Analysis: GOP's health reform alternative

Here's what Rep. Boustany (R-LA) proposed last night as the GOP's alternative plan for health care reform:

One, all individuals should have access to coverage, regardless of preexisting conditions.

Two, individuals, small businesses and other groups should be able to join together to get health insurance at lower prices, the same way large businesses and labor unions do.

Three, we can provide assistance to those who still cannot access a doctor.

And, four, insurers should be able to offer incentives for wellness care and prevention--something particularly important to me. I operated on too many people who could have avoided surgery if they'd simply made healthier choices earlier in life.

We do have ideas the President hasn't agreed with. We're grateful the President mentioned medical liability reform, and we hope he's serious. We need to establish tough liability reform standards, encourage speedy resolution of claims, and deter junk lawsuits that drive up the cost of care. Real reform must do this.

Let's also talk about letting families and businesses buy insurance across state lines. I and many other Republicans believe that that will provide real choice and competition to lower the cost of health insurance. Unfortunately, the President disagrees.

On points 1 and 3, the two parties don't seem that far apart, but the devil is in the details. We shall see.

Tort reform I've talked about several times. It is not a panacea. It is not what's causing health care costs to rise so fast. And limiting malpractice payouts won't solve our health care crisis. But let's do something anyway, just to get this bad idea off the table.

He said that "insurers should be able to offer incentives for wellness care and prevention." He makes it sound like they're not allowed to now! Certainly it is in their interest, and they do. What he's probably hinting at is a 1996 federal law which prohibits employers from discriminating against employees because of their health status or medical history. Now, it's conceivable that if, for example, an insurance company offered a lower premium to somebody if he managed to lose weight, and that person received his health insurance through his employer, who paid most of the cost of that premium, then that the person could be pressured by his employer (i.e. "discriminated against") to lose weight and save the company money. But this is all very "what-if." Most U.S. companies already offer some kind of incentives for employees' participation in wellness and prevention programs.

So, really the GOP has two "big" ideas to cut costs and increase access: (1) let inviduals and small businesses collectively form health cooperatives; and (2) let people purchase insurance plans from any state.

First, co-ops. The kind of co-ops the GOP now envisions have never been tried. They would cut out insurance middlemen altogether, and let co-ops negotiate prices directly with health providers -- doctors, hospitals, and drug companies. The key challenge for co-ops is membership: unless they attract lots of members (500,000, at least) they won't have the same bargaining leverage as national health insurance giants like WellPoint/BlueCross, CIGNA, and Aetna. It could take years for the co-ops to attract enough members -- if they ever do at all. They would need startup assistance from the federal gov't -- at least $6 billion for 12 million members, according to the only estimate. And, according to proposed legislation, these new co-ops would be run by boards appointed by the Dept. of Health and Human Services.

A weaker form of co-ops, which already exists and doesn't require any additional enabling legislation, consists of individuals or businesses pooling resources and risk to negotiate rates with private insurance companies.

One of the oldest and most unique and successful health co-ops, with 556,000 members, is Group Health in Washington state. It owns 26 medical centers and employs its doctors directly. It's contained annual increases in premiums to 12.7% since 2000. It has also invested $40 million in an electronic medical records system. (Will your co-op have enough money to hire its own doctors, build a medical center, and invest $40 million in e-records?) It's just too bad we can't go back in time to 1947 and start up similar co-ops in every state, so that they could spend a few decades increasing their membership, building or buying hospitals, and hiring doctors. (Note to self: Buy time machine; then fix health care.)

If more co-op members means more negotiating leverage, then the bigger the co-op the better, so... shouldn't a nationwide co-op be the best for members? No, say Republicans, contrary to the logic of co-ops and, well, insurance, because they're afraid of anything national. So that settles that.

(We could think of the so-called "public option" as a nationwide co-op, which wouldn't be required to show a profit, pay dividends to investors, or bonuses to employees.)

Second, there is selling insurance across state lines, which was part of McCain's presidential platform, if you recall. The across-state-lines proposal would probably increase costs and deny more people affordable health insurance over time. To have any chance of working, across-state-lines would have to offer so-called "guaranteed issue health insurance" for those with pre-existing conditions. Now, the GOP promises "access" to insurance for those with pre-existing conditions, but the devil is in the details. Access at what cost? After what waiting period? Guaranteed issue plans usually require a waiting period of 12 months before pre-existing conditions are covered. Second, to succeed, across-state-lines would have to offer subsidies to low-income people to pay their premiums, or else provide supplemental funding to pools of the high-risk insured. Third, across-state-lines would have to ensure federal licensure and regulation of insurers.

But what is across-state-lines really about? It's not like Blue Cross is available in only one state, and if only we lived there, we could buy it, too. It's about how the 50 states regulate health care differently, by requiring certain minimal coverage in plans, or certain consumer protections. If national insurers want to sell insurance to residents of a state, their plans have to abide by that state's rules. Today, 35 states impose no limit on the variation of health insurance premiums based on health status. At the other extreme, a few East Coast states like Massachussetts use a so-called "community rating," which means that everybody pays the same premium, regardless of age or health status. Across-state-lines would render the community rating impossible.

