Wyden health care round-up (and Ezra Klein)
Charlie Burr
In the Washington Post today, Ezra Klein wonders if the existence of a public plan alone is the right benchmark to measure health care success.
Discusses the five most important aspects of the debate that aren't related to the public plan, Erza leads with the Health Insurance Exchange:
1) The Health Insurance Exchange: I know. I'm a broken record on this point. But if the fundamental fact driving health-care reform is that our system is broken, then the central question is whether we're building something to replace it. If the Health Insurance Exchange is strong enough, it can serve as that something. If it is weak, and it is limited to the unemployed and the self-employed and small businesses, then it isn't likely to emerge as a viable alternative. And if you're still not convinced that you should care about the Exchange, then consider this: The Exchange is the body that offers the public plan. You could have the strongest public plan in the world, but if the Exchange is only open to 20 percent of the country, then only 20 percent of the country will be able to purchase public insurance coverage.
Read Ezra's take on the key issues that "deserve a lot more attention than they're getting" -- Medicaid, subsidies, minimum benefits, and choice -- here.
The debate closer to home has, of course, largely been dominated by the public option and the senator at the center of national health reform, Ron Wyden. Last week saw President Obama praise Wyden's leadership and approach, while taking issue with parts of Wyden's plan. From the Oregonian:
President Barack Obama praised Oregon Sen. Ron Wyden on Wednesday as a "real thought leader" and ally on health care reform but said he could not support Wyden's controversial plan for providing medical insurance to virtually every American.
"There are a lot of good concepts to what Ron's proposing," Obama said. But despite his professed agreement with "90 percent" of Wyden's thinking, he said parts of the plan are too "radical" for the country.
Wyden has worked on health issues for years and has developed a plan, the Healthy Americans Act, that the Congressional Budget Office has said would be "revenue neutral." While Wyden has support from Democrats and Republicans, his support from Democratic leadership has been lukewarm.
Under Wyden's plan, workers would be responsible for choosing their health insurance. In return, employers would give workers a raise equivalent to the cost of the health care that was previously offered. That pay would be taxable, but Wyden stresses that new federal tax deductions would shield all but the highest earners from additional taxes.
Wyden argues that linking health care costs to individuals will promote competition and drive down costs.
Responding in Willamette Week, Wyden had this to say:
“Whenever the president of the United States says he agrees with 90 percent of what you’re doing, I say with a smile, ‘Mr. President, that sounds pretty good. Let’s go get the other 10 percent,”‘ said Wyden, a former colleague in the Senate with Obama.
Following the Obama interview, an Oregonian editorial praised Wyden's transparency on financing reform:
In all of the national debate, Wyden's bill is the only proposal that has an actual financing plan. When Obama gets around to announcing his own financing plan, it too will be labeled "radical" by those favoring other ideas.
It's true, of course, that Wyden's plan sounds radical. It calls for a fundamental shift in the way employers support health coverage for workers.
Under the Healthy Americans Act, employees would be responsible for selecting the health insurance that best meets their needs. For example, older workers would not need a plan that provides obstetrical services and could buy a more tailored plan.
And:
Happily, Obama said he agrees with 90 percent of Wyden's thinking, such as the idea that health insurance must be portable between jobs. That's good to hear, because no matter what you think of Wyden's plan, he at least understands that the real question isn't so much who pays for health coverage but how it's paid for.
For Obama, it's too easy to dismiss Wyden's financing plan as radical. The president will find it much harder to unveil a plan of his own that doesn't sound equally radical.
Soon, however, he'll have to show his hand. We hope he will be as forthright about its financing mechanism as Oregon's senior senator has been in promoting his own plan, radical or otherwise.
Discuss.
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10:59 p.m.
Jul 6, '09
I'm sorry, wyden's response is moronic and either shows he wasn't listening, or cares not to. Senator, the President called the other 10% of your plan unworkable and too radical a shift--exactly along the lines of single payer in his view--and you know how firmly single payer has been buried. He was being nice, dude--he flat out said the core mechanism in your plan is a nonstarter. That's not 90% of the way there with just a little nudge needed to get you over the top. It's a roadblock to implementation, pure and simple. Without shifting coverage away from employers, there is no HAA. It's as if he'd said he likes the energy bill, except that cap and trade part. That's the bill!
