Why Is Healthcare
Reform So Difficult?
David Davenport
Crystal Serenity
February, 2011

Heated Rhetoric, Complex Issues
51 Million Uninsured?
– About 11 million are noncitizens
– About 16 million adults eligible but not insured
– About 7 million kids eligible but not insured
– Another 9 million have incomes over $66k
So real number closer to 16 million

Heated Rhetoric, Complex Issues
WHO says US life expectancy #42 in world?
--Remove homicides
--Remove traffic fatalities
We’re Number One

The Science & Technology
Are Rapidly Changing

Economics Are Becoming
Unsustainable

45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
1795
War of
1812
1820 1845
Federal Budget Outlays: 1795-2065
(as percentage of GDP)
World War II
Civil War
World War I
1870 1895 1920
Year
1945
Projected
Medicare
&
Medicaid
Social Security
1970 1995
2008
2020 2045
John F. Cogan
Hoover Institution
1/10/09

But Costs Difficult to Manage
• #1 cost driver is technology and improved healthcare
• There is also waste, perhaps as high as
20-25% but difficult to squeeze out

• 3 rd party payor problems (moral hazard)
– $5 of every $6 paid by “someone else”
• Regulatory cost
• Malpractice, lawsuits
• Tax policy drives employer plans

The Equality vs. Liberty Narratives
From the French Revolution: Liberte, egalite et fraternite
From the American Revolution: life, liberty and the pursuit of happiness

• Equality of opportunity
• Limited role of government
• Individual freedom and choice

• Equality of outcomes
• Government oversight
• Limits on free markets and individual freedom to institutionalize equality

Healthcare Reform in the 60’s

What Would Happen In “Ordinary”
Times?
• American people don’t generally support major overhauls
• With 15% uninsured and 80% + happy with their healthcare, felt need for overhaul isn’t widespread
• So work on individual pieces of problem

But These Were Not “Ordinary”
Times
• President Obama wanted to spend his political capital on this
• Both Congress and Senate were in his party
• Tough economic times create greater support for more safety net

• Repeal highly unlikely
• But Congress may alter it in other ways
• Constitutional challenges are real
• Public is ambivalent

For individuals
• National market, portability
• Preexisting conditions
• Tax relief and subsidies for uninsured

Individual Fixes for System
• National market
• Information/accountability for choices
• Change tax incentives
• Reform medical malpractice laws

Why Is Healthcare Reform So
Difficult?