Blog debate - PNHP versus HCAN reform strategy
Blog Debate: “An Obsolete Model”
By Tim Foley
Change.org
Health Care
March 12, 2009
This is the second day of a blog debate about what approach we should take on health care reform in 2009. Debaters are Dr. Don McCanne, a retired family physician now serving as Senior Health Policy Fellow for Physicians for a National Health Program, and Jason Rosenbaum, a writer and activist, and the Deputy Director of Online Campaigns for Health Care for America Now! Dr. McCanne will be presenting the “single-payer” point of view, and Mr. Rosenbaum will be presenting the “public competitor” point of view.
This is Dr. McCanne’s answer to the question: Is there anything valuable that private insurance brings to the table which, with far more muscular federal regulation, would enhance an American universal health care system?
Dr. McCanne: Everyone agrees that we need comprehensive reform of health care financing if we expect to slow the escalation of costs, while improving allocation of our resources. To achieve these goals, do we need to replace our dysfunctional financing system with an efficient public program, or can we simply use increased regulatory oversight to transform our private insurers into a better functioning system?
Systems using private plans that achieve near-universal coverage, such as Switzerland and Holland, are often cited as examples that we can emulate. These systems are more expensive, with greater administrative complexity, less equity, and fall short of true universality, though they satisfy those who ideologically prefer private to public administration. Some nations also use public programs for low-income individuals, comparable, in principle, to Medicaid in the United States. So how would it work if we were to regulate the private plans and then mandate the purchase of those plans?
There is a very fundamental difference between our private plans and theirs. Other nations that use private plans do so within a program of social insurance. Their plans are designed for the public good, assisting individuals in receiving the care they need without having to be concerned about the source of payment. They fulfill the insurance function by effectively pooling risks, whether through a single risk pool or though various methods of risk adjustment.
Our private plans are based on a business model designed to ensure success in the health care marketplace. Success is defined by the medical loss ratio, spending the least they can on health care. Much of their profound administrative waste is due to their elaborate efforts to avoid paying for care.
The plethora of private plans merely demonstrates the insurers’ innovations in restricting benefits — preventing payment for non-covered services; increasing deductibles and other forms of cost sharing — erecting financial barriers to care; contracting with limited lists of providers — penalizing patients who need care outside of the restricted lists; selective marketing to healthy populations — especially the healthy workforce and their young, healthy families; using underwriting and rescissions to avoid paying for essential care; and on and on. These are great business tools, ensuring success of the insurers, but they are anathema to the more egalitarian goals of social insurance systems. They defeat the insurance function of pooling risk by segregating out the low-cost healthy into their own market, and dumping the high-cost sick onto taxpayer funded programs.
Suppose we heavily regulate our private insurers and require guaranteed issue of plans that actually include all necessary services, and remove barriers to care such as restrictive lists of providers and unaffordable deductibles. This would require a massive, revolutionary transformation of the missions, goals, and administrative functions of our business-model private plans designed to prevent paying for care, into social insurance private plans designed to remove the financial system as a barrier to care.
Anyone who believes that this would be a simple transformation needs to have a conversation with insurance executives with their nine-figure compensation packages or with the large institutional investors who have fared extremely well under our market-based health care financing system.
As if that weren’t enough, there is one more unique problem in the United States. Our health care costs are much higher than in any other nation. If we were effective in covering everyone with a choice of private plans, whether with or without a public option, and if those plans covered the necessary care that people actually need, imagine the premium that would have to be charged.
The Milliman Medical Index has demonstrated that an average family of four with employer-sponsored coverage — a healthy sector — already pays $15,600 for their health care. That is only average; many pay more. With a typical household income of $60,000, that is no longer affordable. Now add into the pool the less healthy members of our population and just imagine what the premium would have to be. Financing our health care system through a specific premium assigned to an individual or family, based on an adequate package of benefits, has become an obsolete model of paying for health care.
We need a single, universal risk pool that is equitably funded. That would most easily be accomplished through progressive taxes. Once we do that, why would we continue to support the intrusion of the wasteful private insurers that do no more than take away our choice of hospitals, physicians and other professionals? Public administration is much more efficient, plus enrollment is a one-time event — absolutely everyone is covered for life.
http://healthcare.change.org/blog/view/blog_debate_an_obsolete_model
For the full debate (in progress):
http://healthcare.change.org/
Comment:
By Don McCanne, MD
Members of Physicians for a National Health Program (PNHP) and supporters of the Health Care for America Now! coalition (HCAN) are all passionately dedicated to the goal of achieving reform that will provide affordable, high quality care for everyone. We are bothers and sisters in the cause. The ultimate goals of both organizations are the same, but the strategies are quite different.
The PNHP single payer concept has been around for a couple of decades, but Congress has failed to move on it. The HCAN leadership decided that reform will never occur unless the private insurance industry plays a major role in the future of health care financing, but that the insurers must be challenged with a competing, public Medicare-like option. In theory, the public option would be a better value, and the private plans would fade away as individuals opt to change to the new Medicare program.
There is massive, intense opposition to the public option by the same elements that have been successful in defeating reform in the past. AHIP, PhRMA, the U.S. Chamber of Commerce, the Republican members of Congress, and many others are all opposed to the Medicare-like option.
If the final legislation includes a well-designed public option (adequate benefit package, truly affordable premiums, no excessive cost sharing, the use of private insurer funds for risk adjustment, etc.) then there will be no comprehensive reform. The opponents are powerful enough to defeat it.
If the final legislation includes an emasculated public option, or leaves it out altogether, then reform will be based on a market of private plans.
Following the HCAN strategy, it is absolutely inevitable that private plans will continue to play a major role in financing health care, whether or not comprehensive reform is enacted. The reason that I selected my response on private insurance from our PNHP/HCAN blog debate is that everyone has to understand very clearly why private health plans are an obsolete method of financing an expensive health care system like we have in the United States. Once everyone understands that, we can reject the HCAN strategy and move forward with the program America needs: a single payer national health program.
You are encouraged to follow the debate this week (only four questions) and provide your comments (http://healthcare.change.org/). Tim, Jason and I are very interested in your thoughts, and hopefully the policymakers will be as well.