Health Care Reform: What Could Go Wrong?
In light of some recent discussion on the topic here, I thought I would offer my own thoughts about whether health care reform will “work.” Let me begin by saying that I fully expect that some things will not work out the way reformers expect. That is to be expected. The idea that a single piece of legislation could permanently fix everything that is wrong with the health care system is a fantasy. The legislation currently under consideration will fix some problems and probably create others that will need to be fixed later. I am of the opinion that the net effect will be positive, but we may have to navigate a little whitewater in the process.
As anyone who has designed an IT system knows, there are two types of problems you get in system development. There are problems when the system doesn’t work the way you designed it. The technical term for this is a “bug.” A second type of problem is when the system works the way you designed it, but it causes something else to break. The technical term for this is “Microsoft Vista.” I think most of our problems with health care reform are likely to be of the “Vista” type.
There are parts of reform for which implementation is likely to be reasonably straightforward. Some of expansion in coverage will come from expanding Medicaid and the Children’s Health Insurance Program. Those programs currently exist, have mechanisms in place to enroll people, relationships with providers and health plans, etc. That’s not to say that there are not problems here (e.g. providers refusing to participate in Medicaid because of low reimbursement rates), but expanding coverage through these two programs does not require either federal or state governments to start doing things that they have no idea how to do right now.
Another way that coverage will be expanded is through an employer mandate on employers over a certain size. This is a new thing. On the other hand, the federal government—as any employer will tell you—has a lot of experience in regulating businesses, enforcing mandates, etc. For this reason, I don’t think the employer mandate creates huge technical challenges.
One idea that is somewhat new is the creation of “health exchanges,” where individuals not insured elsewhere could go to purchase coverage. Because these exchanges would aggregate a large number of individuals, they would spread risk reasonably widely and allow insurers to offer the standard benefit package at an affordable cost. While this is somewhat new, both federal and state governments have experience in creating group purchasing arrangements of various types (e.g. “high risk” pools; Medicaid Advantage; the Federal Employees Health Benefit Plan, Children’s Health Insurance Plan, etc.). Much will depend on whether there are enough people in the exchange or exchanges to create a reasonably stable risk pool.
My most significant technical concern is not with the various ways reform will extend coverage, but with the implementation of the individual mandate and the associated subsidies. While the reform bills do contain various types of legal enforcement, the mechanics of actually tracking down non-compliant individuals and sanctioning them could prove challenging.
Exactly how challenging will depend on the subsidies. If they reasonably generous, the number of “mandate evaders” may be somewhat small. But if someone is looking at a health insurance bill of several thousand dollars—even with subsidies—they might well decide to risk non-compliance.
Finally, the “public option” presents some significant technical challenges. It’s true that Medicare has a lot of experience as a payer. But the federal government has never run an insurance plan that had to operate like a business and compete with other plans. Whether the federal government could offer a truly competitive insurance product remains an unanswered question.
That covers a fair number of the “bugs.” What about the “Vista” problems?
One concern is whether insurance regulation (e.g. plans will no longer be permitted to deny coverage based on pre-existing conditions) will drive up insurance premiums. All things being equal, bringing higher risk individuals into an insurance pool would increase rates. At the same time, an individual mandate that brings relatively low-risk individuals into the system would—again, all else held constant—decrease premiums. The ultimate effect may be a wash, but if it’s not that could be a problem.
My second major concern is the impact on the federal budget. Historically, entitlement programs (e.g. Medicare) have cost more than originally estimated. If insurance premiums rise faster than projected, then the subsidies will have to match that growth or risk a major backlash from voters. The resulting crisis would probably lead either to the dismantling of reform or to more aggressive regulation of insurance rates.
Much depends on whether, under a reformed system, market forces would be powerful enough to keep insurance premiums in check. Advocates for a public option think that this would be one of the roles it would play. But if it turns out that the public plan doesn’t have any more luck than private plans in reining in the cost of health care services—and I think this is a significant possibility—then that hoped for feature may not materialize.
All in all, though, I would argue that the upside of reform is worth the risks. We will have established the most important principle, which is that all Americans should have access to a basic level of health insurance. I suspect, though, that we will need to keep working the details—particularly around cost control—as we move through implementation.
