Americans Want Health Security & Affordability, and Don’t Care About Myths & Legislative Procedures

As the House of Representatives prepares to vote on health care reforms that President Obama made a priority and which the electorate brought him to the presidency to enact, it is vital to focus on the big picture. The American people – and Members of Congress – should recognize the unique nature of this historic opportunity. This is a watershed moment that will define our nation’s social responsibility, preserve our economy, and improve our quality of life.

Americans Care About the Policy, Not the Process & Sideshow Issues

When facing such a transcendent turning point, it is no longer appropriate to be dissuaded by the arcane intricacies of the legislative process, nor by myopic devotion to sideshow issues. We all want enhanced health security and affordability, and, once we have it, we won’t care if it came by way of Reconciliation, the “deeming” mechanism, or some other legislative vehicle. After reforms are enacted, Americans who are protected against termination of their coverage for pre-existing conditions won’t care about targeted programs for Vermont, Florida, Connecticut, and Montana.

The same Americans who are angry now about the reform process will become much angrier in future years if reforms are not enacted and their insurance is terminated or becomes unaffordable because they are not protected. Without reform, an ardently pro-life family whose insurance stops due to reaching their lifetime coverage limits after a serious illness of their child will be much more focused on that than on their opposition to the 2010 bill due to its abortion language.

Policy That Does What Is Right for Americans

Ultimately, the benefits of substantive policy – and its improvement of our social fabric and quality of life – prevail. Abraham Lincoln did not allow projections of commodity market fluctuations to alter his drafting of the Emancipation Proclamation. Franklin Roosevelt did not withhold his leadership on Social Security legislation until the intricacies of tax treatment of deferred income for early retirees could be fully coordinated. Lyndon Johnson did not delay the enactment of Medicare until the anti-government naysayers – who today have organized into Tea Parties – were on board. Today’s America would be unimaginable without these advances.

At historic moments, such as the one that our country is currently facing, it is necessary to simply do what is right. The health care reforms that are under consideration are the right policies for America, in both the near- and long-terms, as they would have a positive impact for virtually all Americans (even including the insurance industry, which would collect premiums from millions more people, and enable the risks and costs to be spread among a much larger pool).

Myths, Misconceptions, & Deceptions Are Overcome By Facts & Courage

Doing what is right takes courage and commitment to the facts, especially in light of the many myths, misconceptions, and deceptions that have been propagated by self-focused special interests. Insurance companies fear the reforms because they will have to stop certain activities that have given them a competitive advantage, at the expense of the people who they are supposed to serve. But, since it would be unseemly and transparent for them to fight the bill on those grounds, they have instead manufactured illusory demons which fuel opposition by those who are susceptible to such manipulations.

Knowing that some percentage of the population is stridently anti-government, the myth of a government takeover of health care was created, even though there is absolutely nothing in the bill – nor even in earlier incarnations – which substantiated this. Knowing that most Americans are strongly supportive of their chosen health care providers, the myth was created that the ability to choose one’s providers and insurer would be curtailed, even though President Obama repeatedly emphasized that if you like your doctor and/or your insurer, then you can keep them, and the legislation confirms that. Knowing that everyone is worried about the cost of health care, the myth was created that the legislation would cause premiums to skyrocket, which has been debunked by economists and the Congressional Budget Office, and is patently untrue by virtue of the millions of Americans who would enter and pay premiums into the health insurance market.

In the current climate of unfounded, unsubstantiated, and even paranoid fears of change, doing what is right for the overwhelming majority of Americans requires fortitude to take action based on the facts, rather than on fears, by summoning dedication and determination. Moving the country and the people toward increased health security and affordability will depend on decision-makers’ willingness to embrace the responsibilities, ideals, and commitment to public service that are inherent in serving the greater good, rather than the good of special interests.

Policy Based on Core American Principles

The upcoming vote on health care reform is about principles. Humanism and equality are at the core of expanding coverage to those who do not have it, and preserving coverage for those who do. Fairness and consumer protection are at the core of affordability, to ensure that insurance corporations cannot price families out of the market with hikes in premiums, copayments, and deductibles. Fiscal responsibility is at the core of reforming the economics of our health care system to ensure its long-term sustainability for both the public and private sectors. Opportunity and justice are at the core of health security, which enables individuals and families to engage in “the pursuit of happiness” as they choose, without vulnerability to corporate self-interest.

