Heath Care Reform– Looking at the Glass Half-Full

What Has Been Accomplished; What Still Must Be Done

These days, many progressives are expressing deep disappointment with the health reform legislation now moving through Congress. Some suggest that some legislators made deals with lobbyists and let them write the bills. Others complain that both the subsidies and the penalties are too low. Still others don’t like the fact that states can “opt out” of the public insurance option, and decide not to offer Medicare E. Finally, many ask: “Why can’t everyone sign on for the public plan in 2013? Why do we have to wait until 2013? Why can’t they roll out universal coverage next year?”

Normally, I would be among the first to critique the bills. By temperament and training, I’m both a skeptic and a critic.

But in this case, I think it is important to recognize  that we cannot expect this first piece of health reform legislation to be anything but wildly imperfect.  In fact, I’m impressed by the progress Washington has made in just ten months. I’ve been watching the struggle for health care reform since the early 1970s, and compared to what has happened over the past 39 years, this is mind -boggling.

I also believe that those who favor overhauling our health care system should send a strong signal to legislators: we support you for having come this far.  We realize that you have three years to strengthen, change and refine the plan before rolling it out in 2013.     

What Has Been Accomplished

What is astounding is that this Congress has made as much progress as it has. We may have a new administration in the White House, but we do not have a brand-new group on the Hill. The majority of our legislators are moderates; many are conservatives.  Nevertheless, a sufficient number have found the will to stand up and back changes that would make health care affordable for millions of poor, working-class and middle-class Americans.

For example, under the House bill, a family of three making $32,000 a year  would pay just $1,360 in annual premiums for good, comprehensive coverage; under the Senate Finance Committee bill, the same family would be asked to lay out only $2,013. Today, without reform, if that family tried to buy insurance, it would find that the average plan costs $13,500.  For this household, the current legislation makes all of the difference.

Too often, the press suggests that such a family would be expected to pay $10,000 out-of-pocket to cover co-pays and deductibles. That just isn’t true. Even if the entire family were in an auto accident and racked up $200,000 in medical bills, at their income level, the House bill caps out-of-pocket expenses at $2,000 a year. Under the Senate Finance bill, the family would have to pay $4,000.  Moreover, under both bills, there are no co-pays for primary care. Even private insurers cannot put a $25 dollar barrier between a family and preventive care.

Moving up the income ladder, a median-income household earning roughly $55,000 would pay premiums of $4,300 to $6,500—depending on whether the Senate Finance bill or the more generous House bill sets the terms. Without legislation, they too would face a $13,500 price tag –and that is if they could get a group rate. If they are buying insurance on their own, coverage could easily cost $16,000.

For self-employed workers, early retirees, and those who work for (or own) a small business, the legislation offers major savings.They will be able to buy coverage on the Insurance Exchange, where they would suddenly become part of a group—which makes their premiums much lower. Whether rich or poor, this is great news for anyone who works for himself, retired early (voluntarily or involuntarily), or is part of a small firm.

Granted, the legislation now on the table still doesn’t make insurance affordable for many Americans at the upper-edges of the middle-class–-or the upper-middle-class. They don’t qualify for subsidies.  But, as I discuss below, the legislation does point the way to lowering their premiums. Before reform becomes a reality in 2013, I am convinced that this will happen, in part because it must. We can no longer ignore the waste, inefficiency and pure fraud in our health care system. There is absolutely no reason why we should pay so much more for health care than any other nation in the developed world.

And at least the current legislation protects these more affluent households from medical bankruptcy. No matter how much a family earns, they cannot be asked to pay more than $10,000, out of pocket, in a given year. For households that have savings and property to protect, this means that they don’t have to worry about being wiped out by a medical disaster. Even if you and your family are in that car accident that leads to $200,000 in doctors’ and hospitals bills, you will owe only $10,000. In that situation, doctors and hospitals will let you pay off your bills over time, because they know you can.You won’t be forced into bankruptcy court. This represents an enormous step forward.

In addition, under reform, private insurers will not be able to put a cap on how much they will pay out to you and your family, over the course of a year, or over a lifetime. If tragedy strikes and a child needs six or seven years of cancer treatments, your insurance will not “run out.”  For some families, this one provision will mean the difference between being able to care for their child and financial ruin (coupled with the suspicion that, if they had just had more coverage, they might have been able to save their child.)

