MCC Washington Memo

The debate is on. At the time of this writing, there are no specific health care reform bills, but the rhetoric is heating up as Congress holds hearings, President Obama holds press conferences, and special interest groups on all sides weigh in. This article attempts to answer some of the most frequent questions being raised.

What’s wrong with the current system?

In a nutshell, too many are left without insurance and costs are skyrocketing. Currently, 47 million Americans lack health insurance. Another 16 million are underinsured. Health premiums have almost doubled in the past seven years alone.

Another problem is the current system’s focus on treating illness rather than promoting wellness. When doctors and other providers are paid a fee-for-service, there is a perverse incentive for repeat visits. Insurance companies, on the other hand, work to reduce visits — some through prevention and wellness programs, others by looking for ways to deny paying for legitimate services.

Why is universal coverage important?

Those with insurance end up paying for those without. This is because, when the uninsured visit an emergency room, the hospital often ‘writes off’ their care. The hospital increases the costs of their services to those with insurance to compensate, resulting in a ‘hidden premium tax’ that, according to some estimates, is as high as $1,000 per person per year.

Additionally, those without insurance often delay getting medical care until their condition is severe. This increases not only their suffering, but also the cost of their care. And many young, healthy individuals decide not to purchase insurance at all, skewing insurance rolls toward the older and sicker and increasing premiums.

Universal coverage is typically achieved in one of two ways — by establishing a single payer system where the government provides care for everyone, or by establishing an individual mandate where every citizen is required to purchase insurance (and providing subsidies for those who can’t afford the cost). Currently, the U.S. is the only industrialized nation not to have some form of universal health care.

But we have the best health care system in the world . . . don’t we?

In a 2000 World Health Organization ranking of the world’s health care systems (based on measures of good health and access to care), the U.S. ranked 37th. More recently, a 2008 study by the London School of Hygiene and Tropical Medicine that looked at preventable deaths ranked the U.S. last out of 19 rich nations.

With socialized medicine, won’t I have to wait in long lines and pay higher taxes?

First, not all universal health care systems are alike. In France, which comes out at the top of the two studies cited above, citizens do not consider their system socialized medicine. It is a combination of both private and public insurance where consumers retain their choice of doctors and there are no waiting lists for elective surgery. Cancer patients, for example, can get any drug, even experimental ones.

While it is true that the French pay much higher taxes, in terms of health care, it is important to look at the overall cost. In France, the bulk of health care costs is paid through taxes. In the U.S., costs are paid by employers and consumers. Annual health care costs in France are approximately US$3,300 per person, compared with $6,400 in the U.S. (2005). And yet the French are arguably able to provide better care to their citizens. In one of the most basic measures of health, infant mortality, France has one of the lowest rates in the world.

Won’t health care reform hurt the already struggling economy?

In the current employer-based system, as people lose their jobs, many families also lose their health insurance. Half of all bankruptcies in the U.S. are a result of health-related bills.

According to a study by the Kaiser Family Foundation, health insurance premiums for employer-sponsored family plans have risen by 119 percent, while wages over the same period increased by 34 percent. It is estimated that in 2009, 17.6 percent of our GDP will be spent on health care.

Small business owners — and large ones, too — face difficult choices in providing quality care to their employees in the face of rising costs. This burden, and the tying of health benefits to employment, can stifle flexibility and innovation for both employers and employees. Couple this with the lost productivity due to delayed treatment and the negative effects on the economy are quite serious.

What proposals are on the table?

A single-payer system, where the government acts as a single administrator for all health care services (similar to Medicare) is unlikely to pass in Congress. More likely to pass is a combination of public and private insurance options, coupled with an individual mandate.

The public insurance option is sure to be one of the big sticking points in Congress. The public plan, run by the government, would help to cover those who cannot afford to purchase private insurance. The idea is that such a plan could keep costs down because the federal government, being such a big player, would be able to negotiate significantly lower costs from doctors and hospitals.

Republicans in Congress have expressed concerns that such a public plan will present unfair competition with private plans. Doctors are also concerned about potentially lower payments. Democrats argue that the public option is needed in order to lower costs and that, without it, universal coverage cannot be achieved.

Some type of individual mandate is also likely to be included. The state of Massachusetts enacted such a mandate in 2006 requiring every citizen to have insurance, requiring employers to help pay for costs, and offering subsidies for those who can’t afford it. The advantage is that it builds upon the existing employer-based system; the disadvantages are cost, complexity, and enforcement.

Proposals to shift the focus of health care to disease prevention and wellness look to both reduce costs and improve health. There are interesting alternatives to the fee-for-service structure being discussed—such as paying for episodes of care, a flat fee per patient, bonuses for quality, and fixed salaries for doctors.

How do we pay for all this?

There are essentially two strategies: controlling costs and finding new sources of revenue. The ideas for controlling costs include Health Information Technology (using electronic records to lower administrative costs and better share information), studying the effectiveness of treatments, and focusing on prevention and quality. So far in the debate, there has been little discussion about limits to care, including end-of-life care.

Ideas on the revenue side include increasing taxes on alcohol, tobacco, and even soft drinks. There is also a controversial proposal to tax employer- provided health care benefits.

Is anyone talking about lifestyle choices?

In May, President Obama met with employers and unions who have implemented various wellness efforts such as programs to quit smoking, free gym memberships, healthier food in cafeterias, health screenings, and chronic disease management. Employers have found such programs to significantly reduce health care costs, so it is likely that personal accountability will be part of the discussion.

The health care debate is an important one to follow, not only because it will affect each of us personally, but because it is crucial to ensure that the voices of the least and the last are lifted up. For too many people, this debate can mean the difference between solvency or bankruptcy, between care or suffering, between life or death.