Health Reform Requires Full-menu Insurance Exchange, including Low-cost

Printer-friendly

Email article

Related subjects: Economic Recovery, Healthcare Policy, In the Loop, J.E. Robertson, Legislation, Opinion, U.S. Economy, U.S. Law, U.S. news, U.S. Politics Comments (1)

18 August 2009 :: J.E. Robertson

Opponents of healthcare reform have taken the so-called “public option” as a rallying cry in order to use vocabulary painting all reform as “socialist” and in order to prevent reforms that would put profit-reliant insurers under pressure. Proponents of the public option, including Pres. Barack Obama have called on opponents to offer an alternative that would do something comparable to correct market distortions that rule out those unable to pay for expensive insurance.

The public option is termed that way, because it would be just one option on a health insurance “exchange”, where consumers could search through a menu of policies, including costlier private sector options, or low-cost options the private sector chooses to offer. Such an exchange could also include private not-for-profit insurance plans, run by charities or foundations, and cooperatives, in which small businesses, communities and individual consumers come together to create policies more in line with their needs.

What is perhaps most cynical about attempts to “kill” the public option is that the opponents determined to sow confusion and fear about the program’s nature have offered no alternative whatsoever that would be able to produce comparable benefits to consumers or prevent abusive pricing and denial-of-coverage schemes by private insurers. In a sense, the entire effort to kill the public option is an effort to make sure that consumers not poor enough for Medicaid but too poor to buy private insurance have no healthcare option at all.

There has been an effort by some conservative Democratic members of Congress to support “heathcare co-ops” as a reasonable or even equivalent private-sector alternative to the public option for buy-in health insurance. Some even argue the government could provide the same kind of scaleable cost subsidies that the public option is supposed to include to make sure as few people as possible fall through the cracks and wind up without insurance.

It would be a great achievement if the nation’s economic and medical infrastructure shifted to permit such a new wave of low-cost high-coverage health insurance co-ops to extend coverage to the 52 million people who currently have no coverage and to some of the tens of millions more whose coverage is partially or wholly inadequate. It would be an astonishing market “correction” that would permit such co-ops to put significant pressure on the larger private health insurers, pushing their prices down and expanding their coverage.

But there is no serious work being done in Washington, DC, to achieve such market conditions. Some opponents of such a scheme argue that a proliferation of small co-ops would require much more detailed and constrictive regulation of the private for-profit insurance industry than a public option would — the public option would compete more effectively by virtue of its size and its government backing, and could be legislated to meet new standards without forcing private insurers into the most constrictive regulations.

The goal of the no-public-option crowd is to sow confusion. No good policy will come from mass confusion over what is being done to make policy. And that’s the idea: to force bad policy that will leave the president looking decidedly shabby or to derail the initiative altogether, for political or private gain. A party, a political movement, a policy-agenda, based on sowing confusion and confounding debate and process is essentially of no use, and any party should be wary of building its future on such shaky ground.

The fact is: the so-called “public option”, just one menu item on a full menu of health insurance options —the healthcare exchange—, is the most market-friendly reform concept put forward in decades, in that it operates on the logic of the marketplace. If insurers say they cannot compete, then they are not as efficient as they argue, and the benefit to be had from deferring to them is clearly minimal.

Insurers have to be able to “compete” with the public-option standard —turn no one away, deny no doctor-ordered treatment, keep patient costs low— or they are not making any improvement on the current system, which is failing financially. If co-ops would allow this new standard to dominate the market and reform insurers’ business models, then they could be the way to go, but the public option will be a stronger incentive and will require less intensive regulation.

Another potential option is the co-op of co-ops, a means of pooling the membership and means and broadening the reach of private non-profit health insurance co-ops. A national co-op of co-ops could allow the non-profit model to compete with the for-profit model, entirely within the private market. But some fear such a mass cooperative plan would limit the discretion of co-op organizers, open itself up to being run by private insurance executives and risk making the mass co-op another high-cost private insurer.

