There is a whole lot of talk about health care reform these days, and a lot of it is designed to be confusing, instead of helpful.
To cut through some of that confusion, let me ask you a simple question: is your health insurance stressing you out more than it should?
If you worry about paying for drugs you might not be able to afford, if you don't go to the doctor as much as you should because you recently pawned your last gold bar to cover a margin call on your AIG stock...or if the odds of getting your insurer to take care of what you thought they'd cover are lower than hitting 13 on a double-zero roulette wheel...we need to talk.
This conversation won't be about death panels or secret camps or black helicopters or any of that silly stuff. Instead, let's talk about a few things that we're probably all worried about, and then let's talk about some ideas that might make things better.
So first off, why do we even need reform?
How about because we pay about twice what the rest of the word pays for health care--and we don't get good value for the money.
The US spends almost three times as much as the UK, and twice as much as Canada, per person, for health care--and of the top 50 countries in life expectancy...we come in 45th.
Canada, the UK, Cuba...and 40 other countries...also have lower infant mortality rates than the US.
That is not good; and over the long term it's killing businesses and, by extension, the larger economy. Not to mention, as consumers, we deserve better.
We also want to provide for the nearly 50 million Americans that have no coverage at all, for a couple of reasons:
First, it's extraordinarily expensive to have uninsured people showing up at the emergency room. For a good example, consider the cost of treating a relatively simple cholesterol problem with drugs instead of a paramedic response, an ambulance ride, and heart surgery followed by a stay in the hospital.
The average family with health insurance is today paying about $1,000 a year in extra premiums that they wouldn't be paying if we could find a way to cover those 50 million people--and if my guess is correct, there are a lot of families that could use the extra $1,000.
And for what it's worth, not having insurance is already killing about 18,000 Americans every year.
So that's the uninsured...but what about the insured?
Right off the bat, here's something you should think about: we can expect the cost of the average family's health insurance premium to double by 2020 to roughly $23,000 a year...which is almost $2,000 a month.
If we can't slow that rate of growth, there's going to be a whole lot fewer people getting health care through work--and for several years now employers have been trying to get workers to bear a larger portion of their health care costs.
Plus, insurance companies are increasing profits by looking for more and more ways to cut off policyholders, or by refusing to renew insurance for those clients who do file claims.
And once you get cut off, no one else is likely to allow you to purchase insurance...which means the number of uninsured is growing all the time.
We have also seen the cost of deductibles go up (with $5,000 to $10,000 deductibles looking like the wave of the future)--and all of this means that insurance companies are doing great, while the customers are getting the short end of the stick.
Did you know that more than 60% of the Americans who filed for bankruptcy in 2007 did so because of medical bills? That's not all: more than ¾ of those 900,000 or so newly bankrupt families had health insurance when they went broke.
What about this whole "putting bureaucrats between me and my doctor" thing?
How many people have health insurance that requires pre-approval for procedures or pre-approval to see specialists, or drug formularies that charge different prices for generic and brand-name drugs?
All of those things exist because of insurance company bureaucrats that at this very moment sit between you and your doctor.
So those are some of the problems.
Here are some ideas about how to make things better:
We could tell health insurers that they can't use "preexisting conditions" to deny people coverage, and that they can't just cut people off for the crime of needing care. This allows more people to have access to health care, and it also reduces bankruptcies, since insurers wouldn't be allowed to simply deny coverage when claims come in, leaving families to pay both the health insurance premiums and, later, the medical bills.
This is the least controversial part of the reform plans before Congress today.
There are proposals to create more competition among insurance providers, the idea being to use market forces to keep private insurance companies from drawing so much money out of the system as profit. This would be in the form of one or more insurance plans, operated by some new entity, for which members of the public would be able to "buy in" and get coverage that they can't get today.
The idea here is to create a large new pool of insured persons, which allows the insured group to negotiate for better prices on drugs and procedures and office visits and medical equipment--and if you allow anyone to sign up it can force private insurers to either match the price of the "public option" or lose customers.