Moreover, in the very first year of reform, the public plan will offer less expensive, higher quality coverage to millions of Americans. Congressional Budget Office director Douglas Elmendorf disagrees. He has been spreading misinformation about the government plan. First he low-balls  the number of Americans who will be eligible for the Insurance Exchange where they can choose between a public plan and private insurance. . He  then asserts that only 20 percent of Excharge shoppers will choose the government plan while 80 percent will pick private insurance.  Here Ellmendorf pretends that he can read minds.  

Elmendorf goes on to argue that despite the fact that its administrative costs will be far lower , the public plan will cost more than comprehensive private insurance.  This theory is based on the unfounded assumption that  very few people  will select the public plan , coupled with speculation that the public plan will make no effort to control costs and utilization.  This makes no sense; as reform legislation makes clear, part of the purpose of the publc plan is to offer higher quality care for less. (In part two of his post, I will examine Elmendorf's gesstimates in detail.)

For peculiar reasons that I don’t fully understand, progressives have been listening to Elmendorf’s numbers. They seem to forget his past: a student of the Dean of Conservative Economists. Elmendorf first made his mark in Washington by helping to quash the Clinton’s hopes for health care reform.

Finally, under the House and Senate reform bills, insurers will no longer be able to deny coverage, or charge a customer more, because of a pre-existing condition. If you’ve begun to take that idea for granted, keep in mind that the Republican’s recent 11th hour proposal for reform “gives the insurance industry more leeway” as the Wall Street Journal put it yesterday. (Media Matters points out that this WSJ story disappeared from the paper’s website sometime last night.) Under the Republican proposal, insurers would be able to take pre-existing conditions into consideration.

House Speaker Nancy Pelosi’s “Fact Sheet” offers two examples illustrating just how easy it is for insurers to deny coverage today:

Peggy Robertson:  A Colorado mother of two who was denied health coverage because she had a c-section in 2006. The insurance company told her if she got “sterilized” she would be eligible for coverage.

Christina Turner: After being sexually assaulted in Florida, Christina Turner followed her doctor’s orders and took a month’s worth of anti-AIDS medication as a precautionary measure. She never developed an HIV infection. Months later, when shopping for new health insurance coverage, Ms. Turner was repeatedly denied coverage because of the precautionary treatment she received after being raped.

Today, in most states, this could happen to anyone.  I live in New York, where we have community rating, so I don’t have to worry about pre-existing conditions. My employer provides excellent insurance, with no annual or lifetime caps, so the current reform  legislation would probably have no immediate effect on my life.

But, we all should recognize that the bills on the table would change the lives of millions of Americans, giving them the security that they don’t have today.

Progressives cannot let this opportunity slip through our fingers because we are so busy critiquing the legislation–and arguing with each other. The WSJ online reports that Senate Majority Leader Harry Reid has begun to warn that the Senate may not be able to complete the legislation  by the end of this year.

Given all of the criticism he has faced, Reid could be losing heart. After all, Conservatives continue to argue that legislators like Reid will be punished at the polls. Congressmen who have been pushing for reform need our encouragement. Progressives should continue to make it clear that the majority of Americans want reform– and a public option– even if the legislation is far from perfect.

2010 is an election year. Fearful of losing, some Congressmen will begin to back away from change. It is critical that broad reform legislation is passed this year.  Over the next three years, it can be amended as the critical details are fleshed out. Anyone who thought that Congress would be able to overhaul a $2.6 trillion dollar industry with just one bill was, I submit, terribly naïve.

What Remains To Be Done In the Next Three Years

There is so much to be done:  this is one reason why reform cannot be implemented until 2013.

Congress must figure out how to regulate the private insurance industry. This will require enormous cunning. 

Reformers will have to find a way to stiffen the penalties for those who choose not to buy insurance, without alienating young, healthy voters. This is a job for a charismatic president.

Legislators must map out how the Insurance Exchange will work.

They also will need to come up with a formula that will adjust for risk if one plan winds up with a larger share of poor and sick customers. (Some fear that this will happen to the Public Plan, so this, too, is a crucial detail.)

Finally, and perhaps most importantly, Medicare needs time to begin eliminating waste in the system—saving billions of health care dollars while simultaneously lifting the quality of care. In fact, while all eyes are focused on the legislation, Medicare already has begun putting its own house in order.