11:13 p.m.
Jul 6, '09
Charlie,
Paul Starr of the American Prospect makes a similar point about the strength of "The Exchange."
This issue is not just restricted access to it, and whether private insurers could opt out and not meet its minimum standards. If that's allowed, an "Exchange" just becomes a convenient tool for cherry-picking and dumping to increase profits.
(BTW Wyden's bill provides for separate exchanges (Health Help Agencies) for each state, and for HAPI Plans (Healthy Americans Private Insurance Plans, not by be confused with Happy Meals) potentially to have coverage areas that are not even statewide, which raises questions about portability while traveling & reciprocity.)
<hr/>The reporting above on Wyden's bill, S 391 appears to be incorrect when it says
"In return, employers would give workers a raise equivalent to the cost of the health care that was previously offered."
In fact that raise appears to be purely voluntary, and could range from nothing to only some fraction of the employer's former cost (i.e. premium contribution).
As I read the text of the bill, it appears that during the envisioned two year transition, an employer could continue to pay the same amount of money that they had paid as a contribution to coverage under their extant plan as their "employer responsibility payment" to the HAPI Plan instead, while keeping wages and salaries the same.
I.e. employers are not required to convert benefit payments to wages or salaries at all. Or they could decide to convert say 50% (anything from nothing to 100%) to regular pay.
Then from the third year on they would pay only 17% to 25% of HAPI Plan premium (in the case of large employers) or 2% to 10% (in the case of small employers) while keeping on paying the same wage rate.
There are incentives to convert the benefits to wages. If an employer converted 100% to wages in the first year, that employer would pay nothing to the HAPI Plan during those two years, then experience a sudden jump as the 17%-25%, or 2%-10% came on line.
Converting 100% that way seems unlikely, because the money isn't saved to the company, just paid to employees instead of the HAPI Plan.
I would expect employers to calculate roughly what they thought their contribution to the HAPI Plan premium would be in the third year, and convert at most the difference between that and the full amount they were paying under the pre-existing plan. But I would also expect most employers to calculate how much more they could get away with chiseling from workers. That might depend on the state of the employment market, this year for instance they might be able to chisel quite a lot.
I suppose the theory is that employers would be under a combination of moral pressure from employees and wage competition as more generously converting employers paid higher wages. I am not at all convinced that this would happen, and certainly not convinced that it would happen fully.
Text for wonks:
<hr/>(1) TRANSITION RATE FOR EMPLOYERS PREVIOUSLY PROVIDING HEALTH INSURANCE-
(A) IN GENERAL- In the case of the first and second calendar years to which this section applies, in the case of any employer who provided health insurance coverage for employees on the day before the date of enactment of the Healthy Americans Act, the employer shared responsibility payment shall be, in lieu of the amount determined under subsection (a), an amount equal to--
(i) 100 percent of the designated employee health insurance premium amount of such employer, minus
(ii) the employee salary investment amount.
(B) EMPLOYEE SALARY INVESTMENT AMOUNT- For purposes of this paragraph--
(i) IN GENERAL- The term `employee salary investment amount' means the lesser of--
(I) the excess of the amount of average yearly wages paid to all employees for such year over the amount of average yearly wages paid to such employee for the year before the first year this section applies, or
(II) the designated employee health insurance premium amount of such employer.
(ii) NONDISCRIMINATION RULES- No amount paid by an employer shall be treated as an employee salary investment amount unless such amount is distributed to all employees on a basis that is proportional to the designated employee health insurance premium amount paid with respect to such employee before such distribution.
(iii) NOTICE REQUIREMENT- No amount paid by an employer shall be treated as an employee salary investment amount unless the employer gives each employee notice of the amount of the designated employee health insurance premium amount paid by the employer with respect to the employee.
11:20 p.m.
Jul 6, '09
Charlie, I must be closing the reference tags with the wrong letter because tired. Sorry I didn't preview. If you insert a right after the 391, it will close the reference. Sorry.
