News came out yesterday that Harry Reid will merge the various Senate health care reform bills that were passed out of committee into a consolidated floor bill that contains a public option with a state “opt out” provision. This basically means that there would be a nation wide government insurance option competing with private insurers. However, states could opt out of allowing the plan to operate in their state. The mechanism for opting out will be one of the important issues — e.g., will it require a state law or just a governor’s executive order? When will the opt out be available? Immediately or only after the plan has been in place for a while. This gives the states the flexibility to do their own thing if they think they can do it better, but it also creates an insurance program that will hopefully have the leverage and scale to keep costs down.
The significance of having the option put into the floor bill is that now opponents will have to overcome a filibuster to get it out as opposed to proponents having to overcome a filibuster to get it in. I saw some news reports with vague indications that “unnamed Democrats” are indicating their “concern” as to whether such a bill can get the necessary Senate votes. One thing to keep in mind is that it does not take 60 votes in the Senate to pass a bill. It takes 60 votes in the Senate to overcome a filibuster, there is a difference. While I can see, for example, Senator Bayh voting against a health care bill; I can’t really see him being one of a few Democratic Senators standing with Republicans to kill the bill with a filibuster. In any case, as for the Democratic Senators (and, like I said, I don’t think Bayh is one of these but I could be wrong) who would join a Republican filibuster to prevent a majority vote on a health care reform bill, I would like to see them publicly forced to take that stand rather than doing damage in the shadows while publicly saying something like, “Well, I would have liked to vote for the bill, but, see, there were these *other* Senators . . . .”
Meanwhile, in the House, the question will be whether to push through as strong a bill as they can so as to negotiate from a position of strength going into the conference process or whether to pass a bill that’s similar enough to the Senate bill to maybe make passage of the conference mark up a little easier.
Oh, and idle thought — if an opt out is passed, I wonder if Gov. Daniels’ IBM/ACS debacle with social services privatization will make it significantly harder for Indiana to opt out.
It would certainly depend on what the opt-out conditions are, but doesn’t this leave open a possibility that the states with the worst health care, which are coincidentally (!) red states, will have the option of leaving their poorest citizens out in the cold regarding health care – effectively punishing the poor for being poor and leaving citizens who need it most without the reform needed?
On that note, Steph, can someone help me understand why we don’t just relax the requirements for Medicaid?
If the goal is making sure poor people have health care, we already have a system in place to do that. If we’re not doing that well, let’s adjust the existing system rather than create a new one.
Again, there seems to be a bunch of low-hanging fruit that our lawmakers seem to want to avoid. Health care reform, PHASE 1, does not need to be this hard, people!
There was some discussion on Morning Joe program MSNBC that the opt-out could very well become a state-by state opt-in option..also Dems are very easger to make sure some benefits would be flowing beofore the 2010 election.That would make it better for the most recalcitrant senators to go alone.The two that were named as least likely to vote for cloture were Johnson and Landrieu.This was just all speculation,but from people who have an ear to the ground..
Jason– That wouldn’t solve the problems that many of us have with the insurance companies. Namely, they collect our premiums, deny our claims, and then up our premiums twenty percent.
If the public option turns out to actually be a good value and the average consumer is allowed to buy, the insurance companies will be left whining that it was unfair that they went out of business simply because they sucked.
I don’t want this to be a subsidy for the poor. I want this to be a tool that drives down premiums and improves coverage for the middle class. That’s why I would oppose extended Medicaid. Not incidentally, consider the reputations of Medicare & Social Security versus Medicaid. The former are basically functional and well regarded generally. Medicaid is more resented & neglected politically.
T, you are a doctor, correct?
From what I have researched, government programs such as Medicaid/care basically say “Here is what we’re paying you for X procedure”.
In your experience, are you able to get more from the government programs than private insurance? From your standpoint, I would hope the answer is “yes”, because when private insurance goes out of business (because they DO suck), all you’ll have left is what the government gives you.
