THE DONUT

Although it has gotten the news back-burner lately (and what hasn't, with all the famous idiots dying) the President is pushing ahead with the second Democratic attempt at legislation that provides healthcare for every American. Strategically this is a poor idea. Rather, the timing is poor. You will never meet a more ardent proponent of universal healthcare than Ed, but I think the public and certainly Congress are a little stunned at the moment. Sticker shock might be the right term. While it doesn't make me flinch, the idea of another initiative costing another trillion-and-a-half dollars is giving even Congressional Democrats cold, cold feet. It's not the right time. To try it now ensures another colossal failure. The President needs to re-accumulate some political capital, a process that will take time and hinge on the success of one or more of the big ticket items he has already gotten through Congress. In short, when people aren't so scared shitless about the economy we can have a real conversation about trillion dollar healthcare proposals.

Here's what I don't understand. Why does it have to cost a trillion dollars?

Since the moment I formed an opinion on the subject I have been convinced that a successful universal healthcare proposal in the context of American politics must have two things: a user-end cost for those who can afford it and the ability to opt out of it in favor of private health insurance. This addresses two fundamental aspects of the post-Reagan era public mind. First, charging people something allays the impression that it is free and thus will be abused. It won't be the government "giving" people something as much as selling them something, albeit at a heavily subsidized discount. Second, European nations have discovered by trial and error that rich people may be willing to shoulder the costs of national healthcare, however grudgingly, if they are allowed to retain their Right to be treated better than the rest of us. They may eventually consent to having their taxes provide insurance for dirty poor people, but they'll vehemently refuse to sit in the same waiting room with them. If they want to buy their way into the proverbial gated subdivision, we must let them.

And, of course, the 800-pound gorilla in our policy debates is our insurance and for-profit healthcare industries.
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We have to find some way to let Humana and Wellpoint line their pockets. Because of these three conditions, proposals for reform inevitably become convoluted in a hurry. Remember the 10,000 page clusterfuck that was "HillaryCare?" But taking these factors into account I think there is a much, much simpler solution that is rarely mentioned. Perhaps I'm just overlooking something. You be the judge.

We already have this big healthcare donut. The wealthy and the poor are covered while people in the middle often are not. The truly indigent either qualify for Medicaid or receive Emergency Room services that they simply do not pay for. I say that without condemnation or judgment.

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It is what our system encourages. As inevitably as poor and starving people will steal bread for which they would pay if they could, poor people who are really sick will go to the ER and welch on the bill. They know that ERs must provide service irrespective of ability to pay. Afterwards they will receive a bill that goes unpaid. The hospital will refer the account to collections (my former line of work) who will see that the debtor hasn't a pot in which to piss and close the account.
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Just add it to the pile of billions in write-offs that happen every day in the industry. On the other end of the spectrum, the wealthy can afford simply to buy insurance. So the rich and poor are already taken care of. Add in the fact that a government program already covers the elderly and we have the framework of a system already in place.

So here's EdCare. Tell me where this admittedly simplistic take is missing the boat:

  • 1. Keep Medicare. That takes care of everyone over 65.
  • 2. Expand Medicaid to cover everyone making under $15,000 before taxes.
  • 3. Using Federal money, have governments at the state level act as group purchasers of private sector insurance. Offer everyone not covered by Medicaid and Medicare the option to purchase insurance on an income-based sliding scale. Part of the cost would be subsidized by the government, part of it borne by employers who fail to offer their employees insurance (punitive taxation, so to speak), and part borne by the insured. This is how the system already works for those of you who have insurance; the boss eats part of the cost and takes the rest out of your paycheck.

    In my opinion this addresses all of the key obstacles to reform. Insurers stay in business and get some Federal cash to boot. The poor are covered at no cost without resorting to the misuse of emergency medical services. The elderly are covered by a Medicare system to which they have contributed. People who work but are not offered insurance pay a reasonable dollar amount – say, $50 to $300 monthly depending on income and single/family coverage – to get coverage which is only partially subsidized by the government. See, the entire debate as framed by opponents of universal healthcare is a red herring. No one is asking for "free" healthcare. We want access to health insurance at a reasonable cost. Employers used to provide that access but many no longer do so. This is where Congress needs to step in. The uninsured will gladly pay for insurance if they are able. They simply need a better option than the kind of high deductible, low benefit rip-offs that pass for private health plans in this country (As Seen on TV – usually after 3 AM).

    The uninsured here in Indiana would be perfectly happy, I think, to pay whatever State of Indiana employees pay every month and get the same coverage. What is so hard about that? The entire insurance industry is based on the idea of large groups pooling resources to buy coverage from private insurers at a lower cost than any individual member of the group could get on his or her own. The easiest solution, therefore, is simply to re-define the way we think about who is and is not given the option to buy into the kind of plan that you buy into through your employer right now.

