Answering Obama’s Challenge
President Obama has asked me for ideas on health reform. Okay, he didn’t exactly ask me. He asked Republican Members of Congress. And clearly the GOP needs help.
It isn’t that Republicans don’t have good health reform ideas. They have lots of good ideas. In fact, just about every good health reform idea on Capitol Hill has been endorsed by at least one Republican. The problem is that the party as a party can’t get behind any idea that’s bold enough to actually solve big problems.
So I’ve teamed up with Newt Gingrich to offer ten ideas — to Republicans, to Democrats and even to President Obama himself.
Details, which appear in today’s Wall Street Journal, are below the fold.
- Make insurance affordable. The current taxation of health insurance is arbitrary and unfair, giving lavish subsidies to some, like those who get Cadillac coverage from their employers, and almost no relief to people who have to buy their own. More equitable tax treatment would lower costs for individuals and families. Many health economists conclude that tax relief for health insurance should be a fixed-dollar amount, independent of the amount of insurance purchased. A step in the right direction would be to give Americans the choice of a generous tax credit or the ability to deduct the value of their health insurance up to a certain amount.
- Make health insurance portable. The first step toward genuine portability—and the best way of solving the problems of pre-existing conditions—is to change federal policy. Employers should be encouraged to provide employees with insurance that travels with them from job to job and in and out of the labor market. Also, individuals should have the ability to purchase health insurance across state lines. When insurers compete for consumers, prices will fall and quality will improve.
- Meet the needs of the chronically ill. Most individuals with chronic diseases want to be in charge of their own care. The mother of an asthmatic child, for example, should have a device at home that measures the child’s peak airflow and should be taught when to change his medication, rather than going to the doctor each time.
Having the ability to obtain and manage more health dollars in Health Savings Accounts is a start. A good model for self-management is the Cash and Counseling program for the homebound disabled under Medicaid. Individuals in this program are able to manage their own budgets and hire and fire the people who provide them with custodial services and medical care. Satisfaction rates approach 100%, according to the Robert Wood Johnson Foundation.
We should also encourage health plans to specialize in managing chronic diseases instead of demanding that every plan must be all things to all people. For example, special-needs plans in Medicare Advantage actively compete to enroll and cover the sickest Medicare beneficiaries, and stay in business by meeting their needs. This is the alternative to forcing insurers to take high-cost patients for cut-rate premiums, which guarantees that these patients will be unwanted.
- Allow doctors and patients to control costs. Doctors and patients are currently trapped by government-imposed payment rates. Under Medicare, doctors are not paid if they communicate with their patients by phone or e-mail. Medicare pays by task—there is a list of about 7,500—but doctors do not get paid to advise patients on how to lower their drug costs or how to comparison shop on the Web. In short, they get paid when people are sick, not to keep them healthy.
So long as total cost to the government does not rise and quality of care does not suffer, doctors should have the freedom to repackage and reprice their services. And payment should take into account the quality of the care that is delivered. Once physicians are liberated under Medicare, private insurers will follow.
- Don’t cut Medicare. The reform bills passed by the House and Senate cut Medicare by approximately $500 billion. This is wrong. There is no question that Medicare is on an unsustainable course; the government has promised far more than it can deliver. But this problem will not be solved by cutting Medicare in order to create new unfunded liabilities for young people.
- Protect early retirees. More than 80% of the 78 million baby boomers will likely retire before they become eligible for Medicare. This is often the most difficult time for individuals and families to find affordable insurance. A viable bridge to Medicare can be built by allowing employers to obtain individually owned insurance for their retirees at group rates; allowing them to deposit some or all of the premium amount for post-retirement insurance into a retiree’s Health Savings Account; and giving employers and younger employees the ability to save tax-free for post-retirement health.
- Inform consumers. Patients need to have clear, reliable data about cost and quality before they make decisions about their care. But finding such information is virtually impossible. Sources like Medicare claims data (stripped of patient information) can help consumers answer important questions about their care. Government data—paid for by the taxpayers—can answer these questions and should be made public.
- Eliminate junk lawsuits. Last year the president pledged to consider civil justice reform. We do not need to study or test medical malpractice any longer: The current system is broken. States across the country—Texas in particular—have already implemented key reforms including liability protection for using health information technology or following clinical standards of care; caps on non-economic damages; loser pays laws; and new alternative dispute resolution where patients get compensated for unexpected, adverse medical outcomes without lawyers, courtrooms, judges and juries.
- Stop health-care fraud. Every year up to $120 billion is stolen by criminals who defraud public programs like Medicare and Medicaid, according to the National Health Care Anti-Fraud Association. We can help prevent this by using responsible approaches such as enhanced coordination of benefits, third-party liability verification, and electronic payment.
- Make medical breakthroughs accessible to patients. Breakthrough drugs, innovative devices and new therapies to treat rare, complex diseases as well as chronic conditions should be sped to the market. We can do this by cutting red tape before and during review by the Food and Drug Administration and by deploying information technology to monitor the quality of drugs and devices once they reach the marketplace.
The solutions presented here can be the foundation for a patient-centered system. Let’s hope the president has the courage to embrace them.
what and the hell happened to the control if you don’t obey and what about the high taxes that people will have to pay more and more every year..if these Republicans can’t do better than this..they will be out on their azses also…you all need to to do better kill this deathbill now..we the american people do not want it..obama has alot of secrets in this so called deathbill and it will give him full control over everyone and everything…IMPEACH THESE PUKES..
