Back to the Drawing Board?

Roger collier

The current congressional approach
to health care reform of adding ever more fixes without changing the
underlying system looks increasingly shaky. 

What are the some of the indications? 

  1. The public plan has generated
    enormous opposition—and not just from insurers. Whether anyone believes
    that a Medicare clone would reduce under-65 health care costs or not,
    it is unlikely that a final reform bill will include anything other
    than a weak compromise.

  • The health care industry
    “promise” of $2 trillion in savings was withdrawn almost as soon
    as it was made. Only the truly naïve believe that the industry would
    willingly reduce its revenues.
  • Employer mandates face a
    “heads we lose, tails they win” dilemma. Mandating that every employer
    pay a substantial part of employee premiums won’t fly, but imposing
    only a nominal levy on non-payers will result in many employers abandoning
    existing coverage.
  • Individual mandates face
    the same problem as for employers. They may work where pre-reform uninsured
    numbers are low, but imposing them on states like Texas and Florida
    with more than 20 percent uninsured looks overwhelmingly difficult.
  • The Congressional Budget
    Office analysis of the draft Senate Health, Education, Labor, and Pensions
    Committee bill estimates that it would cost more than a trillion dollars
    over ten years and still leave 37 million Americans uninsured.

    The shakiness of the present congressional
    approach was underlined this week by CBO Director Doug Elmendorf. In
    a letter to Senators Conrad and Gregg, Elmendorf emphasized: “large
    reductions in spending will not be achieved without fundamental changes
    in the financing and delivery of health care.” 

    And that’s exactly the issue. 

    If we want to achieve something close
    to universal coverage without bankrupting the nation (although this
    may happen anyway, without health care reform), we have to rethink our

    So here are seven principles to consider: 

    1. Affordable basic
      benefits – Everyone should be guaranteed basic coverage, but we
      can’t afford Cadillac-level (or possibly even FEHBP-level) insurance.
      Ultimately, funding availability must dictate basic benefits, not the
    2. Fairness of tax treatment
      – Employers should have the option of providing supplemental coverage,
      but this should not be subject to an unfair tax exemption.
    3. Price competition
      without “cherry picking” – As in other industries, competition
      should be fostered by transparent pricing of basic benefits (e.g. through
      an insurance exchange), with supplemental benefits separately priced.
      Insurers should be restricted from selling directly to employers whose
      employees are able to buy coverage through an exchange.
    4. Individual choice, individual
      payment responsibility – With the exception of existing government
      programs and self-insured groups (which, with no insurer risk or profit
      involved, are assumed to provide better value), individuals should have
      the responsibility for choosing coverage that best meets their needs
      and, subject to subsidies for the lower-income, their budgets.
    5. Restrictions on monopolies
      – There should be effective constraints on insurer monopolies, as
      well as on provider monopolies in which specialists in an area group
      together to control prices.
    6. Funding – Just
      as with Medicare and Social Security, there should be specific guaranteed
      sources of funding for basic benefits, rather than continuing to rely
      on the goodwill of employers and the financial abilities of individuals.
    7. Freedom from politics
      – As proposed by Tom Daschle and others, health care policy should
      be set by an independent board. Consideration should also be given to
      moving Medicare payment policy to the same board.

    The Senate Finance Committee’s decision
    this week to delay reform bill markup until after the July Fourth recess
    is a strong indication of their own unease with the current direction
    of reform. Perhaps they could use the holiday to consider these principles. 

    Roger Collier was formerly
    CEO of a national health care consulting firm. His experience includes
    the design and implementation of innovative health care programs for
    HMOs, health insurers, and state and federal agencies.
    He is editor of Health

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    4 replies »

    1. My dad was a restorer (cars, furniture, etc.) Every so often he would look at a very old house and say “Nope, get the bulldozer.” Fix-up would have been useless effort. Better to sit down and design what would work.

    2. Re: monopolies (insurers and providers), the current antitrust laws substantially favor big insurers. In most markets there is an oligopsony whereby a small number of payors (Medicare, Medicaid and a few large insurers) dictate prices to a large number of disaggregated suppliers (physicians)with very little price negotiation. Antitrust laws severly hamper physician aggregation, with the only options outside of forming a large group practice being (1) taking financial risk via capitation which is very difficult to manage and (2) being a clinically integrated physician join venture, for which the FTC has only given 3 advisory opinions, which must be focused on clinical quality improvement. The feds really need to adopt policies which will level the antitrust playing field in healthcare to permit physicians to aggregate into accountable care organizations whch could bargain with insurers and even contract directly with an employer pool to provide a set package of benefits. Insurers could underwrite risk and not try to manage (deny) care. Unfortunately, we’ve seen what insurers do when anyone challenges their turf. They’re howling over a public option and they’d howl over physicians trying to backwardly integrate and take over some of their “functions” (i.e. care and disease management) they use to justify 70% medical loss ratios.

    3. Good set of recommendations.
      However, I would take issue with
      4. Individual choice, individual payment responsibility… individuals should have the responsibility for choosing coverage that best meets their needs and, subject to subsidies for the lower-income, their budgets.
      I am currently healthy and don’t think I need any insurance. This will best meet my needs and budget now. However, if I get sick, I would like to choose a plan that better meets my needs for more care…
      Do you see a problem here?
      We need universal coverage.
      Universal coverage covers everyone all of the time. This should not be tied to employment but it should be paid for through a payroll tax. If we can also regulate excessive use then this will be affordable but the medical-industrial complex will fight this by buying as many congress people as necessary.

    4. Those are the best guidelines for health care reform that I’ve seen anywhere. It’s time to cut the political crap (yeah, right) and get down to designing a program that actually meets Americans’ needs, special interests (and yes, I’m including unions and the other lefty pressure groups in with business) be damned. Is Congress up to that? If not, I hope voters will convince them otherwise.

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