Thursday, September 3, 2009

Let's Make a Deal?

As you must know by now, President Obama has scheduled a televised speech to Congress on health care on Wednesday September 9 in prime-time. The pundits are saying that he's going to lay out HIS prescription for health insurance reform. Up until now, he's spoken in broad terms and allowed Congress to try to work out the details. However, now that it's clear that all the waiting for the Senate Finance Committee has been in vain -- Senators Grassley and Enzi have publicly opposed reform in general during the August recess, with Grassley stoking the fires about "death panels" that DO NOT EXIST in the legislation, and Enzi telling his constituents that he's been at the table to make sure reform didn't pass (were it not for me, he said, you would have health care reform today) -- the President is about to take control of the situation. Or so I hope.

What will the President prescribe?

As I've been saying all along, parts of this are pretty much a done deal:

  • No pre-existing condition exclusions
  • No policy cancellations because of illness
  • No premium increases based on illness
  • No lifetime caps
  • Insurers can sell across state lines
  • Individuals will be required to have insurance (an individual mandate)
  • There will be subsidies for individuals who can't afford insurance
  • There will be a centralized, web-based marketplace where people can review their options and make decisions about what plan to choose
  • Something will be done to plug up the Medicare drug benefit "doughnut hole"
  • Private insurers who administer Medicare Advantage Plans will lose their subsidy (and no, this shouldn't mean they'll cut back on benefits -- indeed, they already deny coverage of things that traditional Medicare covers -- so if you're nervous about this, switch to traditional Medicare and your problem is solved)
  • There will be incentives for people to seek preventive care

There are a bunch of other, narrow provisions that I think will not be controversial. In the end, I suspect there will be a minimum that insurers have to cover -- hospital, doctor, prescription drugs, etc. -- things like that.

So what's left? The public option.

First, let me say AGAIN that this is NOT a government take-over of insurance. There would be choice -- you could buy United Healthcare or Blue Cross or Aetna or other private plans OR you could buy the public option. The reason people think this is important is that a public option will have lower administrative costs (no huge salaries for executives, for one), so by setting up this lower cost competitor to the private insurers, the hope is that we will drive the private insurers to lower their premium rates, as well. After all, if we're going to have an individual mandate, we have to have subsidies, and to keep the subsidies affordable, we have to keep premiums as low as possible. And for all of us who have insurance now, there has to be an end to these 25% premium rate increases every year or eventually, most people no longer will be able to afford insurance.

So if you're opposed to a public option, then my question to you is how are you going to force insurance companies to lower their premiums?

I posed this question to Senator Lieberman's office, and his answer was insurance market reforms -- like the bullets above -- and an individual mandate so you broaden the pool, spreading the risk over more people. The insurance market reforms are great, but they don't bring down cost. If anything, they increase it because people with pre-existing condition will have to be covered, and they tend to be expensive. And spreading the risk over more people may help a bit -- if a bunch of healthy young people are forced to buy insurance they didn't think they needed, that should bring down the costs somewhat because those people will pay the same as others, but cost the insurance companies less. However, you're also going to be covering people with pre-existing conditions, and they are expensive. So broadening the pool is not likely to do a whole lot to decrease premiums.

People oppose a government option because it will cost the government money. Yes, it will, although you'd be BUYING the government option -- it wouldn't be free. People oppose a government option because it means government-run healthcare and they think that's a bad thing. Setting aside the fact that countries with government-run healthcare really aren't as miserable as some would like us to think -- Germany, France, Netherlands don't have long lines and so on -- we already have government-run healthcare in the form of Medicare, VA, military, and prisoners health care. So it's not a huge leap to adding another government-run plan. And people oppose a government option because they are opposed to big government. When the private sector doesn't price itself into extinction, forcing more and more employers and individuals to drop their insurance, this argument may have more weight. But where the private sector fails in an area as important as health care, it's not unreasonable to look to government to step in.

There's talk about co-ops as an alternative. Nobody -- including the people proposing this -- can tell you how they would work though. There's talk about a public option that would be triggered at some point down the road if other attempts to reduce costs failed. Why wait when the private market already has failed?

On the other hand, if the only way to get EVERYTHING else is to give up a public option, what should the President do?

Here, I ask: What would Senator Kennedy have done? He was a master at compromise, a believer in incrementalism. He'd have pushed for a public option, held a vote, let it fail in the Senate -- and then he would have found a way to compromise.

Perhaps caps on the percentage that premiums could increase each year. Perhaps caps on the percentage of premium dollars that could go to administrative costs, so we force insurers to scale back their expensive executive bonuses. With all the really smart people working on this, you have to believe that they can think of at least as many things as I can -- after all, I'm not an accountant, actuary, or policy wonk. If this is what it takes to get people covered, then I say we give it a try and revisit it later.

The Americans with Disabilities Act 2008 amendments are a good example. They passed the Act. They saw how it worked for awhile, how the courts would interpret it, how the government would enforce it. They saw there wasn't enough back-bone, so Congress reversed some of the limiting court decisions and clarified some of the language. The same could happen in health care -- if it's imperfect, it can always be fixed down the road.

But I'm not in favor of sacrificing what we can get because it's not perfect. I think a public option is the way to go. I think it's the best way to make insurance companies decrease premiums. I think we'll be sorry if we don't have a public option because lowering the costs won't happen without it. That's why the insurance companies are saying they're in favor of reform -- they get all these new healthy insureds because of the mandate -- but against a public option. I sort of feel like I should be in favor of anything they should be against.

Still, though, if giving that up (for now) is what it would cost to get everything else, let's make a deal and get this done. Now. Jennifer


  1. Hello, Jennifer. I wondered if you could answer a question about Medicare. I thought Medicare Part C plans had to cover everything Medicare covers, but from reading through your points above I am getting the impression this is not the case. I am planning to go on Medicare in the spring (I'm currently receiving SS disability benefits) and thought a Medicare Advantage Plan would be the way to go, but now I'm not so sure. Can you clarify this for me? Thank you.

  2. Medicare Advantage Plans are administered by private insurance companies. They interpret the rules their own ways. I have had several coverage appeals involving these plans, where I have no such issues with traditional Medicare.

    How to pick a Medicare plan is a very complex issue that I can't fully address in the comment to a blog post. Depending on what state you're in, you may not have many options. In some states, it's impossible to find a Medigap policy that will cover pre-existing conditions, so you're stuck with a Medicare Advantage Plan. The best way to choose plans is to work with your state's SHIP, which you can find at Click on "find a state SHIP" and then select your state from the drop-down menu. Those are the folks who will know everything that's available in your state.

  3. Very nice commentary on possible reform!
    Campaign financing by corporations insures their agendas are never usurped by the concept of 'taxpayer representation'. Our needs are not being represented. Captives by vested interests, our politicians must now make a choice. I am not as optimistic that we, the people will be even slightly satisfied. I hope I am wrong.
    The almost funny statements about cost insult the public who are witnessing 2 wars (that will 'never' go broke) and a banker bailout that would exceed all healthcare costs for decades. This kind of hypocrisy and bigotry is going to further kindle animal spirits which are already against the wall due to:
    1. Real problems, such as the current recession.
    2. The mandatory parade of hobgoblins that are floated past us on a daily basis....designed to make us clamor for safety and surrender to control.

    Those who fear government bureaucrats have obviously not been ill enough to experience the ninja-like evils of corporate bureaucrats.

    Lastly, the notion of 'socialism' espoused by the propaganda machine is laughable since it is the means of production that owns the politicians, not the opposite (which is the definition of socialism).

    A concerned citizen, physician and patient.