BTW I think TJ is pretty much right. The largest merit of Wyden's plan from an insurance point of view would be detaching insurance from a specific employer.
12:14 a.m.
Jul 7, '09
Fixed your link, Chris. You close the link tags with the same letter you open 'em with -- "a"
7:10 a.m.
Jul 7, '09
Yeah, I know Kari, do it often enough that I get overconfident about typos when tired & neglect preview. Doh!
Jul 7, '09
I think the politically ideal situation at this point is to have a universal health insurance exchange, which Wyden has advocated, and include a public option as one of the choices as Obama has supported.
The exchange is what truly leverages the public's power. The bigger the better. Right now, Obama only wants to include small firms, individuals and the uninsured. Instead, we should lobby to include all individuals and make it a truly public exchange. It says, if you want to sell insurance in our state you must sell it at the same price for everyone (by age) regardless of how big their firm is.
The employer based system let's larger firms get a break over smaller firms. And, one problem with the public option is that it benefits the least generous firms among us. The universal health insurance exchange fixes these by including employees at all firms.
The strategic reformer should see the impact of a universal health insurance exchange. I know Ezra Klein recognizes this. Let's take the best of Obama and Wyden and take the first steps into fixing this non-system.
8:42 a.m.
Jul 7, '09
Peter, what do you think of the argument that if insurers "must sell [insurance] at the same price for everyone" that they will just set the price at the maximum that they charge for individual plans?
Also, it appears that you are excluding other categories of actuarial distinction, such a "pre-existing condition," current health status risk factors, sex and so on (as indeed most employer based group plans do).
Why would you allow discrimination by age?
Jul 7, '09
The HELP plan includes a public option, which can be a first step to Single Payer - the solution that works. Wyden's plan does not.
From Paul Krugman: The Congressional Budget Office has looked at the future of American health insurance, and it works
...last week the budget office scored the full proposed legislation from the Senate committee on Health, Education, Labor and Pensions (HELP). And the news — which got far less play in the media than the downbeat earlier analysis — was very, very good. Yes, we can reform health care.
Jul 7, '09
Peter, what do you think of the argument that if insurers "must sell [insurance] at the same price for everyone" that they will just set the price at the maximum that they charge for individual plans?
This is highly unlikely for the same reasons they do not currently charge the individual maximum for large group policies: it will not cost them extra to underwrite (since health history is not under consideration), and if they are not competitive with their price, other plans will attract all the state's individuals.
Also, it appears that you are excluding other categories of actuarial distinction, such as a "pre-existing condition," current health status risk factors, sex and so on (as indeed most employer based group plans do).
Why would you allow discrimination by age?
The exchange would set the ways in which the premiums can vary. Health status and pre-existing conditions are the main variables people want to exclude as part of what are called rating reforms. Sex and age are predictable over time so do not present the kind of unfairness of the others you mentioned.
Also, typically there is not full rating by age but instead some acceptable ratio. That is, maybe the most expensive age groups pay 2 times greater premiums per month rather than the many multiples more if they were charged actuarially fair premiums. This is designed to find a balance between making it affordable for the younger generation yet still subsidizing the older generation.
Regarding rating by health status, there are proposals to allow some discounts in premiums if you take healthy lifestyle choices but that is still more an area of research rather than policy.
Jul 7, '09
Put up a list of the top 40 public health coverages in the damn world. Blindfold a person and have them throw a dart. Whichever plan is selected, we hire 1/2 of their staff to come here and implement it.
We DO NOT lose, we are a lot lower than 40 now.
Screw the nuts and bolts, hire Canada to run our health insurance.
Jul 7, '09
Rather than just yelling that Wyden should support a public option and that if Obama agrees with 90% of his thinking he should forget the other 10%, let's widen this discussion a bit.
It is one thing to yell WE MUST HAVE PUBLIC OPTION and not worry about the details of how that is done because by golly everything will be fine as long as there is a public option.
It is another thing to worry about the logistics---how something is actually done.
Just came across this which should add to the debate.
http://www.ridenbaugh.com/index.php/2009/07/06/the-indian-health-example/
Jul 7, '09
Regardless of the plan that is adopted to reform the U.S. health care system, consider this thought: The nation will be stuck with it for a long time. Given some of the proposed plans being touted by legions of lobbyists and their agents in Congress we are at great risk of getting a Trojan horse sired by the medical-insurance-pharmaceutical complex to make matters worse.
