SOME CAUTIONARY WORDS ABOUT HEALTH CARE REFORM

One of my favorite cinematic moments is the scene in The Sting in which Redford locates Newman, holed up in a whore house, to get advice about how to play the Big Con against Robert Shaw, who has had Redford’s partner, Luther, killed. After sobering up, Newman gives Redford a bit of bleak advice. Even after you take him for half a million, he says [I cannot quote it exactly], it is not going to be enough, but it is all you are going to get, so you will just have to walk away.

Now that Barack and Michelle’s excellent European adventure is over [complete with an intimate dinner at La Fontaine de Mars, a modest bistro in the 7^th featuring Southwest French food], Obama has returned to launch an all-court press for meaningful health care reform. I predict that he will be successful, and that when it is all done and signed, it won’t be enough, but it will be all we are going to get, and we will just have to walk away.

First, a few simple and well-known truths.

1. US GDP is ~$14.3 trillion. Health care expenditures are ~$2.4 trillion, or between 16 and 17 percent of GDP.

2. The French spend roughly half that, per capita, on health care, with statistically superior results [the French, on average, are healthier and live longer].

3. Insurance schemes depend for their viability on spreading the insured risks across a large population of at-risk individuals. The better able the insurer is to exclude from the insured population especially vulnerable individuals, the more profitable the scheme. [If I could persuade people in Denver to buy insurance against coastal flooding, while denying the same insurance to residents of New Orleans, I could get rich quick.]

4. In part as a consequence of decisions taken just after the end of World War II, employed Americans have by and large for the past two-thirds of a century received health insurance as a fringe benefit of their employment, a fact that leaves them especially vulnerable should they change jobs or lose their jobs.

5. Finally, and most important of all, regardless of the wisdom or unwisdom, efficiency or inefficiency, of a set of social arrangements, once those arrangements are put into place, their replication lays down objective physical and organizational structures to which everyone adapts, making any sort of change, even one that is manifestly an improvement, especially difficult to carry out.

Since this last point is the most important of the five, a bit of illustration and discussion may be in order. Three generations ago, the United States gave up on trolley cars and trams [thanks in large part to the fore-sighted and self-interested intervention of General Motors], and opted instead for the family car and a magnificent system of interstate highways. This made possible the hollowing out of the inner city, the growth of suburbs and exurbs, and the concomitant redistribution of work places and shopping centers. Anyone who has spent time in a large European city might come to the conclusion that these were, after all, unwise choices, but to reverse course and try to create European style cities in the United States, pedestrian malls to the contrary notwithstanding, would literally require reconstructing the housing stock of the nation. Apartments in Paris are smaller than those in New York because Parisians expect to spend a good deal more time in public spaces, -- cafes, public squares, promenades, and the like. There are deeply entrenched interests that would be damaged by any attempt fundamentally to alter the structure and functioning of the American city. And it is the residents of the cities, not just the real estate developers and merchants and such, whose interests would be affected.

Our health care system is an enormous structure that funnels into the pockets of millions of health care providers and associated persons roughly a trillion dollars a year more than the objective health needs of the population require. Because of the employment-linked system for providing health care, insurers have been able to exclude many of the most at-risk individuals in the society, thereby making the provision of health insurance vastly more profitable. As many as three-quarters of all Americans profess themselves satisfied with their health insurance and health care.

The entrenched resistance to health care reform, from consumers as well as from providers, has for a long time been so great that it has made serious reform impossible. This, rather than the mismanagement by Hillary Clinton eighteen years ago, is what doomed the last serious effort.

So, what is different now? Two things:

1. The cost of providing some form of health insurance to employees is now making corporations uncompetitive in the world market. The collapse of the U. S. auto industry is only the most visible and dramatic instance of this truth. The huge health care industry is of course still resistant to change, but large though it is, it is dwarfed by the segments of the American corporate world for whom a reduction of health care costs is now essential.

2. The deep recession that we are now in, with real unemployment plus underemployment running at close to 20%, threatens the entrenched interests of that segment of the working population that has, until now, been satisfied with its insurance and care. Too many people now face the prospect of a loss of health insurance, and even bankruptcy.

In this environment, Obama’s extraordinary political skills will, I am convinced, suffice to achieve some major reform of the health care system. Once that reform has been locked into place – according to the most recent political reports, by October 1 of this year -- the chances for further improvement will be nil for at least a generation. Many of us on the left, and indeed many others as well, will be disappointed with the outcome. The new system will not be a single-payer system, it will not achieve the savings demonstrated by the European models, and although it will improve the health of Americans, it will not pull us even with nations like France.

But it will be all that we can g