This is an interesting topic. Another “Vista” problem which I’ve read about, associated with the subsidies, is the “implicit marginal tax rate.” That is, as the less well off become more economically prosperous, they gradually lose health care subsidies. If costs for health services, and health care itself, are steep, the implicit marginal tax rate can become a hurdle over which people may be disinclined to pass. One would hope this plan does not follow in the footsteps of Massachusetts, where the enrollment of the young and healthy has not curtailed the rise in health insurance costs.
Excellent job as usual, Mr. Nixon.
I don’t think that cost control would be one of the details. As Ezra Klein indicated, it’s one of the main problems.
It is true (or at least we in the business believe it is true) that the expense of pre-existing conditions would be offset by a universal mandate. All this does is expand the risk pool and is precisely what single payer does and why single payer works as a means of spreading risk. But as you have seen, there is resistance in the US to establish a mandate. People still often look at health care coverage as a simple consumer product. And this perception is not entirely wrong. Insofar as heath care coverage is true insurance, where it covers the unforeseen, it’s the same as auto or life insurance. Insofar as health care coverage is a tool for covering the costs of all health care treatment, it is a consumer product, and some consumers are going to balk, not only because they don’t want to pay for things that they know (as consumers) that they won’t be using but also because in some cases they don’t want to pay for mandates (which is where abortion, infertility, and contraception enters the picture from a consumer point of view).
A second thing is the so-called public option. Insurance companies are not afraid of the public option because it competes with them but in how it competes with them. Commercial insurance in the United States is built on individual contacts with providers that set the costs of care. As you can see from Klein’s slides, there is a vast range of commercial rates and commercial rates in general are higher than Medicare rates. Even if the public option mandates a 5 percent increase to Medicare rates for participating providers, this will come in under the rates commercial payers pay to providers. This is simple cost mandating by the government where they “compete” by paying less for a cost and the equivalent would be to have military PXs compete with local food stores as a public option for groceries. But the problem isn’t “socialism”. If the structure of health care financing DEPENDS on the differentials that Klein points out because the commercial customers are subsidizing the Medicare and Medicaid customers, hospitals will have to shift costs to the commercial side from the public side. This will cause premiums to rise on the commercial side. Of course, as this happens, it will cause more people to take the public option. Some think that this will be the real core of price control in the health reform in the long run; that what is really going on here is that the government wants all providers to be paid something like Medicare or Medicare plus 5 percent in the long run. And despite the fact that this would lower costs in the United States (per Klein’s slides) you can perhaps see that the short term effects would likely be chaotic.
One thing it would probably produce would be a further shake out of hospitals. Insurance companies worry about this as well, because contrary to what the public thinks, one of our problems in controlling prices at the provider level is a lack of competition among providers.
Insurance companies are in the business (among other things) of selling discounts to providers. This is what “par” means. A particular hospital or physician specialty group may not control a city, but it can quite easily control a part of the city. And if that goup is non-par, then people who live near that hospital or who want to use it for other reasons will not buy the insurance. The providers know this. So insurance companies cannot really mandate prices to providers, even if they have a major market share.
Speaking as a citizen here I am not, by the way, worried about the cost of the mandates in terms of taxes. The gorilla in the room is what we pay taxes for in general in the United States. The reason that we don’t have tax money for health care is that we are spending way too much for the military. We have gotten so used to doing this since WW 2 that we don’t even see it any more. But do we really need to be spending as much as the rest of the world put together? What are we getting. I think we can certainly see what we are not getting; a modern health care system.
Peter
Very thoughtful. A very interesting analogy, and I will go with it. I work with the acqusition of major IT systems and one thing that most, especially the most successful, have in common is that they take an incremental approach. You don’t try and rewicker the entire system to fix all its problems, you isolate those that need to be fixed on a priority basis. Biting off more than you can chew is a recipe for failure with delays, technical failures, and most importantly major cost overruns.
One of the first problems I see is defining what is a system that “works.” Since you readily admit, there will be trade-offs and consequences, isn’t it arguable we already have a system that “works.” An 80% satisfaction rating is pretty good for a major, complex system like this. People don’t even have a common definition of what it means to “work” and within the system the competing interests serve to defeat what will “work” from different perspectives. One thing that will drop costs would be to abandon the fee for service model, but physicians oppose this. And they may even be right that abandoning it will sacrifice quality. Throughout the system there are many such “sacred cows.” The problem with a massive government imposed solution is that which sacred cows are sacrificed will be based on political influence and not what is best for the system. That’s why you know that rationing will be a more likely means to control costs and fee for service and tort reform are off the table. Rationing is difuse, affecting people in different circumstances one at a time, while the other interests are protected by the AMA and ABA.
