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Only public option will save health costs
Robert Reich
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TEXT OF COMMENTARY
Kai Ryssdal: For all the president's politicking about it the past couple of days, work on overhauling the health-care system didn't officially start until this morning. That's when the Senate Committee on Health, Education, Labor and Pensions held its first formal hearing on the topic. Between the White House and Congress there are a couple of reform plans floating around out there, all of them with trillion-dollar price tags. But other than how to pay for it, the biggest fight is shaping up to be whether the government ought to offer some kind of public insurance option. Commentator Robert Reich says really there's only one choice.
ROBERT REICH: The only way to ensure that medical costs will be contained by any upcoming health-care bill is to include a public, Medicare-like option that people can choose as their health insurer over a private insurer, if they want.
Although most Americans who know about the issue favor a public option, and the president has said he wants it in the bill, don't bet on it being there in whatever emerges from committees days or weeks from now. Most Republicans don't want the public option. And many Democrats are being lobbied heavily against it.
Pharmaceutical companies don't want a public option because they fear it will be so big as to have substantial bargaining power to get low drug prices. And private for-profit insurance companies don't want a public option because they fear it will under-price them. After all, the public plan won't have to show a profit -- it just has to cover costs.
Both these powerhouse industries are saying a public option would be unfair. But what's unfair to them may be a boon to you and me if it means lower prices and premiums.
If politics is the art of compromise, as the saying goes, we may get a public option, but one that's barred from negotiating low drug prices, or prevented from charging less than private insurers, or allowed to come into existence only if, at some point down the road, private insurers have failed to lower medical costs and expand coverage by some amount.
In other words, we'll get a public option that won't be able to deliver substantially lower prices. Which is the whole point of having it in the first place, and the whole reason why drug companies and private insurers don't want it.
So there's really no room for compromise here. Either we'll have a public option that disciplines private insurers and offers lower prices and premiums and thereby contains health-care costs or we won't. In the meantime, don't be fooled by the label. Just because a health-care bill includes something called a public option doesn't mean it's the real thing.
RYSSDAL: Robert Reich is a professor of public policy at the University of California, Berkeley.
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The Three Questions you need to ask your representatives.
1. Did you vote for American taxpayer funded health care for Iraqis?
2. Did you vote for American taxpayer funded health care for Afghanis?
3. Will you vote for American taxpayer funded health care for Americans?
When I posed this question to former Sen. Smith's staff during the campaign what I got was a long period of silence and then "we never thought of that, we'll get back to you" which they never did.
I think, given the fact that health insurance premiums have doubled over the last decade at an unsustainable rate three times faster than wages, the status more than 97% of all Massachusetts residents,the highest in the U.S., are now covered could be touted as success model, which features 'mandating insurance' and an option to purchase coverage through the "Connector," a program in which private insurers are required to offer coverage to those who can't get other insurance, regardless of age or health status.
But the Massachusetts model has a problem with costs control, because it relies exclusively on private insurers as Massachusetts' insurers implemented average premium increases of 8% to 12% only in 2008. And it highlights the necessity of having a publicly financed insurance option
To be sure, in case the president's proposal with respect to the strong public option, medical IT, increased efforts in prevention, and a broader array of cost-saving plans and beyond adds to the Massachusetts Plan with the provision of employer mandate and an individual mandate, the cost containment does not matter at all. And most importantly, the promising stem cell research is making its way.
Human health, in a sense, may precede all the other basic human rights as everything means nothing for someone without it. As far as my common sense goes, the major role of government will be to protect basic rights of the public from any threat. That is why all of the industrialized countries have public policy in place, I guess.
Under this premise, the strong public option needs to be cited as a part of 'PROTECTION' like anti-trust law rather than intervention.
The intention to introduce the public choice would be to protect the uninsured, economy and keep the medical industry honest, not be to drive it out.
Hopefully, the health industry can provide reasonable,fair, competitive prices and quality service via tireless innovations like most of the EUROPE, instead of concerning about its monopoly prices, otherwise the forthcoming health start-ups will likely fill in the blanks with competitive terms over time.
We already HAVE SOCIALIZED MEDICINE in the form of the Emergency Room. But that is THE LEAST effective treatment for all except real emergencies. If we had affordable preventative health care, the ER would be reserved more for real emergencies and the costs of ER would be a lot lower.
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So the question is not shall we socialize medicine, too late ... the question is, will we make it cost-effective? Its obvious now to me that the private insurance model has FAILED because they make their profit by denying claims!
Put another way, the insurance companies pay one or two people good money to ensure that thousands of other people are denied the claims.