Essentially, across-state-lines would cause a race to the bottom, where insurance companies would compete in the lowest-common-denominator state(s) without mandates (for "extras" like maternity or diabetes management) for the healthiest consumers who want the cheapest plans with minimal coverage. "[This] would have the ultimate effect of standardizing state regulation to the least restrictive level, thus de facto de-regulating individual insurance markets." Meanwhile, not-so-healthy consumers would end up with fewer choices and even more expensive plans.

But in fact, since one or two insurance giants dominates in each state, chances are even healthy consumers wouldn't see much benefit from buying insurance from another state, because premiums are determined largely by insurers' negotiating leverage. Smaller entrants into another state's insurance market wouldn't be able to compete.

So, to some up: any savings from selling health insurance across state lines -- as unlikely as those savings would be -- must come from effectively separating the healthy from the sick.

BTW, according to the nonpartisan Center for Responsive Politics, Rep. Boustany has received more than 20 percent ($1.25 million) of his campaign funding since 2004 from health and insurance interests. I'll let you decide if that constitutes a conflict of interest.

Forbes: Good summary of health debate

Conservative Forbes gives a pretty good summary below of what the various health care bills in Congress do and don't say. And although Forbes uses the term "Obamacare" incessantly, it admits that Obama has only laid out 3 broad goals for reform; and in response, the House and Senate have proposed several different versions of health care reform.

I understand why Republicans latched onto the term "Obamacare" -- because labelling Hillary's health care bill "Hillarycare" in the 90s really helped kill it. However, unlike Hillary, Obama never came up with a bill in secret, he never plopped a bill in front of Congress and said, "Pass this." He just laid out the goals.

Obama's laid-back approach, however, has probably been his undoing.

This $1 trillion figure (which included a public option -- which Obama has since caved on) from the CBO sounds like a lot, but as Forbes points out, that's only $3,333 for every man, woman and child over 10 years, or $333 per person per year. For many of us, $333 is less than the cost of one month's insurance premium. (It's less than half of mine). $1 trillion still sounds like a scary number, until you consider that the U.S. will spend about $2.5 trillion on health care in 2009 alone, accounting for 17.6 percent of GDP. By 2018, the annual cost of health care is estimated to more than double to $4.4 trillion. Over the last decade, employer-sponsored health insurance premiums have increased 119 percent. Today, the average employer-sponsored health premium costs $13,000 for a family of four, or $3,250 per person, and employees pay 30 percent of that cost, or $3,900 per year, on average. Does that $3,333 estimate over 10 years still sound so scary? Furthermore, the CBO (yes, the same CBO that gave us that scary $1 trillion figure that Republicans have pounced on) estimated that employer-based health costs for an average family of four will reach $25,000 per year by 2018.

Source: http://www.nchc.org/facts/cost.shtml

So, at the same time you're considering the cost of reform, weigh the intolerable cost of doing nothing. Oh, and by the way, conservative Forbes says that health cooperatives won't increase the number of people who get insurance. But co-ops probably will be included in the final bill. Sorry.

Health Care Checkup
By Brian Wingfield and David Whelan

August 18, 2009 | Forbes.com

Feeling a bit lost in the debate over health care reform? It's understandable.

America's health care system was already confusing even before Congress' ideas for changing it. Now, special interests have made things yet murkier. The White House has backed away from its initial support of a government-run insurance program; town hall meetings are brimming with scorn for the ideas on the table, and health care chatter has consumed the airwaves.

Lawmakers will determine this fall what's in the final bill, but as the debate rages this summer, here's a guide to help you get up to speed and back to the beach as quickly as possible:

What's been proposed?

President Obama wants to see reform that includes, among other things, coverage for all Americans, allows people to choose their providers and lowers the growth in health care costs. Congress has to figure out the dicey details.

In July, leaders in the House of Representatives proposed a bill that would create a government-run insurance plan, or "public option," to compete with private insurers. It requires individuals to have coverage and mandates that large businesses provide it or pay a tax to the government. To help pay for the public option, it would increase taxes on the wealthy. Several House committees have produced their own, slightly different, versions of this bill.

The Senate's health committee also proposed a plan in July, and it too includes a public option and individual and employer mandates. However, the Senate Finance Committee, which determines how to pay for the Senate proposal, is deliberating until at least mid-September.

For this reason, "ObamaCare" doesn't really have a formal definition. It's basically still a handful of proposals.

What's still on the table?

Technically, everything; but in fact, a lot has been cut out. Most recently, the White House has backed off from its support of a public option, the most expensive part of reform and an idea that might not pass the Senate. The idea of taxing the wealthy is also probably gone. And the president doesn't support the idea of killing a tax subsidy for employer-provided coverage because it might raise taxes on the middle class.

So what's left? Proposed cost reductions in Medicare, Medicaid and prescription drugs. Perhaps a plan for health insurance to be provided by nonprofit cooperatives instead of the government. The main thing that remains: the problem of figuring out how to insure an additional 46 million people without adding to the deficit.

