Thursday, January 20, 2011
What's next in the health care saga?
I believe that at least a few Republicans are sane, intelligent, and compassionate. Providing affordable health care to all Americans is a noble and compassionate goal and I believe that at least a few Republicans share it. I believe that these compassionate Republicans who voted to repeal the existing health care law would replace it with something that would achieve the goal of universal health care. Let me try to argue their point.
First, these compassionate Republicans believe that health care should continue to be paid for by private insurance. They oppose a universal single-payer plan such as the one in Canada or the national health insurance such as the one in Britain. They favor making it possible for everyone to buy private insurance. That implies that the insurance premiums have to be affordable. How does one achieve that goal?
You can not achieve it by simply legislating the size of the premiums. Private insurance companies have to earn a profit. They must set premiums high enough to cover the cost of the money they pay to medical providers. The whole idea is shared risk. The average person is healthy and does not need any expensive medical treatment. A few individuals do need expensive treatments. The cost has to be shared among both groups. That is, it is necessary that every person has insurance and pays premiums. The same principle applies to home insurance and auto insurance. Everyone pays premiums but few collect benefits.
OK. Compassionate Republican principle number one is that everyone must buy health insurance.
Perversely, one of the big Republican arguments against the existing health care plan is the universal mandate.
A corollary of the principal of requiring everyone to buy health insurance is that insurance companies must not be allowed to cherry-pick their clients. A health insurance company must sell a policy to anyone who applies, regardless of the risk that person poses. The company must ignore any preexisting conditions in setting the premium. Otherwise those persons who need insurance the most will be faced with impossibly high premiums to obtain it.
A second belief of compassionate Republicans is that any move toward universal health care should use, as much as possible, existing systems of providing and paying for medical care. The existing system relies on insurance companies that are regulated by State Insurance Commissioners. Different States have different rules and limits regarding premiums, determining what medical costs are covered, and the like. The result is that a person buying health insurance is limited to those insurance companies subject to the regulation by the State in which they live. A resident of California shouldn't buy insurance from a company that is regulated only by the State of Nevada, for example.
It has been proposed, in the name of competition, to allow insurance companies to sell policies in any State, particularly in States in which they are not regulated. If that change were to be adopted it would require that the federal government set up a national insurance commissioner to replace the 50 State insurance commissioners who now regulate the insurance industry. Alternatively, the insurance industry would operate without any regulation at all. Neither alternative seems to be one that truly conservative Republicans would embrace.
Perversely, some Republicans have advocated just such a change.
My conclusion is that the thoughtful and compassionate Republicans are not the ones that set Party policy. The policy of the Republican Party seems to be simply to oppose anything that Democratic President Obama advocates. I join in calling it "the party of NO."
First, these compassionate Republicans believe that health care should continue to be paid for by private insurance. They oppose a universal single-payer plan such as the one in Canada or the national health insurance such as the one in Britain. They favor making it possible for everyone to buy private insurance. That implies that the insurance premiums have to be affordable. How does one achieve that goal?
You can not achieve it by simply legislating the size of the premiums. Private insurance companies have to earn a profit. They must set premiums high enough to cover the cost of the money they pay to medical providers. The whole idea is shared risk. The average person is healthy and does not need any expensive medical treatment. A few individuals do need expensive treatments. The cost has to be shared among both groups. That is, it is necessary that every person has insurance and pays premiums. The same principle applies to home insurance and auto insurance. Everyone pays premiums but few collect benefits.
OK. Compassionate Republican principle number one is that everyone must buy health insurance.
Perversely, one of the big Republican arguments against the existing health care plan is the universal mandate.
A corollary of the principal of requiring everyone to buy health insurance is that insurance companies must not be allowed to cherry-pick their clients. A health insurance company must sell a policy to anyone who applies, regardless of the risk that person poses. The company must ignore any preexisting conditions in setting the premium. Otherwise those persons who need insurance the most will be faced with impossibly high premiums to obtain it.
