Jonathan Cohn on why the threat of reconciliation changes the political calculus of health care reform so significantly. (Hint: reconciliation is targeted NOT at Republicans, but at.....that's right, the Democrats.)
Sometimes, it seems like the Wyden-Bennett health care plan, which would turn Medicaid and sCHIP into wrap-arounds and institute state-based purchasing pools, is the odd duck out in Congress. It has 14 cosponsors... but no support among those who are writing what will end up being the legislation that gets to the President's desk. The respected Lewin Group has figured out a way to combine Wyden-Bennett with the principles outlined by Senate Finance Committee chairman Max Baucus.
The Lewin proposal would include a mandate for insurance, would force employers to turn health benefits into wages (and change the tax system accordingly), would include a subsidy for the purchase of insurance for people living below the poverty level times four (400%), exchange-like mechanisms that cross state boundaries, an initial "pay or play" requirement for employers and a variety of new regulations on existing health insurance plans. Medicaid would be responsible for protecting poor people up to 100% of the poverty level. There'd be a new government-run plan, too.
Baucus's public plan would (or could be) big enough to compete with the insurance company plans, driving the prices down and spurring competition. Lewin's analyst, John Sheils, notes that "both proposals envision a major role for employers in a reformed health care system," but that each proposal would lead to at least some loss of employer provided health insurance." The group has previously estimated that most Americans would drop their insurance and buy into the public plan; the report doesn't quite say it, but I know Baucus, in crafting his bill now, is playing with the idea of creating a public plan that would somehow hover above the market for a while...giving the market a chance to meet the challenge before true competition begins.
Healthcare Reform: Changing the Incentives and the Rules of the Game
If you have the financial resources of Bill Gates or Warren Buffett you needn’t pay money to a health plan each month, since if you get sick or injured – even very seriously - you obviously have more than enough money to pay all your medical bills yourself.
But those of us with significantly less financial resources must find some other means of dealing with the thousands or even hundreds of thousands of dollars of medical expenses that we might incur should a serious illness or injury be our fate.
Enter the concept of “health insurance”.
Large numbers of individuals put some of their money each month into one or another big pot called a “health plan”. Those individuals who remain essentially healthy and then suddenly die or leave a particular health plan for some other reason - having put more into the pot than was taken out to pay their medical expenses - wind up helping to pay the medical bills of those who are very seriously acutely ill or injured or become chronically ill and have a lot of medical expenses.
Getting someone else to help pay one’s medical bills seems to have become a very common and socially acceptable expectation for many Americans. Some even think it is a “right” they either do have or should have, simply because they are an American citizen. Some see it as a “right” of all members of the species, Homo sapiens.
In a health plan, the monthly premium money goes into the health plan’s big pot from which “covered” healthcare expenses are paid. But what is also paid out of the pot are all the administrative expenses including big salaries and golden parachutes for CEO’s and other “healthcare executives” – individuals who are paid to find technicalities of one sort or another in the health plan’s agreements so they can somehow deny payments, raise premiums, cancel insurance, or in some other way minimize or exclude “bad risks” from the health plan.
If this system in which large numbers of people pool their money to pay the medical bills of all those in the plan - is going to work, rules must be established as to when and how much money may be taken out of the pot (e.g. “legitimate” doctor and hospital bills and administrative costs) as well as how much money must be flowing into the pot each month in premiums paid by members of the health plan so the pot does not become empty.
But the critically important but underappreciated enemy in all of this that must be overcome is unnecessary illness and injury.
We speak about our “healthcare system” and understand that the continually rising costs we are experiencing are unsustainable. But a lot of illness and many injuries are actually preventable. What we fail to focus on, however, is that other than members of a health plan (or their employers who actually pay the monthly premiums) and the employees of the health plan itself, few participants in what should be more appropriately called our “sickness and injury care system” have any real incentive whatsoever to genuinely promote health and prevent disease and injury.
Much to the contrary. Because of the way they are paid, most participants in our sickness and injury care system have an enormous (if unspoken) incentive for continuing to have massive amounts of disease and injury occur in America - the more of it and the more serious, the better - as long as those who are diseased and injured are “covered” by “good insurance”, i.e. health plans who are reliable bill payers.
That is not to say that there are not some excellent and very dedicated hardworking doctors and other health professionals - who are generally paid to care for illness and injury on a fee for service basis - who nevertheless are attempting to essentially work themselves out of a job by strongly encouraging prevention with their patients. And it also should be recognized that some existing health systems – e.g. Kaiser and Group Health - combine insurance, doctors, and hospitals into a single entity in a way that provides everyone - including all their doctors - a real incentive for prevention as well as early diagnosis and treatment. But unfortunately the above two examples do not apply to most of our sickness and injury care system in America.
Because of the way they are paid, most doctors and other professional providers, acute care hospitals and long term care facilities, pharmaceutical manufactures and pharmacists, medical and surgical equipment manufacturers, personal injury and malpractice attorneys, and others depend mightily on massive amounts of disease and injury occurring in America and would be significantly negatively impacted if a lot of the preventable illnesses and injuries were actually prevented.
Unless the incentives and rules are changed to give as many participants as possible a real stake in prevention, early diagnosis and treatment, and maximizing health and minimizing disease and injury, getting healthcare costs under control will never happen. Changing the incentives and the rules of the game is the real task of “healthcare reform”.
For example, why not financially incentivize individuals? It is well recognized that engaging in regular exercise, abstaining from tobacco, eating a healthy diet, and maintaining a reasonably normal body weight are all significant factors in helping to promote an individual’s health and wellness. These healthy behaviors can all be easily confirmed by simple tests in a doctor’s office. Why shouldn’t those individuals who practice these health promoting behaviors pay significantly less for their health insurance than those who don’t?
To really reform healthcare we must figure out ways – through changes in incentives and the rules of the game - to maximize good health and early diagnosis and treatment, and minimize disease and injury and all associated costs. Every participant needs to have a real stake in prevention, rather than merely giving lip service to prevention while actually thriving only on the treatment of illnesses and injuries.
Significant changes in the rules of the game for our legal system – tort reform – is also critically important so that the gaming of the system by personal injury and malpractice attorneys and their clients can be ended and the exorbitant costs to physicians and other professionals for malpractice insurance can be dramatically reduced.
All this may be a formidable task that has never really been done anywhere else before. But it is a worthy task and an essential task, and now is the time for Americans to step up to the plate and do it.