What many reformers don’t seem to understand is that when the public plan begins to negotiate fees with providers in 2013, Medicare fees for some very expensive services will be significantly lower than they are today, while reimbursements to primary care doctors will be  higher. Medicare already has announced plans to cut fees for CT scans and MRIs  next year, and has proposed trimming fees to cardiologist by 6 percent . Meanwhile, it would hike fees for primary care physicians by 4 percent. Congress  has just 60 days to respond to the changes in reimbusements to doctors or they will automatically take effect January 1. Over the next three years, we can expect more changes in the fee schedule. And private insurers will follow Medicare’s lead. As they have explained to the Medicare Payment Advisory Commission (MedPAC), they just want Medicare to provide political cover.

In other words, in 2013 the public plan will be negotiating fees with providers in a very different, less expensive, and more rational context

This is another reasonwhy public plan premiums will be significantly lower than Congressional Budget Office (CBO) director Douglas Elmendorf suggests.

Over the next three years, Medicare will be realigning financial incentives to reward preventive care and management of chronic diseases, while reducing payments for overly aggressive tests and treatments that have no proven benefit– and penalizing hospitals that don’t pay enough attention to medical errors. In the process, Medicare will be conserving health care dollars while protecting patients from needless risks. As President Obama has promised, Medicare cuts can make healthcare safer and more affordable for everyone—including the upper-middle class. Because most private insurers will mime Medicare’s efforts to reduce overpayment, the cost of care will come down for everyone.

The Public Plan will incorporate Medicare’s reforms, and it will have clout.Seven percent of Americans purchase their own insurance in the private sector market. . Most are neither poor nor sick. (If they were, they wouldn't be able to buy insurance in the individual market.) More than half earn over $55,000. They will be able to go into the Exchange and sign up for the public plan. In additon, a large share of relatively young Americans (ages 25-34) are uninsured. Most are relatively healthy. No one knows how many will choose the public plan, but since it will have much lower administrative costs than private sector plans, it will be less expensive. This should make it attractive to younger Americans.

States will not opt out. It would be too difficult for politicians to try to explain to voters why they cannot have access to a government plan that will be able to offer comprehensive insurance for less.

In part 2 of this post, I will explain what Medicare is already doing to pave the way for a structural overhaul of our health care system, and why none of these cost-saving reforms need to be –or should be–spelled out in reform legislation.

22 thoughts on “Heath Care Reform– Looking at the Glass Half-Full

  1. Excellent article. I am eager to see part 2.
    Two important points to add:
    1.) One very important part of the bills is the expansion of Medicaid to include all people with under 150% (133% in the Senate) of the poverty level income, including single people and couples without children, who are excluded in many states. In addition, the plan will change the payment system for Medicaid to match Medicare, cutting down on provider rejection of patients, and will provide funding of the plan from the federal government of 90% or more of costs. This change will provide comprehensive (it covers dental, glasses, and other things that Medicare misses) coverage at virtually no cost for as many as 15 million Americans who are uninsured right now, and are among the most vulnerable people in the system.
    2.) The plans, whether the Senate or the House version, definitively change health care from a privilege to a right, and commit the federal government to seeing that access to health care is universal, bringing us in line with the rest of the developed world in that principle. The importance of this change is impossible to overstate, and will become the basic guiding principle for any future changes in health care. I personally believe that it is recognition of the significance of this fact that motivates the rigid opposition of conservatives to health care reform, since once health care becomes a universal right, we are in a whole new ball game with no going back.

  2. Pat S.–
    Thanks very much.
    The Medicaid reform is terribly important. As you say, in many states the poor did not have access to Medicaid unless they had children (having children qualified you as “worthy poor.”)
    And I know the legislation calls for raising Medicaid fees to Medicare levels for primary care; are you sure it raises Medicaid fees for all care?
    Finally, yes, these bills make it clear that society has an obligation to provide health care for all.
    This is a turning point in our history.
    Conservatives recognize this–they see the big picture.

  3. Pat S.–
    Thanks very much.
    The Medicaid reform is terribly important. As you say, in many states the poor did not have access to Medicaid unless they had children (having children qualified you as “worthy poor.”)
    And I know the legislation calls for raising Medicaid fees to Medicare levels for primary care; are you sure it raises Medicaid fees for all care?
    Finally, yes, these bills make it clear that society has an obligation to provide health care for all.
    This is a turning point in our history.
    Conservatives recognize this–they see the big picture.

