Sunday, February 18, 2007

Health Care: What's the Current State?

A couple weeks ago I posted my thoughts on a discussion of the minimum goals for universal health care from a progressive perspective. I'm hoping to maintain this discussion over the next few months, as various proposals are suggested (and tried, in Massachusetts and California) for solving this problem at the state and federal level.

To understand what needs to be fixed about healthcare, though, we need to understand why the current system is broken. There are some obvious things.

* Some people are uninsured. This has negative implications for them, of course, but it also has negative implications for the rest of us, because emergency rooms are the only part of the health care system that we require to provide care no questions asked... so the uninsured among us end up frequenting the most expensive care facility option. It seems that it would be clearly good all around for everyone to be insured... but, of course, that not-insignificant money would have to come from somewhere.

As an interesting side-note, the state of Oregon is currently considering a significant tax hike on cigarettes, to provide health coverage for all uninsured children in Oregon (or, more specifically, all children of families under a certain income level). Vice taxes are always an interesting approach, though not particularly sustainable (part of the motive of the tax is to move toward eliminating smoking, thereby eliminating the tax revenues!), and certainly not scalable to be an effective overall solution.

* Many people that are insured struggle to pay for their insurance, and for the part of their care that they are responsible for beyond their insurance coverage.

This is the larger problem in our system, I think, and one that is little talked about. My health insurance has a lifetime maximum coverage amount of one million dollars. That seems like a lot... but with health costs as they are, any major ongoing hospital care could reach one million dollars in relatively short order. Because of the employer-based system, I have no option to compare plans or select a different company... I either have the plan my company provides, or I pay for an individual plan out of my pocket at exorbitant rates. What happens if my daughter, who has special health needs, develops serious complications and hits her coverage maximum? I have to change jobs to get a different insurance plan? Move to a different state?

My plan also has a $1000 per person deductible per year. That means that (excepting office visits) the first $1000 of health expenses each year for each member of my family has to come out of pocket. Again, I have no option to let that plan compete on the market and see if something better is available... I have to take it or leave it. I can afford it, and am grateful for the safety net my coverage provides... but there are many people for whom the out-of-pocket amounts they have to pay are a very real burden.

* Others? What would you add to this list? What other problems do you think exist in our current health care system?

Of course, we should also look at what is particularly good about our health care system. I think there are some important things here to keep in mind, things that we definitely would not want to lose in our reforms.

* Options, Competition, and Freedom. In general, Americans have a great deal of choice in what health care they receive and how they receive it. My current insurance plan allows me to visit specialists directly without a referral, for example. A previous HMO plan I was on required a visit (or call) to my primary care provider before being allowed to see the specialist, but the doctor was willing to give me a referral to just about any specialist I felt a need to see. For each of our babies, we were able to choose from a variety of prenatal care providers, and even hospitals. We chose options out of the mainstream, but our insurance covered those nonstandard options without blinking an eye.

Even where insurance doesn't cover a service, it is still available. My daughter has allergy issues that require nearly all her medications to be compounded (given in raw form, without the inactive ingredients, colorings and flavorings and the like, that she is allergic to). Insurance, for some reason, doesn't cover compounded medicines. It doesn't matter that she requires them for medical reasons; because the state laws and regulations allow them to exclude coverage of those prescriptions, and because so few people need that particular benefit, they (and probably all other insurance providers in this state) exclude it to save on whatever costs they can. Yet, we can still get her prescriptions compounded, and even have a selection of pharmacies in the area that will do it for us, and compete for price. We have to pay out of pocket, but the prices are quite reasonable because of the competition.

There are endless examples of situations where we exercise our freedom to find medical care options that are unique to our needs and desires. There are also numerous ways that competition within the health care field improves our care and lowers our costs. Any plan that severely limits to does away with those features, I think would be unacceptable.

What else would you list as particularly good aspects of our current health care system that you would not want to see lost in a comprehensive reform?



purple_kangaroo said...

Some of the health insurance sytems (Kaiser, for example) have much less choice than others. In those, it's not nearly so easy to get referred to a specialist or to get sometimes needed tests and treatments.

I had to chuckle when you called the cost of compounded medications "quite reasonable," since it's sometimes at least 10 times the cost of what one would pay for that same medication otherwise.

I have a hard time imagining that completely government-provided health care could ever be a really good thing. Look at the NHS in great Britain, and other similar programs elsewhere. With no free market and being at the mercy of the state, health care may be free and available to everyone, but at quite a cost.

Dave said...

I would not want a comprehensive reform to limit the degree to which individuals and companies could be financially rewarded for their investment in research and development. I'm including in that all aspects of medical research, technology, prevention, treatment, pharmacology, surgical techniques, etc.


MarkC said...


That's an interesting thought that I hadn't considered. How would that happen? If we went to a full-out government-run health care system, funded by taxes with coverage for everyone... how would that stifle the private medical research and development industry?


steviepinhead said...

