June 26, 2009

Exploring the Health Care Options

As evidenced in Quantifying the Health Care Problem, America faces a growing crisis, badly trailing the rest of the developed world in the quality and availability of health insurance, despite devoting more than one eighth of every dollar spent to providing coverage. What then, are the potential solutions?

The single payer option, under which the government provides insurance for all citizens to use with their choice of doctor, has apparently been rejected out of hand. Senate Finance Committee Chairman Max Baucus held hearings on potential solutions to the health care mess, but while advocates for a wide variety of policies were represented, supporters of single payer were conspicuously excluded and had to resort to protest demonstrations to get any voice at all.

Meanwhile, the Republican Party unveiled its framework for health care reform last week. In legislation titled "The Patients' Choice Act of 2009," the plan would move toward "guaranteed choice of coverage" in the private market through federal-state partnerships called State Health Insurance Exchanges. To do so, the GOP plan would end tax breaks for businesses that provide health insurance, and instead give a tax cut of $5,710 to families (and a $2,290 to individuals) to help them pay for health insurance coverage.

There is no mandate for coverage in the Republican plan, however, and as discussed in my last post, the un- and under-insured are a major source of the costs for health care coverage. More tellingly, families pay about $12,300 annually for health insurance today, and it's difficult to see how the Republican plan would do anything but put families in a hole financially, right from the beginning. Even if expenses drop by more than half, and all at once - both of which are highly unlikely, to put it mildly - insurance will still cost families more on average than they are paying today.

Another potential solution that has been touted is some sort of national version of the model used in Massachusetts, under which all residents are required to buy health care coverage, and the state provides subsidies for those who can't afford it on their own. Unfortunately, Commonwealth Care - as the plan is know - has had to make significant cuts and adjustments to coverage only this week in an effort to keep the plan solvent, a mere three years after it was launched.

Meanwhile, so-called "centrist" Democrats in the Senate have put forth a proposal to let nonprofits create regional health-care cooperatives in an attempt to inject a modicum of public bargaining power into what would still be essentially the same private insurance equation we know today. Unfortunately, such cooperatives are unlikely to have sufficient leverage to get lower prices, because they would be both too small and too widely dispersed. As former Democratic National Committee Chairman, presidential candidate, and governor Howard Dean - who is also, by the way, a medical doctor - explained:
He [Senator Kent Conrad]’s wrong about this. The co-ops are too small to compete with the big, private insurance companies. They will kill the co-ops completely by undercutting them, using their financial clout to do it. In the small states like mine and like Senator Conrad’s, you’re never gonna get to the 500,000 number signed up in the co-op that you need to in order for them to have any marketing [power].

This is a compromise designed to deal with problems in the Senate. But it doesn’t deal with problems in America. And I think it’s time for the Senate to stop playing politics, do what has to be done. … If the Republicans don’t want to get on board, then we can do this without the Republicans.
Likewise, Republican moderate Olympia Snowe is championing a "trigger" methodology that would prohibit any public health care option as long as the insurance industry extends coverage to some predetermined level and drug prices are dropped. Sounds reasonable, right? Tell the insurance and pharmaceutical industries they need to make changes, "or else." Unfortunately, as Robert Reich explains, it's a smoke screen:
Enter Olympia Snowe. Her move is important, not because she's Republican (the Senate needs only 51 votes to pass this) but because she's well-respected and considered non-partisan, and therefore offers some cover to Democrats who may need it. Last night Snowe hosted a private meeting between members and staffers about a new proposal Pharma and Insurance are floating... Under Snowe's proposal, the public option would kick in years from now, but it would be triggered only if insurance companies fail to bring down healthcare costs and expand coverage in the meantime.

What's the catch?

First, these conditions are likely to be achieved by other pieces of the emerging legislation; for example, computerized records will bring down costs a tad, and a mandate requiring everyone to have coverage will automatically expand coverage. If it ever comes to it, Pharma and Insurance can argue that their mere participation fulfills their part of the bargain, so no public option will need to be triggered. Second, as Pharma and Insurance well know, "years from now" in legislative terms means never. There will never be a better time than now to enact a public option. If it's not included, in a few years the public's attention will be elsewhere.
Finally, President Obama has called for the creation of a "public option" to compete with private insurers. The injection of a non-profit competitor in the marketplace is seen by some as unfair, and arguments against the public option have ranged from implying that the government will decide what doctor you can see to cries that it will trigger massive new expenses and eliminate competition.

These criticisms ring hollow, however, when one considers that supporters of a public option have explicitly stated that, if you're happy with your current insurance plan, you can keep it. The bargaining power of a nationwide health insurance program would unquestionably drive down costs, and if Medicare is any indication, such a plan would also spend money far more efficiently. (Overhead expenses for Medicare currently run at about 3%, while those of private insurers are generally between 15% and 25%.) Further, a public option would enable people to keep their insurance, even if they lose their jobs or change employers.

Those against the public option seem to regularly overlook - or ignore - several simple, but crucial, points:
  1. Competition in the private sector has utterly failed to drive down costs; citizens of EVERY OTHER developed nation spend less and get more for their money when it comes to health care.
  2. The cost of insurance is already high, and even if that aggregate expense remains exactly the same, if we can cover the tens of millions of uninsured for the same price - or less - that's a win.
  3. There is already a bureaucrat between patients and their doctors; it's called the insurance company.
  4. Strangely, there has yet to be a single reported case of any member of Congress from either party refusing - or even complaining about - the publicly-funded coverage received by all federal legislators.
  5. If private companies can truly offer the best solution to the health care crisis, they should be able to outperform a bunch of government bureaucrats; it's time to put up or shut up.
The health insurance industry is, unsurprisingly, desperately lobbying members of Congress to maintain the status quo, and former President Bush has even chimed in, saying in a recent speech that he believes "You can spend your money better than the government can spend your money." (Really? Perhaps each and every citizen should be tasked with evaluating, developing and purchasing his or her own share of national defense!) Of course, it's hard to imagine a more glowing endorsement for a policy than to have it opposed by George W. Bush, and while the insurance industry is leveling enormous amounts of cash at this issue, the public is broadly in favor of a public option (see figure, above). While the House version of a health care reform bill includes provisions for a public option, the Senate version ignores public opinion, and does not.

