After immersing myself in the Democratic candidates’ speechifying, policy papers, interview transcripts, and others’ opinions about same, here’s my take on what health care reform should do.
We’ll get to where each candidate stands on each “requirement” tomorrow. Much as I’d like to include the GOP guys, to date there’s been precious little on health care from anyone on that side of the aisle.
As I see it, there are three basic requirements.
Provide universal coverage – because without it, we’re stuck in the cost-shifting hidden-tax method of paying for indigent care.
Community rating is a must-have – that’s where everyone pays the same premiums regardless of age sex or pre-existing conditions. That does not mean some should subsidize the unhealthy behaviors of others. Why community rating? Because without it insurance companies will continue to spend all their brain power figuring out how to NOT cover high-risk people. Instead, they should be focusing those neurons on how to make everyone healthier.
A comprehensive benefit plan that is consistent across all insurers – this ensures that health plans don’t use benefit design to risk-select. Oh, and it has to include coverage of preventive care.
Those are the have-to’s. Personally I’d like to have insurance de-coupled from employment. This gets employers out of the insurance business and makes insurance companies much more responsive to the real customer – their members.
This last point is rarely addressed – today, insurance companies sell to, and are evaluated by, benefits folks at companies. The needs and wants of benefit execs are just different from those of individuals and families – sure there is overlap but the direct connection between the vendor and customer would make insurers more responsive.
We have to figure out what to do with all the people who now are a drag on the system but wouldn’t be needed under this scenario, such as the benefits managers. I suggest they retrain for health IT, since there’s a shortage of skilled people there.
Joe: I absolutely agree with your bullet points. All we have to do is figure out how to pay for it! John Edward’s idea of eliminating the Bush tax roll-backs sounds too simple. Would that really be enough money?.
Joe: I’m interested in what you think about how mental health and substance use should be addressed in health care reform. We know that unaddressed mental health and substance use have a big impact on health care costs (both in terms of their contribution to other disease and the cost associated with treating only the late stages of addiction). Should there be equal coverage and integration of mental health and substance use into “traditional” health care? How can that be done?
I think one could make a case for charging smokers higher premiums than non-smokers within a community rating approach. I would also prefer the mandated basic benefits package to be something like the Federal Employee Health Benefits Plan but with a $5,000 per person deductible. A separate policy covering most or all of the first $5,000 of costs, which I call the insulation piece, could be offered on a sliding scale subsidized basis to those with income up to about 300% of the federal poverty level (FPL). People with incomes above 300% of the FPL could buy the insulation piece on an unsubsidized basis if they want to or they could choose to self-insure.
With respect to possibly replacing the current employer based system with a completely taxpayer funded approach, consider the following: The U.S. population is approximately 300 million. Assuming 45 million uninsured, about 90 million getting insurance through either Medicare or Medicaid, and another 5 million with VA coverage, that leaves 160 million people with commercial coverage today, of which 10% are individual policies with the rest either small group or large group policies. According to the California Healthcare Foundation, private insurers cover about 35% of healthcare costs in the U.S. or $770 billion out of $2.2 trillion of total healthcare spending (about 16% of GDP). Assuming an 80% medical cost ratio (MCR) for the fully insured members and only 6% administrative cost for the 40%-50% of employees who are in self-insured employer plans, employer and individual premium costs are approximately $900 billion.
How much would taxes have to be raised to replace this coverage with taxpayer funded coverage? According to the Congressional Budget Office (CBO), Social Security taxes and Medicare payroll taxes combined will raise approximately $850 billion. Assuming that we could save $50 billion per year of administrative cost in a streamlined system with more standardized benefits, we would have to double the Social Security tax from 12.2% (combined employee and employer share) currently to 24.4%, and double the Medicare portion of the tax from 2.9% to 5.8% which, unlike the Social Security tax, applies to all wages, not just the first $100,000 or so. For those who prefer a value added tax, if we had one that applied to about 40% of the GDP after exemptions, the rate would have to be about 16% to raise $900 billion. Even if employers increased wages by the amount they are currently paying for health insurance premiums and income taxes were adjusted downward so the government does not raise any more net revenue from that source, it is highly questionable just how attractive this package of higher wages and much higher taxes would be to the general population even if it resulted in universal and guaranteed coverage.