Great proposal. I will not hold my breath for the 2/25 scheduled “bi-partisan” symposium in which the GOP leaders are marched into the colliseum in a “for sure” ambush that the mainstream media will announce that the wonderful Obama extended the hand of friendship to the darned old party of “No.” They are interested in bipartanship. It’s a political ploy. Shall we call it a “flea flicker” from the old dogs in the democratic party.
I’m in general agreement with most of these recommendations. But I am confused with “allowing individuals to purchase insurance across state lines”. I’m assuming it is an effort to allow me, currently living in the Dallas area where physician and hospital charges are sky-high and where premiums are to match, to purchase coverage in Salt Lake City, where medical charges are much lower and insurance premiums are too. The question is, why would the Salt Lake City insurance carrier be willing to continue charging the same insurance premiums when they’re having to reimburse my Dallas providers at a much higher level than previously. The answer is – they won’t. They will be forced to raise rates for anyone insured in higher cost areas, like the metropolitan areas of Texas. The “across state lines” proposal won’t work…
Thank you, thank you, thank you. More power to you and Newt. Get the word to those politicians, PLEASE. Health care can be fixed while still preserving freedom and free enterprise.
John,
I think I see Newt’s opportunism all over this piece.
I had thought that you, like me, believe that Medicare shouldn’t even exist or that, at least, it should be reduced over time. And it’s simply incoherent to say that on the one hand, Medicare shouldn’t be cut and that on the other hand it’s unsustainable. Maybe I’m being unfair: so the question to you and Newt is, “when should Medicare be cut?”
Also, you say, “Make health insurance portable.” Then you write, “The first step toward genuine portability—and the best way of solving the problems of pre-existing conditions—is to change federal policy. Employers should be encouraged to provide employees with insurance that travels with them from job to job and in and out of the labor market.” Encourage how? The three ways I know of that the federal government “encourages” anything are with subsidies, taxes, or regulations. Do you advocate any of those? If so, I think you owe it to your reader to give specifics. On the other hand, a legitimate pro-freedom way to encourage is to get rid of subsidies, taxes, and regulations that are presently discouraging something. Maybe that’s what you advocate. OK, then tell the reader.
Best,
David
I think removing the employer tax break for health insurance would be the biggest step to reforming our current system.
It’s interesting how much of my life is handled by my employer: my health, dental, and vision insurance, my disability insurance, my retirement, and even in some cases, life insurance.
We’ve given over so many of these basic financial decisions to employers because of a tax breaks. We lost the portability, choice, and control associated with handling these decisions on our own.
These are pretty vague – is this really the best you’ve got? And aren’t most of those suggestions deficit increasing? Oy.
Great job.
Healthcare reform can start now with no high price tag
Obama and Congress are taking the entirely wrong approach to healthcare reform. We can be doing so much right now to improve healthcare without suspicious price tags. There is nothing wrong with carrying out reform in two phases: the immediate and low price-tag phase, and the longer-term, let’s-find-the-money-first phase.
What can be done now, with little public opposition:
One group plan
Everyone would have access to insurance if all insurance companies were required to offer a plan to individuals as though they were all in one large company group plan, with the same rate and no exclusions. There is no cost to taxpayers; premiums are paid by the insured.
Guaranteed coverage and insurance market reforms
Few would argue with such provisions. The health insurance industry has been such a Wild West that companies could promise anything and provide nothing. They suffered no bad consequences when they blatantly breached contracts with subscribers. Other than enforcement, there would be no cost to taxpayers.
Essential benefits
An independent committee would define an “essential benefit package” as a minimum quality standard. It would include preventive services with no co-pays or deductibles, mental health services, and oral health and vision for children. It would cap the amount that consumers have to spend per year, and cost taxpayers nothing. Insurance companies could add features to this basic package. Now they can get away with not paying for basic services because most people do not have a choice of plans, and insurance plans are far too complicated to easily compare.
Individual responsibility
It is time for the government to be honest about the lifestyle factors that cause many of our healthcare problems. According to an article at preventdisease.com that is based on research reported in The New England Journal of Medicine, “preventable illness makes up approximately 80% of the burden of illness and 90% of all healthcare costs,” and “preventable illnesses account for eight of the nine leading categories of death.” This is the single most important factor in lowering healthcare costs and making people healthier. But in most ways it is not a role for government. It is up to individuals to change their habits. However, the federal government certainly shouldn’t be making the situation worse. That means telling the truth about the fast food and prepared food industries. And it means requiring that government agencies and contractors use part-time and telecommuting work arrangements so people have time to exercise and prepare food at home. A national campaign aimed at employers, encouraging them to use flexible schedules for workers, such as part-time and telecommuting, could do a lot of good, with the government itself taking the lead. Cost to taxpayers: nothing. In fact, there are potentially huge savings in lowered healthcare costs.
Pushing for results
It is time for ratings. Netflix movies are rated. EBay sellers are rated. This is established technology. It is time for a central web site that shows us ratings for healthcare providers. Some sites do this now, but there are too many with too few ratings and it is chaotic. An insurance company doing ratings of its providers is not an unbiased source. How good is that doctor / hospital / radiology lab anyhow? How effective? How organized? How long a wait? How polite? How accurate a bill? This costs little and offers so much in savings and making healthcare very effective quickly. No more money is wasted on ineffective providers. People get well much sooner. Providers change their methods to get better ratings. Cost to taxpayers: very little. Such a site would also reveal the really bad eggs . . . moving on to . . .
