3 Recycling Blunders in Failed Healthcare Policy
Published October 05, 2009 @ 06:00AM PT
Washington, D.C. denizens have done it again. Under the guise of innovative compromise, they have recycled Bush Jr.’s failed “Great Healthcare Bailout of 2002.” Never heard of it? Well, bailouts weren’t the Hollywood stars then that they are today. They called them strategies instead. This one went straight into the failed policy bucket.
Observe: In 2002, Bush tried giving away $40 million in grants to high-risk pools "as part of the Bush Administration's broad strategy for expanding access to health care for the more than 40 million Americans without health insurance." Um, the plan was to spend $1 per person? Really? But I digress.
First, what is a risk pool? It is an extremely expensive insurance option for those in less than perfect health, whom health insurers deem financially risky (read: ‘may cost them money’.) State-sponsored, it is typically administered by a large private insurer. It’s not just the disabled who need this option. Anyone with one or more of a long list of pre-existing conditions (pregnancy anyone?) can be shut out of the individual insurance market. As only those who need expensive treatment will fork over the exorbitant premiums, risk pools tend to become insolvent quickly.
So, what were the results of Bush’s brilliant plan? States used the grants to temporarily regain pool solvency. So 178,000 total enrollees across the country still paid 125-200% of normal premiums and most risk pools remained closed to new applicants.
That’s an early 21st century history lesson on how to waste $40 million. Now let’s take a look at the most recent proposed policy blunders.
- John McCain’s Risk Pool Idea: During the 2008 presidential campaign, McCain proposed expanding states’ risk pools as a “guaranteed access plan.” If guaranteed access means mountains of red tape and ridiculously unaffordable premiums, he pitched it right. Better yet, he wanted to subsidize these insolvent programs by $15-20 billion. Yes, this is the Bush bailout plan on steroids. And Obama says it’s a good idea. Ouch.
- Kent Conrad’s Co-op Proposal: In June, Conrad had the bright idea to replace the public option with non-profit co-ops. First, non-profit insurers have long competed with for-profits, and they are just as expensive. Second, small state-based co-ops with no experience and no clout do not spell success. Substitute "state-run co-op" for "state high-risk pool" and you have a crystal ball.
- Maria Cantwell’s Compromise: Last week, the Senate Finance Committee passed Cantwell’s amendment to subsidize state-purchased coverage for people who don’t qualify for Medicaid. Billed as the “public plan compromise”, it is a public plan negotiated with the private sector. What? So the plan is to neuter the national public option by privatizing and fragmenting it 50 times?
If we want to solve our healthcare inequities, pitching 50 separate states and a divided population against a handful of the largest private insurers is not the way. Bush flushed enough ill-considered bailout money. Recycling is usually a noble activity—reduce, reuse, recycle. However, this is an instance where we should really reduce the reuse of recycling.
Photo ©lydiashiningbrightly //CC BY -NC 2.0
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Comments (10)
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Author
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Gillian Hubble is owner of Actively Fused, a consulting and healthcare advocacy firm, and a partner in KDG, a business development firm.
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Hi Gilllian. I'm looking forward to reading your posts :)
Posted by robin stelly on 10/05/2009 @ 11:39AM PT
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Thanks Robin. I'm looking forward to the dialogue--this community has some great minds!
Posted by Gillian Hubble on 10/05/2009 @ 12:02PM PT
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I agree Gillian. They should expand Medicaid and offer a National Public Option or better yet, Single Payer system.
Posted by Rachel Russell on 10/05/2009 @ 12:05PM PT
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Rachel--Those are definitely two options. Multiple proposals on the national level, whether Kennedy's original "Medicare For All" plan or something else, will provide the strength in numbers necessary to provide real coverage and consumer protections, and begin to rein in wasted premium dollars.
Posted by Gillian Hubble on 10/05/2009 @ 05:42PM PT
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As long as we have for-profit, private health plans we will never control costs much less cover everyone. No other industrialized nation has for-profit private health plans play a central role in health care financing. The mission of for-profit health plans, to make money, is at terrible odds with the mission of health care, to take care of sick people. It cannot be reconciled. I support single payer, but if that's "too scary" for the average American, we can have a German or Swiss model with heavily regulated not-for-profit private health plans. It's more expensive than single payer but at least no profits are generated from denying care. For-profit health plans are unnecessary middlemen. They do not provide the actual health care nor do they raise revenue for health care independent of our premiums. The people pay for 100% of health care in the U.S.
Posted by Christine Adams on 10/06/2009 @ 05:15AM PT
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Good post. Christine also points out that, on a systemic level, we must start asking the right questions. I am referring to her statement about the for-profit mission being directly at odds with the mission of healthcare (though I think health care needs to 're-acquaint' itself with its own mission!).
Is there a place for middlemen? Usually, if they can demonstrate value for their service. Is there a NEED for middlemen? That's were we enter a grey area that WE MUST HAVE THE INTESTINAL FORTITUDE TO ENTER! Our current reform debate, in my opinion, doesn't truly get to the root questions that are fundamental to determining a logical and meaningful solution.
That needs to be addressed..
Posted by Aaron Sidner on 10/06/2009 @ 01:33PM PT
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You've brought up the one thing that's been bothering me, and I have not seen a lot written about it. WHY does the system have to be state-based? Has anyone ever proposed that ALL the policy-holders of a company, nation-wide, be in one big pool? Spread the risk.
Posted by Colleen Thompson on 11/02/2009 @ 07:39AM PT
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Unquestionably a national pool would spread risk better. It would also shift the balance of power towards policyholders and work against private insurers' interests, as they would have little excuse to raise rates. While different states have different insurance regulations, that can be overcome just like it was with HIPAA privacy regulations -- there in now a national privacy standard.
The genesis of state-based options was due to the argument that it would be unfair competition to private insurers and put them out of business. Somehow the basis of the debate has become about what's fair to insurers, not the residents of this country that need fair, affordable health coverage.
Posted by Gillian Hubble on 11/02/2009 @ 11:18AM PT
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So has anyone in Congress proposed doing away with the inefficient, complex state-by-state system we have now? It sure seems like that would be a much simpler, more effective way of getting rid of a lot of the problems that are being addressed on a band-aid basis. Part of this, of course, would be a public, nonprofit option that is open to all, also nationwide.
Posted by Colleen Thompson on 11/02/2009 @ 01:18PM PT
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Sorry for the delayed response! Yes, they have. In particular, Anthony Weiner proposed single payer. HR 3962 proposes a national public plan, but one that's only open to a small percentage of the population and is too expensive to be practical. Republicans submitted a manager's amendment proposing private insurer inter-state policies (this unfortunately allows private insurers to set up shop in the least regulated state.) The Senate proposes a national public option with state opt-out provisions, but hasn't revealed any details.
All of these approaches have caveats and complexities. I completely agree with you that a simple, national approach would be much more effective (not to mention cost effective.) Unfortunately politics doesn't usually follow logic :)
Posted by Gillian Hubble on 11/04/2009 @ 01:49PM PT
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