Health Care Reform: What It Is, Why It's Necessary, How It Works

Jonathan Gruber is an MIT economist and principle architect of Massachusettscare, and was a consultant with the Obama administration and Congress during development of the Affordable Care Act. His book, with H.P. Newquist, is an educational comic book that tells us "what" the ACA is, "why" it's necessary, and "how" it works. It is actually a fast and fun read with a bunch of easy to understand factoids.We first learn almost half of our "private" health care system is already paid by the government, with a lesser amount paid by consumers/employers. Back in 1950 only 5% of our earnings went for health care; we now pay over 17% for care. But Gruber tells us we don't want 1950s medicine where 29 of 1000 infants died in the first year versus 7 today, and 6 out of 1000 adults died of a heart attack versus half that today.Regarding wasted and expensive care, we are told that each Medicare enrollee in McAllen, Texas cost the system $15,000, twice the cost in El Paso for patient outcomes that are no better. Another example is Camden, New Jersey where 1% of the population accounts for more than 30% of the city's health expenses.The Massachusetts care solution was to get everyone covered so the insurance companies could price the insurance fairly knowing they were getting the average risk. This was the individual mandate that provided subsidies for coverage that included preexisting conditions.Under the ACA insurance will need to cover a standard set of services for doctors, hospitals, drugs, and mental health, where total out-of-pocket expenses cannot exceed $6000 per year. Families will pay as little as 2% of their income and no more than 9.5% to buy the insurance. Because the ACA is so expensive ($940 billion over 10 years), the government will cut overpayments to private insurance companies, tax the profitable drug, device, and insurance companies, and individuals earning more than $200,000, and put a surcharge on the "Cadillac policies" that drive up medical costs with overly generous benefits using tax-free money.The goals of the ACA are to lower individual health care costs and reduce costs to the government. Maybe it is worth the wait to see if something good happens.

Interesting, logically presented, graphics help to tell the story. Several people, one a young student, one an older person, one a small businessman, one presumably a lower-middle-class or even working poor trades worker with a family. The law impacts each differently, which is one of the most important contributions of the book -- you get to see that people different from you have different problems and have different relief and new problems due to the bill. It doesn't sugarcoat the fact that it isn't free, but it does skewer a lot of BS claims by opponents. That includes something I didn't realize: the Cadillac Tax is meant to level a playing field that appears to favor wealthier people over us in the working middle class. Not something you hear on screaming head news shows.Take a look. It's a quick read, so read it twice. And read it with your kids and get their take on it. You'll be surprised at what you find. -- RG

Jonathan Gruber's book reminds me of Bill Cosby's book, Everything I Know, I Learned in Kindergarten. While Mr. Gruber's book does not go into detail about the various parts of "Romneycare," and now, "Obamacare," it does give the essence of the programs/laws and helps to clarify issues that have been hotly debated. The book is a very easy read, especially given the cartoon format. Mr. Gruber targeted his audience correctly...6th graders. And, I don't feel offended by that bulls-eye. People who prepare speeches for the general masses, or, who testify in court are usually counseled to tailor their communications towards a +- 6th-grader level. Jonathan Gruber hit his target with this book.