Just look at the “tort reform” in the house bill. It effectively eliminates the two types of reform that we know from experience work – limiting non-pecuniary damages and lawyers fees – all to satisfy a powerful political constituency. That’s how this sytem will work. The party that claims to want to limit influence peddling is about to create one of the biggest political rice bowls in history.
At the end of your piece, you noted a very important victory Mr. Nixon, i.e., that regardless of whether or not the current reform effort is successful – and it looks to me like frankly, it needs a major reworking – it is notable that the discussion up to this point has for the most part established the notion that medical care is a fundamental right of all, regardless of their income.
Prior to this discussion, many Americans did not consider that everyone had a “right” to see the doctor. Frankly, a lot of Americans mainly focused on their own family’s medical care and really did not think much about the medical care of other Americans.
If you ask Americans now about this, most would either state forthrightly or at least concede theoretically that regardless of income, all people have a right to medical care when they are sick.
Thank oyu Mr. Nixon. I think this is an important step; one worth noting before we gear up to move to the next phase.
Peter, thank you — excellent post.
Unagidon, excellent comment. You write: “Some think that this will be the real core of price control in the health reform in the long run; that what is really going on here is that the government wants all providers to be paid something like Medicare or Medicare plus 5 percent in the long run. And despite the fact that this would lower costs in the United States (per Klein’s slides) you can perhaps see that the short term effects would likely be chaotic.”
The question is whether we can get from where we are now to where we need to be without a little chaos. The implementation of a single-payer system, which you and I both favor, would also be chaotic: it would mean grandfathering out an entire industry and forcing two others to reorganize. Whether the goal is to reform the current system or to replace it, things are bound to get messy. Things are already messy.
A really fine post by Peter – I only wish it had a wider distribution than it’s getting.
When final legislation is shaped, i hope he will add to it.
I just want t oadd that I think it’s pretty clear that the catholic position on health care is that it’s a right.
To get to a ‘non-messy” solution, I agree wioth my physician who says that at his age evrythin gwill have worked out by the time he reachjes my age, but the next ten years will bring lots of issues.
Peter:
In all seriousness, have you read the bill that will be coming up for a vote presently?
Is your commentary rooted in the specifics of this bill?
I generally find this..general sort of commentary, without references to the current legislation less than helpful.
Because what Congress is voting on are not our thoughts, hopes and dreams, but on the specifics of this bill which has very specific points.
I’m pretty uninterested in generalities at this point. I’m interested in the specifics of the legislation currently under discussion and about to come up for a vote.
It won’t reign in costs but it will then be impossible to avoid understanding what the cost drivers are. As ugly as that sounds, I long ago realized that this would be the progression, as it has been in Massachusetts. The spotlight will finally turn from the ugly insurers to the not so ugly but still quite voracious medical services industry. There is no other way.
Matthew said: “The question is whether we can get from where we are now to where we need to be without a little chaos. The implementation of a single-payer system, which you and I both favor, would also be chaotic: it would mean grandfathering out an entire industry and forcing two others to reorganize. Whether the goal is to reform the current system or to replace it, things are bound to get messy. Things are already messy.”
I guess I should clarify this. Yes, things are already chaotic, which is why we are looking at a national solution right now. And as a good entrepreneur, I am certainly not going to fear chaos as such. Chaos is where opportunities come from.
But let me posit this. What if the big price differentials that we see in Ezra Kleins slides WITHIN the commercial segment of US health care are not caused by better hospitals charging more for better service but are rather caused by their local market dominance. If there is a payment shift between private commerical and public sector, it is precisely these hospitals that will be most successful at pushing through rate increases on the private side. And I would argue that these more expensive hospitals would also be more successful in surviving in the new payment environment than the cheaper ones.
I suppose that in the long run, one could just say “fine”! Because over time, there would be a general migration from the private side to the public side. You might say that this would be a good thing because Medicare or Medicare linked rates are by and large lower than commerical rates. But Medicare rates are also set to national averages. So what would make the now universal Medicare or Medicare plus five percent rates stay low(er)?
Also, do we want market share or quality to be the driver of rates?
