Thursday, March 16, 2006

For you, special price

George Bush appeared in Maryland yesterday in a promotional event for his Medicare prescription drug benefit. He took questions from the crowd and for the most part, the questions were of high quality -- simple and direct. While the entire transcript is revealing, there are two aspects in particular that we would like to highlight; one where he reveals an intriguing autobiographical detail, and one where he and his Health Secretary (Mike Leavitt) left their audience with a very mistaken impression of how government health policy works.

First, the autobiographical detail:

Q We still have millions of [health] under-insured or uninsured citizens in the United States, and what are you going to do about that?

THE PRESIDENT: ... Some of the people who have not insured are younger Americans who choose not to be insured. It's like, I kind of remember that period of time. I thought I was never going to get sick. And so I thought I'd save some money.

In other words, George Bush is making the specific assertion that earlier in his life, he chose to forgo health insurance on grounds of a health-cost tradeoff. Assuming this is true, one has to ask whether this personal experience -- surely driven by the safety net of being from a wealthy family -- is informing his current views about the necessity of health insurance reform.

Second, Bush had to twice dodge around one of the gaping holes in his Medicare drug benefit, the failure of the government to use its bargaining power as a large purchaser to obtain lower prices for prescription medicine. The legislation that implemented the benefit specifically prohibits this. So:

Q Secondly, I am a member of Medicare, of course. I'm also a member of Kaiser Permanente. My medical bills are absolute nothing -- 90 days or $8. Why does Kaiser have more of a means of putting forth these medications than does the government of the United States?

THE PRESIDENT: See, she is a part of a private program that has provided a benefit that you like, and you don't want to change and you don't have to change -- and that's what we're trying to do. We're trying to give people different options like the option you have got.

In the old system, they didn't have those options. Matter of fact, they didn't have a prescription drug benefit in the old Medicare system. Now the Medicare system has invited a series of providers -- I think there's 34 different providers here in the state of Maryland, if I'm not mistaken -- that say, now, I want to give you a chance to be able to come up and have the same satisfaction with the program that you do.

Look, if you're happy with where you are -- and it sounds like you're pretty happy about it -- don't change.

Q I'm not going to.

Nor should she. Because her private health insurance company is using its bargaining power to get a lower price for her medicine than the government could. However, she could end up forced into the government plan if her insurance company decides that providing her with cover is not sufficiently profitable, knowing full well that she has an alternative now with the costlier government program.

But that wasn't the end of this issue:

Q ... The second question deals with what are we doing at the federal level to get some uniformity in terms of the billing in hospitals so that we don't have the wide dispersion between hospital billing as a result of someone having insurance and someone who does not have insurance, and the whole bit. And that's been going on for years, because I was in a hospital, ran a part of it, and I know that there's a great dispersion in that.

THE PRESIDENT: I appreciate that. Do you want to take that on, Mike?

SECRETARY LEAVITT: Sure. Last night I was in a hotel, and on the back of the hotel door, there was a price: $449 a night. Now, you'll be pleased to know, Mr. President, that I didn't pay that -- (laughter) -- and we didn't pay that because the government had created a government rate. It was only $130 a night, and they slid the bill under the door.

A lot of insurance companies do the same thing and create special prices for the people that are insured with them. What the President has recently done is he's told every insurance company, every employer, and every provider in the country: You ought to tell people what you're charging. People deserve, people have a right to know what they're being charged and the kind of quality they're getting. And that's an initiative of the President. And very shortly, I believe you'll start to see that kind of disclosure.

So in response to a question about why group purchasers -- insurance companies -- can get better prices for healthcare than individuals, the Health Secretary offered an anecdote about how the government can get lower prices for hotel rooms than individuals. But this is exactly the buying power that the government refuses to use for medicine under the Medicare law. And it's exactly the problem that underlies Bush's preference for "consumer-driven healthcare"; individuals buying alone will not be able to get as low a price as group purchasers. The bottom line is that in an efficient healthcare market, the word "social" has to come in somewhere. But this is not something that the current Administration is ideologically disposed to admit.

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