What does Responsible Healthcare Reform Look Like?

Neither the Republicans, Nor the Democrats have any interest in ACTUALLY fixing anything

Yesterday, I got involved in a day-long discussion about the health care reform. Some of the discussion got contentious, by both sides. Words like”slaves”, “immorality”, and “socialist” were thrown around. The discussion on the various proposals quickly turned to the topic of profit, as a friend of ours, Greg Hollingsworth pointed out. When we begin discussing profit we lost sight of the various proposals that were being discussed in the country, and the topic of the discussion to begin with, the outrage and outcry on both sides of the debate.

Greg is of course correct on this point. Dan Patterson, the initiator of the discussion and another friend of ours, wanted to talk about people’s reactions to the “astroturf” (of the pejorative term for prefab grass roots action), but then proponents and opponents of the health care reform quickly altered the course away from the protesting to what I think is a different level of discussion, and began engaging in a bit of protest ourselves. No longer were we commenting on the news, we were participating in it. It was no longer meta-analysis, it was participation. That may or may not have been what Dan had in mind, but that is what he got, and I think he appreciated it.

Then we began discussing issues about WHY people were doing what we were doing: that is, why people were fighting so hard about this issue. Several of the participants noticed that at the heart of the issue is the question of profit: Who gets to profit off of health care? The insurance companies and medical providers or the consumers? Greg tried valiantly, but ultimately futilely, I think, to bring the discussion back to the various proposals. But, we had finally hit the stasis of the argument, and this is what we intended to talk about. This is what people debating this issue SHOULD be debating about, because behind their talking points and screaming matches, this is what they were REALLY talking about.

Profit and who gets it is ultimately the heart of this issue. Greg is absolutely right that this is an ideological, and not a practical discussion. Do you support or are you opposed to private (insurance, though not necessarily) companies making profit? Those who oppose it support the government plan, those who support private profit tend to oppose public options. Since this argument is ideological, obviously no solutions will be derived from it, because people tend to not move on ideology, unless it is a gradual evolutionary shift over a long period of time. I think Greg’s argument was that the ideological discussion was very impractical, and any policy proposals which come from ideological positions will be unacceptable to those who oppose that ideology. Of course, he is correct. But that was the discussion we were having.

Yesterday.

Today, I want to take an opportunity to consider what a responsible health care proposal would look like. Today I want to talk about ends. As a matter of disclosure, first, I am opposed to profit. I am a socialist, and in my ideal world, health care would be nationalized, and fully and adequately funded, regardless of the cost. I would cut the military and the crime fighting budget to the bone if I had to to support this priority. Obviously, though this is not my world. So I need to think of something a little more practical, one that COULD conceivably work in this country, given the fact that we are opposed to socialism, for some weird reason in this country.

First, the smallest acceptable outcomes I would demand would be coverage for all people, regardless of income, health condition, or any other consideration. And that coverage must not be cost-prohibitive. Basic medical care should never be a burden on anyone, and people should not have to bankrupt themselves and destroy their family if they need a costly procedure to save their lives. So cheap and universal are the two guide words I insist upon being in ANY plan, and the most reasonable proposals will include BOTH of these outcomes at the same time. Anything short of inexpensive universality of health care is not real reform, and is doomed to becoming a boondoggle that will probably make life worse for everyone [except for those who currently benefit from the status quo, i.e. the private insurance companies — ed]. I can say at the outset that any program that offers those two outcomes will probably be the best we’re going to get in a non-socialist country.

So let’s look at some possibilities that will help us to arrive at this reasonable outcome. Notice, these are hypothetical situations, meant to provide discussion on the topic. I am not at all concerned about where the money will come from. I really believe that if there is political will to pass a decent bill, these people will find the money, and if health care is truly our priority, the money will be there to fund it. But I would not rule out raising taxes 5% on all income across the board to fund the program. I’d be willing to pay it. I will however, broach the public/private debate. I think acceptable solutions can be found along either avenue, but I don’t mean to be construed as supporting increased profits for insurance and medical providers. I think they should be willing to take a cut in profits to help pay some of the costs. The entire society needs to engage in this issue, and we should all be willing to take a hit if we really want health care that is accessible and affordable by all.

One way to ensure the outcome of inexpensive universality is by making health insurance mandatory, and then imposing a public option. As Obama says, (paraphrased) “If you like your current insurance, you can keep it. If you don’t have any or don’t like your current health insurance, you can opt into a public plan.” If given the option, I would support the option which doesn’t rely on profiting or marketing, and can spread risk around the entire country: You can bet I would be happy to drop my private insurance and take the public option.