However, if the answer is that the government gives you more, then I’m left with two choices. Either the government can have less overhead than the private sector, or we as a country are going to pay more overall for healthcare.
On this overall subject, there is a 2-hour show from “This American Life” that I’ve been annoying everyone with (Sorry for bringing it up a second time, Doug):
http://www.thisamericanlife.org/Radio_Episode.aspx?sched=1320
http://www.thisamericanlife.org/Radio_Episode.aspx?sched=1321
It is two hours of listening, so if you don’t have a commute, I know it is hard to find the time. However, it is REALLY worth listening to in regards to the issue of health care in the US.
Did I read that right? Health Care Cop Out? And all these congressmen from Indiana claiming only to be covered by their spouses insurance program because it is better. Someone needs to check into these claims.
A few thoughts here:
-The worst health care is not equivalent to the worst health (outcomes).
-The poorest citizens already have access to both health care and health insurance. The issue is the working poor and the range of people who have chosen not to purchase the staggeringly-inflated costs caused by government regulation of, against and for insurance companies.
-A state option could easily be twisted later– by connecting federal funding to participation or other correlated mandates.
-How would one extend coverage while driving down premiums?
-Medicare and SS are better regarded because they go to the elderly as opposed to the poor– not because they are more fiscally noteworthy. The former are generally considered to be more deserving, by merit of their condition &/or having contributed more to the well-being of the program.
-The American Life two-hour show is outstanding– very balanced, informative and provocative. Make time for it if you care about this issue.
I’m not sure what you mean by this. (Even so, as a logical proposition, I’m pretty sure you’re correct.)
Whereas I think the cause (not that there is “a” cause) is more along the lines of health insurers paying out only $60 – $75 for health care out of every $100 they take in as well as their incentive to cherry pick the healthy and avoid covering or (once covered) paying for the sick. I’m not sure how you create a private incentive to keep paying for a person once a risk has materialized for that person. And, unless we’re willing to let uninsured people die, the treatment they ultimately receive is likely to be more expensive than creating a more rational system that treats them earlier on in the process.
That’s a risk. I remember Ohio fighting and losing a battle to keep their drinking age at 18 because the federal government tied federal highway finds to a drinking age of 21. But, to a certain extent, I think this battle was lost generally when Lee surrendered to Grant at Appomattox.
The greater the risk pool, the more predictable and manageable the risk. Couple that with the lower administrative costs government seems to need for its health plans, and the result is lower premiums. (See the recent report that $500 – $800 billion of annual health care expenditures in the U.S. is waste.)
I think their relative high regard is not so much because they go to the elderly as that they go to the middle class. I agree that the fact they don’t go to the poor is a critical element in their reputation. That’s why benefits of health care reform shouldn’t go solely to the poor. If the middle class sees no change in their current crappy health care situation and they have to pay more for the poor, the resentment would be enormous. In my mind, anyway, the point of the exercise is to make health care less tenuous for the middle class.
As in one of the responses above, people improperly conflate health with health care and health insurance. For a variety of reasons, it would be possible to have the best health care in the world with the worst health in the world.
Insurers have an incentive to cherry-pick the healthy and avoid covering or paying for the sick. Hospitals have an incentive to… Consumers have an incentive to… Doctors have an incentive to… The NPR program would be helpful for anyone prone to seeing one side of this complex issue.
For those who are interested, I’ve blogged on how we can get around the “incentive to keep paying for a person once a risk has materialized for that person”. Cochrane’s work was published in a top econ journal in 1995– spurred on by the Clinton plans for health care in 1994.
http://schansblog.blogspot.com/2009/08/solideasy-market-based-solution-to-pre.html
Increasing economies of scale in the standard sense is a red herring. (We’ve covered that before.) There are two other possibilities. First, if “greater risk pool” means forcing healthier people to get (more) insurance, subsidizing those who are less healthy, then you have a point– albeit one that is inefficient and inequitable. Second, if you force everyone into a single program, there would be some efficiencies that obtain. But overall? In addition to the philosophical problems with such a system, going to a government monopoly to reduce waste seems like an odd strategy.
