Comments on: REFORM: Is Business For Real?

By: Ken Terry

Ken Terry — Tue, 02 Oct 2007 18:57:03 +0000

It’s illusory to think that we can reach universal coverage through subsidies while costs continue to rise at the current rate. Victor Fuchs and Ezekiel Emanuel recently pointed out, “By focusing on covering the uninsured, [current reform proposals] fail to address either administrative inefficiency or long-term cost-control. Consequently, in the short run, they require ever more money to cover the uninsured, and the long run the unabated rise in health costs will quickly revive the problem of the uninsured.”
What’s really needed is an overhaul of both health care financing and delivery. But none of our political leaders—even single payer proponents—are talking about changing the delivery system, beyond bromides about the need for more preventive care and health IT. The “Medicare for all” crowd wants to change the financing mechanism without altering how health care providers are organized and paid. Most other Presidential candidates and Congressional leaders want to reform financing through insurance mandates, tax changes, FEHBP-like insurance pools, and/or wage increases to replace employer-paid premiums. These approaches would all require government subsidies that would come from a variety of questionable sources.
In fact, we could find nearly all of the money we need to provide universal, comprehensive insurance without adding to the $2 trillion a year we already spend on health care. But to do that while limiting cost growth, it’s essential that we reorganize our health care system. It must be primary care driven; incentives must be realigned to favor preventive and chronic care over acute care; and above all, we need to reduce the fragmentation of providers. In particular, we can no longer afford the cottage industry of small physician practices, which is one of the chief obstacles to quality improvement and computerization of the industry.
In my new book Rx For Health Care Reform (www.rx-healthreform.com), I make two proposals that would fundamentally improve health care and pave the way for a truly competitive health care market. First, I’d have all primary-care physicians join groups large enough to take financial responsibility for all professional services, including primary and specialty care, lab and imaging tests, and prescription drugs. Second, competition among these groups for patients, based on published quality and cost data, would replace competition among insurance companies. There would be only one government-regulated insurer per market or region, and it would not negotiate prices or manage care.
By eliminating the marketing costs and administrative redundancy of multiple private health plans, these changes would save enough money to cover the uninsured. And over time, the competition among physician groups could, I believe, cut health costs by as much as 30 percent.

By: Rob Cunningham

Rob Cunningham — Tue, 02 Oct 2007 13:41:15 +0000

Thanks to both for reading and speaking up. Will we ever see a day when this conversation, instead of being about how high can we go with subsidies, will be about how transformation of the delivery system and innovation in insurance benefit design have finally made coverage affordable for all?

By: Ken Terry

Ken Terry — Mon, 01 Oct 2007 18:20:11 +0000

The support of business is essential to health care reform in California. After all, the California Chamber of Commerce led the successful effort to repeal the state’s employer mandate law in 2006 through a referendum. But business opposition to that law was not monolithic—in fact, a UCLA study showed that 64 percent of the state’s employers favored some kind of “pay or play” measure. So it isn’t surprising that the chambers of commerce in Los Angeles, San Diego, San Francisco, and San Jose have all endorsed Gov. Schwarzenegger’s proposal, which includes not only an employer mandate but also a requirement that individuals buy insurance.
A big part of this support, as you suggest, comes from employers who already offer insurance and are tired of paying the freight for firms that don’t cover their employees. But there may be other reasons why business is more favorably disposed to the Governor’s “pay or play” approach than they were to the earlier plan. For one thing, while the previous employer mandate required businesses to pay 80 percent of the premium, the new plan would have them pay only 4 percent of payroll, which is much less than insurance costs most of them now. As health costs continue to rise, however, this could have the unintended consequence of setting a floor for employer contributions.
Both the old and the new employer mandates exempt small businesses (with under 20 and 11 workers, respectively). Of course, that increases the political viability of Gov. Schwarzenegger’s plan. But it could also have an unintended consequence: if the state subsidized insurance for lower-wage workers, small firms that now offer insurance might drop it.
ERISA poses a problem for any state reform effort. But if self-insured California companies favor the Governor’s plan (or whatever survives a compromise with the legislature), Congress could provide a waiver, as it did for Hawaii in 1983. A bigger challenge will be getting the public to approve a sales tax increase, which seems necessary to fund the plan. Yet recent polls have shown strong public support for health care reform, and that may overcome resistance to higher taxes.

By: Pat Knowd

Pat Knowd — Mon, 24 Sep 2007 22:08:03 +0000

The democratic plan seems to alientate small business and for this reason it is fiercely opposed. Wouldn’t it be refereshing to see Hilary actively engage small business rather than playing a reactive role.

By: Farmanux News

Farmanux News — Tue, 18 Sep 2007 10:07:47 +0000

[...] Reform: Is Business For Real? Massachusetts took our breath away with the elegant political balance of its reform solution — whether the state s universal coverage plan turns out to be implementable or not. California, on the other hand, leaves us scratching our heads: What is going on out there? Ultimately, it is a state that governs by referendum, and the fate […] [...]