Making sure healthcare providers really do their job
States are supposed to enforce this now, but often don’t. According to a press release from Public Citizen’s Sidney Wolfe, MD, “Most state medical boards are doing a dangerously lax job in enforcing their state medical practice acts and adequately disciplining physicians.” In another article, Dr. Wolfe said that from 1990 to 2002, just five percent of U.S. physicians caused 54 percent of the nation’s malpractice lawsuit payments, basing his numbers on information from the National Practitioner Data Bank. A constant stream of reports show that hospitals are covering up mistakes. If states were doing their job, there would be little or no malpractice lawsuits. This is far more important than tort reform. With ratings, state regulators, properly funded and monitored, could spot and check on providers who are doing a poor job before they do something really really wrong. Such a practice would eliminate payments to incompetent providers and lower malpractice cost. Cost to taxpayers: very little.
Emphasizing primary care
Healthcare reform needs to enhance the partnership between patient and primary care doctor. The primary care doctor is the one who needs to be on top of what is happening with a patient, with whatever record-keeping system works best for him or her (usually a hybrid of paper and database. All-electronic record-keeping is not reliable yet). Primary care doctors need to be paid as much or more than specialists and be paid for phone call and record-keeping time instead of just doctor visit time. Many doctors are forced to use a more expensive visit when a phone call will do because they don’t get paid for phone time. Cost to taxpayers: nothing
Looking close at hospitals
Hospitals need to be very closely audited. Not only are there often bogus charges on bills, but the charges are far far beyond costs. No one really checks this, so they keep doing it. Employees wander around hospitals that don’t seem to be doing anything. Hospitals charge for unnecessary tests, with no one making sure that tests are based on research. Anyone who complains is ignored. Medical institutions are roach motels for our hard-earned dollars. Dollars check in but they don’t check out. Cost to taxpayers: very little.
A simple little thing
Refrigerator magnets can save millions. Yes, you read that right. A magnet can list the phone numbers, hours, and locations of urgent care centers that can be used during weekends and evenings instead of much more expensive emergency rooms. We now waste millions on non-emergency problems being treated in emergency rooms simply because people don’t know where else to go. Cost to taxpayers: very little.
Another simple little thing
Money is wasted on mailed Explanation of Benefits forms from insurance companies when this information could be provided for free via a secured web site. Cost to taxpayers: nothing.
These no- or low-cost changes would greatly improve care and save millions. They are the first step. There is no reason to delay them in order to get a “comprehensive” healthcare reform. No reform can possibly work without them in place first.
Patty Zevallos
media producer – web, video, print
http://www.pbzproductions.com
Great ideas.
Dr. Goodman:
Congratulations on your excellent WSJ op-ed. I think it’s the first time I’ve seen you so clearly call for Congress to act on med-mal reform. Your Backgrounder No. 163 mentioned Congress, but only to report what had been considered there previously. Your Handbook on State Health Reform focuses on what states can do. Are you sure you’re not being anti-federalist on this issue? Lawrence McQuillan and I are very cautious about encouraging Congress to act on med-mal.
Thank you for writing this. I agree with the content. May I offer a couple of more suggestions? You haven’t spoken much about problems within the medical establishment itself. First, we need to change the incentive structure of the medical community. A friend recently had a pacemaker installed but later resulted in a staph infection that was also installed with the pacemaker, resulting in a significant health crisis for the individual, as well as 3 more weeks (and associated costs) in the hospital. No one alleges that the mistake was intentional but because neither the doctor, nor the hospital, have much incentive to prevent such errors, they are more likely. In fact, one could argue they have a financial incentive NOT to work to prevent such errors because in the end, this person, and their insurance company, had to pay tens of thousands of additional dollars for the extended stay. If people argue that lawsuits are the incentive, then why do >100,000 people die each year due to such mistakes? I argue that lawsuits merely serve to drive such mistakes underground, to prevent their exposure. Which brings me to my second suggestion: transparency. We need to create legislation that allows for significant transparency in the medical community. If a doctor has had his license suspended by the AMA, that information is kept from me and I don’t know if I’m dealing with a bad doctor or good one. Information about hospital performance is also not readily available. Transparency will not drive them out of business, it will improve their performance. Besides, transparency should be something President Obama will resonate with, right?
I agree with Virginia. Portability, choice, lower costs, the skies the limit when the tie between employers and health insurance (namely the tax benefit) is severed. Many of the other reforms will fall into place because millions of people will choose the free market over their employer. Employers will still want to contribute to their employees health (HSAs are a great mechanism for such contributions), but until the tax benefit goes away very little will change in the health-care industry, including skyrocketing costs.
What would work better than simply eliminating junk lawsuits is eliminating junk doctors who cause the injuries repeatedly, and simply move across state lines when their ability to practice in one state is hampered. In my opinion, if you are going to slam the lawyers, you need to slam the doctors too. How about a three strikes and your out rule: if a doctor loses or settles 3 lawsuits for malpractice under a national system similar to Texas’, that doctor must surrender his license and will not be eligible to practice medicine in the U.S. for X years. Then you might actually see a decrease in claims and cost. I live in Texas and I haven’t seen any real effect on my health care premiums, which keep rising annually. The ones who benefited from the Texas law are the doctors, who actually have seen their malpractice premiums drop a bit. And that has helped bring doctors in to practice in rural areas. That’s a good thing. But it’s not the only thing.
The injuries resulting from doctors’ negligence are real for the most part. The Texas system penalizes the injured patient in favor of the doctor. There needs to be some balance. Again, just my opinion.