I find your comments on employer influence on health plans interesting – I’ve noticed you mention this in other posts. Could you be more specfic on what you think the contrasts between employer benefit manager need and end consumers are? Obviously cost is extremely high on this list, but what do you feel are other considerations? I’m doing research on this topic, and would like to compare what I’ve seen so far to your experience. Thank you.
So far I see the “gummint aint good” propaganda coupled with “its too danged much”, both beloved ploys of the corporate sector and willing fellow travelers to distract from the simple facts. We need change to a single payer, government managed system. Most of the naysayers seem to be comfortably cared for by a system in which insurers and so-called managed card have purchased the various legislatures to do their will. All of that simply has gotten us 37th or lower place in rankings of health care in the world, and all for a cost we pay of far more than number 2 on the list. Hm… Is that the tick-tock of competition so well beloved of our equestrian set, who figure if it takes 300 years for that mythical competition to take place, well thats ok, we are just fine. Bunk, propaganda and trash from the regressive reactionaries. Yes, most of the savings will have to be ripped straight from the hearts of the insurers and mismanaged care clowns, who have gorged themselves with unwarranted profits over the years. The think that is wrong with this country is not government, it is corporate piracy and fraud — which is never punished appropriately at all. Look at Bush recenly taking care of Enron participants. Medicare is a success! Those preaching otherwise are, well, lying through ignorance or malice, or just because their money machine may break down. I hear no high principles here. I do hear 45-48 million uninsured and millions more underinsured thanks to the “open market” controlled by bought politicians and health care cartels, oligopolies, whose only concern is obscene massive profits and unconscionable CEO salaries. All that is extracted from the hides of citizens and voters. Stop the so-called conservative drivel, it never was, is not now and never will be. Beware the babblers of the right, the think tanks, the purchased academic chairs, the main stream media — all subservient too corporations – to whom I am a commodity in process for profit for some mythical shareholders that the managers never listen to anyway. Patient? Ha, not on your life. They would as soon I was a log.
“That does not mean some should subsidize the unhealthy behaviors of others.”
Eh?
What does that mean?
Are you advocating health tribunals to determine if a person’s treatment is the result of “unhealthy” behaviors and therefore not the responsibility of the universal health insurance program? Who do you recommend will decide what is “unhealthy”? Is a clerk in a government bureaucracy much more qualified for this important job than a clerk in an insurance company?
For single payer advocates:
I saw a reference recently in Health Affairs that referred to a study sponsored by the AARP a couple of years ago which found that roughly 50% of healthcare costs in the U.S. are attributable to the 65 and older population. This includes payments by Medicare, Medicaid (mainly long term care costs), Medicare Supplemental insurers, long term care insurers, beneficiary Medicare premiums, and out-of-pocket payments. This sounds about right as the elderly account for roughly 15%-16% of the population and consume approximately three times more healthcare per capita than the rest of the population. These figures imply that current healthcare spending by and on behalf of the elderly works out to between $20,000 and $25,000 per person. Since Medicare is already, in effect, a single payer system (complete with dictated prices and supposedly low administrative costs) for this population, the question is: how does this level of per capita spending on our 65 and older population compare to the per capita spending on the elderly (65 and over) in other countries? If it turns out that our per capita spending on the elderly is 50%-100% higher than other countries’ per capita spending on their elderly populations, it implies that Medicare for All is NOT the answer for the U.S. While there are undoubtedly some administrative inefficiencies in our current fragmented system, the more important cost drivers probably relate to such factors as differences among countries in the approach to end of life care, level of provider compensation, fear of litigation driven defensive medicine, lack of interoperable electronic medical records, higher prices in the U.S. for brand name drugs, and inadequate to non-existent price and quality transparency.
While I’ve seen plenty of comparisons among countries related to overall healthcare spending as a percentage of GDP and per capita spending for the total population, I have never seen any comparisons that focus on the 65 and older population where a single payer system has been in place in the U.S. since 1965!.