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THCB Reader Mail

In response to Matthew’s take on California Governor Arnold Schwarzenegger’s Massachusett’s-style plan to require that all state residents purchase insurance ("California Not Really Uber Alles" 12/26 ) contributor and friend of THCB Jeff Goldsmith writes

"Isn’t it interesting that the projected California budget deficit
and the cost of the health reform program are both about $14 billion.
So to fix both of them would thus requires the state to find a mere $28
billion? That’s the real reason it isn’t going to happen, not provider
lobbying or employer intransigence. No state can really do something
like this by itself without wrecking its economy. It is what we have a
national government for.

It isn’t really that hard conceptually to construct an affordable
benefit. Remember the large majority of the uninsured are young people.
A stripped down package which covered primary care MD services, dental
care, chronic care type drugs like insulin, and catastrophic
hospitalization coverage (w/ some type of negotiated deep discount for
the patient’s part of the hospital bill) would do the trick.

The problem is stopping one’s ears for all the sob stories from the
chiropractors, podiatrists, aromatherapists, etc. who want to force you
to insure for their services. Your suggestion that the real problem is
retaining employer based coverage still dodges the question that
somehow, somewhere, a legislative body still has to define what
coverage is mandated.

Why do you think employers are so resistant (a 7.5% payroll tax
might be part of the explanation)? It is because thirty years of
legislative history suggests our elected representatives, like that
easy woman in the musical Oklahoma, "cain’t say no". Mandated in vitro
fertilization, breast reconstruction after cancer surgery, etc. – all
worthy goals in a resource unlimited world, but death to an affordable
universal benefit.

Oregon’s John Kitzhaber, an emergency physician by training, seems,
so far, to have been the only political leader of either party to have
figured out that making these types of hard choices is the real problem
in health reform- not "play or pay", tax deductions or hard subsidies,
employer or individual mandate, or all the other comparatively trivial
choices. Listen to all the pervarication from the Presidential
candidate poseurs on what actually gets covered. It’s enough to turn
you into a New Zealander."

EDITOR’S NOTE:  Jeff Goldsmith is the president of Health Futures Inc.  From 1982 to 1994, Jeff served as National Advisor for Healthcare
at Ernst & Young. From 1980 to 1990 he was a lecturer at the
Graduate School of Business at the University of Chicago. He currently
serves on the editorial board of Health Affairs. His past pieces for THCB have included "The Perpetual Healthcare Crisis" and "Employers’ Health Cost Growth Continues to Moderate:  Ain’t It Awful?"

 

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6 replies »

  1. “Remember who we’re targeting here: the 28 million uninsured under the age of 34 (or the 36 million under age 44).”
    “Talk to some colleagues in the health insurance industry about how much it actually costs to cover young people…..health plans could still make money.”
    Well if’s so cost effective (and profitable) to do all this, according to the insurance industry, why aren’t they doing it?
    It seems your plan is more geared to bring in profitable business presently not tapped rather than provide health insurnace or curb costs. Let’s just make the uninsured issue go away and we can profit for several more years without those bleeding heart liberals (nothing personal). “The savings are from a stripped down and targeted benefit package, not lower provider payments.”
    “Dental coverage is actually really important, given how many serious infections start in the mouth.”
    Agreed, even Canada doesn’t cover dental unless it is done in a hospital. I’m not sure if it’s because of the projected cost or because this is the bread crumb to private insurance which offers it to business groups.

  2. Hips and knees, cataracts are Medicare business. Remember who we’re targeting here: the 28 million uninsured under the age of 34 (or the 36 million under age 44). Dental care and primary care MDs are bargains, as are generic drugs ($4 at Wal-Mart!) – deductibles for the core services young people use would be very low. You could ER room deductibles at $100 and hospitalization (very rare for young people) at $300 and still have an effect- hospitals that are presently stiffed for these visits would accept lower rates. Dental coverage is actually really important, given how many serious infections start in the mouth. The savings are from a stripped down and targeted benefit package, not lower provider payments.
    Talk to some colleagues in the health insurance industry about how much it actually costs to cover young people. It’s an eye opener. My 34 yr old significant other’s high deductible health plan, with much more comprehensive benefits than suggested here, costs only about $100 a month (Anthem), and that’s probably too high for what she actually uses. The incremental cost of adding more young people to private health plan coverage is extremely low, and even at the premiums suggested, health plans could still make money.
    This wouldn’t help the 10.7 million uninsured boomers, for whom earlier Medicare eligibility is the obvious and affordable answer (subsidized for those w/o resources).
    In the current political climate, even the Democrats won’t cover the over 10 million illegals included in the 47 million count of uninsured. You could cover nearly everyone else between a stripped benefit approach and a Medicare buy-in for boomers. A little pragmatism could take you a giant step toward universal coverage.

  3. $35-$45 per month, that’s it!? How big would the co-pays and deductibles be? That would even cover dental work? Would it include hip and knee replacements, cataracts? Who would administer such a plan – the insurance industry? Who would take the cuts necessary to achieve this? For that price you are indeed right saying everyone would buy in.

  4. $35-40 a month, maybe less. At that level, you won’t need mandates or huge subsidies, because lots of people, including the parents of cash strapped young people, will buy the coverage. Massachusetts will be end up covering maybe half of its uninsured w/ the Commonwealth Health Plan, and the $250-300 a month premiums will be the culprit. High deductible plans were “outlawed”, and the special interest mandates (not joking about in vitro fertilization- it’s in there) and a teaching hospital centric care system were completely untouched.
    BTW, the guns vs butter argument above is hogwash. We spent about $2.3 trillion on healthcare in 2007, vs. about $620 billion on defense, including the war, in a $14 trillion economy. The idea that the war is squeezing healthcare is ludicrous.
    Healthcare is the 800 lb gorilla in our economy now; defense is just a chimpanzee.
    Healthcare is squeezing everything in our economy- corporate cash flow, federal and state budgets, household budgets. The real challenge is putting the gorilla on a diet and getting our $2.3 trillion worth. Even if health reform cost $150 billion, higher than even the Democrats are pricing universal coverage, you could find nearly all of it inside the current healthcare spending envelope w/o any “peace dividend” required.

  5. “It isn’t really that hard conceptually to construct an affordable benefit. Remember the large majority of the uninsured are young people. A stripped down package which covered primary care MD services, dental care, chronic care type drugs like insulin, and catastrophic hospitalization coverage (w/ some type of negotiated deep discount for the patient’s part of the hospital bill) would do the trick.”
    Got a number in mind Jeff?

  6. There is a great little column in the Financial Times today: “The Short View: Guns or butter?”
    http://www.ft.com/cms/s/0/7f68a982-b963-11dc-bb66-0000779fd2ac.html
    “Guns or butter? It is a question that has framed national debates over how economies should allocate resources and provided a neat introduction for textbooks on macroeconomics, for the best part of a century.
    . . . Since the close of the 1990s, when many believed there was a “peace dividend”, the US has for most of the time been embroiled in two costly wars.
    . . . Iowa may matter more than Islamabad. A recession would increase the Democrats’ chances of victory. That in turn would raise the risk that US defence spending is trimmed back. Is there a renewed desire in the US to choose butter over guns?”
    Just insert healthcare in place of butter.

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