A second belief of compassionate Republicans is that any move toward universal health care should use, as much as possible, existing systems of providing and paying for medical care. The existing system relies on insurance companies that are regulated by State Insurance Commissioners. Different States have different rules and limits regarding premiums, determining what medical costs are covered, and the like. The result is that a person buying health insurance is limited to those insurance companies subject to the regulation by the State in which they live. A resident of California shouldn't buy insurance from a company that is regulated only by the State of Nevada, for example.
It has been proposed, in the name of competition, to allow insurance companies to sell policies in any State, particularly in States in which they are not regulated. If that change were to be adopted it would require that the federal government set up a national insurance commissioner to replace the 50 State insurance commissioners who now regulate the insurance industry. Alternatively, the insurance industry would operate without any regulation at all. Neither alternative seems to be one that truly conservative Republicans would embrace.
Perversely, some Republicans have advocated just such a change.
My conclusion is that the thoughtful and compassionate Republicans are not the ones that set Party policy. The policy of the Republican Party seems to be simply to oppose anything that Democratic President Obama advocates. I join in calling it "the party of NO."
Labels: " compassionate conservatism, Republican opposition to "Obama-care, Universal Health Insurance
Sunday, October 18, 2009
A Political Quandary
The quandary relates to the present situation regarding health care and health insurance. Universal health care is a benefit to everyone. It is a benefit even to those healthy individuals who never seem to get sick. It stops the spread of epidemics. It stops bankruptcies of individuals with serious ailments who can't pay their medical bills. It would seem that the cost of universal health care should be shared by everyone. But, how is it to be done?
We Americans are used to the concept of buying insurance from private insurance companies. We buy insurance on our homes, on our cars, on our jewelry, on all imaginable objects or entities that are worth something. We buy insurance to cover our medical bills in case we catch some terrible disease or have a serious accident. In each case, insurance companies hire actuaries who study the statistics of accidents and medical treatments and decide on a fair price for the premium to be paid for each kind of insurance. In the case of homes, actuaties look at the incidence of fires, earthquakes, floods, hurricanes, tornadoes, and other things that damage or destroy houses. They apply the data to the set of houses that a particular insurer insures. The premium divides the cost of the losses among the few houses affected among all the insurees. That's how insurance works. The insurance firm also adds a small amount to the premium to pay the salaries of the actuaries and other employees of the firm and also to pay dividends to the stockholders.
The same principles apply to medical health insurance. In an ideal situation, everyone would have health insurance and the big bills that a few insurees have would be borne by all insurees. However, some individuals do not care to buy insurance. They are healthy and they want no part of paying for others' medical bills. The result is that the premiums now have to be based not on an entire population but only on those individuals who have insurance. Hence, the premiums rise if not everyone participates. The high premiums also make it impossible for others to pay for insurance even though they would like very much to have it.
As long as we continue to rely on a system in which the majority of Americans rely on health insurance provided by private companies we are going to face rising costs of premiums. As the premium costs rise, more and more individuals are priced out of the insurance market and the smaller the pool of individuals for the actuaries' use in calculating premiums. One obvious reform is to require (or encourage) everyone to buy health insurance. In that way premiums would be calculated on the basis of the entire population, not just those people who feel they need the insurance.
The quandary is, how do political leaders compel or persuade everyone to buy health insurance? Subsidies can be provided for those too poor to afford the premiums. Health young people who want to keep as much of their own money as possible will resist buying what they regard as unnecessary insurance. They will also resist a tax imposed in place of insurance. (The tax would be the equivalent of insurance premiums and would be given to the insurers so that they could pretend that everyone is insured and calculate their premiums on that basis.)
I don't see any way around this quandary. That is why I support a universal national single-payer health insurance system in which everyone is covered and everyone pays through a fraction of their income tax. Naturally the insurance companies are terrified of such a possibility. Persons with an ideological conservative bent will oppose it on the ground that it would substantially increase the size and power of the federal government. Perhaps it can be done on a small scale, on a state by state or region by region basis. California is ready to start such a system in California and will do so as soon as a Democratic Governor is elected. Some states, such as Alaska or Rhode Island, are too small or have too small a population for such a system. They would have to join with other states in creating a regional system.
