Government and Health Care: Be Not Afraid
One of the interesting dynamics in the current debate over health care reform is the number of people who are concerned about government involvement in health care. As someone who has been working in health care for more than 15 years, I have to say that the horses left the barn on that one a very long time ago.
First of all, federal and state governments are a direct provider of health insurance to a very large number of people. Medicare (a federal program) and Medicaid (a federal-state partnership) together provide health insurance to more than 100 million Americans. Taken together, these two programs—which have been around since the mid-1960s–provide almost half the revenue going to hospitals.
In addition to providing health insurance directly, federal, state and local governments also buy a lot of health insurance from private insurers. This is mostly to cover their employees (roughly 16 million FTEs), but the Children’s Health Insurance Program (another federal-state partnership) also purchases private health insurance for about 10 million children nationwide.
Federal and state governments are also major regulators of the health care sector and this, too, has been the case for a very long time. Hospitals are regulated at both the federal and state level, although hospitals accredited by the Joint Commission on the Accreditation of Healthcare Organizations (JCAHO) are usually deemed to have met many federal and state regulations. Physicians, nurses and other health care professionals must also comply with both state laws and the rules of their professional bodies.
In addition to regulating providers (e.g. hospitals, physicians), federal and state governments also regulate the business of insurance. This is primarily a state function. Here in California we actually have two bodies to do this, the Department of Insurance (which regulates all types of insurance, including health insurance) and the Department of Managed Health Care (which specifically regulates HMOs). Employers who self-insure are exempt from state insurance law, but are governed by a federal law called ERISA, the Employee Retirement Income Security Act.
Finally, while government plays a smaller role in the direct provision of health care services in the United States than in some other countries, its role is still significant. Public (non-federal) hospitals account for close to a quarter of all community hospitals in the United States, and many of these hospitals provide essential (but expensive) services that other hospitals have abandoned, such as trauma centers and burn units. The VA, of course, runs the largest integrated health care delivery systems in the country, with more than 1400 hospitals, clinics and nursing homes.
My point in recounting all this is merely to say that federal, state and local governments have been deeply involved in providing health care and health insurance—and in regulating these industries—for a very long time. Those of us who work in the industry sometimes chafe at this oversight, but we also respect, for example, the VA’s achievements in the area of patient safety and Medicare’s increasing sophistication about quality measurement and improvement.
The health care bills currently working their way through the Congress are very large and I’m sure almost everyone can find something in them that concerns them. We certainly need a deep and substantive debate over the details of this legislation. It should not be rushed through because of some artificial deadline. But angry rhetoric about the evils of “government controlled health care” is deeply disconnected from the reality of the health care system and the real challenges it faces, not least of which is the growing number of uninsured.
AS an executive in a very large private health insurance company, I couldn’t possibly agree with you more.
What a lot of people need to understand as well is that the accumulation of incremental regulations have made the system very complicated as well as creating widely varying levels of access to affordable care.
Very accurate description of the current managed healthcare system.
An excellent summary, Peter.
Another perhaps unusual indicator of the federal Gov’t's already broad and deep involvement in health care is the multimillions of dollars expended by the Gov’t to ferret out health care fraud, and the multibillions of dollars that have been recovered by the Gov’t in combating such fraud. Nevertheless, the Gov’t has identified only the proverbial tip of the fraud iceberg.
http://oig.hhs.gov/publications/docs/hcfac/hcfacreport2007.pdf
I’m told that there have been several comments made at town hall meetings along the lines of, “Keep the Federal government out of my Medicare!” :-)
Excellent summary and points, Mr. Nixon.
A good example of a mixed return on investment and the cost of doing business in insurance is the state of California’s Department of Managed Care. Over my 20 years of dealing with this department, it appears that its only rationale is to pick up taxes and fees from insurance carriers and managed care companies which, of course, eventually are paid for by members/citizens of California, etc. Very few things they do that bring a value proposition to the current state of medical/managed care affairs for the average citizen in California.
As CNN said well last nite, there is easily $210 billion annually in cost savings available if the paperwork around unnecessary claims, state rules, federal laws, etc. were streamlined.
“But angry rhetoric about the evils of “government controlled health care” is deeply disconnected from the reality of the health care system and the real challenges it faces, not least of which is the growing number of uninsured.”
Exactly, the battle will not be won with reality. The Limbaughs plus the health care industry itself are winning the battle in the streets. What Jim refers to above is the effect of right wing and partisan rhetoric scaring people.
The other side which no one is addressing here is that although health care for all makes sense and is fair, for those who have insurance there will be necessarily a dimunition of service. That might be the biggest hurdle.
