The Multiple Personalities of the Patient’s Choice Act

by Tim Foley

categories: Comparative Effectiveness Research, For Profit Insurance, National Health Exchange, Obama and Congress

Published May 24, 2009 @ 01:30PM PT

If the recently-released Patient’s Choice Act, the alternative health care plan put forward by 2 Republicans (4 in the House, 4 in the Senate) had come out in any other context, I probably would have an easier time collecting my thoughts about it.  It’s clearly designed as a political document for this particular moment, and this health care debate.  But the politics of the plan and the policy of the plan seem to constantly be tripping each other up.  Surprisingly, the Patient’s Choice Act seems to say, “government is really bad for health care – except that it’s the only thing that can fix it.”

Don’t get me wrong – the descriptive prose in the summary and the Q&A document in particular are chock full of the phrases that you would expect to see in a Republican agenda, with accolades to “individual purchasing power” and “innovative markets” and “protecting the doctor‐patient relationship,” enough that my Frank Luntz bingo card filled up in no time.  Similarly, we’re warned off of the inefficiencies of the government, with a heavy dose of irony in the now oft-quoted sentence, “The Federal government would run a health care system — or a public plan option — with the compassion of the IRS, the efficiency of the post office, and the incompetence of Katrina.”  Picking on the IRS and the post office are the normal anti-reform tropes, but Katrina?  Remind me again, who was in charge then?  And why stop at three – why not keep going with “the lack of negotiating restraint of Medicare Part D, the bureaucratic heavy-handedness of No Child Left Behind, and the bravado of ‘Mission Accomplished’”?

Aside from that obvious misstep, the politics of the Patient’s Choice Act are very clear.  Private insurance and private solutions that empower individuals is better than a scary Big Government approach. Except – and here’s why the document is so perplexing – they arrive at roughly the same end-point of many of the most progressive health care plans, particularly on how to increase access through government action.

The main feature of the plan is removing the tax exemption for benefits from employers and using that money to directly provide refundable tax credits, $2,300 per individual or $5,700 per family.  This tax credit can only go for either health insurance or health care – it can’t be used for anything else.  It can go to pay part of your premiums for your employer-based insurance, it can go to you buying your own, or it can go into a Health Savings Account.  HSAs are really the free market dream – you can only withdraw money out of these modified HSAs for care or insurance (presumably – most existing HSAs do allow you to make withdrawals for other reasons, and there’s a nominal penalty to do so but hardly much of a deterrent.)  The Patient’s Choice Act envisions an HSA that would be customized for your needs – like a diabetes-specific HSA – but that idea is pretty vague and may not be much more than branding.

Obviously, this tax credit isn’t enough to cover either the average cost per individuals or for families (a point brought up numerous times when John McCain proposed something similar during the presidential election), and the individual market is the most expensive, most restrictive and most confusing market to deal with for consumers.  So the Patient’s Choice Act substitutes an idea familiar from both Sen. Ron Wyden’s plan, and one that isn’t too far away from what John Edwards proposed:  state-based Exchanges.  Similar to Obama’s plan to create a National Health Exchange, just on a local level, the exchanges would be set up to give clear, transparent options so consumers are comparing like to like.  All private insurance plans would also give standard benefits, equal to what a member of Congress receives.  Everyone would receive the same subsidy to pay for part of the premium.  Where you get the rest of the money from is unclear, meaning a lot of folks will need to get high-deductible plans.

If this seems like a “big government solution,” it undoubtedly is.  It’s just the state government, not the federal.  There’s even extra regulation – private insurers would not be able to reject customers on the basis of pre-existing conditions.  Private insurers would be watched by a “non‐profit, independent board” to make sure they’re not “risk adjusting” – as in disproportionately selling to younger, healthier people.  They’d penalize the ones who are cherry picking and “reward” those who are emphasizing prevention.  How that works, exactly, is anyone’s guess.  But just by slapping “non-profit” on it doesn’t mean the function isn’t that of a government watchdog.  There’s the creation of a Health Services Commission to provide research and information on effective treatments and cost, which should sound familiar.  The Act also empowers the state to have a variety of “auto-enrollment” features – sign up for the Exchange from the doctor’s office, the hospital, the DMV… or, one presumes, that dastardly big government post office.  I suppose that’s why they had to mention Katrina – you can’t badmouth the DMV if you’re going to write it into your plan.

