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by Debbie Trice, July 2009
Health care reform is the #1 political issue of Summer 2009. It is also gearing up to be the #1 political minefield of 2009.
Why? Like the fabled blind men and the elephant, each of us experiences health care in America differently, each of us perceives different aspects as needing reform, each of us wants different aspects to remain unchanged.
Another source of controversy is that reform on a national level — e.g., reining in the total cost of health care as a percentage of GDP — will result in both winners and losers on a personal level. The details of the reform legislation will define who wins and who loses and by how much.
The majority of Americans have adequate health insurance and are satisfied with the care they receive. Most are willing to make small sacrifices to guarantee that everyone can get basic care. But we can expect that the deep pockets with the most to lose will shape their argument against reform to inflate those small sacrifices beyond recognition.
Before the battle lines are drawn, let's consider what we, as individuals, mean when we talk about health care in America, what the problems are, and what we don't want to lose. Let's also look at some of the half-truths and arm ourselves with rebuttals.
Health Care vs. Health Insurance
In discussions of health care reform, the terms "health care" and "health insurance" are often used interchangeably. This is a mistake.
"Health care" encompasses the treatment one receives from medical professionals and facilities, drugs, tests and medical devices. Issues for reform include:
- The quality of the treatment provided and whether it is effective for the medical condition,
- The relative importance of prevention vs. early detection vs. treatment in the delivery of services,
- Access to services, e.g., whether a medical practitioner is geographically available, and
- Development of innovative treatments.
"Health insurance" deals with how our health care is paid for. Some have suggested that Americans spend so much on health care because those with insurance don't know the true cost of the services received. If we knew, we might opt for lower cost alternatives.
Health insurance plans are available from many types of providers:
- Public (government-provided) plans include Medicare, Medicaid, and SCHIP (for children).
- Private plans are offered by both for-profit and not-for-profit companies to individuals and affinity groups.
- Employer-provided plans are usually employer-subsidized versions of group plans offered by for-profit insurance companies. (Although there is competition among insurance companies for the employer's business, the choice of plan is usually based on the employer's bottom line, not the employees' health insurance needs. The employees can choose the employer plan — or nothing. Obama's "public option" would offer them an alternative.)
- The uninsured (or self-insured) include both people who are unable to obtain and/or afford insurance and people who plan to pay for their care themselves because of their good health and/or substantial wealth.
The problem with health insurance
Most of us expect our insurance to pay for both basic well care — e.g., regular check-ups, age-appropriate screening tests and immunizations — and cover the cost of curing us if we get sick or injured. And we expect the cost to us — premiums and co-pays — to be "reasonable." The difference between what we expect and what an insurance provider can profitably deliver is what prompts most of our calls for health care reform.
It all comes down to how the insurer controls its costs. These costs fall into three categories: return on stockholder investment, administrative overhead and payment for health care services.
Return on stockholder investment: Private for-profit insurance companies must make money for their stockholders. This makes it difficult for private plans to compete with public plans and is the reason the insurance industry is fighting "the public option." In their talking points, they blur the line between health care and health insurance when warning against "government making health care decisions for you," and hiding the fact that most users of public health insurance plans like Medicare and the Congressional Health Insurance Plan are very satisfied.
Administrative costs: Claims processing, pre-authorization, marketing and other overhead are said to represent 30% of America's health care costs. The insurance industry admits to 15%, but acknowledges that the system imposes additional administrative costs on physicians and other providers. This contrasts with Medicare's administrative overhead of 2-4%, although health care providers say their overhead is higher for Medicare.
Administrative costs could be trimmed by adopting a standard nationwide claims process and automating medical records, or by adopting a single payer plan.
Payment for health care services: The rationale behind insurance is to spread the risk of financial loss across a large number of people. Premiums are pooled to pay medical expenses of those who get sick. The healthy get peace of mind from knowing their expenses would have been covered if they had gotten sick.
Actuaries can calculate how large the pooled premium should be based on the characteristics of the individuals in the pool. The more younger and healthy members, the lower the risk/cost. The methods insurers use to reduce their risk are the reasons for most of the calls for health care reform.
- Discourage or prevent high risk people from joining the pool. Charging people with "pre-existing conditions" more or denying them coverage altogether keeps the total risk/cost down. One suggestion for reform would outlaw that practice, spreading the cost of covering less healthy people to everyone in the pool. If everyone is required to get insurance, some of these added costs would be shared by young and healthy people who currently opt out.
- Ration care. Rationing is a fact of life. Pre-authorization, transplant waiting lists, lifetime limits on certain services, denying coverage for screening tests, drug formularies — the list goes on. The differences are who decides and what criteria they use. The attack ads will portray "government bureaucrats" as villains, as if decision-making by insurance company clerks is ideal. Another scare tactic will be to suggest that treatments not covered under the reform plan will be unavailable. Just like now, if you are willing and able to pay for a service yourself, you can get it. Some health care reform suggestions for rationing include only covering treatments proven to be effective, paying health care providers for the typical cost of treating an illness, and offering physicians incentives to rein in the "worried well" (healthy individuals who overuse medical care).
- Reduce fees for service paid to providers and delay payments. At some point, the medical care providers can't afford to accept insurance from some companies. When patients learn they either have to switch doctors or pay out-of-pocket, their anger is usually incorrectly directed at the doctor.
Speak Up
Our voices need to be heard. Don't let meaningful health care reform be killed by misinformation.
Talk to your neighbors. Write Letters to the Editor.
Feel free to use ideas and talking points from this article. To be most effective, each letter should be limited to one key idea or message.
Note: This essay was adapted from the July issue of FOCUS, the newsletter of the Democratic Club of Sarasota.
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