The denial of these principles for the benefit of all Americans would be tantamount to giving amorphous, intangible, unsubstantiated fears priority over people. If a republic relegates the needs of its people to the back bench, it would be a foreboding sign of the unraveling of the social fabric. The deficiencies and injustices of our health care system have been so extensively evidenced and documented that it is imperative that they be remedied. Anyone who thinks that they are not vulnerable to these shortcomings is just one serious diagnosis or illness away from discovering that they are wrong. Reform is necessary to reinvigorate our core principles. The moral deficit that is being inflicted by our health care system is reprehensible and intolerable.

The health reform legislation being considered might possibly mean that each of us would pay an extra dollar for a meal at a restaurant to ensure that the cook, the waiter, the cleaning team, and their families have health coverage and the security that comes with it. But who among us would rather pay a dollar less for a nice dinner while looking at a crew that is uninsured and living in fear of illness? Moreover, if they do not have insurance, they may not have gotten treatment for an illness or disease that could be communicable to us at the restaurant. And, without insurance, if they did get treatment, it is likely that they went to an emergency room or a public health facility which was paid for by the rest of us anyway, as taxpayers and by shifting the cost to those with insurance. The waiter who serves the dinner would also like to be served well by legislators who can provide them with health security.

Rising to the Occasion to Do What Is Right

The day of reckoning on health reform is rapidly approaching. It will be one of the most important votes in the career of every legislator. It is a vote that each legislator will remember long after their retirement, either with satisfaction for having done the right thing or with dismay for having succumbed to pressure, special interests, and unfounded fears.

Some might worry that support for reform could impact their career, including their re-election prospects. But, opposition to reform could also result in their electoral defeat, both for denying their constituents the benefits of health security and affordability, and for their failure to take a courageous, principled stand that would improve the quality-of-life of those who they were elected to serve.

The legislation would advance health security and affordability in many ways, from prohibiting denials of coverage due to pre-existing conditions, to enabling millions of uninsured Americans to obtain coverage; and from limiting insurer hikes in premiums, copayments, and deductibles that price people and small business out of the market, to ensuring long-term sustainability of the health care system by containing costs for the public and private sectors. This is very tangible, meaningful progress. Yet, that doesn’t mean that the legislation is perfect, nor that it exactly reflects what any single person would most like it to contain. But that is the nature of democracy and politics as “the art of the possible” between President Obama, 535 Members of Congress, and a long list of citizen- and interest-groups. The old maxim that “the perfect must not be the enemy of the good” is perhaps more true in the context of health reform than any other issue.

An Historic Moment For the Country…..and For Each Legislator

If Congress does not pass health reform now, there will not be another opportunity for many years to come. And, when it does come again, the problems with our nation’s health care system will be so much more extensive, intractable, amplified, and varied, with costs having skyrocketed past the point of being able to be reined in. Reform at that time will be much more extreme and painful, and much less likely to resolve deficiencies and put our nation’s health spending on a sustainable track. It is critical that we do not miss this historic chance at substantial progress for the sake of individuals and families, businesses and economic growth, and preservation of our society and fiscal health. Now is the time to unite our diverse citizenship under the tent of health security and affordability for all, or risk further fragmentation and hardship which will be monumentally more difficult to repair.

Legislators for whom the vote on health reform is especially vexing would be well served to consider not only the impact of voting for the bill, but also the impact of voting against the bill. This vote goes right to the heart of public service. It will become increasingly apparent in the years to come that supporting this legislation was the right thing to do for America and Americans. Years from now, when looking in the mirror, a legislator will not see the insurance lobbyists, a group of Fortune 500 CEOs, nor a little room of over-heated Tea Partiers. Instead, the person looking back will be the person who voted on the 2010 legislation to increase health security and affordability for all Americans.

Achieving Compromise on the Public Option Through A Hybrid Solution

When baseball and basketball players went on strike in past years, they eventually went back to the field and the court by crafting a hybrid solution that met the essential needs of both players and owners, rather than one side winning an “all or nothing” victory. A similar approach for negotiating a hybrid solution could be valuable in resolving differences on health care reform.

Both the House and Senate bills offer myriad improvements to our nation’s current health system in terms of access to coverage, cost controls, health care quality, and insurance regulation. Yet, the fate of the “public option” remains an important, and contentious, issue. Although the House bill includes only a scaled down version – accessible only to the individual, family, and small business markets, which face the steepest premiums – insurance companies opposed it strenuously. They and others were, of course, successful in keeping the public option out of the Senate bill (for example, by the efforts of Senator Lieberman, who represents Connecticut, the nerve center of the insurance industry).