First – and most importantly – I agree with the Catholic Church on all this. Keeping in mind that 30% of the nation’s hospitals are religious-based, and that 90% of those are Catholic, and bearing in mind also, that the Catholic Church is the largest charitable organization on the planet, US Catholic Bishops recently pointed out that any effort to help the poor by expanding or socializing of health care:
1 – Should not include paying for abortions
2 – Should not include euthanasia
3 – Needs to include all residents of the country; not just citizens. That is to say, it must cover the (mostly Mexican) indocumentados.
And so in usual fashion, we Catholics are calling for something that will irritate both Liberals (most of whom are pro-abortion) and Conservatives (most of whom are not thrilled about providing public services for illegal aliens).
Once we resolve these issues, assuming the morality at hand is equal, we need to be careful that we do not allow the good to be the enemy of the best.
Of course trying to resolve the problem of un-insured Americans is more than a worthwhile effort; in fact it is our Christian duty. However it seems we are making this far too complicated.
Since when we say “the un-insured”, we are referring to a relatively small group of people (maybe 10% of the total population), it seems best to simply expand Medicare or Medicaid in order to cover these folks. I take Democrats at their word; that their goal is not about moving the national economy left-ward, but in fact that they are simply trying to provide medical insurance to the un-insured.
We already have a small-to-medium sized system of national socialized medicine. It is comprised of two parts; Medicare and Medicaid. Medicare is the larger part and it is run by the Feds; Medicaid is the smaller part and it is run by the individual States. Both are in financial difficulty now, but that does not mean they are no longer viable. Any financial problems that Medicare-Medicaid are having certainly do not mean we should establish yet anther, brand-new, heavier national bureaucracy, while leaving the older medical bureaucracies to rot.
Keeping the current financial problems of Medicare in mind, one good way to balance the numbers is to take the 20 million or so people who are not yet old and infirm, but who are currently un-insured, and enroll them into Medicare. This would also help us focus of fixing Medicare and Medicaid without establishing the sort of vast national bureaucracy that a fully national socialized medical plan would require. We already have an establishe bureaucracy that can be modified to handle providing medical insurance for these folks.
The other benefit to this approach is that it would not threaten the established insurance business. If anyone thinks for a minute that the existing, well-established insurance companies are going to just roll over and quietly go out of business, they are wrong. If insurance companies feel threatened, they will fight this whole effort to the bitter end, and we will lose the opportunity altogether – at least for another 12 or so years. On the other hand, enrolling currently un-insured folks in existing government insurance programs does not threaten the insurance industry. In fact they could not care less about the working poor or the un-insurable; they just want to insure middle and upper class folks.
Again, it is correct to be concerned about the non-insured; helping resolve the matter is only our Christian duty after all.
However, rather than re-inventing the wheel, we should use our existing system of socialized medicine to cover those who currently are not insured, and leave the free market alone. We do not need a “tabula rasa”; we need not rend society from one end to the other, simply in order to insure the working poor and the un-insurable.
I left this comment on the post immediately above, but that was in error.
Will Wilkinson makes an eminently sensible point here, in response to Ezra Klein but apt as a response to many others as well:
Why indeed? It would be much simpler, no? If you’re worried about healthcare expenses borne by people above the Medicaid eligibility requirements, name the income limit that would suffice. Then you have a one-page bill.
I’m pretty sure Ken’s numbers are too low.
Besides the life issues and the financial dubiousness, perhaps the right’s underlying concern has more to do with how very much the dems want nationalized health care. It looks, fair or not, like an enormous step towards a socialist system.
It was Secretary Clinton’s priority almost 20 years ago, as First Lady.
Can we talk about reality for one minute? What is the political upside, for progressives, of nationalized healthcare?
Nationalized health care, in England and Canada, basically equates to nationalization of provider resources. This is simply not a goal, much less a priority, of progressives in the United States and I defy Kathy to provide me with a single article stating that it is. Medicare is a nationalized insurance program.
To an earlier comment, the reason not to expand Medicaid is that Medicaid is basically already dysfunctional, while Medicare basically works pretty well. It has problems, don’t get me wrong, but it is way more rational and reliable than Medicaid, which varies enormously from state to state — the last thing you want is the federal government forcing states to try to administer an expanded benefit they have to provide but can’t or won’t fund.
Also, one thing that people tend to forget about Medicaid is that the majority of Medicaid dollars are spent on the Medicare population, paying for services for people living in nursing homes. In some states like Pennsylvania, it’s as high as 80% of all expenditures. The indigent actually tend to have fewer medical needs than the elderly.
Barbara, my question is more general than that. In addition to motives of compassion among the rank and file, which I think are real, there must be a political motive among party leaders for a plank so aggressively pursued.
What is the polical motive?
