How Soon Can We Expect National Health Reform?

On this blog, we have debated how soon Americans will be ready for national health reform.  Many observers believe that we’ll only get reform when more people are uninsured—specifically when more middle-class and  upper-middle-class families find themselves “going naked.”

The chart below comes from a new Commonwealth Fund Report which shows that while two-thirds of low-income adults (earning less than 200 percent of the federal poverty threshold) were uninsured or underinsured in 2006, just 17 percent of those earning more than 200 percent of the federal poverty level (FPL) were either underinsured or uninsured at some point during the year.

 

Uninsuredandunderinsured_2

“Underinsured” is defined as someone who finds himself spending 10 percent or more of his income on out-of-pocket medical expenses. (For those earning less than 200 percent of FPL, the number is 5 percent.)

The report observes that employers are continuing to back away from offering health benefits:  “Between 2000 and 2005, the proportion of workers receiving employer-provided health insurance declined from 74.2 percent to 70.5 percent,” and again “middle- and lower-wage workers,” suffered most, with “the largest decreases” hitting this group.

The fact that 83 percent of those earning more than 200 percent of the
FPL are well insured explains why polls show 80 percent of Americans
saying  they are happy with their health insurance—and, by and large,
don’t want to see it changed.  This is why they are afraid of single
payer plans; they don’t want to be forced into something new.

Of course, their insurance may not be as good as they think it is, but
as long as they don’t become seriously ill, they won’t know that there
are gaps in their coverage. And most of the time, most middle and
upper-middle-class people are not seriously ill.

Meanwhile, low-income workers don’t have enough political clout to push
Congress to stand up to the lobbyists who will fight national health
reform tooth and nail.

Here, then, is the crucial question: how many middle-class and
upper-middle-class Americans will join the ranks of the uninsured or
seriously underinsured between now and 2009? If you believe, as I do,
that we’re heading into a serious recession, a fair number could lose
their benefits. But will it be enough to reach a tipping point?

This is why I think that the next president should have a back-up plan
for his or her first term. True national health reform will have
powerful enemies.  For, as defined by the progressive candidates with
the most detailed plans (Clinton and Edwards), creating a sustainable,
affordable, high quality health care system for all will require:

  • tightly regulating  private insurers while forcing them to
    compete, on a level playing field, with public sector insurance
    (something like Medicare for all),  and then letting Americans choose
    whether they want to keep private insurance or sign up for the
    government plan
  • negotiating significantly lower prices with drug-makers and
    device-makers, and insisting that they prove their products are better
    than existing products before bringing them to market
  • creating an independent “Center for Comparative Effectiveness
    Research” which does head-to-head comparisons of tests, treatments and
    products in order to determine which are most effective
  • and finally, providing subsidies so that low-income and middle-income  Americans can afford comprehensive insurance policies.

If the votes aren’t there to accomplish this goal, too much compromise
could be disastrous.  We’ll end up where Massachusetts is today: with
“universal coverage” in name only, offering insurance that is too
expensive for many—and/or fails to provide adequate coverage.

There is no point in pretending we have national health insurance if we
let insurers sell “Swiss Cheese” policies (filled with holes) to the
middle class. And if we don’t rein in the cost of over-priced drug,
devices and treatments, tax-payers will not be able to afford the
subsidies that low-income and middle-income Americans will need. This
is what has happened in Massachusetts—which I’ve written about here and here. And Massachusetts is much wealthier than many states.

This why I think the next president should have a back-up plan for his
or her first term. If he or she doesn’t have the votes for full reform,
overhauling Medicare would be an outstanding first step, paving the way
for national health insurance in his or her second term. We need a good
model for national health insurance and Medicare could serve as a
prototype—if we cut the waste.

Right now Medicare is too expensive because it’s paying for so many
unnecessary, unproven and over-priced tests, drugs and treatments. Even
though it keeps hiking co-pays and deductibles, it’s headed for serious
financial trouble.

But there is a blueprint for reform.  The Medicare Payment Advisory
Commission (MedPac), an independent committee composed of intelligent,
well-informed people, has made excellent suggestions which include:
pursuing comparative effectiveness research; encouraging primary care
by raising fees for family doctors and  other generalists; lowering
fees for some specialists; and refusing to cover products and services
unless we have medical evidence that they are effective. (See
www.medpac.gov ).

20 thoughts on “How Soon Can We Expect National Health Reform?

  1. Maybe insurance is the problem. People opt for “over treatment” because they are not paying; the insurance company is. I would think getting rid of insurance except for catastrophic coverage would greatly improve the system. People would seek only necessary care at the best price if they are spending their own money. And many would adopt healthier lifestyles if they could save their own money on health care. Instead of paying for health insurance, the money could go into a health spending account and the govt could give a tax credit similar to the EIC for low/no wage individuals. As for all the people who would lose their jobs in the insurance industry, they could do more productive work – like actually providing health care.