The key to the healthcare co-op model is consumer management and a non-profit approach. Currently, the nation’s largest non-profit healthcare co-op HealthPartners, based in Minnesota, directly employs doctors and pays out more than Medicare. With the hot glare of major national reform now focusing in on the co-op methodology, there is mounting consensus that new co-ops, or a national co-op, would have to allow patients to choose their doctor and lower costs still further, because the public option would do so.

One of the major points of confusion about the current debate on the public option is the idea that it would limit choice of doctor, limit choice of treatments, limit total reimbursements for needed care, and deny treatment or coverage. The public option is specifically designed to ensure none of those things happen, yet all of them are customary of not only private for-profit insurance, but of existing cooperatives.

We should take a breath and look closely at what reform is intended to do. For the record, there is no secret conspiracy to socialize the American healthcare system. The private health insurance industry not only routinely denies coverage and limits treatment, it also specifies which doctors a patient is permitted to see and interferes with doctors’ recommendations for care, modifying, overruling or denying prescribed care as a matter of policy, without reducing costs to the patient.

The public option would allow patients to choose their doctors, would allow doctors to decide what course of care is most appropriate, would not put a cap on care or deny coverage. And, it would be administered with the specific purpose of not only achieving all of these standards, but to do so while lowering costs to the patient. Healthcare reform must achieve these goals; it’s not a matter of ideology, but of saving the American healthcare system, curing the sick, preventing needless deaths, and avoiding an economic collapse.

The disparity between what the public wants healthcare to be and what it is when it depends on a private insurance company’s good will has been a major driving factor in creating the nationwide momentum for healthcare reform. Members of Congress who support the inclusion of a public option in the healthcare insurance exchange are simply reacting to public sentiment about the failings of the existing system.

In June, OurFuture.org reported the following:

Eighty-three percent of Americans favor and only 14 percent oppose “creating a new public health insurance plan that anyone can purchase” according to EBRI, a conservative business research organization. This flatly contradicts conservatives’ loudest attack against President Obama’s plan to provide quality, affordable health care for all.

The Employee Benefit Research Institute (EBRI) calls itself “the most authoritative and objective source of information” on the issues of employee retirement and health benefits. Founded in 1978, EBRI says it “is the gold standard for private analysts and decision makers, government policymakers, the media, and the public.” And EBRI is funded by many of the largest corporations in America.

It’s important to understand the disparity between what is being reported about the public option and what it actually is designed to do for the average American; it’s equally important to understand the disparity between what is being reported about public sentiment and what the public actually wants in a fully functional, fair market for healthcare.

Consumers are drowning in the current system, because private insurers have systematically avoided covering fully 64% of the population —47% covered by Medicare, Medicaid, SCHIP, military and VA plans, 17% with no insurance at all— and costs cannot be contained by the existing system. It is consumers of every income level who are demanding better quality of coverage and better value for their costs.

The average consumer is not being represented by any of the heat and light we’ve seen at tumultuous town hall meetings. The population of the uninsured, fully 17% of the American population is virtually absent from mass media coverage of the issue. The gravity of the situation is beyond what is being reported, and Congressional leaders “unsure” about the public option clearly are not aware of the fundamental problem or of the details of proposed reforms.

Any public opinion survey that asked respondents about “the public option” without explaining the specific benefits it would bring is suspect. Any public opinion survey that asked respondents about “socialized medicine” —which is not even on the table—, then reports responses as pertaining to the question of a public option on the health insurance exchange, is so dishonest as to warrant being shunned by major media outlets.

Healthcare reform that succeeds in preventing catastrophic persistent price inflation must cover the uninsured, eliminate the problem of uncompensated care, end denial of treatment —profit-driven “rationing of care”—, and bring costs down across the board. To do this through a market-based strategy that strengthens our hybrid public-private system —without imposing crushing comprehensive mandates and regulations on the insurance industry, and without ballooning the deficit through wasteful subsidies to private firms—, the public option will likely have to be part of the fix.

A low-cost option on the healthcare insurance exchange will be integral and indispensable, but a “public option” need not be the only program nor so big as to replace the private insurance market. Without a new affordable market player that does not deny treatment, reforms will be unable to reduce costs or make private insurers sustainable as a major part of the healthcare system.

   Send article as PDF   

Printer-friendly

Email article