Ms.Zevallos, you sorely miss the point. Your suggestion is, in concept, no different than that of the democrat majority. You identify all these things that (in the opinion of many) are wasteful or (again – in the opinion of many) not beneficial to the American citizen. Having identified these problems you set out to “fix” them with mandates on insurance companies, hospitals, doctors, and even patients. I use the word “mandate” because you mention “insurance companies required”, “independent panels” and “government agencies being required to….”, “ratings”, etc. Presumably these “requirements” will have to be mandated somehow by government, and you will have started down the slippery slope once again.
This is not to disparage your opinion with regard to the problem areas. What you fail to recognize is that most of these problems are a direct result of the previous involvment of the government (state and federal) along with the insurance companies themselves in the process of limiting choice and restraining competition (aka – requiring). The basic answer lies in letting the market correct the inefficiencies. It’s true that intelligent regulation is necessary, but that does not include having “panels” or “agencies”, independent (as if that were possible) or otherwise, mandating coverage for the masses.
It’s true that insurance involvement is a mitigating factor in a free market product or service because it necessarily involves “pooling” risks, and it has to be considered with that in mind from the standpoint of regulation. But the bottom line is that we must resist the temptation to view a person’s healthcare as something that needs to be “managed” by a third party. That should start and end as an arrangement between the patient and his doctor.
Although Ms. Zevallos touched on it, the fact that INDIVIDUAL ACCOUNTABILITY is not in your 10 point plan ignores the single most important variable in this mess. I know that you would have a better chance of seeing God than getting elected if you asked people to be accountable—-but without it we will be DOA and it is do-able.
I also believe that the people who cause a problem should be charged with solving it. I sent the following suggestion to the President relative to the insurance companies. You develop a product improvement specification with no more than the 4 most “impactful” action items your “non-partisan” team identifies not a 2,000 page document. You tell the companies you have 6 months to submit a business plan on how you will achieve them– and 1 year to implement the plan. As an example, assuming one item is to reduce costs by say 4% if they only achieve 3% they are taxed dollar for dollar on the difference. If they achieve 5% they are given a dollar for dollar tax credit.To ensure quality they must provide patient and provider satisfation surveys. If they refuse to comply then they continue to be penalized accordingly and the results are made public. The insurance companies are given the freedom to achieve the items/goals in any manner they wish as long as they maintain quality-But the price for that freedom of choice is accountability. This beats the heck out of a Government sponsored politically doomed Health Plan or complete Government control of Health Care..
There must be a new Bart posting here today. The above wasn’t me.
I can go along with most of the ideas as presented here, but have some differences in how to reform the tax exclusion, which I’ve already mentioned. Primarily, any new tax credits for health insurance must be restricted to coverage which is community rated to at least the same level as employer-based coverage. To do otherwise would lead to collapse of the group plans.
This approach fits inside the Venn-diagram intersection of existing GOP and Democratic proposals. Republicans want to extend a tax break to those who don’t get their coverage from work; this does so for some forms of coverage. Democrats want to force everyone into community-rated plans; this approach makes existing community-rated plans more affordable and may lead to expanded offerings. Democrats want to subsidize community-rated coverage by forcing healthy people to pay into them, essentially a hidden tax; this idea uses the existing tax code to subsidize community rating, as it already does for employer-based plans.
The only “compromise” required is that the two parties be willing to break their proposals into component parts, and to defer components which are not mutually agreeable.
David Henderson rightly points out the inconsistency of being against Medicare cuts and while at the same time railing that it is unsustainable (which it is and worse –it will gobble up the economy if nothing is done). But what needs to be controlled and the future path cut is the government contribution to Medicare not the government administered pay rates to providers –a method that not only fails to control costs but also leads to gross inefficiency which is one of the real drivers of escalating medical costs.Medicare should be converted into a defined contribution plan with an income related voucher used towards the purchase of private plans.
One area of possible bi-partisanship might come out of the first two points dealing with the distorting effects of the tax deduction given employer based insurance.Even those economists who support Obama agree that the deduction leads to imprudent purchase of health insurance, overuse of health resources and rising costs. And it is not portable. Substituting income related credits that could be used in private markets would be a remedy.
The Senate plan makes a bow in that direction in a very convoluted way with its excise tax on Cadillac plans. The unions attacked it and undoubtedly wouldn’t like tax credits. But the status quo can’t go on forever. Elsewhere in the Democrats bills there is nothing that would reduce health costs in any way. That leaves rationing as the only recourse.
John – While I admire the gumption to put forward the ideas in the manner you have, the content leaves out a lot more than just the details. I believe that a lot of your posts, and these ideas, show a missing component to completing the thought process and to be able to anticipate a lot of the missing elements. That missing component, I believe, is the actuarial dimension. If you included this important input, you would realize what huge assumptions you make by presuming that insurance companies would/could/should operate in the manner you assume in a number of your points.
For example, “portable” employer based insurance goes against group underwriting principles because of the anti-selection that takes place when only some people “need” to take it with them because they are sick. (The same thing happens when stupid state legislation pushes the requirement for insurance companies to cover dependents who are otherwise not disabled to some ridiculous age like 29 or 30.) Your expression “individually owned insurance at group rates” begs a whole pot full of questions and challenges. The special test programs within Medicaid and Medicare to which you allude are not viable models for individually purchased insurance because they would be totally priced out of reach (they can be done within those programs because the beneficiaries are able to use other people’s money to pay for it). The same thing explains why chronics can’t afford to pay for “chronic care only” style policies – by definition, those policies will have to cost as much as the care itself, plus margin and expenses – there is no pooling.