There may be another way. I can't see it right now. Perhaps I lack imagination. I leave it to you who may read this to suggest other ways around the quandary.
We Americans are used to the concept of buying insurance from private insurance companies. We buy insurance on our homes, on our cars, on our jewelry, on all imaginable objects or entities that are worth something. We buy insurance to cover our medical bills in case we catch some terrible disease or have a serious accident. In each case, insurance companies hire actuaries who study the statistics of accidents and medical treatments and decide on a fair price for the premium to be paid for each kind of insurance. In the case of homes, actuaties look at the incidence of fires, earthquakes, floods, hurricanes, tornadoes, and other things that damage or destroy houses. They apply the data to the set of houses that a particular insurer insures. The premium divides the cost of the losses among the few houses affected among all the insurees. That's how insurance works. The insurance firm also adds a small amount to the premium to pay the salaries of the actuaries and other employees of the firm and also to pay dividends to the stockholders.
The same principles apply to medical health insurance. In an ideal situation, everyone would have health insurance and the big bills that a few insurees have would be borne by all insurees. However, some individuals do not care to buy insurance. They are healthy and they want no part of paying for others' medical bills. The result is that the premiums now have to be based not on an entire population but only on those individuals who have insurance. Hence, the premiums rise if not everyone participates. The high premiums also make it impossible for others to pay for insurance even though they would like very much to have it.
As long as we continue to rely on a system in which the majority of Americans rely on health insurance provided by private companies we are going to face rising costs of premiums. As the premium costs rise, more and more individuals are priced out of the insurance market and the smaller the pool of individuals for the actuaries' use in calculating premiums. One obvious reform is to require (or encourage) everyone to buy health insurance. In that way premiums would be calculated on the basis of the entire population, not just those people who feel they need the insurance.
The quandary is, how do political leaders compel or persuade everyone to buy health insurance? Subsidies can be provided for those too poor to afford the premiums. Health young people who want to keep as much of their own money as possible will resist buying what they regard as unnecessary insurance. They will also resist a tax imposed in place of insurance. (The tax would be the equivalent of insurance premiums and would be given to the insurers so that they could pretend that everyone is insured and calculate their premiums on that basis.)
I don't see any way around this quandary. That is why I support a universal national single-payer health insurance system in which everyone is covered and everyone pays through a fraction of their income tax. Naturally the insurance companies are terrified of such a possibility. Persons with an ideological conservative bent will oppose it on the ground that it would substantially increase the size and power of the federal government. Perhaps it can be done on a small scale, on a state by state or region by region basis. California is ready to start such a system in California and will do so as soon as a Democratic Governor is elected. Some states, such as Alaska or Rhode Island, are too small or have too small a population for such a system. They would have to join with other states in creating a regional system.
There may be another way. I can't see it right now. Perhaps I lack imagination. I leave it to you who may read this to suggest other ways around the quandary.
Labels: Opposition to Single-Payer, Universal Health Insurance
Saturday, May 10, 2008
Whose Health Care Plan is Best?
Candidates Clinton, Obama, and McCain all offer plans to improve the existing health care system of our country. Clinton tries to achieve universal health care by simply requiring everyone to buy health insurance. Obama tries to make health insurance more affordable for low income residents. McCain offers the most radical proposal: decouple health insurance availability from employment and instead create insurance pools based on labor unions, organizations, and other definable groups.
I haven’t seen any details of McCain’s plan. I like the idea of separating health insurance from employment. I would like to believe that McCain’s advisors have in mind something like the system of health insurance of Germany. In Germany there are numerous insurance pools. An individual joins one of the pools and obtains health insurance. Because the pools are large, individuals can be insured without regard to pre-existing conditions.
I suspect that McCain’s advisors have not yet thought through the implications of their proposal. These pools should be operated with an incentive to provide needed and good quality medical care rather than an incentive to provide high dividends to share holders. Decisions about coverage should be made by medical experts rather than accountants. Pool managers should be rewarded according to the care paid for by the pool and not by the profit or the increase in the pool’s financial resources. It will take some thought to create such incentives for pool managers.
