Health insurance is a big deal, Mr. Obama, so take a little time to get it right
posted 2-24-2008 8:22 a.m.

 
The problem with most backroom deals in politics is that they’re completed in everything short of a vote before the public even knows about them. Average Americans like you and me have no opportunity to influence the result, yet often we’re the ones most affected – sometimes most adversely affected – by the result. Such a backroom deal on health insurance reform is afoot right now, led by none other than Ted Kennedy. And President Obama appears to have signed off on it. I'm betting it's what he presents tonight in his address to the nation.

Senator Kennedy has long wanted health care reform and championed that cause, even for a time favoring a single payor plan not unlike Medicare. That he should be talking to stakeholders is not the concern. He wants to accomplish something lasting on health care before he dies. But national health insurance, or even something close to it, is a far cry from what’s on the table now – and what is under discussion is more a full-employment plan for the insurance industry with you and me footing the bill than what most Americans want.

Last Thursday, Robert Pear of The New York Times reported that Sen. Kennedy has been having closed-door meetings with lobbyists representing a range of interest groups, including some that helped defeat the Clinton plan 15 years ago, to find some consensus. What they’ve agreed is to leave consumers holding the bag: an individual mandate. It means you’ll be responsible for buying your own health insurance – and for all too many of us, that means another hole in our pockets. We won’t be able to get group rates: we’ll be paying higher premiums than anyone else.

An individual mandate simply preserves the intolerable status quo on everything that’s wrong with health insurance now, without fixing anything, and forces people to buy whatever these stakeholders agree on, even if it’s the wrong thing and too expensive for most of us. And we don’t have any say. In this economy? And we’re supposed to accept this?? That’s just a recipe for disaster. How did the Obama Administration let this happen? More to the point, why? Perhaps an overworked Obama with other things on his plate simply trusts the senator too much.

That Ted Kennedy would agree to this now is deeply disappointing but not incomprehensible. The Obama Administration seems to have lost significant momentum with the delays over the economic stimulus package, TARP, the partisan intransigence of the Republicans, and the demise of Tom Daschle. I understand that Kennedy wants to get at least something done before he dies – but this is really the wrong something. It’s merely the easiest thing for him to get consensus on. In this case, this particular something is NOT better than nothing, and in his heart Kennedy must know that. Yet pressure to make it at least look like there’s progress is increasing as the number of uninsured and unemployed jumps higher.

When Congress is forced to act quickly, as with bailing out the banks and financial firms, what is done is likely to be done badly, with insufficient oversight, and will take years to undo, if ever. We’ve already made that mistake with the banks now and the savings and loans 20 years ago; surely Mr. Obama doesn’t want to get caught in a similar hasty trap on health insurance. If so, he’d better start paying attention and head off Sen. Kennedy’s dealmaking for an individual mandate.

That the other stakeholders involved would agree to an individual mandate without regard to what the rest of us want is no surprise: it would cost them almost nothing. Employers have long been afraid that government would impose an employer mandate instead, requiring every employer regardless of size to provide health benefits (a move that unions prefer but one that has small businesses terrified); so corporations see this as an opportunity to rid themselves of an enormous expense that they’ve been steadily shifting to their workers anyway over the last two decades or trying to escape entirely. Employers are glad of an opportunity to duck responsibility for paying their share of health premiums, especially now. Insurers see an opportunity to make more money while still cherry-picking enrollees and without really having to change how they do business, whereas unions have lost so much of their power and are so worn down from simply trying to preserve their members’ jobs that they’re willing to make concessions not exactly in their members’ (and our) best interest. And health care providers just want to get paid – more people with coverage means fewer people who can’t pay their hospital and doctor bills.

But wait – who’s missing here? You got it: we, the people most affected, who will have to live with the resulting mess and pay for the privilege. For way too long, insured people haven’t had any say about what coverage they’ve been given or what it should include, and now Sen. Kennedy wants to enshrine this inequality into law. Just because he can get the other stakeholders to agree on something doesn’t mean that what they agree on is what we want or need or what will work best over the long term. And the individual mandate is none of those things.

The first thing wrong with the individual mandate is that it does nothing to hold down premium costs. Insurers will still be able to jack up premium prices whenever they want. They do it to employers, union groups, and associations all the time. The only effective way to hold down premium costs is to have leverage through a single program like, say, Medicare or Medicaid. Then you have real negotiating clout. But because insurers still have the non-poor, non-retiree market to go to for enrollees, many choose not to participate in or drop out of Medicare and Medicaid. However, if everyone is folded into a single plan so that one agency negotiates terms for all, plans have no choice to but deal with that agency and agree to its terms if they want to stay in that business.

You can see why insurers would balk at that, and yet many still do contract with both Medicare and Medicaid, which means the terms aren’t completely disagreeable. There’s no reason that kind of cost control shouldn’t be used on behalf of the rest of us, and plenty of reasons – particularly in this economy – why it should. I don’t see most of the general public crying for the insurers on this.