And that cannot be allowed to stand, for one need look no further back than June 17th to see how little will actually change without a public option. At a hearing on that day, three top health insurance executives were asked if they would be willing to stop dropping customers except in cases where they can demonstrate "intentional fraud." If there is any doubt that the health insurance industry is more focused on profits than on providing access to care, it is only necessary to know that - despite public sentiment and widespread momentum for change - all three answered, "No."

June 21, 2009

Quantifying the Health Care Problem

In recent months, the subprime mortgage meltdown and the global financial crisis have justifiably occupied much of the public's attention. Underlying our current, deep economic trough, however, is an issue that affects nearly all Americans - not just the 9.4% of us who are currently unemployed: the cost of health care.

The past several weeks have witnessed the early stages of a battle over the fundamental way in which health insurance will operate in the United States, and with good reason; the existing system is flat-out broken. Consider these alarming facts:
  • In 2007, the latest year for which government data is available, nearly 46 million Americans - 18 percent of the population under the age of 65 - were without health insurance. Between 2005 and 2006, the number of uninsured rose 2.2 million, and has increased by almost 8 million people since 2000.
  • Eighty percent of the uninsured are native or naturalized citizens, NOT illegal immigrants. More than 8 in 10 uninsured people are in working families, and almost 70 percent come from families with one or more full-time workers.
  • The percentage of people (including workers and dependents) with employer-provided health insurance has dropped from 70 percent in 1987 to just 62 percent in 2007.
  • The number of uninsured children in 2007 was 8.1 million, or just under 11% of all children in the United States.
The United States spends a larger percentage of its GDP on health care than any other developed nation. One might reasonably think, then, that the quality and availability of health care in this country would be top notch. One would be wrong; for all of that expenditure, the U.S. is just 37th in the most recent World Health Organization (WHO) rankings of the world's health care systems, slightly ahead of Slovenia and Cuba, but behind such powerhouses as Costa Rica, Dominica, Chile, Colombia, Morocco and Greece.

Anyone who was alive during the Clinton Administration knows that this has been an issue for some time, and that access to health care is actually declining. In addition to the human cost of this situation is the sheer economic waste involved. Each year, the United States spends almost $100 billion to provide uninsured residents with health services - often for preventable diseases or ones more easily treated with early diagnosis - and hospitals shell out another $34 billion worth of uncompensated care on top of that.

Perhaps worst of all, however, is when human and economic costs intersect. In 2001, an American Journal of Medicine (AJM) study found that 46.2% of all personal bankruptcies were directly related to medical problems and the lack of adequate health insurance. In 2007, the AJM ran the study again, and what they found is truly staggering:
Using a conservative definition, 62.1% of all bankruptcies in 2007 were medical; 92% of these medical debtors had medical debts over $5000, or 10% of pretax family income. The rest met criteria for medical bankruptcy because they had lost significant income due to illness or mortgaged a home to pay medical bills. Most medical debtors were well educated, owned homes, and had middle-class occupations. Three quarters had health insurance. Using identical definitions in 2001 and 2007, the share of bankruptcies attributable to medical problems rose by 49.6%. In logistic regression analysis controlling for demographic factors, the odds that a bankruptcy had a medical cause was 2.38-fold higher in 2007 than in 2001.
Clearly - at least if one believes that adequate health care should be available to everyone, not just the rich or the fortunate - the employer-based system of private health care that has been in place in the United States since World War II does not meet the needs of the American people.

NEXT: Exploring the Health Care Options

June 16, 2009

Third Blogoversary

Getting home yesterday after several weeks of extensive travel was a relief, and I have a lot of catching up to do both at work and at home. Normal, twice-weekly posting will resume later this week.

Oh, and Sensen No Sen celebrates its 3rd anniversary this month!
So I've got that going for me.
Which is nice.

June 9, 2009

42nd Annual Japan Karate-Do Ryobu-Kai International Tournament

I'm entering the home stretch of a fairly strenuous travel schedule, but looking forward to finishing big. Over the past couple of weeks, I've been in Dallas, Miami and Ithaca, NY, and now I'm getting ready to head to Anaheim for the 42nd Annual Japan Karate-Do Ryobu-Kai International Tournament.

Along with Elite Training, the JKRI Tournament is one of Japan Karate-Do Rybobu-Kai's two largest annual teaching, competition and testing events. It's a fantastic opportunity to learn from world class instructors, and a great chance to catch up with good friends in the martial arts community.
I missed last year's event for the first time in a while, and am excited to do some heavy training. (And then, I'll be just as excited to be a homebody!)

June 3, 2009

Reunion Weekend

Posts are likely to be a little spotty over the next couple of weeks, as I have a fair amount of traveling to do.

This weekend, I'm off to Ithaca, NY for the Johnson Graduate School of Management Class of 1999 Reunion. Hard to believe it's been a decade since business school, but I'm looking forward to catching up with people I haven't seen since graduation!