Friday, August 21, 2009

Getting Serious About Health Care Reform

I'm not a health insurance reform expert. Almost no one on earth is. That doesn't mean we can't talk about it. And I think that any discussion of insurance reform has to begin with the problems we are currently facing, because we can't find solutions to problems we only understand vaguely.

The biggest problem, of course, is that costs are increasing at an unsustainable rate. Premiums are rising at four times the rate of inflation and wages. National health expenditures are rising faster than GDP. Over the past ten years, premiums have more than doubled for the average family. Employers increasingly cannot afford adequate coverage, and the individual market for families is incredibly expensive.

There is also the problem of cherrypicking. The primary goal of the insurance companies is to make money. That is the nature of business in general. To maximize profits they only insure the healthiest people and they avoid paying for procedures, treatments, and medicine as much as is humanly possible. This means that those that need insurance most are least likely to get it, and those that have insurance are likely to be fought tooth and nail for using it. There are countless stories that illustrate this point.

There are nearly 50 million uninsured Americans, including nearly 10 million uninsured children.

So what we've got is a system that does not work. After decades of minimal regulation we are on the cusp of a system failure that would have serious consequences. Does this sound familiar? The difference between the insurance industry and the banking industry is that we allowed the banking system to basically fail, millions of people lost billions of dollars and retirement savings before we stepped in and put some serious regulation on the books. We simply cannot afford to let that happen in the insurance industry where more than just money is at stake.

From what I can glean from interwebs (and here are some articles I really like on more liberal side of things), Democratic health care reform has two main goals. The first is industry regulation. Here is where we address many of the problems that have slowly matriculated in the current system. Some examples are that insurance companies would not be able to deny consumers based on their medical history. Insurance companies would be required to set premiums based on community rating rather than experience rating. Under community rating, everyone would pay the same premiums, regardless of medical history, age, etc. Under experience rating, the current rating system, premiums are based on those and other factors. These reforms would create a much larger risk pool which would make health insurance affordable for many for whom it is not now.

The second part of health care reform seems to be a reform of the market itself. This is where the public option comes in. For all the new regulations that are being proposed, no one doubts that the incredibly rich and powerful and resourceful insurance industry will find ways to continue their current practices. Ambiguous language in the bill, bullying those without the means to fight back, delaying procedures for as long as possible, and the like are all ways that they can game the system. Regulation will be necessary and helpful, but it won't take us all the way. What's more, individual plans and small group plans will still cost more than large group plans because the administrative costs are higher and the risk is spread over a smaller group.

So a public option would combat those problems. It would provide a safety net for those that can't afford private insurance. It might resemble public/private choices like parcel service or education where there is a niche for both government run options and private options. If there were only ever private colleges and universities and suddenly the government decided to provide lower cost, competitive colleges and universities, would conservatives being calling it socialism? I kind of think they would. But no one is calling the current system socialist.

I don't think the public option for health insurance is all that different. The government subsidizes and runs education at all levels because we have deemed that education is so important that it should be provided to every citizen. In fact, education up to 12th grade is absolutely free for every citizen. Why is it so different for us, as Americans, to then say that adequate health care is so fundamentally important that we are going to make sure that every American has access to it? That is going to mean a market where there is competition between the government and private industry, but we are okay with that because it means that everyone has the peace of mind knowing that they have the means to deal with the sicknesses and injuries that their families will face.

I have said it before and I say it again now, this is a moral issue. I want to live in a nation where we make sure everyone, regardless of socio-economic situation, or any other factor, has access to adequate health care. Certainly it is better for our economy to have a more healthy, physically and mentally, workforce. But it is also good for our souls.

We are told again and again in the scriptures and through prophets to care for the sick and needy, the orphans and widows. In our modern world, health care is an essential part of that admonition. There is no way for us to individually make sure that the poor have health care, we have to do it as a group. I'm not saying that you have to support a public option to be a good Mormon or to keep the commandment to care for the poor, but it is a legitimate way to do so where no other viable option has been presented.


Josh said...

I found myself not responding to the other posts, because I have a difficult time controlling my temper about this. However, I have to say it. The Government has no right, responsibility, or reason to run a business. I know, I know, we run a lot of businesses. Well, just quickly, from the top of my head, I'll give a couple I don't think we should run. The Post Office, NASA, and the various federal research centers/laboratories. Business is intended to be left to the people.

I believe that there should be restrictions on insurance, providers, and lawyers when it comes to health care. That would make sense. When it comes down to it, though, I would rather see no "reform" than the "option" of public run health insurance.

I am sure that none of us here has braved reading the entire 1000+ page reform bill. I read enough of it to get angry, and stopped. I don't need high blood pressure, can't afford the co-pay on my insurance to go to the doctor.

