When supposedly the intent of the health reform legislation was to try to provide health insurance for everyone (well, not quite), it is particularly disconcerting to see large employers such as Walmart, Gap, United Parcel Service, Hilton, and even health insurer Aetna propose rules that would relieve them of the requirement to cover as many as half or even more of their employees. But these employers do have a point. Is it reasonable for them to provide health benefits for a highly unstable workforce that works seasonally, part time, or temporarily, especially when that turnover creates instability and fragmentation in the employees’ health care coverage?

Our medical liability system is very expensive, highly inefficient, extremely adversarial thereby inflicting much emotional pain on all involved, and leaves most individuals with medical injury uncompensated. It is a very lousy system. This report describes far better systems in three other nations, providing very valuable lessons for the United States.

Private insurers have been gaming the system for many decades. They have been selectively marketing their products to the healthy workforce, their young, healthy families, and to healthy individuals who purchase their coverage in the individual market. The costs of higher needs patients have been shifted to the taxpayers through programs such as Medicare end-of-life care, Medicare long-term disability care, Medicaid nursing home and other care, and safety-net institutions for the uninsured. So what has changed that requires us to now look at risk adjustment?

The excerpt above from today’s HHS release of the proposed rule for the insurance exchanges to be established under the Patient Protection and Affordable Care Act was selected to make a point. The fragmentation and instability of coverage is only one of the great many highly flawed features of the model of reform foisted off on us by our politicians.

Utah’s state health insurance exchange is now in full operation. It is a very loosely regulated system organized as what they call a “defined contribution market.” It is designed to cater especially to small businesses which include the majority of Utah’s workers. How successful has this program been?

Although innumerable studies have shown that health insurance provides both health security and financial security, some have contended that insurance is not necessary, especially for low income individuals, since they can find care through our safety-net institutions. As President George W. Bush stated, “After all, you just go to an emergency room.” This study, the Oregon Health Insurance Experiment (Oregon HIE), puts an end to that contention. Low income Oregon residents who were selected by a random lottery to be enrolled in Medicaid fared significantly better than those who were randomly excluded.

This highly credible report from GAO provides more evidence that access remains a problem within the Medicaid and CHIP programs. Less than half of physicians are willing to accept children in these programs as new patients, and over four-fifths experience difficulty referring Medicaid and CHIP children to specialty care. Instead of trying to expand this chronically underfunded program, we should replace it and all other programs with a single comprehensive program for everyone that eliminates financial barriers to care. No one would ever have to ask again if a physician accepts whatever program. They would simply get the care they need, no questions asked.

In the push towards integrated health systems, hospitals have been consolidating within markets in order to gain leverage in the negotiation of insurance contracts. Physicians have been consolidating within medical groups, also giving them greater market leverage. Leading the way, virtually all metropolitan insurance markets are now highly concentrated. In this power play between the health care giants, who is winning and who is losing?

It is great to have on board another economist from the academic community who understands the imperative of the single payer model. We should be hearing more from Professor Gerald Friedman.

According to Peter Orszag, “commercial insurers are too fragmented to change healthcare payments, but Medicare has the clout.” Though he didn’t expand on that with the obvious extrapolation, we can. Let’s get rid of the commercial insurers and improve and expand Medicare so that it covers everyone.