There are many things that McCain proposes doing if he becomes President. I oppose many of them. In particular, I oppose investing more lives and money in the Iraq project in the vain hope of eventual “victory.” I oppose making the Bush tax cuts permanent. Instead, the President and the Congress must be free to investigate any and all plans to reduce our growing national debt, if only to escape the situation in which all available revenue would have to be used to pay the interest. I oppose McCain’s presumed policy of appointing more ultra-conservatives to the federal courts. I have many reasons for voting against McCain this coming November.
However, I hope that whoever becomes President will take a close look at McCain’s proposal to create insurance groups that are not connected to employment. That looks like a good first step toward repairing our broken health care system.
I haven’t seen any details of McCain’s plan. I like the idea of separating health insurance from employment. I would like to believe that McCain’s advisors have in mind something like the system of health insurance of Germany. In Germany there are numerous insurance pools. An individual joins one of the pools and obtains health insurance. Because the pools are large, individuals can be insured without regard to pre-existing conditions.
I suspect that McCain’s advisors have not yet thought through the implications of their proposal. These pools should be operated with an incentive to provide needed and good quality medical care rather than an incentive to provide high dividends to share holders. Decisions about coverage should be made by medical experts rather than accountants. Pool managers should be rewarded according to the care paid for by the pool and not by the profit or the increase in the pool’s financial resources. It will take some thought to create such incentives for pool managers.
There are many things that McCain proposes doing if he becomes President. I oppose many of them. In particular, I oppose investing more lives and money in the Iraq project in the vain hope of eventual “victory.” I oppose making the Bush tax cuts permanent. Instead, the President and the Congress must be free to investigate any and all plans to reduce our growing national debt, if only to escape the situation in which all available revenue would have to be used to pay the interest. I oppose McCain’s presumed policy of appointing more ultra-conservatives to the federal courts. I have many reasons for voting against McCain this coming November.
However, I hope that whoever becomes President will take a close look at McCain’s proposal to create insurance groups that are not connected to employment. That looks like a good first step toward repairing our broken health care system.
Labels: German plan, Health insurance, insurance groups, Plans of Presidential Candidates, Universal Health Insurance
Wednesday, July 11, 2007
Why I don't like the Republican UHC Plan
The "compassionate" Republican plan to provide health care to all Americans involves mandating that everyone buy health insurance, preferably from private, for-profit insurers. The Republican analysis seems to go like this: since forty million (or more) Americans don't have health insurance, make it a legal requirement that they get health insurance. Apply the same principle that works with auto insurance: require everyone to have insurance. Problem solved.
Of course, not all Republicans think like the late Milton Friedman, who once famously declared to his class of graduate students that there are no poor people in America. Governor Schwarzenegger (California) and former Governor Romney (Massachusetts) have both put forward health care plans in which the central ingredient is to require everyone to buy insurance. They recognize that some people are so poor that they can't afford the premiums. In their plans there are provisions to subsidize insurance for low-income people.
Governor Schwarzenegger also recognizes that insurance companies tend to charge high premiums or even refuse to provide insurance to individuals with expensive medical problems. He proposes to get around that plan by requiring that insurance companies insure everyone, or anyone who applies, regardless of any existing medical condition. I have not read his plan, so I do not know if insurance companies are required to charge the same premium to everyone, or whether, as they have from olden days, they first give you a physical examination and then determine the premium from the result of the exam.
If I were an insurance company and were required to sell health insurance to everyone, I would want to be able to charge a very high premium to a client who seems to be close to death. I would insist that it is my constitutional right to do so. No State, no Governor can require me to operate my business in a way to lose money. I'm sure the present Supreme Court would sympathize with me and decide the case in my favor.
So much for any legal requirement that insurance companies insure anyone who applies, regardless of his or her medical condition. More especially, so much for requiring that insurance companies apply the same premium to everyone. Insurance companies are going to tend to select the healthiest patients. Sick patients are going to tend to select insurance companies that charge the lowest premiums. The Supreme Court isn't going to allow States to mandate premiums or choice of patients that require insurance companies to operate at a loss.
