Heath Care: it's all about maximizing your choices
Kari Chisholm
Lately, I've been studying up on what the WaPo's Ezra Klein calls "the most important aspect of health reform": the Health Exchange. Time Magazine called them "poorly understood" and "often overlooked".
But before I get into explaining what the Health Exchange is and why it's so important, let's start by stipulating something: there's effectively no such thing as a free market in health care.
If you get your health care through your employer, you probably have a choice between one and three plans that they've chosen for you. And never mind trying to buy health insurance as an individual. If you can find a plan, it's surely overpriced and full of absurd loopholes. And just wait until something bad happens - you'll discover just how broad the phrase "pre-existing condition" can be. As Time's Kate Pickert notes, "it's a fairly safe bet that" the right-wingers that are so stoutly defending the existing system "have never had to buy a health-insurance policy on the open market."
Recognizing this problem, the health reform plans that are winding their way through the House and Senate are creating dramatic new options for the way that we buy health insurance in America. While the existing system will remain in place, the reform plans will create a new, additional, much free-er market called the Health Exchange.
What is the Health Exchange, exactly? Well, for starters, it'll be an easy-to-use free market of health insurance plans. If you're in the Exchange, you'll have lots of choices for health plans - including, hopefully, a public option to go along with all the private ones. To guarantee that all the plans are good ones, there will be minimum standards for the level of coverage and affordability. Rather than getting priced individually, you'd be in a huge risk pool (which brings prices down and, more imporantantly, stabilizes prices.) And the whole idea of "pre-existing conditions" would go away.
"So what?" you ask? Yeah, as Ezra Klein notes, it's "weirdly simple":
Compared with the crazy-quilt system we have now, the idea behind the health insurance exchange is almost weirdly simple: It's a single market, structured for consumer convenience, in which you choose between the products of competing health insurers (both public and private). This is not a new idea. It is how we buy everything from books to socks to soup. Everything, that is, except health insurance. The benefits of reversing that bit of accidental exceptionalism are obvious to anyone who has ever stepped inside a Target: Consumers will benefit from more choice, from direct competition between insurance providers hungry for their business, from regulations meant to protect them from deceptive products, from efficiencies of scale, and from the sort of purchasing power that only a large base of customers can provide. They will benefit, in other words, from an actual, working market -- something health insurers have managed to avoid for far too long.
The whole idea is to be supremely consumer-friendly - web-searchable, standardized contract terms, good minimum plans, etc. And it's not just good policy, it's also good politics. Ezra Klein:
The central problem in health-care reform is that good policy and good politics point in opposite directions. Good policy proceeds from the understanding that our health-care system is a fractured, pricey, inefficient mess. Good politics, however, proceeds from the insight that a lot of people rely on this fractured, pricey, inefficient mess and don't trust Washington to change it. ...How do you reform a system that you're not allowed to change?The answer that reformers have come up with is that you don't change the current system. In the short term, you strengthen it with subsidies and regulations on insurers. You make it kinder and gentler. But you also build the beginnings of a new, better health-care system off to the side. You let it demonstrate its efficiencies and improvements. You let the lure of lower costs and higher quality persuade Americans to migrate over of their own accord.
This is what the health insurance exchange is designed to do. It is arguably the single most important element of health-care reform, because it is the bridge between the system we have and the system we want.
Which isn't to say that everyone agrees on how the Health Exchange would work. The big open questions that remain:
First and foremost: Will there be a public option? To me, it's a no-brainer. The arguments are well-rehearsed. But it's not the only question that progressives should be concerned about.
Will the Health Exchange be national - or will there be regional or state-level exchanges? The bigger the risk pool, the more stable, fair, and cost-effective the system will be. The more consumers in the system, the more bargaining power they'll have collectively - thus bringing down prices.
Right now, the House bill has a single national exchange, while the Senate bill envisions state and regional exchanges.
Who gets to join the Health Exchange? You'd think, based on the rhetoric of public-option advocates, that anyone could choose the public option. But you'd be wrong.