There were people at the Constitutional Convention in Philadelphia for whom getting a Constitution was paramount. There was a lot of compromising and slavery was allowed to be part of the new United States anticipating George Orwell's aphorism about some people being more equal than others. It took a civil war to begin the long and brutal path to correcting that error in judgment. We don't need a health care version of that piece of American history.
Jul 8, '09
Slightly off topic, but here is a very interesting article from today's NYT on the conflict between cost containment and the fee-for-service model:
http://www.nytimes.com/2009/07/08/business/economy/08leonhardt.html
Jul 8, '09
One of the great myths about health care plans is that the Federal Employees Health Benefit Plan (FEHBP) is so wonderful. Admittedly, it is much better than many others and could be better than no health plan at all, but it has definite shortcomings. The total premiums paid to insurance corporations by the the government and employees/retirees for family plans can run over $1,000 a month or over $12,000 a year. That is almost double the per-capita health expenditure amounts in other countries with national health plans, but with these FEHBP plans patients still have to pay for services, including sizable deductibles. For people who are healthy and as long as they stay that way, they could very likely find paying the doctors directly would cost less than their premiums.
While there is much to be said for a government/public option, check the fine print.
Jul 8, '09
Health insurance is a fascinating subject regardless of the politics. For me, once you exclude single-payer as an option, you begin sliding down the proverbial slippery-slope back toward the failed system we already have. To me, the value of a "public option" depends upon creating an entity with unlimited open enrollment, overwhelming bargaining power, and an ultra efficient not-for-profit organization structure, such that (a) doctors, hospitals, drug companies and equipment suppliers can be forced to accept rational limits on payments; and (b) the entity itself can achieve efficiencies which match as closely as possible the efficiencies of the VA system and the Medicare system. Take away the overwhelming bargaining power component (as the regional co-op suggestion would do) and you lose most of the advantage of the so-called public option. If you leave the regional coops free to pay their CEOs and management "market rate" salaries and to pick and choose between various efficiencies (electronic records, etc.), you lose more of the benefits. Ultimately, regional co-ops may not make any sense and may just add another layer of $200K per year administrators to the already bankrupt system.
If rising insurance rates cannot be contained via a national public option, perhaps the remaining benefit that might be achieved in this current "reform" environment would be to (a) force all health insurers to offer policies without discrimination and without reference to pre-existing conditions, and (b) allow purchasers of medical insurance to make market-based decisions on coverages, costs, etc. If we are moving to a "pay as you go" system, it only makes sense to allow insurance purchasers to opt in or out of coverages for things like birth control or obstetrics (if you are not going to have children) or mental health or substance abuse coverages (if you are willing to take the risk). Perhaps health insurance will more resemble automobile insurance, where you are forced to purchase some very basic coverage (minimum liability) but you are given the option of purchasing many other coverages (uninsured motorist, collision, towing, theft, etc, etc.)
None of what I just said makes sense to me from a public policy standpoint or as an advocate of universal single-payer coverage, but in this climate, that ain't happening.
3380 days to Medicare. I can hardly wait.
9:49 a.m.
Jul 8, '09
The trouble with health care policy is its complextiy; even avid, wonky amateurs like me get swamped in data. The logic of the public option seems obvious to me; I have rare felt as unambiguously positive about an element of policy. But I recognize that what I know is dwarfed by what I don't know and that logic is only as good as the mastery of facts.
Part of the complexity comes from assumptions about implementation. Politically, which calculation is accurate? 1) We'll only get to do this once, so it must be as close to our ideal as we can get it, or 2) since this is a camel's nose issue, putting the concept of universal coverage in place means you pretty much guarantee a process of incremental tinkering over the next decade.
So not only do we need to understand the policy, but the politics. You could hold exactly the same view on the policy but be bitter foes on politics. If you are a propenent of scenario 1, you think that it's worse to pass a minor change. At least if it fails, you might use the stored energy to pass something down the road. But if you think that it will be an incremental process, the one outcome you can't abide is getting nothing passed. If both sides dig in, the only way out of the political impasse--even for those on the same team policy-wise--is getting most or all of what they want.