This lack of affordable health care is DESTROYING AMERICA'S ENGINES OF INNOVATION: The small business/nonprofit that enable those oddball people with inspired ideas (that threaten the Dilbert Management that tends to run larger orgs). Those small orgs/ businesses can't hire good employees as well since they can't offer health insurance. And those inspired oddballs must choose between following their inspiration (and risking early and painful death) or their soul and Soulless.Inc that is also large enough to provide health insurance.
And starting your own business? Same death-match.
America cannot AFFORD a lack of affordable health care. The overhead paid to the worthless MBAs that run most of these "Ïnsurance" companies cost too much.
I am ready to try some different mistakes.
And to those that ASSUME that a "public option" would somehow intrinsically HAVE to be a disaster - and ask for one example of something the government did pretty well:
A model that I would use:
The US Postal Service.
That "public option" did not prevent the creation of UPS etc.
And really, it mostly works pretty well.
Cancer patient tells of rips in health insurance safety net
* Robin Beaton's insurance rescinded her policy days before her mastectomy
* Hearing focusing on "post-claims underwriting" in individual insurance market
* Subcommittee grills CEOs on their rescission policies
* Insurance companies insist rescission is rare and people can appeal
(CNN) -- Robin Beaton found out last June she had an aggressive form of breast cancer and needed surgery -- immediately.
Her insurance carrier precertified her for a double mastectomy and hospital stay. But three days before the operation, the insurance company called and told her they had red-flagged her chart and she would not be able to have her surgery.
The reason? In May 2008, Beaton had visited a dermatologist for acne. A word written on her chart was interpreted to mean precancerous, so the insurance company decided to launch an investigation into her medical history.
Beaton's dermatologist begged her insurance provider to go ahead with the surgery.
"He said, 'This is a misunderstanding. This is not precancerous. All she has is acne.' ... He said ,'Please don't hold up her cancer surgery for this,' " Beaton, 59, said as she testified at a House subcommittee hearing on the terminations of individual health policies by insurance companies.
Still, the insurance carrier decided to rescind her coverage. The company said it had reviewed her medical records and found out that she had misinformed them about some of her medical history.
Beaton had listed her weight incorrectly. She also didn't disclose medication she had taken for a pre-existing heart condition -- medicine she wasn't taking when she originally applied for coverage.
"I didn't know what to do. The hospital wanted a $30,000 deposit. I was by myself. I didn't have that kind of money," Beaton said through tears. "Can you imagine, having to walk around with cancer growing in your body? With no insurance. It's the most terrifying thing in the world to not have anybody to turn to or anywhere to go."
Beaton, who worked as a registered nurse for three decades, charged that the insurance company "searched high and low" to pull out anything on her so that they would not have to pay for her surgery.
Beaton turned to Texas Rep. Joe Barton for help. Barton said his staff went to work, but the insurance company, he said, was "unyielding." Barton appealed to the company's president, who promised to investigate personally. The president called Barton back within four hours and said the coverage would be reinstated.
Beaton underwent surgery in October, but by then her tumor had grown from two to three centimeters to seven. She had to have all the lymph nodes removed in her arm.
Beaton is one of more than 16 million Americans who have individual health insurance policies. She and two others testified Tuesday about their experiences with insurance rescission.
The witnesses charged that insurance applications are purposely long and confusing, and that companies look for any discrepancy to avoid covering expensive treatments.
The hearing, which was a result of a yearlong congressional investigation in the individual insurance market, examined "post-claims underwriting," a process by which insurance carriers cancel an individual's policy after providers submit claims for medical services they received.
"Overall, what we found is that the market for individual health insurance in the United States is fundamentally flawed," said Rep. Henry Waxman, the chairman of the House Committee on Energy and Commerce.
One of the witnesses, Wittney Horton, said her coverage was canceled after her carrier said she did not disclose that she had taken a drug prescribed for weight loss and because of her irregular menstrual cycle. Her carrier sent her a letter saying they would not have accepted her had they known she had "polycystic ovaries," a condition she did not know she had.
Peggy Raddatz testified on behalf of her brother, who was diagnosed with stage four non-Hodgkin's type lymphoma. In the midst of his chemotherapy treatment, his coverage was rescinded and he was not able to receive the stem cell transplant needed to save his life.
Raddatz's brother was told his coverage was canceled for failing to disclose that, unknown to him, a doctor had once noted in his file that a CT scan showed a small aneurysm and some insignificant gallstones.
Peggy Raddatz worked with the Illinois attorney general's office and eventually was able, after two appeals, to get her brother's coverage reinstated.
