Sometimes you think you’ve lived before
All that you live today
Things you do come back to you
As though they knew the way
Oh, the tricks your mind can play!
“Where or When,” Richard Rodgers and Lorenz Hart
“It seems we’ve stood and talked like this before,” goes the Rodgers and Hart lyric above, finally ending with a question: “But who knows where or when?”
When it comes to health care reform, it does seem we’ve “stood and talked like this before,” because we have — many times. And there’s no question as to where or when.
The pitfall of the “compromise” being discussed by the White House and Sen. Olympia Snowe seems to obvious that it almost pains me to point it out.
President Obama and top aides have quietly stepped up talks with moderate Republican Sen. Olympia Snowe of Maine on a scaled-back health care bill, according to two sources familiar with the negotiations.
The compromise plan would lack a government-run public health insurance option favored by Obama, but would leave the door open to adding that provision down the road under an idea proposed by Snowe, the sources said.
…The modified proposal would include insurance reforms, such as preventing insurance companies from denying coverage to people with pre-existing conditions, according to the source.
The potential deal would give insurance companies a defined period to make such changes in order to help cover more people and drive down long-term costs. But if those changes failed to occur within the defined period, a so-called “trigger” would provide for creating a public option to force change on the insurance companies, the source said.
“Some things that happened for the first time, seem to be happening again,” the song goes. (Yes, I’m humming Rodgers and Hart even as I type this.) Well, yeah. But some things that happened for the “first time” don’t just seem to be happening again. They are happening again.
The situation here is so excruciatingly obvious that any number of cliches — so many that I could fit them all in without ending up with a blog post that would rival War & Peace. So I’ll just pick a few.
One definition of insanity, it’s been said by everyone from Albert Einstein on down, is “doing the same thing over and over again and expecting different results.” It doesn’t, however, take an Einstein to see that giving insurance companies “a defined period to make changes” — basically, to reform themselves — isn’t the way to achieve reform that will “cover more people” and “drive down costs.” After all, we just did it and it didn’t work.
Except, it was the credit card industry we were trying to “reform” back in May, when Congress passed and the president signed a credit card “reform bill” that would restrict credit card industry practices like arbitrary rate increases, unannounced rate increases, “universal default,” “over the limit” charges, and exorbitant fees.
That is, it would prevent them eventually. You see, the credit reform bill had a few holes in it. One of the more gaping holes was the credit card industries a “defined period of time” before the “reforms” take effect.
Most of the provisions take effect nine months after the bill is signed into law — so likely in February 2010 — giving credit card issuers ample time to raise rates or fees.
“This is a strong package, but it’s a disappointment” that the protections won’t take effect until next year, says Gail Hillebrand, attorney at Consumers Union
Actually, a “strong” package would have taken place immediately, or a lot faster than nine months. What we did instead was tell credit card companies that they don’t have to clean up their acts right now. We weren’t going to pull the “trigger” on reform for a whole nine months.
So, given plenty of time, they pulled their trigger first. As a result, consumers got splattered with those increased rates and fees we were warned about before. Citibank jacked up rates on 15 million accounts just a month after the “reform” bill was signed. The same month, Bank of America, JPMorgan Chase, and Capitol One pulled their triggers raised their rates too.
Since Congress approved the landmark credit card overhaul legislation last spring, many issuers of plastic have jacked up interest rates, switched accounts from fixed to variable rates, and raised annual fees and penalties for late payments. The actions are helping banks lock in revenue ahead of the new restrictions under the Credit Card Accountability, Responsibility and Disclosure Act.
SinceApril, the average variable rate on new cards has risen steadily to 11.22% as of this week from 10.69%, according to Bankrate.com, a consumer finance website. This comes even though the prime rate, the index to which card rates are generally pegged, hasn’t moved in that period.
“It seems [banks] are getting their shots in while they can,” said Greg McBride, senior financial analyst at Bankrate. The sweeping actions by banks — which must now give customers at least 45 days’ notice when making a significant change — signal a profound shift in the way banks and consumers deal with plastic. Bankers and others have argued that the new law will further crimp consumer spending by leading to reduced access to credit and higher interest rates for cardholders, thus hurting an economic recovery.
Consumers say they are already feeling the pinch of higher credit card fees.
If interest rates rates and annual fees were automatic rifles, consumers would be shot full of more holes than the “reform” that’s supposed protect them. Because fewer and fewer people are working anymore, at the same time more and more of the same people face higher credit card rates and fees, credit cards defaults are climbing. They reached record levels in May — the highest since 1980.
