Blog debate with Don McCanne and Jason Rosenbaum
Question One: “How does your solution help us get the runaway train that is the cost of health care in this country under control?”
As President Obama said last week at the White House Health Care Summit, quoting Health Care for America Now’s National Campaign Director, Richard Kirsch, “We can’t have a false dichotomy between coverage and costs.” If we are serious about lowering costs, we also must be serious about bringing everyone into the health care system.
When you have no health insurance, primary and preventative care is often not an option, leaving you with expensive emergency care. The plans President Obama, Senator Max Baucus, and Health Care for America Now are supporting cover everybody by allowing them a choice between keeping the insurance they have or opting for a new public health insurance plan that is open to everyone and made affordable based on a family’s ability to pay, in addition to regulation on the insurance industry to force them to end their bad practices like habitually dropping expensive customers. By covering everyone, preventative and primary care will become accessible and can be incentivized, producing cost savings.
Cost savings will also be realized by sheer competition. In our plan, the public health insurance option competes on a level playing field with private insurance, driving both to be more efficient. As Jacob Hacker, a key architect of our plan, argues:
A public plan, says Hacker, is “a prerequisite for substantially improving the quality and effectiveness of American medical care.” Private insurers keep their claims and effectiveness data proprietary. They argue that the data amounts to a trade secret: It is what they use to glean analytical insights and better their product. Releasing it would deprive them of competitive advantage. Medicare, conversely, shares its records, and they’ve been responsible for some of the most important health policy insights in recent years.
Competition between public and private plans could actually be more efficient than either system alone, as each could function in a way to keep the other honest.
A public health insurance option’s overhead costs, if they are in line with Medicare’s 3%, will be much lower than private insurance, which is more like 10-25%, saving taxpayers money. According to the Institute for America’s Future report by Jacob Hacker, we could save $46 billion per year this way [pdf].
Finally, the public health insurance option would drive down cost using its bargaining power to negotiate better prices from providers and drug companies, much like Medicare has in the past.
Overall, according to a Lewin Group analysis of our plan, we could realize $1 trillion in savings over 10 years.
This is a significant savings. By covering everyone in this way, we will “bend the curve” of our health care costs, getting them under control so they don’t continue taking up more and more of our GDP.
Response from Dr. Don McCanne:
Of all of the factors contributing to our very high national health expenditures, our fragmented system of financing health care bears much of the responsibility for perpetuating many of the dysfunctions in our system. With a great multitude of private plans and public programs, no single entity, not even Medicare, has adequate monopsony power to align appropriate payments that would incentivize the transformation of health care delivery into a high performance system.
We can greatly improve value in our health care purchasing through measures such as the following:
- A single financing system would eliminate hundreds of billions of dollars in administrative waste. We would recover not only the funds wasted by private insurer administrative excesses, but also the huge amount of funds wasted by physicians, hospitals and other providers in their efforts to comply with the complex requirements of a multitude of payers within our fragmented system.
- We have by far the highest health care prices of all nations. A single purchaser would be able to negotiate prices based on legitimate costs plus fair profits, improving value in our health care purchases. Negotiated bulk purchasing of pharmaceuticals is an obvious example.
- Global budgeting of hospitals would reduce waste and improve value.
- Separate budgeting of capital improvements would limit excess capacity that can be a driver of excess spending.
- A single financing system would be able to realign incentives to promote primary care medical homes while reducing spending on non-beneficial high-tech excesses. Although information technology and comparative effectiveness studies are being touted as an approach to identifying and reducing excesses, the benefit of these improvements cannot begin to match the efficiency of providing everyone with a medical home. Primary care professionals would be there to help patients navigate our high-tech health care delivery system so that they receive those services that improve outcomes while avoiding those that expose them to intrusive interventions that waste money.
The experiment of establishing competition between a public, Medicare-like insurance program and a market of private plans has already been completed, and it does not provide the efficiency that the proponents tout. Private Medicare Advantage plans have required large overpayments to cover their administrative excesses, including marketing costs, luring healthier patients to their products, leaving more of the sick in the traditional Medicare program.
The battle in Washington should be over adopting a single payer, improved Medicare program for everyone versus continuing with a market of private plans with a public option. Instead, the battle is over whether a public plan should be allowed as an additional option to private plans. The insurance industry and their supporters complain bitterly that a public plan would provide unfair competition for the private insurers. They are correct that they would be unable to compete, but fairness? What is fair about diverting our health care dollars to an industry that is incapable of providing us with an efficient financing system?
Rebutal from Jason Roseanbaum:
The argument that single-payer health care would be more efficient is a straw man. Both health care reform plans would increase efficiencies and save a great deal of money. But only one can get 60 votes in the Senate. It may not be “fair” to include the morally bankrupt health insurance industry as part of a health care overhaul, but considering they represent 1/6th of our economy, it’s not realistic to talk about legislating them out of existence overnight. A public health insurance option open to everyone would be a giant step forward for our country, save billions of dollars per year, and fundamentally reform our health care system. We must remember to not let the perfect be the enemy of the good.
Question Two: “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?”
Don McCanne, MD:
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.
Response from Jason R.
There is no question that the health insurance industry in America has failed at their ostensible goal: To provide health insurance to the people in this country. Their products are not affordable, they waste far too much money on administrative overhead, profit, and marketing, and they spend their days figuring out how to deny people the care they paid for. They will always put their profits over our health.