The Republican plan for universal health insurance is an example of a solution to a very complex problem that is simple, inexpensive, and wrong.
Of course, not all Republicans think like the late Milton Friedman, who once famously declared to his class of graduate students that there are no poor people in America. Governor Schwarzenegger (California) and former Governor Romney (Massachusetts) have both put forward health care plans in which the central ingredient is to require everyone to buy insurance. They recognize that some people are so poor that they can't afford the premiums. In their plans there are provisions to subsidize insurance for low-income people.
Governor Schwarzenegger also recognizes that insurance companies tend to charge high premiums or even refuse to provide insurance to individuals with expensive medical problems. He proposes to get around that plan by requiring that insurance companies insure everyone, or anyone who applies, regardless of any existing medical condition. I have not read his plan, so I do not know if insurance companies are required to charge the same premium to everyone, or whether, as they have from olden days, they first give you a physical examination and then determine the premium from the result of the exam.
If I were an insurance company and were required to sell health insurance to everyone, I would want to be able to charge a very high premium to a client who seems to be close to death. I would insist that it is my constitutional right to do so. No State, no Governor can require me to operate my business in a way to lose money. I'm sure the present Supreme Court would sympathize with me and decide the case in my favor.
So much for any legal requirement that insurance companies insure anyone who applies, regardless of his or her medical condition. More especially, so much for requiring that insurance companies apply the same premium to everyone. Insurance companies are going to tend to select the healthiest patients. Sick patients are going to tend to select insurance companies that charge the lowest premiums. The Supreme Court isn't going to allow States to mandate premiums or choice of patients that require insurance companies to operate at a loss.
The Republican plan for universal health insurance is an example of a solution to a very complex problem that is simple, inexpensive, and wrong.
Labels: Auto insurance metaphor, Republican plan for health care, Supreme Court, Universal Health Insurance
Thursday, April 05, 2007
Opposition to Universal Health Care
Writers Michael Tanner and Michael Cannon have an opinion article in the Los Angeles Times for Thursday, April 5 in which they present the Libertarian argument against universal health care or universal health insurance. Mr. Tanner and Mr. Cannon are scholars at the Cato Institute. In their argument they make the following points:
- Providing universal insurance does not necessarily provide universal or equal access to medical care. Many countries that provide universal health insurance still require waiting periods for many more expensive procedures, such as joint replacements or organ transplants. The patient may die while waitint.
- In our own country, lack of health insurance does not deny medical care. An uninsured person can always obtain medical treatment at a hospital emergency room. Hospitals are legally required to provide such care.
- The writers cite studies that show that having health insurance does not correlate with having better health.
- The writers cite a report that shows that the cost to society of providing health care to uninsured persons amounts to no more than three percent of the total cost of medical care in the United States.
The writers conclude that, rather than concentrate on providing affordable health insurance to everyone, politicians should work on fixing some of the other problems and applying other solutions,
such as enacting a standard health insurance deduction, expanding health savings accounts and deregulating insurance markets.
I think that these writers are living inside a bubble. Even they concede that it would be good to provide everyone with health insurance. They don't think it would solve anything to do so. They don't recognize that our national health care system is broken and is deteriorating. It may be statistically true (I can't dismiss their statistics out of hand) that a person who must rely on a hospital emergency room for medical care is otherwise just as healthy as a person with health insurance or with enough money to pay for visits to the doctor. I do know that more and more hospitals are closing their emergency rooms. Emergency treatment is still available, but waiting times are longer and longer. I have good health insurance and I have enough money to pay for medical costs out of pocket, but if I have a heart attack I may not be able to reach a hospital with a working emergency room in time to save my life.
It is very wrong to argue that we don't have a pressing need for universal health insurance, at least, simply because emergency rooms are legally required to care for the uninsured and indigent members of our society. We all need access to emergency treatment from time to time. Such treatment should not be delayed because ideologues have objections to society providing afforcable health care to all.
Labels: Cato Institute, hospital emergency rooms, Universal health care, Universal Health Insurance