When they’re not raising rates and fees,credit card companies are figuring out new ways to squeeze consumers who are all but economically bled dry by now. And they still have plenty of time to do so between now and when “reform” kicks in.
That’s the problem with the “defined period of time” and the “trigger,” regardless of how either is ultimately defined. The outcome is that the very entities desperately in need of regulating for the sake of consumers — the working men and women who make up the real economy that supplies financial entities with fees and interest to invest in whatever they cook up next — get more time to cook up a new way around new regulations, and with more than enough holes in the newly passed “reform” to light their way.
The law, which the House of Representatives passed and sent to Obama on Wednesday, will impose far-reaching restrictions on everything from interest rate increases — which have become common even though interest rates in general have fallen — to when and how issuers impose over-limit and late fees.
But experts say it doesn’t go far enough in tackling some of the practices that have mired consumers in a never-ending cycle of debt.
“I’m torn because the legislation has its heart in the right place,” says Adam Levitin, Georgetown University law professor. The problem is, “It just doesn’t address the hydraulic nature of the market. If you block one avenue, the market’s going to circumvent it.”
And they will, if you give them plenty of time to do it.
Like I said, it doesn’t take an Einstein. The lawmakers who are devising a “defined period of time” for the health insurance industry to reform itself have to know that they’re doing the same thing they did before and expecting different results. Or, at least, they’re telling us to expect different results.
Either that, or they’re not paying attention. We essentially did the same thing with the bailout. And now we’re still debating bonuses and begging banks to modify mortgages, while bankruptcies and foreclosures skyrocket. This is after essentially trusting them to reform themselves.
Anybody who doesn’t see the obvious parallels to health care reform either doesn’t want to or doesn’t care to. But if you think the comparisons above aren’t not apt, consider that we’ve done the same thing with health insurers before.
Negotiations and concessions, whether over health care reform or homework, come down to how much one party can still get away with. And the insurance industry has gotten away with a lot in the long, long history of health care reform in this country, which goes all the way back to the inclusion of health care in the Progressive Party platform.
You can see, at various points along the timeline above, insurance companies opposed from the beginning any efforts to provide Americans with affordable, quality health insurance. Though the Clinton plan was the last attempt at universal health care in the U.S., what’s happening now bears more resemblance to 1977 than 1994.
That’s the last time the health insurance industry made a “voluntary effort” to control costs, after President Carter proposed tougher cost controls. The result was the Hospital Cost Containment Act of 1977, passed without cost controls, and a “voluntary effort” that didn’t last very long.
More than a decade before the Clinton experience, then-President Jimmy Carter called for legislation to impose cost controls on hospitals as a way to rein in rising medical expenses. The industry came forward and said don’t bother with legislation, we will cut costs voluntarily. “Congress never passed cost controls and six months later there was no sign of voluntary cost controls,” recalled Robert Blendon, professor of health policy and political analysis at Harvard.
Health care spending soon surged again, and kept rising until 1993-1994 when — again threatened with real change in policy — the industry behaved itself just until the threat passed, and went back to business as usual.
The health care industry had more thirty years, and at least two obvious changes to change practices and policies that served profits more than patients, and put the health and lives of many Americans at risk. In 1977 and in 1994, they engaged in the kind of obfuscation a child does when he moves his vegetables around on his plate, and claims he’s eating them.
And, just to refresh, they gave us more behavior like this.
And more stories like these.
So, here we are. Some Americans are finding out that their health insurance premiums are going up s much as 29%. Some Americans are finding out how little the insurance they have — or the insurance they have left — actually covers, and how much more they’re stuck with in medical bills. And some Americans are moving south of the border for cheaper medical care.
And we still think that they’re going to change voluntarily? Given how much money they’ve invested in not having to change? (Those insurance industry salaries, after all, can turn into a lot of campaign contribution checks.) Does anyone really think that if we give them plenty of time, and pretty much everything they want, they’ll decide to change their ways? (Because not changing isn’t paying off?)
Anyone who pretends otherwise doesn’t know what any six-year-old who’s read If You Give A Mouse A Cookie, or had it read to them (as read below by First Lady Michelle Obama, with help from her mother and daughters) already knows.
We’ll do all of this, and ultimately find ourselves right back here again. It’ll be deja vu all over again … again.