I agree with you that “the point of the exercise is to make health care less tenuous for the middle class”. To the earlier responder’s point, you could get there by extending Medicaid into the middle class. (That would mostly cause additional problems, but it could be done.)
The better way would be to dramatically increase the market’s role in providing health care– and especially health insurance. This would require govt to reduce regulation on, in favor of, and against health insurance.
How do increased market forces work to deliver appropriate treatment to a person in the middle of a heart attack or requiring extensive cancer treatment? In neither case is the person simply able – short of choosing death – to walk away from the transaction. In the former case, there is no time to shop around (there is effectively a gun to the head of one side of the transaction) and in the latter case, the expense is simply too great for any average person to afford.
In the latter case, that’s the point of insurance. (How can the average person afford a car accident or a house fire?) In the former case, one already has a contract in place– as is common now, but in particular, to cover catastrophic cases.
A more challenging question is how insurance could change along the lines laid out by Cochrane. But if insurance regs– against them and in their favor– were dropped, this would be easy.
So, let’s say we remove regulation from the insurance market – why would they ever cover extremely sick people — keep paying out so long as the person isn’t too demanding of the policy to keep the premiums coming in and maintain the illusion of a more or less respectable product, but when the illness became catastrophic, drop the person like a hot potato when they’re too sick to fight about it? What would stop them from writing the coverage language ever more obscurely to give them outs that can be more or less justified legally? Why wouldn’t they just prey on low information consumers who either don’t have the time or the wherewithal to spot potential pitfalls in their insuring contract? In other words, in the absence of regulation, what is to stop the abuses that are already present from getting worse?
I think you’d have to have certain regulation to allow insurance to perform as close to a free market as possible.
Some government body would need to work WITH the insurance companies to create standardized packages. Say options A through F. I could then shop around and compare prices on “A” level insurance from every company, and know that I’m protected from being preyed upon with legalese. Other things such as preexisting condition protection would need to be enforced.
With that system in place, I could trust the free market to work. Without it, I assume the insurance companies are going to screw me to make more money for their shareholders.
I think along with what I put above, we need to make it illegal for companies to buy insurance on an employee’s behalf. They could give their employees a check that can only be used for insurance (using a reimbursement process), but today, too many people have to change jobs to change insurance, so there is no reasonable free market there either. Yes, I could buy my own separate from my company, but it is too expensive.
Again, to be clear: the issue is not sick people per se, but people who want to be covered for expensive health care. The sickest people only require hospice care. The true cost issue is extensive and long-term treatment plans.
Health insurers would cover sick people just like auto insurance covers accidents and hospitalization and fire insurance covers houses that burn down. I suppose it’s possible that health care expenses could be so open-ended and expensive that one would reach a limit in what could be reasonably insured against. But there are constraints to be observed here, yes?
Would insurers try to jerk people around– and vice versa. That should be limited by courts/lawsuits and market reputation. If Allstate messes people over, how long will they be a dominant player?
I think the market would naturally arrive at “standardized packages”– as they do in other insured markets.
Cochrane’s plan takes care of pre-existing conditions. If you’re really interested in fixing this, please read the piece.
If you get rid of the subsidy for health insurance attached to employment– by far, the biggest problem in this arena– a lot of these problems take care of themselves. Govt heavily subsidizes and regulates insurance– and then we complain that costs rise. Duh!
Auto & fire insurance is different from health insurance because of the nature of the risk. An auto accident and a fire happen in a short period of time and the damage pretty well occurs all at once. Insurance against, say, broken arms or other acute injuries probably resemble auto & fire insurance closely enough. But with chronic ailments, the “insurable event” is ongoing as is the damage. Trying to get insurance once you’re known to have cancer is a little like trying to get insurance in the middle of an accident. There is no market to insure such people. And, I have to think the incentives to dump such people if they were able to get insurance prior to knowing about their chronic ailment mostly outweigh the incentives (reputation and so forth) to keep paying out on such people’s claims; so long as you maintain at least some level of plausible deniability. (That’s where complicated insuring language, extensive insurance applications, pre-existing conditions, and rescission come into play.)
