Turning Point in the Health Care Debate

A significant development today toward resolving the impasse on health care reform: HHS Secretary Kathleen Sebelius indicated on CNN that the administration is not wedded to the public option for health insurance reform. This opens the door for the the regional non-profit cooperatives alternative, seeded by government funds but not controlled by the federal bureaucracy and more responsive to local and regional concerns.

Overall, there is a balance to be achieved in terms of taxation and funding of the health care plan, the balance of federal versus state and local control, and the expansion of coverage versus the schedule of benefits received. These are the short term considerations to get legislation passed that achieves the objectives of realistic budgetary impact, significant expansion of coverage, and reduction of health care costs for consumers through increased competition in the insurance market and subsidies. But this deals with the cash flow of the health care system, the payers, and so far neglects the restructuring of the providers. The result will be a short term success at wringing more coverage out of the current system at a lower average cost to the consumer and satisfies the populist constituency.

At the same time, any regulations that transfer more control to the federal government will be blocked, which should allow enough of the opposition to passage to be neutralized to get it through. But an opportunity has been lost here for a mature dialog about what will happen five years from now, just as we have failed to do on Social Security and other health and welfare related issues. This one is the one that breaks the bank unless we restructure.