  4. Not sure about all care off the top of my head, following the Pelosi re-do of the bill. I am sure you are better informed about that.
    However, the main trouble that most Medicaid patients have is at the level of getting into the system (primary care.) Once you are in the system, at least in most places, you are in. Most specialists are reluctant to turn down referrals from their primary care networks since that can risk loss of referral base. This is especially true in some parts of the country, but may not be true in NYC. However, when a young woman I know personally in NYC was on Medicaid, she had no trouble getting specialty care, including oncology, radiation oncology, endocrinology, and two different types of surgeons, but could not get into a primary care doctor. As soon as she got employer based insurance, that problem went away.

  5. Well, I agree on the ‘half-empty’ part. I also agree that the health care system cannot be reformed in a single piece of legislation, although it is the Democrats primarily who have resisted incremental reforms.
    Although no bill has been passed, it is arguable whether the bill-in-waiting represents true accomplishment. If, of course, you favor expansion of government into health care, as well as into other spheres of our lives, then Obamacare is welcome medicine. If you are wary of government control, as I am, then you are very skeptical that true progress is in the offing. For many, government health care is much more about protecting the health of the government than protecting our health.
    I am perplexed why you malign Douglas Elemendorf, the director of the non-partisan Congressional Budget Office, practically calling him a liar. Is it his calcuations regarding the public option that led to your accusation that he is being deceptive? If his numbers ‘lined up’ better, would he be lauded as a dedicated public servant?
    I agree with you that waste in Medicare and beyond is rampant, but it will be no simple task to eliminate this. There are many reasons why phyiscians order excessive medical tests and treatments, and it will be an enormous challenge to combat this. Various stakeholders will line up against any effort that threatens their interests. We have learned over the past few decades how difficult is to determine if a medical test is necessary. This issue cannot be cleanly addressed.
    I am dismayed that tort reform was not included on your list of what needs to be done in the next 3 years, For many of us, the arguments favoring tort reform are overwhelming. Pelosi’s incentive to the states to pursue tort reform don’t even merit a response.
    The results of the gubernatorial elections yesterday in NJ and VA may give some legislators pause, before jumping into the Obama pool.
    I agree much needs to be done in the coming years. I don’t agree, however, on the plan currently in play. http://www.MDWhistleblower.blogspot.com

  6. Thanks, Maggie, for offering us an accurate and refreshing departure from the angry gnashing of teeth that seems to prevail in many quarters unable to take yes for an answer.
    On one particular item, the CBO estimate of insurance premiums, I find myself struggling to guess the CBO rationale. That agency, although endowed with miraculous powers, does not yet seem able to repeal the laws of arithmetic. If, as they acknowledge, public option (PO) administrative costs will be lower than those of private insurers, and as they also acknowledge, both will pay providers at the same rates, I see no way the PO can fail to charge lower premiums than private insurers for any package offering exactly the same content. When the CBO ambiguously suggests that a “typical” PO plan will charge more than “average” private plans, I’m guessing that they expect many PO plans to offer something at least some subscribers find more attractive – particularly, in their view, subscribers with health problems. They may be guessing that a PO plan with an actuarial value of 70 percent, for example (the mandated value for all basic level plans, public or private), will emulate current Medicare in allowing subscribers wide choice of fee for service providers, while a private plan of similar actuarial value will manage care in ways similar to some Medicare Advantage HMOs, so as to charge lower premiums. Two points are relevant.
    First, even if that were to be true, it would reflect downward pressure on private insurance premiums due to the existence of the PO. Second, however, the CBO may be overlooking the opportunities, embodied in the proposed bills (at least in the House version – I’m less familiar with the others) for the PO to utilize multiple new payment mechanisms to reward value rather than quantity – accountable care organizations, medical “homes”, partial capitation, and various other bundling mechanisms and cost reduction measures that would depart from current fee for service incentives that reward excess and duplication. Finally, despite its unexpected conclusions regarding “typical” premiums, the CBO in the end does estimate substantial cost savings from a public ooption overall – not huge in terms of total U.S. healthcare costs, but meaningful for those who would benefit from them.