Under the main proposals moving forward now, the Health Exchange would only be open to the uninsured, the self-employed, and very small businesses. Imagine that: you spend a year successfully arguing for the public option, only to discover that it's not open to you because you've got a mid-sized employer that already provides health care.
Why? Because folks are actually worried that the Health Exchange could be too good to consumers, and if it's open to everyone, too many businesses will dump their current plans and join the Exchange. And that would seem to violate the President's promise that "if you like what you have, you can keep it."
But as Ezra Klein notes, our own Senator Ron Wyden is "uncowed." Wyden has proposed an amendment to the main health reform plans (separate from his main proposal) that would allow every American to take the money their employer spends on their health care and spend it in the Exchange, rather than with the employer-selected health plan. On Wyden's Free Choice proposal, Ezra writes:
This idea wouldn't take away what anyone has. But it would allow those of us who don't like what we have to change it. More so than any other idea in the health-care debate, it offers a concrete way that reform could benefit the insured. It gives them a way out of a health-care system that is eating through their wages and limiting their choices.And that's no small gain. The only way that health-care reform will truly give us a more efficient, more effective, more affordable health-care system is if it begins to fundamentally change the inefficient, ineffective, unaffordable system we have now. The strength of the health insurance exchanges is the key to that transition. That is not to underplay the political or policy challenges. Change is scary. But it's what Obama promised, and it's what the health-care system needs.
Along with everything else we're trying to do with health reform, I believe that it's critical that we give consumers more choices. The more choices we offer Americans, the happier they're going to be.
The House bill envisions slowly raising the level of "small" business that's eligible for the Exchange - but that still leaves the decision about whether to join the Exchange up to employers. I'd rather see the choice made by consumers - which means opening it up to as many people as possible, as fast as possible. Even if that risks screwing up the profit models currently enjoyed by the health insurance industry. As David Leonhardt notes in the New York Times:
You might think, then, that a central goal of health reform would be to offer people more choice. But it isn’t.Real choice is not part of the bills moving through the Democratic-led Congress; even if the much-debated government-run insurance plan was created, it would not be available to most people who already have coverage. Republicans, meanwhile, have shown no interest in making insurance choice part of a compromise they could accept. Both parties are protecting the insurers.
If you support the public option - and you should - then you should also be advocating for Senator Wyden's Free Choice proposal, and allow every American to enter the Exchange and, if they want, to choose the public option.
I'm all for letting people keep the health insurance they've got if they're happy. But we can't let that goal prevent us from achieving the more important goal - to give more Americans more options, so that those who don't have health care, or who have substandard too-expensive health care, can finally choose something better.
Want to learn more about how the Health Exchange(s) would work - and what the key questions are? Read the four-page summary from the Kaiser Family Foundation (PDF). Read Kate Pickert's explanation in Time Magazine. And read this blog post and this op-ed by Ezra Klein in the Washington Post. Finally, check out Senator Wyden's three-page Free Choice proposal (PDF).
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12:56 a.m.
Aug 31, '09
Full disclosure: My firm built Senator Wyden's campaign website, but I speak only for myself.
Aug 31, '09
Hi, This is great work and very good information on health care. I personally like your post; you have shared good insights and experiences. Thanks for such a nice informative ideas.
Aug 31, '09
If the findings of CBO over inaction had been released earlier, Ted Kennedy could've seen his lifetime wish come true.
Inaction cost, $9trillion over the next decade, can not be compared to the balance between estimate and outcome in a worst case of scenario, and this balance could be adjusted each year. ((Some of CBO analysis : While the costs of the financial bailouts and economic stimulus bills are staggering, they are only a fraction of the coming costs from Social Security, Medicare, and Medicaid. Over the next decade, the Congressional Budget Office (CBO) projects that each year Medicaid will expand by 7 percent, Medicare by 6 percent, and Social Security by 5 percent. These programs face a 75-year shortfall of $43 trillion--60 times greater than the gross cost of the $700 billion TARP financial bailout)). Time does not fix endless greed and energy depletion.
When the public health is also one of commodity like a house, we come to a tragic and unthinkable conclusion : As to for-profit business, the more and longer ills patients get, the more profits they make, and it will debilitate the overall economy involving education for the future, not to mention continued bankruptcy of middle class.