Jonathan Gruber has been a central figure in health care reform for more than a decade and his paradigmatic views have shaped much of the philosophical framework for Commonwealth Care in Massachusetts and the federal Patient Protection and Affordable Care Act ("PPACA"). So I was interested to see that Dr. Gruber had published "Health Care Reform" with the advertised promise to demystify this complex subject in a moderate and balanced way.Upon receiving the book I was immediately impressed by the cleverness of using the comic book-type format to make such complex concepts accessible to the general public - an historical obstacle to forming a national consensus.In "Health Care Reform" a cartoon version of Gruber takes the reader on a brief tour of the American health care system as experienced by four comic book-style characters intended to represent the diverse American public. In doing so, we begin to see the inherent limitations of the comic book format; particularly its need to use characters to focus the reader's attention as well as its penchant for over-simplification - unfortunately in the case of "Health Care Reform", often to the point of nonsensical abstraction.But rather than illuminate, Gruber demagogues the most critical issues by recycling - without challenge - virtually every canard employed by advocates of so-called "progressive" health care reform in the guise of fearsome monsters ultimately defeated by PPACA. In doing this Gruber reveals that, far from being the objective purveyor of fact, he is at best a cheerleader for the form of government-driven health care reform in which he has been an active participant.Cartoon Gruber places much of the blame for rising health care costs on the need to care for the uninsured, very literally linking the two in the form of a snarling two-headed alligator. He points out that the uninsured often receive their health care through hospital emergency rooms and correctly notes that this is one of the most expensive ways to provide primary care. However, he conveniently overlooks Congress's primary role in creating this monster by requiring that hospitals treat anyone who shows up in an emergency room without regard for insurance coverage (EMTALA 1986). Nor does he mention that, unlike other forms of insurance which require a person to be insured at the time of loss in order to have coverage, health insurance (especially eligibility for public programs like Medicaid and care for the indigent) can be written retroactively once an injury is sustained or an illness has been diagnosed. As a result otherwise healthy individuals (especially the young) have little incentive to maintain health insurance - even when it is offered to them and heavily subsidized by their employer.Cartoon Gruber spends little time discussing the structure of the current system, its historic development, or market distortions caused by government intervention (both regulatory and economic). In fact, when trying to put today's health care system into perspective, he goes out of his way to begin his historical comparisons in the pre-Medicare/pre-Medicaid era of the 1950s but fails to reference the impact that these large public programs have had on the private health insurance markets (given that they now account for a majority of all health care services and nearly half of all health care spending). While he is keen to point out the impact that caring for the uninsured have on private insurance premiums, Gruber fails to mention that this cost (roughly 1.4% in a study by the Hoover Institute) is dwarfed by cost-shifting from underfunded programs like Medicaid and Medicare which is 7½ times greater (that's 7½ times not percent). Nor does he mention that utilization (the primary cost driver for all health insurance programs) is increasing nearly twice as fast among Medicare participants as for Americans with private health insurance or that the unfunded liabilities for Medicare and Medicaid are quickly approaching $100 trillion - a debt that will be passed on to future generations.Gruber seems unaware that the states, not the federal government, have been the primary regulators of insurance, a role that has been formally codified in federal law (ERISA 1974). So Gruber either knows or reasonably should know that even before PPACA, the claim that any insurer could "yank your insurance away whenever you get sick" or "stop paying my medical bills even if I'm really sick" is false and was already illegal in all 50 states. This is also true for his claim that "you can't get coverage if you're sick because [insurers] won't cover preexisting conditions." Long before PPACA, COBRA (1986) and its state-based sisters banned this practice for participants in group plans and, while rules for individual markets differ from state to state, every state places limits on such exclusionary underwriting by barring the practice for those previously insured, limiting the practice for the uninsured, and/or providing state-sponsored "high-risk pools" that require insurers to provide privately-subsidized coverage until participants transfer to an unrestricted policy at standard prices.Nor is Cartoon Gruber any more credible when it comes to his assessment of PPACA's provisions. The core of his argument are three key affirmations, all demonstrably false:- "You won't have to worry about going broke if you get sick." Here Gruber summarizes a series of discredited studies (produced by leaders of a group advocating for a Canadian-style single payor health care system) suggesting that 62.1% of all bankruptcies are the result of medical conditions - even when the individual had health insurance - and asserting that these would be eliminated by PPACA. A closer review of those studies shows that, in nearly all cases where a medical condition precipitated a bankruptcy filing, it was the resulting loss of income (usually due to the absence of disability insurance) not the medical bills themselves which were responsible (seemingly obvious since most health insurance policies have state-mandated annual out-of-pocket maximums of less than $2,000). Studies by the Frasier Institute confirm that there is no statistically significant difference between the medically-affected bankruptcy rates in the U.S. and Canada (oddly, they're slightly higher in Canada), despite the presence of the Canadian single-payor health care system. Gruber also fails to mention that medically-affected bankruptcies in Massachusetts have risen, not decreased, since implementing Gruber-inspired Commonwealth Care.- "We will start to bring the costs of health care under control." Nowhere is Gruber's cheerleading more obvious. It is generally accepted (oddly, even by Gruber himself) that beyond adding new taxes, oversight boards, and costly layers of new bureaucracies, PPACA does little to reduce health care costs. Medicare's own actuary has repeatedly stated that PPACA bends the cost-curve up not down and, not surprisingly, shifts more of the burden to the private sector. President Obama learned this when he was corrected after making this same claim during a House and Senate summit meeting in early 2010. The CBO confirmed that, overall, PPACA will increase employer premiums (as Commonwealth Care has done in Massachusetts) and only a small percentage of small businesses would be eligible to benefit from the promised premium decreases - and then only if they qualified for the substantial subsidies promised to incentivize participation in state health care exchanges.- "We will do all this while reducing the federal deficit." This is perhaps the most disingenuous claim of all. While Gruber happily references CBO's initial claim that PPACA will reduce the federal deficit ($143 billion in the first 10 years following its passage), he fails to mention that many of the core assumptions that went into the CBO's analysis have since changed or been proven false. For example, $70.2 billion of PPACA's projected deficit savings came from anticipated premium to be collected from participants in the now-abandoned CLASS Act. PPACA assumed another $200 billion in savings by enforcing the complete application of the Sustainable Growth Rate (SGR) formula for reimbursing Medicare providers - despite the fact that Congress hadn't done it for almost a decade - and then, in a masterful accounting trick, doubled down on this deception by pulling the so-called "Doc Fix" component out of the bill leaving 100% of the "savings" in PPACA and placing 100% of the cost in a separate and "unrelated" bill passed just a few weeks later! Since PPACA's enactment the CBO has been forced to further revise its estimates of PPACA's cost constantly upward and its proffered savings downward to the point that now few outside the Obama Administration (other than Gruber) continue to make this assertion.Overall, there is little evidence to support Gruber's view of health care reform. It is difficult to discern whether he is aware of the facts that contradict the assertions in his book (and is, therefore, being intentionally deceptive) or if he is merely ignorant of them (in which case he is far from the expert he claims to be). A quick review of the relatively few specifically health care-related papers he has published and even his master tome, "Public Finance and Public Policy", suggests that at best he has a very simple, almost primitive understanding of health care cost drivers or the mechanisms at work in this complex part of our economy, not entirely unexpected from an academic who has never worked in any meaningful capacity in the health care industry - except as an "expert" of course.In short, "Health Care Reform" is not the unbiased, fact-based summary of the health care system and PPACA reforms that it purports to be. It is, rather, a political advocacy piece roughly akin to those produced by the pamphletiers of 18th and 19th-century America. Viewed in that light, it is an entertaining but only marginally effective effort.