Barbara – It is precisely because Medicare and Medicaid are not current functioning as intended that we ought to focus on improving them. Frankly, if we cannot run these smaller versions of socialized medicine, what makes us think we can manage a much larger version?
The fact is that while both Medicare and Medicaid need some attention, they are not done for. It might well be the states can no longer handle Medicaid program (maybe they never could); perhaps we should consider rolling Medicaid into the Medicare program. In any case, Medicare is still very viable and necessary and moreover we (via our government), need to learn how to manage it properly.
We need not re-invent the wheel.
Use Existing Bureaucracy: Enrolling the currently un-insured in the existing national healthcare system (i.e. Medicare) would tend to balance Medicare’s numbers a bit. Currently Medicare’s patient group is the old, who are quite often infirm. The currently un-insured group of people is not as old and consequently is (statistically speaking of course) not as in-firm as the average Medicare patient is.
Timeline for Real Help for Real People: Enrolling the un-insured into Medicare would help them now. Consider the time it will take to hammer out (from scratch) a new, and heavier, national healthcare bureaucracy, and then to test and implement same. Then consider that in spite of all the numbers we toss around, this is about real people, people about whom we claim to be worried. These real people need help sooner rather than later.
Reality & Business & Opportunity: Again, we need to recognize reality. The fact of the matter is that that existing health insurance companies are not about to just roll over or go quietly into that good night. They won’t do that at all, nor should they for that matter. If they feel threatened, they will fight all this tooth and nail, and we will be left with the existing system – probably for at least another ten or fifteen years. Seems it would be a shame if we let this opportunity slip away again.
“The other benefit to this approach is that it would not threaten the established insurance business. If anyone thinks for a minute that the existing, well-established insurance companies are going to just roll over and quietly go out of business, they are wrong. ”
Ken, why would the director or owner of a business, currently offering health care benefits to its employees, for which it incurs a considerable expense, not drop its coverage like a hot potato and let its employees make do with the public option?
unagidon said, “AS an executive in a very large private health insurance company, I couldn’t possibly agree with you more.”
Of Course as an executive in a very large private health insurance company you couldn’t possibly agree more as insurance companies have the most to gain from this so called health care reform. Since the government, in addition to providing health insurance directly, buys a lot of health insurance from private insurers. This is mostly to cover their employees (roughly 16 million FTEs), but the Children’s Health Insurance Program (another federal-state partnership) also purchases private health insurance for about 10 million children nationwide. So, add another 45 million into the pool and it’s jackpot for private health insurance companies.
Where does any of this demonstrate improved access, improved quality and improved outcomes? Where does any of this health care reform proposal assure better and more cost effective healthcare for all? Where is the manpower and healthcare support going to come from to provide care, nurses, doctors, lab and xray technicians, hospitals, clinics, etc.? Who is going to pay for the exorbitant costs in educating an expanded healthcare professional pool of providers? Who is going to pay for the additional hospitals and clinics? Who is going to be willing to provide healthcare in an environment where the standard of care is determined by the government and not the healthcare profession itself? Where is the control of costs caused by excalating healthcare insurance premiums, with rising co pays and diminished authorized insured care? Where is the control of the out of control trial attorneys nationwide and their malpractice suits?
Until these realities are addressed realistically, any government driven healthcare reform will end up like the rest of government driven reforms – out of control costs, rampant deficits, escalating taxation with diminished quality of services and healthcare DMV style.
Reform should come from the healthcare profession itself, led by physicians who know healthcare best. Pharmaceutical companies’ costs need control, Private health insurance companies premiums and profits need control, and Nationwide Medical Malpractice litigation needs major reform before any healthcare reform can be meaningful…government driven or private sector driven.
Ken, I think you will find that the majority if not the clear majority of progressives would be only too happy to expand Medicare.
Medicare does work well. Its main issues relate to the RBRVS payment system for physicians, which, however well intended, has clearly outlived its usefulness and created very conflicting and sometimes damaging incentives. The other issue with Medicare, which at least one of the bills would address, is payment reform for specific areas that would make it much more difficult for Congress to engage in micromanaging based on interest group access. It has led to some really awful results that end up costing the program a lot and even precipitating fraud in various areas. I won’t say more. If you understand Medicare, you will know what I’m talking about.
I do not think cost control at a medical level is achievable without universal access. The ability to wring costs out of the system by denying care or coverage is too seductive, and simply much easier than tackling the issue of sensible medical practice.
