The Changing Face of Health Insurance
Alliance for Health Reform
April 5, 2002
Washington, DC
James Robinson, Ph.D., Professor of Health Economics at the University of California at Berkeley:
The new increased cost sharing virtually is designed to shift more cost onto the ill. As one person said to me once, "New product designs are designed to protect non-users from users." And where did that come from? Where'd that come from?
Well, I think that, in the past decade, that the public sector has abdicated its basic responsibility to define what is a decent minimum health insurance and healthcare system or entitlement. And, to fight everything else, as optional and buy-out. It's abdicated that, and it has pandered to the special interest and defined everything as the basic minimum, which drove to the current affordability crisis simultaneously in our laws, step by step, every cost control mechanism in managed care.
And so the last response available to the payers, and I'm talking about the employers here, is cost sharing. That's the last thing. I mean, what are ya gonna do, capitation? Gate-keeping? I mean, you know. And so that's where we are. That's where we are. And cost sharing hurts the sick and it hurts the poor. That's the essence of cost sharing, all right?
Now, ideally, we would all have MSA accounts which were adjusted for income, and those of us that are high income would have small accounts and we'd pay most of the rest of it off our Visa card, and those that are low income people would have real fat accounts, okay?
Also, these would be health adjusted and people that had chronic diseases would have big MSAs and people who are the worried well, oh, yeah, I'm worried well, would have small accounts, right? That's the way, you know, the system ought to work, all right? But, as long as we're into this-this fantasy land, where healthcare is an entitlement, it's a right, and somebody else is gonna pay for it, and no choices have to be made, no priorities have to be set, no tradeoffs are necessary, we will never get there. And the system by itself, driven by the wishes of the individual employer and the individual employee, the healthy employee, wants the high deductible product. They want the MSA because they can spend an MSA on dental, vision, all kinds of other cool stuff. Of course, a diabetic is gonna spend the whole MSA just on diabetes care.
And that is the system that we have created. We, America, have created this system.
<http://www.kaisernetwork.org/health_cast/uploaded_files/4.05.02_Transcript_HealthInsurance.pdf>http://www.kaisernetwork.org/health_cast/uploaded_files/4.05.02_Transcript_HealthInsurance.pdf
Comment: Professor Robinson seems to support the concept that the public sector must define a basic tier of "decent minimum health insurance." Clearly he recognizes the terrible consequences of shifting the costs of essential services to the individual, cost sharing that hurts the sick and poor. He recognizes that MSAs destroy access to the risk pool for the sick and poor, by protecting non-users from users.
So the public sector needs to define the basic tier. Can Dr. Robinson create a template for that tier? For the middle-aged patient, disabled with advanced degenerative hip disease, is the first tier being provided with a walker or wheelchair, with hip replacement being limited to those capable of sharing the cost? Are mammograms or a PSA tests for prostate cancer, tests which may not lead to improved outcomes for most of those screened, basic tier tests, or should they also be limited to those that are capable of sharing the cost? Or should the basic tier be defined in general terms such that all beneficial health care services should be covered? And since "beneficial" is a fluid term that changes with the state of the art, how would Dr. Robinson's template accommodate this ephemeral concept? The reality is that placing "basic" care completely within the risk pool, and then requiring cost sharing for elective or more expensive services will inevitably prevent access to important, beneficial services for the sick and poor.
So what is the answer? The $1.55 trillion that we are spending on health care is more than enough to fund all providers and facilities that we need to provide the capacity for comprehensive services for everyone, providing that excessive administrative waste is reduced. Since the escalating costs of health care seem to be a primary concern that needs to be addressed, we can do this simply by establishing a global budget for our entire health care system. If capacity is pushed to the limit, decisions can be made on limiting services that are of negligible value, or, alternatively, we may actually want to shift more of the GDP to health care. But with a budget that is currently 14.7% of our GDP, under a single payer model there would never be a need to tell a person that your tier qualifies you only for a walker for the rest of your life.
Uwe Reinhardt, Ph.D. responds to James Robinson, Ph.D. on patient cost sharing:
I believe both Jamie Robinson and Don McCanne are right.
In a way, Jamie repeats the dire message that I wrote last August and that triggered such a heavy e-mail traffic, notably from Ted Marmor. Jamie says, "We, America, chose this." To which Ted might add the footnote, "'We America' is the small elite that makes health policy." Whatever the case may be, we are stuck with this system and shall now go through a lengthy (possibly permanent) phase in which the financial burden of health care is rolled over from the shoulders of the healthy to the shoulders of the sick. I see no way around it now, and I did not last summer.
Don is also right. If Canada spent 14% of its smaller GDP on health care, within the current structure of that system, one cannot imagine what they could not have. Gold-plated bed frames, perhaps; but everything we have and more they could have.
Alas, for some reason God won't allow us Americans to have a single payer system, so the point is moot. Nor, of course, will the elite making health policy in Canada ever allow 14% of the GDP to be spent on health care. So that scenario is moot for Canadians.
Jamie's (and my) prediction for America rules: Rationing by health status and income.
Mazel tov!
Best
Uwe