Insurance companies argue rescissions are relatively rare, but Waxman said the practice saved the companies $300 million over the past five years. Waxman said he and the insurers agree the solution to the rescission problem is to pass comprehensive health reform legislation.
The CEOs of Assurant Health, UnitedHealth Groups' Golden Rule Insurance Co. and WellPoint's Consumer Business also testified at the hearing.
Don Hamm, the CEO of Assurant Health, said his company regrets the "necessity of even a single rescission."
He said the company has a fair rescission investigation process: When the company becomes aware of a pre-existing condition that was not disclosed on a person's application, a senior underwriter reviews the information to determine if the omission was "material" to the underwriting decision.
A manager verifies the analysis. If the omission was not material, the review is complete, but if it was, the application goes to a review panel, which includes a physician. The panel evaluates the information and makes a decision. The amount of the claim is not revealed to the panel, Hamm said.
There also are multiple opportunities for a person to appeal -- including by means of an independent review panel, he said.
Richard Collins, the CEO of Golden Rule, noted that rescission "has long been recognized by the laws of virtually every state."
"Rescission is uncommon, but unfortunate, and a necessary recourse in the event of material, and at times intentional or fraudulent, misstatement or omission on an insurance application," he said.
Less than one-half of 1 percent of individual insurance policies were terminated or rescinded, he said.
Brian Sassi, president and CEO of Consumer Business, said WellPoint is proposing a set of rescission regulations with new consumer protections.
"In addition, the health insurance industry has proposed a set of comprehensive and interrelated reforms to the individual health insurance market as a whole. The centerpiece of this proposal is the elimination of medical underwriting, combined with an effective and enforceable personal coverage requirement," he said.
Members of the subcommittee grilled the CEOs on their rescission policies -- including the fact that some companies will not take on clients who have had insurance rescinded in the past -- but the companies maintained that rescission is not about cost.
Asked if they would commit to never rescinding a policy unless it was intentionally fraudulent, all of the CEOs said no, noting that a commitment like that does not coincide with the state laws and regulations they follow.
"Doesn't it bother you that people are going to die because you insist on reviewing a policy that somebody took out in good faith and forgot to tell you that they were being treated for acne?" Barton asked the panel of CEOs.
"Yes sir, it does, and we regret the necessity that that has to occur even a single time, and we've made suggestions that would reform the system such that that would no longer be needed," Hamm replied.
My preference is for a single-payer system. I don't feel comfortable with the extremely mixed system that we have now despite the fact that I am participating in an excellent healthcare system. It is not just because of the rather minimal copays that I am stuck with, but primarily because I am thinking of the mix of uninsured and under-insured here in the states. In my opinion, these people have a lot to worry about--and that's just not baankruptcy or shorter lives.
Full disclosure, I work for health insurance company. As a result I see some of the data that insurance businesses analyze on a daily basis. This data has and will promote better and more appropriate care people. Some of the data that the government has (and creates policy with) is years or decades old (yes, decades).
Also, most insurance companies are leading the way to better health, you just don't see it much in the press. Privatization leads to innovation.
And no, I don't get paid a lot, I don't get bonuses, and I no one I know got a raise this year.
A simple question:
If privatization will always produce higher quality at lower cost, why aren't the drug and insurance companies welcoming the public option? After all, the bumbling & inefficient public agency in charge of health care will just make people flock to the insurance companies, right?
Or, just maybe, is it that people really don't believe their own press about privatization?
Bargaining power is another way to say "Price control". In fact the Public option can only be effective it "controls" waht doctors, hospital, drug companies charge. Sounds like "Wage and price contols" if you ask me. This is not a solution just a new way to a different catastrophy.
It's simply not true that there is "no room for compromise" in this debate.
For example, imagine a scheme where the stakeholders determine a "reasonable" percentage of profit that medical insurers and the like can expect to make in the market. Then write in a requirement that the "public option" agency created to compete with private providers would not operate to recover cost only but would instead operate to with a particular profit percentage goal. That way, the reforms could be introduced, waste eliminated from the system and the playing field would be leveled-- for public and private options alike.
Industry may still complain about the new competition but they could hardly claim that the competition was unfair. The proceeds earned from the "profit" of the public entities could in turn be diverted into any number of worthwhile causes.
There is no such thing as a problem without a solution. You just have to be creative sometimes and know what you can bend without breaking.
"Mr Reich and others who keep making this "if you take the profit motive out of health care it will be much cheaper" argument should explain why the principle can't be applied to all other industries."
How about this Oliver? The US Postal Service. Cheaper and more reliable than for profit company.
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