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    Crazy, I know.

  • 8 thoughts on “THE DONUT”

    • ladiesbane says:

      Please consider reading this New Yorker article :
      http://www.newyorker.com/online/blogs/newsdesk/2009/06/atul-gawande-the-cost-conundrum-redux.html

      — one major reason why health care costs so much is overutilization (this is abundantly clear), but this article digs into one important and overlooked cause: people following doctors' orders to obtain "let's just be sure" MRIs, and how 'bout another week of PT? The author is a physician, and doctors opened up about things I doubt they would try to explain to a layman. Profit versus medical necessity is food for thought in this discussion.

      As a career insurance worker, I can tell you that there are good carriers and bad, and that many health insurers are not so profitable as you might think. There are also regulations, depending on where you live, that limit premiums based on a small margin over anticipated costs; often the profit margin for health is around 4%, and the big pocket-lining income comes from other lines of business. (Incidentally, rich people can't just buy medical insurance if they are not already healthy and good insurance risks; all they can do is pay for their treatment directly.)

      I wouldn't and won't defend the carriers with bad practices, but I hope people will also keep in mind that needing universal health care does not imply being able to afford universal health care, even when pooled by job class or risk. NICU care for a few weeks for one infant can eat more than a year's worth of premiums for a group of twenty people, and assumes no one else in the group has so much as an earache or a pap smear. Cancer, transplants, accidents, renal failure, HIV/AIDS…these are not cheap, no matter who is paying (nor are the garden variety joint replacements, cardiac care, diabetes, hypertension, thyroid, meds, and so on.) Most people would hate to refuse a $60,000 NICU bill, but there is a LOT of bitching when groups buy plans that don't cover chiropractic, acupuncture, massage therapy, or brand-name drugs if generics are available. Are we prepared to pay not only for everyone's coverage, but for every possible extreme of treatment?

      If the answer is yes, are we prepared for the tax burden? How many workers will it take to support the health care needs of the unemployed? Will doctors have to cut their rates? We can't force people to go to medical school, but how will we pay them? (And will people make noise about health care rationing when there simply aren't enough doctors?) Even people who have decent group coverage now do not have unlimited access to the best quality care — but that's what people think of when they hear "Universal Health." So far I have not heard anyone mention an implied obligation as a citizen to stop smoking, overindulging, or engaging in risky behavior, in order to avoid becoming a tax burden on his or her neighbors. (In Japan, yes; here, no.)

      I admire the French attitude: it costs a lot, and can be inconvenient, but they value being able to say that all of their citizens have healthcare. It's important to them, and I like that. But I wonder if Americans will be able to endure the shortcomings as well as afford the price. I hope so.

      As to EdCare, New Mexico has it already, or very nearly; other than Medicare, Medicaid, and employer-sponsored group health, there is the NMHIA (for small employers who can't afford to offer group coverage, which requires employers to pay 50% of the group premium) and the State Risk Pool, with its sliding-scale premiums, for medically uninsurable individuals and other folk who are HIPAA-eligible (COBRA expired, company stopped offering insurance, etc.)

      Are people covered? Yes, and by that measure, it is working. But look at the population of the state (slightly less than the City of Chicago.) How many people are unemployed; how many are working for the state; and how many are actually earning the money that supports the other two groups? Where does the money come from? From other states, via the Fed. Other states are wealthier, but will they be for long?

      Universal health is important to me. I'd love to have to change career paths for that reason. But our economy is in bad shape, and this is very expensive, so it makes me worry. For that reason, please don't look at the cost of insurance for everyone; look at the cost of healthcare. We don't need insurance. We just need to pay the bills for medically necessary treatment.

    • I've heard a trillion, I've heard 600 billion, and I've heard a lot of different numbers about a lot of different plans. What I haven't heard is how something like your plan will make it proitable for insurers to cover the sick people who need insurance but can't afford it because they have a pre-existing condition. In other words, why should we subsidize every insurer to do what they already do when they still won't do what's needed for the already sick?

      A for-profit company just has no interest in that, which is why we need the federal government to cover all the basics and the private insurers to cover the extra stuff people will want. Want a private room at the hospital? Private insurers or cash or you get a roommate. Want cosmetic treatments? Cash or private. Want a quicker knee replacement? Private care, cash, or hobble back in that line.

      There's plenty of room for private insurance companies under any government plan that gets out of their way, as any decent plan should. But I just don't see why the feds should subsidize an inflated system that discriminates against the sick. It's okay that private companies do that, since they exist to make profits. But I don't want the federal government subsidizing it. Instead, the government should be filling in where the market won't. To promote the general welfare and all that, you know.