  7. I am concerned about subsidizing a $13,500 premium to such a large extent.
    It seems to me under this format, we are enablers, enabling the too-expensive comprehensive coverage to remain so – too expensive for the median family.
    We have a necessity that’s priced as a luxury.
    An efficient way to get premiums down is to get prices down, prices at the time of service.
    Covering these prices at virtually 100% encourages prices to rise, not to fall.
    Heavily subsidizing premiums and prices is a dangerous way to proceed.
    Don Levit

  8. Don–
    I don’t think you read the whole post.
    Medicare is already beginning to reduce the cost of care–beginning this January. And this just the beginning of Medicare cuts that we’ll see over the next 3 years.
    Medicare is not cutting needed care. It is eliminating waste, and cutting in places where we are over-paying.
    Private insurers have said that they will follow Medicare’s lead. They just want political cover.
    A family plan doesn’t have to ccost $13,500 in today’s dollars.
    We’re overpaying for over-treatment.

  9. Maggie:
    I did read the post.
    Eliminating waste will certainly help.
    But subsidizing premiums and services after the waste is eliminated is still enabling those premiums and services that remain to continue to grow faster than inflation or incomes.
    Not until the providers realize that the prices that remain are major league renditions for us minor leaguers, will the prices drop.
    That’s my story anyway.
    Don Levit

  10. Don–
    Everyone in the administration– and in Medicare (CMS) knows that prices cannot continue to rise.
    A last minute addition to the House bill says that private insurers cannot raise premiums without explaining and justifying.
    (And this goes into effect in 2010)
    If they can’t raise premiums, do you think they are going to continue to raise fees? They won’t be able to pass them along.

  11. “If you are wary of government control, as I am, then you are very skeptical that true progress is in the offing.”
    Dr. Kirsch:
    Maybe you haven’t noticed that “progressives” actually define moral progress as “more government control”. It’s their religion.
    It’s not a debate about healthcare, or any other rational discussion. It’s a conflict of moral visions.
    Unfortunate, but it means one side has to lose.

  12. Last night I watched “By the People,” the documentary about Obama’s election. I guess we missed a lot of that down here in Bush country (Texas), or perhaps I was too absorbed in medical errors. In any event, during one speech he said something that reminds me of health care. He was much more eloquent and I can’t recall word for word, but the message was, power will not go down without a big fight. In that spirit, I agree with Maggie, the glass is half full. The Medical Mafia is going down, and it’s going to take a big fight.

  13. Fred, Michael, Tim, Lisa
    Thanks for your comments
    Fred –“Peple who just won’t take yes for an answer” is a good way to put it.
    I’m mystified by some of my progressive colleagues who seem bent on finding fault with–and undermining– the legislation.
    In my next post, I explain CBO’s reasoning (and mind-reading).
    Elmendorf’s reasoning is that the public plan will be more expensive because it will make no effort to “manage utlization.” It will just pay providers whatever they want to charge for whatever tests or treatments patients think they want– effective or not.
    Secondly, Elmendorf assumes that the people in the public plan will be poor and sick –ignoring the many relatively affluent self-employed folks who today buy their own insurance and will be in the Exchange–where they can buy the public plan.
    Finally he assumes that the public plan will be tiny, asserting that only one-fifth of those in the Exchange will pick the public plan.
    I didnt’ call Elmendorf a “liar.” I said he was spreading misinformation.
    See my reply to Fred.
    He states that only 1/5 of those in the Exchange will pick the public plan– as if this is a fact. His assertion has been widely repeated –as fact, because he is the CBO director, and so people assume that when he says something, he has the numbers to back it up.
    But of course, no one can know what percentage of people in the Exchange will choose the public plan. We don’t even know what the public plan will look like.
    When he made this statement, he wasn’t “lying” — he was expressing his opinion. But as CBO director, he should have made it clear that this was an opinion–not something that anyone can “score.” As I’ll explain in my next post, his opinoin is based on a series of “probably’s.” .
    When I say that more than one piece of legislation will be needed. I’m not talking about incremental reforms.
    I’m talking about bills that make major, structural changes.
    Maybe one of those bills will address malpracice.
    I certainly agree that we need to address the problem. But we know that capping awards doesn’t work to reduce malpractice (see Texas).
    So we have to find another approach. As I have indicated, I think that moving away from juries of laymen would help, and more transparency by hosptials –allowing nurses and doctors to tell what happened–would help.
    Of course, we would need legislation to protect those nurses and doctors–as well as the hosptial– for having that testimony used in court.
    Ideally, hospitals would be forthcoming and then both the patient (or family) and hosptial would go to arbirtation.
    The whole “discovery” process that prcedes a trial is enromously expensive and time-consuming. And one reason
    families and patients become so angry (and sue) is become they’re stone-walled–no one dares to talk to them.
    Transparency–and saying “we’re sorry” would really help defuse the anger. (We know this from experience; hospitals that follow this model are sued less often.)
    Finally, under this legislation, the government will not be involved in your heatlhcare unless you decide to choose a public plan.
    Granted, insurance companies will no longer be able to deny care to people with pre-existing conditions, but it’s hard to imagine that many people would object to that as “govt’ intervention.”
    I have to say, I agree, this does come down to conflicting moral visions.
    Some people believe that society has a reponsibility to insure that everyone has access to high quality, affordable health care. And that we should all help pay for it.
    Others (both conservatives and libertarians) believe that this would entail too much govt’ intervention in our lives. They tend to believe that individual freedom is more important than equality and that everyone should take personal responsibility for their health without expecting society (or government) to assure access to affordable care.
    They also tend to object to being taxed to provide safety nets for those members of society who are poorer, or older or weaker than the rest of us.
    And as you suggest, it’s virtually impossible to find “common ground” between these two positions. They are based on values that people don’t want to compromise.
    Lisa– I thought it was a great documentary.
    It was made by one of my favorite actors– Ed Norton.
    I also can’t remember the exact wording, but Obama made it clear that very powerful forces–with big money behind them– would oppose reform.
    Neverthless, he decided to stake his presidency on this issue. He knew this would be very very difficult, and that those who have been profiteering on the old system would fight tooth and nail.
    And I have to say that I’m impressed that so many legilators have come forward to help design a far-less-than perfect, but
    far-better-than-the-status quo version of reform.
    This is just the beginning of the fight for an affordable, safe health care system.

