From most Democrats in DC, the reform discussion to date has focused on expanding coverage, and to hell with the financial consequences. On the R side of the aisle, the chorus has wailed endlessly, uselessly, and moronically, about ‘government run health plans’.
Its enough to make anyone throw up their hands and move to…any place where we can avoid watching health reform head off yet another cliff. But just when you’re about to collapse in despair, something that is actually promising comes along.
An intriguing new proposal hit my inbox this morning, authored by the very-well-connected Bob Laszewski.
Bob’s idea is to require all healthplans to restrain the rate of increase in health care costs to a level set by an independent board; failure to do so results in that plan losing tax-exempt status (and then rapidly going out of business). Here’s the intro:
“Health plan networks made up of insurers and providers would be required to first begin to stabilize and then control their costs. Failure to do so would mean the loss of their federal tax qualification. Premiums for a non-qualified health plan would no longer be tax deductible for individuals or plan sponsors who used these unqualified plans.
The Affordability Model would create an unambiguous reason for each of the stakeholders to finally work together to get America’s health care system under control. The Health Care Affordability Model creates unavoidable incentives for health plans and their provider network partners to maintain their tax qualification.”
There’s a lot more to this, and Bob has thought it through carefully. And knowing Bob, he’s been talking with others – influential others in key roles in DC – about this for some time. This is an elegantly simple, yet very effective way to blunt the rise in costs without alienating too many stakeholders.
There’s no need for a public plan if the industry constrains costs. Healthplans will find it rather difficult to oppose Laszewski’s Affordabilty Model, because by doing so they would admit they can’t control costs and increase quality (tough for even marketing types to spin that…).
And there’s lots of waste out there, lots of opportunities to reduce costs. (the Dartmouth Atlas has been publicizing this for two decades). Yet to date, no one has made any credible effort to do anything with all this knowledge – we know where the waste is but neither providers nor payers had any incentive to do anything about it.
The problem with the healthplan industry has been and continues to be simple – they have few incentives to restrain much less reduce costs. As costs go up, so too do their top lines, commissions for brokers, and in many cases margins. They add precious little value, acting more as network aggregators and marketing agents for providers than ‘care managers’. And without any change in their incentives, private insurers are not going to impact costs.
For some reason the Republicans mindlessly continue to laud the free market, despite thirty years of evidence that private insurers can’t control costs. The definition of insanity indeed.
But their Democratic colleagues are equally blind, worried way more about coverage than about long-term cost control. Frankly, the plans coming out of the HELP and Finance Committees to date are recipes for disaster.
Except for the Wyden-Bennett Healthy Americans Act, which promises to actually reduce total health care spending. The HAA was missing an ‘enforcement mechanism’, some way to force private insurers to get serious about cost control. Laszewski’s contribution does just that.
His effort is well worth your consideration.
Jul
3
“despite thirty years of evidence that private insurers can’t control costs.”
compared to medicare and medicaid which have done such an exceptional job of controlling cost, assuming by controlling cost you mean shifting cost to private plans.
In the states that have any willing provider a health plan will be required by law to accept a provider and when that provider drives up their cost they lose their tax exempt status, sounds fair.
Will the government continue to increase benefit mandates then revoke the tax exempt status when those mandates drive up cost?
Is this plan going to stop states from increasing premium taxes or the federal government requiring more mailings, or is this plan really just a trojan horse to tax healthcare benefits?
You really think Representatives and Senators would vote for something that could have hospitals in their districts or voters through no fault of their own, lose their tax exempt status. Kinda goes against if you like your plan or your doc you get to keep it. (period)
Finally someone who has thought through real reform instead of all of these proposals to give everyone what they want and send the bill to someplace else.
The only thing all the proposals are going to do that are in the Congress now is blow up the budget even more and health care costs will just keep going up.
This is real reform!!!!
Jenga: You need to actually read the proposal!
Hospitals would not lose their tax benefits–any network they were in that did not control costs would. That is a clear incentive to hospitals–and all other providers to finally stop telling us what they can’t do and do the right thing by making our system affordable.
Nate: It is not a “trojan horse for taxes.” You also need to read the proposal. The only thing that happens–and it is big–is that any network that can’t meet affordability goals loses its tax preference and consumers and employers buy from one smart enough to be able to control costs and keep it!
I think this guy is onto something!!!
Joe: Thanks for posting this but I think you are in error in one area–there is no cost board. The way I read it the genius of this is that there are no cost boards, price controls, limits on what docs can do, etc.
But, when the day is done whatever you do has to work.
Sounds like the accountability we need from all these special interests that say they know how to get the job done!
Joe:
You seem to be implying that this could be added to the Wyden Bennett bill.
I like WB–great on access–but it is short on cost containment. I’d like to see these ideas added to WB.
Have to believe the CBO would score the combo as saving trillions not billions!