When you unravel insurance pooling, you increase the overall spend, because you can’t give everyone everything they will need, AND provide coverage for everything they MIGHT need, for less money than a group pooling mechanism based on an average probability of what people could need.
This said, many of your proposals are of course totally reasonable, meaningful, and practical. Unfortunately, unless we fix the pricing problem (by requiring an “all payer” system where providers set their rates and all payers must recognize them without recourse to discounting, and therefore require balance billing, etc.), we will never fix the core problem of the system, we will only be patching symptoms on the periphery. And since this would require politicians to admit the whole mess is their fault in the first place (Medicare and Medicaid price fixing and cost shifting), and would require telling seniors that they have had too much of a good deal for too long, don’t expect any “true” reform to come out of the summit.
Response to David Henderson and June O’Neil:
In the NCPA study “Roforming Medicare” (Oops, a correction. The study is titled “A Framework for Medicare Reform”), I outlined a way to move Medicare to a private, prefunded system that by mid century will require no higher payroll tax than the one we have today. (Simulations by Tom Saving and his colleagues.) If there is a way to find “savings” in Medicare, I can almost guarantee you they will be needed to help fund that reform. In the meantime, we do not want to create new unfunded liabilities for young people — which is what ObamaCare would do. Taking Medicare off the table, I believe, would completely end that threat.
On the issue of “encouraging” employers, I agree that was an unfortunate choice of words — something that slipped through in the back-and-forth editing between two authors. Employers in almost every state today are barred from buying individually owned insurance with pre-tax dollars. They can only buy group insurance. The proposal is to “allow” employers to buy individually owned insurance.
Response to HD Carroll:
We have proposal to deal with the problems you bring up as we move to a system of portable insurance. I agree that it is not easy and will take careful thought and planning. See the chapter on this in our Handbook on State Health Care Reform.
Response to John Graham:
I don’t have a position on whether malpractice reform should be federal or state, and if federal, what decisions should be left to the states. In our Handbook on State Health Care Reform we outline a way for doctors, patients and hospitals to opt out of tort law in favor of an alternative system that immediately compensates victims of unexpected adverse events without lawsuits.
One idea is for the federal government to lay down the terms of opting out and let states determine what happens to people if they don’t opt out. In any case we are going to have to fight the trial lawyers at every level of government to get any lasting reform.
John,
I agree heartily with yours and the Speaker’s ideas, and have written to Leaders Boehner and McConnell in support of them as well. However, as others have suggested, the devil is, once again, in the details.
I am a mental health practitioner. In my circles, the main complaint I hear from my patients, about Republican healthcare reform strategies, is fear of being overwhelmed by how to choose their own insurance options. Over my 20 years of practice, I can say that one task I perform countless times each day is educate people about how their health insurance works. Even so, it never ceases to amaze me how many people want others to be responsible for their healthcare, and how little they care to know about their own policies. Many people who have employer-provided healthcare treat it like an entitlement program, even if they are paying into it.
It will take a substantial effort to train people how to take this personal responsibility of choosing their own insurance plans. Republicans need to get down to the “nitty gritty” and start letting Americans know they are thinking of these details.
Mr. Goodman, the 10 suggestions in your article (all excellent, by the way) have found their way into cartoon form today at “Hope n’ Change Cartoons.” You can see it at http://hopenchangecartoons.blogspot.com/2010/02/healthcare-top-ten.html
Please keep up the great work!
Great piece in the WSJ today.
I read it.
Good.
All are important.
I think providing price transparency is the critical one.
Require the providers to show the charge, the net discounted amount (whether an insurance discount, self pay discount, or charity care discount) and show what the provider would receive and accept from Medicare. Once the consumers have a valid price reference, the market will take care of the rest.
John, what is wrong with the ideas of:
1. Insurance competition across state lines.
2. Small business collective pools for health insurance.
I am an ex-hospital CEO and I agree with you on the tort reform point. It is, easily, the lowest hanging fruit. Unfortunately I think that the lay public thinks only in terms of lowering insurance premiums in an effort to further line physicians’ pockets. Hence, it’s been easier for our elected officials inside the Beltway to ignore tort reform. Having worked inside of several different hospitals in multiple states, I can tell you that the “amount” of services provided simply to avoid lawsuit is much larger than even most analysts estimate.
Keep fighting the fight.
John, well done. I’ll be listening to Bill Bennett’s show. A few suggestions:
Words/terms matter. Health care is a term that leads to the wrong expectations. Jane Orient, M.D. has written on this. People are responsible for their own health. The medical profession can assist in the management of illness or trauma, that is medical care. Insurance should be sickness or medical care insurance, not “health” insurance. People have come to expect low price, prepaid, wellness assurance, not a true insurance product.
As much as I believe some malpractice reform is needed, it is not a national government issue. Malpractice is not tried in federal courts. We don’t need MORE federal government.
Hallelujah.
John,
You beat me to the email. I was going to email you to say that I’d heard President Obama publicly ask twice for recommendations and to ask if you had answered the call.
Thank you !
Oops. I had the study named wrong. It’s: A Framework for Medicare Reform.
Here is another set of ideas from Arnold Kling:
http://econlog.econlib.org/archives/2010/02/bipartisan_heal.html
John: There’s some ambiguity between the headline used in your 10 GOP health ideas on Medicare (“Don’t Cut Medicare”) and the sentences below that headline. I assume, like me, you ARE for steps to slow the growth of Medicare spending (such as moving to a defined contribution) but are opposed to any such savings being used to “finance” a new entitlement, right?