  14. Maggie – I had interpreted the CBO rationale on premium cost differentials between the PO and private plans the same way you did. You said, “Elmendorf’s reasoning is that the public plan will be more expensive because it will make no effort to ‘manage utlization.’ It will just pay providers whatever they want to charge for whatever tests or treatments patients think they want– effective or not.”
    Elmendorf (or at least the CBO analysts) presumably then went on to conclude that sicker patients would gravitate to plans with this type of latitude.
    I found the CBO assumption that the PO would make no attempt to increase efficiency somewhat puzzling, given that increased efficiency of care was one of its expressed purposes. In section 324 of the new House version, this intent is stated as follows:
    “The Secretary may utilize innovative payment mechanisms and policies to determine payments for items and services
    under the public health insurance option. The payment mechanisms and policies under this section may include
    patient-centered medical home and other care management payments, accountable care organizations, value
    based purchasing, bundling of services, differential payment rates, performance or utilization based payments, partial capitation, and direct contracting with providers.”
    Why the CBO wants to dismiss these intentions is something they haven’t chosen to explain.

  15. Fred–
    Thanks very much. I had just written (this evening) that Elmenndorf’s interpretation of how open-handed the public option would be directly contradicts the express goals of the public option:
    You gave me the quote I needed after the colon. Thank you.
    Elmendorf is interpreting things this way because he did his Ph.D. in economics at Harvard with somoeone who is still considered the “Dean of conservative economists.”
    When Elmendorf came to Washington he played a role in killing the Clinton Health Care bill (saying it was too expensive.)
    He has spent most of his years in WAshington working for conservatives or Greenspan (libertarian/ Ayn Rand enthusiast and chameleon depending on who is in power).
    A few years ago , seeing the handwriting on the wall, Elmendorf switched over to the liberal Brookings Institute (which is how he landed the CBO job)
    But his pronouncements on health care reform suggest that he is still less than enthusiastic about a government plan.

