Russ McBee

Hillary Clinton is still bruising from the smack-down Congress gave her health care proposal in 1993. The health care system in this country was in need of serious reform in those days; today, it's fundamentally broken. Given the worsening of health care insurance, delivery, and costs over the intervening years, it's struck me as a bit craven for her to have said so little about health care since her presidential campaign began.

She's finally decided to talk about health care, just one week before Barack Obama is scheduled to speak on the same subject. In her speech at George Washington University yesterday, she said:

There are three parts to my approach. First, lowering costs for everyone. Second, improving quality for everyone. Third, insuring everyone. Today, I will focus on the challenge of lowering costs.

She plans on delivering speeches on the other two points in the coming months.

This is what she proposes regarding costs:

Her plan calls for seven steps: a "prevention initiative" to reduce preventable diseases such as diabetes; modernizing health-care records through computerization; overhauling care for the chronically ill, whose costs account for approximately two-thirds of all health-care expenditures; "ending insurance discrimination" by providing care to people with pre-existing conditions, who are currently shut out; creating a "best practices institute," with both government and private participants, to determine standards of care; legalizing prescription-drug importation and requiring Medicare to negotiate lower drug prices; and implementing "common sense" changes to the medical malpractice system.

There's no doubt that medical record-keeping and administration are woefully inefficient and contribute to bloated health care costs. She said:

A recent RAND study concluded that chronic disease management, preceded by prevention and backed by information technology, could save $147 billion annually. 

She's talking about a "coordinated care model" in which chronically ill patients who see multiple doctors would have all their medical records combined into a single database, available to all that patient's health care providers. The model itself is long overdue and would certainly be of tremendous benefit. At first, I was skeptical of the $147 billion number. She's saying that much money could be saved every year simply by improving the IT infrastructure within the health care industry. The number seemed awfully high. However, we spent $2 trillion per year on health care in this country, so $147 billion is actually only 7%. It's entirely realistic to believe just about any industry could theoretically shave 7% off its overhead through IT infrastructure improvements.

That much money would provide health insurance for all the 47 million uninsured, three times over.

Her seven points include some talk about insurance, but she said she's saving insurance accessibility for another speech. In this one, she did say:

Fourth, my plan will offer individuals and small businesses market access to larger insurance pools that will lower costs and end insurance company discrimination against people with pre-existing conditions. As part of a plan for universal coverage, which I will discuss in detail in the coming months, we would create large insurance pools that lower administrative costs for small businesses and individuals by spreading the risk. In a system of universal coverage insurance companies cannot as easily shift costs through cherry picking and other means.

Short of a single-payer system (for example, expanding Medicare to cover everyone), the pooling of individuals and small businesses would go a long way toward making insurance more accessible and more affordable. With an individual health insurance policy costing as much as $20,000 per year, something has to give.

However, merely pooling small businesses and individuals together does not address the other side of the cost equation: the outrageous rate of inflation in the underlying costs of providing health care. Insurance has gotten more expensive because underlying medical costs have increased (well, and because of greed on the part of the insurance companies, but that's another post). Drugs, surgical procedures, hospital stays, office visits, and all the other attendant fees have increased much faster than the rate of inflation in the rest of the economy, and that trend has been going on for over twenty years now. Providing affordable insurance to everyone will help push those costs down somewhat, but it does not address the underlying question of rapid cost inflation.

I'm glad the candidates are talking about health care (Edwards has made it a key component of his campaign), and I'm glad Clinton is finally talking about it. I don't think she's presented a magic bullet on the subject, and I'm certainly no fan of her as a presidential candidate, but she has brought up some points worth considering.