Of young adults ages 19 to 29, 13.2 million, or 29 percent, lacked coverage in 2007, and that implies the total of this promising reform will be cheaper than expected, I guess.
In case of an unexpected injury or ill, they might give up their learning or aspiration, in this regard, this reform means liberty, job opportunity, competitiveness for them and future.
The contents of savings (below) in this reform 'have nothing to do with' limit to medical access, rationing, tax raise, and deficit etc.
Rather, without wiping out these wastes and roots of bankruptcy for middle class, all fronts are sure to face larger financial ruin than this recession, which leads to more limit to medical access, more rationing, more tax raise, and more deficit etc than today.
$1.042trillion (cost of reform) + $245bn (cost to reflect annual pay raise of docs) = $1.287bn (actual cost of reform).
$583bn (the revenue package) + $80bn (so-called doughnut hole) + $155bn (savings from hospitals) + $167bn (ending the unnecessary subsidies for insurers) + 129bn(mandate-related fine based on shared responsibility) + $277bn (ending medical fraud, a minimum of 3% , the combined Medicare and Medicaid cost of $923.5bn per year, as of July,) = $1.391trillion + the reduced cost of ER visits (Medicare covers some 40% of the total) + the tax code on the wealthiest more reduced than originally proposed = why not ? (except for a magic pill, an outcome-based payment reform & IT effects and so forth).
As lawmakers debate how to pay for an overhaul of the nation's health care system, a new report from The Commonwealth Fund claims that including both private and public insurance choices in a new insurance exchange would save the United States as much as $265 billion in administrative costs from 2010 to 2020.
"Health reform can help pay for itself, but both private and public insurance choices are critically important," said Commonwealth Fund President Karen Davis, who coauthored the new report. "A public insurance plan can help drive new efficiencies in the system that will produce large cost reductions. Without a public plan, much of those potential savings will be lost."
Unlike high fuel price and mortgage rate in recent years as the roots of great recession and bankruptcy of middle class, the severity in the high cost of health premiums has come to light lately. Similarly, in an attempt to hide these deficit-driven corruptions and wastes, the greed allies struggle to turn the savings via removing these wastes into limit to medical access, rationing, tax raise, and deficit etc.
In contrast, not to mention a wide range of consumer protection, options across state lines, this promising reform takes initiatives in more primary care docs and improved long-term care. And the bill expands coverage for mental health services, and defines what will be covered. It also prohibits co-payment charges for wellness and preventive medical care. There is no mention of rationing. The use of this term is, again, a gratuitous distraction aimed at feeding fear.
Aug 31, '09
Thanks for explaining this, Kari. I haven't read anything on choice in the newspapers.
Wyden said recently that over 80 percent of Americans would not have access to the public option in the House and Senate bills, and a lot of OFA people in the audience at his Medford town hall were trying to figure out what he was talking about. I am not fighting daily for a public option that won't apply to me, my family, or anyone I know, and this really makes my blood boil.
Here is my situation - I have insurance through my employer that I like and I may want to keep it until I have reason to believe that the public option is better. I have kids and need to be a bit cautious about pulling up stakes and picking a new option. But I want my insurer to know that unless they measure up, I can and will leave and get better public option insurance.
I have three questions for some public option knowledgeable person -
How will the public option put fear into the hearts and boardrooms of health insurers unless it is open to all, or at least open to most Americans?
Why aren't HCAN , the unions, and other public option advocates speaking out about this?
And why isn't the MSM reporting this (other than the New York Times)?
8:00 a.m.
Aug 31, '09
i wish Wyden would demonstrate that he understands that the majority of Oregonians want a public insurance option. his ideas about free choice & portability are terrific, but his refusal to even sound like he supports the President is crazy-making. right now the health care battle is not about policy, it's about the politics. but Wyden is so busy pushing the policy, he's allowing the right-wing anti-reform politics to dominate. he needs to use his town halls not to endlessly trumpet his bill; he needs to rally Oregonians to the cause of reform and support of the President (who does not have a bill but instead has 3 core principles on which most people who are for reform agree: choice, cost reduction & quality care for all).
we have to win the political battle or the policy fight will be moot. and right now, Wyden is not doing a lot to win the politics. which is a shame because he's got some great policy to offer.
