Holland, pay-or-play and the WSJ Opinion page making sense?

Don’t worry, the WSJ Opinion only makes sense because they let Zeke Emmanuel and Ron Wyden write an op-ed. The article is called Why Tie Health Insurance to a Job? and it’s impossible to argue with the logic about why we ought to move away from employer-based insurance.

There is of course an argument amongst those of us who both want to move to a social insurance system and want to have universal insurance as to whether this should be done in the voucher-type model that Emmanuel & Vic Fuchs have proposed (which looks a little like how the Dutch now do it) or whether we need to go to a modified single/multiple payer system like the French/Japanese/Brits/Australians.

I gave a talk in Canada the other night suggesting that there was some potential for convergence, and I used the very recent Commonwealth Fund data looking at the experiences of the chronically ill in seven nations. What is very interesting to me is that in terms of access to primary care and in terms of disease management, the Canadians and Americans look roughly similar—and not too good. As for specialty care, well as we know the Canadians & Brits ration by time and the Americans ration by money (or socio-economic status).

What was fascinating to me is that the data appears to show that the
Dutch have not only figured out access to primary care, but also to
specialty care, better than anyone else. And they have the least
pissed-off population, in terms of those who want the system completely
rebuilt. Only 9% of Dutch say that, compared to 12% of Brits, 16% of
Canadians, 23% of the French and 33% of Americans.

But are we going to end up with a Dutch-type system of highly
regulated insurers competing a la Enthoven (or a la
Fuchs/Emmanuel/Wyden) within a social insurance system? It certainly
doesn’t look like it—or not immediately.

Despite Wyden’s plan having a decent amount of bi-partisan support,
instead it looks like we’re going to a half-assed expansion of pay or
play—which, as Brian Klepper pointed out on THCB a few weeks back,
will still leave big problems and large swathes of uninsured as usually
small firms and those with contract or casual work-forces are left out.
Which probably means that the expansion of Medicare and Medicaid will
be the real result. I guess at least we know what to expect from
that—love ‘em or loathe ‘em.

8 replies »

  1. I’m from the Netherlands so for maybe I can shed *some* light on the issues raised here (although I’m no healthcare financy or policy expert – rather more organization oriented)
    Peter —
    A comment about the conversion figures in your comment: 1EU =~ 1.35 USD, so an amount of 95EU is approx. 128USD (so more than the double of what you calculated).
    I don’t think your comment about the insurance companies making money is accurate. It is completely true that there has been consolodation leaving us with 4-5 big players. These companies are mostly part of bigger insurance conglomerates offering more than just healthcare insurance. But the money in healthcare insurance for that reason is probably made not most on the basic premium, but rather on the extra premiums you pay. And yes: you get government subsidies, but only if you earn below minimum wage or special circumstances. When I was a student that amount to ~50EU (~67USD) per month, that’s about half of what I had to pay for my insurance.
    Matthew —
    As your article doesn’t look like it’s supposed to be choosing either side, let me just give my take on why only 9% of the Dutch might want to rebuild our healthcare system.
    The basic insurance package is a point of constant debate in the government. But as a result there’s relatively high relevance of what goes in it (according to current views). For most people it’s a comfortable idea that extra is really extra (and not something you have to pay for in the end anyway.
    There’s also the point of a obligatory deductible of 150EU for out-of pocket costs. Supposedly to keep the risk of moral hazard low (but this is still somewhat unclear, as we went from no-claim to deductible/own risk last year – despite the results of the famous RAND experiment on this).
    In general the main point of the Dutch healthcare (insurance) system, for me at least, is the employer-independenc and therefore worry-free system. Reaching that through access of care can eg be because of the gatekeeper system (GPs, family physicians as first gatekeepers). There’s probably more research on the access part which I don’t have at hand right now.
    Last: it’s interesting to see that in NL we now have large discussion about eg. concierge care or “special treatment care” where often the finger is pointed to how it works in the US… Well I suppose everybody thinks the grass is greener on the other side. Well that is, if you at least have grass.

  2. The poor young saps who voted for Obama will soon discover that they’re paying for a super-luxury health insurance plan when, in the past, they happily existed without any insurance at all. Of course, what they really need is inexpensive catastrophic coverage, but the premiums associated with that wouldn’t be enough to subsidize all those older and sicker people who currently have no coverage.
    When, inevitably, the Dem’s plan creates an absolute cost explosion, and Congressionally-mandated reimbursement cuts and rationing begin to kick-in, we will see the best medical personnel depart the system altogether for concierge practices. Corporate executives, highly-paid professionals, and other wealthy individuals will then have truly luxurious care. Everyone else will sit for hours in urine-stenched waiting rooms, hoping and praying for proper treatment.
    At that point, will Congress make concierge care illegal?