It is tempting to imagine doing away with the entire industry, as single payer supporters advocate. However, the health insurance industry is a trillion dollar industry that employs hundreds of thousands of Americans. Though they may be the very picture of evil big business, it is unrealistic to propose wiping the entire industry out of existence with the stroke of a pen.
As Atul Gawande, noted physician and veteran of the Clinton White House, put it in the New Yorker, we must build on the system we have to get to quality, affordable health care for all:
It won’t necessarily be clear what the final system will look like. Maybe employers will continue to slough off benefits, and that lifeboat will grow to become the entire system. Or maybe employers will decide to strengthen their benefits programs to attract employees, and American health care will emerge as a mixture of the new and the old. We could have Medicare for retirees, the V.A. for veterans, employer-organized insurance for some workers, federally organized insurance for others. The system will undoubtedly be messier than anything an idealist would devise. But the results would almost certainly be better.
Jacob Hacker backs this up, arguing a combination of public and private insurance may actually be stronger than the two alone:
Public and private insurance each have distinct strengths. Private insurance has been quicker to provide new benefit options and offers greater flexibility in benefit design and payment strategies, while public insurance has proved more stable and better capable of controlling costs while ensuring access, especially for the most vulnerable. Acting alongside each other, with enrollees able to choose between them on a level playing field, public and private insurance can serve simultaneously as a safety valve and a spur for improvement for each other.
This is not the time to be idealistic; health care in America is too much of a crisis. If we can create a system that gives a guarantee of quality, affordable health care for all - and that system can pass through Congress - I hope everyone can get behind it, even if it doesn’t do away with private insurance.
I would agree with Don McCanne that hefty regulation is key to making this kind of system work. Private and public health insurance would have to compete on a level playing field, offering a minimum level of benefits open to anyone that would cover higher-cost customers adequately, effectively outlawing unfair risk-pooling. And I would hope Don would agree that such a plan would require a robust public health insurance option, open to all and affordable based on income, to effectively compete.
If such a plan were to be put before Congress, as seems likely given what President Obama campaigned for and what the leaders of the relevant Congressional Committees have been saying, I would hope single payer advocates would join in common cause to make sure that plan doesn’t get watered down, is passed, and is signed into law. It might not be a plan an idealist would devise, but it will get us to quality, affordable health care for all. And isn’t that the ultimate point?
Rebutall from Dr. Don McCanne:
Jason Rosenbaum and I do agree that today’s private insurers have failed to cover everyone, have failed to provide affordable comprehensive plans, have wasted too much money on administrative excesses, and have devised innovations to avoid paying for care. We disagree that regulation would be enough to enable level competition between private plans and a public option. If the playing field were truly level, the debate is over, because private plans could never compete, as the Medicare Advantage program has proven.
We agree that public insurance is more stable, more able to control costs, and better at ensuring access for all. The alleged advantages of private plans – greater flexibility in benefit design and payment strategies – are not advantages, but rather disadvantages. Having the flexibility to reduce benefits and shift more costs to the patient is precisely what we need to move away from.
Jason says that this is not the time for idealism, and I agree. Crafting a flawed program merely to satisfy the pro-market ideologues is the wrong approach when what we need is the pragmatic approach of enacting a program that actually works – a single payer national health program.
In his rebuttal to Question 1, Jason said that we should not let the perfect be the enemy of the good, but why on earth would we want to let the mediocre be the enemy of the perfect?
Question three: “What are these plans doing to ensure there are enough physicians, particularly primary care practitioners, to cover the huge new influx of patients with coverage?”
The lack of providers, particularly primary care providers, in our system is extremely troubling. We don’t even have enough providers to go around now, especially in rural or other under-served areas, much less when millions more enter our health care system when President Obama’s health care plan is signed into law.
President Obama has been a strong supporter of primary care providers. In fact, he ran for President on a promise of providing a primary care physician for every American. Many of the ideas Obama ran on can concerning providers can be reviewed at http://www.milandevries.org/dfo/info.html. They include things like increasing reimbursement rates and expanding training grant and loan-repayment options for primary care providers.
Health Care for America Now supports expanding the number and reach of primary care providers. We are especially concerned with making sure primary care providers reach under-served communities like rural areas and communities of color, and that those providers are culturally sensitive to the people they are providing care to. Making sure we all have enough providers to give us the care we need is a crucial part of reforming our health care system.
Response from Dr. Don McCanne
The stewards of a single payer system are particularly well suited to monitor the needs of the health care system, and then to make spending decisions that will improve allocation of our resources. Incentives need to be realigned to attract more physicians and nurse practitioners into primary care.
Budgeting of capital improvements will ensure that appropriate facilities are available where needed. Primary care medical homes not only provide patients with ideal access to the health care system, but they also provide more pleasant and less stressful practice environments making primary care a more attractive choice for our professionals.
We already are increasing the numbers of medical schools and the sizes of the classes. There is also a pressing need for more nurse educators to meet the expanded requirements in the nursing profession. Government policies and directed funds can provide support to the teaching institutions to ensure adequate manpower in the health professions.
Fortunately, many of the uninsured are young and healthy. Those uninsured who do have needs are receiving about one-half of the care that the insured receive, even though payment issues remain a major problem. There is a modest pent-up demand for health care, and there will be transitional problems, but it is anticipated that the initial surge will not be so large that it would overwhelm the system. We can handle it.
The attitude of the payers really counts. Do we want control of our health care dollars in the hands of private insurers who spend their time trying to figure our how to avoid paying for our care, or do we want control in the hands of our own public administrators who try to ensure that adequate facilities and health professionals will be there when we need them?
Rebutal from Jason R.