It is important to note that the mandatory insurance proposal is necessary. There can be no opt out of insurance, if our aim is inexpensive universality. The only way to lower costs is to either dictate a cost freeze, which is obviously a non-starter in this country, or to expand coverage as widely as humanly possible: this is how insurance works. Health care is an example of a public good (whether we ideologically agree that it is a right is a totally different question), which cannot be denied to anyone regardless of if they shoulder the cost for it or not (that is, if they free ride off the system.) Insurance expands that coverage to more people so the system doesn’t go broke trying to bleed turnips and other obstinate folks who simply refuse to pay for it. Everyone pays a little so no one does without, and the burden is light enough so there is a stronger incentive to participate (making it not the optimal, but a satisficial outcome).

But if we don’t lower the risk that individuals bear by spreading that risk out over more customers, the burden falls more heavily on fewer individuals, and there is more of an incentive to defect from the scheme and get the public good for free. When we all do that, the system breaks down and nobody gets health care. It’s a fairly simple public goods problem. The only way we can ensure, once and for all that it is a more preferable outcome for people to pay a little into the system than to pay nothing into the system is to make the costs of free-riding artificially high through the law. Then it will be in the interests of everyone to contribute just a little (and those who cannot will be subsidized, of course by society), and in the interest of no-one to opt out.

The public option is also necessary to achieve the outcomes I desire. I have long advocated that the government who passes mandatory auto insurance laws should be willing to provide a non-profit public alternative for auto-insurance, so they are not simply passing laws which help private firms get richer. As it stands right now, the government is legally requiring me to buy a product (my auto-insurance) from a private company. If it was televisions and not auto-insurance, people would call forcing me to buy televisions “fascism”. I don’t think I should be required to help private insurance companies make money, regardless of how good or bad a driver I am. I understand the point of mandatory insurance, I just don’t think that I should be the source of a company’s profits because I am required to buy their product by law.

A government option would be the first step in requiring all people to have health insurance, which is something that opponents of the public plan also advocate (the mandatory aspect, not the government plan aspect). Requiring everyone to carry health insurance would allow costs to go down, because there would be enough money in the system to allow companies to cover any claims made against them at low cost to the consumer. As it stands now, companies basically cut their own throats by pricing a significant portion of Americans out of the market, and then they have to raise premiums on whoever is left to ensure they make profit (it’s a vicious cycle based on American business law which requires public companies to turn profits). If everyone had to carry the health care insurance, prices for all participants would be lower.

The critics of the public proposal of course suggest that if the government got into this business, many people would choose the lowest cost option, meaning the player who doesn’t have to turn a profit. Less people in the private insurance game would cause damage to the private company’s profit margin and they would reduce their risk so they could continue to follow the law and return profit to their stock holders. Companies that couldn’t reduce their risk would be driven out of business, and only the few strongest would survive. And more people would be driven into the public program.

If we know how insurance works, this does seem like a justifiable concern. The private insurance companies are all for making insurance mandatory (which equals lower costs for all consumers and higher profits for the companies, which means they can take on more risk, and provide better coverage to more people easier), but obviously cannot abide by government participation in this market, for their profiting scheme to work. There is, therefore some truth to the arguments the supporters of private insurance are making, both from the insurance company and from the consumer stand point.

But let’s look at this with zero concern for private insurance’s bottom line. As I said, I don’t want to help insurance companies make a profit. The one thing we forget is that either way, consumers make out, at least financially, if insurance is mandatory. If there is no public option available, and companies are deregulated, in theory at least my premiums should go down and my coverage should increase, because the risk of my getting seriously sick is spread out over more people. If there is a public option, my premiums start low because there is less overhead for the government to pay attention to. They are not required to turn a profit and can even operate at a loss, and so there is, in theory, no concern for spreading risk out. Risk is theoretically spread out over the entire country and underwritten by the treasury of one of the largest economies in the entire world. Premiums would be low, though they could also be theoretically non-existent, and instead paid back in taxes.