Part of the problem with controlling costs is that it has to happen at a higher level than the level at which beneficiary eligibility and coverage is determined. An individual employer (or an individual) basically has no ability to control costs except through foregoing the purchase of insurance altogether, or shifting a greater and greater percentage of premiums onto employees, which then pushes the affordability conundrum onto them. Likewise, the more fragmented coverage is, the easier it is for entities with leverage to force the cost of medical care onto others — so the government forces the higher costs of Medicare and Medicaid onto providers, and providers with sufficient leverage force it onto insurers, who then force it onto you and me, who have basically no ability to do anything about it.
Until it is clear to all that the only solution is bending the expense/utilization curve of medical services, it will not happen.
First Jim – You raise a good point. Of course, while en-rolling the currently un-insured group into some expanded version of Medicare would necessarily involve broadening Medicare’s current eligibility requirements, we would also, as a matter of necessity, still need to have some limits placed on who would then qualify for basic medical coverage under Medicare.
The other limiting factor would be that Medicare coverage for non-retired folks (i.e. for the group people who are currently un-insured), would necessarily be more limited and basic than that which we currently provide retired folks. We could call it Medicare-A and Medicare-B, but there would need to be a difference in coverage between the two groups. In short, the Medicare for non-retirees will need to be a very simple and basic.
As such, most Unions or bargaining groups – provided they were satisfied with their existing insurance – would probably not vote their bosses drop the current insurance plans, but instead would protect them contractually. In fact most labor contracts have protected their benefits package contractually.
Barbara – You also make very good points, but you delve into more detail than I think is necessary at this point. Given the attention that both Medicare and Medicaid obviously need, we first need to decide whether or not we should defer trying to reform them, and instead set out to re-invent yet another – new, large and heavy – bureaucracy that fully national socialized medicine would require. Obviously we can and will ultimately need to repair both the Medicare and Medicaid programs. My point is that while we are at that task, or as part of that task, we can as part of the reformation of those two medical bureaucracies also resolve the problem of the currently un-insured.
Before getting into the minutiae however, I think it best to set out the main goals and structure.
Goal – Ensure that all US residents have some basic health insurance; Christian decency calls us to care for our brother.
Structure of Bureaucracy – Reform existing Medicare-Medicaid systems so that in addition to their original charters, they will also cover the currently un-insured. Care for a use what we have.
Laws; Federal Mandates – We will probably need to have a law to the effect that if someone can afford health insurance, they must obtain it. That will keep folks who can pay for their own insurance off the federal dole. Those who can, should provide for themselves.
Ethics – The government-funded health insurance should not pay for abortion or euthanasia, and the federal medical bureaucracy should cover the (mostly Mexican) indocumentados. We need to remember our humanity and the dignity of Man.
“most Unions or bargaining groups – provided they were satisfied with their existing insurance – would probably not vote their bosses drop the current insurance plans, but instead would protect them contractually. In fact most labor contracts have protected their benefits package contractually.”
Ken, that’s fortunate for those who work under the protection of collective bargaining agreements, but the vast majority of American workers are “at-will” employees. Their leverage with their employer is to take the employer’s health care plan or not take it. Or find another job.
Jim – That is true, and this sort of thing might very well encourage folks in various jobs to organize unions. The point you do not mention is how the eligibility for this Medicare-B (if we can call it that) would be defined.
It may be that in addition to federal legislation to the effect that if one can afford to buy insurance, one would be legally obliged to, there might also need to be legislation that would force companies or businesses of a certain size to provide medical coverage. Either employees via their union, or the government via the force of law, would need to apply pressure on employers regarding this. Employers have in the past been made to understand that offering medical insurance is “good for business”, and they responded accordingly.
The upshot is that your concerns could be dealt with outside a national socialized medical plan, that is to say your concern is best handled via labor organizing and labor law, and maybe by adjusting existing regulations on the private i.e., non-government insurance business. Again, I would advise against our re-inventing the wheel.
I just do not see how your point would preclude expanding Medicare to insure those who are currently un-insured.
“I just do not see how your point would preclude expanding Medicare to insure those who are currently un-insured.”
It wouldn’t preclude it. But I believe employers would have strong incentives to act in ways that (probably) would be unforeseen, and/or seen as undesirable for the common good. One, as I mentioned above, would be to “dump” employees onto the Medicare dole. If that is made illegal, it provides yet another incentive for employers to close plants and offices in the United States and move the job functions to more business-hospitable countries.
The end result would be, for all practical purposes, single-payer.
Jim – I think we first need to decide what it is we are trying to do.
If we are trying to help our less fortunate residents by providing them (via our government) some sort of basic, minimal health insurance, that is one thing.
If we are trying to put everyone in the USA on the same insurance policy, and have our government pay for and oversee everyone’s health insurance, that is quite another matter.
As Christians, we know very well we have a responsibility to care for our neighbour.
We as a nation then, we need to decide what we want to do regarding all this.