Peter:
Have you actually read the 2000-odd page monstrosity that Nancy Pelosi is pushing? Do you understand it? Lets have the truth, buddy, no spinning or fibbing.
Incidentally, there is another “systems” issue that you failed to mention. It is often referred to as the “waterfall effect”. Every operation in a system impacts another operation “downstream” from the one under consideration, and it is this waterfall effect that has devastated so many new systems, systems that were intended to “improve” something but ended up as train wrecks. And since this new “reform” act, shot through with mandates, regulations, and attempted tweaks, will subsume the entire health care system of this country, no aspect of doctor-patient interaction, monetary transactions, patient health decisions will be unaffected. A monstrous bureaucracy will squat atop public life and suck the air out of all aspects of American life. And you can believe absolutely that that sacrament of liberalism, abortion, will be ultimately enshrined supreme.
Bob, speaking from within the private sector here, if you’re not going to like the health care reform please at least try to not like it for the right reasons.
U, can the plan currently being offered be compared to any of the current state health care plans? Massachusetts? Maine?
Well the status is the House wants to vote on their proposal soon (within a week anyway), the Senate is under no such timetable. There are sure to be differences between the Senate bill and the House bill, and given the 1900 page length of the House bill, the reconciliation process is sure to be long and drawn out.
The fact of the matter is that Congress is not good at developing things such as this and, because they fear losing their re-elections (their jobs), Congressmen (and women) do not like irritating the public. As such, the folks in Congress do not particularly like risk.
If the current effort falls flat – which is a real possibility given the recent election results – that would be the time for President Obama should take the lead on this and work to develop a plan; outside of Congress.
He could then present his official plan to the public and make the case for it and, assuming the public gives him the nod, the President could finally guide it through Congress.
Because usually people trust and like a President better than they do Congress, this sort of thing is best driven by the President. Keep in mind that for all his troubles, even Bush had better approval ratings than Congress.
By the President presenting the plan to the public and making the case for it, he would take some heat off Congress and give them some idea of public opinion, and they in turn could make their decisions accordingly.
Unagidon, for at least the second time, so what’s the private market answer to the concentration of market power by health care providers that allows them to deflect efforts to address excessive costs and inefficiencies?
I guess we could require divestiture of assets so that there would be competing facilities, but you know as well as I do that won’t happen. Providers have been maddeningly successful at convincing their customers that it is insurance that is the problem when it comes to cost. Not that insurance practices don’t contribute, but you know it’s not the lion’s share.
This is a very balanced examination of the risks. On the issue of how premiums will react, look at the case of Massachusetts wher Romney (gasp!) introduced a similar reform at the state level.
The result is lower premiums: “…an enormous reduction in the cost of nongroup insurance in the state: The average individual premium in the state fell from $8,537 at the end of 2006 to $5,143 in mid-2009, a 40 percent reduction, while the rest of the nation was seeing a 14 percent increase.” See here for link to study: http://voices.washingtonpost.com/ezra-klein/2009/11/massachusetts_provides_evidenc.html
A key issue with cost is that the reform makes very little progress is tackling the underlying source of the problem – the income paid to providers of health care. It is this, more than anything that the insurance companies do, that makes the US such an outlier. Insurance reform is great for access and ending immoral behavior, but actually cutting costs means making some very tough decisions. This again is a real single payer works so well – the government can set the terms of reimbursement!
“A key issue with cost is that the reform makes very little progress is tackling the underlying source of the problem – the income paid to providers of health care. It is this, more than anything that the insurance companies do, that makes the US such an outlier.”
Just speaking from my experience as a patient: if the “public option” leads to de facto price controls, I suspect that the nimbler and better-managed providers will adjust to the new rules. Since wages are usually sticky downward, that would mean that they’ll be looking for ways to treat more patients with fewer employees.
From today’s Times:
http://www.nytimes.com/2009/11/08/magazine/08Healthcare-t.html?hp
Great article. What about what could go right? Here’s my hope: http://cli.gs/z3AtaY/
Just want to add:
John Bohner today told(his neocon) crowd the house bill is”the greatest threat to freedom he’s seen.”
I think this underscores the impossibility of rational discourse with the neocons, some of whom even post here.
Bob, could you shoehorn another instance of “neocon” into your post? I think it will aid rational discourse.
