Single-Payer and Group Coverage Empower Government, Not the People
I agree with Professor Chaufan that the “reforms” many states embraced to expand coverage with private insurance have failed, but disagree that it is because of a lack of government power. In fact, such reforms massively increase government power. For example, Massachusetts’ latest reform (passed by Governor Romney in 2006) made health insurance mandatory, and heavily subsidized those who could not afford it.
The results have been instructive: the reform has not cut costs by moving patients from hospitals’ emergency rooms to primary care. According to the Boston Globe and the New York Times, the cost of caring for ER patients has soared 17 percent over two years, despite efforts to direct patients with non-urgent problems to primary care doctors. Costs, including salaries for caregivers, tests such as X-rays and CT scans, and medicines jumped from $826 million to $973 million. Remarkably, the state hospital association claims that hospitals’ profit margins have dropped from 0.7% to 0.3% in the last year. Because of the recession, patients are deferring surgeries, and hospitals are delaying capital investments, despite “universal” health care.
Nevertheless, the Commonwealth asserts savings of $250 million in uncompensated care since reform. Typical of government’s inability to measure cost and benefit, the Commonwealth fails to appreciate that spending $820 million on a “universal” health care plan to save $250 million in uncompensated care is not a good trade-off. The spiraling costs of this taxpayer-crushing reform have caused Governor Patrick to summon the stakeholders to the table once again, to figure out how to get them under control.
However, the alternative, which Professor Chaufan calls “single payer” but is more accurately named “government monopoly” is even less palatable. In discussing “social insurance,” she puts forward (in her comments) Bismarck’s creation of the welfare state in the 1880’s as an example of a program designed to stabilize society from revolutionary forces. Well, I am not enough of a historian to describe the social effects of Bismarckian social insurance on the health of Germany, writ large, but I trust none of us would look to that state’s evolution (at least until 1945) as exemplary!
I also respectfully submit that the term “social insurance” muddles two things: income-transfers to the poor so that they can afford a secure living-standard, and actual insurance. Pooling risk refers to people sharing the risk of an unanticipated future event, not historical events. If we were to adopt “cross-subsidy,” as Professor Chaufan puts it, for car insurance, we would force insurers to sell the same insurance policy to people who have already crashed their cars as those who fear an accident in the future. Looking at it another way, the state subsidizes people who cannot afford rent or groceries, but it does not impose a government-monopoly housing or feeding plan! The insurance principle and the welfare principle are both important in health care, but we must treat them separately.
Mr. Wright’s insistence on expanding group coverage confuses me. The primary reason for fragmentation in American health insurance is the tax code’s bias towards group coverage: losing your job equals losing your health insurance. Although both the federal and state governments have rules designed to allow you to keep coverage, they are poorly designed. If the individual market were the market of first resort, people could buy health insurance that they kept for as long as they wanted, and if they switched insurers after falling ill, they would carry an actuarialy fair amount of money with them to the new insurer. Although difficult to communicate to the people at large, robust scholarly models of such policies have been designed by Professor John Cochrane of the University of Chicago and Professor Mark Pauly of the University of Pennsylvania, and colleagues.
However, there is something else going on between the advocates of universal group coverage and single-payer coverage that I do not understand. In 2007, the Service Employees International Union (SEIU) supported Governor Schwarzenegger’s universal group reform, only to see it killed by Senator Sheila Kuehl, who was supported by the California Nurses Association. Federally, we see the SEIU collaborating with the lobbyists for the health care “industry” to promote a similar reform to Congress and President Obama, while the single-payer extremists are shoved away from the table.
This is an inter-union conflict that is beyond my ken. As, indeed, are all reforms that give more power to the American government, instead of the American people.
Not Change We Can Believe In
In this second posting, I wish to elaborate on the question: “Is the public option model change we can believe in?”
I wish I could, but sadly I see no reason or evidence to do so. But before readers who may be excited about this approach conclude that I am a “spoiler,” let me lay out my case, making educated guesses about what assumptions underlie the “public option theory.”
During his election campaign, President Obama said he believed that health care is a right, so I assume that whatever he does, granting this universal right must be a high priority. So to secure this right he has promised to “overhaul” health care.
