US Healthcare

Government’s role

I believe the fundamental argument for free enterprise:  that free markets are the most efficient means to allocate scarce resources. But this is not like a law of physics that is true in every instance. Free markets without government parameters do not work for healthcare. Some people will go without adequate healthcare in a totally free market. Also, we can’t rationally shop for healthcare when we are sick as we would for most other consumer goods. (Even if we are not sick, there is no price transparency or price coherency.) Yes, we can shop for insurance when we are not sick, but that is where we need the government.

Normal insurance underwriting does not work for healthcare. Not only will a person with a serious preexisting condition be denied coverage, but any previous health problem that an otherwise healthy person may have had will be “excluded” from coverage. Anyone over 50 who shopped for insurance on the individual market before the ACA knows this first hand. We can’t complain about this too much. This is what insurance companies do. Their actuaries are very good at gauging their risks. This is why government must be involved in regulating insurance for healthcare.

Our current situation

Apparently, we are incapable of comprehensive reform to how we pay for healthcare. In 2009 Democrats passed the ACA by only one vote. In 2017 Republicans could not agree on any substantive reform. John McCain has predicted that simply making incremental reforms may be our only option to make progress. If piece meal steps are our most likely way forward, let’s get to it.

We can’t afford our healthcare. The government can’t afford it. Employers can’t. Individuals can’t. In 1965 we spent 5% of our GDP on healthcare. Today we spend 17%. Is the answer to spend 20%, 22%, or whatever it takes on healthcare? We spend almost twice as much per person than most industrialized countries. To quote Warren Buffet, “The cost of the service is disconnected from its underlying value.”

While we have some of the best healthcare in the world (best survival rates for breast cancer), we have low overall health indexes. To me, that’s a picture of a lack of access to healthcare.

Steps forward

We are in such a crisis situation that we need market stabilization and near term certainty. I support and hope for bipartisan near term measures from the Senate Health Committee chairs, Senators Alexander and Murray, including cost share payments to insurance providers.(This refusal by some to do anything to help the ACA work better – even in the short term – is just toxic.)

Beyond the immediate near term, a bipartisan Problem Solvers caucus is working on solutions – piece by piece. There is a certain genius to moving piece by piece (albeit very inefficiently). It is easier for partisans to compromise on incremental steps instead of compromising on very dramatic comprehensive measures.

Some “incremental steps” I support:

–          Raise the threshold to 500 from 50 on the number of employees at which an employer is required to provide coverage. I would eventually want to end the employer mandate.

–          Raise the threshold to 40 from 30 hours for the ACA’s definition of fulltime worker.

–          Direct HHS to issue regulations to allow states to enter into compacts to enable insurers to sell policies across state lines. This is already allowed under the ACA. Republicans could have accomplished this as part of their first 100 days agenda. I doubt that it will change much. 14 states already permit out-of-state insurers to sell policies in their states.

–          Expand competitive bidding for Medicare Advantage programs. I also propose allowing people 55 and older to enroll in Medicare Advantage. This could be seen as a hybrid type of public/private option.

–          I support the so called “Cadillac” tax. It is not really a tax. It’s a “claw back”. It is a limit on the level of health insurance as an employee benefit that the government will give preferential tax treatment to (i.e. a deduction).

 

 

Medicare

The low hanging fruit for cutting costs is negotiating lower drug prices for Medicare (which Republicans made off limits part D in 2006.) How many times do people need to point this out?

A pilot program to bundle costs for treatments and a pilot program where Medicare and providers share savings from provider innovations are part of the ACA. Both have demonstrated cost savings. (Some very substantial.) Republicans have ended both these programs and have taken a step backwards in controlling costs.