Blog Debate: "An Obsolete Model"
Published March 12, 2009 @ 09:11AM PT
Editor's Note: This is the second day of a blog debate about what approach we should take on health care reform in 2009 will be Dr. Don McCanne, a retired family physician now serving as Senior Health Policy Fellow for Physicians for a National Health Program, and Jason Rosenbaum, a writer and activist, and the Deputy Director of Online Campaigns for Health Care for America Now! Dr. McCanne will be presenting the "single-payer" point of view, and Mr. Rosenbaum will be presenting the "public competitor" point of view. You can read the first day's exchange here.
This is Dr. McCanne's answer to the question: Is there anything valuable that private insurance brings to the table which, with far more muscular federal regulation, would enhance an American universal health care system?
Everyone agrees that we need comprehensive reform of health care financing if we expect to slow the escalation of costs, while improving allocation of our resources. To achieve these goals, do we need to replace our dysfunctional financing system with an efficient public program, or can we simply use increased regulatory oversight to transform our private insurers into a better functioning system?
Systems using private plans that achieve near-universal coverage, such as Switzerland and Holland, are often cited as examples that we can emulate. These systems are more expensive, with greater administrative complexity, less equity, and fall short of true universality, though they satisfy those who ideologically prefer private to public administration. Some nations also use public programs for low-income individuals, comparable, in principle, to Medicaid in the United States. So how would it work if we were to regulate the private plans and then mandate the purchase of those plans?
There is a very fundamental difference between our private plans and theirs. Other nations that use private plans do so within a program of social insurance. Their plans are designed for the public good, assisting individuals in receiving the care they need without having to be concerned about the source of payment. They fulfill the insurance function by effectively pooling risks, whether through a single risk pool or though various methods of risk adjustment.
Our private plans are based on a business model designed to ensure success in the health care marketplace. Success is defined by the medical loss ratio, spending the least they can on health care. Much of their profound administrative waste is due to their elaborate efforts to avoid paying for care.
The plethora of private plans merely demonstrates the insurers’ innovations in restricting benefits – preventing payment for non-covered services; increasing deductibles and other forms of cost sharing – erecting financial barriers to care; contracting with limited lists of providers – penalizing patients who need care outside of the restricted lists; selective marketing to healthy populations – especially the healthy workforce and their young, healthy families; using underwriting and rescissions to avoid paying for essential care; and on and on. These are great business tools, ensuring success of the insurers, but they are anathema to the more egalitarian goals of social insurance systems. They defeat the insurance function of pooling risk by segregating out the low-cost healthy into their own market, and dumping the high-cost sick onto taxpayer funded programs.
Suppose we heavily regulate our private insurers and require guaranteed issue of plans that actually include all necessary services, and remove barriers to care such as restrictive lists of providers and unaffordable deductibles. This would require a massive, revolutionary transformation of the missions, goals, and administrative functions of our business-model private plans designed to prevent paying for care, into social insurance private plans designed to remove the financial system as a barrier to care.
Anyone who believes that this would be a simple transformation needs to have a conversation with insurance executives with their nine-figure compensation packages or with the large institutional investors who have fared extremely well under our market-based health care financing system.
As if that weren’t enough, there is one more unique problem in the United States. Our health care costs are much higher than in any other nation. If we were effective in covering everyone with a choice of private plans, whether with or without a public option, and if those plans covered the necessary care that people actually need, imagine the premium that would have to be charged.
The Milliman Medical Index has demonstrated that an average family of four with employer-sponsored coverage – a healthy sector – already pays $15,600 for their health care. That is only average; many pay more. With a typical household income of $60,000, that is no longer affordable. Now add into the pool the less healthy members of our population and just imagine what the premium would have to be. Financing our health care system through a specific premium assigned to an individual or family, based on an adequate package of benefits, has become an obsolete model of paying for health care.
We need a single, universal risk pool that is equitably funded. That would most easily be accomplished through progressive taxes. Once we do that, why would we continue to support the intrusion of the wasteful private insurers that do no more than take away our choice of hospitals, physicians and other professionals? Public administration is much more efficient, plus enrollment is a one-time event – absolutely everyone is covered for life.
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Comments (4)
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Don McCanne is a retired family physician now serving as Senior Health Policy Fellow for Physicians for a National Health Program, an organization dedicated to affordable, quality health care for everyone through a single payer national health program. He writes a Quote of the Day on current health policy issues.
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Two quotes:
"Americans will always do the right thing, after they have exhausted all the alternatives," - Winston Churchill.
"He felt the kind of merriment men know when events have ended in utter disaster." - Jack London
The first quote may be apt to our situation now though it gives us hope for the future.
The second quote may be apt to our situation later, when the reform efforts of Senator Baucus have failed so miserably as to leave us with the greatest of opportunities.
