A Political Race in Massachusetts and the Implications for Health Care Reform

Martha Coakley (a Democrat, lawyer and former Attorney General of the state of Massachusetts) is in a tight race with Scott Brown (a Republican, lawyer and a member of the House of Reps in Mass) for the U.S. Senate seat that was previously held by Ted Kennedy for 46 years until his death. To win the race, both parties are pulling out the big guns. At this point, it is unclear who is going to win (for what it's worth, my guess is that Coakley will win). This much is certain, there are enormous implications on both health care reform and banking reform, depending on which way this seat goes.

Currently, Democrats hold a 60 seat super voting majority in the Senate. The race between Coakley and Brown could change that. If Brown wins, one likely result is that the House version of the Health Care Reform bill will die. The only way that any version of the House bill remains is that both House and Senate Democrats shotgun a version of the bill through the system before Brown is sworn in. This is conceivable, but the likely negative impact of that move could cost Democrats many more seats later in the year. The other option is that the House version of the bill is given the ax completely, and since the Senate has already voted on its version of the bill, the House would then vote for the Senate version as is, and then it is taken up to President Obama as is for passage.

So, regardless of who wins, some version of Health Care Reform is going to pass barring a complete split on the issue among Democrats (which is possible). I've read up on House version H.R.3200 (America's Affordable Health Choices Act of 2009) and Senate version H.R.3590 (Patient Protection and Affordable Care Act), and I can tell you that both versions have significant flaws. I favor the idea of extending health care to those who cannot afford it, because I believe such a policy is in the spirit of what the American society is all about. From our foundation at the Declaration of Independence we have promoted a sweeping view of human rights whereby all people "are created equal" and "endowed" by God with identifiable and specific "unalienable Rights that among these are Life, Liberty and the pursuit of Happiness." I would argue that our current health care system, which is unaffordable to millions of Americans, denies them life and liberty and their pursuit of happiness.

That's where I stand on the issue. But I will also tell you that I do not believe in taking a big dump on a piece of paper and passing it as a landmark bill because "that's the best that can be done right now." Both versions of Health Care Reform are just that... a piece of poop on paper. The most glaring flaw of each is that neither adequately addresses the market forces that contribute to escalating health care prices. For instance, as it is currently structured, health insurers enjoy a system that favors oligopoly and collusion. What I mean by this is that the healthcare system in the U.S. is structured such that a small number of insurers have been given the legal "green" flag to go out and dominate the marketplace; this absolute dominance allows the key players to collude with each other and fix prices as they see fit. In Montana, for example, Blue Cross-Blue Shield is the dominate player with 75% market share; United Health Group dominates the remainder of the Montana health care market. In Connecticut, Well Point dominates with a 55% market share; go down the list and it is virtually the same in every state. This un-free market system bars true competition that is needed to drive down costs to an affordable rate.

Since 1945, healthcare companies have benefited from a anti-trust exemption that legally makes it possible for the oligopoly and collusive system now in place. What's amazing is that both Libertarians on the far Right and Progressives on the far Left are opposed to the notion of healthcare enjoying such an oligopoly, yet neither side has gained any momentum whatsoever in putting a provision forward that will forever remove this exemption. Why is no one pushing for this common sense provision? Because money talks -- big insurers have bought off both sides of the aisle. Health care insurers have long contributed heavily to Republicans, and now, over the past year, the same insurers have targeted a handful of Democrats in the Senate to buy them off too. Lieberman (now an Independent), Baucus, Nelson, Landrieu, Lincoln, and Conrad have been the recipients of millions of dollars in campaign funding from the healthcare industry. Nice system we have, huh?

Because neither version of Healthcare Reform bills remove the anti-trust exemption for insurers, the expansion of healthcare to some 30+million Americans who currently cannot attain health insurance, essentially pumps a ton of new money (much of it public money) into an oligopoly where insurers will reap record profits. Investors are aware of this, and for this reason many of the insurers set to benefit most from the Senate bill have seen 52-week highs in their respective stocks in recent weeks; 90% of healthcare stocks in the S&P 500 are near 52-week highs. Healthcare stocks are on a sharp rise because the so-called healthcare reform is a boon for insurers (particularly the Senate version because it does not permit competition through at least a public option as the House version does).

[There are other pricing forces affecting healthcare affordability that need addressed as well, such as ultra-high education loans for M.D. and J.D. students; $150,000+ student loans in these two fields have adverse effects on the healthcare marketplace. Sound tort reform and education reform would also help reduce healthcare costs].

Peace

Jeremy