Very well. What may he and his supporters (like Kennedy, Baucus, etc.) have in mind? They have called their approach “uniquely American,” and modeled it after Berkeley professor Jacob Hacker’s proposal of a “public option” competing with private plans within a “highly regulated health care market.”
I call them all “hope it works” health care policy.
The fundamental problem is that, because supporters of this policy hold false assumptions about health insurance – that it is something you can comparative shop for with the same ease you comparative shop for designer shoes – they send you comparative shopping for it. But you do not comparative shop for rights; you are entitled to them.
“But,” says the public option crowd, “we have to send you comparative shopping because this will control costs and make health care affordable to everybody!” But what if I still cannot afford meaningful coverage that will protect me financially if I get sick? They might answer, “don’t worry; the health care marketplace will be highly regulated.”
What would they mean by that? Let me lay it out schematically:
First, they mean that private insurers will be legally bound to sell policies to everybody, regardless of past or present health status, and at prices people can afford. (Note: we are not told how this regulatory machinery will be enforced, or who will pay for it, but we can infer that taxpayers will foot the bill and, given the history of private insurance business practices, it won’t be cheap).
Second, employers will either provide insurance or contribute to a public fund. Discussions are also now moving from Obama’s initial demand for a mandate for children to a “universal individual mandate” that will legally compel all Americans to buy insurance.
Third, public programs for “vulnerable (i.e. expensive or poor) populations” will be expanded (Note: again, we are not told who will foot the bill of the machinery to divide people up according to “vulnerable” or not, or who will pay for the public programs, but we can safely infer it will be all taxpayers).
Fourth, there will be subsidies for those who cannot afford market prices, yet who are not “poor enough” to qualify for public programs (Note: again, criteria for “poor enough” remain a mystery, and once more we can infer that taxpayers will pay for subsidies, whether or not they qualify for them themselves).
Fifth, and here is where the theme of this second posting comes into play, there will be a “public option” good enough to set high standards – assuming, that is, that private insurers do not kill this option or water it down enough to make it worthless. The high standards of the public option — presumed by Hacker, based on Medicare’s indicators of performance, to provide excellent services and fair prices — will force insurers to compete or drop out of the market.
Finally, the plan will encourage providers to use electronic medical records, emphasize preventive medicine and fund research on comparative efficacy of treatment options.
Then we will all hold our breath, and hope that all this works, somehow.
Don’t get me wrong. I am not against electronic medical records, preventive medicine, eating your broccoli and not smoking, or researching what really works in medicine. All else equal, they are wonderful things. But is there any reason to believe that all or any of these things will, for instance, increase our purchasing power so that health care becomes affordable and can be universally guaranteed, as it is everywhere else in the industrialized world?
Well, there is not, because as I discussed in my previous posting, purchasing power comes from bulk purchasing, and all of the above are irrelevant to it.
Nor do electronic medical records or healthy lifestyles have any connection whatsoever with the other big “cancer” of our system: the administrative overhead that comes from dividing people up according to a mind boggling number of policies or eligibility criteria. (Britons spend half of what we do, while providing comprehensive and universal coverage, since they created the National Health Services. And there is no evidence whatsoever that their costs are lower because they eat more broccoli or use computerized records).
“But,” you might still insist, “what about the public option?” Well, in the absolutely best case scenario, it will end up with all the “bad customers” (i.e. the sicker, the poorer and the “not so poor for public programs yet not poor enough to qualify for a subsidy”, etc.).
And of course the public option, by being just an option, will be deprived of the greatest strengths of social insurance: 1. risk pooling, which assures sustainability and lowest costs, and 2) cooperative compulsory contributions, which secures an economically and politically sustainable source of money to pay for health care for all.
“But”, you may still argue, “can we not hope that this time a hybrid “private-public” insurance model will work?” You can, but you can’t rely on any past evidence of success – quite the contrary. Similar “hybrids” giving a central role to private insurance have been tried, touted repeatedly as “ground-braking” by a complacent, misinforming mainstream media, and have failed, repeatedly. They were tried in Massachusetts in 1988; Oregon in 1989; Minnesota, Tennessee and Vermont in 1992; Washington State in 1993; Maine in 2003; and again in Massachusetts in 2006. (For excellent analysis of these attempts, see “State Health Reform Flatlines” [PDF].)