Thank you Dr. McCanne. You are to American healthcare reform what Wernher von Braun was to America's space program. :)
Posted by Martin Bring on 03/12/2009 @ 11:24AM PT
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Health care system, whichever model we choose from (private or public) it is a complex system. Although I think that one of the duties of the state (government) it fundamentally to provide to the population: Education (if not all degrees but at least basic one), Public Safety, Health Care and Basic Sanitation (sewer system, etc). The biggest problem with American health care system, in my point of view, is "the big guys", that means those politicians and high paid executives from Health Insurance plus pharmaceutical companies. Also the American culture that in part I totally believe that is wonderful pledging free market, in order hand treating HEALTH as another business like any other one. There are many consequences when we take that path. One of them is that it lacks people in many areas such as IT, teachers, scientists...why? Because everybody wants to be a lawyer or a medical doctor (dentist as well). And why is that? Because the system (health care) pays BIG BUCKS to those many times no so good doctors and lawyers. To make even worst one thing causes another...law and medical schools tuition are the most expensive ones.
When we go to any MD or dentist consultation...it has a cashier with a list of payments accepted and even financial options!!! This is unbelievable. Health is not a business ... I understand that everybody has to make a living and get paid enough to support their family but many consultations last 3 to 7 minutes top. Well here we go..because it is a REAL profitable business. This is a BIG game, where we have billionaire pharmaceutical companies that need doctors to prescribe their drugs, health insurance companies and doctors.
Couple years ago, one of the number 1 reason for personal bankruptcy was medical bills. I know several people who owe (even using private insurance) 15K, 20, 50K or more for medical procedures. WE can't pay that. It is impossible. Just imagine a medical bill (dentist inclusive) of 20 grand (very common) that has that money to spend? It is outrageous.
Like I said, I totally understand that everybody has to make a living but this is ridiculous. When we go to a doctor appointment IS NOT LIKE WE HAVE A CHOICE ..like shopping for a car or grocery, it is a necessity, many times it is a matter of living or dying. We can't postpone to the next month or year (like we do with any goods). Health Care must come in first place. Would be possible for us to live without it?
Posted by Manuela Rodrigues on 03/12/2009 @ 01:40PM PT
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From Allen Robbins
From Allen Robbins
My evaluation of HR 676
Actually H.R. 676 has been around since the 1940’s. Back then it was called the Prepaid Group Practice System. Subscribers (NYC workers about 750,000) had their health covered with no-co pays, no-deductibles and no claim forms, FULL COVERAGE and free drugs were added in the late 1960’s. The 750,000 members generated about 2.5 million office visits annually.
This means that the new 47 million people will generate 155 million office visits annually to an already overburdened (112,000 GP Physicians and 588,000 Specialists) health care system. Physicians could see 10 to 12 patients an hour as compared to 5 to 8 patients now seen at some very busy offices.
Prepaid Group Practice System (H.R. 676) has already been tried in New York for NYC Employees and shown to be documented failure.
HIP of New Jersey-Failed, HIP of Florida-Failed and now HIP was forced to merge with GHI.
Example: HIP of NY started in 1947 and by the early 1960’s so many complaints from the rank and file union people that were complaining and requested the City of New York to offer more choice. The Group Health Insurance plan was included as a choice for all city workers. The biggest complaint about HIP (HR676) was too many people had to wait three months for an annual checkup. This is one of many reasons why we cannot repeat the same errors again.
NOTE: Medicare now is a comprehensive health system and most members do not want to be forced to change their insurance plan or doctor. They represent one of the largest voting blocks, which you do not want to anger. A great many Labor Union jobs that would also be lost, estimated in the ten’s of thousands and in today’s economy that is unacceptable. No co-pays and no deductibles always lead to abuses and over utilization of services and longer wait times. A limit of say $15.00 co-pay or deductible should be enough to lower some abuses.
I believe we can move forward in small steps. Because of the condition of the economy we must find ways that won’t cost the taxpayer any additional tax burden and save jobs. We also need Universal Health Care Single Payer system without having massive layoffs (est. 500,000+), which is covered on Page 20 of HR 676.
Our current economic concerns include the national debt, Social Security, corporate debt, mortgage debt and falling house prices. We cannot afford HR 676 to add to our current massive unemployment.
There is currently only one group of physicians with 14,000 members supporting HR 676. What about all the other doctors? What about 700,000 physicians nation wide? A recent study showed that 59% of Doctors support a single payer system not necessarily supporting HR 676.
What if large numbers of Physicians don’t join and we start seeing $150 dollar per office visit? That could be a real possibility; I hope I’m wrong. We can’t force doctors to join.
To my fellow Democrats:
Please do not embarrass President Obama with the first possible VETO of his presidency. In an interview Obama said HR 676 is the following, “I’m not saying everything about HR 676 is bad, but the FUNDING MECHANISM IS FATALLY FLAWED” In this same interview Obama says “no one should be forced to sign up for insurance”. This is why we all should support Barack Obama’s Plan for a Healthy America.
I’m for a single payer health care system that resembles the Federal Employee Health Benefit Program (FEHBP).
1. Where there is real CHOICE of programs and physicians.
2. Cost efficient health delivery system, which the Federal Government monitors closely and has a proven track record of controlling cost for over 20 years.