Actually, A. I was just following the CNBC report with my own comment – I thought his comment ludicrous and irrational..I think it’s exemplary of a group who will say most anything to defend their ideology.
It’s a major source of polarization.
I’m sorry if that bothers you, but I think it’s your problem(ideologically, if I may be permitted to be repetitive.)
It doesn’t bother me, Bob. I just think it makes you look foolish to use “neocons” the way you do, and in the same breath bemoan the sorry state of rational discourse.
Unagidon:
And the right reasons are….?
Sure Bob.
If this were truly a free market free enterprise society in the fullest sense, then we would not hesitate for a moment (socially) to let people simply get sick and die who cannot afford medical care. If you take away government entirely from what it does now between Medicare, Medicaid, and emergency care mandates, this is the kind of system we have now. The only mitigation for this would be whatever charity could offer.
But we don’t do this. Not only is government involved right now as, in effect, a consumer of health care services, but the mandates like emergency care that the law requires means that we are all paying for everyone right now. Also, all of this care which is either provided by the government and subsidized by taxes or subsidized directly by private insurance (which is one of the reasons why those charts of Klein’s show such massive differentials between commercial costs and Medicare costs). It is done, actually, already through the giant bureaucracies that you are worried about, although admittedly some of them are currently privately owned.
So it isn’t a question of whether we should pay but how we should pay. We are doing a very bad and inefficient job right now on the whole. When I talk about taking a “business point of view”, I don’t mean that the government should step aside and somehow the Magic Fairies of Capitalism will fix everything. I am speaking from the point of view of a person who makes his living trying to find efficiencies (cost effective, by the way, means lower cost but nonetheless effective) and looking at a wasteful system and a reform effort that seems to bake a lot of the current waste into it.
A “right” reason to not like the health reform bill is that it does not do too much to control costs, and cost control at the provider level is the real problem. Another problem that it doesn’t address is that while at least basic health care is and should be a right in a modern country, it does not necessarily follow that it should also be a consumer product. It’s rather like food in this; one has a right not to starve in America but does it follow that one therefore has a right to eat whatever one wants? There are too many interests trying to mandate their businesses into the new plan.
“Wrong” reasons to not like the health reform bill include: it’s “socialistic” (it’s not); it elevates abortion, that shrine of liberalism (it doesn’t; what abortion is in this bill is one of a giant host of consumer provisions that people are trying to stick into it); death panels (don’t exist and never will); attacks “free enterprise” (believe me, the free enterprise system will still make a buck off of it no matter what happens; do you think we’re asleep?); it’s a plot of evil government to take control of the economy (it’s not; this is modern America and the line between government and business is wafer thin; big government is good for big business. Even Reagan knew this); it contains a lot of regulations and mandates (insurance is already heavily regulated and mandated, despite what the left would have one believe); the sacred relationship between doctor and patient would be violated (nope; this is modern capitalist America; you’re a customer now and your doctor is a vendor and it’s been that way for years in America), etc. etc.
I don’t know and don’t really care whether you think I talk from the “right” or the “left”. But whatever you think I am, do you know what really pisses me off as a businessman? That we in the United States can’t look at this problem as something that can be fixed and fix it. The government played a big hand in pulling America out of the Depression, THEN we won a two front world war, THEN we fixed Europe AND Asia. This was before right wing tax dodgers started the meme that if you go into government you become brain dead, like this is some sort of law of nature. But it’s not government versus business. We all go to the same schools, get the same degrees, get the same educations, and all grow up in the same capitalist country with the same capitalist values, God help us.
Unagidon: You said (among other things)
I don’t know and don’t really care whether you think I talk from the “right” or the “left”. But whatever you think I am, do you know what really pisses me off as a businessman? That we in the United States can’t look at this problem as something that can be fixed and fix it.
Heavens! My dear fellow, let me remind you that it’s better to be pissed off than pissed on. But aside from that mundane observation, your first statement,
If this were truly a free market free enterprise society in the fullest sense, then we would not hesitate for a moment (socially) to let people simply get sick and die who cannot afford medical care
seems to me to be a rather flagrant attempt to give America a bad name. All of us (Catholics & other Christians, and pious Jews) really want a Judeo-Christian civilization, which, to me, must include free enterprise. But free enterprise leavened with Old and New Testament wisdom, and the love of Christ. But surely you must (and I am convinced you do) realize that the “Government Option” will (sooner rather than later) put all private medical insurance companies out of business. The we will be left with the government medical plan, which will be bankrupt in due course, just like Medicare.