Now, I recognize that the picture I have given you is grim. But let me tell you about the change I, at least, can believe in. It is the change that grassroots, truly popular social movements are able to bring about. One such movement is the single-payer movement.
If all those who believe that health care is a right – and evidence indicates that it is the majority of the population – drop the self-defeating belief that a true right to health care is not “politically feasible” and join in this movement, its collective strength will move mountains. After all, during the civil rights movements, Americans did not say, “let us just negotiate that black people be able to sit in the rear half of buses and hope this will lead to a universal right to sit in the whole bus.” They settled for no less than full equal rights.
Single payer legislation has already passed twice in our state, and was vetoed, twice, by Governor Schwarzenegger and his fellow Republicans. It has recently been reintroduced by Senator Mark Leno. At the federal level, many brave Americans are being dragged out of Washington-sponsored meetings and thrown in jail for demanding single payer (see video clips in my reply to a reader’s comment on my previous post). And as more people continue falling into debt or suffering unnecessarily, many more will join the ranks of these brave Americans. There are only so many jails to throw the increasing number who fight for health care equity. And they – we – cannot be silenced forever.
This growing grassroots movement gives me real hope that meaningful change is on the horizon and that politicians will eventually have to listen.
Because it is ordinary people who hold the vote.
Reform Depends Upon Some Unpleasant Decisions
“Our time of standing pat, of protecting narrow interests and putting off unpleasant decisions — that time has surely passed.” – President Obama
Among diverse listeners, this excerpt from President Obama’s inaugural address doubtless evoked different social, economic and political calls to action. For me, the words struck a chord in the context of our country’s long-standing ambivalence toward fundamental health system change.
Here are just a few examples of the “unpleasant decisions” that will accompany efforts to cover more people, rein in health spending, and use new treatments and technology more effectively:
• In order to improve patients’ access to primary care providers, should they be paid more while specialists are paid less?
• Where multiple prescriptions/treatments are effective for most (but not all) individuals, should people be required to try less costly approaches before moving on to more expensive ones?
• Should young, relatively healthy Americans pay more than they do today, in order to subsidize the old and relatively sick?
• Among those who have insurance, should we impose limits on choice of providers and covered treatments – particularly those shown to cost more and/or be less effective – in order to contain overall spending?
Affording health coverage for more people involves trade-offs. (You can explore these trade-offs and answer a few questions to identify your preferences here.) No matter how successful in the long term, a broader health reform agenda – changing the way care is paid for and delivered, and increasing our commitment to prevention and wellness – will still create short-term winners and losers with respect to cost, choice, and autonomy.
The recent announcement that health industry groups would voluntarily reduce spending by $2 trillion over the coming decade sounds like – and may prove to be – progress. But as they have for decades, such commitments may prove fleeting when confronted with specific legislative proposals. In this context, another commentator’s admonition to “Trust but Verify” seems well-placed.
Are we ready for “unpleasant decisions” in health care? It’s much easier to get disparate stakeholders to agree that the current system needs reform than to agree on who should pay more or be obligated to behave differently to change it. To me, a sign of progress would be open political discourse about specific sacrifices by some in order to assure more appropriate, accessible and affordable care and coverage for all.
Health Care Inequities: Up Close and Personal
So far, the avalanche of comments in this Healthy Ideas dialogue is dissecting the particulars of health care reform. It’s clear that “health reform” to date has not substantively addressed the fact that expanding coverage is not enough; there are underlying inequities across health services by race/ethnicity and income that will require major overhauls in attitudes and practices.
I’ve dealt with these inequities for years. As a second-year medical student allowed to deliver seven babies during a two-month OB-GYN rotation, all to single teenage mothers, while barely allowed to touch the “private service” patients. As a doctor at a federally-qualified New York City health center serving Harlem nearly two decades before Clinton moved there. As an adolescent medicine director at a foster care agency in the East Village before “gentrification.” And now as a researcher, teacher, doctoral program head and Center director. I’ve made it my life’s work to give voice to those usually silenced by our societal hierarchy and address the factors contributing to health status disparities. But it’s one thing to study the disparities, it’s another to experience them first-hand, to see them in living color. I can’t add much to the thoughts of my erudite colleagues in the health care debate, so let me tell you a story.