Stuart: Yes and yes. I am in favor of converting Medicare into a private, prefinanced system (as outlined in the study “A Framework for Medicare Reform”). This could be done by mid-century with demand-side and supply-side reforms. The modeling was done by Thomas Saving, a former Medicare trustee. These reforms would slow the growth and cost without cutting benefits or raising payroll taxes. We should also avoid creating new unfinanced liabilities by taking Medicare cuts off the negotiation table.
It seems that it doesn’t matter which way I turn or who’s plan I read no one seems in my opinion to come up with an equitable solution. The only hope for the USA to keep the best health care system in the world is for the government at all levels to eliminate the laws that prevent the health care system from working for those who do not have it, has anyone ever thought that just maybe they don’t want it? Consider all of the restrictions not only on health care but on al businesses in this country that cause the continuous increase in the cost of health care. One example is every time my wife goes to a doctor she ends up going thru one test after another that she doesn’t need and I believe in part because the doctor is terrified of the consequences he will suffer if he is not right in his diagnoses a fear that they transfer to my wife. Set a reasonable amount to each malpractice event for the lose of the victim and permit the insurances to sell interstate lift some of burden if not all from those whom the government regulates by passing laws and creating new agencies to control them in other words bring us out of bondage to a government that is getting closer to a totalitarian regime with each day that passes. I will not support this organization nor any other who desires to place our health care system into the hands of government bureaucrats whether it is supported by the extreme leftists, extreme centrists, or extreme rightists or any special interest group anywhere in between. there is not 10 cents worth of difference between Newt and his associates on the opposite side all of them are after power and fail to place their country first. No one seems to desire to solve problems they only place band aids on the sore and let it continue. The deductions that come out of the pay checks and profits of working Americans should go into a sealed account with disbursement only to those who pay into it. That should apply to Social Security and Medicare and any other obsolete program that the government has failed to keep functional by using those funds for their own personal gain. Talk about the definition of secret combinations and that is the definition of our governments at all levels the worst culprit of them all is what was once a federal government which has become a Democratic government where the largest number of voices get their desires fulfilled by a group of political criminals who don’t even fear to steal trillions of dollars in broad with the approval of a great number of those voices who became the beneficiaries of those two heists supported by both party members on both sides of the aisle under a Republican administration and it has picked up speed under a Socialist Democrat Administration. Even law enforcement is standing idly by and permitting this theft to continue. How many are violating their oath of office? This also invites special interests or secret combinations to then reap a harvest from the desperate electorate by begging for donations the only good thing about all this is these special interest groups such as yours beg for donations while the government at all levels threaten a person with the loss of all they have is they don’t comply to their demands, boy do we have trouble right here in river city and prairie city and desert city and Ocean city and bay city etc. I am sure I have made my point.
You forgot to put anything in their about illegals paying their own medical bills. I was charged $6,000.00 for being in the hospital over night with the flu. When I complained the hospital billing office said someone has to pay for the illegals and we had insurance so we got to help. This is not right.
If we have to pay, make the Muslim pay too. I bet there are many who did not know that Muslim are exempt from the MO_Bama Care fiasco. This is one technique the Muslim use to Tax the Infidel into submission. Just become a Muslim and your exempt. No Thanks. Great having a Muslim for President. An illegal one at that.
This forum has produced a number of good ideas and an equal number of bad ones. Too many people are making assumptions regarding how health insurance and health insurance companies work/s without the knowledge, just their assumptions. The same thing happens with legislators because they will not educate themselves or get a specialist on their staff to dig out the facts and truths.
I am going to address some of the ideas, practices, wish lists, and gripes but not all as I don’t have the time tonight to do all of them but will address any one of these on a one-on-one basis if requested.
Insurance premiums are developed using several factors: age, sex, zip code of residence which has the real cost of services attributed to it, type of benefits offered, and the past and current health of the person insured. This somewhat changes when employer group benefits plans are developed as the group premium in the simplest form form averages all of these factors for the group and most groups use this average premium cost per employee regardless of age, sex, current or past health conditions.
Now understand this first as one of the contributors pointed out. The insurance company will charge what it determines to be actual cost plus a reasonable profit margin just as any business does. Now some companies are better than others in keeping their operating costs lean which does have an effect on the rates. Now, lets address some issues that have lead to sometimes frivolous demands or debates.
Using sex, age, current and past health conditions to determine premiums. Well the facts are these. Women cost more to insure in the younger childbearing years simply due to maternity costs. This higher cost usually continues until later middle age because women have more medical conditions arise than men during this age bracket. Ultimately in the older ages men cost more than women due to the same principle. Age comes into play because younger people tend to be healthier but they are involved in more accidents. Now a lot of younger people will opt out of insurance because they are healthy and have that bullet proof attitude which then drives up costs for all others because the average age of the insureds increases. This same procedure is used in auto insurance and yet no one squawks about it. It just costs more to insure certain ages and there is a difference in medical treatment frequency in the sexes.
Now lets address the zip code ratings. It may cost on the average $900/day for a semi-private hospital room in New York and only $400/day in Kansas City. A doctor in New York may charge $150/routine office visit and the Kansas City doctor $75. Enough said here, I think you get it. Buying insurance across state lines will not change this. Most insurance companies selling individual and family health insurance plans sell similar plans in all of the states. Do they price them differently in different states of course they do for the reasons stated. Attempting to make these companies charge the same rate in each state will only cause them to pull out of certain states or raise the lower cost states to compensate. Neither of these is good for the public. By the way, states that are plaintiff friendly in lawsuits against insurance companies IE large punitive damages tend to run off some very good companies and leave the state with little competition for the citizens to choose from.