Aug 31, '09
Good greif. Why don't universal health care advocates just answer some basic questions honestly?
Example. The so called coverage for illegal immigrants "myth".
Bernie Sanders on Thom Hartman said "There's nothing in the legislation that provides coverage for illegal immigrants"
Now come on people, that's the most obfuscating piece of BS I've heard lately.
What did Bernie say? And Thom didn't ask for any clarification. He just moved on as if that "myth" was settled.
I can't figure out how you people that that kind of BS is supposed to work as some sort of debunking.
Obviously legislation doesn't have to have language providing coverage. It need only exclude any means to exclude illegals from coverage. And Bernie can't even make clear that he is opposed to coverage for illegals.
Democrats have been killing amendments requiring proof of citizenship for coverage.
So what exactly is the message from you advocates on this simple matter?
Spit it out.
Let's get one thing straight at a time.
8:18 a.m.
Aug 31, '09
Kari, you are so right! This is a key issue, expanding choice for consumers. And by increasing competition among insurers, it could put pressure on them to cut their overhead costs.
With or without the public option, Wyden Free Choice proposal is important.
9:31 a.m.
Aug 31, '09
This is a great post, Kari.
Unfortunately, too many normally thoughtful people agree with TA, who comments above that "right now the health care battle is not about policy, it's about the politics."
Because polls show a majority of Oregonians support a "public option" (without knowing exactly what that means or that most of them might not even be eligible for it), that doesn't mean Wyden should simply roll over on this point.
Over the weekend, I heard Sen. Mary Landrieu (D-La) on TV praising the Wyden-Bennett bill. Now I don't expect that bill to be the one ultimately enacted, but Wyden can play a major role in crafting a strong, and yes, perhaps even bipartisan bill.
Remember the old days, when we expected the people we elected to exercise leadership? Believe it or not, that's what Wyden is doing now.
Aug 31, '09
Jack, this comment is the intelligent Jack Roberts we sometimes see. The future of the GOP is more discussion like you have provided here, less of the sniping and game playing.
I heard Sen. Hatch say on a Sunday show that he and Sen. Kennedy passed children's health care as part of a budget balance bill. Sounds like a precedent for using reconciliation if there aren't 60 out of 99 Senators for something more bipartisan.
From what I have heard of the Swiss plan (universal coverage, private insurance, but insurance is treated like a regulated utility ) it makes a lot of sense. If not that, what? Insurance company administrative costs rising to double what Americans now deal with just to avoid government involvement? How does that help average Americans, or is defeating the other party more important than helping Americans?
For the salaries we are paying Senators, they need to start voting in Finance comm. by mid-Sept. and start the long hard slog through all amendments like Chris Dodd did with the Health Comm. Are there any parts of the bill that Grassley and Enzi can support? The old sayings, "fish or cut bait", "put up or shut up" come to mind.
Time to stop the game playing and rhetoric and cast the votes they are paid to cast. If they can find bipartisan agreement, that is fine. But don't let "negotiations" drag on into October. Stay in session all October casting votes, and if all the votes have not been taken by mid-November, or if it is in conference committee, no more than a 3 day break for Thanksgiving, and then back to work. If they want to be home for Christmas, they will find a way to get something to the president's desk by then.
Yes, Jack, leadership is important. So is hard work.
Aug 31, '09
Bill Moyers on why the Dems are failing us on healthcare: VIDEO
Aug 31, '09
So, in light of the Corbett Schools situation would those in favor of the public option (whatever that means) also be in favor of maximizing choices in public education?
Could our country develop a bipartisan approach in healthcare (aided and/or led by Wyden) that could actually become a model to address some of the ineqaulities of public education as well?
Aug 31, '09
t.a., you said it yourself - "i wish Wyden would demonstrate that he understands that the majority of Oregonians want a public insurance option."