Additionally, I’m suspicious about the likelihood of a lot of potential insurers stepping in to provide competition once market regulation is removed. Among other things, insurers have to have large risk pools to maintain a predictable and manageable balance between premiums and claims. That strikes me as a significant barrier to entry.
Answering Jason’s question: Private insurance pays better than medicare, which pays better than medicaid, which pays better than the free care I end up giving to those who evade collections. In an ideal world, a government option that didn’t have the 30% overhead that private insurance does would be able to provide services for an affordable premium, and still be able to pay me on a par with medicare. I’m willing to take a pay cut–especially if I get to spend less of my time begging insurance companies to cover the service that they agreed to. Or if I didn’t have to resubmit the claim or send more information. If I didn’t have to pay a nurse to be on the phone for forty-five minutes, on hold, to talk to someone in Manila or Bangalore about my patient. Also, if some of my non-paying patients ended up paying me at least something due to having a public option, that would help make it closer to a zero sum game for me.
But I’ve ended up approaching this as a public policy matter, rather than a personal finance matter for me. I work harder than I ever intended, but my earnings exceed what my expectations were going into this. My son’s medical expenses have been both educational and humbling for me. My own personal ride on Wall Street last year changed my priorities from early retirement to just being thankful I can keep the bills paid. When you hear doctors say they will quit and do something else, they’re bullshitting you. Most of us still love the medicine, and would do it for less if the administrative/paperwork headaches diminished. Besides, even with a considerable pay cut, it still would be a decent living. What the hell else are we going to do? Are people really going to say “I won’t work for $100k”? I would be embarrassed to say something like that, having seen people with real problems.
Some doctors may decide to not participate in whatever public option that becomes available. But someone will be there to pick up the slack. If the public option doctor has less paper to shuffle, the lower pay scale can be made up with volume. Life will go on.
The thing I focus on is that the insurance industry doesn’t add any value to health care. Doctors, drug companies, medical supply companies, etc, for all our collective faults, actually save and improve lives. The insurance companies to some extent mitigate some risk for some people. But on the whole, they at least appear to be a big leech sucking capital out of the system.
I agree that long-term and expensive health care coverage are different. But reputation and lawsuits would take care of much of it. Preceding those remedies/constraints, Cochrane’s innovation obviates most of the initial need by eliminating the insurance problems associated with “health status changes” that then become “pre-existing conditions”.
There are direct and indirect barriers to competition in insurance at present. Greed-mongering insurers would presumably love to get a piece of the profitable pie and would cross state lines if those barriers were removed. In any case, how are those barriers helpful?
No insurance adds value to the thing it insures. It adds value to those who are willing to pay premia to reduce the risk of far greater damage. The size/extent of insurance is the problem– e.g., imagine auto insurance that covered door dings and oil changes– but this is directly attributable to the substantial govt subsidy for us to purchase insurance through employers.
T,
Your comments remind me of the trend for some doctors to go cash-only.
They have said they get fewer customers, but they also have fewer staff (just someone to make appointments and watch the door) and get to spend a whole boatload of time actually making people well.
Such is the case for HRAs. Have insurance for things that might cost more than $5000 in a year, but pay cash for everything else.
What about making the “public option” nothing more than a HRA-compatible plan? Allow Medicare/aid to handle the people that can’t afford $5000 a year in medical bills, but allow the middle class and up to decide how to spend their money. People like T get paid in cash. Insurance companies don’t get involved. The rest of the country actually starts saving money when they don’t need to use the full $5k that year, and it helps us create a generation of people that have other retirement that is fully self-funded and helps eliminate the need for social security.
*bows*
Health care reformed solved, off to the middle east. :)
HA! Health care is tractable, with some political imagination and courage. The Middle East? Not so much!