  2. This says to me that those with the “power” make an effort to be insured.
    Workers at lower wage levels have no market power. Employers can hire without offering that benefit. If employers found they could not hire they would offer the benefit.
    Continued strong-arming by states and federal forces would seem to be the way to extend employment-based insurance to lower wage employees. Unless we develop a shortage of less-skilled labor the market will do do it for us.

  3. Maggie,
    As you know, there is politics, and there is policy. All the candidates are too smart (I think) to believe their plans are bullet proof.
    This iterative process will not be about implementing back ups, but a sisyphean task with gobs of compromise. Whoever has the bully pulpit will push and prod, but at the end of the day, no one knows what this will look like. Kind of like redecorating your house if you have ever been there. No such thing as a back up–you craft as you go and work around the snags.
    Seems to me though that the mom and apple pie stuff (IT, comparative effectiveness, reinvigorating primary care, etc) will be the easy part, it is paying for it and everything else that will be the problem.
    brad

  4. FWIW, this squib is from Mark Anderson at SNS. http://www.tapsns.com.
    He includes this in his “top ten predictions for 2008.”
    ——————–
    7. U.S. Healthcare (finally) Gets Diagnosed, as a result of the presidential campaign. Reforming healthcare will challenge Iraq as the primary issue of concern during the year. (In 2009, something gets done about it.)
    Among the problems we’ll find:
    Doctors report to HMOs (and not to patients).
    HMOs report to shareholders (and not to patients).
    Insurance companies dictate pricing – often are primarily in the investment business, but don’t share investment profits adequately when they come in, and only report directly to shareholders (not to patients).
    Government programs are rife with fraud by doctors and institutions.
    Defensive medicine is practiced at huge cost increase to avoid lawsuits.
    Over-testing also pays fees to doctors and pays for the equipment, while acting as lawsuit vaccine.
    There is very little use of IT to reduce costs; the industry can’t even launch proper Electronic Medical Records. Guess what? It makes more money re-creating them each time you switch.
    No one reports to the patient, and almost No one gets paid for good health outcomes.
    Exhibit A: There is no penalty for killing your patients.
    A few answers: cap legal awards, make doctors directly responsible to patients, and remove HMOs and insurance companies from the mix, since they contribute nothing and take much.
    ——————–
    Of course, it looks like he cribbed this bit from Maggie’s book. 😉
    According to his newsletter, his past “top ten predictions” have been averaging 97% accuracy.
    Thanks.
    mp

  5. Thanks Maggie-
    I agree we’ll see major reform by 2010.
    As US citizens continue to get squeezed economically with a likely recession in 08, health care costs both personally and nationwide must be addressed.
    Longer term if we don’t do someting about “tsunami” like Medicare costs “yesterday” watch for erosion of other basic social services that will get the very quick attention of most of us.
    Dr. Rick Lippin
    http://medicalcrises.blogspot.com