I obviously prefer the latter of the two options because I resent that I may be required to help some private company make money off of me. And it is really a gamble that private companies who are deregulated will cut my premiums: they could, after all consider this a windfall and not realize any responsibility to the population of the country. Even if the government requires it in law, there is still no guarantee that I will be able to afford private insurance, being as poor as I am. If the government runs the insurance program and I get to opt into it, financially I will be guaranteed cheap health care which will be theoretically available to all citizens of the US, and underwritten by our treasury. If I was a gambling person I would say I would be better off, at least financially, in the government system. Me and everyone else in the country, except those who rely on the insurance companies for their income. Private insurers indeed would be driven right out of business, and private insurance would be a curious luxury of the rich.

Another possibility offered, from the free market side of things, was to open the market to allow companies to compete more freely with one another by removing regulations that prevent competition in the industry as it is today. Apparently, laws prevent insurance companies from selling insurance across state lines. I don’t know about health insurance, but I do know that I can’t carry auto insurance from some other (cheaper) state in this state, where prices are outrageous, because apparently nobody in Illinois believes that traffic laws apply to them. If I wanted to commit insurance fraud, I would have to go set up a PO box in a cheap state, and then use that address to buy insurance there, and then use it on my car here. (I’m not advocating insurance fraud, and nobody should think these are directions on how to do it. I’m just saying…)

I assume, though will not commit without more information, that it is the same in the health insurance industry again. This may look good from the standpoint of someone who believes that markets solve everything (and who obviously are blind to the fact that completely legal and institutionally encouraged market speculation ruins any opportunity for supply and demand equilibrium in the market), but there is one major problem with this solution: Allowing us to buy from the cheapest bidder, regardless of where that company is located, would be a small immediate gain for consumers, but in the end, I think it would lead to higher premiums in the long run, as companies try to spread the cost of coverage in highly sick areas over the entire system, and are not making enough money because everyone is buying their insurance from the cheapest states. Premiums will eventually rise in those cheap areas as well, and premium rates will eventually become standardized at the highest rate, across the entire country.

Another solution floated would be tax deductions for insurance costs. Allowing for tax deductions for insurance payments would serve as a rebate for insurance premiums, which would conceivably reduce costs for consumers and serve as a massive stimulus to insurance companies. This solution, however, doesn’t cover those who are too poor or too ill to get into the health insurance game in the first place, but make too much to get medicaid It also amounts, once more in a massive, though indirect transfer of the public treasury into the hands of private business.

Tying insurance to the person rather than to the job is another suggestion, though the reason why employer-based health care is currently preferable to (and less expensive than) individual based health care is because an employer can deliver several people into the system, where the individual can only deliver himself. Consequently, since there are automatically more people entering the system and risk is spread out over all those people, the rates are system-wide cheaper (see the discussion above about mandatory health care: this method aims at that end, ultimately.) None of these market-based solutions address adequately inexpensive universality. They do get closer to one or the other of these two outcomes, but never both at the same time.

Basically, of the proposals named so far, if our bottom line is inexpensive universality, the only way to accomplish this is mandatory insurance with a government option. There may be other proposals floating around, and I would love to read them, but these are the ones raised during our discussion yesterday.

Granted, there are other concerns as well: Quality of health care is one big one. But I think this strays too far into ideological territory, and I said I would not do this. Standards of quality health care are different with everyone. Obviously someone with a brain tumor considers MRI technology absolutely essential, and if they personally have to wait for MRI’s, like they apparently have to do in other countries, and therefore can’t get really the only medical care they need when they need it, obviously they will not be happy about their health care and give quality of that system extremely low ratings. Along the same lines, I, a relatively healthy young man in his early thirties, for whom dental is the only really persistent problem will call a health care system that doesn’t cover my dental (which ours doesn’t) lousy, but what do I care about MRI technology? It is probable that nothing that comes out from the government will include government taking over the provision of health care, only the funding for it, and so this isn’t really even an issue. The real issue is if I can afford to pay for the services which are available to people who are richer and better connected than I am. So quality of health care outcomes is not even on the table. We’re probably not ever going to have a system that genuinely prefers preventative medicine over treatment of the already sick (though there are some proposals available which do seem aimed in that direction: see below), so our health care quality will always be low in my opinion.

Besides, government-run programs right now don’t tell people that they have to go to less qualified doctors than people on private insurance. The decisions about whether I can see this or that doctors is almost exclusively dictated by the doctor him or herself (or the hospital institution they work for) determining whether or not they take medicaid and medicare. If they are not going to take my medicaid, and I have to pay for the treatment myself, you can bet I’m not going there, but will go to a doctor who does take my medicaid. By the way, private insurers determine whether or not I can see a certain doctor and get a test done or not, by refusing to pay for my visit there or for the procedure. So if there is dictated health service by the government it will actually be no different than it is today.

