Separating Wheat from Chaff on Health Care Policy

by: Matt Singer

Tue Dec 02, 2008 at 16:11:44 PM MST

But I should also be clear, while a public-private bill is really my preferred option right now, single-payer is a close second. The status quo and deregulation-based reforms come in a distant third and fourth in my mind. In other words, if the choice in the end is between single-payer and the status quo, my lot is definitely with single-payer.

This is a strange (and good) time to be a progressive in Montana and America. I say that because I'm about to explain why I don't currently favor a single-payer health insurance plan and prefer the Baucus template for reform, offering a cautionary note that the details of any reform measure will be what makes or breaks it. The complexity of America's health care system is such that the white paper Max Baucus recently released even at 96 pages still lacks many details that will be filled in over the coming years.

How we answer the questions left unanswered -- how is a public option being created, how will a mandate be enforced, what protections will be put in place for consumers of private insurance, how do we control costs for the long-term -- will be the final determinant of the strength of the bill that results from this process.

But the framework itself is sound.

With that said, I wanted to offer some perspective on the political and substantive concerns raised by a quick move to single-payer (unsurprisingly, the two are interconnected) and why I think the Baucus framework is preferable. Then, I'd like to highlight some details to keep an eye on as we move forward.

Why Not Single Payer -- The Substance

Any real discussion of how to move forward on health care reform needs to address political reality, but the case against single payer is not simply, as some would indicate, a political one. The reality is that a move to a single-payer system is extremely complicated. While I don't doubt my own progressive values, I do share conservative doubts over whether a master-minded top-down single institution can work appropriately from day one.

Progressives also need to keep in mind that what gets labeled "single payer" in the United States is not a single system, but rather a number of different options, some of which have a single payer and many of which have several. Canada, our neighbor to the north, has a single payer system, in which the hospitals and doctors are privately run, but all Canadians are insured by the government. England's system, the NHS, is different, in that the government owns the medical delivery system and employs the doctors. To put it in American terms, Canada's single payer is like Medicare and England's NHS is like the VA.

Integrated health delivery (like the NHS or the VA or Kaiser Permanente) has its advantages, including some very specific incentives for cost-savings over the long-term. But it is also not a secret to anyone who knows someone who has dealt with the VA, Kaiser, or IHS that these systems aren't always super popular.

But it may be time to end the tangent. Because the point here is simply, even if we agree that we want single payer, we still would have a lot of hard work to do to determine exactly what that means.

There are two very good arguments, in my mind, against embracing single payer today. I'll phrase them broadly:

• Transforming 16% of the Economy is Hard. This is the first argument. Our health care system is simply larger and more complex and more costly than any system in the world. That means that any mistakes we make in the transition are magnified. It means thinking through the details is crucial. What gets covered? What isn't covered? Who processes the claims? Simply because these decisions are made by a government agency instead of by an insurance company, there is no reason to expect that the answers become clear overnight.

  These aren't the only difficult questions. Health insurance companies employ a lot of people. Do we nationalize them, merge them, and start through a round of layoffs? Do we build a national health insurance company and leave the Blues fighting for the high-end scraps (I think it'd be difficult to envision a scenario where the U.S. government literally prohibits private insurance or paying for some forms of care out-of-pocket) and watch as round after round of layoffs commence? How do we evaluate risk models? How do we experiment with cost controls?

• Transforming 16% of the Economy Overnight is Painful. It's hard enough to figure out how to transform the economy, but there is no way to do it without causing massive harm, unless you're looking at a 20-year timeline, or so. Again, the folks in private sector health insurance will largely be let go. Hospital billing departments will also downsize. That's where the administrative savings come from. But these administrative savings, as large as they may be, simply aren't what is ultimately going to make or break the bank when it comes to the higher costs of American health insurance.

  If reining in administrative costs isn't the panacea, but it could be a major source of pain, the question has to be -- why would we try to do it overnight?

Why Not Single Payer -- The Politics

These objections immediately lead in to the politics of single-payer. The obvious point (and the one most typically raised by single-payer advocates) is that the insurance industry hates single-payer. The accusation here is that Congress is bought off and won't do anything the insurance industry hates. There may be some truth to this concern, but it isn't the real reason to fear the insurance industry.

The real reason to fear the insurance industry is that they have a lot of money. Money has limitations when it is used to buy politicians because there is something far more powerful than money in politics: votes. So money is most powerful when it can be used to scare voters, which is exactly how the deep pockets would be used.

Mike Dennison makes passing reference to this fear in his article in today's Lee Newspapers:

What [top Democrats] really mean is that when it comes to health care reform, they don't want a political fight with some of the nation's most powerful financial interests, which have the resources and the motivation to turn public opinion against meaningful reforms.

[...]

They cite polls showing that the public thinks single-payer equates with "big government," and taking away what insurance they already have. A majority may like the idea, but that support erodes when asked if they'd pay higher taxes to support it.

This polling is testing the obvious lines of attack that single-payer's political opponents would employ: Big government, higher taxes, less choice.