Several winters ago, my 83 year-old mother developed a simple urinary tract infection, and was taken by ambulance to a nearby community hospital. My mom suffered from Alzheimer’s and osteoarthritis, but was ambulatory with a walker, articulate and. having earned a master’s degree in education, generally able to mask her memory impairment to those who didn’t know her.
Although her current medications and primary care physician’s name and affiliation were communicated to the emergency room physician orally and in writing, after her arrival on the ward, her medications for mild hypertension and diabetes were arbitrarily changed, and no anti-inflammatory agent for pain was prescribed. Upon my return to Los Angeles from a trip abroad, I was shocked to find out that her neck was spasming, she’d not been helped out of bed for the entire week since her arrival, she was grimacing in pain and barely lucid.
The attending physician indicated that he was not aware that she was previously ambulatory, that her neck was not permanently in spasm, nor that she was usually lucid, and he felt no need to call her regular physician, saying he had treated her based on the clinical “signs.” He couldn’t have even pulled back the sheets, much less conducted a full physical exam, because few lay folks, much less trained clinicians, could miss the hallmarks of severe degenerative arthritis: grossly swollen finger joints and a two-foot long scar over a swollen and permanently bent right knee.
After transferring her to UCLA the next morning, she spent a week there and a full month at a rehabilitation center just to restore her to near her prior level of functioning.
My mother was fortunate that I returned when I did, and that I had access to medical information and resources that I could so quickly marshal. I can’t help wondering whether the fact that she was an elderly African American woman played into such dismissive care. I suspect that he presumed she was indigent, a fourth “strike” leading to abhorrent care. Certainly, her treatment was consistent with the racial inequities in health care and health outcomes we’re discussing. However, were race and income not at play, there’s ample evidence that these types of mistakes are all too common and are but a symptom of America’s severely overburdened health care system in need of a dramatic overhaul.
My mother, a native of Kansas City who passed away peacefully in her sleep on August 7, 2008, taught me while young about the challenges of prejudice but also stressed that “can’t” was a word our family did not use. She told me how Rosa Parks refused her “place” but she also invoked the “Serenity Prayer” when times got tough.
She is why I am where I am, doing what I do. And she, along with so many like her, is why we need to address not just how many people we cover with health insurance, but how we cover them with quality health care and caring.
Health Reform Has to Be More than Health Coverage
Too much of the public discourse and debate around health reform focuses on the issue of financing — who pays and what they will pay. For many Americans, having an insurance card and guarantee of payment do not equate to health or even access to health care. Millions of Americans live in communities with no hospital, few doctors and only a handful of limited specialists within miles.
We get bogged down in whether or not we should have a single payer system or employer and individual mandates, without the benefit of a fuller understanding, agreement and commitment to what we are trying to achieve. If what we are trying to achieve through health reform is some level of health care coverage for all Americans, we have truly missed the mark. The current structure and financial incentives for health care financing are often contrary to maintaining the health of a community or population and do little to ensure equitable distribution of our health care resources, particularly in areas of greatest need. The financial incentives and interests of the various healthcare industry stakeholders are not aligned with prevention and disease management, much less serving the chronically ill or rural, urban and racial/ethnic communities. What is the value of an insurance card if you can’t get to care in a timely manner, or experience disparities in health care?
One writer suggested while there are disparities in health, there are no disparities in health care. Data indicate this is far from true. Too much of the health reform debate and legislation are being framed by and for the insurance, pharmaceutical and health care industries. Where is the discussion in health reform about eliminating health care disparities, realigning the financial incentives to drive the equitable distribution of health care resources and setting standards and goals for the delivery of care? Maybe this is where the discussion should start.
Expanding Group Coverage is the First Step
Health policy debates are often characterized by false choices. Should we focus on covering children or adults? Should we focus on expanding coverage, or reducing cost? Should we pursue reform at the state, or at the federal level? Should we attempt fully universal coverage, or in strategic steps?
Most of these questions are not “either/or,” but “yes, both.” As Yogi Berra said, “when you come to a fork in the road, take it.” I am a firm believer that we need to have a vision of quality, affordable health coverage for all America, but we need to fight the battles of the moment.
That said, there are dividing lines about the direction reform should go. Most people will simply look upon any health reform and ask: will care be available, affordable, and adequate to my needs, when I need it?