Now I will take a moment to address a simmering issue that will end up in the Supreme Court, mark my words. The Federalizing of insurance regulation by taking away the state’s authority to regulate insurance companies doing business in their state. This is against the McCarran-Ferguson Act which gives the sole authority to the states to regulate insurance in their states. This has been before the Supreme Court other times in the past and it has always been upheld in the states favor. To propose the Federal Government can legally force an insurance company to sell products in all states, only charge a certain premium, dictate what benefits must be included just is not legal and should not be legal. For many years Banks made numerous attempts to get into the insurance business but were always blocked by the McCarran-Ferguson Act. Bet you are glad now that they never were allowed to do so.
One last issue I will address for the night. I know it is extremely popular to do away with the pre-existing condition clauses in medical/health insurance and it can be done but not for free! Why is simple, anti-selection by the public. If there is no restriction on getting coverage immediately for an existing medical condition then people will wait until they need treatment to buy coverage and drop it when they don’t need to use it. You can’t wait to insure a house until it catches fire or a hurricane is just off the coast from you, and you can’t buy auto insurance to cover damage that already exists, and you can’t buy life insurance after you have been diagnosed with a terminal illness or can you? Sure you could…you would pay a premium equal to the total insured value plus a profit margin. A sure claim will result in a full benefit premium being charged plus the companies expected profit margin. Is this wrong? No, you want you insurer to be in business and able to pay your claims don’t you? Insurance companies are not charities. When I first learned of this change being proposed in the treatment of pre-existing conditions I wrote to the President, the White House, Senators, Members of Congress, and those posturing to run for office in 2012 and told them premiums would rise immediately 25% because of this, I was wrong..it was around 30%.
Now there are basically two types of insurance companies, Mutual Companies that are owned by the policy holders, and stock companies that are owned by the stockholders. You would think that the Mutual Company would always be the lower cost wouldn’t you? They don’t have to be concerned about the stock increasing in value or paying dividends. However, they have other requirements that differ from stock companies in reserve requirements and this also affects their ability to secure financing for expansion.
For the record, I am not on the insurance industry’s side or payroll. I am just a concerned citizen that knows the new health care plan is not the way to handle health care and health care insurance. Well you should be soundly asleep by now but for those that read this entire post you hopefully will have a better understanding of the complexity of changing health insurance. I will post my recommendations on what I think may be a better way to go if I receive some requests to do so, otherwise I have just done it again…spent a good deal of my “me time” trying to make a difference but no one wants to hear it.
The way one votes has consequences. What worries me is that although everyone is aware of this fact. The incumbents continue down a path which under ordinary circumstances is sure to defeat them. Do they have a secret plan that will make our descending votes irrelevant???
I believe that Medicare could save a LOT of money on equipment needed and supplied to patients.Wheel chairs nebulizers,hospital beds etc.if they had warehouses with these needed items. At present these needed items are rented instead of being owed by Medicare. I know a woman who was furnished with a hoverround with quite a hefty price tag. She didn’t like it so traded with a neighbor for a hospital bed. After the woman died , her daughter SOLD the hoverround!If medicare owned the equipment and had a warehouse in five or six counties with a couple of people to maintain and for pick up and delivery. I have an incurable lung condition and have to use oxygen.It costs over $300.00 a month,
which is outrageous. If Medicare owned it, it would have been paid for , probably tenfold by now. Yes we do need changes in health care,but we don’t need to tear it to the ground.repair the things that do work and fix the things that don’t but let the people do the “FIXING”and then let the people run it.Washington , keep out.
Why should anyone listen to anything that Newt Gingrich says? He is a member of the CFR/ Council on Foreign Relations and they are the group that is initiating every bad policy and bill that is being shoved down our throats, including Obama care, so why would anyone listen to Newt Gingrich? He is in Newsmax all the time and on Fox news, owned for the most part by Rupert Murdoch who is also a member. I expose Newt every chance I get and he just keeps on keeping on. Maybe he should try working for a change. He can get running for President out of his head. No I won’t listen to Newt Gingrich or any of his hairbrained ideas on health care thank you.
Some of your idea’s will work, others are already in place with insurance companies and some just plan won’t work.
Can you image how complicated it would be for employees to move their insurance from employer to employer. Massive, expensive changes would have to be made to the system.
Right now, 100% of an employees cost for health insurance can come out of their paycheck pre-tax or tax free. It would be nice for individuals to be able to do the same thing on their taxes. Although most individual plans are held by the self employeed and they can take a full tax deduction at the end of the year.
Here are just a few points. Most of what is said is accurate and could help.
I don’t think ANYBODY gets it! Everyone is so intent on the do-not-haves, they are killing the “haves”! We have insurance because we worked our rears off to get it! Now, I have to pay medicare $96/mo for something I got for $20/mo, and Medicare informed me they had “deductibles” (which was not mentioned in the original paperwork). I have had three x-rays for my replaced hip, and medicare hasn’t paid any. They paid $30 of a $400 bill for tests, etc. Now, I don’t know what in the Lord’s name they are taking FROM Medicare, because I can’t figure out what Medicare is PAYING!!!
Cut the crap and kill this lunacy. People who don’t have experience with the use of medical insurance are3 trying to fix it. That’s remarkably ignorant. Get a few citizens on there. See what reality is!