  16. Thanks, Maggie, I needed that! (the glass is half-full argument). And I like Lisa’s remark that the medical mafia is going down and that it’s going to take a big fight. She’s right. So we’ve got to pace ourselves. Plus, we advocates must create new ways to work together more broadly and effectively.
    We’ve got to build as big a health reform tent as possible so that as many of us as possible can advocate strongly together for reforms that put us on the right track. That track would be toward something akin to improved Medicare-for-All for those who want it.
    Absolutely this is gonna be a huge and protracted fight. Actually, it’s a fight that’s been going on for years, including the Clinton effort and smaller, state-level skirmishes such as our 2 statewide ballot initiatives for universal healthcare in Massachusetts that were attacked and outspent 100-to-1 by the medical industrial complex. The state initiatives in California have been huge battles as has their advancement of a state-level single payer bill (it passed the legislature but the Gov. vetoed it).
    Maggie and Don McCanne are two tremendously valuable “tent-builders” whose analysis, insights, and dedication to this incredibly complex and urgent issue I find invaluable. Thank you. I’m trying to reach out to more nurses as well as the nursing students I teach to engage them in health reform advocacy and tent-building. It’s an uphill battle since many (most) are already feeling overwhelmed by working within the broken system, without trying to fundamentally change the system, too!!
    One of Don McCanne’s latest posts (he’s a physician policy advocate) is about a WaPo interview with Drew Altman from Kaiser Foundation, and it pairs nicely with this terrific post of Maggie’s. If you’re interested the link’s below.
    This excerpt is particularly salient, as are Don McCanne’s comments that follow at the link:
    “MS. ROMANO: Is the U.S. obligated to provide every citizen with health insurance–health care–let me ask that again. Is the United States obligated to provide health care to all of its citizens?
    MR. ALTMAN: The way I would answer that question is to say that it is certainly something that we should do. And I don’t know anybody–you know, right, left, or center–who doesn’t believe that at some level. The debate is about how we get there, and, unfortunately, that debate about how we get there has been a really bitter and difficult debate in our country. And the tough part of it is, if you scratch beneath the surface and look at the difficult part of it, it is fundamentally about redistributing wealth in our country; that, ultimately, it means, as some of us who have more, have to pay, you know, a little bit more, so that others who have less can have health care. You can slice it and dice it a million ways with this kind of tax or that kind of mandate, but, at the end of the day, that’s what’s involved, and we don’t do that too easily in our country, too happily, or too willingly….”

  17. Dr. Rick & Ann
    Thank you Both
    Ann– Yes, I agree. This is going to be a long and bitter fight.
    Reform advocates have to build a big tent. And we need to stop squabbling with each other.
    We should remember that we have 3 years to refine and strengthen this legislation.
    Both now, and then, we need to pull together.

  18. Dear Maggie, thanks for this insightful, thorough analysis. The only thig which brings me up short is the idea that a median-income household earning roughly $55,000 would pay premiums of $4,300 to $6,500. This seems totally unrealistic to me. Families I know in this income range are already strapped with basic expenses of food, transportation, clothing, utilities and an occasional family dinner at a fast food restaurant. From what I have heard they probably also have $10,000 in credit card debt and practically no savings for kids college expenses or retirement. How on earth will they be able to take on another $5000 of expense?

  19. “For example, under the House bill, a family of three making $32,000 a year would pay just $1,360 in annual premiums”
    “Today, without reform, if that family tried to buy insurance, it would find that the average plan costs $13,500.”
    “Moving up the income ladder, a median-income household earning roughly $55,000 would pay premiums of $4,300 to $6,500”
    “Without legislation, they too would face a $13,500 price tag”
    If you notice the $13,500 cost doesn’t go away – it’s just subsidized!
    “the legislation now on the table still doesn’t make insurance affordable for many Americans at the upper-edges of the middle-class–-or the upper-middle-class. They don’t qualify for subsidies.”
    Exactly! And that’s not the only thing this group will get screwed from. It will be expected to pay even higher premiums from insurance mandates and more taxes for subsidizing everyone else.
    “the legislation does point the way to lowering their premiums. Before reform becomes a reality in 2013, I am convinced that this will happen,”
    In your dreams Maggie. I’ll take the penalty for not buying insurance as the mandate is just a method to force middle income Americans to buy expensive insurance they cannot afford.

