The History of Healthcare Legislation, Part One

I get occasional questions about the new Health Care legislation.  Busy, responsible people are asking what all the commotion is about.  They hear companies complaining, while TV commentators say it’s not that big a deal. What’s up?  Here’s my take on it, but fair warning:  I’m in favor of companies making lots of money and hiring lots of new employees.

How can two different points of view be held so passionately, each party so certain that the other side is wrong?

Strangely, what passes for a debate on health care has escalated into emotional battles over who’s going to lose what. And most of the losses don’t seem to be tied to taking care of sick people.  


The conversation starts simply enough. There are sick people who want medical care.

It evolves:
There are sick people who want medical care, and they can’t get it.

It gets power:
There are sick people who want medical care, and they can’t get it… And that’s just wrong.

It gains supporters:
There are sick people who want medical care, and they can’t get it… And that’s just wrong. YOU WOULDN’T DENY THEM MEDICAL CARE, WOULD YOU?

Sometimes the answer “of course not” is followed by a donation, during a telethon fundraiser.

Just as frequently, the question is asked by TV reporters doing man in the street interviews. They’ll pop into a restaurant, turn on the cameras, walk up to a table and say, “How do you feel about giving health care to the poor?”

The patron puts down a piece of toast, wipes away some grape jelly, and says, “Oh, I’m in favor of that. That would be really great.”

So, supporters pick up momentum. Some are in favor, because they don’t have something they want. Some are in favor, because it would be really nice to give it to them. And some are in favor, because promising to give away valuable things is a wonderful way to get elected.

In fact, even the folks who are suspicious of what they hear have difficulty arguing against the idea of providing better health care for people… whatever “better” means, and whatever “people” we might be talking about.

So, now all we have to do is implement a program, and we’re off to the races.

The simplest answer for “solving the health care problem” is for me to identify anything I don’t like and write a law against it. And I can solve any funding problem I have by taking your money.

Problem solved.

Cooler heads slow down the process, asking annoying questions.

Things like, “What does better health care mean?”
Answer: “Less costly, more widely available, and higher quality.”

And the resistance kicks in: “Wow. You don’t get that by writing a law.”

And another question: “Better health care for what people?”
Answer: “Everybody.”

More resistance: “Everybody? We’re not completely satisfying people who purchase the finest health insurance in the country. You want paid health care for anybody who sets foot in the U.S.?”

So, now we have two positions: The SURE, SWELL side, and the NOT SO SURE side.

SURE, SWELL pushes harder, because they really, really want it.

NOT SO SURE starts looking for ways to help.
Maybe we could let insurance companies sell insurance all across the country. They wouldn’t be constrained by individual state laws. How about that?
Naah. Too complicated.

OK, tell you what: Some 20% of health care costs come from lawsuits or malpractice insurance. How about we limit those gigantic awards and keep the cost of health care down? It worked in Texas.
Naah. It’s fun to win millions of dollars, even if you did do something stupid.

Oh, my.  Well, how about this:  Create a medicare type program just for folks who can’t participate in the open market.  You can’t ask insurance companies to have open ended responsibility for every medical issue, now, can you?

Naah, and Naah.  We don’t want answers just for the toughest problems.  We want to be the source for everybody’s answers.  Besides, we may eliminate health insurance companies, altogether.

“OK, I give up,” says the NOT SO SUREs, “what would you do?”

“Well,” the now VERY SURE contingent says, “how about, we just let everybody have health care. In fact, not just health care. Health care as good as any Congressman or President would get. That sounds even better.”

“I know you think we can’t afford it, but we can. We’ll just make doctors work longer hours for less money. We’ll tell pharmaceutical companies that we don’t want their expensive drugs. We’ll just take the cheap ones.

“We can pay for it with money from the rich people. And from rich insurance companies. In fact, we’ll take it from all companies. If that’s not enough, we’ll take it from other programs. How about Medicare? It’s supposed to have money. And, hey, let’s take it from people who aren’t so rich. Never mind, don’t worry. We’ll borrow the rest.”

To some ears, that argument is falling apart.

Pride and power can sometimes overcome reality… for awhile.

If you focus single-mindedly on just one thing, like passing health care legislation, you may very well get it passed.

In March, 2010, a brutal series of legislative sessions force-fed a health care bill into law.

The force-feeding process left behind charges of illegal behavior.

The laws themselves are under challenge. A significant number of states are lining up to sue the federal government on the grounds that the health care legislation is not constitutional. (This is a major pushback in a country that is recognized around the world for the most excellent legal system in the history of man. And where its citizens couldn’t begin to tell you what’s in the Constitution or the Bill of Rights.)

The financing doesn’t exist. Politicians make their living by telling whoppers to citizens and trying not to get caught. Medicare, Medicaid, Social Security, and other party favors are out of money. The President of The United States, Mr. Obama has actually said the country has no money. Telling little fibs here and there to get health care passed isn’t going to save us when the sum total of health care fibs is bigger than any number an economist has ever seen.

Costs can’t go down. Hospitals, medical firms, drug companies, and insurance companies publish their financials. If you care to read their reports (and very few people will) you can see that tight cost controls allow modest profits. How do costs go down, when you plan to add unlimited services to the sickest, most desperate patients in the country? And how do costs go down when you add tens of millions of new patients to the system? This isn’t a question of what we want. This math problem says costs cannot go down.

Availability can’t go up. As it turns out, doctors object to being told how to practice medicine. They don’t like the idea that they will make less money, work harder to earn it, and pay higher taxes. They really don’t like the idea that rushing ever larger streams of patients through their waiting rooms could result in errors. Errors that will trigger devastating lawsuits. Much easier, nearly half of all docs report, much easier to just retire. There is no reason for someone to want to go into this nightmare. There’s plenty of reason to leave it.

It wasn’t enough to warn the administration that this legislation would hurt employers, kill jobs, and slow the economy. The legislation passed. Here’s what happened immediately:

The markets showed resistance. Yes, the equities markets are drifting higher. The issue here, though, has to do with the ability of The United States to borrow money. Astronomical sums of money. Sometimes more than once a week.

The cost of borrowing is creeping up, because lenders suspect they might not get paid.  At the state level, 48 states are reported to be in severe financial straights.  Cities are in trouble.   And the country, itself, has no visible way of paying its obligations.  In fact, so many lenders are quietly heading out the back door that the single largest purchaser of U.S. Treasurys is… the Fed. We have been printing money so we could loan it to ourselves. Nice.

And major corporations promptly – I mean right away – reported they would take charges against quarterly earnings. ATT called for a billion dollar hit.  The $100 million and up club includes Caterpillar, Deere , Boeing, 3M, and more.

They also announced thousands and thousands of potential layoffs.

Will they really do it?

Why not? Every job cut saves serious benefits costs. Companies have been repositioning outside of this country for sometime.

It wasn’t a week before we read that Tim Hortons ice cream is leaving the U.S.   Now, Canada, of all places, is a tax haven compared to us.

Why does this matter?

The more that companies and people flee high costs, the more the costs are jacked up on whoever’s left to pay them. California is a great example. Taxes are high. So companies cut their payrolls to meet their tax obligations. Tax revenues decline. California responds with higher taxes.  This isn’t pretty.

… hasn’t been written yet.


The conversation starts simply enough. There are sick people who want medical care.