I agree that most Oregonians would like to have a public insurance option. The problem, as Wyden, Klein, and Leonhardt are pointing out, is that the majority of Oregonians WOULD HAVE NO PUBLIC OPTION OR ANY ADDITIONAL OPTIONS under the House and Senate bills that have been passed by committees. What is the point of politics if it isn't about important policy?
Why are the people who helped elect Obama being asked to fight for public option if it won't even apply to most of us? I would like you and someone from HCAN to answer my questions above, please!
Aug 31, '09
Corporations are pushing through legislation in the United States that will force us to buy defective, for-profit health insurance, a plan that will expand corporate monopolies and profits at our expense and leave tens of millions without adequate care. Corporations are blocking all attempts to move to renewable and sustainable energy to protect the staggering profits of the oil, natural gas and coal industries. Corporations are plunging us deeper and deeper as a nation into debt to feed the permanent war economy and swell the military budget, which consumes half of all discretionary spending. Corporations use lobbyists and campaign contributions to maintain arcane tax codes that offer them tax havens and tax evasions. Corporations are draining the treasury while the working class sheds jobs, sees homes foreclosed and struggles to survive in a new and terrifying global serfdom. This has been the awful price of complacency.
from: http://www.truthdig.com/report/print/20090831_hedges_pittsburgh_g20_defiance/
2:12 p.m.
Aug 31, '09
Where, in touting universal choice, does Kari address the point that it would be harmful to flood the market with public choice opters? He brings it up, but never says why it's not valid.
Other points:
*"small business" is actually where a large chunk of American society works. From what I can tell, 1/5th of the entire workforce is employed by a business with 20 workers or fewer.
*Of the 47 million without health insurance, it's estimated that as many as 20 million are employed by small business. The first step is to create universal care, to start driving the costs down.
*Many smaller businesses will end up dropping their customers--thus enabling their entry into the exchange--anyway, because they relish the opportunity to pay a fixed 8% payroll tax, rather than endure the uncertain budgeting process that attempts to figure wildly variant premiums from year to year.
*This piece also fails to notice that the eligibility for the exchange is set to gradually expand (double the number of employees in the 2nd year, and I believe doubling again after five years, to 50), and is thereafter under control of the HHS Secretary. Meaning that it can always be adjusted. That mechanism would seem prudent, given the desire to roughly manage the flow into the exchange so as not to flood it--both from a logistical standpoint for the exchange, and to prevent wholesale collapse of the private insurance industry.
The current ideas for the PO are fine. I don't think full free choice is as wise at this point.
Aug 31, '09
The health care "debate" has now reached the Tower of Babel stage. The complex wonkfest of options, non-options and competing options has thoroughly confused what should have been a simple, easy-to-sell message: Medicare For All.
That this was the intention all along does not take a genius to see.
5:10 p.m.
Aug 31, '09
Good post, I agree! Giving people the ability to vote with their feet is at least as important as giving them an alternative for which to vote.
Sep 1, '09
So none of you are willing to tell the truth about illegal aliens?
Bernie Sanders on Thom Hartman said "There's nothing in the legislation that provides coverage for illegal immigrants"
Unless there is a specific exclusion or a proof of citizenship requirement they're covered.
Are you all trying to hide this from the astroturf oppostion?
Isn't the truth a better way to advance legislation?
Sep 1, '09
Obama has pledged to provide drivers licenses to illegal aliens, which would make it all the easier for them to access any nationalized health plan.
There is no language in the bill to prevent illegals from using the plan. NONE.
Proof of residency (like a drivers license), not proof of citizenship, is all they will need.
Illegal aliens are already bankrupting California now with the strain they put on the health care system.
Sep 1, '09
Kari:
But before I get into explaining what the Health Exchange is and why it's so important, let's start by stipulating something: there's effectively no such thing as a free market in health care.
Bob T:
Well, thanks for acknowledging that, Kari. I'm getting pretty sick and tired of hearing people say that we have one. But I also keep in mind that people will label something to make it easier to hate and therefore want to change, so they label the current system "free market".