    • I am not a healthcare policy expert but two things:

      1. The Ed plan seems to operate from the assumption that the hole in the middle of the donut is the only thing that needs fixed, if we just cover the uncovered, the system will be great. It ignores though that the donut as it currenty exists is stale, crumbling, full of nasty preservatives, and covered in flies. There are a lot of problems with the existing system even for those that are able to afford coverage, including not covering those with pre-existing conditions as mentioned above. I have no idea the exact number but a decent percentage of people who have filed bankruptcy due to healthcare expenses had insurance. Insurance companies, perhaps not all but a fair number, make it common practice to deny and fight before paying claims. They know that the majority of people will be too poor or simply too exhausted to fight them all the way to the end and so they won't have to pay. As it is we pay more per person than any other country for healthcare by far, and yet rank no where near the top in terms of quality of care.

      2. It seems the reason Obama is pushing the health care plan now despite it not being the best time strategically is that he thinks, and I think he is right, you can't really fix the economy without fixing healthcare. If small companies don't expand because they can't afford healthcare for their employees or if you foreclose on your house because you can't pay for your cancer treatments, you impact the economy. It is the whole chicken versus the egg dilemma. Personally, and this is my own policy ax to grind, I don't think you can fix healthcare in this country until you fix our incredibly broken industrialized agriculture/food system, but I think that is fairly far down on the agenda.

    • Well, the taxes on my cigarettes (which have already been jacked twice in the last year or so) are already (I hope) being funneled to some sort of health care to my fellow Indianians.

    • Just wanted to address a couple points…

      It's a bit naive to assume the "boss eats the cost." That's never the case. It's just like the payroll tax. The boss only 'eats' it in the context of that it is never discussed how such taxes play into the stagnation of wages. For example, my raise this year was much smaller than last year. This is largely due to the increased cost of health insurance for my company's employees. Don't get me wrong, I'm not blaming the company I work for — the bills are very real and we're pretty small so it's the only thing they can do. However, in the end, it's the workers that pay.

      Secondly, any system that still encourages businesses to pony up the insurance will inevitably lead to the same situation we are in now, which is that you must have a job to be covered. Sure, you can say you don't and pay into the public system, but that will inevitably be more expensive to the end consumer as long as businesses are offsetting the cost as a part of the benefits of employment. This discourages small businesses. If it were not for my pre-existing condition and the outrageous cost of a single family health care option, I would quit and start my own business as an IT consultant. As it stands, I simply cannot afford it due to health costs. And I worry about any employer-based solution will not be much better.

      What is needed is single payer. Short of that, we need an "opt-out" plan for the uber-rich (as you stated). Short of that, we need a hybrid plan that does not rely on employers AT ALL. Simply stated, you have a market, public and private, and the group is the state (or better, the entire country), so the cost is the same and the insurance is the same no matter where your career path takes you.

    • I second Shane on both points.

      I must add that I'd like to see some evidence for your claim that the Democratic pols who balk at the idea of a public plan do so because of sticker shock. I've heard a few of them express their opposition to Obama's effort on healthcare, and it was not because of the supposedly steep price (right, like private insurance is so fucking affordable in today's America). Rather, shitheads like Ben Nelson and his ilk oppose it for allegedly "philosophical" reasons; that means ideological bullshit. Philosophy is hard, and requires, among other things, a brain, which these dipshits manifestly lack.

      But all of their nonsense is just a facade, to be sure. The dispiriting truth is that the health industry's outsized member has become so firmly engorged in their collective throat that they can barely spout off the Reaganite pieties about "choice" and "enterprise" any longer.

    • Great Britain instituted single payer, universal, cradle to grave, low to no cost healthcare coverage in 1948, when the country was near bankrupt from WW II.

      Sure the U.S. system suffers from the twin deamons of over and under utilization. We also pay twice as much per capita, compared to other first world countries while leaving a significant percentage uncovered, having shorter life spans, and suffering higher infant mortality than many 3rd world countries.

      Without gainsaying any of ladiesbanes' points, I'll say that the profitability of health insurance providers, while perhaps not the main proximate cause of our high cost/low effectivness system, is certainly a driver for the decisions that are. Frex: increased profits from denying claims, and refusing patients with pre-existing conditions who end up using expensive services they can't pay for, after the conditions have become more costly to treat.

      Fuck Humana. In places where this works (you know – the rest of the civilized world) it's illegal to sell primary health care coverage for profit.

      England made universal, single payer work when it was broke. What we lack here is the political will.

    • I agree, but please: I still don't see HOW we can afford it, and HOW we are supposed to do it right. Post-war Britain didn't have million-dollar micro-preemies, coronary artery bypass grafts, and a huge population of generally unhealthy people who need multiple levels of maintenance care.

      I support universal health care, but I can easily see our government getting it horribly wrong.

      Also, you can't require doctors, nurses, techs, and support staff to do hard work and live like paupers simply because health care for profit sounds shameful. Like most of us, most of them do what they do to make their living, not as a noble hobby.

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