Healthy Choice
Philadelphia Weekly
(May 17-23)
by Jesse Smith
Last month Massachusetts garnered national attention for legislation heralded as an answer to the state’s-and possibly the nation’s-problem of health coverage gaps. Requiring that all residents have health insurance, the state will subsidize coverage for the poor but will force others to purchase theirs through private insurers.
In Pennsylvania, legislators led by state Sen. Jim Ferlo and healthcare advocates are working on their own plan for universal coverage, one that would take private insurers out of the mix entirely.
“We needed a model bill out there for public debate,” Ferlo says. “Change isn’t going to happen in a vacuum. This is our plan, and now the legislature, governor and candidates can react to it.”
Now in the Public Health and Welfare Committee, Senate Bill 1085-the Balanced and Comprehensive Healthcare Reform Act-proposes the establishment of a state-run healthcare trust as a means of repairing a system Ferlo describes as a “sick patient in need of radical surgery.”
Funded by a 10 percent payroll tax on employers, a 3 percent individual wellness tax on personal income and federal money, the program would cover most medical services (with the exception of cosmetic procedures) and make no exclusions of preexisting conditions. Unlike most traditional insurance plans, the proposed system would cover those services without a beneficiary co-pay or deductible.
The program’s reach would extend beyond universal coverage in a state with an uninsured population of approximately 1.5 million. It would establish a malpractice payout program that essentially eliminates the notoriously high premiums providers currently pay. It would provide transitional employment assistance to workers affected by the shift from private insurers. And in an attempt to strengthen the state’s volunteer emergency responder network, it would offer those volunteers a $1,000 annual tax rebate.
The single-payer Medicare-like plan would exempt employees with collective bargaining agreement benefits equal to or greater than those of the state plan, but would automatically enroll all other Pennsylvanians, including out-of-state students, the homeless and migrant agricultural workers.
Under Ferlo’s proposal, private insurers would operate in Pennsylvania only to serve collective bargaining units and individuals seeking coverage for those treatments (mainly cosmetic) not covered by the state plan.
His attempt to drop private insurers from the healthcare equation is in stark contrast to the high-profile Massachusetts plan, a program the senator describes as “a marketing scheme” and “fraudulent” for its connection to the profit-driven sector.
That industry views the situation differently. Sam Marshall, president and CEO of the Insurance Federation of Pennsylvania Inc., agrees the cost of healthcare is a “real problem,” but says eliminating private insurers isn’t the solution. Marshall says instead, increasing their presence will drive down the cost of coverage by creating more competition, a scenario he believes is achievable through a prohibition of non-competition clauses among current insurers.
Marshall says the presence of cost-conscious private insurers also encourages more efficient innovation and keeps costs low, something he doubts the government can do. “Is it realistic to think a government spending $600 on toilet seats is going to deliver cheaper healthcare coverage?” he asks.
But Dr. Adam Tsai, a University of Pennsylvania researcher and member of the Pennsylvania Health Care Solutions Coalition-an advocacy group that helped draft the bill-says private insurers’ obligation to both their investors and customers creates a “built-in conflict of interest.” Profit, marketing and overhead costs, fueled by what Tsai sees as an administrative bureaucracy that seeks to deny claims, raise healthcare costs far above what they would be under a single-payer system, he says.
These costs account for 16.7 percent of claims costs for private insurers, as opposed to approximately 5.2 percent for Medicare, according to a report released earlier this year by the Council for Affordable Health Insurance, an association of carriers that advocates for marketplace solutions.
Tsai emphasizes the proposed system isn’t a publicly funded/publicly delivered socialized system, but rather a publicly funded/privately delivered system of social insurance that allows consumers to still choose providers while ensuring that quality isn’t compromised.
That doesn’t mean such a radical plan’s time has arrived just yet. Tsai is skeptical of the bill’s chances for passage, but he believes the attempt is a necessary first step. “It may not be viable in election year, but I think states in general are ripe for trying this sort of reform,” he says. “If we don’t try, we’ve already lost.”