Businesses would be required to either pay for coverage for their workers or a tax if they don't. Small businesses would be exempt, but we are not sure how small exactly "small" would be as of today.
This public option proposal is very controversial, and insurance companies are spending over a million dollars a day to shut the idea down before it gets out of Congress.
The most controversial reform proposal is to create a "single-payer" system, which is what Canada has today. At the moment, this is not likely to be part of the program that comes out of Congress, if any program does.
In the Canadian system, people keep their own doctors and the Province where you live becomes the insurance company. You go to your doctor, who then bills the Province. Everyone is entitled to an insurance card, which means everyone has coverage. All of this is paid for with tax dollars.
That's also how Medicare works, and there are people who suggest the best way to do healthcare reform would be to simply enroll everyone in Medicare.
The catch would be how to control costs while providing care for all, and that's the last thing we'll talk about here.
Right now it looks like it would cost about $1 trillion, over ten years, to provide coverage for roughly 50 million people.
Remember the conversation we had about how treating high cholesterol problems with drugs is cheaper than treating heart attacks? It turns out it's so much cheaper that about $700 billion of that $1 trillion can be found with that change and other similar changes, like treating people before they have diabetes instead of dealing with the disease later.
That leaves us roughly $250 billion short. In 2003 we gave a substantial tax cut to people with especially high incomes, and Obama has proposed ending that tax cut. This would cause people making more than $1.2 million a year to return to the same tax rates they had from the 1990s until 2003.
If the public option is made widely available, the insurers tell us, private industry could never compete...but that's not as certain as insurers would want you to believe.
Consider the electricity market: in Washington State, Puget Sound Energy, a private company, operates side-by-side, literally, with "public options" like Seattle City Light and Snohomish PUD, and seems to be doing just fine--and they've been doing just fine for roughly a century.
A final point: there is a lot of talk about how government providing health care is "socialism".
Maybe it is.
But you know what? In America we also have socialized police and firefighting and EMS, and socialized streets and roads and libraries and sewers and airports and Post Offices...and socialized National Defense.
And if you really want to talk about the Founding Fathers and socialism, consider this: among the original 13 Colonies were the Commonwealths of Massachusetts, Pennsylvania, and Virginia.
Add in the Commonwealth of Kentucky, and four of the 50 stars on our flag today represent places that are known not as States, but instead as "Commonwealths." Which, oddly enough, is both about as American and as socialist as you can get.
How's that for a lot of stuff to digest?
To finish, let's summarize what we have.
There are a lot of reasons we want to do some sort of reform:
- we pay more than anyone else in the world for health care, but lots of other countries have longer life expectancies and lower infant mortality rates.
- we need to do something about the nearly 50,000,000 Americans who have no access to care outside of the emergency room, both for moral and for economic reasons.
- in 10 years the cost of health insurance will be somewhere around $2,000 a month for the average family. Businesses cannot afford this, so as time goes on more and more people who now have coverage through their jobs...won't.
- if nothing changes those who are able to keep their insurance at work should expect their employers to move to plans with $5,000 to $10,000 deductibles.
- every year, almost 900,000 American bankruptcies are related to health care costs. 3/4 of those people had insurance, but their insurers refused to cover their medical bills, and they went broke.
- if you have a significant claim, or you lose your job, you stand a good chance of losing your insurance, which means you are not very likely to be insurable again.
We talked about some reform ideas, with protections against "preexisting conditions" and cutting people off for having claims being the most likely reforms to be turned into law, a "public option" being less likely, and "single payer" being highly unlikely.
There is money available to pay for this. Roughly 2/3 would come from treating the uninsured in cheaper ways than we do today, and the other 1/3 could be raised by letting a tax cut for very wealthy people expire.
The good news here is that lots of other countries are doing better than we are, and spending half the money we are doing it; which means there are solutions available that do work and do save money.
If we can put some of those solutions to work here, it would probably help us, too.