If single-payer is packaged in that context, of course it's a loser. But as any skilled politician knows, if you craft a better message and get it out there, you win.

What polling shows (and this isn't just polling, it is also what we've found at Forward Montana through literally thousands of one-on-one conversations with Montanans all over the state) is that the big concerns that drive voters away from single-payer are choice and fear of losing their status quo.

So let's break these down:

• Most voters don't want significant personal change on health care. What we know from talking to Americans is that people know the system is broken, but they are quite worried of what coverage they have being taken away from them. Since the vast majority of Americans are insured, either through work, individual coverage, Medicare, Medicaid, CHIP, the VA, IHS, or a family member's policy, the Americans who are uninsured aren't the people we're most worried about losing in a fight for health care for all. We're worried about losing support from people who like their coverage, just wish it covered a few more ailments and cost them less each month.

  These are the voters who share my first concern from up above -- the voters who understand that transitioning 16% of the economy is hard and worry that they'll be among the acceptable losses of the transition.

• Voters want choices in health care -- and so should politicians. Health care is an extremely private realm. Our health care providers see us naked, ask us invasive questions, and know disturbing things about us. We need to be able to pick providers whom we trust not to blackmail us. In all seriousness, though, a movement that thinks that privacy protects library records ought to realize that agency should include choice of medical providers.

This is where Max Baucus's plan comes in.

Given that we need to bring everyone into the system, maintain choice, bring down costs, and increase quality, here are the basic principles:

• Expand Choice Through Public Options. One of the biggest problems in the health care market is that private insurance faces relatively little competition -- and the market for small business and individuals is especially perverse. We can regulate our way to all sorts of things, but a large pool public insurance competitor is the best way to check these entities. The Baucus plan does this in two ways -- first by allowing Americans 55 and older to enroll in Medicare and second by creating a public insurance option available to individuals and small businesses (this could theoretically also be made available to large businesses, although they already generally get relatively affordable coverage).
• Allow People Who Like Their Coverage to Keep It. This is probably the most difficult piece to keep in place while moving to health coverage for all Americans, but it is something that Baucus, Obama, Clinton, Edwards, and really every prominent Democratic politician with a health care plan is doing.
• Constrain Costs for the Long Term. Any universal plan will reduce cost-shifting, which will save the currently insured money. But a good plan needs to go beyond that -- focus on primary care, improved health IT, and a move away from pay by procedure. Baucus's plan lacks some of the bells and whistles on this front, but has some rather innovative ideas to help the uninsured access primary care quickly.
• End Cherry Picking. One of the worst things about the current insurance market is that companies have an incentive to only insure the healthy. Thus they spend a lot of time and money trying to figure out how to do that. To put an end to cherry picking, guaranteed issue and community rating in pricing is the solution. Basically, that means that insurance companies can't discriminate against you based on a health condition -- either in pricing or in willingness to extend a policy. Insurers scream and moan about this, but will probably be willing to do it, assuming that they get a guarantee that healthy people will also buy into the system (otherwise, we'd get the opposite problem of today and only sick people would buy insurance).

But there's some other things to keep in mind as the plan moves forward. Note that most of these things would need to be kept in mind with a single-payer system as well:

• What's the contribution? What's the benefit? The progressive upshot of single-payer is that the "contribution" is through taxes, so presumably the rich poor and the low-income less. The question with Max's plan (or any other private-public mix) is how you charge premiums and how you subsidize coverage for the low-income. These subsidies aren't fully spelled out in the Baucus white paper. Where they are set matters a great deal. Similarly, the benefits package matters. A hollow insurance plan is meaningless, whether provided by the government or a private company. So how far do the benefits extend? Is mental health covered? How good is coverage for dental?
• How Accessible is the Public Options? The public option in Max Baucus's plan is not thoroughly fleshed out, but a good public insurance option should be able to compete against the full array of private plans.
• How is the Mandate Handled? Both single-payer and the Baucus plan rely on a mandate. Single-payer does it through automatic enrollment and a tax hike. The Baucus plan does it through...an as yet-to-be-determined mechanism. One proposal is to do it through tax returns. An ideal system (I think) would do it through tax returns with auto-enrollment in the public option for people who didn't purchase coverage, paid for by a payroll tax. Anyone who makes enough money to file a tax return can pay some small amount toward their own health insurance. Anyone who doesn't pay taxes either should get free health insurance anyways or can be found guilty of tax evasion for failure to pay into the system.
• Bigger Cost Controls Either the Baucus plan or any other plan needs to do more than tackle cost-shifting and administrative overhead to really address the long-term fiscal threat posed by America's broken health care system. Ezra Klein points out one big example of what is wrong with our system -- in this case prescription drug companies that act like tobacco companies. The quick adoption of extremely expensive technologies and drugs that do little to improve health is probably the best place to save. Also -- moving away from fee-for-service would be a good step. Again, this would apply equally to single-payer.

Tear it apart, my friends.