Why is it all the American people have to put up with Obama and his ludicrous health care that is’t worth the paper it is written on and it is definitely selling out the American people. On top of that the illegals get all our benefits and they haven’t worked a penny for any of the benefits they are getting. I fully agree with Arizona, send them all back home and free up our American rights and privileges and take back our country from all their gangs and illegal drugs they force on our country. I truly home all the other state make laws against the illegals and send them home till they can learn English and not expect to be handed everything free here. If we went to Mexico they wouldn’t be cowtowing to all our wants and they certainly wouldn’t be paying our medical, education, hospital and jobs and everything they seem to think is free by being an illegal in America.
I worked for doctors for over 25 years and billed insurance claims for many of those year. First Medicare has such a problem with fraud because the people running Medicare, and paying claims, don’t know what they should pay or to whom they should be paying it to. I use to have to call Medicare on a daily basis when I worked and I could ask 5 people the same question and get 5 different answers. No one there is trained enough to answer simple questions. Medicare is the most complicated insurance to deal with, but what should we expect from a government run insurance company? Nothing the government runs works! Medicare, Medicaid, IRS, Postal Service, etc. Now that I am approaching Medicare age, I am worried to death on how I will be able to pay for my medical expenses. My husband is a retiree of Verizon, and I am sure that they soon will drop all of their retiree’s benefits to save money, thanks to Obama and his new health care package. They will just throw us all into the government plan and pay the fines if necessary. It would be cheaper for them to do this. Every year we see our benefits lowered, and we anticipate not having any before it is all through. Our country use to be great, and now we won’t even take care of our elderly citizens. We are taking care of my husband’s 87 year old mother, but soon we won’t be able to do that when we can’t even pay for our own medications, or doctor’s expenses. What has happened to this country?
There is one factor, which if truly addressed, could simplify the whole problem. That factor is COST. Have you noticed what a service provider (hospital, Dr.) can charge for services rendered? Have you compared these costs to what’s charged in other countries?
Let a free market do it’s thing. Open up US medical markets to foreign competition. Then allow insurance companies the chance to create defined networks that include more competitively priced providers. If the insurance plan member agrees to use an ‘international’ network then the insurance premiums could be dramatically less making insurance more affordable/accessable while stabalizing the price.
Encourage the mechanisms of self-directed care (HSAs,PPOs)and frivolous utilization will go down. Add this to the Goodman mix and now the funding problem shrinks dramatically.
Finally, create a national CATASTROPHIC health plan that kicks in after the first $20K of expenses, that every American pays into via payroll taxes. (The risk pool must include everyone, healthy as well as sick) This is not a single-payer system but rather private insurance companies managing and administering the program in an environment that allows for competition (much like Medicare Advantage). Now Joe Blow citizen can purchase a supplement that addresses the first-dollar expenses (e.g $20K) and pay premiums that are very managible.
Every person must have ‘skin in the game’ to fix our current situation.
I’m sure the heart specialist earning $300K a year doesn’t like this idea but it’s time to free Americans from the monopoly of our current healthcare system.
This article is exactly the right approach to healthcare reform. We need to bring the Old Dinosaur model into the 21st century. It hit on the biggest problems that keep healthcare the unmanageable behemoth that it is.
To be clear: 1)Eliminate the greed, corruption, and duplicate services that drive up prices 2)Open competition with reasonable price controls to allow free market behavior 3)Preventative Healthcare promoted from the National Level and down to community levels 4)Catastrophic healthcare coverage for all. These would lower healthcare and allow for no tax increases. God save 1/6 of the American Economy.
You left out two truly enormous cost saving reforms: 1. Drastically reduce or eliminate most state and federal healthcare mandates. Depending on which study you look at, this could save 10%-40% on current health insurance premiums.
2. Institute a moratorium on new healthcare legislation. Compliance costs for insurers, providers, agents and even consumers is estimated to be over $60 billion annually. Instead concentrating their efforts on providing better quality healthcare, these entities are busy reprogramming claims system, rewriting contracts, reissuing booklets, certificates and benefit summaries and adjusting their billing systems which costs much time and money.
Appeal health care. It is going to regulate the Amercicans. Health care reform will hurt the country. No more health care reform. President Obama, stop punishing Israel.
Great article. However, I have a question. Why are they taking 500 billion from Medicare and very little from Medicaid? I read an article in the Alabama Newspaper that said that the state had received a large amount of money from Obama (can’t remember how much, but it was a lot)for Medicaid. We, the elderly, have paid into Medicare for years and then when we need it, zap it is being cut. Now most of the people on Medicaid are young and can still work but we can’t. Also, I am sick and tired of hearing about the low-income people because when you see all that they get compared to a middle class person, they come out way ahead. For example, free home health care, phone, electric, housing, medical care, food stamps, long-term care, pads for incontinence and on and on. On paper, we are middle class, however, we pay for all of the above and when you do, we are the low-income people and we never asked for five cents from the government and we worked all our lives so that we would have a good retirement, but guess what with all the above bills we pay and more, we are lucky to have a roof over our head and food on the table never mind take a vacation. Whatever happened to take care of the elderly? We took care of our parents and our parents took care of their parents. The young people should be in an uproar over these proposed death panels for their grandparents, but I don’t hear much from them. Well, they will all be old one day and they will then see the light! I wish I had never worked as then I could get all the freebies and would not have to worry how I am going to pay for increased health care, long term care insurance, etc.
What about training more general practitioners? Simple supply and demand argues that point. Odd that didn’t make Newt’s list. As a matter of fact, a lot of “common sense” solutions to lowering healthcare costs didn’t make Newt’s list. Best of luck to Newt; I hope he does more homework on this topic….A lot more homework!