  20. Patricia and Peter-
    Patricia– In the rest of the developed world where countries have universal coverage, households are typically expected to spend 10% of their income on health care before receiving help from the government.
    That’s the price they have to pay if they want to live in a countrywhere everyone is secure in the knowledge that they have access to care.
    I think we should try to hold premiums to 8% to 10% of income– $4500 to $5500 for that family, and make co-pays and deductibles very very low–except for prescription drugs when generics are available and
    co-pays for servcies that we know provide little or no benefit to the patient (MRIs for low back pain, PSA tests, Ceasarians that aren’t medically necessary, etc.)
    Surprisingly, today the average American family winds up paying close 10% of income on health care– much of it co-pays and deductibles, as well as the money the uninsured must shell out when they have to go to a doctor or an ER.
    And keep in mind that, under reform, the majority of Americans will stick with teh employer-based insurance they have now– at least for 3 or 4 years if not longer. In those cases, their employer pays 60% to 100% of the premiums, and, in most cases, will continue to do so–as long as we rein in healthcare inflation.
    See my reply to Patricia.
    I agree we need to bring the price of a good family plan down from $13,500.
    The public plan will automatically cost about $2,000 less because of much lower administrative costs. (Commonwealth Fund broke down the numbers on this.)
    So that takes us to $11,500–but still too expensive for an upper-middle-class family earning, say $95,000.
    Of course most families at that income level have employer-sponosred insurance with the employer paying 60% to 100% of teh premiums. And under reform they’ll keep those plans.
    So we’re talking about people who don’t have help from an employer.
    How do we make insurance affordable for those people? You need to keep in mind that the premiums are high, not because the insurers are making huge profits (their profit margin is only 3.2%) but because medical care in this country costs too much.
    This is partially because too much money is wasted on unncessary tests, teatments and products, and because we overpay for practically everything (see part 3 of this post–which I plan to write this week).
    For the past 10 years private insurers have been paying out 10% more each and every year to doctors, hospitals and patients in the form of reimbursments for care.
    The cost of care should not be spiraling that fast.
    Efficient medical centers show that we can rein in utlilization without hurting the quality of care.
    Other countries demonstrate that we don’t have to pay so much for drugs, devices, tests and some specialists’ procedures.
    Medicare is already moving to cut costs. The reform legilsation says that the public plan will incorporate Medicare’s reforms. Many insurers will follow at least some of Medicare’s cuts.
    For instance, next year Medicare plans to slash fees for MRIs and CT scans by as much as 38%. It also will cut fees for tests done in a doc’s office when he rents or leases the equipment. (In those situations, doctors recommend twice as many tests).
    We know that we are doing way too many of these diagnostic tests. Volume of CT scans has doubled in 7 years. No improvement in health outcomes. And many fear that patients are being exposed to way too much radiation.
    Experience tells us that when we cut fees for tests, volume levels off.
    Medicare also proposes cutting fees for cardiologists by 6% while raising fees for primary care by 4%.
    I’m not dreaming, Peter. This is happening.
    People said that civil rights legilsation would never happen. It did.
    People said that the U.S. economy was dependent on slavery– that we could never abolish slavery. We did.
    (I’m not claiming that health are reform is up there with abolishing slavery. But long-term, the health care reform movement is, in many ways, like the civil rights movement. Once this legilsation is passed, there will be no turning back.
    We will have acknowledged that, as a
    civilized society, we have a responsiblity to provide good, comprehensive health care for all.
    The conservatives understand this. That is why they are so very upset. (See some of the responses to my Washington Post op-ed today (Sunday. )
    Private insurers have told MedPAC that they will follow Medicare’s cuts–they just want political cover so that they are not blamed.
    I suspect that we can bring the cost of a good, comprehensive public optin for a family down to around $9,000.
    And then we may need to raise subsidies (and income levels that qualify for subsidies) somewhat– so that people are paying that 8-10% of their income for insurance. (As people do in other developed countires–and as many Americans do today.)
    We’re also going to have to raise the fines for people who decide not to buy insurance.
    We need younger healthy people in the pool to make all of this affordable for everyone.
    The good news: most people on Medicare like Medicare.
    If the public plan is as good as a reformed Medicare plan, and if private sector insurers are forced to clean up their act and provide insurance you can trust, people may not resent paying for the insurance, even if they’re healthy.
    There is much to be said for peace of mind, nowing that if something happens, you will be able to get good care, and won’t be wiped out financially is important.
    And knowing that your 50–year-old parents are safe is important.
    At the same time, we have to keep a lid on heatlh care costs, shift the emphasis form aggressive care to preventive care, pay for quality not volume, and refuse to overpay.
    Pharma is now enjoying a 16% profit margin and has been hugely profitable for many years. No one needs to make a 16% profit when selling necessary products to sick people.
    Peter, I know it is hard to believe, but things are going to change. They have to. The alternative is to watch our entire health care system melt down as premiums double over the next 9 years.
    What can’t happen, won’t.