  3. From the WSJ Opinion: “Why, then, do millions of Americans get their health care through an employer-based system from the 1940s?”
    “Why does the country run on a constitution that was originally written in 1789?”
    Their comment was a silly one.
    A great reason for having employer run health plans / insurance is competitive advantage in that it gives employers an ability to attract employees with better plans. If one has one unified system there is no inducement to improve quality. Competition is the best way to deal with that.
    Now, if one is worried about costs one needs to apply a principal that is used with automobile insurance. People who live in Manhattan and don’t drive cars don’t pay for automobile insurance. In many states, speeding violations (a lifestyle habit) add to the cost of insurance premiums. This simple principal needs to be applied to health care: those people that voluntarily incur health care costs through lifestyle such as smoking must pay as a self insured pool (the class of smokers) additional insurance fees to pay for their voluntary risky behavior. Impose a fee on tobacco crop and put that fee into a fund that can be drawn on to pay for medical treatment for disease such as smoking induced lung cancer, emphysema or heart disease. Raising the cost of smoking induces teenagers to not start smoking and adult smokers to quit smoking. The same principal should be applied to lifestyle habits that incur disease.
    Similarly those that incur pollution such as coal powered power plants that incur health care costs should pay a health fee that goes directly into the health care system.
    Market forces that make tobacco products more expensive, that make pollution more expensive (so that the polluters choose cleaning equipment or cleaner alternatives), so that high fructose corn syrup soft drinks cost 50% more than diet soft drinks is the best way to induce public health. Attempting to get many patients to quit smoking, to eat more healthily often doesn’t work. Market forces do work.

  4. I agree with Deron generally, and have steadily been commenting since I started reading this blog, that health care financing/insurance reform is doomed to failure (by breaking the bank) unless health care DELIVERY reform is accomplished either first or simultaneously. It seems that only the people inside the system understand how entirely screwed up the delivery system is; patients and other outsiders only get a glimpse.
    As far as tying insurance to employment, we are seeing the inevitable result when lots and lots of people lose their jobs as is happening now. A major design flaw in that system.

  5. Read this Dutch report: http://www.rivm.nl/vtv/root/o33.html
    If we look at what the actual premiums are as well as the additional out-of-pocket, the amounts are staggering compared to U.S. costs. No wonder the Dutch like their system. If the U.S. had the same costs for the present system no one would be complaining.
    Here’s examples:
    Basic monthy premium: “The fees for the basic health insurance package are annually determined by the health insurance companies and are normally approximately €95 per month.” 95 Guilders = about $55us
    Add to that: “Increase in additional chronic-illness-related expenses. In 2005, 87% of people with chronic illnesses and disabilities had, in addition to their
    health insurance premium (basic and supplementary insurance), additional illness related expenses such as co-payments, over-the-counter drugs, medical aids, transport,special diets, additional energy, and tokens for informal caregivers (Van den Brink-
    Muinen et al., 2007). The average amount of additional expenses per month in 2005 was €73 for every person with a chronic illness or disability (including those who did not have additional expenses). For the category that did have additional expenses, the average amount per month was €81. This amount does not include any fiscal compensation that this category received. On average the additional expenses increase with increasing physical limitations. Data over a longer period are only available for chronically ill people and then only for the additional expenses, excluding medical aids and adaptations. Figure 3.2.2 shows the additional expenses (not corrected for inflation).
    The expenses increased in the period between 1997 and 2005.”
    Out-of-pocket above adds about another $45us. BUT that does not account for government subsidies.
    And note: “After the reform was implemented, however, there was significant consolidation in the health insurance market and now there are only four or five large plans. This may reduce the amount of price competition in the market.” I have also read that Dutch Insurance companies are not making money yet under this plan – please correct me if I’m wrong.
    Does anyone think U.S. healthcare will achieve close to these costs? What is also important to compare are the wage rates and poverty levels in Holland and the U.S.

  6. If our per capita costs were half of what they are now, would our discussions be different? Would many see the need to redesign the financing?
    In my mind, we shouldn’t be devoting resources (time and money) to redesigning how healthcare is paid for. Those are resources that could be better deployed finding ways to make healthcare more affordable. Healthcare reform seems more daunting when we worry about the financing at the same time that we worry about our high costs issues.
    If we redesign the financing first, do we run the risk of limiting ourselves when it comes time to redesign the care delivery system? If we can effectively drive down costs, we will decrease the uninsured population in a more natural way. Those that remain uninsured should be picked up by the Medicaid system, which would be merged with Medicare to make one government system based solely on need. The current Medicare system in which millionaire seniors are covered doesn’t make sense to me.