Just a quick side note. As staunchly right-winged as I may be, or as I am perceived to be, I don't think I've ever implied that a liberal Mormon is not living up to his/her covenants. At least, Jake, you gave that little disclaimer at the bottom, so we know you aren't throwing that accusation around either.

Javelin said...

We PAY for all who go to the emergency room. We LOSE the tax revenue from the lost wages of those who are not able to see a doctor when an small illness is starting. Does preventive care costs more? Sure, in the short run. However, in the long run it pays for itself ten times over. A dead person cannot work.

Andrew said...

"...I'll give a couple I don't think we should run. The Post Office, NASA, and the various federal research centers/laboratories. Business is intended to be left to the people."

I strongly disagree (not really a surprise there); we need more public funding of basic science research. The problem is there are a large number of well-trained scientists who go into other fields because they either a.) have to work for a pharmaceutical company, or b.) compete for the few publicly-funded positions available (including professorships and the grant money that goes with them). There are very few pure research institutions, and as a result we're losing a lot of good scientists to trivial pursuits. I've had a number of friends ditch science altogether to work on Wall Street, or go into law, or do something other than what they've trained to do. I think many would have continued on if there were a viable career path outside of corporate science (which means, essentially, pharma or defense technology) and academia.

Also, having sold a bunch of stuff on Ebay recently, I've found the Post Office (even in densely-populated Los Angeles) to be both the cheapest and easiest way to ship packages. UPS, Fedex, DHL, and all the rest are often priced twice to three times more than the Post Office for packages of a similar size and weight. None of those three have after-hours package shipping (you can do that from kiosks within may Post Offices), either.

Josh said...

Actually, no we do not NEED more public funding for ANYTHING. We NEED to get out of the public funding business all together. Our country is so far in the hole we can actually see the Chinese rear ends as our President kisses them! This is the problem with Liberal thinking. You all want the government to take care of every problem there is, and don't give two turds about where the money comes from. But, if a Conservative is in office, you want to count every penny (not to mention every minute) that he spends!

Several of the folks that participate in this blog like to question my religious standing, as a Conservative Mormon, so I'll question theirs here too. How, given all of the teaching we recieve about self-sustainablity, and about being debt free, can you support this radical spending behavior and feel good about it?

I digress, and reiterate: this country does not need more public funding or assistance of any kind! We need to do a lot of things, but we don't need "public assistance" to do them!

peter said...

My main problem with the public option is that the government would be running it and their track record with health care is not that impressive. The current Medicaid and Medicare systems essentially set prices for physician visits and medical procedures for the entire industry. It has been proved that lower cost/higher effectiveness healthcare is coordinated with a primary-care based system. Our system is specialty based at this time. The government talks about needing more primary care, but if they were serious then they would change reimbursement rates to reflect a greater emphasis on primary care instead of rewarding specialists two to four times what primary care is making. Money talks.

Medical residency education is also paid out of Medicare; if the government was serious about a primary based care system that would lower cost and raise efficiency then they would change ratios in primary care/specialist residency spots.

If the government was serious about reducing medical costs then they would change the provision in the Medicare Part D drug plan that does not allow the government to negotiate lower drug prices from the drug companies based on bulk purchasing. And now Obama is getting back in bed with the drug companies (a larger lobbying group than the insurance interests) including banning drug importation from other countries that would drive down drug costs. (Basically they are giving a free pass to drug industries while sticking it to physicians. i.e. they won’t negotiate lower drug prices but they will try to low-ball physician payments based on the idea of group leverage.)

We’re also the only country that allows direct-to-consumer marketing from drug companies. There could be an argument for this, but it only benefits the drug companies. Drug companies sell a lifestyle, consumers don’t understand the risks and benefits, but if it is the latest and “greatest” then they have to have it and they dictate to their physicians instead of consulting with their physician who knows a whole lot more than they do and doesn’t have a vested interest in prescribing them a specific drug.

Medicare and Medicaid are not self-sustaining at this point and there are worries about the programs being bankrupt not too far in the future…if we can’t run these programs efficiently, how can we run a more comprehensive plan?

And don’t forget the VA system, they had their own problems exposed a few years ago about the quality of their hospitals and systems starting with Walter Reed (,, The government has not proved that they can run the programs that they are currently running. The government easily becomes overloaded and inefficient with no incentive to do things differently.

peter said...

And as for your comparison of health care to education, there is some possibility in what you say. Available free health care for people under 18 and everyone else can pay a lower rate than current private insurance (but still pay.) We could consider possible rate reductions for healthy lifestyle factors that cut down on problems such as smoking, obesity, drug use, and promiscuity. Maybe we could also consider gradients in premiums based on income.