Another concern I want to get into however, will be how this program is organized, since one of the conversants said yesterday that this is important. I heard a good report on “insurance exchanges” on NPR this morning. I think the idea is pretty interesting, but several issues were noted in the report, such as the necessity of a lot of participation in it. Mandatory provisions such as the one I discussed briefly above, would mitigate this concern There would need to be more work done on this topic, I think. The one benefit of this, obviously, as the story discusses, is that it would cut costs, which could satisfy both my criteria for reasonable health coverage AND those in the free market who want to keep competition in the game. Though I certainly don’t endorse the program, it is one of those ideas floating around out there.

Another is the health care non-profit co-op. NPR once more gives an excellent thumbnail sketch of this program . Apparently, these co-ops are partnerships between members and the health care providers, setting up what is essentially public health insurance that is administered by the members (in this case the nation as a whole) but not by the government. Because it would be subsidized by the government , however, and not be for-profit, it would serve to drive costs down by providing competition for private for profit groups. The best thing that the co-op idea has going for it, and its best chance at success is still the fact that the government would only subsidize it, but not administer it, which makes it more or less like Public Television.

The article exposes some excellent objections to the plan. The biggest weakness to the co-op idea is that doctors and hospitals have demanded higher pay for services than the co-ops have been willing to pay, and there is no means that the co-op has of forcing doctors and hospitals to accept lower fees for their services. One positive aspect, at least from the NPR story, is that because it is focused on cost for service-reduction, it focuses on preventative care, keeping people healthy rather that treating them when they are sick. As a result, more expensive procedures are needed less often, and cheaper, early intervention procedures are used more regularly. This may also get to the quality of outcomes issue.

In summary, we have focused primarily on the quantifiable aspects of the health care debate. I don’t mean to suggest here that the normative aspects of the debate should be ignored. Obviously I am normatively biased. But I don’t think that discussion serves if we are looking for reasonable outcomes. I identified two of these reasonable outcomes: At the very least, we should look for lower costs to consumers and increased coverage, both in terms of numbers of people and in terms of services offered. My standard for a reasonable health care reform was inexpensive universality. We can measure both of these criteria to determine whether or not the proposal that eventually passes is “real” reform or if it is just some political compromise designed to make us think that something has been done when in fact, a back room compromise designed to squelch discussion has been struck.

In the long run, those who have been in control of the pricing for health care (doctors, hospitals, and insurance companies) are going to have to realize an end to spiraling costs. How they do that is totally up to them. Issues that were raised along these lines were the rising cost of malpractice insurance (and the necessity of tort reform to control them) and the rising cost of doctor education (and the public subsidies for education necessary to control them). Those are different discussions, and I am willing to go into that at a different time.

But for now, the system we have, where tens of millions of Americans can’t get health insurance, let alone GOOD health insurance, and then probably hundreds of millions more who don’t have good health insurance, is untenable, and needs change. How ever politicians do it, we as a society must demand that it be reasonable. That is, we may not get everything we want, but the providers of care and coverage are going to have to give something too. As I lay it out, the best way to ensure inexpensive universality is through mandatory health insurance coverage with some form of public plan, either funded through direct government underwriting or through heavy-duty government subsidies, in addition to significant sanctions for not carrying the insurance (like they do for auto insurance: In South Dakota, for example, driving without insurance is a Class C Misdemeanor, the same exact crime and penalty as a DUI.)

Insurance must be made inexpensive for all, rich and poor, old and young, sick and healthy. There should not be one rate for the poor and another for the rich. We need to start thinking of health care as a public good (because ultimately, even under our current system, it is one), to which all are entitled by virtue of being a member of this society, and to which all have some responsibility to support for the benefit of the society. You can’t have multiple rates the way we do today, where one group pays one thing, and another group pays another thing. A flat fee, like an office visit fee, must also be part of the plan, and must cover 1 or 50 tests, so that doctors stop requiring additional tests just so they can wrack up the bills, whether or not those tests are actually necessary. Surgeries and dental must be covered the same way that well-child check ups are covered. And nobody should be thrown off the system if they move, or if they get sick, or if they can’t afford it.

How we accomplish that very reasonable proposal is up to the technocrats. I don’t have my statistics right in front of me, but I guarantee it, if there is a will there is a way. And failure to adopt reasonable health care demonstrates only the lack of political will, for which people must hold the decision makers accountable.