Insurance companies will rake in premiums from having millions of new customers, and they are fighting hard to keep these premiums exclusively within their domain. They suggest that they could not handle the competition that a public option would provide. But it is precisely that competition that would pressure them to restrain premium rates and rises, since the small group and individual markets are the most vulnerable to insurer pricing schemes.

A solution is still being sought which would satisfy the competition, coverage, cost control, and quality improvement rationales of the public option, while doing so in a way that would not allow the Federal government to function as a full-fledged insurer for this market (even though the government does fulfill this role with Medicare and Medicaid).

There is a solution to this quandary.

Proponents of the public option envision it functioning just like a private-sector insurance company, as one of the options accessed through the “purchasing exchange”. To do so, it would engage in a number of activities: (a) it would market the program, and pool together individuals, families, and small businesses who choose to enroll; (b) the Federal government would underwrite the program and take on the financial responsibility (i.e., assume the risk); (c) the government would establish the premium rates; and (d) the government would administer all aspects of the program, including collecting premiums, enlisting providers, and paying claims.

However, the goals of the public option could be achieved by fulfilling just some of these roles, and, in so doing, placating its opponents. A hybrid model could serve this market through a true public-private partnership between the government and the insurance companies, with a blend of roles:

1. the Federal government would market a “publicly-administered option” to individuals, families, and small businesses who are eligible to participate in the “exchange”, enroll those who select this option, and create a risk pool among those who would be covered by this option;
2. insurance companies that seek to cover enrollees would apply to the program to be a participating insurer under this program, and would submit its underwriting, coverage, and customer service plans to the program administrator, to ensure conformance with standards established by the administrator;
3. proposed premium rates would have to be approved by the administrator, and an insurer could not participate – nor, in the future, increase premiums – until the administrator approves the rate schedule;
4. enrollees in the “publicly-administered option” would select an insurer from among those that are approved for participation, pay their premiums directly to their chosen insurer, and interface with the insurer for all of their customer service needs and related issues;
5. participating insurers would assemble a provider network to satisfy all enrollee health care needs (in conformance with standards issued by the option’s administrator), manage all financial aspects of its relationships with providers (e.g., payment of claims and other forms of compensation), and transfer to the option’s administrator a small amount of premiums to cover the expenses incurred in executing the administrator’s role;
6. enrollees in the “publicly-administered option” could switch insurers during an annual open-enrollment period if they are not satisfied with their insurer for any reason (e.g., cost, customer service, the provider network, etc.); and
7. the option’s administrator would establish an ombudsperson and a review board for enrollees to resolve complaints and appeal decisions relating to the insurer’s practices and decisions.

This hybrid of roles would satisfy each of the objectives that are sought to be achieved by the public option, while still keeping the Federal government from becoming a direct competitor of the private insurers. Coverage would be expanded by virtue of element #1; competition would be enhanced by elements #2, #4, and #6; cost control would be advanced by elements #3, #5, and #6; and health care quality would be improved by elements #2, #5, #6, and #7. At the same time, the private health insurers’ role in the market as underwriter would be maintained by virtue of #2.

Although private insurers would still be the underwriters of policies under this hybrid, and they may also compete for business in the “exchange” as a stand-alone option, the “publicly-administered option” still offers considerable value to consumers. This option will ensure that the risk pool is large enough to minimize costs, premium rates and rises are scrutinized and approved by the administrator, customer service mechanisms are in place, the provider networks are sufficient, and that there is recourse to challenge practices and decisions which consumers find objectionable.

Bridging the gap between the House and Senate bills with regard to the public option is certainly challenging. However, the development of a public-private partnership for a “publicly-administered option” has the potential to satisfy a broad range of stakeholders and achieve sufficient support to enable the health reform legislation to proceed on to other issues.

A 10-Point Plan to Drive Down Health Care Costs & Expand Coverage

Without health care reform, premiums are expected to escalate dramatically in the upcoming years, pricing many Americans out of the market and into the ranks of the uninsured. There is also a rampant misconception that health insurance is stable and reliable, which is easily disproven by multitudes of coverage and treatment denials. Reform is just as essential for the sake of the insured as for the uninsured.

Objectives of Health Care Reform

Health care reform – including a palatable public option – is capable of achieving each of the key objectives which must be satisfied for a bill to emerge from Congress. #1: The plan must drive down costs for all Americans, all health care payors, and the overall health care system. #2: All Americans must have access to affordable, reliable health insurance, and quality, affordable health care. #3: Americans must retain their ability to choose among health insurance and health provider options. In conjunction with other components of the Senate and House bills, the ten elements below could meet these objectives and appeal to key legislators and constituencies.