As with several of "our" other ongoing discussions--global warming, immigration policy, war and peace--this is a critical area which will impact all of us eventually (if not immediately--after a remarkably illness and injury-free life, I've had four eye operations in two years; a brother-in-law may have terminal intestinal cancer that has spread widely; a younger step-brother has done well after being hit with lung cancer surgery and two hip replacements; a sister has had two rounds of intestinal-blockage surgery; and my 79-year-old dad, after a similarly carefree life, just suffered and survived a heart attack brought on by a coronary blockage--one of those slick stent procedures was performed and he was out of the hospital and back to independent living within five days).

One could go on and on. If neither you nor your relatives have significant health issues, you are bound to have friends and neighbors who do. (Or you are very young or very unconnected...)

Unfortunately, like some of our other discussions, this is also a huge topic which is hard to get one's mental arms around, much less progress toward a "solution."

I don't have any answers on this one, but I think Mark and Dave have identified some essential issues: freedom of choice in terms of providers, plans, and (within reason) procedures; breadth and "depth" of coverage (arguably everyone should have access to routine preventitive care and emergency care, but should we extend that to all "elective" care and every possible all-out, last-full-measure of alternative care?), cost, cost, cost, and--thanks, Dave!--the issue of incentives (incentives to take care of oneself, instead of "electing" an unhealthy lifestyle), to become doctors or researchers in the first place, for healthcare providers to live and work in less rewarding areas, for reseaching, developing, and extending ever-better machines, drugs, technologies, and other advancements in knowledge and techniques...).

I continue to be amazed at how willing Mark is to take on these overwhelming topics. We don't always manage to break them down into digestible and manageable chunks, but "we" usually perform above my expectations.

I'll be watching the efforts in Massachusetts and California with great interest. Or with at least the same interest with which I watch my deductibles climb and my coverages contract!

Dave said...


My concern is that with "a full-out government-run health care system, funded by taxes" there would necessarily be government imposed price fixing, for example. Getting too much government involvement (oversight, restrictions, government-run) could lead to profit caps, penalties, and other forms of disincentive for the private sector.

One of the areas I hear about this the most is in regard to the profits that pharmaceutical companies make. Are there not a number of vocal politicians who are (or have) advocated against "big pharmaceutical" companies and their "excessive" profits?

This is just one example of the incentive/disincentive issue that I see needing to be addressed in the overall discussion of health care reform.

steviepinhead said...

Here's a link to a Slate magazine story I found thoughtful:

The main focus of the article is a plan being formulated by politician Wyden, but I thought that both the article and Wyden's own efforts to seek cooperation are refreshingly free of the Bush- and Republican-bashing one usually sees/hears in discussions of resolving/reforming the health care crisis.

As an aside, I had a long discussion with a self-employed accountant/book-keeper yesterday evening--while I was in the midst of commenting on Mark's latest "fine-tuning" post, heh heh--which touched upon some of the issues of incentives/disincentives that dave has raised in his comments here. Despite our mutual concern that medical coverage ve more broadly and economically available, both Vicki (the accountant, who pays several hundred dollars a month for a high-deductible private plan that that never reaches a 100% coverage) and I found ourselves agreeing with dave's concerns.

Though we desperately need broader and fairer health care coverage, incentives for cutting edge research must not be sacrificed as part of the "solution," whatever that turns out to be.

MarkC said...


Thanks for that link. That article does a great job of outlining the broad goals that we all generally agree on, and the most glaring flaws of Bush's and Edwards' plans. As you say, it was quite thoughtful.

I wish I could see actual details of Wyden's plan. Obviously the author of the article has seen it, but they didn't provide any link to it, and I couldn't find more details on Wyden's website in a quick search. I'd be very interested to dig into his proposal a bit more closely; and I'll be very interested to see how it is received by various interested parties.

There are a couple of things that confuse me. One is this statement from Wyden's letter to President Bush:

[O]ur businesses are at a severe disadvantage when their competitors in the global market get health care for “free.”

I don't understand quite how this works. Competitors in the global market don't get health care for free. They have to pay their workers more, so that their workers can pay more taxes, which then provide healthcare. Wyden's plan, as I understand it, proposes the same redirection of costs... instead of businesses paying for insurance directly, they give that same money to their employees to use to purchase their own insurance. It's no cheaper for businesses, so I don't see how our current system is any disadvantage in the world marketplace.

The next statement is from the Slate article, and confuses me even farther:

Getting rid of the employer tax deduction, which costs a whopping $200 billion a year, would free up funds to subsidize insurance up to 400 percent of the poverty line, which is $82,000 for a family of four.

What tax deduction will Wyden's plan get rid of? I understood that the money that employers currently spend on health insurance for their employees (tax-free) will instead be given to employees to spend on their own health insurance (tax-free). Is Wyden suggesting that businesses will now be taxed on that extra income as a payroll tax? Talk about putting businesses at a competitive disadvantage in the global marketplace! If that's what Wyden's plan entails as a way to raise extra money to subsidize healthcare, it's ridiculous... it amounts to nothing more than taxing the amount individuals spend on healthcare. Businesses, which will be paying all this extra tax money, will then raise prices to compensate, which will be indirectly, then, a tax on consumers directly related to the amount they are spending on their healthcare.

