No “government takeover”

            If there’s any phrase that’s echoed through the health reform debate, it’s “government takeover of medicine.” Conservative wordsmith Frank Luntz has brilliantly characterized the issue. The big nasties are “politicians,” “bureaucrats,” and “Washington,” he explains.   Win the war of words and win the battle.

            The language battle is far from over, but one thing is clear: The health insurance reform bill that Obama signed isn’t (and, frankly never was going to be) government takeover of medicine. Consider three different vignettes that tell the tale.

            First, the government’s big medical programs are Medicare (for seniors) and Medicaid (for the poor). Together they account for 20% of all federal spending. But the agency that administers them, the Centers for Medicare and Medicaid Services, accounts for less than 0.2% of all federal employees—just a bit more than 4,000 employees. The health care bill didn’t create a monster new bureaucracy and there aren’t any plans to grow CMS into a Frankenstein-sized agency.  This might be the single most remarkable and revealing statistic in the entire federal government—CMS leverages one-fifth of the entire budget with a mere 4,400 employees.

            Second, once they sign up for the program, most individuals receiving Medicare and Medicaid never see a government employee. That’s because they receive their care from private doctors and nurses and hospitals—providers that they choose and that the government (the feds and the states) pay for. This isn’t going to change under health reform. People will still be able to pick their health care providers. They will just have insurance (whether they like it or not) to pay for the care.

            Third, part of the cost of health reform will come from $500 billion in savings from Medicare. The federal government has to squeeze the program to pay the bill, but this isn’t a takeover. It requires the feds to find ways of extracting savings from the private providers and managed health plans (see point two) who actually do the program’s work. And it’s more complicated than that. The feds don’t actually work with the providers but leverage the program through a web of intermediaries—all in the private sector—who collect the bills from providers and collect the money from the government. (Billionaire Ross Perot made his money figuring out how to do this better than anyone.) The feds have been trying for years to wring savings from the program but continue to struggle—to the point that Medicare is a charter member of the U.S. Government Accountability Office’s “high-risk list” of programs susceptible to fraud, waste, and abuse.

            Despite the clever language, we’re really not talking about government takeover of medicine. We’re talking about government finding a way to leverage one of every six dollars in the American economy. It’s long been a shared public-private-nonprofit system, and it will continue that way. The trick is how the government’s leverage is going to work—the rules it will write to shape a system that is—and will remain—in private hands. The coming reality is a whole lot more interesting than the rhetoric.

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