Opposition to Health Care Reform

The opponents to meaningful reform mainly base their resistance on three misconceptions: (a) individuals, families, and small businesses are adequately served by the existing system and can fend for themselves; (b) market forces should be the sole driver of competition to private insurers, and no governmental action should be taken that could result in a decline in the market share of insurers that are not providing reliable, affordable coverage for all applicants in their coverage area; and (c) the Federal government should have no role in pooling risk and providing coverage even for Americans who are not being adequately and affordably served by insurers.

The first objection is rooted in the centuries-long debate on the primacy of the community versus that of the individual. Advocates of comprehensive reform recognize that all payors and providers are inter-dependent, as evidenced by the uncompensated costs of health care pushing up costs and premiums for both private and public insurance (e.g., higher costs of care lead to lower reimbursement rates to achieve cost savings, which result in higher premiums). Reform opponents often focus on their own coverage and care, believing that free market principles allow their needs to be fulfilled in isolation from the needs and payment mechanisms of others.

But it is an illusion for anyone to believe that the cost of their health care – whether public or private – is isolated from other cost and coverage factors. Whether or not they realize it, families, individuals, and businesses need competition and a system that affordably serves everyone, in order to stabilize the scope and cost of coverage. Currently, neither exists. Each of us is one diagnosis away from learning that we are not insulated from the failures of the current system. Buyers in the individual and small-group markets are neither empowered nor self-sufficient, due to risk pooling, the practices of insurers, and the inequality of bargaining power between small purchasers and insurers. The shortcomings of the today’s marketplace cannot be ignored.

The second objection is rooted in the absurd suggestion that private insurers, who need to generate profits, cannot compete with an option that is not designed to generate profits. That argument is self-defeating. If profits account for the disparity in premiums between the two, then profits are unjustifiably high, and the amount spent on health claims is irresponsibly low. An insurer that retains modest profits can compete well. But insurers that manipulate coverage and care decisions to ensure high profits will not be able to compete. Why should anyone defend the right of insurers to generate windfall profits at the expense of the families that they insure? Why would reform opponents want to limit our choices to the most expensive insurance alternatives, which are also notorious for denying care? These insurers have been escalating costs, and have caused great hardship for many Americans. They should not be rewarded. If the bad actors lose market share, the responsible insurers will benefit, along with the American people.

The third objection is rooted in denial of the intrinsic nature of insurance: the pooling of resources of the many to pay for the needs of the few. That is also a normal and regular role of government in many contexts. People pay into a collective repository – even if they do not need services at the time – in exchange for that repository paying their own expenses in the future when needed. For most Americans, the health care repository is a private-sector insurer, whereas for senior citizens and people with disabilities, the main repository is Medicare. People pay into a collective fund for Medicare while they are able to do so, and become beneficiaries years later. Whether health insurance is provided by private insurers or the government, the principles of communal pooling of funds are the same. Thus, anyone who supports Medicare but objects to Federal risk pooling and health insurance is being hypocritical.

Reform, With a Palatable Public Option, that Achieves the Three Main Objectives

Many legislators would prefer a public option that is maximally robust and extensive. However, to pass a reform bill, the public option should be constrained to the part of the market for which it is most needed, and must not exclude insurers that wish to compete with it. The following ten elements could be combined to achieve the three objectives, and gain legislative support.

(1) Private-sector and non-profit insurers that serve the individual and small-group markets would be aggregated into a marketplace exchange for eligible purchasers that is similar to the Federal Employee Health Benefits program. This component would be similar to what was proposed by the Senate’s “Gang of Ten” in early December, and would be administered by the government.

(2) Insurers in the exchange could offer low-premium catastrophic care plans, to provide families, individuals, and small businesses with a less expensive “safety net” just in case of a major health need. Consumers could choose between comprehensive coverage or a catastrophic care plan, which would be a lower-cost alternative for those who seek coverage just for major illnesses, and would alleviate the strain on health care providers from uncompensated care for major treatment.

