Summers on Health Care

Former Secretary of the Treasury Robert Rubin's Hamilton Project, housed at the Brookings Institution, held a forum at the National Press Club yesterday on health care reform. A first panel laid out four approaches, from expanding Medicare to include the uninsured to individual mandates tied to eliminating the tax deductibility of health insurance, which disproportionately helps upper income Americans in the same way the mortgage interest deduction does. (The more you earn, the higher your tax bracket, the more the value of a tax deduction.)

However, it was another erstwhile Treasury Secretary, sitting on the second panel with a CEO, a union leader and a former Bush administration official, who made the best comment of the morning. "When only 20 percent of Americans with hypertension get proper treatment," Lawrence Summers said, "framing the question as insuring the uninsured just isn't asking the right question."

The question for the panel was whether the next administration should pursue incremental reforms or a wholesale redrawing of the health care system. Summers, his self-deprecating wit enhanced by having been ousted from the presidency of Harvard, prefaced his remarks by saying "I'm not usually plagued by doubt, but I don't know where I come down."

He likened the current system to a board game where every player draws cards that send them to various places on the board where special interests game the system while patients and payers get arbitrary and variable outcomes and costs. He then said it will grow worse in the next few years because of personalized medicine, which will only allow insurers to predict with more certainty who will get sick in the future. In other words, adverse selection, where profit-maximizing insurers shrink their risk pool by eliminating those with pre-existing conditions, will grow.

Yet he concluded by saying it was hard to imagine comprehensive reform, such as a single-payer plan or even expanding Medicare, without some catastrophic event that deeply affected the 85 percent of the public that already has insurance. Like what? A major flu epidemic or a major economic downturn where business gets serious about health care's impact on its competitiveness, he suggested.

When the CEO of General Mills, Steven Sanger, suggested Congress could start by repealing the tax break for health insurance and redistribute the revenue to help low-income people buy individual health insurance, it was Summers who trenchantly destroyed the arguments behind the Bush administration proposal.
It would double the adverse selection by forcing millions of Americans into the dysfunctional individual health insurance market, he said, while encouraging healthier people to buy low-cost catastrophic plans that would further erode the pooling of risk that is essential to any successful health insurance system.

A decade ago, just before he became Treasury Secretary, I wrote a profile of Summers for Boston Magazine. I dutifully catalogued all the incidents that had earned him a reputation for being intellectually and personally arrogant. But the comment I recall most from our interview was his response to my question about his ambitions, and what motivated him to always want to be the best, whether on the tennis court, in a classroom, or in politics. "It's not ambition," he said. "I'm motivated by new challenges."

He's just a lowly Harvard professor now. His recent setbacks appear to have washed away most of the arrogance. Yesterday, he was witty, gracious and attentive to others' concerns -- skills one learns when wending one's way through the rat's nest of politics in academia and Washington, where special interests inevitably prevail.

It's easy to imagine him taking on some challenge for the next Democratic president. He's not a health care economist. But given the obvious attention he's given to the subject lately, perhaps he's auditioning for the role that Hillary Clinton played in the Democratic Party's last attempt to reform the health care system. Based on what I heard yesterday, he'd be a good man for the job.

Posted by gooznews at July 18, 2007 08:39 AM