Unagidon: There is no perfection on earth, and, anyway, perfection is the enemy of the good. We must mend and tweak our present system (which is doable) by, among many other things, would include selling medical insurance across state lines.
You seem like a good guy, Unagidon (even with that ridiculous nom de plume’, so carry on and I appreciate your comments.
Thank you.
The government option could very well move everyone into a government system eventually. It would work like this. As Klein’s graphs clearly show, while Medicare payments are very high for medical services compared to the rest of the world, commercial payments are much higher. This is because commercial insurers pay providers much more than Medicare does. It is simply a myth that there is no competition between insurance companies, that they can dictate rates to hospitals and doctors, and that for some strange reason they don’t want to.
So the government option would outperform private insurers for the simple reason that it would be able set its own prices. As people moved into it and out of commercial insurance, hospitals would shift costs. I know that there are a million economists out there who claim their theories say that this won’t happen. But hospitals and big provider groups are already hitting us up for double digit increases or higher in anticipation of a government option. The gap (again Klein’s charts) between what commercial payers pay and what Medicare pays will have to come from somewhere.
The political line up behind the health care reform has been interesting to watch. Hospitals and doctors tend to want it IF it cuts insurance companies out of the equation but leaves the current pricing system intact. This is because insurance companies really do work to bring down costs. That really how they make profits. When it looks like overall reimbursements will go down, they suddenly start to get cold, but not in a particularly public way. People who are salaried and might get a bump in pay based on a simple increase of volume tend to support the public option. The volume thing (which only works if everyone is required to have insurance) will increase the money flowing into the system (and “average premiums” would go down) but whose money will this be? And also, since we seem to have a cost problem, do we really need more money flowing into the system (too)?
There are many, many people who just seem to be saying “screw it; let the government take it over.” And there might be ways that the government could take it over (over time) and do it effectively. If you think about it, if you take away the risk part of the insurance system, the simple funding of claims, and but the burden over the entire country in the form of a single payer system, you will have spread risk as simply as actuarially possible and premiums would therefore, in aggregate, be as low as possible. And yet the insurance companies themselves could still survive doing the all administrative things that people don’t think about that are so important to make a complex system work at all. But you can’t do this IF YOU DON’T CONTROL COSTS and get this part down first.
This thread exemplifies why I like this blog so much. Thanks, all, but especially Peter and Unagidon for bringing their specialized knowledge to the table..
Here is what Unagidon didn’t tell you: Insurers do work to keep down costs, but increasingly, the only way they can do this is to either not cover things or not cover you. Many insurers hate this state of affairs because they really do have business and management expertise that would allow them to cut costs in different ways, principally through greater collaboration with providers. This is the Kaiser model, but it was also the model in looser networks of physicians and providers, prior to 2000.
The so-called managed care backlash effectively threw out the baby with the bathwater, and it was spearheaded by providers who don’t like being second guessed or told that they are not good enough to participate in a network, even when their practice of medicine really is nothing more than guesswork and they really are not as good as their peers. The providers won. They won through appeals to patients who only know that if there is an argument between an insurer and a provider, they support the provider. They won so decisively that there is virtually no way that insurers can force providers to practice cost effectively, by, as Unagidon said, using negotiating leverage. Concentration among hospitals has also made it very difficult.
With or without a public option, it’s important to recognize that insurers don’t have the power to change any of this. It’s true that Medicare keeps provider reimbursement low because, basically, it can. But it’s also true that Medicare’s very thin management structure (relatively, considering the size of the program) results in very significant misallocation of resources, not helped by congressional meddling. So, in fact, commercial insurers pay much lower fees for all kinds of equipment and drugs than Medicare does (Medicare did fix the drug reimbursement, so that’s not necessarily the case anymore). But they pay higher fees to doctors, as Unagidon said.
The best of both worlds would have strong government control over policy and benefit related components of health care, with some caps on fees and out of pocket costs to consumers, while retaining commercial insurance management capabilities. This is what MA was supposed to be, and to some extent, Tricare is. In many respects, the public option is nothing more than a proxy for this model — foregoing more exacting regulation of private insurers by creating a normative market standard that elevates consumer protection. Over time, in order to be successful, it would have to allocate resources more effectively than Medicare, and ratchet down provider costs.
