Carville, Rove share competing visions for U.S. healthcare

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As might be expected, noted political consultants James Carville and Karl Rove found little to agree on during a debate on U.S. healthcare at last week's annual Healthcare Information and Management Systems Society (HIMSS) meeting.

Rove, a longtime Republican consultant and policy advisor, advocated a model that offers insurance premium support to provide insurance and higher-quality care to more Americans, while Democratic activist and consultant James Carville focused on the lower healthcare-spending growth rates achieved in the past three years, the promise of Obamacare to insure more Americans, and the value of the Medicare program.

While neither man was able to win the other over to his side, the debate offered an intelligent and surprisingly civil discussion that illuminated the dilemma facing the U.S. as it struggles to provide quality healthcare at a price the country can afford.

Financial disaster?

Rove believes that Obamacare is going to be a financial disaster and that Republicans should be constantly thinking about alternatives to the Patient Protection and Affordable Care Act.

Of the funds raised for Obamacare via borrowing from Medicare and other sources over 10 years, 85% is set to be spent in the first four years of the program (2016 to 2019). "That's unsustainable," Rove said.

Republican consultant Karl Rove.Republican consultant Karl Rove.
Republican consultant Karl Rove.

Rove also highlighted what he calls the "perverse" incentives in the program.

"If you're a company, you're stupid to continue to provide employer-provided coverage to employees," he said.

Companies would be better off paying the $2,000 per-employee penalty for not providing insurance, instead of the $8,000 to $9,000 they are currently spending per employee, Rove said.

Premiums are also up, and patients are having a harder time finding a doctor, he said.

Perhaps surprisingly, a Republican alternative could come from a Democrat who participated in the National Bipartisan Commission on the Future of Medicare during the Clinton administration, according to Rove. Premium support, an idea championed then by Sen. John Breaux (D-LA), has been showing advantages with Medicare Part D and may be a way to solve the Medicare problem as a whole, he said.

"A consumer-oriented, choice-based, market-based model ... may [offer] some really important lessons for how we handle the rest of healthcare," he said.

Recent Medicare cost containment

Carville responded by noting that the past three years have been the best ever in terms of containing healthcare costs in the U.S.

"If there's one problem that can kill us, it's the percent of our [gross domestic product (GDP)] that we spend on healthcare costs," he said. "If [the healthcare cost-containment trend] should continue, that would be pretty good news."

As journalist Steven Brill noted in a recent article in Time magazine, Medicare delivers healthcare cheaper than any other system. Also, as with any change this big that is being implemented this fast, some things with Obamacare are going to work better than others, and some aspects will have to be improved, Carville said.

The overall framework, however, is a remarkable achievement for President Obama and will get more people covered, Carville said.

Rove, in turn, said it's a reach to tie the Affordable Care Act to the slowing growth in healthcare spending, as the insurance exchanges don't start until 2014 and aren't fully enforced until 2016.

Democratic consultant James Carville.Democratic consultant James Carville.
Democratic consultant James Carville.

"To claim that this recent hiatus in growth in healthcare expenditures is somehow related to the program we really haven't started operating yet is a little bit of a far stretch," he said.

Rove noted that there was also a period during the Clinton administration when healthcare costs experienced moderate growth. At the time, health economists attributed the moderation to many of the conditions in effect today, namely sluggish economic growth that prevents many people from going to the doctor, Rove said.

Another factor might simply be difficulty in getting access to Medicare services.

"Some of this may also be because last year [the Department of Health and Human Services] said that the largest number in recorded history of seniors said they were having difficulty in getting a doctor to accept them for Medicare coverage," Rove said. "Some people were delayed coverage because literally a doc said they weren't taking any more Medicare patients."

Some of this reduction in healthcare spending could also be attributed to health IT, but it's difficult to establish a cause-and-effect relationship, he said.

Medicare quality

Medicare pays the average physician or healthcare provider roughly 80% of what private insurance pays, because "some smart person in Washington has decided that this is what this must cost," Rove said.

Because insurance companies are not in the business of making healthcare providers rich, this inevitably leads to cost shifting: Providers are not being fully reimbursed for their Medicare and Medicaid patients, so they make up the difference by charging non-Medicare and non-Medicaid patients more, Rove said.

"Cost shifting is inefficient and it causes distortions in the system," Rove said.

Even assuming that it's a great healthcare system, the hospital portion of Medicare is going to go broke in 2024, Rove said. The average American puts in $109,000 in Medicare taxes over the course of his or her working career and takes out $330,000 in benefits. The $220,000 excess is placed on the nation's credit card and left to kids and grandkids to pay.

"Is that a system that's sustainable or moral, or even right?" Rove asked. "We need to find a way to make these great social safety nets like Medicare and Social Security sustainable for the long haul without bankrupting our kids and grandkids."

A good value?

If you think the problem in the U.S. is that we spend too much of our GDP on healthcare, then you advocate the expansion of Medicare, because it's cheap, Carville said. And Medicaid is even cheaper.

"If we're delivering healthcare at 18% of GDP and nobody in the world is breaking 12%, then, excuse me, maybe we ought to look at something," he said.

What's more, Medicare appears to be working: Life expectancy after 65 may be the only meaningful health statistic in which the U.S. leads the world, Carville said.

"Where do people over 65 get their healthcare from?" Carville said. "You know it and I know it and the whole world knows it."

Carville also pointed out that if trends hold, the changes in projections for future healthcare costs will reduce Medicare spending more than the Simpson-Bowles deficit-reduction panel had included in its original proposal to cut Medicare spending.

While it's unknown exactly what's behind the slowing growth in healthcare spending, we should be investigating this trend and exploring its causes, Carville said.

Rove countered by pointing out that Medicaid is busting state budgets, and in most states, it consumes more resources than education and other social services.

"Let's be honest, Medicaid is second-class healthcare," he said. "It is a shame on our country that we provide Medicaid rather than allowing people who are poor to have the same choices that people in the middle class have."

The cost-shifting problem is also even worse with Medicaid, which reimburses at an even lower rate, Rove said.

"You can't tell me that if you're getting low reimbursement rates like that, you're getting good quality care," he said. "It just doesn't work that way."

Rove did agree with Carville on one thing.

"We need to do something different," he said. "We need to look at facts and we need to look at practice and how these things roll out."

Carville closed by emphasizing that healthcare under Medicare is less expensive than care provided by private insurance.

In response to a comment by Rove that this is only accomplished by lowering reimbursement rates below the cost of the care provided, Carville offered a rejoinder on hospital pricing.

"If the hospital charges you $18 for an Advil, you don't pay it," he said. "A hospital bill is [marked up] more than the price of a rug in Istanbul."

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