(3) The public option would be in the exchange as just one of the many options for purchasers. Enrollment could be limited to individuals, families, high-risk populations, and small businesses (up to 50 or 100 employees, or under a payroll threshold). The eligibility of small businesses could mute some objections since their advocates maintain that they often cannot afford private insurance (even the opponents of the public option acknowledge that it would be less expensive). Insurance companies would benefit when high-risk persons enroll in the public option (their care is often more expensive). Large and medium sized groups and employers would be ineligible, continuing the major role of private insurers in this market. Although some oppose any coverage option that is not profit-driven, most would not mind getting a bigger bang for their premium buck.

(4) Health care practitioners who wish to participate in the public option would be required to meet new Health Information Technology (HIT) standards by a specified timetable that is sooner than that required for other providers. This would accelerate the adoption of HIT among providers who participate with both the public option and private insurers. Insurance companies would benefit because their providers would begin to use HIT – resulting in cost containment and administrative efficiencies for both providers and insurers – without insurers applying the same early efforts toward that transformation.

(5) All plans in the exchange – the public option, the non-profits, and the private insurers – would adhere to an “expense to premium ratio”. This ratio indicates the amount of premiums spent on administrative expenses rather than on claims for health services and treatment. If an insurer’s expenditures on overhead (including administration, advertising, utilization review, agent fees, corporate retreats, lobbying, and profits) exceed the specified ratio, a steep fee would apply. Insurers could avoid the fee by having a low ratio, signifying that premiums are paying for care, not disproportionately paying overhead. Use of “expense to premium ratios” would promote cost containment and consumer value, minimizing spending on activities that are devoid of benefit to consumers. The ratio is a strong tool for evaluating proposed hikes in premiums, deductibles, and copayments. It would apply separately to each line of business of an insurer, not allowing insurers to leverage and distort results among consumers by aggregating lines of business.

(“Expense to premium ratios” are a more accurate reflection of insurer behavior than “loss ratios” because “loss ratios” do not include insurers’ revenues from the investment of premiums. “Loss ratios” are cited by insurers because they erroneously create the impression that health insurers only have premium dollars, and no other finances. They allow profiteering and high expenses.)

(6) Since the 1940s, the McCarran-Ferguson Act has exempted insurers from most Federal regulation. This has created a patchwork of inconsistent state regulations for health insurers, and limited competition. It might also impair the effectiveness of the marketplace exchange: for example, the use of “expense to premium ratios” to enhance value for consumers and cost containment. Amending or repealing this law is necessary so that competition, cost containment, and reliable, affordable health insurance may thrive. Also, if health insurers were allowed to provide coverage nationally, as proposed by some Republican legislators, the outright repeal of McCarran-Ferguson would be essential.

(7) Claims administration – with each insurers’ distinct forms, processes, and rules – has become overwhelmingly time consuming and expensive for health practitioners. These problems would be solved by use of a single set of uniform, standardized forms and procedures for claims filing, and interactions. The system would be based on electronic filing, applied nationwide, and utilized by all providers, payors, and regulators. It would advance cost containment, facilitate evaluation of data to improve health care quality and treatment protocols, and magnify efficiency of the exchange. Providers and insurers who participate in the exchange could be required to adopt these systems first, ahead of the schedule for adoption by others, as a trade-off for the additional business that they would gain by joining the exchange. The cost savings and alleviation of burden would be incentives for others to embrace the standardized system.

(8) Rules should be developed that prohibit denials of coverage based on traditional underwriting schemes, and limit rate variances among enrollees in the exchange. The rules, which must apply to all plans in the exchange, would establish that premium rates are either to be constructed on the basis of Community Rating, Adjusted Community Rating, or tightly limited “rate bands” which allow only minor variances based on specified criteria.

(9) Consumers have been reassured that they can keep their health insurance and providers if they would like to do so. However, it is also vital to annually enable enrollees in the exchange to switch to a different insurer if they are not satisfied. The plans in the exchange should have the tightest controls against cost increases and coverage limitations, to enable continuity.

(10) Medical malpractice liability insurance and defensive medicine have played a role in the escalating cost of health care. It is important yet difficult to assess the justifiability of premium rates, due to the lack of data from liability insurers. Increased reporting from them is necessary, including premium rates and revenues, med mal claims made, claims defended, claims paid, court settlements reached. Reasonable regulation of premium rates would contain costs and enhance accountability, alleviating the burden on doctors, hospitals, and payors. Defensive medicine costs, on the other hand, will be reduced not by legal reform, but through the adoption of HIT. When electronic medical records and practice guidelines are fully implemented in the US, defensive medicine will be ameliorated by the access of providers to patient records of treatment, tests, and health history, as well as guidance from the aggregated data.