There’s plenty more to the plan, although a lot of it is vague.  I don’t bring up the DMV example just to be funny.  But it demonstrates the strong cognitive dissonance that I can’t seem to shake while reading these documents.  Empowering state governments to reshape the insurance landscape instead of the federal government is a weird way to express free market principles.  So is creating an “independent board” rather than using outright regulation.  They accomplish the same purpose – I suppose the only difference is the power is now in the hands of state capitols (who have done such an all-over-the-place job managing Medicaid) instead of having national consistency through the federal government.  It used to be the case that conservatives like McCain decried the patchwork quilt of regulation from state to state that made it difficult for individuals and insurance companies to understand what they’re getting into.  The Patient’s Choice Act seems poised to fracture our approach to health care even further.

I think what gives me the hardest time of rationally analyzing the plan is, thanks to the lively debate in Washington, I keep hearing the conservative and industry talking points against the president’s plan coming back to haunt elements of this plan.  Let me just hit two, and you’ll see what I mean.

1.)  If you like what you have, you can keep it… maybe

Sen. Chuck Grassley has taken issue with Obama saying, “If you like your [employer-based] health insurance, you can keep it,” yet providing a public plan which may be so cost-efficient, high-quality and popular that it consumes the market.  The individual then wouldn’t get to keep his or her coverage, because their employer will either switch to the public plan, or the private insurance plan they have now will be discontinued.  The Patient’s Choice Act makes the same pledge:  “Under our plan, if you like the health coverage you have, you can keep it. If you have health insurance through your employer, nothing will change.”

But the whole point of the plan is to put more control into the hands of the individual and away from the dependency on your employer.  Whether you keep the plan that you have really isn’t up to you, then – it’s up to your employer, who must weigh the pros and cons of offering benefits which would no longer receiving a special tax exclusion.  It’s also up to your fellow co-workers, particularly if you’re in a small business.  If the plan works, in fact, most people should drop their employer-based plan and use their credit for a plan on the state exchange.  That’s empowering the individual consumer, right?  A Microsoft or IBM probably wouldn’t lose enough enrollees to consider jettisoning the plan – but a small business is going to have to make hard choices if most of the company takes their tax credit and goes elsewhere.

2.)  My Board is better than your Board

Much mockery and fear-mongering has been made of both comparative effectiveness in general and Tom Daschle’s idea of a Federal Health Board, which would be independent, staffed with experts (doctors, patients rights advocates, economists, etc.) and empowered to make the tough decisions about quality, standards, treatments and affordability that politicians would do poorly.  Indeed, the text of the Patient’s Choice Act specifically rejects the Institute for Comparative Effectiveness created by the president – only to propose their own Health Services Commission, which is tasked with doing the exact same thing.  “The PCA creates a Healthcare Services Commission that relies on a public/private partnership to enhance the quality, appropriateness and effectiveness of health care services through the publication and enforcement of quality and price information.”  After much protest that a bureaucrat should not be involved, they create their own bureaucracy.

Look at this description of a federal board to watch over our health care:  “The new agency, renamed the [blank], will be governed along the same lines as the Securities and Exchange Commission, and managed by five commissioners chosen from the private sector (with no more than three from the same political party), appointed by the President, and approved by the Senate.”  An excerpt from Tom Daschle’s book or a line from the Patient’s Choice Act?  You can’t tell, can you?

So you’ve got me on this one.  There’s an entire Q&A section devoted to this, and I still couldn’t tell you what the difference is between the two ideas, other than rhetoric. State-based government agencies, regulation through quasi-government “independent boards,” eroding the employer-based health care system, a “Health Services Commission” – if these ideas were being proposed by Ted Kennedy, we’d be patiently explaining why it’s not “socialized medicine.”  (It’s not.)  I’m certainly underselling the emphasis on private insurance vs. public programs as a cure-all, which admittedly is a huge philosophical difference that runs throughout the Act and one I’ll get to in my next post.

But I can’t shake the feeling that the Patient’s Choice Act spends more time arguing with itself than it does successfully offering an alternative vision for health care in America.

(Photo credit:  The Doctr on Flickr.)