  6. mark g, Ginger, Brad, nauggie doggie and Rick–
    Thank you all for your comments.
    markg–one would think that if people were spending their own money they would “seek only necessary care at the best price.”
    But unfortuantely, this isn’t the case. Large studies show that when people have high deductibles that force them to spend their own money, they are just as likely to skip “necessary care” as they are to skip “unncessary care.”
    Then they wind up getting really sick, blow through the deductible, and we all wind up paying for the delayed. more expensive care that they need in the form of higher premiums.
    The whole “if only patients had more skin in the game” theory doesn’t hold water in part because many people just are not well-educated enough to know what is and what isn’t necessary care and because even well-eduated people often do not act in their own best-interest.
    How many college-educated middle-aged men do you know who are overweight, eat too much meat, and don’t work out–even though they know this increases their chance of heart attack or stroke?
    They realy, really don’t want to have a heart attack or stroke (even if their insurance will cover it) yet they continue to act in a way that isn’t good for their health.
    Studies also show that people in many other countries are healthier than we are because preventative care is free. No co-pay. No deductible. So everyone goes for their Pap smears, etc.—the things that we know work to prevent diseae.
    In the U.S. we tend to pour money into aggressive care after people get sick
    rather than spending on the smoking cessation clinics that would help them avoid diseaes.
    Ginger B—Yes, low-income employees need insurance–and the market is not going to do it.
    But there is a limit to what we can expect from small businesses. Many businesses that are labor intensive (like neighborhood restaurants) are barely breaking even. The owner may take home $60,000 a year. If he has 12-15 employees (cooks, wait staff, dishwashers) he really can’t afford paying even $4,0000 to $5,000 apiece toward their health insurance. And they can’t afford the other $5,000 or so that it would take to buy them family coverage.
    This is not primarily because insurers are over-charging (though they do waste money) but because health care in the U.S. is so overpriced and because we are sold so much unncessary care.
    So rather than strong-arming employers, I think we need to fund healthcare for everyone through progressive income taxes, with everyone contributing, on a sliding scale, according to their income.. Larger companies should also be contributing to the fund through progressive corporate income taxes. Many employers would rather do that than continue to try to shop for and administer health insurance for their employees.
    Brad wrote: ” the process will not be about implementing back ups, but a sisyphean task with gobs of compromise.Whoever has the bully pulpit will push and prod, but at the end of the day, no one knows what this will look like. Kind of like redecorating your house if you have ever been there. No such thing as a back up–you craft as you go and work around the snags. . . Seems to me though that the mom and apple pie stuff (IT, comparative effectiveness, reinvigorating primary care, etc) will be the easy part, it is paying for it and everything else that will be the problem.”
    The anology to home renovation is a good one. But we can’t afford “gobs of compromise” just as a home renovator cannot afford to compromise with a contractor who is trying to rip him off while cutting corners on things like insulation, fire-proofing where needed, etc.
    We can no longer afford to be ripped off by drug-makers, device-makers and those docotors and hospitals that are selling over-priced and often unnecessary products and services.
    Health care spending is going up over 6% a year, year after year. That is 2 to 3 times faster than incomes are rising. It’s two or three times faster than GDP is growing.
    We can’t afford universal healthcare unless we bring prices down and cut unncessary care.
    If we continue to let the for-profit health care industry gouge us, soon 50 percent of us–and then 70 percent of us–really won’t be able to afford high quality health care.
    This is what the upper-middle-class doesn’t yet quite believe (though they are beginning to worry.) It’s quite possible that twenty years from now you will be diagnosed with cancer, and told that the medication you need will cost $500,000 a year. If you don’t have $500,000, you don’t get it. (We as a society cannot afford to spend $500,000 a year on everyone who has cancer–or we wouldn’t have enough money for things like education, combating global warming, etc.
    So we have to begin regulating prices for health care. That means telling drug-makers device-makers and insurers that they can no longer look foward to double-digit earnings growth. They are going to have to settle for the profit margins of 6 percent to 7 percent that companies in other sectors of the economy live with.
    And we are going to have to tell specialists that we are no longer going to pay “fee for service”, allowing some to make a million or $2 million or $4 million a year by doing lots and lots of procedures when we don’t have any medical evidence that all of those procedures are effective or necessary.
    Ultimately, as we’ve discussed, we’ll have to move from fee-for-service to paying doctors a salary (plus perhaps a bonus of 10 percent or so for very high quality). Experenced doctors could hope to make $300,000 to $600,000 a year (in today’s dollars)–not millions. (In this scenario, we would fund their medical school education so that they did not graduate with huge loans.–Again this is the way it work in every other developed country.)
    We’re going to have to tell hospitals that if they choose to borrow money to build a new wing with an atrium, they can’t raise their prices to pay off the debt. And that in the future, before they purchase more MRI equipment they are going to have to provide evidence that there is not already enough such equipment within a 60 mile
    radius.
    We are going to have to tell patients that we can’t build hospitals and surgical centers in every suburb. We need to take advantage of economies of scale–especially as we begin using health IT.
    This means suburbanites are gong to have to use the larger hospitals in near-by cities which may not offer as many amenities (valet parking and so on), but do offer very experienced health care providers offering high quality care.
    We’re also going to have to tell patients that they can’t have every new treatment that they hear about unless there is medical evidence that it would work for them.
    Every other developed country in the world does these things. We must too–or accept the fact that many of us just won’t be able to afford health care.
    This is why we can’t compromise with the lobbyists who will fight true health care reform tooth and nail.
    This is why I would rather see the next president wait until his or her second term to achieve full-scale reform while laying the groundwork by reforming Medicare in the 1st term.
    Most in Congres understand that they are going to have to do something about Medicare. The alternative is to cut fees to all doctors who take Medicare patients by about 35 percent over the next three years. At that point, many, many doctors would refuse to take Medicare patients. Politically, that would be a disaster. So I think Congress will come around on Medicare reform even if there are not enough votes for full national health reform until more of their middle-class and upper-middle-class constituents find themselves unable to afford care.
    Nauggie doggie– I agree, health-care needs to become patient-centered, not profit-centered.
    Rick–I’m afraid we may not get full national health reform until 2013–but in the meantime we can get a lot accomplished: repealing overpayment to insurers who offer Medicare advantage; expand SCHIP to cover all poor children and their parents as needed; set up a comparative effectiveness research institute; and maybe Medicare can begin negotiating prices with drug-makers and device-makers . . .

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