Barbara said: “Here is what Unagidon didn’t tell you: Insurers do work to keep down costs, but increasingly, the only way they can do this is to either not cover things or not cover you. Many insurers hate this state of affairs because they really do have business and management expertise that would allow them to cut costs in different ways, principally through greater collaboration with providers. This is the Kaiser model, but it was also the model in looser networks of physicians and providers, prior to 2000.”
This is true and no secret and I hope you weren’t implying that I was trying to hide this.
People read this sort of thing and say “Aha! Insurance companies do make profits by denying coverage!” But this isn’t what’s really going on here.
In the United States, most private coverage is provided by the workplace as part of the pay package. The workplace, of course, is also responsible for giving cost of living wage increases and other things to the workers. If medical costs start rising each year by double digits, a company becomes locked into trying to duplicate last year’s coverage plus give out the raise that everyone is expecting. Sometimes they can’t do it; sometimes they won’t do it. But it is getting very expensive for them. So what they ask us the payer to do is to devise medical plans that they can afford but that will shift some of (rather, more of) the cost burden onto the worker himself. The alternative (especially for small companies) would be (if benefits were simply duplicated each year regardless of underlying claims costs) to either drop insurance (and many businesses want to eliminate this expense) or not give raises and put the money into the insurance package.
Unfortunately, we have reached a point in the United States where not much more cost shifting is possible and underlying costs are still rising quickly (certainly faster than overall inflation). Workers are revolting and so, in fact, is business. If this was not the case IMO the health reform would not even have gotten as far as it has. At least now, unlike when Clinton tried it, there is pretty universal agreement among those who count in business that there is a real problem on a national scale.
I don’t think you are trying to hide it, but the point is, if the end is a health care/health insurance system that “works” so that everyone has access to needed health care, then maintaining the role of insurance is not an end in and of itself. I happen to think that private insurers (some of them) could do things better than government, but if insurers really are powerless to control the cost of providing health care services (either because they can’t or because, increasingly, we won’t let them) then they and we will have to face that fact in some form or fashion because they aren’t doing from either a market or a public policy perspective what needs to be done. The notion that private insurers will continue to earn substantial profits while relying on government to clamp down on providers to control their costs is simply not feasible. There has to be something else on the table.
Bob said: “seems to me to be a rather flagrant attempt to give America a bad name. All of us (Catholics & other Christians, and pious Jews) really want a Judeo-Christian civilization, which, to me, must include free enterprise. But free enterprise leavened with Old and New Testament wisdom, and the love of Christ.”
I was thinking about this in the shower this morning, which may give you an idea of how lame my life is on my days off. But it struck me that if what you said is true, we only became a Judeo-Christian society in the thirties. One recognizable (I would submit) theme in American literature that has utterly disappeared is the problem that one used to face if they couldn’t raise the money for the operation that would save, say, mother’s life. This was a real thing in our past that is not real (at least in the same way) now.
Achieving a Christian civilization is our goal as Catholics (I include here the “Judeo” piece because we believe that all that is good about Jewish civilization is already contain in our Christian ethics, don’t we?) But a “Christian” civilization is not something that we need to “move back to” as though we used to be this way and have moved away from it. We are always trying to move towards it. We have never, ever, been as fully Christian as a civilization as we need to be, despite what conservatives might think.
An interesting discussion about the merits of this particular bill, which strikes me as not doing enough to bring overall health care costs down.
I think it’s one thing to object to the bill on its merits, and I think lots of objections could and are being made that aren’t being listened to.
On the other hand, as someone who’s lost health care and is unlikely to get any at my age (55) unless a company decides there’s money in it (fat chance), it’s hard not to take discussions about the health care plan as something of a referendum on one’s worth to society.
I try not to take it personally, but, really, as a taxpayer who works and has so far paid my own way in life, it’s depressing to know that one’s countrymen would rather see one dead on a slab than a fix to the problem.
Meantime, I’m sure that, at the very least, I have the prayers of those who oppose health care reform that I’ll make it to age 65 and Medicare without incurring any major illness. Otherwise, as someone noted above, “the mandates like emergency care that the law requires means that we are all paying for everyone right now.”
Because if I DO end up dead on a slab and get there through an ER or expensive hospital admission, you’ll be picking up the slack and getting pissed on, as Bob so eloquently put it.