December 12th 2009

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Articles from this issue:

EDITORIAL: The challenges facing Tony Abbott

CANBERRA OBSERVED: Abbott's victory took media by surprise

NATIONAL AFFAIRS: Senate committee recommends against same-sex marriage

SOUTH AUSTRALIA: Euthanasia bill defeated in SA

ENVIRONMENT: UK's climate research centre discredited

ECONOMICS: Birdsville Amendment stops fuel predatory pricing

ENERGY: Time for a new Coalition emissions policy

THE MANHATTAN DECLARATION: U.S. Christian leaders draw a line in the sand

REPRODUCTIVE HEALTH: Women's health risk ignored by Rudd Government

UNITED STATES: Health care reforms unleash passionate debate

RUSSIA: Medvedev's desperate drive to modernise Russia

EDUCATION: Whatever happened to adult authority?

SCHOOLS: Are independent schools enemies of social cohesion?

Westmore has not read my report: Fr Frank Brennan

Morally handicapped politicians

Market economics misunderstood

Surafend massacre


CINEMA: Dickens' Christmas tale brought to life A Christmas Carol (rated PG)

BOOK REVIEW: FIRES OF FAITH: Catholic England under Mary Tudor, by Eamon Duffy

BOOK REVIEW: THE REVOLT OF THE PENDULUM: Essays 2005-2008, by Clive James

Books promotion page

Health care reforms unleash passionate debate

by Jeffry Babb

News Weekly, December 12, 2009
The health care debate is consuming America. The airwaves are flooded by advertisements for and against, from all sorts of interest groups.

Let's look at the main features of this debate. As the health care bill is debated in the US Senate, it will go through the process of being examined by various committees, and then the 2,000-page document will have to be voted on by the whole Senate. The Democrats have 60 votes in the Senate, which means that the Republicans, who so far are uniformly opposed to the bill, cannot stop it from being debated.

Whatever happens, health care in America will remain tied to employment. Americans get their health coverage through their workplace, which is fine if you have a big employer who can afford to pay. Many small employers cannot afford to provide health cover.


If you lose your job - and over 10 per cent of the workforce are unemployed - you will lose your health cover. A scheme called COBRA (Consolidated Omnibus Budget Reconciliation Act) exists to provide continuing health cover for the unemployed, but most unemployed people cannot afford to take advantage of it.

Whatever scheme emerges, it will not be like Britain's National Health Service, which is known as a "single payer" scheme - in other words, the government pays all the bills. That is not even on the table.

What is on the table is the public option. This would be a government-run scheme to provide health cover for those people whose employers could not afford private cover. This would provide an alternative to private medicine and, in the process, hold prices down.

This is unlikely to get up in its present form. Several key members of the Democratic coalition are opposed to it, including Senator Joe Lieberman, the independent senator from Connecticut, who votes with the Democrats.

The public option may survive, but it is likely to be outsourced to the private insurance companies, which will act as contractors to the government.

Private health care insurers are not opposed to health care reform, strange to say. Currently, some 46 million Americans are uninsured, while an estimated 16 million others are underinsured, meaning in excess of 60 million Americans lack adequate health cover. As all Americans would be required to have health insurance or pay a penalty, the health insurance companies can see a vast new market opening up, and so have been supportive of the general move to expand health insurance in America.

At the moment, it is impossible for many Americans with chronic health problems to get heath insurance, meaning that those who most need health cover can't get it. Health insurance companies treat health insurance the same way insurers treat other categories of insurance - a bad risk will pay more.

People, however, are not like cars. We are not all going to write off our cars, but we are all going to get sick and die. Private health insurers in Australia overcome this is by community rating. That is, all people pay the same premium, regardless of their age. In effect, the young subsidise the old. But this is not as inequitable as it sounds. The young, who are on the whole fitter and healthier, are liable to catastrophic illnesses and accidents.

According to one nurse from Florida, in America this can be brutal. A young self-employed man without health cover was being readied for an emergency operation to replace a heart valve. The surgeon went up to him and said "unless you can give me $10,000 on your credit card, I'm not doing the operation." The young man did not have $10,000 on his credit card.

Those who suffer most from America's health care system are the working poor and those in small companies which do not offer health insurance. The elderly, over 65, are covered by Medicare, and most poor people are covered by Medicaid.

It's those in the middle who are most at risk. The current bill would extend cover for the poor under Medicaid, but cut back on benefits for the elderly under Medicare, meaning the health bill would actually cut government outlays.

Increasing health costs

Another aim of the bill is to moderate the increase in health costs. Within 20 years, health costs will account for 20 per cent of US GDP at the current rate of increase.

Both Democrats and Republicans agree this is insupportable, taking into account the rapidly ageing baby boomers, who are moving into the years when they most need health care - paid for by the government under Medicare.

The bill also aims to penalise so-called "Cadillac plans" which offer almost unlimited benefits and act as price-setters for the rest of the heath industry.

In all, the final bill is likely to be, at least in the eyes of most Australians, a modest reform rather than a revolution that aims to rectify a situation which is clearly inequitable and places the hardest working and most enterprising Americans at risk.

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