For those who look at the health system as a whole, I think health consumers are most at risk when they are left on their own. Right now, it is individual self-pay consumers who pay more than anyone else in the world for health care — whether prescription drugs, hospital care or health insurance. Public programs, employers and other large purchasers, in contrast, are able to negotiate for better rates.
So I am opposed to John Graham’s desire for an even more deregulated system, one where people are at the mercy of market forces. I am skeptical about Lucian Wulsin’s preference for the Wyden-Bennett bill, which seems to encourage people into an individual market, rather than group coverage. While this would be a regulated market, I don’t think that is enough to balance the lack of market power that an individual has — or doesn’t have. In order to level the playing field, government should not just be regulator, but a negotiator and/or a competitor. That’s the hope of the “public health insurance option” that has been discussed in health policy circles.
I thus agree with Claudia Chaufan’s analysis of the benefits of pooling risk, but think that is an argument for a range of reforms that expand group coverage. A universal, single-payer system is one solution I support, but other solutions are worthy of attention and advocacy.
Right now, we have a President committed to health reform, an outline of which he campaigned on vigorously — he spent more than $100 million in television ads just in October promoting his health plan. His plan would expand group coverage, provide much-needed assistance to millions of uninsured and underinsured, and create the framework for additional reform efforts — addressing access, cost, and quality — in the future.
We need to take the fork in the road, and I am optimistic that it will take us forward.
We Must Subsidize Insurance Before We Can Mandate
If not the Wyden-Bennett bill as suggested in my first posting, my second preference is for the shared responsibility ideas put forth this past winter in a White Paper by Senator Max Baucus, the Chair of the Senate Finance Committee. They may be more politically doable than Wyden-Bennett and are quite similar to what Assembly Speaker Nunez and Governor Schwarzenegger tried in California through AB X1 1 in 2006-08.
This approach is built around an individual mandate to enroll — with shared financing from employers, individuals and government to assure affordability. This approach leaves the insured with the coverage and doctors they already have and assures them they will never lose coverage. It covers the low income uninsured through existing public programs that have low co-pays, low subscriber shares of premiums and familiar delivery networks; this would cover 65%-75% of California’s uninsured, depending on the income threshold where public programs end. The California proposal would have ended eligibility for public programs at 250% of the federal poverty level – roughly $25,000 for an individual. Between 250% and 400% (more than $80,000 a year for a family of four) of the federal poverty level, it could use refundable tax credits to assure affordability. To put these figures in context, roughly half of all Californians have incomes below and about half have incomes in excess of 300% of poverty.
Higher income uninsured would have a choice of enrolling in either a private or public plan and paying the appropriate premium but without public subsidies. Insurance companies would not be allowed turn anyone down; this would be accompanied by an individual mandate, both in order to cover everyone and to avoid adverse selection of the sickest individuals to plans and providers.
There is an affordability problem if individuals are mandated to purchase. Most will get coverage through their jobs or through public programs, where affordability is subsidized by the employer or the public program. Let’s be clear that the affordability challenge for others can be fixed; it is limited to those uninsured individuals who must buy coverage in the individual market because they are not eligible for coverage through the workplace or through public programs. Half of California’s newly unemployed will fall into this group of uninsured. The affordability problem is concentrated among individuals with no access to employer coverage who have to pay three times as much for coverage as do others of comparable income.
Who are they? First, a relatively small percentage of the uninsured are older uninsured individuals – about 9% in California. Their affordability problems in the individual market are caused by age rating; individuals use more health care as they get older, and age rating charges premiums based on the average use of those in the same age group. Due to age rating, those uninsured over 55 pay three times as much for coverage as do twenty-somethings (a far larger share of the uninsured). This aspect of affordability can be solved with refundable tax credits or premium subsidies through an insurance exchange. California proposed to help uninsured individuals with incomes up to 400% of FPL — $40,000 for an individual, maybe it should be higher.
Second, families pay three times as much in the individual market as does a single individual of the same age and income strata. This is due to family rating, which charges individuals based on the size of their family, the number of family members being insured. This is a very real problem for the self-employed who have no employer to contribute towards the costs of their coverage. This group accounts for a very small percentage of the uninsured; three fourths of California’s uninsured families have incomes of less than 200% of the federal poverty level and only 15% (260,000 persons) have incomes in excess of 300% of FPL. California proposed to help uninsured families with this affordability problem up to 400% of FPL or $80,000 for a family of four through a combination of refundable tax credits and public program expansions. Let’s be clear there is an affordability problem under a mandate for a small share of the overall uninsured, but also let’s be clear that this is a manageable problem that can be fixed.