The problem with free healthcare is the tendency to abuse the system. When people do not absorb the full cost of their care, they are more ready to do more tests and more expensive therapies and drugs. After the advent of HMO’s medical spending skyrocketed because no one absorbed the cost of their own care. Americans have come to believe that more healthcare equals better healthcare when that is not always true. We have lost focus on healthy lifestyle changes that can be much more effective than medical intervention in many cases. I know that you don’t think that entitlement and abuse of the healthcare system are very big at all, but if you went to work with a primary care resident at a low-income clinic I think you’d be surprised.

And three more things…

Medical malpractice is more specific to state, but the fear of malpractice does contribute to a lot of unnecessary procedures and tests by physicians who are trying to cover their rears (because even if a malpractice case does not have merit, it still involves an input of resources and an undesirable uncertainty.) Hospitals aren’t going to curtail the practice because they also don’t like malpractice suits and the extra tests often mean more money for them. Malpractice reform that still protects the patient, but also protects the physician would help lower health care costs as well as providing better access to care for some patients. States with bad malpractice laws are being avoided by physicians entering practice which will result in decreased access to care.

I also agree that there has to be a way to make insurance portable...without a public option.

And, amazingly, I agree with Andrew that more research should be government sponsored. The problem with corporate sponsored research is that the people funding it have an agenda and if the research doesn’t say what they want to say it, they ditch it or spin it. In addition, the research being done is not always the research that should be done. For example, instead of doing tests against proven therapies, tests will be done against no therapy at all proving that the drug is effective but not whether a low-cost alternative is just as effective. We need research that is not run by the drug companies or by people who are in the drug companies’ pockets. At this point in time, there are very few truly independent research institutions.

I know that I don’t have all the answers, but this is an issue that I care a lot about. I am equally frustrated by some of the plans of the Democrats on how they wish to reform the system as I am by the Republican’s allowing fear of the Democrat’s passing any healthcare lead them to advocate no change instead of talking about some positive changes that could be made without enlarging the scope of government.


Jacob S. said...

Thanks for the comments. I think we need to be clear that a public option is not a free option for anyone who wants it. They still have to pay, like for private coverage, but because the government can spread the risk to a greater pool and use some taxpayer dollars (from the richest 1% - socialism!) costs would be lower. I'm not saying it is a perfect plan, I don't think there is a perfect plan, but we need to get these millions of people covered.

While I haven't mustered the same disgust for big pharma that I have for the insurance industry, I definitely understand the complaints. I haven't looked into it at all, and therefor don't have a strong opinion yet, but I think it is clear that something needs to change.

Andrew said...
This comment has been removed by the author.
Andrew said...

My wife is a grad student in biochemistry, so I have a small window into how that side of things works. Kristy, I agree in part with some of the things you've written. I think the existing government programs can be tweaked to make them more effective (I'm fairly certain some of those things are in the current set of bills).

However, there is a huge systemic gap in coverage, and no real way to fill it without some sort of government-sponsored plan. That gap drags down our economy (by lowering productivity) and has a whole host of negative effects on society, from stressing emergency rooms to creating public health hazards (because people won't get treatment when they're sick with something contagious). After all is said and done, that's the main problem that we need to solve.

peter said...

If insurance is reformed (as the administration is talking about) so that people cannot be denied coverage for preexisting conditions and make insurance portable by creating large, non-work groups at the same time as lowering cost while doing some of the things I mentioned, why would we need a public option? They could still run Medicare and Medicaid, but everyone else could be on private insurance.

Jacob S. said...

As I wrote in the post, because people basically don't trust the insurance industry to actually follow these reforms in both letter and spirit. They will find loopholes and abuse the system. Their primary goal is to make money, not cover health expenses. But if the reforms actually work and the private industry actually lowers costs and improves coverage and covers everyone, then the public option may not last long. Its not like I just love the thought of government health care, but I don't see any other real options to getting everyone covered. I'd be happy to be wrong and have the health care industry step up and create a private system that works, but I'll believe it when I see it.

peter said...

Good point, but do you really think that if a public option is instituted that it would ever be ended if other companies actually did follow through with reform? It seems that government rarely gives up "power" once they have established it.

Josh said...

And the primary goal of this administration is to collect taxes! Jake, seriously, the primary goal of every entity out there is to make money, especially the government!

Jacob S. said...

The big difference, of course, is that government employees, including the President and members of Congress, do not receive higher compensation for increased tax revenue. Whereas directors and executives do receive higher compensation for increased revenue.

I'm not saying politicians are all magnanimous and un-power-hungry, just that they go about solidifying their power in different ways. Politicians do it by pleasing as many constituents as possible, and some act for what they perceive as the genuine good of the country they love. Private corporations act to make money for themselves and shareholders. Neither system is perfect, so why not incorporate some of both?

Josh said...

Why not? I told you already. It is not the right, or responsibility, of the government to get into this business. We should pass laws and control measures on insurance, medical providers, and attorneys. I agree with you there. I can't possibly, though, imagine how you could see it as the government's right to run an insurance business.