To your point, in the paper I just finished on market-based health reform, I ran across Robert Berry who runs PATMOS (Payment At TiMe Of Service), a six-year old clinic in Greeneville, TN with 7,000 clients. Berry was named the winner of the 2006 “Pioneer in Medical Practice” by Consumers for Health Care Choices. He does not accept insurance; he lists prices for various services on the wall of his waiting room; and generally, his prices are 1/3 to 1/2 of those using insurance.
Getting the market to/toward catastrophic is vital. HIRAs and HSAs can be a piece of that puzzle. To this juncture in time, they have been helpful in initiating a mindset that most people should be responsible for most of their health care decisions and expenses.
I can definitely agree with some points:
1. Employer based insurance makes no sense.
2. We need much more transparent pricing for medical services (recognizing that some costs can’t really be estimated before the doctor looks ‘under the hood.’)
3. Risk management model of insurance makes more sense than a subscription model. (You’re going to pay out of pocket for the first $x, but above that, it will be paid for.) But, even with this, I think we need to be careful so that people don’t put off paying for the oil changes so long that it turns into a major mechanical problem.
Doug, your point #3 hits a bigger issue. Yes, things we have to pay for, like cancer screenings, can help avoid big problems later.
However, I think everyone agrees that lifestyle decisions (smoking, exercise, alcohol, drugs, weight), are free decisions that net much larger results than a prostrate exam.
Unless we’re going to penalize people that make bad lifestyle decisions (since they cost us all money with their decisions), why should we pay for a pap smear?
People that care about their health will get tested, even if there is a fee.
People that don’t care about their health won’t bother with a test, even if it is free.
Doug’s 2 and 3 get taken care of with the insurance reforms to which I have alluded.
Jason makes an important and oft-overlooked point about lifestyle changes. For one thing, it’s responsible, in large part, for the disparities between health care spending and health care outcomes. Beyond that is the philosophical question about how responsible people should be for their own choices. Some people prefer a lot of paternalism; others not so much.
On #2, consider door dings and oil changes for autos– and consider Lasik, cosmetic surgery, dental services, and vet services.
“Lifestyle” issues opens up a whole new can of worms — not that the can is irrelevant to discussions of health care. But, I think there has been a tendency for food to generally become less healthy (due, in part, to subsidy and other agricultural policy choices) and for our society to be structured in ways that encourages more sedentary behavior (urban design allows for less walking and employment is based more on sitting & manipulating symbols than physical labor.)
Now, I’m probably straying far afield here, but it seems to me that there is a notion among many people that we are in a general state of decline from some unspecified Golden Age. (Maybe we’ve been falling from grace ever since Adam & Eve were kicked out of the garden – or, alternately, since WWII and the greatest generation – or, maybe since FDR and his socialist ways).
By attributing the various ways in which, perhaps, we do not measure up to generations past to moral failings (and, for some, maybe just waiting for the Rapture) rather than looking for structural issues that might be contributing to the problem, we can avoid the impulse to actually do anything about them. Needless to say, this suits those benefiting from the status quo just fine.
True enough, but is anyone advocating the status quo on health care/insurance– the current mix of market activity with heavy govt regulation and subsidy?
The choice on the table right now is even more govt. In the near future, hopefully that will fail, and we can discuss market-based reforms that will address the core issues rather than mostly making those issues worse.
My great-grandma had a way of reminding me that the “good old days” were never that good, without making me feel guilty about being born into my generation.
Point is, I don’t think we’re on any kind of decline. Our health and health care is far greater than it has even been in history.
If we want to keep improving at it, then we need to change the status quo, because I think everyone agrees we can’t continue down the path we’re currently on.
There are a lot of people opposed to the plan on the table that are not just saying “NO! Don’t change it”. Many are just saying “No, don’t make it WORSE!”
Supporters of this current bill seem to think that the goal is to just get something done now, while they have the votes, or they’ll never get the chance again. I think they need to consider that there is a worse thing that can happen.
If the bill passes, and then the plan fails, we’ll end up voting people in that support a full, unrestricted market. I don’t have any more confidence in that plan than this one.