditions. Net savings for consumers overall would be negligible.

That's just the two most prominent examples, but they demonstrate the problem with the Republican approach. It's not that the ideas aren't worth considering, but that they fail to achieve the costs savings necessary to make health care affordable to a significant number of Americans who are presently unable to afford it.

According to the Congressional Budget Office, over 10 years the bill introduced by House Republicans would cover another three million Americans and shave $68 billion off the deficit. By comparison, the last bill proposed by House Democrats would cover another 36 million Americans and shave $104 billion off the deficit.

While the Republican approach proposes attempts to control costs by investing modestly initially and adding as necessary, the Democratic approach actually reduces costs by expanding coverage. That's an important distinction because of the role that the uninsured play in driving up health-care costs.

If you've ever seen an itemized bill after a stay in the hospital and wondered if the Tylenol they gave you was gold-plated, it's because those inflated prices (which are reflected in your insurance premiums) help pay for the hospital's care for the uninsured.

The size and complexity of health-care reform is daunting, especially in such a perilous economic environment, but it is essential. The disproportionate amount of money we spend on health care steals money from every other sector in the economy. It makes our businesses less competitive in a global market. It makes it harder to add jobs and grow our economy, which is essential to reducing the deficit.

Our health-care system isn't just a little bit sick; the two-aspirin approach offered by the Republicans won't cure it. "Incremental" sounds less risky, almost comforting, but incrementally is not a rational response to a problem that's growing exponentially.

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