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."

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