The second reason the individual mandate is a terrible idea is that it perpetuates a pricing structure and sales practices insurers use to choose only enrollees they think will cost them the least money in claims. It still allows insurers ways to limit or deny coverage to some people while favoring others. Oh sure, you can make it illegal for insurers to deny coverage or charge outrageously higher premiums that force people to either look elsewhere or buy drastically inadequate coverage, but who’s going to enforce that, and how? What’s the penalty for breaking such a law? And will it really be painful enough to discourage insurers’ bad behavior? I’m betting not. Government has a lousy record of policing insurers.

Third, simply forcing people to buy some kind of coverage, whether it’s adequate, affordable, and appropriate or not, does nothing to hold down overall health care costs. That’s a whole different set of solutions, one that will take years longer to affect with the status quo. Why? Because we really have two systems to fix here -- the health care financing system, which is the insurance end, and the health care delivery system, which includes doctors, hospitals and all other providers. Solutions to fix one won't fix the other and vice versa.

Meanwhile, most health insurance products are supposedly some flavor of managed care (HMOs or PPOs), but most insurers don’t know how to run managed care other than to negotiate provider discounts, limit reimbursement, or deny claims. Because that’s how they run their other insurance products. But managed care isn’t an insurance model or product: it’s a way of practicing medicine and providing care. Insurers really do very little to affect care other than to deny it by denying payment (things are different with group/staff model HMOs, which can and do affect medical practice, but I digress). The nasty little secret is that health insurance is a far different animal than any other kind of insurance, and most insurers haven’t figured that out at this late date.

Think about it: with any other kind of insurance – homeowner’s, automobile, disability, flood insurance, business liability, fire and marine, whatever – you pay a premium and hope to God never to have to make a claim. That may have been the case with health insurance a century ago, when medicine couldn’t do much more than set broken bones and amputate crushed or gangrenous limbs, but it isn’t the case now.

Health insurance today is not protection against rare events but a means to an end, a way to pay for care that you expect right from the start to need on a more or less regular basis. An insured person gets health insurance fully expecting to make use of it, and sooner rather than later: research tells us that we should seek care promptly, that early treatment is more effective and less expensive than delayed care, and that prevention is far better and cheaper than cure. This is precisely why having copayments and deductibles that discourage people from immediately seeking care when they need it is such a stupid idea: it costs us all far more in the end. Moreover, high out-of-pocket health care costs really do keep people from getting care and are one of the top reasons people declare bankruptcy. Until the economy went south, health care debts were the top reason.

There is nothing about forcing people to buy their own health insurance that guarantees it will truly be affordable (instead of some well-off conservative’s pipedream of what ‘affordable’ means), that it will be adequate, or that it will have limits on out-of-pocket costs that will keep people from delaying care or going bankrupt if they do get care. The only thing we are guaranteed is that most, if not all, of the cost will fall on us and that it will fall unfairly on those who can afford it the least. Moreover, telling people that they can join ‘buying pools’ to lower their costs is an illusion and just perpetuates the same unfair variable pricing structure that people hate now. Besides, if putting people into big risk pools is such a great idea, then putting everyone into one giant national risk pool ought to be a terrific idea – and it is. It's called single payor.

What Americans want is health insurance with some fairness to it – a plan that doesn’t discriminate, that covers everybody, that has the same premium rates for everyone regardless of who they work for or where they live. They want coverage that has a decent comprehensive benefit package to cover preventive, primary and acute care, out-of-pocket costs that don’t discourage people from seeking care promptly and won’t bankrupt them when the bills come, and coverage they can keep no matter where they move or whether or not they’re employed. And they want a plan with premiums that don’t keep rising faster than all other costs except the Iraq war. Any number of polls over the years will confirm this, and Sen. Kennedy knows it even if Mr. Obama doesn’t. However, the only thing that will meet all these requirements is a national health insurance program administered by a single federal agency with the clout and mandate to standardize benefits, set terms and performance requirements for all participating plans, and leverage enough to negotiate lower premiums for all.

If Sen. Kennedy tries to ram through an individual mandate now, it won’t matter how many illusory accompanying schemes claiming to make coverage affordable he tacks on to it – his proposal still won’t come close to covering everyone, it won’t hold down costs, and it won’t be affordable to those who can’t buy coverage now. What it will do is make a lot of people angry once they figure out that the plan has dumped yet another expensive financial obligation on them, just as they’re struggling to hold on to their jobs and homes and pay their bills. Just as the economy continues to worsen. And if the president endorses Kennedy’s plan, people will blame Mr. Obama when it costs too much and doesn’t work as promised.

Sen. Kennedy needs to stop obsessing about his legacy, stop trying to find the lowest common denominator that makes the lobbyists happy, and start listening to the one set of stakeholders that counts: the voters. And the president should take more time to get his health care proposals right. Or else the senator and President Obama will soon discover that a bad proposal that dumps the most of the costs on voters is the quickest way to push them back into the arms of the GOP.