The bigger challenge for federal reform efforts is designing a new structure for coverage of the flex workforce — the temps, provisionals, part timers and contract workers as well as the lower income, self-employed and micro-businesses. They have limited access to group coverage through employers; some have incomes too high to qualify for public coverage and too low to afford individual coverage. They need a new structure that is efficient, has bargaining power and is not a bad risk pool. The individual market as currently configured is not right for them; it is too expensive and of limited value, as medical loss ratios are quite poor. This market has insufficient consumer protections and weak buying power for individuals, on top of little or no tax advantages.
Health Insurance Exchanges (HIEs) could be the answer, but only if they have real bargaining power and can cut down the administrative costs. Reinsurance and risk adjustments among health plans for high cost individuals can be part of the answer, as this will curb “cherry-picking” the healthiest enrollees. There may well need to be a pro rata contribution from employers that would reduce employees’ costs and limit the natural incentives for some employers to create new classes of non-benefitted workers. Several Fortune 500 companies have recognized the problem and created a pool for their flex workforces, but do not offer the subsidies needed to assure affordability.
The right way to partially finance coverage for the uninsured is by redirecting existing spending on the uninsured, savings from cost containment reforms and re-orienting the public tax subsidies to those who need them most. If needed, this can be supplemented with a small consumption tax like a sales tax on certain services or a VAT (Value Added Tax) commonly used in other developed countries, or a small payroll tax for those employers who do not offer and/or a small income tax surcharge for individuals who do not enroll in coverage; this could round out the financing package. The financing reforms will need to be designed to enhance our global competitiveness and recovery from recession.
Medicare Needs to Learn to Say No
Some people like to blame our cost problem on administration. Proponents of this view point to Medicare, which spends something like 3-5% on administration, as compared to around 15-20% for HMOs in California.
I don’t like this argument. In fact, it is completely backwards. I would argue that Medicare spends too little on administration. They pay for all services regardless of cost, review nothing, and end up with a financing scheme that is rife with fraud (see this story from MSNBC).
And because Medicare covers everything and reviews nothing (in essence, does no “upstream rationing”), it makes administration that much harder for the private plans. Medicare’s 2003 decision to pay for left ventricular assist devices is a good example. These devices can cost Medicare $200,000 or more, but patient survival is very poor. And once Medicare covers them, it puts pressure on all health plans to provide access to them.
Even if you think administrative costs are too high, they still can’t explain the growth in health care spending. The percentage we spend on administration hasn’t changed in at least the last decade. So, while it may eat up some of our health care dollars, it doesn’t explain why the pie is getting bigger.
Everyone loves Medicare because it always says “Yes.” It is convenient to pick on HMOs, but they should at least get some credit for trying to say “No.”
Flu Scare Highlights Need for Paid Sick Days as a Health Policy
Across the country, public health officials are mobilizing to prevent the further spread of the H1N1 flu epidemic. As a fundamental part of their response, they are instructing people who get sick to stay home from work or school to keep from infecting others.
For almost 6 million California workers, this is easier said than done. These workers, who do not earn any paid sick days, are asked to make an incredibly difficult choice – between following medical advice or losing pay, between keeping a job and potentially infecting others.
The right to paid sick days is more than an employment benefit – it is, fundamentally, a health equity issue. Workers in low-wage jobs are the least likely to have paid sick days – in California 70% of workers in the accommodation and food service industries do not have the right to accrue paid sick days, and the majority of California’s Latino workers (56%) do not have paid sick days, compared to 38% of White workers.
Whether we are trying to prevent the H1N1 flu, seasonal influenza, or food borne disease outbreaks in restaurants, guaranteeing the right of all workers to earn and use paid sick days is a commonsense public health strategy – for individual workers, their families, and for all Americans.
The United States remains alone among developed and prosperous Western nations in not guaranteeing this basic right for its workers. If we are serious about improving the health of all Americans we must look past our traditional silos and incorporate health in all policies. Paid sick days for all is a good place to start.