What's likely to get done, if anything?

Democrats in control of Congress and the White House aren't going to walk away from this battle without being able to claim victory, so expect some type of health care reform to happen this year. Much depends on what the Senate Finance Committee determines.

Reform will most likely cost less than $1 trillion, paid for by entitlement savings and various tax increases. It will likely expand health insurance, though probably not as much as the president hopes. And it seems increasingly likely that it won't include a public option.

What's it likely to cost?

With a public plan, the bill is projected by the Congressional Budget Office to cost just under $1 trillion over 10 years. That's $3,333 for every man woman and child. Take out the public plan completely and that drops by $773 billion, so the administration will have more room to spend that money on other proposals, like health co-ops or expanding Medicaid eligibility, promoting electronic health records or comparative effectiveness research. Removing that cost could also allow the final bill to include fewer Medicare cuts to hospitals or doctors.

What would it mean to the way I get medical care?

If you are part of the demographic that right now is not well served by the private insurance market and you don't qualify for Medicaid, Medicare or S-CHIP--you could suffer without a public plan option. The public plan would be ideal for small businesses that can't afford double-digit annual premium increases or low-to-middle income individuals with preexisting conditions who, in many states, can't even find an HMO to buy a plan from.

Co-ops could provide another option for these patients, but where they already operate, there's no evidence that they solve the uninsured and under-insured problems.

If you work at a big company, have Medicare or qualify for Medicaid, likely your medical care will not dramatically change, though the long-term fiscal pressures on the government plans will likely lead to cost-cutting and tax increases down the road.

What happens next?

Supporters of the public plan will likely make a push to ensure it's in the final bill. If they succeed, the final passage will happen, but it will be a bruising battle until the end. Expect more angry town halls. And forget about beer and car ads during football season. It will be all health care all the time.

If they don't get it back in, it will be much easier to get congressional support from moderates and even Republicans--but the president and the original band of reformers will face criticism that they didn't accomplish what they set out to do.

Obama caves to GOP, nixes 'public option'

See? Why were you Repugs worried about Obama? All along, it's the liberals like me who should have feared he was a corporate sellout. And now it's happened (again). Money and power did their thing. Obama caved.

So, the compromise deal will probably include state health insurance co-ops. Once those fail, and if Obama is re-elected to a second term, then we'll have another shot at real reform. If Obama isn't re-elected, then we'll have to wait another 4-8 years. So, long story short, we're talking about a four- to 10-year delay of the inevitable "public option." Meanwhile, all you Repugs get to high-five each other for enraging and scaring the crap out of America; and you can rejoice in the continued millions of uninsured and their needless, avoidable suffering. And four to 10 years from now, we liberals will get to say, "I told ya so." Gee, sounds like a great deal.

Making legislative sausage aint pretty. The sight of it can even make you sick.

White House appears ready to drop 'public option'

By Philip Elliot

August 16, 2009 | (the George Soros-funded and controlled) Associated Press

Bowing to Republican pressure and an uneasy public, President Barack Obama's administration signaled Sunday it is ready to abandon the idea of giving Americans the option of government-run insurance as part of a new health care system.

Facing mounting opposition to the overhaul, administration officials left open the chance for a compromise with Republicans that would include health insurance cooperatives instead of a government-run plan. Such a concession probably would enrage Obama's liberal supporters but could deliver a much-needed victory on a top domestic priority opposed by GOP lawmakers.

Officials from both political parties reached across the aisle in an effort to find compromises on proposals they left behind when they returned to their districts for an August recess. Obama had wanted the government to run a health insurance organization to help cover the nation's almost 50 million uninsured, but didn't include it as one of his core principles of reform.

Under a proposal by Sen. Kent Conrad, D-N.D., consumer-owned nonprofit cooperatives would sell insurance in competition with private industry, not unlike the way electric and agriculture co-ops operate, especially in rural states such as his own.

With $3 billion to $4 billion in initial support from the government, the co-ops would operate under a national structure with state affiliates, but independent of the government. They would be required to maintain the type of financial reserves that private companies are required to keep in case of unexpectedly high claims.

"I think there will be a competitor to private insurers," Sebelius said. "That's really the essential part, is you don't turn over the whole new marketplace to private insurance companies and trust them to do the right thing."

Obama's spokesman refused to say a public option was a make-or-break choice.

"What I am saying is the bottom line for this for the president is, what we have to have is choice and competition in the insurance market," White House press secretary Robert Gibbs said Sunday.

A day before, Obama appeared to hedge his bets.

"All I'm saying is, though, that the public option, whether we have it or we don't have it, is not the entirety of health care reform," Obama said at a town hall meeting in Grand Junction, Colo. "This is just one sliver of it, one aspect of it."

It's hardly the same rhetoric Obama employed during a constant, personal campaign for legislation.

"I am pleased by the progress we're making on health care reform and still believe, as I've said before, that one of the best ways to bring down costs, provide more choices and assure quality is a public option that will force the insurance companies to compete and keep them honest," Obama said in July.