Which makes it very easy to block.
Jul 8, '09
Another point not discussed much here. The so-called "individual mandate" seems to be included in all current proposals. So everyone will be required to purchase health insurance. I assume somewhat similar to the Mass. system. Not necessarily a bad thing from a public policy perspective, but for the young and healthy and semi-broke, (none of which includes me), this may be a somewhat bitter pill to swallow.
http://www.msnbc.msn.com/id/31782553/ns/politics-capitol_hill/
10:24 a.m.
Jul 8, '09
Greg, I believe the HELP plan does not have an individual mandate, but an employer mandate.
Jul 8, '09
According to Ezra:
The new version of the HELP bill includes an employer mandate for firms with more than 25 workers.
But, the individual mandate is still there as well.
Jul 8, '09
The troubling thing about the new version of HELP is that they are talking about achieving 97% coverage by 2019. Ten years is a long time to wait, particularly given the frequently changing winds of US politics. And yes, as I understand it, HELP does include an individual mandate. I don't think you can reasonably require the insurance companies to accept everybody regardless of pre-existing conditions if you don't have an individual mandate. Otherwise, you will get too many folks who will wait to purchase insurance until they are diagnosed with some terrible and expensive condition. As much as I hate insurance companies, that would be unfair to all concerned.
Jul 8, '09
The best of all national health plans may exist, but if you ask 100 members of congress, you will probably get 100 different answers.
However, we have reached crunch time in the push to get a national health passed this year. Our next shot may be ten or fifteen years from now. Democrats need to settle on a good plan that all or most Democrats can accept. The president's plan or something close (with a strong public option) would be one option.
They should move out a plan that can win with Democrat votes alone.
The Republicans are not interested in bi-partisanship and most will vote against any health plan. Big concessions might win a handful (or less) of Republican votes. In my opinion, these votes are not worth the cost in terms of giveaways required to get them.
Jul 9, '09
Here is more about the importance of a strong health insurance exchange...sustainable change.
Jul 9, '09
As you get into the complexity of the various plans needed to make them work, single payer emerges as simple, elegant, and workable. Unfortunately, that means little in our corrupted political process. Special interests with money almost always trump the general welfare. So, as with climate change, we will get an expensive Rube Goldberg contraption that does little to address real needs.
But wait - things may get even worse. Some think the SCOTUS is about to end the federal prohibition on direct corporate campaign contributions. Perhaps we will actually get congresspeople and presidents with corporate logos sewn onto their suits.
Jul 9, '09
Blue Oregon 9 July 2008 Health Care
There are several other problems, besides affordability and the uninsured, with the way the American Health Care Payment System functions. One of them is the way Employer Provided Health Insurance puts American Companies at a competitive disadvantage in the global market place.
Wyden’s non-reform proposal continues this problem. This provides us with yet another reason to oppose his pro-insurance company proposal.
It is time for Wyden to be replaced by someone who represents Oregonians and not insurance companies.
Jul 9, '09
Where is Senator Merkley on the health care reform debate? We all know the status quo is not good enough but rising health care costs are wreaking havoc on working families. Too many people are falling through the cracks and going without the care they need. Yet real health care reform must include a real effort to reduce the growth of health care costs to make coverage affordable and ensure that the system is sustainable. Shifting millions of Americans over to a government plan without increasing reimbursement rates in Oregon will only abolish employer-based health care, which I happen to quite enjoy, threaten to underpay health care providers for services to WAY MORE people, increase the federal budget deficit and destabilize Medicare. Wrong choice, wrong time. Just say "no" to a government plan.
Jul 9, '09
The (Bend) Source Weekly is not at all enamored with Wyden's health plan. Wyden's "Health Care Reform" Turkey
Jul 9, '09
Wendell Potter, Health Industry Insider, Interviewed for Bill Moyers Journal July 10, 2009
Jul 10, '09
Note Wendell Potter's article - Health Care Industry Adopts Tobacco Lobby's Tactics - at CounterPunch.