Kari:
As Time's Kate Pickert notes, "it's a fairly safe bet that" the right-wingers that are so stoutly defending the existing system "have never had to buy a health-insurance policy on the open market."
Bob T:
Well, the later is probably impossible (if one also assumes that a free market policy is also one free of mandated coverage), and while the former point is not clear there is little evidence that the Repubs have ever had any real interest in reforming the system in a direction that more or less matches their rhetoric (say, passing a lot of recommendations by the Cato Institute, which I'd agree with). The reason we are having this serious nation-wide debate again is because the Repubs did absolutely nothing about the issue in all the years since ClintonCare failed to get off the ground. I'm not even going to count Bush's prescription medication bill which was a zero in the big picture.
Let's face it -- the Democrats don't like anything that enables people to do without government bureaucrats getting involved, but the Republicans aren't much into that, either.
Bob Tiernan Portland
Sep 1, '09
I am a former Federal employee so I've used the "exchange" program when looking for insurance plans. As Senator Wyden knows, when you live in the Portland Metro area you don't have the same choices as someone in Washington, D.C. When I went looking for a plan other than Regence Blue Cross Blue Shield I found that I would have to either ask some of my medical providers if they would consider becoming part of the network (and the insurance plan would accept them) or look for new providers. Even if there is a national network, will your choices of medical providers really give you a "real" choice? Have you ever asked your medical providers to contract with another plan? If so, ask them what they went through.
I've also had the experience of trying to be the good health care consumer by shopping around within the insurance network. Out of 4 interviews with surgeons related to an auto accident, 3 were unethical in coming up with excuses as to why they didn't want to treat me because they would have to accept what the health insurance company would be paying them. I wrote a written complaint to the insurance company about the most egregious one and after a year he was taken off the preferred provider list for 3 months.
The insurance exchange option is not for me. I told Senator Wyden that if he truely believes in choice for Americans then there needs to be a public option.
Sep 3, '09
Great post! The health exchange eliminates so many problems that are perpetuated by the employer model. Hopefully the exchange remains strong through the harmonizing about to occur.
Sep 3, '09
Kari Chisholm wrote:
"If you get your health care through your employer, you probably have a choice between one and three plans that they've chosen for you."
This is a fair point, and 3 choices are all probably thru one provider, so it's like asking if you want Kelloggs Crunchies, Kelloggs Sweeties or Kelloggs Yummies for breakfast. You're gonna get Kelloggs.
Some very large companies will offer a wide array and you'll get to pick between Kelloggs, Post and General Mills. But most employers don't.
This is why it is so important that individuals should have the right to band together WITHOUT government interference and form their own groups to purchase health insurance at competitive rates.
Why do liberals think that we can't manage to do this without government assistance?
Each state should amend their laws , allowing groups to form, and then get out of the way.
We don't need federal help to do this. We need freedom of choice.
De-regulation is the answer to this, not more regulation.
Sep 3, '09
We're all trying to read a 1000 pages but will say in the last week, have seen sharp outlines and it's more clear to follow the details rather than the political rhetoric as an American !When were finding in the US they're selling illgal body parts,it makes ya think this defensive practice of medicine needs a cure as much as the Quadrulpe Reassortant needs a vaccination match.Sail on and let's find compromise and solutions to make it happen.
Sep 3, '09
Peter Graven wrote:
"The health exchange eliminates so many problems that are perpetuated by the employer model."
Does it matter to you a bit that millions of people are perfectly satisfied with obtaining health insurance thru their employer?
Why should they lose what they like just because you don't like it?
Sep 3, '09
mp97303 wrote:
"Bill Moyers on why the Dems are failing us on healthcare"
Dems are failing because of their hypocrisy. We have Ed Schultz preaching WWJD to try to convince Christians that it's their religious duty to vote along with Obama.
Sep 3, '09
If you are registered with Washington Post, this is an excellent animated cartoon.
http://www.washingtonpost.com/wp-dyn/content/opinions/anntelnaes/?hpid=opinionsbox1
<h2>(If you are not, it relates to the accuracy of GOP health care claims.)</h2>