3. Quality is tightly controlled through an Accreditation Process (NCQA).
4. Only the best insurance companies can sell insurance to federal employees.
5. Low co-pays and low deductibles, which curbs over utilization.
6. A National Forms Standard Board that set the standard for Enrollment, Medical Records and Billing that uses the most modern computer methods and all insurance companies use the same approved forms.
7. FEHBP already has a proven track record of over 20 years that doesn’t turn the entire health care industry upside down and adds to the massive unemployment in this time of a national financial crisis and the jobless rate of over 5 million.
8. Limit administrative cost to a maximum of 8% each premium dollar. Leaving 92% of premium dollars for providing health care. Offer a Million Dollars or one dollar per subscriber incentive for those who bring administrative costs below 5%.
9. Physician incentives programs – Malpractice insurance, Education programs etc.
10. To find ways building the Health Care info structure and relieve the current shortages for Physicians, Nurses and supporting technical staff currently we now have.
11. The best way to really lower health costs is finding cures for the most debilitating illnesses that require long-term care and providing a cost effective Home Care network.
Note:
A. Item #6, 10 and 11 should save 100’s of Billions of Health Care Dollars.
B. Can best of these two single payer systems be merged? I think not at this time because HR 676 is a too radical approach. So why not take some of the good parts of HR 676 and try to incorporate them into Barack Obama’s Plan for a Healthy America.
As documented resources I have attached material to backup this up.
http://www.heritage.org/Research/healthcare/bg1674.cfm
I SAY NO TO HR 676 in its current form and we should recommend ONLY a National Single Payer Plan and make no mention of HR 676. We need Universal Health Care Single Payer system for America and that is what we all could support.
As more people are finding out just how bad this concept is, and I’m sure it will have repercussions as large numbers of seniors are now getting angry. In my community we had an open discussion on health care and HR 676 hit the fan.
Allen Robbins Background: I worked for the Health Insurance Plan of Greater New York (New York States largest HMO) from 1965 to retirement in 1996 and was kept on as a consultant working on the Federal Employees Health Care Benefit Program until 2002 FEHBP for all New York State Federal Employees.
As part of my job description I was responsible for designing all medical records forms including Physician, Hospital and Enrollment forms as well as working closely with the Underwriting Department with all State and Federal fillings.
I was also part of a team, which included a Pharmacy Department head, a Pharmacist and a Drug Committee and myself that created in 1993 HIP’s first Drug Formulary Book approved by New York State Insurance Department. Ten thousand Books (288 pages ea.) were printed. HIP saved over (TEN MILLION DOLLARS) the very first year it was implemented. This saving was passed along to members by keeping the premium rates down.
I'm a current member of the Democratic Party Executive Legislative Committee in P.B.C. Florida.
America desperately needs a Single-payer National Comprehensive Health Insurance Plan (NOT H.R. 676 – Health Welfare Plan). I hand delivered a two-page report to Congressmen Dennis Kucinich why H.R. 676 was doomed to failure. In this report, I showed serious problems with this approach. People want choice not forced to join a Not for Profit Health Welfare Plan or give up there current doctor and we definitely don’t want health care rationing.
I always have an open mind. But remember I look at real documented facts and figures!
Posted by Allen Robbins on 03/16/2009 @ 08:30AM PT
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I lifted this from Don McCanne's quote of the day 01/30/09.
"Comment: House Majority Whip James Clyburn (D-S.C.), obviously an insider, recently confused observers of the Washington scene by stating that health care reform would be incremental. This appeared to conflict with the position of other important players - Barack Obama, Tom Daschle, Ted Kennedy, Max Baucus, Pete Stark, amongst others - who have indicated that comprehensive reform would be as expeditious as possible - presumably this year or early 2010 at the very latest. The statement by Henry Waxman seems to confirm the fact that the House of Representatives is aligned with the Senate and The White House to move forward expeditiously with comprehensive reform."
"They are also aligned on the position that single payer is unrealistic, and that reform will be based on private insurance. There is still confusion as to whether there is agreement that a public option must be a Medicare-like program, or if the public option would be satisfied by a pool of FEHBP-type private plans. The Republicans, AHIP, and the USCOC have said that the former is a non-starter, so the public option may well end up being just more private insurance in disguise."
"If a U.S. model based on private plans were as effective as the Swiss and Dutch systems, it would still leave about 7,600,000 individuals without insurance, which certainly tests the definition of universal. With much higher health care spending in the United States, the premiums for private plans, even with generous subsidies, certainly would test the definition of affordability. U.S.-style private plans, designed to enhance business success by creating patient barriers to care and payment for care, certainly tests the definition of social insurance."
"..... If we were to continue with only incremental reforms, we would end up with a system that will leave many without insurance, that will leave health care unaffordable for many more, and that will leave in place an industry that takes away health care access and choice to further its own financial interests. Hmmm... Looks like another con job. Go the incremental route, but call it universal."
Posted by Martin Bring on 03/16/2009 @ 04:28PM PT
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