Again, I wish I could see the details of Wyden's plan, so I could tell whether my reading of the Slate article's summary is accurate. Maybe one of you can provide an alternate reading that makes more sense? Where is that mysterious $200 billion coming from, if not from extra taxes on money paid for health care?

I'm also very curious what Wyden's plan suggests as cost-cutting measures. Also, I assume that insurance prices will be somewhat regulated, as they are today and in every other plan I've seen (currently, they're regulated by requiring insurers to charge everyone in a company the same rate). I'd be interested to see how Wyden's plan intends to deal with that difficult issue.

If anyone out there can track down a copy of the details of Wyden's plan, please post a link! Thanks,


steviepinhead said...

I gotta go start cleaning house for visiting youngsters, but this may be a start:

It at least identifies the legislation by bill number: S 334...

Kevin said...

Thanks, Stevie. S.334. Healthy Americans Act.

I share Mark's insightful concerns about the details of the Bill and the Slate article.

The summaries I've seen read more like sales pitches than explaining how it will work or the flow of money. I assume the "savings" come from a forced limit on the maximum price doctors can charge for "standard care".


steviepinhead said...

Needless to say, this may not be the panacea, but it does seem like a fresh approach that's worth encouraging...

I like the incentives and emphasis on healthy lifestyles.

I'm going to attempt to copy in the final section of S. 334 relating to cost savings. I agree, though, that it still doesn't furnish raw numbers...


Congress finds that the Healthy Americans Act will result in the following:

(1) Private insurance companies will be forced to hold down costs and will slow the rate of growth because they are required to offer standardized Healthy American Private Insurance plans.

(2) Administrative savings will be derived from decoupling employers from the health care infrastructure and reducing employers' and insurers' administrative costs.

(3) Private insurance companies will implement uniform billing and common claims forms.

(4) Congress will reclaim Medicare and Medicaid disproportionate share hospital (DSH) payments because previously uninsured persons will go to providers on an outpatient basis instead of an emergency department.

(5) State and local governments will save money on programs they operated for the uninsured before enactment of this Act.

(6) The Federal Government will save money on Federal tax subsidies that reward inefficient care and are regressive.

(7) The Federal Government and the private sector will save money if the Food and Drug Administration determines whether products provide new value.

(8) Reducing medical errors will save the government and the private sector money.

(9) Requiring hospitals to send large bills to patients for their review will reduce errors in medical billing and force major providers to be more cost conscious.

(10) Requiring insurers to reimburse for quality and cost effective services will hold down private sector costs.

(11) Reduction of Medicare's restriction on bargaining power for prescription drugs will reduce costs for sole source drugs and other medications.

(12) Establishment of electronic medical records by insurers will create savings.

(13) Publication of cost and quality data will enable people to look up by zip code affordable high-quality providers.

steviepinhead said...

Presidential candidate John Edwards is bragging about a health care plan, too.

Anyone found details on that yet?

MarkC said...


I linked to that and wrote about it some in my first post on this topic, here.

Edwards' plan seems to be a sort of hybrid plan, where employers could continue to operate as they currently do, or they could just pay the government to provide centralized health care, whichever employers chose.


steviepinhead said...

Ah, er, uh... So you did! (They, um, don't call me a "pinhead" for nothing...)

I'll take a look back. On first impression, while the Wyden plan seems more complicated, it also seems more comprehensive and realistic: this is just a complicated area, with a lot of ramifications, and overly-simplistic "solutions" trigger automatic misgivings.

MarkC said...


I'd say that the Wyden plan (from the little I've had time to look at it yet) seems more sustainable. Edwards' plan, to me, looks like a transitional plan to help people get used to the idea of government-run insurance, and I don't think that's a good idea at all.

Thank you, by the way, for linking to the full text of the Wyden plan. I took a quick look through it, but I was mainly looking for the source of that mysterious $400 billion dollars that is going to appear from the removal of some business tax exemption, and subsidize health care for all us poor people (me included, according to the numbers I saw). That seems a bit hard to believe, considering what I make, so I'm real suspicious that there's some new tax or double tax hidden in their somewhere, but I haven't had time to ferret it out yet.

It may be that a bunch of new taxes are necessary. If that's the case, I'd rather have them acknowledged up front. :)

Anyway, I'll take a more careful look at the Wyden plan soon, I hope, and be able to give more informed thoughts.


steviepinhead said...

I think that Kevin actually provided the link to the text of the act, though maybe I facilitated getting from here to there...

I agree, Mark, that your word "sustainable" better captures my (initial) impressions of the difference between the Wyden and Edwards concepts.

I don't know that I share your antipathy toward a "government-run" plan, as such. Such plans can stand alongside, push aside, or be supplemented by private plans and, conceivably at least (though here past and current performance of many programs may well warrant suspicion), a government-run plan need not lead to bureaucracy, bloat, etc. Social Security performed well for many years, until it was undermined by timid and greedy politicians.

In any event, I suspect that this whole health plan issue may well become a "defining" one for the upcoming presidential campaign, and is well worth the ongoing attention of our little "study group."